THE SUPREME COURT JUDGEMENT IN HIRICHAND v HIRICHAND (2024) – HAS THE LAW CHANGED?

The decision of the Supreme Court in the case of Hirichand has today been published, which confirms that when considering the level of award in a claim under the Inheritance (Provision for Family and Dependants) Act 1975, a Judge can take into account when considering the level of the lump sum to be paid to the Claimant any success fee payable by the Claimant to their solicitor for funding the claim on a no-win, no fee basis. 

The Supreme court confirmed the decision of the Court of Appeal  and found that [ADD IN DECSION HERE .......]

What is an Inheritance Act claim?

Claims under the Inheritance (Provision for Family and Dependents) Act 1975 can be brought by a person who believes that they have not been reasonably provided for in a will (or under the rules of intestacy if there is no will) as long as they fall into one of the five classes of applicant:

1.         Spouse/civil partner of the deceased;

2.         Former spouse/civil partner of the deceased (who has not re-married and a claim has  not been excluded under any financial order following divorce/dissolution);

3.         Cohabitee of the deceased, having lived continuously together for a period of 2 years before death;

4.         Child of the deceased (which includes any child legally adopted by the deceased and adult children); or

5.         Dependant of the deceased (someone who, immediately before death, was maintained in whole or part by the deceased).

Claims are considered by the court on a case by case basis, taking into account certain factors which include (amongst others) the size and nature of the estate; the financial needs of the Claimant and any other beneficiaries; and any disability of the claimant or any other beneficiary under the estate.

If the claim is brought by a spouse or civil partner situation, the Court will also consider the length of marriage and any contribution made by the claimant to the welfare of the family.

What is a success fee?

Funding arrangements such as Conditional Fee Agreements (“CFA’s”) or Damages Based Agreements (“DBA’s”) are collectively referred to as “no win, no fee” agreements.  These funding arrangements are offered by some firms for some types of claims, however unless you are claiming against a very large estate and are expecting to recover a significant sum, it is unlikely to be in your best interests to fund your claim under one of these agreements because of the success fee which is charged.

Whilst the idea of not paying any legal fees if you lose the case sounds very attractive, the flip side of the agreement is that if you win the case, you will pay to your solicitor on top of their fees, a success fee which is calculated on a percentage of the fees incurred (up to 100%) (for a CFA) or a percentage of the damages recovered (for a DBA).

The general rule in claims relating to an estate is that the winner of the claim pays the losers costs.  It is generally misunderstood that all costs will come from the estate.

This means that if you are successful in your claim, your legal costs will be paid by the losing party (subject to assessment by the court).  The losing party will not, however, be required to pay your success fee.  This will have to be paid by you from the award you receive from the court.  As an example, if your legal costs are £100,000 and you have been awarded £80,000 plus costs by the Judge at trial, whilst you have won and you will receive £180,000 from the losing party, you will be required to pay your solicitor £200,000 (being £100,000 costs plus 100% success fee), which means that you could end up owing your solicitor £20,000.

What does this decision mean for future claims?

When considering claims under the Inheritance Act (other than a claim by a spouse or civil partner), the court is concerned with what is required for the maintenance of the Claimant, namely whether there is a housing or income need. As a result, successful claims brought by cohabitees, children and other dependants are generally brought by those who do not have disposable funds to pay legal fees, so access to justice can be difficult.

For that reason, no-win no-fee agreements are popular with Claimants, but as highlighted above, success fees significantly reduce the lump sum awarded by the court to such an extent that it is not worth the Claimant bring a claim which would otherwise have resulted in an award being made for them.

The decision by the Supreme Court confirming that the original trial Judge was correct to take the success fee into account when determining how much to award to the Claimant means that Claimants now do not need to be concerned with how much they will be left with from their award after paying their legal fees which is likely to result in far more claims being brought.

Are more claims a good thing?

Yes and no.  This division will provide better access to justice for many Claimants who have claims which will be successful and who may ordinarily have been unable to pursue their claim, however inevitably it will also result in an increased level of Claimants with poor claims which will cause estates and beneficiaries to incur unnecessary costs and will clog up the courts.

It is essential that if you are considering a claim, whether on a no-win, no-fee basis or not, that you seek advice from a specialist solicitor who will provide you with clear advice regarding the prospects of your claim.