Examining Hirachand v Hirachand [2021] EWCA Civ 1498

The Court of Appeal’s dismissal of the appeal in Hirachand v Hirachand [2021] EWCA Civ 1498is confirmation that successful claimants under the Inheritance (Provision for Family and Dependants) Act 1975 enjoy special treatment when it comes to the recovery of costs, in comparison to litigants in other claims.

However, the ruling was not a clear-cut decision – and the boundaries as to when a success fee is recoverable under the Act are still not entirely clear. In fact, the judgment raises more questions than it answers – which could result in further satellite litigation and make cases harder to settle.

On the face of it, it could be easy to think the decision will open the floodgates to lots of conditional fee agreement (CFA) claims. However, the appeal judge made it clear success fees will not always be recoverable – so each case will turn on its facts. In particular, the court will analyse whether it was reasonable for a case to be taken under a CFA, or whether other methods of funding were available.

The appeal

On 7 May 2020, Mr Justice Cohen made an order in proceedings brought by Sheila Hirachand (the respondent) for provision from the estate of her estranged father, Navinchandra Hirachand (the deceased), under the 1975 Act. The judge held that the assets of the deceased totalled £554,000.

The respondent – who suffers from other specified dissociative disorder and obsessive compulsive disorder, which have a severe impact on her daily life – was awarded £138,918. This included £16,750 to pay some of the success fee due under her CFA, with the judging noting that the no-win, no-fee agreement was necessary, as the respondent would have had no other means of funding the litigation.

The deceased’s wife Nalini Hirachand (the appellant), who was the sole beneficiary of the estate, lodged an appeal against the order, stating that a success fee was not recoverable separately and should remain within the estate.

However, the Court of Appeal dismissed the claim on 15 October 2021, stating that the judge was right in concluding an order for maintenance could contain an element referable to a success fee and without such a contribution, ‘one or more of the claimant’s primary needs would not be met’.

Moving forward

The ruling is good news for claimants under the 1975 Act, as it means they should be able to recover more. However, in Hirachand, the claimant only recovered a 25 per cent contribution towards the success fee, and the remaining 75 per cent would have been payable from the other sums recovered. The judgment, therefore, emphasises the importance of setting success fees at an appropriate level, which is not always an easy decision.

There is no doubt the ruling will increase the value of claims too. In a personal injury or clinical negligence claim, it is usually insurers or the NHS who will pay out. But in a contentious probate claim, it will be the estate, and the more calls there are on the estate and its assets, the harder it can be to settle a claim as the pot is finite.

It is a reminder too that there is no presumption in these sorts of claims that the estate pays – far from it. The starting point will still be that the loser is ordered to pay the winner’s costs. And as a result of this decision, those costs are likely to include at least some of the additional sums payable under a CFA.

Other ways of funding

The judgment makes it clear that the rule is not absolute. The judge stated that the court will look at each decision on a case-by-case basis to work out whether it is appropriate in those circumstances for the uplift under a CFA to be payable in whole or in part.

This means lawyers and clients will start cases not knowing whether they are guaranteed to recover an uplift from an estate. The courts will, no doubt, be scrutinising cases more carefully – and expecting solicitors to have explored other financing options.

If acting for claimants, it will be important to be sure a CFA is the only way of funding a case. Conversely, if acting for defendants and faced with a request for funds, the risk in saying no is that the claimant will be pushed onto a CFA, which is likely to increase the overall value of the claim.

Andrew Wilkinson is partner and head of contentious probate at Shakespeare Martineau: shma.co.uk