Do Not Waste this Time
Inheritance Act claims: Managing time limits and using stand-still agreements
Our Sectors • • • •
Technology, Communications & Digital Media Construction, Land & Planning Personal Affairs, Private Wealth & Philanthropy Retail & Hospitality
Our Expertise • • • • • • • • • • • • •
Arbitration Banking & Finance Charities Commercial & Corporate Data Protection & Information Disputes Employment & Immigration Family & Matrimonial Insolvency & Restructuring IP & Technology Real Estate Tax Trusts, Estates & Private Client
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
laytons.com | 3
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.
4 | laytons.com
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.
laytons.com | 5
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.”
6 | laytons.com
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.�
laytons.com | 7
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.
Our Team John Abbott
Partner john.abbott@laytons.com +44 (0)20 7842 8000
Robert Clark Partner robert.clark@laytons.com +44 (0)20 7842 8000
Simon Foster
Richard Harrison
Paddy Kelly
Rebekah Parker
Partner simon.foster@laytons.com +44 (0)1483 407 000
Partner paddy.kelly@laytons.com +44 (0)20 7842 8000
Partner richard.harrison@laytons.com +44 (0)20 7842 8000
Partner rebekah.parker@laytons.com +44 (0)20 7842 8000
Will Slater
Geraint Thomas
Ben Thorogood
Daniel Walter
Consultant will.slater@laytons.com +44 (0)20 7842 8000
Solicitor ben.thorogood@laytons.com +44 (0)20 7842 8000
8 | laytons.com
Partner geraint.thomas@laytons.com +44 (0)20 7842 8000 Solicitor daniel.walter@laytons.com +44 (0)20 7842 8000
This information is offered on the basis that it is a general guide only and not a substitute for legal advice. We cannot accept any responsibility for any liabilities of any kind incurred in reliance on this information.
London
Manchester
Guildford
2 More London Riverside London SE1 2AP +44 (0)20 7842 8000 london@laytons.com
22 St. John Street Manchester M3 4EB +44 (0)161 214 1600 manchester@laytons.com
Ranger House, Walnut Tree Close Guildford GU1 4UL +44 (0)1483 407 000 guildford@laytons.com
www.laytons.com
Š Laytons LLP which is authorised and regulated by the Solicitors Regulation Authority (SRA Nº 566807). A list of members is available for inspection at the above offices.