Inclusion of Conditional Fee Agreements in Maintenance Awards: Hirachand v Hirachand & Anor ([2021] EWCA Civ 1498)

Introduction

The case of Hirachand v Hirachand & Anor deals with a dispute over financial provision under the Inheritance (Provision for Family and Dependants) Act 1975 ("the Inheritance Act"). The appellant, Nalini Hirachand, sought to contest an order made by Mr Justice Cohen, which mandated her to pay a sum of £138,918 to her estranged daughter, Sheila Hirachand ("the Respondent"), from the estate of Navinchandra Hirachand ("the Deceased"). The central issues revolved around procedural fairness in a remote hearing setting and the legality of including a Conditional Fee Agreement (CFA) success fee in the maintenance award.

Summary of the Judgment

The Court of Appeal dismissed Nalini Hirachand's appeal against the lower court’s decision. The key findings included:

The trial proceeded appropriately despite the appellant’s profound deafness and reliance on a care worker during a remote hearing via Skype.
The inclusion of a £16,750 CFA success fee in the maintenance award was deemed lawful, as it addressed the respondent’s financial needs resulting from litigation costs.

The court upheld the original award, emphasizing that the judge had rightly considered the CFA as part of the respondent's financial needs under the Inheritance Act.

Analysis

Precedents Cited

The judgment referenced several key cases to support its reasoning:

Ilott v Blue Cross and Others (No 2) [2018] AC 545: Emphasized that maintenance under the Inheritance Act includes provisions to meet everyday living expenses and potentially the settlement of debts.
Re Clarke [2019] EWHC 1193 (Ch): Established that CFA success fees should not be included in maintenance awards, aiming to prevent litigation funding from disadvantaging estates.
Bullock v Denton [2020]: Offered an opposing view where the success fee was considered part of the claimant’s financial needs.
Times Travel (UK) Ltd v Pakistan International Airlines Corp [2019] EWHC 3732 (Ch): Highlighted that debarring orders should be strictly enforced, and parties should not bypass procedural rules to influence outcomes.
Lilleyman v Lilleyman [2012] 3 WLR 754 and Lilleyman v Lilleyman (No 2) [2012] 1 WLR 2801: Discussed the complexities of including contingent costs in maintenance awards.

These precedents provided a framework for assessing both procedural fairness in the conduct of the trial and the scope of maintenance provisions under the Inheritance Act.

Legal Reasoning

The court's legal reasoning focused on two primary issues:

Procedural Fairness in Remote Hearing: The court determined that proceeding with the trial via Skype was appropriate despite the appellant’s deafness. The judge ensured that the appellant had adequate assistance through a care worker and that the trial's remote nature did not infringe upon her rights. The court emphasized that debarring orders are to be strictly interpreted and that the appellant's failure to comply with procedural requirements did not warrant further accommodations.
Inclusion of CFA Success Fee in Maintenance Award: Addressing whether the success fee could be incorporated into the maintenance award, the court held that it was permissible. Drawing from Ilott and distinguishing cases like Re Clarke and Bullock, the court concluded that the success fee represented a legitimate financial need arising from litigation costs, which the respondent could not otherwise recover. The cautious inclusion of a partial success fee (25%) aimed to mitigate potential injustices without overburdening the estate.

The judge balanced the legal principles with the specific circumstances, ensuring that the decision aligned with both statutory provisions and equitable considerations.

Impact

This judgment establishes important precedents in two key areas:

Procedural Accommodations for Disabled Litigants: The court reaffirmed the strict interpretation of debarring orders, signaling that procedural non-compliance, even by vulnerable individuals, does not necessitate additional accommodations beyond what is lawfully required.
Financial Provision for CFA Success Fees: By permitting the inclusion of a CFA success fee in a maintenance award, the judgment provides clarity on how future cases may handle litigation funding costs within inheritance claims. This could influence how courts assess financial needs and manage the intersection of legal fees and statutory maintenance provisions.

Overall, the judgment underscores the judiciary's role in balancing procedural integrity with the equitable treatment of parties, particularly in complex financial and familial contexts.

Complex Concepts Simplified

Inheritance (Provision for Family and Dependants) Act 1975

This Act allows certain individuals, such as children or spouses, to claim financial provision from a deceased person's estate if the will does not make reasonable provision for them.

Conditional Fee Agreement (CFA)

A CFA is a contract where a lawyer agrees to take a case on the basis that their fee is dependent on winning the case. If successful, the lawyer receives a success fee in addition to standard fees.

Debarring Orders under CPR Rules

These orders prevent a party from actively participating in court proceedings if they fail to comply with procedural requirements, such as filing necessary documents on time.

Section 9 of the Inheritance Act

Section 9 grants courts the power to make orders regarding the distribution of an estate in a way that is just in all circumstances, potentially deviating from the deceased’s will if necessary.

Conclusion

The Court of Appeal's decision in Hirachand v Hirachand & Anor reinforces the judiciary's commitment to procedural fairness while recognizing the legitimate financial needs arising from litigation processes. By upholding the inclusion of a CFA success fee in the maintenance award, the court acknowledges the real-world financial burdens faced by claimants, ensuring that statutory aims of providing for dependants align with practical considerations of legal expenses. Additionally, the judgment clarifies the boundaries of procedural compliance, emphasizing that strict adherence to court rules is essential, regardless of a party’s personal circumstances. This decision serves as a critical reference point for future cases involving inheritance disputes and the financial implications of litigation funding mechanisms.