All change: Hirachand v Hirachand [2021] EWCA Civ 1498

Michael Welsh evaluates the effect of Hirachand

The recent Court of Appeal judgement in Hirachand v Hirachand 2021] EWCA Civ 1498 provides authority for recovery of a CFA success fee in claims under the Inheritance (Provision for Family & Dependants) Act 1975.

Relevant facts

The Deceased died in 2016 and left the entirety of his modest estate to his wife, Nalini Hirachand. The Judge held the net estate to be £554,000. Sheila Hirachand issued proceedings as a child of the Deceased under the 1975 Act for such provision as it would be reasonable for her to receive for her maintenance. Sheila funded the litigation via a solicitor through a Conditional Fee Agreement (‘CFA’). When a claim is successful under a CFA, lawyers usually charge a percentage uplift of their legal costs, which is known as a success fee. By virtue of the CFA, if Sheila was successful, she would be liable to settle the success fee personally, which was agreed as being a 72 per cent uplift of her total costs (£48,175 in total).

In summary, the principal facts are, save for a short period of time in Sheila’s early twenties, Sheila lived at home until 1999 at aged 30 and the only financial assistance given to Sheila following this was between 2007 and 2011, during which time the Deceased gave her an allowance of £400 a month. Sheila was estranged from her parents from 2011, has longstanding mental health problems and was limited in terms of her financial means.

First instance decision

Cohen J when assessing Sheila’s claim, had consideration to her claim for a mortgage free house, therapy, capitalised maintenance and costs and concluded the Will did not make reasonable financial provision. Sheila was granted an award of £138,918.

Part of the award comprised of a sum of £16,750, being a 25 per cent contribution to Sheila’s total success fee of £48,175. Cohen J concluded without such a contribution, ‘one or more of the Claimant’s primary needs would not be met’ and it would not be fair to completely ignore Sheila’s liability to her solicitors.

The appeal

The Deceased’s widow, who is also Sheila’s mother appealed the decision on two grounds; firstly, regarding a procedural irregularity at trial, and secondly, challenging the contribution towards Sheila’s liability to pay a success fee to her solicitors.

The Court of Appeal upheld the first instance decision on the success fee. When considering recoverability, the Court of Appeal agreed the CFA uplift is to be treated as a liability payable by Sheila that needs to be incorporated into the calculation for her ‘need’ under the 1975 Act. Whilst King LJ concluded she would not engage with the value of the contribution, she agreed a contribution to the CFA uplift should be recoverable from the estate and it is a debt capable of inclusion within a maintenance award, specifically when the only way in which the claimant has been able to litigate had been by entering into a CFA arrangement.

A way forward

The Court of Appeal has confirmed an applicant’s liability to pay a success fee may be awarded as part of the overall financial award from an estate. This is the first such decision from a higher court.

As it has been confirmed judges can now have consideration to a success fee as a liability of the claimant when calculating their maintenance needs, it could be argued remaining beneficiaries and the estate will unfairly suffer from the pursuit of such claims, as their respective entitlements will be directly impacted by the said claimants’ funding arrangements and circumstances. It could also be argued this decision circumvents the far-reaching Jackson reforms following Sir Rupert Jackson’s Review of Civil Litigation Costs of 2009 and others will worry it may open the floodgates to unmeritorious claims in the future.

Michael Welsh is a solicitor with Irwin Mitchell: irwinmitchell.com