Do Not Waste this Time: Inheritance Act stand-still agreements

Do Not Waste this Time

Inheritance Act claims: Managing time limits and using stand-still agreements

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Do Not Waste this Time Inheritance Act claims: Managing time limits and using stand-still agreements The Inheritance (Provision for Families and Dependants) Act 1975 (“the Inheritance Act�) enables some limited exceptions to the principle of testamentary freedom and provides an option for redress for those dissatisfied with the dispositions made to them in a will.

However, there is a time limit on claims. Pursuant to section 4, applications are required to be made before the end of the period of 6 months from the date of the grant of probate. There is an exception if the court grants permission.

Richard Harrison Partner richard.harrison@laytons.com +44 (0)20 7842 8000

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Do Not Waste this Time | Inheritance Act claims: Managing time limits and using stand-still agreements

There is a tension between the need for certainty, to resolve disputes quickly and enable executors to get on with their job of realising and distributing assets and permitting parties to engage in sensible and constructive negotiations to avoid the expense and distress of contested litigation.

A recent case before the Court of Appeal, Cowan v. Foreman and others [2019] EWCA 1336 has confirmed that the Court will exercise its discretion to extend time in suitable cases and will give effect to properly constituted “stand-still agreements” in appropriate circumstances.

The mere fact that the appeal had to be brought however, and some of the comments of the judge at first instance, make it clear that managing time limit compliance in civil litigation can be a fraught process and there are different sorts of time limit which require addressing in different ways.

There are certain judicial attitudes and a pervasive culture of enforcement which need to be recognised and managed.

Three specific situations where time limits are important are: • Time bars in normal litigation as governed by the Limitation Act • Procedural time limits under the Civil Procedure Rules • The 6 month provision in section 4 of the Inheritance Act.

The Limitation Act The Limitation Act is recognised as being procedural: if a limitation defence is not pleaded then the claim can continue. And there are various exceptions involving the discretion of the court and latent damage. Essentially, there may be circumstances where a properly drafted “stand-still Agreement” under which a potential defendant agrees not to take a limitation point on certain conditions, is entirely appropriate. Despite occasional expressions of judicial displeasure under which the court seems to think it is better to pay a £10,000 issue fee and then seek a stay, such agreements are common and, for all practical purposes very useful.

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Do Not Waste this Time | Inheritance Act claims: Managing time limits and using stand-still agreements

The CPR: a disciplinary jurisdiction

Significance of the case

The Civil Procedure Rules seek to apply an overriding

Cowan v. Foreman saw the judge at first instance apply

objective which includes a concept of allotting to each case

principles from the CPR category to a case under the

an appropriate share of the courts resources while taking into

Inheritance Act category. Refreshingly, the Court of Appeal

account the need to allocate resources to other cases. The

corrected the position.

application of this principle can be quite unpredictable. The development of a jurisprudence on the availability of “relief

The facts

from sanctions”, , originated in the undoubtedly brutal and unyielding philosophy of Mitchell in 2013. It led to the wide

The late Michael Cowan has been described as a bin liner

but still exacting discretion embodied in the Denton principles

tycoon: he made a vast fortune out of plastic bin bags. On

first expounded in 2014: there is now a three stage test which

death, his estate was worth a little under £16m. Under his

still places emphasis on the court’s disciplinary role in policing

will he left the bulk of his estate tied up in trusts of which Mrs

the need to enforce compliance with rules, practice directions

Cowan was only a discretionary beneficiary.

and orders.

The Inheritance Act: a protective jurisdiction

Probate of the will was granted on 16 December 2016 and Mrs Cowan felt that she was very much at the mercy of the trustees. Following detailed discussions between highly

The timebar under Section 4 is its own creature: in principle it

experienced solicitors, a stand-still agreement and a failed

is there to protect personal representatives and enable them

mediation, the application was made on 8 November 2018,

to carry out their duties.

making it 17 months out of time.

