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Standstill agreements - to use or not to use

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If you are currently a party to a standstill agreement in an "inheritance act" claim under the Inheritance (Provision for Family and Dependants) Act 1975 then you might wish to give this article some serious thought.

Standstill agreements are very popular with Lawyers as it allows them to record their agreement to not take the point if one party does not commence proceedings within the time limit prescribed (limitation). This allows the parties more time to gather their evidence, enter mediation if necessary and avoid the costs of preparing the court papers together with the court fees themselves. Most limitation periods are governed by the Limitation Act 1980. Issuing proceedings beyond a limitation period governed by the Limitation Act is only a problem if the Defendant takes the point within their defence. Of course, a standstill agreement prevents the Defendant from doing just that.

Unfortunately the limitation period for claims under the Inheritance (Provision for Family and Dependants) Act 1975 are not governed by the Limitation Act 1980 but rather by the Act itself. Section 4 of the Inheritance Act provides that proceedings must be brought within six months from the date of the grant otherwise permission from the Court to commence proceedings must be sought.

In Cowan v Foreman (2019), the parties had entered into a standstill agreement. The Claimant wished to bring an Inheritance Act claim and issued her claim form some 17 months after limitation expired. Permission to issue proceedings was sought (in accordance with section 4 of the Act). This was heard by Mr Justice Mostyn who decided not to grant permission. His reasoning was based on a two stage test:

  1. The Claimant has shown good reason for the delay.
  2. The case has sufficient merit to proceed to trial.

Permission was not granted for the second limb for reasons beyond the scope of the article but briefly the Claimant was already receiving reasonable provision from a trust. In relation to the first limb, Mr Justice Mostyn was unaware that standstill agreements were commonplace and made it clear the use of these standstill agreements must come to an immediate end as they are used to usurp the function of the Court. Instead, parties should issue proceedings in time and then seek permission from the Court to extend time limits.

So that's clear then, avoid standstill agreements and make sure you issue within six months of the grant. However, no less than two weeks from the handing down of Cowan came along Bhusate v Patel (2019) where an application under section 4 was considered by Chief Master Marsh in the High Court. Permission was granted some 25 years after limitation had expired. The facts of this case are beyond the scope of this article but briefly, the Claimant was able to satisfy the two stage test as without it she would have been left homeless and without reasonable provision from her Husband's estate.

So, a 17 month delay is intolerable however 25 years is acceptable. It remains to be seen how the Court will deal with further applications however, you would be well advised to avoid the gamble altogether. Do not enter into a standstill agreement, make sure you issue proceedings in time and seek any extensions post issue. You'll then avoid a bashing.

For further advice on Inheritance Claims please contact Shaun Jardine.