Sick of costs?

A special approach has been taken to gastric illness (‘GI’) claims since it was established in the case law in Kempson & Kempson v First Choice Holidays (2007) and Wood v TUI Travel Plc [2017] EWCA Civ 11 that food or drink contaminated with bacteria in sufficient quantity to cause illness cannot be considered to have been “fit for purpose” or of “satisfactory quality” under ss4 and 13 of the Supply of Goods and Services Act 1982. This is not a “strict liability” regime, as confirmed in Wood v TUI, but it does set GI claims apart from other package travel claims in terms of what a claimant is required to establish.

Since 2018, the costs associated with GI claims have also been dealt with distinctly from those in other package claims.

GI claims were brought into the scope of the fixed recoverable costs (‘FRC’) regime in Part 45 of the Civil Procedure Rules by operation of the Civil Procedure (Amendment No.2) Rules 2018 (SI 2018/479) at the same time as the Pre-action Protocol for Resolution of Package Travel Claims (‘the PT Protocol’) came into force, on 7 May 2018. Despite its broad title, the PT Protocol deals only with claims for damages for gastric illness contracted during a package holiday, and only with claims valued up to £25,000.

That development was against the backdrop of a 500% increase in GI claims between 2013 and 2016 (as reported by ABTA) and a government consultation which sought to reduce the number of “unmeritorious” claims and to control costs. The new approach brought costs in GI claims in line with those in public liability cases.

Under the new FRC regime, however, which came into effect on 1 October 2023 by SI 2023/572, GI claims (as well as claims which no longer continue under the RTA or EL/PL Pre-Action Protocols) are bundled up with other fast track claims in Section VI of Part 45 of the CPR: “fixed costs in the fast track”. Because GI is a form of personal injury, whether a claim falls under the old or the new scheme will depend when the cause of action accrued, rather than when the claim was issued.

The costs regime

Where the cause of action accrues before 1 October 2023

The rules can be found under Part 45x in the White Book, the FRC figures at 45.29E and Table 6D and the disbursements at rule 45.29I. The below is a ready reckoner:

The Court may only allow a claim for the disbursements listed under rule 45.29I, which include medical records, expert reports as provided for in the relevant protocol, and court fees.

Where the cause of action accrues on or after 1 October 2023

Where a claim is allocated to the fast-track (usually for claims valued between £10,000 and £25,000) it will also be assigned to one of four complexity bands. The full new allocation and costs scheme is covered more comprehensively in Katharine Bailey’s article, but it is likely that most GI claims, which fall under the PT Protocol, will come under Band 2 of the fast-track.

The new Section VI of CPR Part 45 will apply “to any claim which would normally be or is allocated to the fast track” (rule 45.43). It matters not which protocol applies (apart from when considering disbursements: see below). Rule 45.44 provides that the only costs allowable in such claims will be the FRC in Table 12 (in the Practice Direction to Part 45) and the disbursements in section IX of Part 45.

This means the following costs will be awarded in any GI claim (or indeed any other claim) which falls under complexity band 2 of the fast-track:

Rule 45.59 under Section IX deals with disbursements for Section VI claims. Rule 45.59(a) limits the disbursements allowed in claims started under the RTA and EL/PL Protocols to a finite list which reflects the one in Part 45x. Contrastingly, “in any other” Section VI claim, apparently including gastric illness claims, the winning party will be able to recover “any disbursement which has been reasonably incurred, other than a disbursement covering work for which costs are already allowed in Section VI.”

How the court will determine “reasonably incurred” in this context remains to be seen, but it is a reminder to those defending such claims to keep a close eye on disbursements and to cooperate with claimants where possible, particularly given the extensive expert evidence that might be required in claims of this nature.

Conclusion

Unlike previously, the application of FRC to the package travel world will not be limited to GI claims. No need, then, for the Government to reconsider the specific proposal it initially made in 2018: “to extend fixed recoverable costs to all package personal public liability claims in the fast track.” At the time, the decision was made not to do so because:

“the case was not made out to cover non-GI claims at this stage. In particular: there is no evidence of a serious problem with other package PI PL claims; different circumstances pertain in different types of claim, not least the application of the Athens Convention (for cruise claims) and the Montreal Convention (for aviation claims), which potentially give rise to unforeseen consequences in applying a new PAP. As the Association of Personal Injury Lawyers put it, an extension to include all types of package holiday PI claims represented a ‘cure that goes much further than the identified malaise’.”

The report noted, however, that there would “be an opportunity to reconsider the appropriate rates in any consultation on Sir Rupert Jackson’s recommendations to extend FRC more widely: the Government is considering the way forward on his report.” That “way forward” has brought us to the new Part 45.

To adopt the language in the Government’s report, which in turn quoted APIL, will the new “cure” root out all the “malaise” affecting cross-border personal injury claims? That will become clearer as newer claims fall to be determined, namely those where the cause of action accrued after 1 October 2023.

One might wonder, however, whether the application of FRC really deters fraudulent claims. It has no impact on the damages available to claimants. The answer must be, therefore, that it depends largely on claimant solicitors. The SRA have previously issued specific warnings to solicitors in relation to holiday sickness claims; particularly the need to properly investigate the facts and evidence (https://www.sra.org.uk/solicitors/guidance/conduct-disputes/, particularly Case Study 1). Of course, the disapplication of QOCS for fundamental dishonesty remains a strong deterrent. Claimant solicitors should continue to advise their clients carefully of that risk and the personal liability they might face as a result.

The latest ABTA numbers on the increase in gastric illness claims cover the years 2013 to 2016. It is hoped that new data will soon be available to show the effects of the new scheme.