Controversial Statement Made By Judge On Standstill Agreements In Will Disputes

A recent case has caused a stir in the will disputes community following a High Court judge’s condemnation of standstill agreements.

The deceased, Michael Cowan, died in April 2016 from a brain tumour with an estate worth around £16m. Probate was granted in December 2016 and the six-month limitation period, as set out in the Inheritance Act, expired in June 2017.

Michael’s will made provision by way of two trusts, a business property trust of which his wife Mary was one of the beneficiaries and a residuary trust in which Mary had a revocable life interest. She was also able to stay in their Santa Barbara home and had begun receiving substantial monthly payments from the trust.

However, Mary argued the lack of outright provision left her insecure and at the mercy of the trustees, therefore bringing a claim in the English courts. She brought a claim on her husband’s estate in November 2018 after her solicitors had secured a standstill agreement in January 2018.

A standstill agreement is an agreement between potential parties involved in litigation to effectively extend or suspend a limitation period. They have become commonplace in civil cases as they give the parties more time to work through any pre-action requirements before a claim is made.

Mostyn J found that Mary and her sons clearly knew about the existence of the possible claim and the limitation period, but a standstill agreement was still put in place. Mostyn J observed that he had been told that this was common practice, but that practice should come to an immediate end and stated ‘it is not for parties to give away time that belongs to the court'.

As standstill agreements are an established if contentious practice, Mostyn J’s scathing comments sheds new light onto the argument of whether they should be banned.

Expert Opinion

“Mr Justice Mostyn’s condemnation of stand-still agreements in Cowan v Foreman, where he dismissed a widow’s application to extend the six-month time limit on her Inheritance Act claim following a 13-month delay, will certainly cause a stir in the will disputes community.

“Currently there are two schools of thought around the matter, the first being that standstill agreements are a good idea because they give more time to the six-month rule in Inheritance Act cases and they can avoid costly and stressful litigation for all; on the other hand they are risky, not always successful and not in the spirit of the Act. It is much more certain to issue a claim within the limitation period instead.

“Mr Justice Mostyn has provided clear guidance: in his words, the practice of stand-still agreements must come to ‘an immediate end’ because ‘it is not for the parties to give away time that belongs to the court’. Some lawyers in this area will favour this approach as bringing welcome clarity, but it will be a contentious issue for some who regularly use standstill agreements and consider them beneficial to their clients.

“It is possible that the judgment could be appealed because of this, and could even end up at the Supreme Court because of its clear condemnation of stand-still agreements which have been widely used for years.

“Arguably the law needs clarifying in this area. Litigation is costly for parties, both emotionally and financially, and Mr Justice Mostyn’s point that ‘a moratorium privately agreed after the time limit has already expired should never in the future rank as a good reason for delay’ is a bold statement that the sector cannot ignore. I’m sure practitioners will follow this case with interest.” Paula Myers - Partner