Holiday compensation claim settled through online court

Thousands of people who believe they have lost out financially at the hands of holiday operators and other companies have won compensation thanks to a little-known Government dispute resolution service.

The Money Claim Online scheme, launched in 2002 by the Courts Service, handled just 21,000 cases in its first year of operation. In the first four months of this year alone, its caseload rose to 70,000.

The service can deal with any kind of monetary claim against another party. Four out of five cases are uncontested, in which case judgement is almost always awarded in favour of the claimant. The cost of filing a case varies from £30 to £300, depending on the size of the claim.

I experienced the service first-hand, and won an extra £342 to spend on this year's summer holiday - without the services of a lawyer - courtesy of a villa company that let us down on the way to booking last year's trip to Italy.

We were desperate to book a Sardinian villa, but found that many of the best had already gone. One company e-mailed us four options, of which two fitted our requirements. We asked the company to put them on hold until lunchtime the following day to reflect and to allow us to book flights. The company agreed - by e-mail.

We selected our favourite villa and booked easyJet flights to the nearest airport: Olbia. We rang to confirm the villa, and the company accepted the booking. But an hour later, a timid member of staff rang back to say there had been a mistake. Having spoken to the owner, it transpired that the villa was no longer available. Neither was the other we'd been interested in. No other alternatives were suitable.

The mood changed when I suggested that the company would have to recompense us for our £400 flights if our holiday plans no longer required us to fly to Olbia. A flustered manager first asked for sympathy - explaining an inexperienced member of staff had made an honest mistake - and then said that unless I stopped talking about compensation, she would refuse to discuss the matter any further.

Sensing imminent defeat, I fired off one letter to the villa company and received no reply. We booked another villa near Cagliari and rearranged our flights - at a £242 cost on top of the original Olbia price.

I sought advice from some experts in holiday law, who were unanimous in saying I did not have a hope. It was then that I turned to the Money Claim Online scheme, which bills itself as "a simple, convenient and secure process to make or respond to a money claim on the internet".

After making a credit card payment of £30 I was able to fill in a form explaining what had happened and the breakdown of my £272 claim (the cost of changing flights, plus the £30 Money Claim Online fee).

My case was lodged in July. By September, the operator had not replied and judgement had consequently been granted in my favour.

At that stage, there was an extra charge of £50 for a warrant to send in bailiffs to recover property to meet the claim. Annoyingly the company's address I'd given at the start (taken from Companies House records) was no longer valid. I paid another £20 for an extra warrant to be served at the new address.

Four months after starting the process, I received a letter to say the money had been recovered (including the cost of both warrants). A matter of weeks later a cheque arrived for £342.

"It's a system that was originally used primarily by credit card companies to recover bad debts," said a spokesman for the service. "But it can be used by any consumer who feels they have a claim against a company - that includes travellers wishing to pursue a case against holiday firms."

Moneyclaim: 0845 601 5935; www.moneyclaim.gov.uk.