Restoration of standstill agreements?


The first instance decision in Cowan v Foreman [2019] has recently been overturned to allow the appellant, Mrs Cowan, to bring her claim under the Inheritance (Provision for Families and Dependants) Act 1975 (“the Inheritance Act”) for reasonable financial provision from her husband’s estate, 17 months out of time. The statutory limitation date for such claims is 6 months from the grant of probate. In other words, an Inheritance Act claim should be issued within this 6 month period.

This decision is important for contentious probate practitioners in light of the recent Bhusate decision allowing a claim of a similar nature to be brought after 25 years’ delay, which caused uncertainty in this field. It also provides useful guidance in the use of standstill agreements. Mostyn J’s criticism of standstill agreements in Cowan at first instance left many unsettled given their frequent use in Inheritance Act proceedings.

Standstill agreements are used to place the limitation period of 6 months on hold while the parties attempt to resolve matters without the costs of proceeding to lengthy and stressful litigation. It prevents the defendant from raising the limitation period as a defence. The permission of the Court to bring the claim out of time is still required, but if the parties are in agreement then the Courts have generally granted such permission.

Mrs Cowan’s claim was initially dismissed because Mostyn J believed she did not demonstrate good reasons for justifying the lengthy delay, nor did her claim have sufficient merit, in order for it to be allowed to proceed to trial.

However, on appeal Aspin LJ held that Mostyn J was “plainly wrong to come to the conclusion he did”. The Court of Appeal allowed Mrs Cowan permission to commence her proceedings out of time on the basis that Mostyn J failed to consider all the relevant factors or have proper regard to all the circumstances of the case, which is required under the Inheritance Act.

In relation to standstill agreements, Mostyn J correctly concluded that section 4 of the Inheritance Act does not give parties the power to extend the time limit and that this was a matter for the Court. However, the Court of Appeal’s view was that without prejudice negotiations (which are confidential to the Court) should be encouraged in an attempt to avoid claimants issuing a claim unnecessarily.

There may still be a risk to the claimant in entering into a standstill agreement where negotiations fail, as permission will be required from the Court to commence proceedings out of time. Nonetheless, if both parties are legally represented, it is considered that the Court would be unlikely to refuse to endorse the approach agreed.

This decision should provide some comfort to Inheritance Act claimants concerned about the limitation period. However, we would strongly urge anyone considering bringing a claim to seek independent legal advice at the earliest opportunity to ensure the correct action is taken.

If you require advice on issuing or defending an Inheritance Act claim, please contact our Contentious Probate team. Emma Saunders is a Senior Associate specialising these matters and she can be contacted on 0191 226 3293 or at emma.saunders@sintons.co.uk.


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