On 18 December 2024, the long-awaited Judgment in Hirachand v Hirachand and another [2024] UKSC 43 was handed down.
By way of a brief background, Navinchandra Dayalal Hirachand (“the Deceased”) died, leaving a widow (“the widow”), a daughter (“The daughter”) and a son, Katan Hirachand (“Respondent two”). The daughter had severe mental health problems and made a claim against the Estate for financial provision under the Inheritance (Provision for Family and Dependants) Act 1975 (“The 1975 Act”). S3(1)(a) of the 1975 Act allows certain parties to make a claim against an Estate for financial provision. The Court shall have regard to the “financial resources and financial needs which the applicant has or is likely to have in the foreseeable future…” when exercising its power in determining the financial provision that should be awarded, if any, to a party.
The daughter entered into a Conditional Fee Agreement (“CFA”) with her solicitor to fund the litigation proceedings. The CFA specified that if the daughter lost, the solicitors (and counsel) would not be paid but if she won, they would receive their fees and a success fee of 72%.
The High Court ruled in the daughter’s favour and concluded that the Will of the Deceased did not make reasonable financial provision for the daughter and she was awarded a lump sum of £138,918, which included a sum in respect of the success fee payable under the CFA, concluding that the success fee was a liability of the daughter and therefore a “financial need”.
The award in respect of the success fee was appealed to Court of Appeal (“COA”) on the basis that a success fee should not be considered a financial need and that under Section 58A(6) of the Courts and Legal Services Act 1990, the daughter would not have been able to recoup the success fee as part of a costs order. The COA upheld the decision of the High Court and determined that the CFA success fee was a debt required to be paid by the daughter and therefore was considered a “financial need” within Section 3(1)(a) of the 1975 Act.
The widow appealed to the Supreme Court (“SC”). The Supreme Court allowed the appeal and excluded the award in respect of the success fee to the daughter. This decision was made for various reasons, taking into consideration whether or not a success fee was considered a “financial need” of the daughter.
Whilst taking in to account the fact that payments to fund legal costs in matrimonial proceedings under the Matrimonial Causes Act 1973 (“MCA”) may constitute “maintenance”, the general rule under the Civil Procedure Rules do not allow for success fees to be claimed as part of a costs order (S58A(6) Courts and Legal Services Act 1990) and that in any event costs should be dealt with under a separate costs order and should not form part of a substantive award. Given claims under the 1975 Act are civil proceedings, the CPR apply and not this case is not a case being brought under the Matrimonial Causes Act but a case under the 1975 Act.
It was argued by the daughter’s legal counsel that S58(A) only applies to costs orders and that provision, such as the success fee award in this case, as part of a substantive award is left open. The SC argued that the order made was a “costs order” as it included a provision of payment towards the daughter’s success fee.
In conclusion, this case will set precedent in 1975 Act cases going forward in that these cases are still civil proceedings, and are bound by the rules set out therein, and success fees are not to be included in any relief awarded under the 1975 Act. Therefore, any success fee would need to be paid by the Claimant and the rules under Section 58A (6) of the Courts and Legal Services Act 1990 would apply.
Judgment can be found at https://www.bailii.org/ew/cases/EWCA/Civ/2021/1498.html
if you have any queries or wish to discuss any potential claims you may have under the Inheritance (Provision for Family and Dependents) Act 1975, then contact Sasha Burl at sasha.burl@wellerslawgroup.com or on 01732 457 575.