The Court of Appeal's decision on the recoverability of CFA success fees in Inheritance Act 1975 claims

Even judges disagree - the Court of Appeal’s decision on the recoverability of CFA success fees in Inheritance (Provision for Family and Dependants) Act 1975 claims.

As considered in our Legacy Team webinar “Claims against charity legacies in England & Wales, and overseas” on 28 October 2020, there were conflicting High Court authorities on the recoverability of Conditional Fee Agreement (‘CFA’) success fees in Inheritance (Provision for Family and Dependants) Act 1975 (‘1975 Act’) claims and there was a need for a decision from the Court of Appeal.

In Hirachand v Hirachand and another [2021] EWCA Civ 1498, the Court of Appeal unanimously held that where a claim was brought under the 1975 Act and the claimant was funded using a CFA, the success fee payable to the claimant’s solicitor under the CFA, which cannot be recovered by way of a costs order by virtue of section 58A(6) Courts and Legal Services Act 1990, was capable of being regarded as a debt for which the Court may make provision in a maintenance-based award under the 1975 Act. However, King LJ made it clear:

• An award that includes a sum representing part of a CFA success fee is only likely to be appropriate if the judge is satisfied that the only way in which the claimant had been able to bring the claim was by entering into a CFA.
• The judge would consider the extent to which the claimant had ‘succeeded’ in her/his 1975 Act claim.
• An award will only be made to the extent necessary in order to ensure that reasonable provision is made for the claimant. This does not mean there can be no impact on the standard of living the claimant would otherwise be afforded by the maintenance award.

Hirachand v Hirachand provides practitioners, and charities, with much-needed clarity. In practice, it is not clear that the decision provides claimants with an advantage in negotiations. It may simply identify a CFA success fee as a debt and a financial need of the claimant along with her/his other financial needs under s.3(1)(a) 1975 Act. If a charity faces a claimant claiming a contribution to her/his CFA success fee, it should, at least in the first instance, approach the financial need in the context of the claim as a whole. 

You can read the judgment here.

If you have any queries in relation to the above or would like further information, please contact Sean Knight at seanknight@stoneking.co.uk.