Earlier this year the conflicting authorities of Bhusate v Patel  EWHC 470 (Ch) and Cowan v Foreman and others  EWHC 349 (Fam) cast doubt on the use of standstill agreements in respect of claims intended to be brought under section 2 of the Inheritance (Provision for Family and Dependants) Act 1975 (“the Act”). Following the determination of the appeal in the latter case that uncertainty has to a large extent been resolved.
In Cowan v Foreman  EWCA Civ 1336 probate was granted on the 16th December 2016, which meant that the six-month deadline expired on the 16th June 2017. The application for permission was made on the 8th November 2018, some 17 months following expiry.
The deceased had effectively placed his estate in two trusts, primarily it would seem for tax purposes, for the benefit of the claimant and his grandchildren, however the claimant subsequently took issue with the manner in which the trustees were exercising their discretion and sought to make a claim under the Act. A standstill agreement was entered into on the 7th December 2017 (some six months after the expiry of the deadline), which expired on the 1st May 2018. Mostyn J effectively disregarded the period covered by the moratorium, determining the case on the thirteen-month delay. In so doing he commented:
“In my judgment there are no good reasons justifying the delay for that aggregate period of 13 months. The period of delay is very substantial: more than twice the period allowed by Parliament for making a claim. In my judgment, absent highly exceptional factors, in the modern era of civil ligation the limit of excusable delay should be measured in weeks, or, at most, a few months.”
With regard to the practice of utilising a standstill agreement Mostyn J stated:
“…I suggest that in no future case should any privately agreed moratorium ever count as stopping the clock in terms of the accrual of delay. Put another way, a moratorium privately agreed after the time limit has already expired should never in the future rank as a good reason for delay.”
The Claimant appealed that decision and it was subsequently considered by the Court of Appeal, the leading Judgment being given by Lady Justice Asplin, in which it was determined that Mostyn J had wrongly adopted a disciplinary view in considering that he could approach the matter purely by reference to a good reason for delay and an arguable case. Asplin LJ considered that the concept of a ‘stale claim’ was of little relevance to the Act, it being borrowed from and more relevant to cases being considered under the Limitation Act 1980. Rather than being designed to protect the court from such claims, “Section 4 can be exercised in order to further the overriding objective of bringing such claims before the court where it is just to do so…”
“Secondly, it follows that I do not agree with the Judge that what he describes as “a robust application of the extension power” is necessary. There is nothing in section 4 or in the principles distilled in Berger v Berger which requires such an approach to be adopted…”
“Thirdly, it seems to me that the Judge’s references to the “ever-developing sanctions jurisprudence exemplified in Denton …” and the fact that “the time limit is contained within the statute rather than in a procedural rule” are for the most part inapposite. There is no disciplinary element to section 4.”
Moreover Asplin LJ determined that Mostyn J had incorrectly considered the prospects of success and issue of the delay in the case and gave the Claimant permission to apply out of time.
Asplin LJ and King LJ went on to deal specifically with the issue of standstill agreements, Asplin LJ commenting on Mostyn J’s approach as follows:
“In any event, the Judge commented that standstill agreements should not be common practice and in fact the practice ‘should come to an immediate end.’ He stated that if parties want to agree a moratorium for the purposes of negotiation they should, nevertheless, issue the claim in time and invite the court to stay the proceedings and that it was not for the parties to give away time which in truth belonged to the court.”
“It seems to me that although the Judge was correct to conclude that the effect of section 4 is that the legislature has determined that the power to extend the six-month period belongs to the court, and that any agreement not to take a point about delay cannot be binding, without prejudice negotiations rather than the issue of proceedings should be encouraged. Although the potential claimant will have to take a risk if an application is made subsequently to extend time in circumstances where negotiations have failed, if both parties have been legally represented, it seems to me that it would be unlikely that the court would refuse to endorse the approach. Obviously, the court’s attitude will depend upon all of the circumstances in the particular case and may be influenced by whether some of the parties have not been privy to the moratorium agreement or the negotiations.”
Further to the determination of the appeal, whilst it would appear that the safest approach in such circumstances would be to issue proceedings before the expiry of the six-month deadline and then seek a stay of proceedings to enable negotiations to take place, the use of standstill agreements may well be undertaken provided the above requirements are complied with.
Indeed King LJ went on to comment as follows:
“I agree with Asplin LJ, that whilst the final decision always rests with the court, where there is a properly evidenced agreement to which no objection has been taken by the Executors and beneficiaries, it is unlikely that in the ordinary way, a judge would dismiss an application for an extension of time.
I should stress however, that if parties choose the ‘stand-still’ route, there should be clear written agreement setting out the terms/duration of such an agreement and each of the potential parties should be included in the agreement. In the event that proceedings have, in due course to be issued, the court should be presented with a consent application for permission to be granted notwithstanding that six months has elapsed.”