Hirachand v Hirachand: The Future of Success Fees in 1975 Act Claims
13 February 2025
On 18 December 2024, the Supreme Court handed down its hotly awaited judgment in Hirachand v Hirachand.
The key question before the Supreme Court was whether the Court of Appeal was wrong in law to decide that a conditional fee agreement (“CFA”) success fee is a debt. If classified as a debt, the Court considered whether this could constitute a “financial need” for which the court could grant an award under the Inheritance (Provision for Family and Dependants) Act 1975 (“1975 Act”).
Background
The deceased died in 2016, leaving behind a widow, a daughter, and a son. He left his entire estate to his widow. Neither the daughter nor the son were beneficiaries of the will in the first instance.
The daughter had severe health issues and did not have sufficient income or assets to support herself. On the basis that the deceased’s will did not make reasonable financial provision for her, the daughter entered into a CFA with her solicitors and brought a claim under the 1975 Act. The CFA contained a substantial success fee, in the event that the daughter were to ‘win’ her claim.
The High Court concluded that the deceased’s will failed to make reasonable financial provision for the daughter and awarded her a lump sum, which included an amount towards the success fee as part of her “financial need”.
The deceased’s widow appealed this decision to the Court of Appeal, arguing that the Court’s decision to award a sum for the success fee was wrong in law. The Court of Appeal dismissed the widow’s appeal, stating that the court had discretion to award a sum towards the success fee, where the award is needs-based. The widow appealed to the Supreme Court.
The Supreme Court Judgment
In its landmark decision, the Supreme Court ruled that success fees due under a CFA are not recoverable by a claimant as part of the award for “financial need” under the 1975 Act.
The Court unanimously allowed the widow’s appeal and excluded the sum for the success fee from the order made in favour of the daughter. In his reasoning, Lord Richard emphasised that such an order “would undermine the costs regime”.
This judgment by the Supreme Court provides significant clarification and ensures consistency within civil litigation. The judgment reinforces that success fees in 1975 Act claims are not recoverable from the ‘losing’ party, which reflects the position in Section 58A(6) of the Courts and Legal Services Act 1990.
It is now the case that a judge can no longer, whether directly or indirectly, make any allowance for a success fee when determining an award under a 1975 Act claim.
Implications following the Supreme Court Judgment
Whilst providing consistency in respect of funding in civil litigation, it is difficult to assess the implications following the Supreme Court judgment.
We may begin to see a decrease in the number of 1975 Act claims being brought, in particular, those funded by CFAs, whereby the burden to pay the success fee will now lie with the successful claimant. Due the nature of 1975 Act claims, often individuals do not have sufficient financial resources to fund their legal costs outright, resulting in CFAs being commonplace.
The Supreme Court decision in Hirachand v Hirachand will no doubt change the landscape for funding in these types of claims and greater consideration will be needed when assessing the cost implications for clients.
How Can Redkite Help You?
If you or a loved one are concerned that you have not been provided for under a will or intestacy and wish to discuss funding arrangements, then please get in contact with our leading team of experts here at Redkite Solicitors.
Our friendly team of experts in our Will, Trust and Estate Disputes team are here to help and support you at every step of the way.
This article was written by Redkite Solicitors, Anna Perkins. To find out more about Anna and the support that she can provide to you, visit her website profile here: https://www.redkitesolicitors.co.uk/team/anna-perkins/
The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.