How will the judgment of the Hirachand Supreme Court case affect people bringing inheritance claims?
The highest Court in England and Wales, the Supreme Court, recently gave a judgment which will have an impact on claims brought under the Inheritance (Provision for Family and Dependants) Act 1975 (IHA). The case in question was Hirachand v Hirachand (and another) [2024] UKSC 43 and the judgment can be found here. This is a long-running IHA claim concerning “no win, no fee” arrangements, and whether the Court can award sums to help a claimant recover their success fees.
What is the Inheritance (Provision for Family and Dependants) Act 1975?
The IHA enables people with difficult financial circumstances to bring a claim for money, or property, from the estate of a deceased person. If a loved one has recently passed away, and you find out that you were not included in their will, you can bring this claim if you are one of the following people:
- The surviving spouse
- One of the Deceased’s children
- Someone “treated as a child of the family”
- A cohabitant of two years or more
- Someone who was financially dependent on the Deceased up to the time of their death.
The IHA does not usually result in the claimant receiving the entire estate. The Court will look at:
- The facts of the case
- The estate size
- The effect on the people due to inherit from the will
- The financial positions of the person bringing the claim and anybody else affected by the claim.
The Court will make an award that is “reasonable” in the circumstances to help maintain the Claimant. Generally, claims by spouses tend to be worth more as the Court will often imagine how a divorce settlement might have looked and use this as the starting point.
IHA claims are brought against the estate executor (or administrator if there is no will) and beneficiaries. The grant of probate (known as “letters of administration” if the deceased did not make a will) enables the estate executor or administrator to sell the estate assets, pay any debts and distribute the money to beneficiaries. A claim under the IHA must be brought before the Court within 6 months of the estate executor obtaining a grant of probate. If the claimant does not bring the claim within that timeframe, it is time barred under limitation rules. However, in exceptional circumstances, it’s still possible to apply for permission to bring the claim outside the time limit.
As IHA claims are about obtaining financial maintenance, understandably some individuals cannot afford to pay legal fees but if their claim has merit, their solicitor might be prepared to act on a Conditional Fee Arrangement (CFA).
What are Conditional Fee Arrangements and success fees?
A CFA usually involves the solicitors agreeing not to charge any fees unless their client is successful in their case, or settles their case on reasonable terms. Usually, the agreement states that solicitors will charge a success fee which is an additional amount, calculated as a percentage of their overall costs. These can range from around 25% if a case settles early to 100% if the case goes to trial and they can be hefty fees.
Success fees cannot be recovered from the other party however, as provided for under section 58A(6) of the Courts and Legal Services Act 1990. If you win at trial, then normally you will be awarded most of your legal costs from the other party – although the Court has the power to make a different order if the circumstances warrant it.
What happened in Hirachand?
Mr Hirachand died and left his entire estate to his surviving spouse. However, Mr Hirachand’s daughter, who had significant financial needs and difficult personal circumstances, was due to receive no inheritance in the will unless Mr Hirachand’s wife died before him (which she did not). She brought an IHA claim against Mr Hirachand’s estate. The estate was worth around £550,000.
The daughter was successful in the claim and at trial, she was awarded around £160,000. The award was broken down into chunks designed to meet various immediate financial needs, and one part of the award was the sum of £16,750 which the Court provided to her to help her pay her success fee to her solicitors, who were acting on a CFA.
Although success fees cannot be recovered, the Court’s view was that the IHA is there to provide claimants with financial help when they needed it, including help in meeting their liabilities. The sum of £16,750 was assessed to be a “reasonable” success fee for the solicitors to claim (roughly 30% of their costs) because the claim from the daughter was strong and very likely to succeed at trial.
This judgment was appealed however, and the final appeal was heard by the Supreme Court this year. The Supreme Court reversed the decision to award the Claimant £16,750 towards her success fee. Although this might have been a financial burden that the Claimant faced, the Supreme Court accepted the argument from her opponent’s legal team that allowing claimants in IHA claims to recover money to help pay their solicitors’ costs would be problematic because:
- It would defeat the purpose of the costs rules, by offering a “workaround”
- It might result in far more solicitors acting on no-win, no-fee claims and this would increase IHA litigation
- There might be scope to order awards for success fees in other cases (e.g. negligence claims, contract disputes)
- Costs are dealt with separately after judgment has been given and that process would be undermined by the Court making an award to reflect part of a claimant’s legal expenses
- It might put more pressure on estates to settle claims with less merit for inflated amounts if they know that success fees are recoverable.
Essentially, the judgment puts things back to how they were – success fees payable under a CFA cannot be recovered from another party. That is not to say that no win, no fee claims are not still going to be possible in IHA claims, but given that a success fee will be charged, the person looking to bring such a claim will need to think about the financial implications of this when set against the value of their claim if it succeeds.
It can be tough to find out you weren’t included in the will of a loved one after they’ve passed away – and could leave you worrying about your future and financial stability. If you believe you’re entitled to a share of an estate, it’s important to understand the legal options available to you.
Contact our experienced contentious probate specialists today to find out how we can support you.
