Hirachand Appeal to be Heard by the Supreme Court
Back in 2017, a claim was issued under the Inheritance (Provision for Family and Dependants) Act 1975 (1975 Act) by the widow of the late Navinchandra Hirachand. The Claimant alleged that she had not been sufficiently provided for in her late husband’s will, and the 1975 Act enables certain individuals in such a position to bring a claim against the estate.
A limited class of people may bring this type of claim – generally close relatives (spouses, children, someone “treated as a child” of the family, cohabitants of two or more years prior to death and anybody being maintained by the Deceased person). The Court will usually award a sum that is reasonable to meet the Claimant’s maintenance needs, but tends to be more generous to spouses, adopting the position that might have arisen had the parties divorced.
Ms Hirachand was successful in her claim but like many 1975 Act claimants, she lacked the financial resources to bring the proceedings on a privately paid basis and her solicitors agreed to act on a no win, no fee agreement (a CFA). In CFAs, a success fee is usually payable to the legal representatives if the case ends with the claimant deriving benefit – either by settlement or by getting a favourable award at trial. In this case, the Claimant achieved a favourable award at trial but this triggered a liability to pay a significant success fee to her solicitors.
One of the most important factors the Court will consider in a 1975 Act claim is the financial needs and liabilities the claimant must meet. The maintenance award will sometimes be calculated with this in mind – although it is not the sole factor the Court will consider. It must be balanced against the needs of other claimants, other beneficiaries, the size of the estate and other matters such as the Deceased’s reasons for not providing for the claimant or the claimant’s conduct. However, as we have seen from decisions such as Ilott v Blue Cross, these factors do not necessarily tend to prevent a successful claim.
The Court at first instance accepted Ms Hirachand’s argument that the fee due to her solicitors comprised a “financial liability” and added the sum of £16,750 to her award to help her towards the success fee (although it did not fully settle it). However, it has been appealed. The Court of Appeal upheld the decision in 2021 ([2021] EWCA Civ 1498), but it is due to be heard again by the Supreme Court on 18 January 2024. The argument put forward by the Defendant is that the Court should not make awards designed to meet legal costs, as this would go behind the costs rules and regulations set out in the Civil Procedure Rules 1998. These rules set the parameters for costs recovery, and in 2012, the Courts and Legal Services Act 1990 was amended to outlaw the recovery of success fees by successful parties in litigation from their opponents.
This change in the law did not prevent CFAs but it did draw a line in the sand, sparing the unsuccessful party from paying a substantial additional sum to the winner on top of the usual costs order and in effect, the Hirachand decision has undermined the legislation. That said, it is very arguable that 1975 Act claimants generally cannot afford to bring proceedings and pursue them to trial unless their solicitors are prepared to act on a CFA, and the liability to pay a success fee will dilute the benefit they receive which in some cases almost defeats the object.
The decision of the Supreme Court will have significant implications as to whether CFAs in 1975 Act claims become more commonplace, extending to more opportunistic litigants, or whether this type of litigation will become less frequent and genuine claimants may be put off, or feel pressured to accept lower offers of settlement to mitigate costs exposure.
For further advice and assistance in relation to 1975 Act claims, please contact Lewis Hastie or Joshua Proud at BRM Solicitors on 01143497000.
