Can Conditional Fee Agreements be used in Inheritance Act Claims?

A recent judgment from the Court of Appeal has brought clarification to the law surrounding Success Fee recoverability in claims made under the Inheritance Act 1975.

The Case

Hirachand v Hirachand [2021] EWCA Civ 1498 – This was a claim by an adult child under the 1975 Inheritance (Provision for Family and Dependants) Act 1975 (“the 1975 Act”).

The Claimant’s father died and his whole Estate passed to his wife under a Will.

The Claimant sought to bring a claim for reasonable financial provision from the Estate on the basis that the provisions of her father’s Will did not provide her with sufficient provision, the Claimant was of limited means.

This was a sad case, but not untypical, in that the Claimant had been estranged from her family for many years and she had considerable financial needs.

The interesting aspect of the case relating to Condition Fee Agreements (CFAs) is that part of her financial needs included the legal costs she had expended in running the case and the fact that if it was successful, her lawyers would be entitled to a success fee. The success fee would be due as a debt from the Claimant to her solicitors pursuant to the CFA she had signed.

The Court at first instance decided that the Will had not sufficiently provided for the Claimant and made an award which included an uplift in respect of the success fee she would have to pay her lawyers. The trial judge found that a cautious approach to this was needed and, in this case, found 25% was the appropriate uplift.

The Appeal

The Defendant appealed on two grounds, one of which was that the trial judge was wrong to uplift the award in respect of the success fee.

The Court of Appeal concluded liability for a success fee could be considered, and that the trial judge was right to do so in this case. The Appeal Court found that if the award were not uplifted to cover the success fee, one or more of her primary needs would not be met by the award.

Implications

The Court of Appeal has clarified the law on the Court’s ability to uplift an award under the Inheritance Act to consider a success fee payable. The Court endorsed the cautious approach of the trial judge to the amount of the uplift. The Court also made it clear it will not be in every case that the award is uplifted to reflect a success fee payable. Effectively, each case will be considered on its own merits.

To some extent, the Court of Appeal decision is a helpful precedent for claimants seeking to increase an award in respect of a CFA success fee.

It may encourage lawyers and their claimant clients, to pursue claims with a reasonable hope that any award will be uplifted to reflect the success fee.

It is by no means a green light to CFA arrangements in Inheritance Act cases as the success fee is not recoverable as such. The case is authority for a cautious approach to query whether a success fee of more than 25% could be taken into account.

Timing

The government have stated that it currently costs HM Courts & Tribunals Service more to process applications than it receives in fees and the increase in fees would generate between £23m and £25m each year from 2022 for HM Courts & Tribunals Service which has been stated to have a current deficit of £85m for the service. However, the proposals to increase the fees come at a time when users of the service are experiencing substantial delays as well as issues with errors on grants and logging in to the online system.

On the matter, Stephanie Boyce further stated “It is vital that HMCTS addresses the service issues as a matter of urgency and makes the necessary improvements to provide a service which both legal professionals and citizens have confidence in, before the new fee is introduced.” “The UK government should also implement a minimum service level standard for applications. If the service drops below that standard on an individual application, then there should be an automatic reimbursement of a percentage of the fee.”

Perhaps the increase in probate fees would be met with less criticism if it were proposed at a time when the service being paid for was not causing severe delays to the administration of estates and putting additional strain on grieving families.

More information

This article is prepared by Stephen Eccles, Head of Litigation Department. Our specialist Contentious Probate Team of Kerry Hull (APTAPS) and Catherine Loadman (APTAPS) are experts in this area and will be able to assist with any matters arising out of this article and the related facts.

This article was written by Stephen Eccles, Partner in our Litigation Department. The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. Specific legal advice should be taken on each individual matter. This article is based on the law as of November 2021.