Controversial High Court Ruling On Standstill Agreements Overturned

The Court of Appeal has ruled out of time will disputes should be considered on a case-by-case basis, slamming a judge’s strict interpretation of standstill agreements in will disputes.

The high-profile Cowan v Foreman case first came into the spotlight in March this year when Mostyn J took a hard line against standstill agreements in will disputes, stating “it is not for parties to give away time that belongs to the court” and that the practice should come to an immediate end.

However the Court of Appeal has overturned this ruling, with Asplin LJ saying Mostyn J was “plainly wrong to come to the conclusion he did” and giving permission to Mrs Cowan for her to pursue the Inheritance Act claim.

Expert Opinion

“This latest judgment from the Court of Appeal will come as a relief to many litigators. While standstill agreements are controversial, equally they encourage negotiations and amicable settlements rather than forcing the parties to litigate quickly.

“The Court of Appeal’s take on out of time will disputes being considered on a case-by-case basis will also be a welcome ruling. Standstill agreements are regularly used by litigators and often will disputes are multifaceted; a blanket regulation cannot truly be enforced when there are quirks and complexities in each case.

“Nonetheless, the wind could change in the future on standstill agreements so we would argue further clarity is still needed with this area of law.” Paula Myers - Partner

A standstill agreement is an agreement between potential parties involved in litigation to effectively extend or suspend a limitation period and 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.

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.

The latest ruling from the Court of Appeal means Mrs Cowan will be able to pursue her Inheritance Act claim on the £16m estate.