Date published: 20th December 2024

This landmark ruling addresses the inclusion of success fees in awards under the Inheritance Provision for Family and Dependants Act 1975, fundamentally altering how such claims are approached. Consequently, the decision will significantly influence how solicitors structure their fee agreements and how claimants approach litigation funding in inheritance cases.

Case Background 

The case revolves around the estate of Navinchandra Dayalal Hirachand, who passed away leaving behind his wife, a daughter, and a son. Navinchandra's will left his entire estate to his wife, excluding his daughter, who suffers from severe health issues and lacks the sufficient means to support herself.

In response, the daughter filed a claim under the Inheritance (Provision for Family and Dependants) Act 1975. This law allows certain family members to ask for financial support from the inherited estate if they were left out of the will or not adequately provided for.

To fund her legal proceedings, she entered into a Conditional Fee Agreement (CFA) with her solicitors. A CFA is commonly referred to as a “no win, no fee” agreement, meaning that her solicitors would only get paid if they provided her with a successful outcome. If her claim succeeded, she would have to pay their fees plus a 72% success fee from the overall award total.

The High Court ruled that Navinchandra Hirachand failed to make reasonable financial provisions for his daughter and awarded her a lump sum of £138,918 from her father's estate. Included in this amount, was an additional contribution of £16,750 towards her solicitors CFA success fee.

Initially, both the High Court and the Court of Appeal ruled in favour of including a contribution towards the success fee in the daughter's award. However, the UKSC ultimately overturned the £16,750 award, stating that success fees cannot be included in awards under the 1975 Act.

Supreme Court Decision

The UKSCs decision in the case is a landmark ruling with significant implications for inheritance law, litigation funding and financially disadvantaged claimants. Here’s some things to consider: 

  • Legal Reasoning: The Court’s ruling emphasised that including success fees to the claimants’ award goes against the rules and principles laid out by the 1975 Act. The decision is also inline with the current guidelines of the Courts and Legal Services Act 1990, which prohibits the recovery of success fees as part of the main claimants’ rewards.

     

  • Policy Considerations: The UKSC highlighted that allowing success fees to be included in awards would undermine the costs regime and lead to incoherent results. The costs regime is the set of rules and principles that govern how legal costs are handled in litigation. If success fees were included in the awards given to claimants, it will disrupt this system. It could lead to inconsistent and unfair outcomes, where some awards are inflated by these additional costs. The decision ensures that the cost system remains balanced by keeping legal fees separate from the main award amount.

     

  • Future Implications for Claimants:This ruling means that claimants under the 1975 Act who rely on CFAs must seek alternative funding. The additional contribution towards a success fee cannot be included in the award, so claimants will need to cover their legal costs and success fee from their own award.

Legal Contexts and Implications

The UKSCs decision in this landmark case aligns with the 2010 government actioned Jackson Report's recommendations to prohibit the recovery of success fees on public policy grounds. 

While the decision ensures that awards under the 1975 Act are not inflated by litigation costs, it also raises concerns about access to justice. Solicitors will be less inclined to take on CFA-funded claims under the Act. As a result, claimants relying on CFAs may struggle to fund their legal actions, limiting their ability to seek reasonable claims from estates. Equally, the ruling also prevents situations where claimants' awards are consumed by legal success fees, ensuring their victories aren’t hollow.

Andrew Leakey, Head of Civil & Commercial Litigation at Jackson Lees, commented on the outcome of Hirachand v Hirachand, he said:

Whilst this is disappointing for Claimants, and will reduce what they receive from a will, it does bring Conditional Fee Agreements in this area of law back towards the direction of travel set by successive governments in other litigation:  Namely, that clients expect to have a success fee deducted from their total award.

“If you’re feeling confused by this ruling and want to know what it means for you and your case reach out to our team of Civil Litigation experts today”

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We are dedicated to ensuring you receive the best possible advice and representation, especially in light of evolving legal landscapes, like the recent UKSC Hirachand v Hirachand ruling. Call us today, request a call back, or make an enquiry to speak to our Civil Litigation experts.