Warning to travel companies following landmark court case
Travel companies are being warned that compensation claims from customers could become more costly following a major change in court rules relating to costs in personal injury claims.
The warning came after a landmark case ended with the travel company in question having to pay all of its own legal costs, and those of its supplier, even though the customer had lost.
The changes come after an overhaul of the procedural rules relating to the recovery of costs by defendants who win, under the Jackson Reforms, designed to end a situation where the cost of litigation was often significantly higher than the compensation paid.
The new rules were applied to the recent case of Wagenaar v Weekend Travel Limited and Serradj and meant that the tour operator had to pay its own legal costs, even though Wagenaar lost the case.
This was because a personal injury claimant who loses does not now have to pay the defendant's costs except in limited circumstances.
In this case, the customer had a serious skiing accident on holiday and sued Weekend Travel under the Package Travel, Package Holidays and Package Tour Regulations 1992. Weekend Travel then brought in the ski instructor as a third party.
As Mr Wagenaar lost the case, Weekend Travel had to cover its own legal costs as the costs fell under the new rule relating to the claimant's injury claim.
The Court of Appeal decided the claim by the tour operator against the ski instructor was not a personal injury claim and was therefore outside the new rules, so the loser paid the winner's costs, the ski instructor having won.
Lewis Solomon, a travel law expert at Adams & Remers LLP, said: "This is a big change in the way in which costs are recovered and the travel industry as a whole should pay particular attention to this ruling and the financial implications for future claims.
"Travel companies will need to seek specialist legal advice as they are going to have to think very carefully about whether they defend injury claims, because they are unlikely to recover costs if they succeed.
"If they do take on costly cases against their suppliers and they successfully defend, they will pay all their supplier's costs as well. They should be wary of bringing in third party suppliers unless they are certain the claimant will succeed."