Fixed costs in holiday claims?

After increasing media interest in, and tour operator concern about rising numbers of holiday sickness claims, the Ministry of Justice has now asked for rules to limit the legal costs in such cases to be looked at as a priority. These cases are outside current rules on fixed legal costs for injury and disease cases under £25,000 and – as was the case with noise-induced hearing loss claims a few years ago – it would appear reasonably likely that the spike in these cases is fairly closely related to the fact that costs aren’t restricted.

The issue was mentioned in passing in last week’s debate about the regulation of claims management companies, in which Lord Kinnoull said “I do not believe … that hygiene arrangements in the kitchens of holiday destinations have fallen off a cliff.” Lord Hunt’s somewhat more direct view was that claims management firms “continue to treat claimants as a commodity, an entry ticket to maximising profit.”

‘Displacement’ seems to be the preferred (neutral) term for this sort targeting of claims outside fixed costs regimes, although I have heard colleagues refer to it as a waterbed: the analogy being that if you press down on one part, you produce a bulge somewhere else.

It is not yet entirely clear if this new activity by the MoJ is joined up with other work, most notably Sir Rupert Jackson’s review of fixed costs which is due to report at the end of this month. The hope has to be that it is and maybe there is a clue to that in the MoJ press release here confirming that it will task the Civil Justice Council to look more generally at the rules in lower value personal injury claims in order to reduce incentives to pursue claims of very limited merit.

The MoJ is using secondary legislation in this field – the CPR – to fix a policy problem. It could be that this approach becomes a more commonly-used technique by what is, after the election, a minority Government that could well seek to avoid all but absolutely necessary votes on primary legislative measures.


ak Written by Alistair Kinley, director of policy and government affairs at BLM

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