Inheritance Claims CFA Success Fee Judgment25 Oct 2021 | Katie de Swarte
The Court of Appeal upholds the recoverability of CFA success fees in 1975 Act claims.
An individual who claims reasonable provision out of an estate may be able to secure part of the success fee due under a conditional fee agreement (CFA) if they win.
A significant ruling has affirmed the power of the courts to award claimants an element of their success fee if they are awarded a maintenance-based provision under the Inheritance (Provision for Family and Dependants) Act 1975. Our contentious probate solicitors have a proven track record in representing clients in successful claims against estates.
Hirachand v Hirachand
Sheila Hirachand, the deceased’s estranged daughter, brought a claim against her father’s estate for financial provision. He had sadly died in a house fire in 2016, and his elderly and frail wife was the sole beneficiary of what was a fairly modest estate.
A conditional fee agreement (CFA) enables a claimant to bring their claim without the financial risk of losing. Only if the claimant wins will they pay their legal fees, but there will also be an agreed-upon success fee. Under the CFA between Sheila and her solicitors, a success fee of 72% was agreed upon.
Sheila had lived at home until 1999 when she left at 30 to do post-graduate study at university. Her father gave her a £400 monthly allowance until 2001, but her relationship with her parents completely broke down. She has been married and had children, but she suffers longstanding mental health problems which impact her daily life.
On the evidence, the judge allowed her to claim that the will did not make reasonable financial provision for her. However, the award would be limited to meet her current financial needs – not to effectively set her up for life.
He awarded her a total of £138,918 out of the estate, including a contribution of £16,750 towards the success fee (25%) for which the daughter was liable under the CFA.
A success fee under a CFA cannot be recouped under a costs order under section 58A(6) Courts and Legal Services Act 1990. Instead, the judge decided he could exercise his discretion to include a sum regarding the success fee as part of the overall award.
Under the CFA, the total success fee amounted to £48,175. As the judge pointed out if the award did not include the uplift, her needs-based award would be significantly reduced.
A key issue for the appeal judges was whether the judge was wrong in law to include a contribution for the success fee in a maintenance-based award calculated by reference to the claimant’s financial needs.
The Court of Appeal emphasised that the term ‘financial needs’ is unqualified and unlimited and that the payment of debts can form part of a maintenance award. On that basis, it must undoubtedly be the case that a claimant’s financial need can include the payment of a debt.
The appeal judges ruled that a success fee – unrecoverable under a costs order – could be a debt for these purposes. That is not to say it will always be appropriate to make such an award. The court will consider the wider circumstances, particularly the ability (or otherwise) of a claimant to bring proceedings other than under a CFA. The court also made clear such an order will only be made to the extent necessary to ensure reasonable provision is made.
This is an important ruling for clients claiming an inheritance under a CFA and their lawyers. It clarifies that the courts can make an award to include an element towards the success fee, but the discretion to do so will be limited.
If you’re considering making an inheritance claim but are concerned about the potential costs, contact the contentious probate solicitors at Osbornes Law for specialist advice.
Katie de Swarte is an associate solicitor who specialises in contested claims. Katie can advise you on whether you can bring such a claim based on the facts of your circumstances and can assist in defending such a claim. Katie is featured in the Legal 500 as a recommended solicitor in London.
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Katie de Swarte and Elspeth Neilson have both instructed me recently, and both seemed to me to be able to build excellent relationships with their clients and to run their practices very efficiently
Katie de Swarte is hardworking and has great empathy for her clients
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