We look at the recent Court of Appeal decision to award a success fee uplift in Hirachand and consider how this might impact Inheritance Act claims in the future.
This case involves an Inheritance Act claim brought by an adult child, where her mother was the surviving widow and sole beneficiary of her late father’s estate.
The adult child was claiming under the Inheritance (Provision for Family and Dependants) Act 1975 that reasonable financial provision for her maintenance had not been provided by her father’s will.
The claim was funded by a Conditional Fee Agreement (CFA). At first instance, the court made an order, which, very significantly, included an award for £16,750 towards the success fee uplift payable under the terms of the CFA, amounting to just over one-third of the uplift claimed.
The mother appealed to the Court of Appeal on two grounds including whether it was wrong for a judge to make provision for a success fee uplift by reference to the daughter’s financial needs.
The Court of Appeal dismissed the mother’s appeal and held that the court was entitled to make provision for the success fee uplift. Whilst success fees cannot be received by way of a costs order the Court found they were capable of being a debt and the success fee was considered a ‘financial need’ which the court was entitled to take into account.
It is important to note that the Court highlighted that a CFA had been the only way in which she had been able to litigate and also that the matter was not actively defended which may have led to a different outcome.
At first glance, this decision appears positive for claimants funding their claim under a CFA and one might reasonably expect claimants to rely on this case as authority for a success fee uplift award. However, the judgment is wide in nature and makes clear that the Court have not set a precedent that every claimant will receive such an award. A court will take various considerations into account including the claimant’s needs, their ability to fund the litigation, and the claimant’s success in their claim. It should be borne in mind that any award made by the court is to be ‘reasonable’ and it does not follow that an award will be for the total amount claimed.
This decision gives rise to numerous questions to those pursuing and defending Inheritance Act claims. ‘Financial need’ is wide in nature and there is no test determining at what point a claimant is unable to fund their litigation. It is unclear whether a claimant would be expected to exhaust all potential funding options before the court would consider them to have “no other means“.
This decision may significantly impact Part 36 and other without prejudice offers which can be made during the course of proceedings.
The CFA itself may well become a document which must be disclosed in the course of proceedings. There will no doubt be ongoing debate as to just how much of the CFA can be disclosed without waiving privilege.
Due to the significance of this case for future Inheritance Act claims, it may be this case proceeds to the Supreme Court. For now, there is an established position and we can expect to see claimant’s using Hirachand in an attempt to be awarded a success fee uplift.
In these types of claims, costs are dealt with at the point of trial. To avoid the above uncertainty and risk in relation to costs, the parties should always explore settlement before reaching trial.
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