This decision has been highly anticipated and long awaited by contentious probate lawyers and is likely to have far-reaching implications for claims brought under the Inheritance (Provision for Family and Dependants) Act 1975 (1975 Act). In advance of the decision, I decided it would be useful to provide a recap of what is at stake and, at risk of getting it horribly wrong, what I believe the outcome should be!
The Court of Appeal’s Decision
In Hirachand v Hirachand, the claimant was the estranged daughter of the deceased. She brought a claim under the 1975 Act, arguing that reasonable financial provision had not been made for her. Notably, her legal representation was funded through a Conditional Fee Agreement (CFA), commonly referred to as a “no win, no fee” arrangement. Such agreements often include a success fee payable in the event of a successful claim.
The Court of Appeal upheld a first-instance decision to include a portion of the CFA success fee as part of the award to the claimant. This approach was based on the argument that the claimant would not otherwise have been able to pursue her claim and that excluding the success fee would undermine the objective of ensuring reasonable financial provision.
This judgment has sparked significant debate. While some commentators view it as a pragmatic solution to ensure access to justice, others argue it risks distorting the fundamental principles of 1975 Act claims. Traditionally, such claims are assessed on the claimant’s needs and the resources available in the estate, without consideration of the claimant’s litigation funding arrangements.
What Might the Supreme Court Decide?
The Supreme Court’s decision could fall into one of three broad categories:
Affirm the Court of Appeal’s approach: The Court may agree that CFA success fees can be included in awards under the 1975 Act. This would effectively endorse the principle that access to justice considerations should influence awards in certain circumstances.
Reject the inclusion of CFA success fees entirely: The Supreme Court could decide that the inclusion of CFA success fees is inconsistent with the statutory framework of the 1975 Act, which focuses on the needs of the claimant and the estate’s ability to meet those needs. This would maintain the traditional approach to assessing claims under the Act.
Create a nuanced framework: The Court might outline specific circumstances where CFA success fees could be considered, providing clarity while limiting the scope for such awards to become the norm.
Implications for 1975 Act Claims
The Supreme Court’s decision will have significant implications, particularly for:
Claimants and their advisors: If CFA success fees are included in awards, it may embolden claimants with limited financial resources to pursue claims. Conversely, a rejection of this approach could deter potential claimants who cannot afford to fund litigation upfront or obtain After the Event (ATE) insurance.
Estate administration: Executors and beneficiaries could face increased uncertainty and potential exposure if CFA success fees are routinely considered part of awards. This might lead to more contentious probate disputes, especially where estates are modest.
Legal practice: The decision will influence how practitioners structure funding arrangements in 1975 Act cases. A ruling against the inclusion of CFA success fees could lead to greater reliance on ATE insurance or alternative funding models.
Predictions from Legal Commentators
Legal commentators are divided on the likely outcome. Some predict the Supreme Court will affirm the Court of Appeal’s decision, viewing it as a progressive step to improve access to justice. Others believe the Court will take a more conservative approach, emphasizing the statutory framework and the principle that litigation costs should not distort the assessment of reasonable financial provision.
Comment
This is a really difficult case to predict. The Supreme Court may conclude that CFA success fees should be excluded from consideration when assessing the value of a 1975 Act claim. Or, that they could be allowed in principle, but in such constrained situations that it amounts to an effective exclusion.
While access to justice is undeniably important, the statutory framework of the 1975 Act focuses on the needs of the claimant and the financial capacity of the estate. Including CFA success fees risks creating a precedent that could distort the purpose of the Act, leading to awards that exceed the claimant’s reasonable needs.
It is common for a successful 1975 Act Claimant to fail to recover all of their legal costs, which can arguably have just as great an impact on their finances as a success fee would. Yet, nobody is arguing that these should be recovered in full, because it is accepted that it is part of the litigation risk. Finally, the overriding impression I get from the wider legal world, is that there is a dissatisfaction with success fees being recovered, in addition to legal costs. It has been many years since they were disallowed in personal injury claims and, while there are parallels that can be brought with financial family law matters, ultimately the costs position in those claims is radically different to this situation.
If access to justice concerns could be addressed through broader reforms to litigation funding, such as expanding the availability of legal aid or promoting affordable ATE insurance, these measures would avoid placing additional burdens on estates and beneficiaries, while still ensuring claimants can pursue meritorious claims.
Conclusion
The Supreme Court’s decision in Hirachand v Hirachand will be a landmark moment for 1975 Act litigation. Lawyers and clients alike should prepare for potential shifts in how these claims are assessed and funded. Whatever the outcome, the decision will underscore the importance of carefully navigating the competing interests of access to justice and the principles underpinning contentious probate law.
