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Contentious Probate

Ally Tow

Dispute resolution


On 7 May 2020, Mr Justice Cohen made an order in proceedings brought by Sheila Hirachand (“Sheila”) for provision from the estate of her estranged father, Navinchandra under the Inheritance (Provision for Family & Dependants) Act 1971 (“the Act”).

Probate fees increase dropped

Under her late father’s will, Sheila’s mother, Nalini was the sole beneficiary of Navinchandra’s estate. The judge had been satisfied that the disposition of the estate effected by Navinchandra’s will failed to make reasonable financial provision for Sheila’s maintenance and made an order that the personal representatives do pay her the sum of £138,918.00 out of the estate. That figure included the sum of £16,750.00 as a contribution towards Sheila’s liability to pay a success fee pursuant to a conditional fee agreement (“CFA”) entered into by her with her solicitors.

Success fee

Sheila had entered into a CFA with her solicitors on 6 March 2018. By virtue of the terms of the agreement, the success fee was 72% which amounted to £48,175.00.

By Section 58A(6) of the Courts and Legal Services Act 1990 a costs order “may not include provision requiring the payment of one party of all or part of a success fee payable by another party under a conditional fee agreement”. Consequently, Sheila could not recover the success fee by way of a costs order in the proceedings. However, Sheila’s counsel contended that the totality of the fee payable should fall on the estate as part of the award because it was as a result of the CFA that she had had to enter into in order to fund the litigation that she had incurred the liability, a liability which her solicitors could enforce and which, if not included in the award, would lead to her needs based award being correspondingly reduced.

The question for the court therefore was whether, notwithstanding the provisions of Section 58A(6) could a judge, in the exercise of his discretion, include as part of the overall award a sum by reference to the success fee where the award is a needs-based award.

Mr Justice Cohen had been referred to two cases, Re Clarke [2019] and Bulluck V Denton [2020]. In the Clarke case Deputy Master Linwood had declined to make any provision for a success fee in his award, finding that it would be contrary to legislative policy and would mean a CFA claimant in a claim under the Act would be in a better position in terms of negotiation due to the risk of a substantial costs burden and in a better position that a claimant in a personal injuries claim.

In Bullock, on the other hand, HHJ Gosnell took the view that “additional liabilities” including the success fee fell into a different category from the costs incurred by both sides. He said that in his view he was “entitled to take them into account both because they fall within the claimant’s financial needs under Section 3(1)(a) and because they are debts incurred since the death and the court is enjoined to make the assessment at the date of trial not the date of death.”.

In a claim for reasonable financial provision by a child of the deceased reasonable financial provision means such financial provision as “it would be reasonable in all the circumstances of the case for the applicant to receive for his maintenance”. A succession of cases have emphasised not only that maintenance should not be defined too prescriptively for the purposes of the Act but also that payment of debts may form a legitimate part of a maintenance award.

Mr Justice Cohen confirmed that he preferred the approach of HHJ Gosnell saying” I accept that it is appropriate for me to consider this liability as part of C’s needs. I do so for largely case specific reasons. I am not making a large award … It is not an award that permits of much elasticity. If I do not make such an allowance one or more of C’s primary needs will not be met. The liability cannot be recovered as part of any costs award from other parties. The liability is that of C alone. She had no other means of funding the litigation.”.

Basis of the judge’s award

The judge held that the award should be calculated by reference to what Sheila required to meet her current financial needs. He said this was not a case where Sheila should “in effect be set up with a home or income fund for life” and he therefore calculated the award as follows:

  • £17,000.00 for therapy;
  • £48,169.00 and £32,000.00 representing income shortfall and loss of universal credit for a period of three years;
  • £15,000.00 for white goods and a replacement car;
  • £10,000.00 for rental deposit; and
  • £16,750.00 as regards the CFA success fee.

The appeal

Nalini appealed that order on two grounds, one of which was to assert that the judge had been wrong in law to include such a contribution for a success fee in a maintenance based award calculated by reference to Sheila’s financial needs.

Giving the lead judgment, Lady Justice King confirmed that in her judgment Mr Justice Cohen had been right in concluding that an order for maintenance could contain an element referable to a success fee. In her judgment, “a success fee, which cannot be recovered by way of a costs order by virtue of Section 58A(6) is capable of being a debt, the satisfaction of which is in whole or part a “financial need” for which the court may in its discretion make provision in its needs based calculation”.

In the circumstances, the appeal was dismissed.

Conclusion

Notwithstanding the court of appeal’s decision, this decision certainly cannot be seen as meaning that all claimants involved in maintenance based cases who are funded by way of a CFA will have a “blank cheque book” when it comes to the question of recovery of success fees.

Lady Justice King went on in her judgment to make it clear that it will by no means always be appropriate to make such an order and that it was unlikely 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 and consideration will no doubt be given as to the extent to which the claimant had “succeeded” in his or her claim.

Further, she said, an order will only be made to the extent necessary in order to ensure reasonable provision is made. It does not mean that there can be no impact whatsoever upon the standard of living that the applicant would otherwise be afforded by the maintenance award.

It remains imperative in the circumstances that claimants continue to engage fully in the question of settlement and making realistic offers in order to settle their claims.

Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.

 

Get in touch

If you have any questions relating to this article or have any legal disputes you would like to discuss, please contact Ally on [email protected]

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