Hirachand v Hirachand: Conditional Fee Agreements in Inheritance Act Claims 

On 18 January 2024, the Supreme Court heard the much-awaited appeal in the case of Hirachand v Hirachand. This is a landmark case, the outcome of which is expected to have a significant impact on claimants, defendants, and lawyers involved in cases under the Inheritance (Provision for Family and Dependants) Act 1975 (the Inheritance Act). 

The facts of the case

Sheila Hirachand brought the initial case against her estranged mother, Nalini Hirachand, the sole beneficiary of her husband’s estate after his death in 2016. Sheila claimed that the deceased’s Will did not make reasonable financial provision for her maintenance under the Inheritance Act. 

Sheila lived with her parents until she was 30 when she moved out to advance her higher education, during which her father provided her with a monthly allowance. This financial support ended around their estrangement in 2011. Sheila had suffered severe mental health issues for much of her adult life and was unable to work following the birth of her eldest child. 

In the initial litigation, the High Court awarded Sheila a lump sum of £138,918 from the deceased’s estate to be used towards her treatment costs. In addition, the court included £16,750 in the award for Sheila’s Conditional Fee Agreement (CFA) success fee.  The decision was appealed by the Defendant in 2021 based on the lawfulness of including an award for CFA within the award for maintenance. 

The Defendant, an elderly lady with various health issues, did not actively engage in the legal proceedings. The Court of Appeal upheld the High Court’s decision that a CFA success fee could be recovered from an estate under the 1975 Inheritance Act, albeit emphasis was placed upon the fact that such an award would be considered depending on the merits of each case.  

Conditional Fee Arrangements (CFA)

Conditional Fee Arrangements, also known as ‘no win, no fee’ agreements, are commonly used when clients cannot afford to fund their claims. This is a common position for claimants in 1975 Act cases where financial hardship is the basis of the claim. A CFA includes a success fee or ‘uplift’ that the claimant pays their solicitor if the claim succeeds. Such success fee aims to reflect the risks that the practitioners take in representing their clients. Before 2013, the losing party could be responsible for reimbursing some or all of the CFA fee, but this changed with the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO). Whilst the position remained that legal costs could be recovered by a successful party, this extended only to the costs incurred on a private client basis, not the success fee.  

Supreme Court’s judgement

In Hirachand v Hirachand, the Supreme Court will shortly decide whether a success fees can be considered a liability, that increases the claimant’s financial need for the purpose of the claim. If that is the case, they will then consider whether the Court should have the discretion to increase the compensation payable to include funds to repay some or all of this liability as part of a “reasonable financial provision.” award. 

Whilst it is likely that any decision to allow the success fee to be included in the claim is likely to be subject to a stringent requirement to analyse whether the success fee is reasonable, it is hoped the court will take this opportunity to extend access to justice, through allowing awards to reflect the economic realities of litigation funding.

On 19 June 2024, Anthony Gold will be hosting a seminar with 10 Old Square Chambers titled ‘Anatomy of a 1975 Act Claim’ during which costs will be discussed in more detail. For further information or to sign up, click on the banner below: