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Christmas Clauses and Family Feuds – Unwrapping Hirachand v Hirachand

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Ellie Sharp - Trainee Solicitor

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Article reviewed by Eleanor Clarke and Helen Thompson.
inheritance claims

Christmas comes early for Contentious Probate lawyers eagerly awaiting the decision of a landmark appeal case, Hirachand v Hirachand [2024] UKSC 43.

The appeal was heard back in January 2024 and the Supreme Court’s Judgment was finally handed down today, giving Contentious Probate lawyers something to read over Christmas.

Our Contentious Probate Solicitors take a look at the landmark appeal.

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Background to Hirachand v Hirachand

This is a landmark case in relation to litigation funding for claims under the Inheritance (Provision for Family and Dependants) Act 1975 (“the 1975 Act”).

Under the 1975 Act, certain categories of person can make an application against a deceased’s estate for reasonable financial provision.

Under s.3(1)(a) of the 1975 Act, in determining whether and in what manner the court should grant a claimant financial provision, it shall have regard to ‘the financial resources and financial needs which the applicant has or is likely to have in the foreseeable future’.

In this case, the claimant, Sheila Hirachand (Sheila), was the estranged daughter of her late father and made a claim for reasonable financial provision against his estate.

The defendant was the deceased’s surviving spouse, Nalini Hirachand (Nalini), who was the sole beneficiary under the deceased’s Will. Sheila’s claim was successful, and she was awarded a lump sum of £138,918 from her late father’s estate.

This lump sum included a contribution towards Sheila’s success fee, under her Conditional Fee Arrangement (CFA) with her solicitors. Nalini appealed and the Court of Appeal upheld the High Court decision.

Nalini then appealed to the Supreme Court. The question for the Supreme Court was essentially whether the Court of Appeal was wrong in law to decide that a CFA success fee is a debt which can be recoverable as part of an award under the 1975 Act.

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Inheritance Act Claims

What is a CFA?

A CFA is essentially a ‘no win no fee’ agreement, whereby a claimant is only required to pay their solicitor’s legal fees if they are successful and “win” their case.

The terms of most CFAs will mean that the client is charged for their solicitor’s fees at their usual hourly rates and then an additional sum or “uplift” based on a percentage of the solicitor’s fees.

The success fee is usually calculated by taking into account (1) the risk to the firm of losing the litigation and, as such, not receiving their fees and (2) the cost to the firm of not being paid the fees until the outcome of the case, i.e. the delay in receiving the fees.

Recovering costs

The usual costs rule is that if a claimant is successful in their claim, they will usually be able to recover some, but not all, of their costs from their opponent as the losing party. They would then  be required to pay any difference to their solicitor. Hirachand has now confirmed that any uplift charged under the CFA cannot be recoverable from the other side and will have to be paid by the claimant separately, usually from any funds they are awarded in the claim.

The previous authority on this recoverability of success fees is Higgins v Morgan and others [2021] EWHC 2846 (Ch) in which the claimant was represented by Stephanie Ewan of Myerson.

In Higgins, the Court did consider the success fee when considering the claimant’s financial resources and needs.

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Inheritance Act

Importance of Hirachand decision

The Supreme Court’s decision is important as it will affect the funding options available for 1975 Act claims.

The Supreme Court’s decision will be final and will set a precedent for all future 1975 Act claims to follow.

Claims under the 1975 Act are ordinarily brought because the Claimant has a need for maintenance from the Deceased’s estate – this means that they are unlikely to be able to fund legal fees privately  so CFAs are an extremely common way of funding in 1975 Act claims.

For claimants without the means to meet legal fees, the Hirachand decision may make it more difficult for them to bring their claims and CFA agreements may be a less attractive funding method.

However, it is important to note that success fees have never been fully recoverable, and it has always been the case that a proportion of these will be met by the claimant.

Now that the Supreme Court has confirmed that success fees are not recoverable, this will add certainty to negotiations and may assist in bringing matters to settlement at an earlier stage, saving time and costs for all parties.

For defendants, the decision in Hirachand will come as welcome confirmation that they do not need to worry about paying an uplift on top of the costs of a successful claimant.

However, the costs of any claim brought to trial are likely to be substantial even without the threat of an uplift.

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The Supreme Court

Other funding options

A CFA is not the only method of funding litigation in contentious probate cases.

At Myerson we will assess the merits and circumstances of a claim and seek to find the most appropriate funding method for a matter.

As well as CFAs, we also work with insurance funding and Deferred Fee Agreements depending on the circumstances.

Funding v3

Contact Our Contentious Probate Lawyers

Myerson’s Contentious Probate team is one of the largest in the North West.

Our solicitors have considerable experience in successfully bringing and defending 1975 Act claims.

If you would like advice on a claim or have any questions on the impact of the Hirachand judgment, please get in touch with a member of our Contentious Probate team on:

01619414000

Ellie Sharp's profile picture

Ellie Sharp

Trainee Solicitor

Ellie joined Myerson as a Trainee Solicitor in September 2023 and is currently undertaking her third seat in the Probate litigation department.

Ellie obtained a 1st class Law degree from the University of Law in Chester in 2020, and then completed her LPC and LLM in 2021 at the same University, obtaining a Distinction in both.

She has previous experience carrying out residential property post-completion tasks, compliance and reporting at a law firm in Nantwich. She then moved to work as a paralegal in the in-house legal team at the Woodland Trust, working on a variety of matters and gaining experience in areas such as commercial law, intellectual property, property law and charity law.

During her studies, Ellie also volunteered at Citizens Advice as both an adviser and a fundraising volunteer.

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