Hirachand v Hirachand Supreme Court Judgment

The Hirachand v Hirachand Supreme Court Judgment has today (18 December 2024) been handed down. One aspect of the case rested on whether conditional fee agreement success fees could be included as additional award under Inheritance Act claims. This could potentially have important implications for those considering pursuing a claim.

Hayley Gaffney, Associate Solicitor in Coodes’ Inheritance and Will Disputes Team comments on the long anticipated Supreme Court Judgment.

Condition Fee Agreements for Inheritance Act claims

People can claim under the Inheritance Act for financial provision from an estate of a loved one if they fall within certain categories of people and are able to meet the criteria. To bring a claim, the Will or intestacy of the deceased must leave them either no provision or insufficient provision.

Many potential claimants under the Inheritance (Provision for Family and Dependants) Act 1975 are not in a financial position to fund their legal costs to pursue those claims. By their very nature, those types of claims are brought by people with very little resources. They are often in need of financial provision from estates of loved ones just to meet their everyday needs. Whilst they have a good and meritorious claim, they are unable to fund their claims unless law firms assist with contingent funding arrangements. This is sometimes under a conditional fee agreement (CFA), known as a ‘no win no fee’ agreement.

However, under a CFA, law firms are taking the risk of not having their costs paid if the claim is unsuccessful. This means that the CFA frequently includes a success fee on top of the base costs they are due to be paid if the claim succeeds. Therefore, if a claimant wins (whether at trial or by negotiation) their solicitors are paid the normal fees and the success fee becomes payable on top. The success fee is usually calculated as a percentage of the fees payable.

What is Hirachand v Hirachand?

The Hirachand case was a claim for reasonable financial provision brought by the deceased’s adult daughter under the Act.

The claim was successful with the daughter awarded £139,918 from her late father’s estate. The claimant was also awarded an additional £16,750 contribution toward her CFA success fee due to her solicitors.

This decision was appealed to the Court of Appeal. The appellant argued that allowing recovery of CFA success fees in this way contradicted the 2013 Jackson reforms. The reforms meant that CFAs entered into post-1 April 2013 (save for in some cases) were not recoverable from the other side.

The Court of Appeal upheld the decision that a success fee was recoverable as it had been included as part of the claimant’s overall financial need, rather than as part of their costs separately. That decision was appealed to the Supreme Court and heard in January 2024.

What was the Supreme Court decision?

The Supreme Court concluded that allowing the inclusion of a CFA success fee would circumvent common law rules relating to costs. Also, it would bypass statutory rules prohibiting recovery of success fees from unsuccessful parties.

Broadly, a successful claimant funding their Inheritance Act claim under a CFA will now have to pay their success fees to their solicitors from their own pocket. Alternatively, they can pay the fee from the award they receive although it is likely they need it for other daily expenditure. This could leave them short and without the funds they need to meet their financial needs as claimed.

Why is the Judgment important?

The Hirachand Supreme Court Judgment has a potentially significant impact on claims brought under the Inheritance Act and how these are funded in future. It will possibly impact whether prospective claimants can even afford to pursue such a claim at all.

If you wish to discuss a potential claim for provision, please contact our Inheritance Disputes Team who will be happy to assist. You can also contact Hayley Gaffney at hayley.gaffney@coodes.co.uk or call 01872 246 233.