The Supreme Court judgment in Hirachand v Hirachand and what it means for claims under the 1975 Act

After keeping the contentious probate world on the edge of its seat for many months, the United Kingdom Supreme Court (UKSC) has handed down its judgment in the Hirachand case. However, is it a confirmation of the new order or a return to the status quo? 

The judgment in Hirachand v Hirachand [2024] UKSC 43 was arguably the most highly anticipated in the world of contentious probate for many years. The key issue in question was whether a success fee under a conditional fee agreement (CFA) could be recovered as part of an award given to a successful claimant under the Inheritance (Provision for Family and Dependants) Act 1975 (the 1975 Act)? 

The background

The claim was brought by Sheila Hirachand against the sole beneficiary of her late father’s estate, who was her mother, Nalini Hirachand. 

Sheila was estranged from her parents but brought a claim against her father’s estate under the 1975 Act, asserting she hadn't received reasonable financial provision.

Nalini was elderly, resided in a care home due to her deteriorating health, and wasn't an overly active participant in the litigation. 

The case history

At first instance, the High Court ruled in favour of Shelia. She was awarded a lump sum of £138,918 on 7 May 2020. Crucially, this lump sum included a contribution of 25% of the success fee, or £16,750, towards the success fee payable to her solicitors pursuant to the CFA they were acting under. 

The High Court deemed Shelia’s liability for the success fee under the CFA as a debt, a construction required owing to the accepted pre-Hirachand position that success fees are not recoverable pursuant to sections 58 and 58A of the Courts and Legal Services Act 1990 (the 1990 Act). 

Nalini appealed the decision on the basis that the awarded lump sum including a contribution towards a success fee was an error in law under the 1990 Act. 

The Court of Appeal, however, upheld the High Court’s decision on 15 October 2021 stating it was within the court’s discretion to include the success fee within the maintenance provision. Whilst other matters were considered, it was the legality of the inclusion of the success fee which led to the UKSC appeal.  

The UKSC judgment

Whether a success fee under a CFA can be considered a debt, the satisfaction of which may constitute a “financial need” in accordance with section 3(1)(a) of the 1975 Act, was the primary question before the court. 

The UKSC overturned the rulings of both the High Court and the Court of Appeal in a decision handed down on 18 December 2024. This narrows the construction of financial provision awards to bring them in line with the principles in the 1990 Act restricting the recovery of success fees under CFAs. But what does this mean going forwards?

The implications

By returning to the status quo, could the Supreme Court judgment quell the tide of rising numbers of CFAs, especially in 1975 Act claims (one would posit in no small part due to the previous Hirachand judgments in the lower courts)? Could it restrict the class of future claimants under the 1975 Act or simply be trying to reduce the numbers of cases before the courts of England and Wales? Perhaps the former is a necessary evil to achieve the latter goal. 

The key impacts are likely to be the following: 

1. Potential fall off in the use of CFAs
2. Lower awards for 1975 Act claims and the brunt of success fees being borne by the claimant
3. A pathway for 1975 Act claims being only for the relatively wealthy?
4. A decrease in the number of 1975 Act cases before the courts

Whether these are a desirable set of outcomes is something which will be difficult to assess until the ramifications of the UKSC decision are felt by claimants and the courts. 

If you're considering a 1975 Act claim, or would like advice about defending one, please do get in contact with the Mills & Reeve estate trust and wills disputes team.

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