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Standstill agreements: time to move on

In the recent High Court English decision of Cowan v Foreman & Ors, Mr Justice Mostyn called time on standstill agreements.

The claimant applied under section 4 of the Inheritance (Provision for Family and Dependents) Act 1975 for permission to make an out of time application under section 2 of that Act for reasonable provision to be made for the claimant.

To grant the permission, the Court determined it must be satisfied that the claimant has shown:

  • A good reason justifying the delay, which in the context of modern civil litigation should be measured in weeks, or at most, a few months; and
  • That she has a claim of sufficient merit to be allowed to proceed to trial; ie, the test for summary judgment that she must show she has a “real prospect” of succeeding substantively.

The Court held neither limb was satisfied.

When considering the first limb and the issue of delay, the Court was referred to a ‘standstill agreement’ whereby the defendant trustees and executors agreed not to take a point on the six-month statutory deadline having passed.

The Court clearly stated that the practice of such agreements should come to an immediate end: “It is not for the parties to give away time that belongs to the court”. The proper procedure should be for the claim to be issued in time and a stay of proceedings sought from the Court while negotiations are pursued.

Despite this, the Court did not take into account the period covered by the agreement, but made it clear that a moratorium privately agreed after the time limit has already expired should never in the future rank as a good reason for delay. 

This decision is already causing controversy as to the potential extent of its application and whether it will be applied to matters outside of the Inheritance (Provision for Family and Dependents) Act 1975. It is also worthy of debate as to whether it  is moving away from the overriding objective of the Court by encouraging parties to commence proceedings, at the expense of parties and the Court, instead of seeking to settle matters consensually.

Standstill agreements: time to move on

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