AGREEMENTS TO EXTEND TIME : THEY CAN BE A GOOD THING – BUT MUST BE DONE PROPERLY

In Cowan v Foreman & Ors [2019] EWCA Civ 1336 the Court of Appeal were far more supportive of the idea that parties in Inheritance Act claims could agree a “limitation amnesty”.  However an agreement has to be drafted with care.

 

“… if parties choose the ‘stand-still’ route, there should be clear written agreement setting out the terms/duration of such an agreement and each of the potential parties should be included in the agreement. 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.”

THE CASE

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 JUDGMENT AT FIRST INSTANCE

Mostyn J was scathing of the use of standstill agreements.

“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 JUDGMENT OF THE COURT OF APPEAL

Lady Justice Asplin deatl with this issue.

  1. Before turning to the Judge’s treatment of the without prejudice negotiations in general, I must address the Judge’s comments about the moratorium to which the Executors/Will Trustees agreed in their letter of 25 January 2018. In the end, the Judge decided that the period from the date of that letter until the letter of claim of 1 May 2018 could be ignored for the purposes of calculating the length of the delay for the purposes of section 4: see the judgment at [35]. In any event, the Judge commented that standstill agreements should not be common practice and in fact the practice “should come to an immediate end”. He stated that if parties want to agree a moratorium for the purposes of negotiation they should, nevertheless, issue the claim in time and invite the court to stay the proceedings and that it was not for the parties to give away time which in truth belonged to the court.
  2. It seems to me that although the Judge was correct to conclude that the effect of section 4 is that the legislature has determined that the power to extend the six- month period belongs to the court, and that any agreement not to take a point about delay cannot be binding, without prejudice negotiations rather than the issue of proceedings should be encouraged. Although the potential claimant will have to take a risk if an application is made subsequently to extend time in circumstances where negotiations have failed, if both parties have been legally represented, it seems to me that it would be unlikely that the court would refuse to endorse the approach. Obviously, the court’s attitude will depend upon all of the circumstances in the particular case and may be influenced by whether some of the parties have not been privy to the moratorium agreement or the negotiations. In this case, Ms Angus QC, on behalf of the Foundation Trustees, submits that her clients were only made aware of the moratorium agreement in the form of the letter of 25 January 2018, after the mediation had failed. It seems to me that in this case, that can carry very little weight. The Foundation Trustees took part in the mediation itself and, therefore, must have considered that there was a claim to settle and were also copied in on correspondence such as the letter of 23 May 2018.

LADY JUSTICE KING

  1. Miss Angus QC on behalf of the Foundation told the court that in parts of the profession the use of stand-still agreements is strongly deprecated. Given that such agreements cannot be binding, the approached favoured by many, said Miss Angus, is that which was preferred by the judge; namely that proceedings should be issued within 6 months and, if the parties are conducting negotiations, an agreed application for an adjournment is made to the court at the earliest opportunity.
  2. 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 and to say that there is no place for stand-still agreements in what are often highly distressing and sensitive cases and in which a decision to issue is otherwise to be made whilst bereavement is still very raw and emotions high. In such circumstances the issue of proceedings can, rather than 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 distribution.
  3. I agree with Asplin LJ, that whilst the final decision always rests with the court, where there is a properly evidenced agreement to which no objection has been taken by the Executors and beneficiaries, it is unlikely that in the ordinary way, a judge would dismiss an application for an extension of time.
  4. I should stress however, that if parties choose the ‘stand-still’ route, there should be clear written agreement setting out the terms/duration of such an agreement and each of the potential parties should be included in the agreement. 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.