It was neither reasonable nor proportionate for a group of claimants to spend £456,000 in base costs alone on litigating holiday claims that could have been dealt with far more cheaply by the mediation scheme run by the Association of British Travel Agents (ABTA), a costs judge has decided.
Master James was ruling on several preliminary costs issues following a group action brought by 599 claimants who had stayed at a resort in Turkey in the summer of 2009.
They settled their cases for £1.7m, and their solicitors, Irwin Mitchell, claimed base costs of just under £2m, with a further £2.5m in additional liabilities.
Of the claimants, 447 suffered illness, typically gastrointestinal, Master James recorded, while 152 had to endure substandard accommodation and service, “not to mention (in many cases) witnessing and indeed caring for family members or companions” who had fallen ill.
Some claimants came away with five-figure damages, while others received less than £100.
The costs bill came under attack on several grounds, including that the 152 claimants who were not ill should have pursued ABTA mediation for their claims of diminution of value, loss of enjoyment and out-of-pocket expenses.
The scheme provided compensation of up to £5,000 per person or £25,000 per booking, a cap that Master James said would have covered the 152 claimants “perfectly adequately”. The fee for using the scheme ranged from £108 to £264 depending on the size of the claim.
This meant that the maximum that could have been spent using the ABTA scheme was £40,128, and in reality would have been considerably less than that, compared to £456,000 in base costs that Irwin Mitchell had billed.
“I find that it was neither reasonable nor proportionate to run up nearly half a million pounds in base costs of litigating those 152 matters,” Master James ruled. “Nor do I find that claiming them alongside the ill claimants’ damages in the group litigation was a reasonable and proportionate step. It certainly didn’t save any costs, quite the contrary as far as I can see.”
She ordered that the maximum costs the defendant First Choice Holidays should have to pay in relation to these claimants was what they would have paid to use the ABTA scheme.
While acknowledging that it was a voluntary scheme and that the claimants could not be “forced” into ADR, she said “it is trite law, per Halsey, that that they can be penalised in costs if their refusal to do so is found to be unreasonable”.
Looking more broadly at the total costs bill, and applying the pre-Jackson Lownds test (as work was done and proceedings commenced before 1 April 2013), Master James said that on the basis of the bills she had seen so far, “I am at the very least in some doubt as to whether the way this litigation has been run by the claimants has kept costs to a reasonable and proportionate level.
“As this is a standard basis assessment, I therefore resolve that doubt in favour of the paying party by ruling that, viewed globally, the costs in this action are disproportionate and that the second stage of the Lownds test (necessity) will therefore apply.”
An Irwin Mitchell spokesman said it “opposes the ruling made with regards to ABTA”.
He continued: “Our clients were entitled to pursue their legal action as a group, as part of a wider group action, and were not under any duty to utilise a voluntary ABTA scheme. The claimants have therefore appealed the Judgment provided in this respect.
“We are proud to have secured substantial damages for our clients, who should not have been subjected to the conditions at the Holiday Village Complex in Turkey in 2009, which led to significant numbers of people contracting bacterial illnesses and hundreds of people having their holidays ruined.
“The issue was so severe that it featured on the BBC’s Watchdog programme after disgruntled holidaymakers contacted the programme in their droves, yet despite that and the high numbers of people affected, the defendant still chose to deny liability and a settlement could not be reached for five years.
“Despite the claimants’ repeated requests to mediate at the outset of the litigation, these were ignored by the defendant, who chose to robustly defend the action and increase costs.”