Introducing myself My name is Edward Pitt and I started my training contract with Dawson Hart on 1 February 2024. I graduated in Law LLB from the University of Reading in 2021. I then completed the LPC alongside an MSc in Law and Business Management in...
Under Section 58A(6) of the Courts and Legal Services Act 1990, a success fee payable as part of a contingent fee arrangement cannot be included in costs payable by the other party in litigation. The Supreme Court recently ruled on whether Section 58A(6) prevents a success fee being included in an order for reasonable financial provision from a deceased person's estate.
A man died leaving a will which bequeathed his estate to his wife if she survived him, and to his son and daughter equally if she did not. His wife did survive him, with the result that his children were not beneficiaries under his will. His daughter brought a claim under the Inheritance (Provision for Family and Dependants) Act 1975. She entered into a conditional fee arrangement, by which her legal representatives would receive nothing if her claim failed but would be entitled to a 72 per cent uplift on their fees if it succeeded.
The High Court concluded that the will did not make reasonable financial provision for her and awarded her £138,918. The Court noted that she was liable to pay the success fee and concluded that it formed part of her financial needs, and her award therefore included £16,750 in respect of it. This represented a 25 per cent uplift which, the Court considered, fairly reflected the relatively high prospect of her claim succeeding.
The widow appealed to the Court of Appeal, arguing that it was wrong in law to include a contribution towards a success fee in an award under the 1975 Act. Her appeal was unsuccessful, and she made a further appeal to the Supreme Court.
The Court observed that, in civil proceedings generally, liability to pay costs is treated as a separate matter from the substantive relief sought, and litigation costs cannot be recovered as part of damages. In view of that principle, and taking into account the policy underpinning Section 58A(6), the logical position was that success fees were not recoverable as part of a substantive award.
The daughter submitted that the prohibition on the recovery of success fees only applied to costs orders. Rejecting this assertion, however, the Court noted that it would be very surprising if a success fee that was not recoverable under the costs regime could be recovered as part of the substantive award. The Court did not accept that 'financial needs' for the purposes of an award under the 1975 Act included liabilities for costs incurred in the proceedings that led to the award.
Allowing the appeal, the Court ruled that any sums for the success fee should be excluded from the daughter's award.