Introduction

The case of Hirachand v Hirachand & Anor ([2024] UKSC 43) addresses a pivotal issue in English civil litigation: whether section 58A(6) of the Courts and Legal Services Act 1990 (the "1990 Act") prohibits the inclusion of success fees within orders for reasonable financial provision under the Inheritance (Provision for Family and Dependants) Act 1975 (the "1975 Act"). The Supreme Court's ruling in this case sets a significant precedent regarding the intersection of costs recovery and statutory provisions for inheritance claims.

The parties involved in the case are Navinchandra Dayalal Hirachand (the Deceased), his widow, and their children, the Daughter and the Son. The central issue revolves around the Daughter's attempt to recover a success fee from the Deceased's estate, which was awarded under the 1975 Act.

Summary of the Judgment

The Supreme Court concluded that section 58A(6) of the 1990 Act effectively prohibits the inclusion of success fees in any costs orders related to civil proceedings, including those under the 1975 Act. The appeal by the Widow was allowed, resulting in the exclusion of the Daughter's success fee from the order for financial provision.

Initially, the High Court awarded the Daughter a sum that included a provision for her success fee, which was subsequently challenged. The Court of Appeal upheld the High Court's decision, deeming it lawful to include the success fee as part of the financial provision. However, the Supreme Court overturned this, emphasizing the overarching prohibition against recovering success fees through costs orders.

Analysis

Precedents Cited

The judgment extensively references foundational cases and statutory provisions that shape the current understanding of costs recovery in civil litigation:

• In re Dennis, decd [1981]: Emphasized the broad but specific interpretation of "maintenance" under the 1975 Act.
• Holman J in A v A (Maintenance Pending Suit: Payment of Legal Fees) [2001]: Established that legal costs can constitute "maintenance" under certain conditions.
• Cockburn v Edwards (1881): Affirmed the principle that litigation costs are separate from substantive relief.
• Seavision Investment SA v Evennett (The Tiburon) [1992]: Reinforced that costs must be recovered through designated mechanisms, not as damages.
• Azarmi-Movafagh v Bassiri-Dezfouli [2021]: Confirmed that parties can include liabilities for their own costs in financial remedy proceedings.
• Ilott v The Blue Cross (No 2) [2017]: Assisted in interpreting "maintenance" within the context of costs.

Legal Reasoning

The Court's reasoning centered on the interpretation of section 58A(6) of the 1990 Act, which explicitly disallows the inclusion of success fees in costs orders. The judgment underscored the importance of maintaining the integrity of the costs regime established by the Civil Procedure Rules 1998 (the "CPR"). Allowing success fees to be part of substantive awards would undermine established principles that costs are to be handled separately from substantive relief.

The Court also analyzed the policy considerations behind the prohibition of success fees, citing concerns about disproportionate costs and the potential for injustice. The analogy with financial remedy proceedings under the Matrimonial Causes Act 1973 (the "MCA") highlighted the different treatment of costs in family law matters compared to civil litigation.

Furthermore, the Court dismissed arguments that section 58A(6) should only apply to "costs orders" and not to substantive relief, emphasizing the clear public policy intent to exclude success fees from any form of recovery in civil proceedings.

Impact

This judgment has significant implications for future civil litigation, particularly in the context of inheritance and family provision claims:

• Clarification of Costs Recovery: Reinforces that success fees cannot be included in any awards under the 1975 Act, aligning inherited costs recovery with broader civil litigation principles.
• Restrictive on Success Fees: Limits the ability of claimants to recover success fees from opposing parties, impacting the financial planning of litigation.
• Consistency in Costs Regime: Upholds the separation between costs and substantive claims, ensuring predictability and fairness in judicial decisions.
• Policy Enforcement: Strengthens the government's stance against disproportionate litigation costs and supports ongoing efforts to regulate legal costs effectively.

Complex Concepts Simplified

Conclusion

The Supreme Court's decision in Hirachand v Hirachand & Anor firmly establishes that success fees cannot be incorporated into awards for reasonable financial provision under the 1975 Act. This ruling reinforces the principle that costs in civil litigation, governed by the CPR, must remain separate from substantive relief. By excluding success fees from such awards, the Court aligns inheritance claims with broader civil litigation standards, ensuring fairness and consistency in the recovery of legal costs. This judgment serves as a crucial reference for future cases involving costs recovery and reinforces the policy intent to regulate litigation expenses effectively.