Hirachand (Appellant) v Hirachand and another (Respondents) – The Supreme Court

(Written with reference to submissions made by Counsel pursuant to the hearing footage available)

This article is intended to set out a summary of the submissions made during the Supreme Court appeal hearing of Hirachand (Appellant) v Hirachand and another (Respondents) and the potential impact a decision made in favour of the Respondent would have on future Inheritance (Provision for Family and Dependants) Act 1975 (the 1975 Act) claims.


The matter arises from a claim brought under the 1975 Act by the Respondent for reasonable financial provision from the Deceased’s estate. At first instance a lump sum was awarded to the Respondent to include payment of a success fee under a CFA.

The decision was appealed on the basis that Section 58A(6) of the Court’s and Legal Services Act 1990 (the 1990 Act) provides that ‘A costs order made in proceedings may not include provision requiring the payment by one party of all or part of a success fee payable by another party under a conditional fee agreement.’

The Court of Appeal confirmed that it was within the Court’s discretion to provide provision for payment of a CFA success fee under the 1975 Act on the basis that such liability is a debt to be considered within the scope of financial need pursuant to Section 3(1)(a).[i]

The Appellant has now appealed to the Supreme Court.

Appellant Submissions

The Appellant makes their case based on two primary submissions:

  • That Section 58A(6) of the 1990 Act provides a statutory bar that prevents any order that deals with costs seeking to recover, by way of payment by one party to another, a success fee under a CFA.
  • The Court is not entitled to make a maintenance-based order on the basis it provides only, or in part, for the payment of a success fee because it is not a “reasonable financial provision” that the will/intestacy has failed to provide for.

It was accepted that the idea of a statue bar under Section 58A(6) would turn on the definition of a “costs order.” The Appellant maintained that “costs order” related to any item which could rightfully be characterised as costs of the proceedings between the parties. The Appellant went further to submit that a success fee is rightly characterised as costs as per Clause 58(2) of the 1990 Act which defines a CFA as fees and expenses paid in certain circumstances or a success fee if it provides for an amount of any fees to be increased in certain circumstances[ii].

The Appellant made the point that CPR 57 makes it clear that costs of 1975 Act claims are governed by the CPR and, whilst the Court may have discretion as to costs (under the Supreme Courts Act), ultimately the rules regulate.

In summary it was the Appellants case that case law, the Jackson Report and Government Response, in so far it deals with CFAs, was clear in the intent to abolish the recoverability of success fees from the losing party in any proceedings and that the recovery of success fees post 2013 (barring some exceptions not applicable to this case) would be paid by the CFA funded party.

As there is an explicit decision to treat 1975 Act claims under the CPR in order for the court to make an order of something rightly characterised as costs the court has to go through the process of having regard to the factors listed, generally under CPR 44 and CPR 36, prior to making an order. This cannot happen at trial, and it can only happen after the event when the offers can be made available to the court.

The basis of the second submissions is twofold. Firstly, does the failure of the Deceased to include provision for the cost of potential litigation under the 1975 Act mean that there has been failure to make reasonable financial provision and secondly, if it is deemed that the Deceased failed to make reasonable financial provision (for any reason) can the success fee be awarded as part of an award for maintenance.

Referring to Re Coventry[iii]  it was submitted that it is not for the Court to determine whether the Deceased acted unreasonably but, looked at objectively, whether his disposition or lack of a disposition produces an unreasonable result so that it does not make any or any greater provision for the applicant. In other words, the Court cannot completely reform the Deceased’s dispositions to accord with what the Court itself might think is sensible if it had been in the Deceased’s position.

The right test is:

  • Did the will or intestacy make reasonable provision for the Claimant(applicant)?
  • If not, what reasonable financial provision ought now to be made?

It was the Appellant’s submission that when applying the first leg of the test the process needs to be saying “from the position of the deceased taking all factors into account was there a failure to make reasonable provision.”

Using the above logic, it was submitted that a success fee cannot fall into the basket of “reasonable financial provision” because the deceased could not nor would have made provision for the cost of litigation arising from his/her failure to provide reasonable financial provision.

The Appellant went on to submit that, even if the will/intestacy was found to have failed to provide reasonable financial provision, the success fee cannot be defined as maintenance.

Referring to Re Dennis[iv] the Appellant submitted that the definition of maintenance relates to provisions made to meet the cost of everyday living and recurring expenses of living or of an income nature. Re Dennis cautioned that it may be the case where payment of debt is appropriate as part of a maintenance award (the example provided being the payment of debt to enable the Applicant to continue in a profit-making business) but only where that debt has a direct effect on past or future expenses or income.

Simply put the Appellant is submitting that maintenance under the 1975 Act is not determined as capital for capital. It is not enough to simply say “I have this debt and I need money to pay it”.

It was accepted that the success fee is a debt incurred to generate money that helps the Respondent’s future needs but that the payment of the success fee is not maintenance as it is not a cost incurred as ordinary living or a way of meeting it and the paying of it, whilst it will increase the amount of award, is not changing the income and expense situation of the Claimant.

As such the success fee cannot be form part of a maintenance award under the 1975 Act.

Respondent’s Submissions

The Respondent’s submissions seek to deal with the following key points:

  • CFAs/Jackson Reforms and the direct link between an increase in damages because success fees are not recoverable by way of a costs order.
  • The definition of a costs order.
  • Analogy with Family Proceedings and the appropriateness of this analogy.

The initial point made by the Respondent was that, via the Jackson recommendations, it has been acknowledged that awards for damages can be increased to take account of the fact that success fees were no longer recoverable by way of costs.

The key here being that the Appellant’s case is that Section 58A(6) of the 1990 Act creates a concrete obstacle to substantive relief being granted if that relief  refers to a success fee. However, it is clear that Jackson LJ proposed that relief to be granted in the form of a 10% uplift on general damages which were referable to a success fee.

