A landmark Supreme Court ruling has determined that conditional fee agreement success fees cannot be recovered in claims under the Inheritance (Provision for Family and Dependants) Act 1975. This decision emerged from the long-running Hirachand v Hirachand case.
In this article we provide detail on the Hirachand v Hirachand case and highlight how the decision will impact future inheritance claims.
The ruling stemmed from a case involving Navinchandra Dayalal Hirachand’s estate, valued at £554,000, where his will left everything to his widow. The Inheritance (Provision for Family and Dependants) Act 1975 empowers courts to order an award out of a deceased person’s estate to certain family members or dependants. When assessing a claim a factor the courts must consider is the claimant’s financial needs and resources.
The deceased’s daughter, who suffered health problems and had insufficient income to support herself, challenged her father’s will under the Inheritance (Provision for Family and Dependants) Act 1975 - claiming it failed to make reasonable financial provision for her maintenance. The daughter entered into a conditional fee agreement with her solicitors which stipulated that if her claim failed, her solicitors wouldn't be entitled to any fees, but if she won she would be liable to pay their fees and a 72% success fee in addition.
A key question before the Supreme Court was whether the success fee under the conditional fee agreement was a ‘financial need’ that should be factored into the court’s decision-making process in determining the sum to award. The court concluded that it was not.
This decision confirms that in an Inheritance (Provision for Family and Dependants) Act 1975 claim, the success fee cannot be included in the claim against the estate as part of the claimant’s financial needs. The financial burden of the success fee therefore remains entirely with the claimants and they must pay it themselves from their own resources or from the award itself.
The ruling re-aligns inheritance claims with other civil proceedings regarding success fee treatment and emphasises that legal costs, including success fees, remain between the claimant and their own lawyer.
This decision is significant for anyone involved in Inheritance (Provision for Family and Dependants) Act 1975 disputes in which a claimant is funded on a no win no fee basis as it could make it much more challenging for an impecunious claimant to pursue a claim.
If you are contemplating bringing a claim under the Inheritance (Provision for Family and Dependants) Act 1975 or currently have an ongoing claim and need clarity on how this ruling affects your situation, please get in touch.
The full case ruling is available here.
