The Court of Appeal has in the last few days ruled in the case of Re Hirachand (Deceased) that a “success fee” in a claim funded by a Conditional Fee Agreement (CFA, or as they are often known, a ‘no win, no fee’ agreement) could be recovered as part of the award under the Inheritance (Provision for Family and Dependants) Act 1975.
This is a landmark ruling and will provide comfort to claimants who have a claim to pursue but have no other way of funding the litigation other than through a Conditional Fee Agreement (CFA). The Court of Appeal judgment sets a clear precedent that success fees agreed with a legal team acting for a Claimant can be factored into the award given by the Court.
The case considered by the Court of Appeal saw the estranged daughter of the deceased awarded a share of her father's Estate. She had previously been left out of his Will and had brought a claim under the Inheritance (Provision for Family and Dependants) Act 1975.
Mr Hirachand had died in a house fire in August 2016 leaving a last Will dated 25 June 1998 that left has entire estate to his wife, the Claimant's mother. His estate was valued at approximately £1.2 million. The Claimant had a pre-existing mental health condition and brought a claim under the Inheritance (Provision for Family and Dependants) Act 1975 for reasonable financial provision to cover ongoing healthcare costs.
At first instance Mr Justice Cohen factored the CFA success fee into the award to the Claimant and her mother appealed the decision.
Howes Percival Partner Michael Green commented:
"This is a really important decision – both for Claimants and for others involved in litigation based upon the 1975 Act. Claimants in a difficult financial position now have more comfort that they can recover their costs, including the often sizeable ‘success fee’ as part of their costs under their CFA. This is because the Claimant’s financial position is assessed at the date of trial, the significant liability of their legal costs, particularly the success fee, which they incur in pursuing their claim increases the likelihood of placing them in a poor financial position when the claim reaches trial.
Existing beneficiaries and those seeking to defend such claims need to consider very carefully at the outset the potential added costs in such claims. This makes ADR and early negotiation/settlement more critical than ever.”
For more information, please contact a member of our Contentious Trust & Probate team.
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