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Conditional fee arrangement uplifts are now available in England and Wales 1975 Act claims

Thursday, 21 May, 2020

The England and Wales High Court's (EWHC) judgment in Re H (Deceased) (2020 EWHC 1134) appears to have confirmed that claimants in Inheritance (Provision for Family and Dependants) Act 1975 (the 1975 Act) cases can now ask for a conditional fee arrangement (CFA) uplift to pay for their legal costs.

In the case, the successful adult claimant was awarded GBP139,000 award from her father's GBP550,000 estate. This included a 25 per cent contribution to her CFA uplift.

Until very recently, it has been accepted that successful 1975 Act claimants who funded their litigation with a CFA were limited to recovering their base costs from the defendants to the litigation, and that the success fee payable under the CFA was a liability that the claimant would have to pay from their own pocket. This was a consequence of s.44 and 46 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO) in April 2013. This made many 1975 Act claims unfeasible, as CFAs are often the only realistic way for disappointed beneficiaries to fund them, and are in fact widely used for the purpose.

That position was confirmed in Re Clarke (2019 EWHC 1193 Ch), in which Deputy Master Linwood declined to increase an 1975 Act award to include a success fee on five stated grounds, including that it would be contrary to legislative policy that the losing party should not be responsible for the success fee.

However, in the March 2020 case of Bullock v Denton, Gosnell HHJ in Leeds County Court came to a different conclusion. He considered that the CFA success fee that the claimant would have to pay formed part of her future financial needs under the 1975 Act, and so he was entitled to take them into account.

In the latest case of Re H Deceased, Cohen J in the EWHC decided to follow the Bullock case rather than Re Clarke, because it would not be fair on the claimant for him to ignore her costs liability. He allowed what he referred to as the sum required to meet what he regarded as a reasonable CFA mark-up of GBP16,750, which equated to an uplift of 25 per cent. All the same, he recognised the risk of an injustice to the estate if an appropriate Part 36 offer had been made, and stated that if the award did not bring about the operation of the uplift, he would revisit the element of the award allowing the costs contribution.

This judgment has the potential to be highly influential, as it is now binding on the County Court and any decisions in the EWHC heard by a Master or District Judge, commented Elis Gomer of St John's Buildings. 'The general principle is now beyond doubt: it is open to the court to make an award in respect of a CFA uplift if it considers that not doing so would subvert its assessment of the claimant's reasonable needs, just as it is open for the Court to do so in appropriate matrimonial cases. The likely impact on solicitors' risk assessments, and their quantification of their clients’ claims in light of this decision, will be considerable.'

'It is unclear whether Re H will be appealed, but there appears to be a real change in the approach of the courts to 1975 Act claims which in effect override the Jackson Reforms', commented Marisa Lloyd of Parklane Plowden Chambers. 'The recent cases highlight the real tension between an award that is intended to provide for the future financial needs of a successful claimant; the claimant's liability to meet irrecoverable costs out of future financial provision, and the position of an unsuccessful defendant.'

Some consideration of the issue from the higher courts would be welcome by practitioners dealing with 1975 Act claims, said Lloyd. 'In the meantime...claimants will continue to argue for the payment of the uplift element of their costs to be made part of their 1975 Act claim awards.'