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Insights
02/01/2025
1. In December 2024, the Supreme Court handed down judgment in the case of Hirachand v Hirachand, overturning the Court of Appeal and first instance decisions, on a question which, it might be said, did not have a satisfactory answer either way.
2. The issue was whether or not an order for reasonable financial provision under the Inheritance (Provision for Family and Dependants) Act 1975 (“1975 Act”) could include payment of a success fee payable by a claimant under a conditional fee agreement (“CFA”). Lord Richards, giving the judgment of the court, said ‘no’.
3. The claim in Hirachand concerned the estate of a deceased father, who, in the events that happened, had by his will left his entire estate to his widow and nothing to his daughter. Both the widow and the daughter of the deceased had severe health problems, the widow would need residential care for the rest of her life, and the daughter had insufficient resources to support herself.
4. The daughter brought a 1975 Act claim for provision from the deceased’s estate, which was opposed by the widow. At first instance, the claim succeeded. The court made an award from the deceased’s estate in favour of the daughter, including a sum of £16,750 towards the success fee payable under her CFA; and separately ordered the widow to pay the daughter’s costs (i.e. base costs, in CFA terms) of the claim.
5. The widow appealed against the inclusion of the sum for the success fee in the 1975 Act award, but the Court of Appeal dismissed her appeal – so she appealed to the Supreme Court. (References to paragraphs of the Supreme Court’s judgment appear in emboldened square brackets below.)
6. The Supreme Court accepted, referring to Ilott v Blue Cross (No 2) [2018] AC 545 at paragraph 14, that an award for the ‘maintenance’ of a claimant under the 1975 Act could, as a matter of statutory construction, include a sum to meet a liability for litigation costs [26].
7. However, the court emphasised that, in civil proceedings generally, litigation costs were treated as a separate matter from – and not recoverable as part of – the substantive relief [32]; and this principle applied to claims under the 1975 Act, so ‘base’ costs were not recoverable as part of an award thereunder [56-57] (hence the first instance court had correctly made a separate order for these costs in Hirachand).
8. As success fees are part of the costs incurred in such proceedings, the court found no reason why the said principle should not similarly apply to them; the logical position was to say that success fees are not recoverable as part of a substantive award in any civil proceedings, including those under the 1975 Act [62, 66].
9. The court noted potential difficulties in operating the provisions of CPR Part 36 if the position were otherwise [70]. It also recognised, following Weisz v Weisz [2020] 2 FLR 95, that interim payments may be ordered under section 5 of the 1975 Act to fund a claimant’s legal costs in such proceedings [75-76], but said this power was different in character from a power to include litigation costs in a final substantive order.
10. Furthermore, as the court referenced throughout its judgment, Section 58A(6) of the Courts and Legal Services Act 1990 prohibits the making of a costs order that requires one party to pay a success fee payable under a CFA by another party (hence the first instance court had been unable to include it in the separate costs order in Hirachand).
11. The daughter argued this prohibition should apply only to provision for payment of a success fee in ‘a costs order’ (the phrase used in Section 58A(6)) as distinct from an award of substantive relief – but the court disagreed [79 et seq.].
12. It construed ‘a costs order’ as including any order which dealt with costs of the proceedings in which the order was made; and it did not accept that ‘financial needs’ under the 1975 Act will include costs liabilities incurred in such proceedings.
13. As such, following the judgment in Hirachand v Hirachand, the position is that a judge cannot, in determining the appropriate relief in a 1975 Act claim, include directly or indirectly any allowance for a CFA success fee; and this is so for orders for the transfer of property or periodic payments as well as lump sum orders [85].
14. Ultimately, the judgment provides clarification on this discrete point concerning CFAs in a context where they are frequent, although it seems relatively thin on wider legal analysis and may prove controversial – but, as indicated at the outset, one can see that might have been the case whatever decision was reached.
Michael Selway & Jess Sharratt, Guildhall Chambers; December 2024
The material contained in this article is provided for general information purposes only. It does not constitute legal or other professional advice. No responsibility is assumed by any member of chambers for its accuracy or currency, and reliance should not be placed upon it. Specific, personal legal advice should be obtained in relation to any case or matter. Any views expressed are those of the editor or named author.
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