Hirachand v Hirachand Decision Upheld & Claimants Still Able To Recover Success Fee During A Claim Made Pursuant To The Inheritance Act

Hirachand v Hirachand & Anor [2021] EWCA Civ 1498 (15 October 2021)

The case of Hirachand v Hirachand (Re H) was first tried by the Court in May 2020 where it was held the Applicant would be awarded a sum to cover her Solicitor’s success fee in addition to the award she had been granted.

The Applicant, in this case, was the estranged daughter of the deceased and had brought a claim against his estate pursuant to the Inheritance (Provisions for Family and Dependants) Act 1975 (Act).

The facts of the case meant that the Applicant was entitled to bring a claim under the Act for an award of maintenance on the basis the deceased’s Will had failed to make provision for her.

Initial Court proceedings

The Judge, in the initial case, awarded the Applicant a total of £138,918 as assessed to meet her current financial needs, including a sum of £16,750 to meet part of her Solicitor’s success fee in accordance with the no win no fee agreement (CFA) she entered into. The Judge expanded on this award and explained it was appropriate to consider this liability as part of the Applicant’s needs and if no award was made in that respect one or more of the Applicant’s primary needs will not be met.

The Judge also noted that the CFA was necessary as the Applicant would have had no other means of funding the litigation.

The appeal

The Respondent (now Appellant) appealed the decision on the grounds that the Judge erred in law when awarding a sum of £16,750 as a contribution towards the Claimant’s liability to pay a CFA uplift.

The Appellant’s argument was that the Judge had no authority to make such an award due to the fact that the reforms in the law governing CFAs that came into force in 2013 forbid the recovery of success fees from a defendant in the event a claimant is successful and therefore those sums should remain within the estate.

This appeal was dismissed by the appeal Judge. It was held the payment of the success fee formed part of the Applicant’s debts for payment and should be considered when assessing the financial resources and financial needs of an applicant under section 3(1)(a) of the Act, as previously confirmed in the case of Re Dennis.

The appeal Judge confirmed a success fee, which cannot be recovered by way of a costs order, is capable of being a debt. The appeal Judge also emphasised, like the Judge at first instance, that without such provision one or more of the Applicant’s primary needs would not be met.

The Judge commented that this principle should not always apply and as an example, set out a caveat that such an award may not be appropriate where an applicant had other means of funding litigation.

The area of some concern was the fact that it was not known whether the Applicant would have been successful in terms of Part 36 offers. It follows that Judges would be unaware of any without prejudice negotiations and it may be that the Applicant was, in fact, liable for part of a Defendant’s costs, if they were unable to beat a Part 36 offer at trial. This has the potential to render the success fee unfair as the success fee may not be payable. The appeal Judges were aware of this and considered the practicalities of a CFA, which would often oblige applicants to accept a reasonable Part 36 offer, so it can be anticipated any award at trial was likely to have beaten previous Part 36 offers. The Judge only having awarded 25% of the costs as the success fee instead of the 72% success fee detailed in the CFA also takes into account that risk and mitigates that potential injustice which, within the current frames of civil litigation, cannot be avoided.

Comment

This case has a great impact on claims made pursuant to the Act moving forward and could encourage more claims being brought in knowing the Court will consider making an award in respect of payment of a success fee.