The implementation of the 10% uplift on damages to compensate successful claimant’s for no longer being able to recover the success fee was done not by legislation but by the Court of Appeal in Simmons v Castle.[v]

It was the Respondent’s position that the Court of Appeal readily did this and/or regarded themselves as having an obligation to do this. By doing this they did not consider it an offence against the success fees not being recoverable by way of a costs order thus demonstrating that, even if Section 58A(6) of the 1990 Act  prohibited the recoverability of success fees by way of costs order, it does not prohibit success fees being properly recoverable through other means (i.e. as damages/awards).

In respect of the position that any award for payment of the success fee could be contingent upon the definition of “costs order” the Respondent maintained that the fact that the current CPR does not refer to success fees as costs means that costs, by omission, does not apply to the success fee.

Translating that across to Section 58A of the 1990 Act the provision that a costs order must be made under the CPR does not apply to the success fee.

It was the Respondent’s submission that this would leave cases such as this outside of the reforms meaning we are left with a Claimant who has a debt, cannot recover it by any other means and, therefore, it becomes part of the 1975 Act. It is open to the Judge to make the decision, as made in this case, and provide payment of the success fee as part of the award.

On the point of maintenance Mr Wagstaffe KC for the Respondent later referred to the case of A v A in which Holman J stated “…..Maintenance payments will not be restricted to matters of daily living in it’s most literal and restrictive sense and legal fees incurred in the course of litigation were recurring expenses of an income nature.”

The final submission made by the Respondent draws an analogy between Schedule 1 of the Childrens Act 1989 (Schedule 1), the 1975 Act and the Matrimonial Clauses Act 1973 (the 1973 Act).

The purpose of this submission being that the statutory language of all three jurisdictions is such that “all circumstances of the case” must be considered. The needs assessment is the same under all three jurisdictions and amounts to a fact-finding exercise. Therefore, a contract which includes the payment of a success fee or likely payment of the success fee in the future, is a finding of fact that the Court must take into account contrary to the Appellant’s case that Section 58A(6) limits the wide range of factors that the Court’s must take into account and give weight to.

The Respondent rested on the point that there is nothing within, and no Parliamentary intent within, Section 58A of the 1990 Act to limit the clear statutory language as provided by the aforementioned Acts as to what the Court can take into account and can do about it.

What does this mean for Inheritance Act 1975 Claims?

It appears that there are two principal concerns in the event the decision goes in the Respondent’s favour. Firstly, whether the Court can make such a decision without the backing of a full policy review and secondly, the potential for the Court to award payment of the success fee without the benefit of having sight of Part 36/Calderbank offers to determine whether the Claimant has, in fact, been successful.

Mr Wagstaffe KC addressed the “success” issue providing four practical solutions to the problem:

  • Deal with the award on a contingent basis.
  • The award can be appealed if the Claimant is not deemed successful.
  • Apply under the principles of Barder v Caluori[vi] on basis that something unforeseen had happened which had upset the factual basis of the judges’ award; or
  • Make a set aside application.

A decision in the Respondent’s favour will undoubtedly change the landscape of these claims with Claimant’s seeking payment of their success fees as part of their financial award becoming common place.

Such a decision, on the face of it, will be beneficial to the Claimant. However, there are likely to be wide reaching effects on the approach that Claimant’s Solicitors will need to take to such claims.

Should the Respondent’s case prevail then not only will the Court have the power to determine whether a success fee is payable, but they will also be able to exercise a discretion in determining the percentage level of success fee recoverable. Consequently, this may lead a Claimant to question the level of success fee adopted at the outset and/or query any reductions made on quantum to reflect a litigation risk that the success fee will be reduced.[vii]

Interestingly, Lord Leggatt appeared to be of an opinion that a decision in the Respondent’s favour would be an “all or nothing” approach. In short, if a success fee can be recovered by way of an award under the 1975 Act then it so follows that base costs should also be recoverable.

I suspect that even if there is not a judgment on this point it would only be a matter of time before a claim for recovery of base costs, in addition to payment of the success fee, is sought as part of a maintenance award under the 1975 Act.

From a costs perspective the impact of a decision in the Respondent’s favour is clear. As with all litigation the Claimant will be required to prove their claim.

Lord Leggatt said during the hearing that in the event of a determination that costs become payable as part of the award then, just as he goes through loan documents with a fine-tooth comb, he will do the same with costs.

Where a provision for a success fee has been made within the claim then evidence as to costs will become just as important as providing evidence as to the Claimants everyday financial needs. Costs will have to be considered at every stage whether that be preparing the claim value for issue, advising on a Part 36 or presenting evidence at trial.

To my mind a decision in the Respondent’s favour will change the landscape as to how costs are also dealt with in these claims with the best solution being to prepare the between the parties bill as the matter is being litigated ensuring any quantum valuations are accurate in addition to providing vital evidence that can be relied upon at trial.

Ultimately, should Lord Leggatt be right, and any Respondent decision be classed as an all or nothing approach such preparation in terms of costs will become even more integral.

[i] Hirachand v Hirachand [2021] EWCA Civ 1498 – Radcliffe Chambers

[ii] R (on the application of PACCAR Inc and others) (Appellants) v Competition Appeal Tribunal and others (Respondents) (supremecourt.uk)

[iii] RE COVENTRY (DECEASED) [1980] 1 CH 461

[iv] RE Dennis (Deceased) [1981] 2 ALL ER 140

[v]  Simmons v Castle [2012] EWCA Civ 1288

[vi] Barder v Caluori [1988] AC 20

[vii] Success Fee Recoverability in Inheritance Act Claims (jmw.co.uk)


Michelle Mone, Costs Lawyer