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Standstill Agreements
When is it okay to be out of time?
It is not unusual for parties and their legal advisers to agree, despite time limits set out in legislation, to disregard these time limits to give them an opportunity to try and agree their dispute without court proceedings. If they manage to do so they save significant sums on court fees and other associated costs of bringing the claim. If they don’t settle their dispute, they still have the option to pursue their claim, even if the time limits set out in the legislation has expired. Such agreements are referred to as ‘Standstill Agreements’.
Standstill Agreements in Will Disputes
If a relative wants to bring a claim against an estate because they feel that reasonable provision has not been made for them under the terms of a Will, the Inheritance (Provision for Family and Dependants) Act 1975 outlines the law, including that a claim must be bought within six months. Often the legal advisers acting for the claimant and the defendants will enter into a Standstill Agreement which has the effect of suspending the limitation period. This has been a long-accepted practice in inheritance disputes. If a claim is issued after the six-month time limit, the court would need to give its permission for the out-of-time claim but, until recently, it has always been assumed this was a formality.
Cowan v Foreman
A recent case brought by a widow, Mrs Cowan, resulted in confusion in the use of Standstill Agreements in Will disputes. Mrs Cowan made a claim for lack of provision following the death of her husband. He was a wealthy man with an estate worth £29m. His estate was left in trust for the benefit of a number of relatives including Mrs Cowan was the primary beneficiary.
However, she claimed she had not been adequately provided for because she had no assets in her own name and did not have control over Mr Cowan’s estate.
The parties agreed to enter into a Standstill Agreement and entered negotiations to try and settle her claim. By the time negotiations had broken down it was 17 months after the date that she should have made a claim. She issued a claim. The High Court refused to allow her claim to proceed for various reasons but primarily that it was out of time.
The case progressed to the Court of Appeal who ruled in favour of Mrs Cowan and reconfirmed the previous position in relation to Standstill Agreements, namely that if all of the parties have agreed to enter into one then the Court is likely to give its permission to the agreement.
What does this case mean for claimants in Will disputes?
The case is important as it removes any confusion in relation to the use of Standstill Agreements in Will disputes.
As the time limits in this area of the law are short, it is essential that people who are unhappy with the provision under a loved one’s Will, seek advice as soon as possible. If the parties are keen to enter into a Standstill Agreement, it is imperative that all relevant parties are part of this and that the drafting of the agreement is careful and precise to provide the best chance of the Agreement being upheld by the Court.