LIMITATION AND INHERITANCE ACT CLAIMS: SOMETHING TO WATCH CAREFULLY: AGREEING “LIMITATION AMNESTY” MAY NOT BE POSSIBLE
NB – THESE COMMENTS ON THE POWER TO AGREE AN AMNESTY WERE DOUBTED BY THE COURT OF APPEAL SEE THE POST HERE
In Cowan v Foreman & Ors  EWHC 349 (Fam) Mr Justice Mostyn set out some importance principles in relation to applications brought outside the time period set out in the Inheritance (Provision for Family and Dependants) Act 1975. There is a detailed consideration of the court’s approach to applications brought out of time. The judge had considerable doubt as to whether the parties can agree to extend that time period by a stand-still agreement. This is essential reading for anyone involved (or likely to be involved) in this type of litigation.
“I was told that to agree a stand-still agreement of this nature is “common practice”. If it is indeed common practice, then I suggest that it is a practice that should come to an immediate end. It is not for the parties to give away time that belongs to the court. If the parties want to agree a moratorium for the purposes of negotiations, then the claim should be issued in time and then the court invited to stay the proceedings while the negotiations are pursued. Otherwise it is, as I remarked in argument, simply to cock a snook at the clear Parliamentary intention.”
The applicant wife brought an application under the I(PFD)A claiming that the income and assets left on trust by her late husband were not sufficient to meet her needs. The time for bringing a claim under the Act expired in June 2016. In January 2018 the respondents’s solicitors wrote stating that
“In the first instance, I can confirm that the executors of Michael’s estate… and the trustees of the two trusts established by Michael’s will… will not take a point on the six-month deadline having passed pending receipt of a letter of claim”
Proceedings were not, in fact, issued until November 2018, following a letter of claim being written in May 2018.
THE TIME PERIOD FOR BRINGING A CLAIM
“An application for an order under section 2 of this Act shall not, except with the permission of the court, be made after the end of the period of six months from the date on which representation with respect to the estate of the deceased is first taken out.”
THE PARTIES DO NOT HAVE POWER TO SUSPEND THE TIME PERIOD IN AN INHERITANCE ACT CLAIM
The judge was very clear in his view that the parties could not agree to suspend the time period in a claim brought under this Act.
“I was told that to agree a stand-still agreement of this nature is “common practice”. If it is indeed common practice, then I suggest that it is a practice that should come to an immediate end. It is not for the parties to give away time that belongs to the court. If the parties want to agree a moratorium for the purposes of negotiations, then the claim should be issued in time and then the court invited to stay the proceedings while the negotiations are pursued. Otherwise it is, as I remarked in argument, simply to cock a snook at the clear Parliamentary intention.
The letter of claim arrived on 1 May 2018. The claimant and her solicitors must have realised that if a moratorium had validly taken effect, then it expired on the date of that letter and it was incumbent on the claimant to issue her claim forthwith. I am prepared on the facts of this case to ignore the period of delay from 7 December 2017 to 1 May 2018, because that was the period covered by this supposed moratorium. But I suggest that in no future case should any privately agreed moratorium ever count as stopping the clock in terms of the accrual of delay. Put another way, a moratorium privately agreed after the time limit has already expired should never in the future rank as a good reason for delay.
The claim form seeking permission under section 4 was not, however, issued until 8 November 2018. A further six months of delay was allowed to elapse. It was explained that this was because there were without prejudice negotiations and a mediation in that period. In my judgment that is no excuse for this further delay given the clear terms of the expiration of the moratorium in the email of Bryony Cove dated 25 January 2018.
In my judgment there are no good reasons justifying the delay for that aggregate period of 13 months. The period of delay is very substantial: more than twice the period allowed by Parliament for making a claim. In my judgment, absent highly exceptional factors, in the modern era of civil ligation the limit of excusable delay should be measured in weeks, or, at most, a few months.”
