Adrian Lyon, Solicitor, discusses the recent Cowan v Foreman case, and what is means for late claims under the Inheritance (Provision for Family and Dependants) Act 1975.
The Court of Appeal has clarified whether parties can agree to extend the deadline to bring a claim under the Inheritance (Provision for Family and Dependants) Act 1975.
In the case of Cowan v Foreman, Mary Cowan sought to bring a claim against the estate of her late husband, Michael Cowan. Michael was a successful businessman, amassing an estate worth just short of £30 million at his death. His will left some legacies to his children and his personal belongings to Mrs Cowan. The majority of his estate was to go into a trust which would provide the trustees with discretion to benefit Mary Cowan and other beneficiaries. Mary Cowan sought to bring a claim on the basis that her position was not sufficiently certain, that she had no assets in her own name and that she had no control over what she would receive.
In order to allow the parties to explore whether the matter could be resolved without the need for court proceedings, they agreed to enter into an agreement known as a Standstill Agreement. The purpose of the agreement was that both parties agreed to extend the 6-month deadline to bring claim, and that nobody would defend the claim on the basis of it being out of time.
The purpose of the Inheritance (Provision for Family and Dependants) Act 1975 (“the Act”) is to allow certain categories of people to apply to court for reasonable financial provision from the estate of a deceased person if the will fails to make adequate provision for them.
Section 4 of the Act provides a very tight deadline for an application to be made. The application must be made within 6 months of the date of a Grant of Probate, otherwise it can only proceed with the permission of the court. Such permission is rarely granted, and exceptional circumstances are required.
Original Decision of the High Court
When the attempts at resolving the matter were unsuccessful, Mary Cowan applied to court. However, Justice Mostyn in the High Court refused to allow the claim to proceed. He stated that the six month time limit is designed to prevent stale claims from holding up the administration of the estate, and that only the court has the power to extend the six-month deadline. It was therefore not in the gift of the parties to agree an extension of time, even if both sides agreed.
Furthermore, Justice Mostyn thought that the strength of the claim was weak, and that this was a factor in why the claim should not be allowed to proceed out of time.
The result was that Mary Cowan’s claim could not continue.
Court of Appeal Decision
Last week, the Court of Appeal reversed Justice Mostyn’s original judgment after Mary Cowan appealed it. The Court of Appeal held that executors of an estate have sufficient protection against personal liability for distributing an estate – section 20 of the Act provides that executors are not personally liable to refund any monies distributed once six months have expired from the date of the Grant of Probate provided that they are not on notice of any claims.
The Court of Appeal also disagreed with Justice Mostyn’s views on the strength of Mary Cowan’s claims; the Court of Appeal thought that her claims had a real prospect of success as the only outright benefit that she received from her late husband’s estate were his personal belongings.
The court reinstated Mrs Cowan’s claims and she will now be able to proceed to a substantive hearing where her arguments will be heard.
Despite the court allowing Mrs Cowan’s claims to proceed, it is still important that those thinking of bringing a claim act quickly; the court has a discretion as to whether to allow a claim to proceed out of time, and the safest approach is to bring the claim in time to ensure that the discretion is not exercised unfavourably.
If it is necessary to extend the 6-month deadline, then any agreement must be carefully documented in writing and signed by all parties. Whilst the decision as to whether to allow such an extension rests with the court, it is unlikely that the court would refuse to allow an extension of time where the claimant, executors and beneficiaries have all previously agreed it.