Payment of No Win No Fee? The Court might agree…but it’s not a guarantee

A recent decision handed down by the Court of Appeal has some interesting ramifications for potential Claimants bringing a claim under the Inheritance (Provision for Family and Dependents) Act 1975 (“1975 Act”) and those who seek to fund their potential case on a “No Win No Fee” basis i.e. subject to a CFA.

A copy of the judgment of Hirachand v Hirachand [2021] EWCA Civ 1498 can be read here.

The case related to a claim made by the Deceased’s adult estranged daughter seeking reasonable financial provision for her maintenance. The Deceased’s wife was the sole beneficiary of his Estate. The Court was satisfied that the disposition of the Deceased’s Estate as prescribed by his will did not make reasonable financial provision for his daughter’s maintenance and awarded the sum of £138,918.00 out of the Estate to be paid to the daughter.

An appeal was brought on two grounds:

1. Whether the trial had been conducted fairly as the Deceased’s wife (who had been debarred from defending due to previous procedural breaches) who was profoundly deaf, 87 years old and was only present remotely with the assistance of her care home worker
2. Whether the inclusion of the sum of £16,750 as a contribution towards the daughter's liability to pay a Conditional Fee Agreement ("CFA") success fee should have been included in a maintenance-based award calculated by reference to her financial needs

Ground 1 was swiftly dismissed with the Court noting that “debarring orders should mean what they say and that a litigant who is debarred as a consequence of their own failure to comply with the rules cannot expect nevertheless to be entitled to have made available to him or her all the proper and carefully developed protections which have been put in place over the years to ensure that a participating party can put their case effectively”.

Ground 2 was also dismissed with the Court accepting that a success fee was capable of being a debt which could form part of a Claimant’s financial needs, although the Court did advise caution noting that “It is unlikely that an award will include a sum representing part of the success fee unless the judge is satisfied that the only way in which the claimant had been able to litigate was by entering into a CFA arrangement and consideration will no doubt be given of the extent to which the claimant has 'succeeded' in his or her claim”.

It was submitted on behalf of the daughter that the inclusion of part of the success fee in the award was “directed at meeting day to day living expenses” as she had “no other means to discharge her debt other than from her income which, on any view, is and will remain very modest”. It was further submitted that the trial judge held expressly that if he did not make such an allowance “one or more of Claimant's primary needs will not be met”, arguments which the Court accepted.

Interestingly, the Court also commented on the potential disconnect that could arise between a party securing a contribution towards their CFA uplift as part of their award but being ordered to pay the opposing party’s costs for failing to beat a Part 36 offer, which is a strategic offer that can be made by a party which has particular costs consequences depending on whether a party beats or fails to beat that offer.

However, the Court did not consider this to be a particular high risk given that, under CFAs, a “claimant is obliged to accept any reasonable settlement offer or an offer above a specified threshold or risk the solicitors withdrawing from the CFA. Conversely a success fee is frequently not payable in the event that the claimant, on advice, rejects a Part 36 offer or other relevant settlement offer but subsequently fails to beat that offer at trial”.

In this case, the trial judge took what was described as a cautious approach and awarded 25% towards payment of the success fee which the Court commended and stated “serves to highlight the imperative of the full engagement in the Part 36 process and the importance of the parties making realistic offers in order to settle these difficult and distressing cases”.

Conclusion

Notwithstanding the comments made during the judgment, what is evident is the Court confirmed that it is not a guarantee that a success fee will be awarded but it is a possibility that a claiming party may get a contribution towards it. It remains entirely at the Court’s discretion as to whether anything or indeed nothing at all is awarded given the particular circumstances of the applicant, conduct of the parties during the proceedings and the extent to which “success” has actually been achieved in the claim. Such cases carry a high litigation risk given the wide discretion of the Court so the potential recoverability of the CFA success fee should not be exaggerated.

How can we help?

If you need advice in this area, the TSP Dispute Resolution Team can advise you on the best course of action and funding options.