Court of Appeal Reverses Mostyn’s Decision in Cowan: Standstill Agreements Are No Longer Invalid
Cowan v Foreman  EWCA Civ 1336
For those unaware, earlier on this year a case was brought before Justice Mostyn – a judge of the Family Division of the High Court – in relation to late claims brought under Inheritance (Provision for Family and Dependants) Act 1975 (the 1975 Act), and he surprised the legal community by invalidating standstill agreements. Until that case, standstill agreements were commonly used to extend the time allowed to bring a claim against an estate (the limitation period) and were agreed by both parties.
Mr Cowan met the future Mrs Cowan (the Claimant) in 1991 and they started living together in 1994. When Mr Cowan was diagnosed with a terminal illness, in 2016, the couple married and Mr Cowan made a new will (marriage invalidates most existing wills). In his will, Mr Cowan made the Claimant a beneficiary of two trusts, one of which gave her the income from and occupation of his properties (called a life interest trust), and the other provided for her and other members of his family such as his grandchildren.
Mr Cowan died and probate was granted to the executors of his will on 16 December 2016. The Claimant was not happy with the fact that she inherited as a beneficiary of the trust – she did not have absolute control over the money: the trustees did. She therefore sought to sue the estate. In accordance with the 1975 Act, the Claimant had 6 months from the date of the issue of probate to issue her claim (ie 16 June 2017).
Once the executors were notified of the Claimant’s wish to sue the estate they entered into a standstill agreement and agreed that the Claimant had more than 6 months from the date on which probate was issued to bring a claim. This was used to seek a resolution outside of court.
The Claimant then issued her claim on 8 November 2018.
The Case Before Mostyn
The Claim was issued in the Family Division of the High Court before Justice Mostyn. In his judgement, Mostyn said clearly that ‘an application…shall not, without the permission of the court, be made after the end of the period of six months from the date on which [the grant of probate was issued]’. The Claimant was, in Mostyn’s view, out of time to issue in accordance with the 1975 Act.
Given the long held belief that standstill agreements extended the 6 month limitation deadline, this case created uncertainty among the profession. Mostyn was aware of this when he commented:
‘I was told that to agree to 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’.
Practitioners now issued claims where they could otherwise have been dealt with outside of court.
A further case (Bhusate v Patel and others  EWHC 470 (Ch)) was brought before the Chancery Division of the High Court and the facts were fairly similar to the Cowan case – a claim was issued 25 years out of time. In that case, however, the judge diverged from Mostyn’s decision and allowed the claim to be issued despite the time lapse.
Following on from this divergence, it seemed as though you could end up with different results depending upon in which division of the High Court you issued your claim.
With the Court of Appeal’s reversal of Mostyn’s decision they have managed to harmonise the position between the Family Division and Chancery Division of the High Court so that standstill agreements and late claims can still be issued against estates. Whilst this is obviously beneficial to disappointed beneficiaries and potential claimants, it does pose a risk to executors who may be subject to a claim years after the completion of the administration of an estate.