THE JUDICIAL EXERCISE OF THE DISCRETION
The judge reviewed the principles relating to the exercise of a discretion. He found that
“Before leaving the relevant legal principles, it is in my judgment also relevant that the limitation period which has now expired in this case is one imposed under the Inheritance Act. It is both of a special type in the sense that it confers upon the court a discretionary power to permit a claim to be made out of time on well-settled principles and it exists for a particular purpose, namely to avoid the unnecessary delay in the administration of estates to be caused by the tardy bringing of proceedings under the Act and to avoid the difficulties which might be occasioned if distributions of an estate are made before proceedings are brought, requiring possible recoveries from beneficiaries if those proceedings once brought are successful “
That is plainly a good reason for the existence of the limitation period, but it is, surely, not the only reason. Litigation is intrinsically stressful and extremely expensive. The time limit must be there to protect beneficiaries from being vexed by a stale claim, whether or not the estate has been distributed. Similarly, the time limit must be there to spare the court from being burdened with stale claims which should have been made much earlier. A robust application of the extension power in section 4 would be consistent with the spirit of the overriding objective, specifically CPR 1.1(2)(d) (“dealing with the case expeditiously”), 1.1(2)(e) (“allotting the case an appropriate share of the court’s resources”) and 1.1(2)(f) (“enforcing compliance with rules”). It would also echo the ever-developing sanctions jurisprudence exemplified by Denton & Ors v TH White Ltd & Ors  EWCA Civ 906,  1 WLR 3926. The fact that the time limit is contained within the statute rather than in a procedural rule is also of significance.
The principles on an application under section 4 have been developed in a number of cases and were encapsulated by Black LJ in Berger v Berger EWCA Civ 1305 at  where she said:
“Section 4 does not give any guidance as to how the court should approach an application for permission but there is no dispute between the parties as to the judge’s formulation of the correct approach to such an application. He distilled what he called “the following propositions” from Re Salmon  Ch 167 and Re Dennis  2 All ER 140:
“(1) The court’s discretion is unfettered but must be exercised judicially in accordance with what is right and proper.
(2) The onus is on the Applicant to show sufficient grounds for the granting of permission to apply out of time.
(3) The court must consider whether the Applicant has acted promptly and the circumstances in which she applied for an extension of time after the expiry of the time limit.
(4) Were negotiations begun within the time limit?
(5) Has the estate been distributed before the claim was notified to the Defendants?
(6) Would dismissal of the claim leave the Applicant without recourse to other remedies?
(7) Looking at the position as it is now, has the Applicant an arguable case under the Inheritance Act if I allowed the application to proceed?”
Of course, the discretion is not “unfettered”. The list above contains a number of highly prescriptive, fettering, factors which when applied will drive the exercise of the power. In fact, I doubt whether the exercise is correctly to be framed as one of “discretion” at all. Fundamentally, the court must be satisfied that the claimant has shown (a) good reasons justifying the delay and (b) that she has a claim of sufficient merit to be allowed to proceed to trial. This is not an exercise of discretion but is, rather, the making of a qualitative decision or a value judgment. The difference was pithily pointed out by Lord Clarke in Abela & Ors v. Baadarani  UKSC 44,  1 WLR 2043 at :
“Orders under rule 6.15(1) and, by implication, also rule 6.15(2) can be made only if there is a “good reason” to do so. The question, therefore, is whether there was a good reason to order that the steps taken on 22 October 2009 in Beirut to bring the claim form to the attention of the respondent constituted good service of the claim form upon him. The judge held that there was. In doing so, he was not exercising a discretion but was reaching a value judgment based on the evaluation of a number of different factors.”
THE EXERCISE OF THE COURT’S POWER ON THE FACTS OF THIS CASE
The judge held that the discretion to extend time would not be exercised on the facts of this case.
In my judgment there are no good reasons justifying the delay for that aggregate period of 13 months. The period of delay is very substantial: more than twice the period allowed by Parliament for making a claim. In my judgment, absent highly exceptional factors, in the modern era of civil ligation the limit of excusable delay should be measured in weeks, or, at most, a few months.
I have explained above that I do not consider that I am exercising a discretion. I have weighed the relevant factors and formed a value judgment, or qualitative decision, as to whether the claimant has satisfied both limbs of the test which I have identified in para 6 above. In my judgment she satisfies neither and for the reasons I have given her application is dismissed.