CFA costs payable as part of maintenance award, CoA rules

The Court of Appeal has ruled that a judge was correct to include some costs in a maintenance-based award, after the claimant had successfully secured part of her father’s estate.

Having determined the lump sum payable, Mr Justice Cohen had included a further contribution of £16,750 towards the claimant’s liability to pay a conditional fee agreement.

On appeal, Lady Justice King concluded in Hirachand v Hirachand & Ors that the judge was right to determine that an order for maintenance could contain an element referring to a success fee. He was also correct to regard the success fee as a debt which could be included in a maintenance award. The appeal was dismissed.

The court heard that claimant Sheila Hirachand had been awarded £138,918 from her deceased father’s estate, after his will had failed to make reasonable financial provision for her maintenance. This was based on what she required to meet her current financial needs, which were set out in the judgment.

Sheila Hirachand had entered into a conditional fee agreement in 2018. The terms of the agreement were that the success fee was 72% which amounted to £48,175, and it was submitted that the whole of this should fall on the estate as part of the award.

Cohen J ruled that, if he did not make a costs award, then one or more of the claimant’s needs could not be met, as the liability was hers alone and she had no other means of funding the litigation.

Lady Justice King agreed with that conclusion, but stressed it was not always appropriate to make such an order. She added that the judge had to be satisfied that ‘the only way in which the claimant had been able to litigate was by entering into a CFA arrangement’.

She noted that the judge had taken a ‘cautious approach’ towards the success fee liability and ordered a ‘modest’ contribution of 25%.

Following the judgment, lawyers working in wills and trusts said claimants can now look to recover all or part of any success fee under a CFA as part of an award of reasonable financial provision.

Claire-Marie Cornford, a partner at Irwin Mitchell, said: ‘This is a significant decision that could have a big impact on Inheritance Act claims going forward because it endorses the approach that a success fee can be recoverable from an estate, which may lead to bigger financial awards for successful claimants, who previously may have to pay their solicitors’ success fee from their award without the benefit of an uplift from the estate.

‘Nonetheless, the Court of Appeal has made it clear that a contribution towards a success fee will not always be appropriate as it will depend on the facts of each case including whether a CFA was the only means by which the claimant could pursue such a claim.’

Scott Taylor, partner and head of contentious trusts and estates at Moore Barlow, who acted for the claimant, said this was an incredibly important and positive ruling which supports claimants who are only able to litigate by entering into a CFA arrangement.

'Previously, claimants in a difficult financial position had worryingly few avenues to pursue such claims because of the prohibitive costs associated with taking legal action. CFAs are one of the few options open to people in these circumstances but access to good legal representation was often hard to come by because law firms had very little guarantee they would be able to recover their fees.

'The court’s decision incentivises private client lawyers to take on cases under the Inheritance Act 1975 for those able to demonstrate genuine financial need under CFAs which in turn could make it easier for people to access specialist legal support, regardless of their financial circumstances.'

Brie Stevens-Hoare QC and Oliver Ingham (instructed by Mills & Reeve LLP) acted for the appellant (appearing pro bono). Constance McDonnell QC and Sophia Rogers (instructed by Moore Barlow LLP) acted for the respondent.