This decision is important for litigation estate practitioners in light of Bhusate`s recent decision, which allows for a similar appeal to be asserted after 25 years of delay, which has led to uncertainty in this area. It also provides useful instructions for the use of status quo agreements. Mostyn J`s criticism of the status quo agreements in Cowan at first instance has raised many concerns about their frequent use in succession proceedings. While the Court of Appeal partially approved the previous judgment, the High Court held that the refusal to comply with standstill agreements might in fact undermine the very purpose of the agreements, namely to encourage the parties to reach a negotiated settlement without the intervention of the Tribunal and to avoid the costs of litigation. In allowing Ms. Cowan`s appeal, the Court of Appeal took a somewhat less harsh approach. It did not resume Judge Mostyn`s two-stage proceedings and found that a good reason for delay was not a precondition for granting authorisation. The power of Section 4 could be properly exercised under a strong right of making available if there is no good reason to delay issuance. While Mostyn, J., had rightly concluded that the effect of S.4 was to confer on the Tribunal the power to extend the six-month period and that any agreement that could not take into account the point of delay could not be binding, negotiations should be encouraged without prejudice. „While the potential plaintiff must take a risk if a request for an extension of time is made ex post facto in circumstances where negotiations have failed, it seems unlikely to me that the court would refuse to approve this approach if both parties were legally represented.“ Maya Elci, solicitor of Hammersmith Contentious Probate & Property Litigation, notes that the Court of Appeal`s decision has provided lawyers with some certainty in that status quo agreements are used in practice to prematurely protect and prevent the problem of the proceedings, which can lead to unnecessary costs. Nevertheless, it should be taken into account that each case is considered in itself.
When it comes to status quo agreements, Lady Justice Asplin said that stop agreements still have their place. In my experience, they have become somewhat less „standard practice“ since Justice Mostyn`s decision and, while the Court of Appeal has reopened the way to the judgment, its reference to potential complainants who „take a risk“ is not entirely reassuring. Any plaintiff who chooses the status quo route would obviously be well advised to ensure that she meets the conditions set by Lady Justice King. There are a number of ways to overcome the potential problems presented in Section 4. Often, an application is submitted in a timely manner, and then a request for an agreed postponement or suspension is made at an early stage. Alternatively, the parties may agree to enter into standstill agreements prior to issuance, i.e. the defendants agree that they would not make the delay in granting more flexible if negotiations are interrupted. That is what the parties followed in Cowan.
Therefore, while the case is not necessarily a general blessing to status quo agreements, it is of little relevance to other restrictive issues or to the availability of sanctions facilities. However, it does provide some comfort to those who wish to deal with inheritance tax issues on a measured and reasonable basis. If you are interested in asserting a claim under the Estate Act, contact specialist lawyer Andrew Carswell on 01202 339044 or send an online application form to arrange a counselling interview. In summary, standstill agreements will likely be approved by the Tribunal if the estate of the deceased still needs to be distributed and there is a reasonable explanation for the delay in opening formal proceedings. . . .