The decision Mr Justice Mostyn at first instance dismissed the claim on the basis that no good reason had been shown, essentially applying the Denton principles and treating non-compliance with the time limit as a disciplinary matter. He deprecated stand-still agreements and suggested that their use should cease.

The Court of Appeal in summary held as follows: • Section 4 of the Inheritance Act does not exist to protect the court from “stale claims” as the judge suggested. It is there to provide protection for personal representatives.

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Do Not Waste this Time | Inheritance Act claims: Managing time limits and using stand-still agreements

• There is no disciplinary element to section 4. Lady Justice Asplin confirmed that to have regard to the

Lady Justice King went further and provided useful guidance for the legal profession in such cases:

Denton approach to relief from sanctions when exercising the discretion under section 4 “involves

“[the Court was told that] in parts of the profession the

conflating issues that, if they are related, are at best

use of stand-still agreements is strongly deprecated. Given

distant cousins”.

that such agreements cannot be binding, the approached favoured by many, ……………, is that which was preferred by

• The proper approach is to consider all the relevant

the judge; namely that proceedings should be issued within

factors and give them appropriate weight in the

6 months and, if the parties are conducting negotiations,

particular circumstances of the case.

an agreed application for an adjournment is made to the court at the earliest opportunity.

It is not necessarily true there must be “good reason” for a delay in every case, each case turns on its own facts.

That this will often be the appropriate course is undeniable but, for my part, I would not wish to go so far as the judge

It is necessary to decide whether an applicant’s claim has a

and to say that there is no place for stand-still agreements

real prospect of success (the summary judgment test) rather

in what are often highly distressing and sensitive cases and

than a fanciful one. The Court of Appeal found that the judge

in which a decision to issue is otherwise to be made whilst

at first instance had come to some sweeping and erroneous

bereavement is still very raw and emotions high. In such

conclusions on this issue.

circumstances the issue of proceedings can, rather than

Stand-still Agreements

providing a safety net if agreement cannot be reached, lead to a hardening of attitudes and a focus on the litigation with the consequent cost to the estate and delay in its

As for stand-still agreements, Lady Justice Asplin said this:

distribution.

“It seems to me that although the Judge was correct to

I agree with Asplin LJ, that whilst the final decision always

conclude that the effect of section 4 is that the legislature

rests with the court, where there is a properly evidenced

has determined that the power to extend the six- month

agreement to which no objection has been taken by

period belongs to the court, and that any agreement not

the Executors and beneficiaries, it is unlikely that in the

to take a point about delay cannot be binding, without

ordinary way, a judge would dismiss an application for an

prejudice negotiations rather than the issue of proceedings

extension of time.

should be encouraged. Although the potential claimant will have to take a risk if an application is made subsequently

I should stress however, that if parties choose the 'stand-

to extend time in circumstances where negotiations have

still' route, there should be clear written agreement setting

failed, if both parties have been legally represented, it

out the terms/duration of such an agreement and each of

seems to me that it would be unlikely that the court would

the potential parties should be included in the agreement.

refuse to endorse the approach.”

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.”

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Do Not Waste this Time | Inheritance Act claims: Managing time limits and using stand-still agreements

Conclusion So, whilst the case is not necessarily a general blessing for stand-still agreements, it has little relevance to other limitation issues or the availability of relief from sanctions. It does however provide some comfort for those wishing to deal with issues arising from Inheritance Act claims on a measured and sensible basis.

In summary, it is possible to control the process and avoid an unseemly and distressing rush to litigation but you have got to get it right. As a wise man once said: “do not waste this time.�

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Do Not Waste this Time | Inheritance Act claims: Managing time limits and using stand-still agreements

Disputes Our specialist team is experienced in avoiding, managing and resolving claims and disputes in a variety of contexts. Our work involves the identification of legal problems and solving them by effective advice and negotiation. Where necessary we use litigation in a variety of courts and tribunals.

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