The case of Hirichand v Hirichand has caused uproar within the contentious probate sector. The case had the potential to turn everything upside down when it came to no win no fee agreements and a claimant’s ability to recover the success fee charged under such agreements from the defendant.
We have waited almost one year for the judgment to be passed down from the Supreme Court, with it being issued in December 2024, some 11 months after the Supreme Court hearing in January 2024.
The history of the Hirichand case
Prior to the Supreme Court hearing, the matter had initially been heard in the High Court where the claimant was successful in her claim. Following the death of her father, she sought to bring a claim against his estate. She had been estranged from her parents for some time and so was not due to inherit anything from her father’s estate upon his passing, with her mother being the sole beneficiary. Due to the claimant’s health issues and financial struggles, the court awarded her a sum from the estate.
In addition to monies from the estate she was also awarded a sum towards the success fee charged by her solicitor under the no win no fee agreement/conditional fee agreement (CFA) that she had instructed them under.
Whilst a successful claimant can generally pursue recovery of their costs, at least in part, they cannot generally pursue contribution towards the success fee due to their solicitor under a CFA as this is considered to be an agreement between the client and solicitor and no one else. Before this case, the claimant was expected to settle the success fee from the monies awarded to them. However, in this case, the Judge considered the CFA success fee as a debt and so allowed a sum towards the success fee in addition to the original sum awarded.
The defendant appealed the Judge’s decision, and the case was later heard in the Court of Appeal in October 2021 where the judgment was upheld. Remaining dissatisfied with the outcome, the defendant appealed again and the case was heard in the Supreme Court.
The judgment
After being heard in January 2024, the December 2024 judgment details that the Supreme Court has overturned the decision of the High Court and the Court of Appeal.
The Supreme Court ruled that a claimant’s success fee under a CFA should not be considered a part of the Inheritance Act claim meaning the claimant will remain liable for settling this sum with their solicitor from their awarded monies. The court provided emphasis on the point that whilst the objective of these claims was to provide the claimant with monies to meet their financial need, litigation costs – including success fees – should not be considered to be a financial need.
Whilst this does essentially leave claimant’s in the same position that they had been in previously, with regards to recovering their success fee from the other side, there had been a period of hope that this may change and so the judgment has been disappointing in some ways.
Consequences of the judgment
The Supreme Court declaring that a success fee cannot be considered a debt, and therein cannot be recovered from the other side in addition to the sum awarded from the estate, does mean that claimants will need to carefully consider their claims before bringing them, including considerations relating to funding methods.
A claimant will retain the liability of settling the success fee, therein weakening the position of the claimant and seemingly strengthening that of the defendant. Had the Supreme Court declared that the success fee could be recovered in addition to the settlement sum, then this would have negatively impacted the defending estate as it would have resulted in additional funds being drawn from the estate meaning that the estate would need to consider this risk from an early stage.
But now, claimants will need to carefully consider whether entering into a CFA is the right decision for them as they will be required to settle the success fee from the monies awarded to them. In some cases, the cost of litigation, and therein the additional cost of the success fee, may deem the cost disproportionate to the potential award from the estate. This can therefore limit access to justice for some claimants who cannot privately fund their claims.
It is possible that the court’s will see a decrease in Inheritance Act claims.
Conclusion
Claims under the Inheritance (Provision for Family and Dependants) Act 1975 seek to provide claimants with reasonable financial provision from the estate. The sums awarded are often carefully calculated to ensure they meet their needs – nothing more and nothing less – and so the deduction of a success fee can sometimes impact the suitability of the sum awarded as it results in the lesser sum being issued to the claimant once the issue of costs has been settled.
The consideration of the success fee as a debt of the claimant – and therein as something that should be settled as part of the claim - appeared logical as it allowed the claimant to retain the full sum awarded to them. Many viewed this approach as a more just approach to bringing such claims whilst others criticised it as being too biased towards claimant weighted litigation. Regardless, the judgment has finally been passed down and it will undoubtedly be discussed for years to come.
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