Thomas Cook Compensation Scheme – a lifeline for seriously injured Claimants?
By Mike Hagan, Head of Travel Litigation
It was with some surprise, given the Government’s historical attitude towards the Personal Injury sector, that Andrea Leadsome, the Business Secretary, announced on November 5, 2019 that the Government was considering implementing a statutory compensation scheme, in respect of personal injury claims being pursued against Thomas Cook Companies, for Claimants who have suffered serious injury or death.
The need for the scheme stems from the fact that the Thomas Cook Group was self-insured for all but the very highest value personal injury claims.
That has meant that the vast majority of Claimants with pending claims against group companies have suddenly found themselves at the back of a long line of unsecured creditors, and are likely to recover nothing for injuries and losses suffered, through no fault of their own.
In some cases, there may be alternative avenues for redress, for example Claimants may be able to pursue claims against foreign suppliers (eg. hotels) as an alternative, but this will not be an option for every, or even most, Claimants.
Statutory Compensation Schemes are not a new concept. The Financial Services Compensation Scheme(FSCS), for example, has paid out more than £26 billion in compensation since 2001 to customers of financial services firms who have been unable to meet their liabilities to customers.
In the realm of Personal Injury litigation, the Motor Insurers Bureau (MIB) and Criminal Injuries Compensation Authority (CICA) have long acted as safety nets for injured people who would otherwise be left without a solvent defendant to pursue.
It should be noted that the language of the announcement is rather mixed, with Ms Leadsome initially offering only to ‘develop proposals’ for a scheme, but later saying that the Government intends to bring forward the necessary legislation ‘urgently’ after the election.
One likely objection, if this matter does reach a legislative stage, is that it will set a precedent in which the Government will be required to set up similar schemes every time a large company goes the way of Thomas Cook.
The announcement also outlined that there will be a cap on the fund and it would only apply to those ‘facing the most serious hardship as a result of injuries or loss of life for which UK-based Thomas Cook companies would have been liable’
What qualifies as ‘most serious hardship’ remains to be seen, as does how the scheme will determine if a Thomas Cook company would have been liable; will an assessment of prospects be made in liability denied cases or will it only apply to cases where liability is admitted/judgment has been obtained?
Whatever the answers to these questions, it seems certain that the scheme is going to be of no benefit to the vast majority of Claimants. For example, I represent a child who has suffered a serious laceration wound following an accident during a Thomas Cook holiday. Despite the fact they have been left with visible permanent scarring it seems, from the Government announcement that they (and thousands of others) will not qualify for the scheme.
Those of a more cynical bent will have taken note that the timing of this announcement coincides with the coming general election, in which the Government seems to be competing with its rivals in announcing ‘populist’ policies.
A scheme to redress the wrongs caused by a seemingly recklessly run company, with perceived ‘fat cat’ directors at the helm, could be a potential vote winner.
However, any indication on the part of the Government that it is prepared to step in to assist people who have suffered devastating injury and loss, is to be welcomed.
The author is aware of one severely brain injured Claimant who was pursuing litigation against a Thomas Cook Company in the High Court. Upon announcement of the collapse of the Thomas Cook Group this Claimant was contemplating suicide, such is the importance to him of being able to secure the compensation he needs to cope with his life changing injuries.
There will no doubt be many other vulnerable Claimants in similar positions.
It is to be hoped that the scheme comes to fruition and is as wide as possible, so that as many Claimants as possible, left ‘high & dry’ by Thomas Cook’s collapse, can obtain access to justice.