07/08/19

The Inheritance Act Claims Procedure – Delay and permission to claim

The Inheritance Act Claims Procedure – Delay and permission to claim developments.

There have been 3 cases so far this year dealing with section 4 of the Inheritance (Provision for Family and Dependants) Act 1975 (“the Inheritance Act” or “the 1975 Act”), which sets out the time-limit for applications.

The Inheritance Act claims procedure states under s4 that an application cannot be made more than 6 months after the date that probate was granted in the estate, except with the permission of the Court.

Cowan v Foreman [2019]

At the High Court hearing of Cowan v Foreman in February, a widow was refused permission by the High Court to issue her claim for reasonable financial provision from the estate of her late husband 17 months out of time.

Mrs Cowan was left no outright provision from the £16m estate but was the principal beneficiary of two discretionary trusts.  Permission to issue her claim out of time was refused by the judge on the grounds that there were no exceptional circumstances which warranted her delay and that the claim had “virtually non-existent prospects of success”.  The trial judge also criticised the use of Standstill Agreements to “slow the ticking clock” of the 6-month deadline.

The Court of Appeal recently reversed the trial judge’s decision.

The Court of Appeal determined that the trial judge was “plainly wrong” to come to his decision and had erred in principle in looking for “good reasons” for the delay.  The 6-month time limit prescribed by s4 of the 1975 Act does not have a “disciplinary element” and the power to extend time can be exercised even if there is no good reason for delay.  Whilst it is necessary to decide whether the claim has real chances of success, the decision should take into account all of the circumstances.

Mrs Cowan had advanced her claim as soon as possible after becoming aware of it, understanding her position and taking appropriate advice.  The delay could be properly explained.

No issue was taken with the use of Standstill Agreements and the Court emphasised that “without prejudice” negotiations rather than the issue of proceedings should be encouraged.

The Court therefore considered that it was able to exercise the power under s4 to allow Mrs Cowan to bring a claim out of time and that it was appropriate to do so.

Bhusate v Patel [2019]

Between the two Cowan hearings, the case of Bhusate v Patel was heard, in which the High Court granted a widow permission to issue an Inheritance Act claim an unprecedented 25 years and 9 months out of time.

Mr Bhusate died in 1990 intestate, leaving his widow with a fixed statutory inheritance.  The administration of his estate had not been completed by the time Mrs Bhusate brought her claim.

There were many factors that the Court took into consideration in this particularly complex case, not least that the family dynamic between Mrs Bhusate and her stepchildren was “awry” but despite this she attempted to reach a resolution with them; she lacked formal education and English language skills; and she had no previous involvement in financial matters.

In addition, the merits of her claim as a surviving spouse were strong.  She had few assets of her own, took responsibility for the running of the household, suffered from illness, and was caring for a young child (the couple’s son).

Compared to the well-educated, financially comfortable stepchildren, the judge concluded that it was not sufficient for them to rely on the deadline alone to prevent a claim.

 Hendry v Hendry

It is also worth mentioning the unreported July case of Hendry, where the late Mr Hendry’s wife was seeking permission to issue her claim out of time.

The Hendrys married in 2003 but by 2016 the marriage had collapsed and Mrs Hendry filed for divorce.  Mr Hendry died before the divorce was finalised.

Mr Hendry’s Will excluded Mrs Hendry and instead left his estate to his two children.  There was, however, a prenuptial agreement stating that if the marriage collapsed Mrs Hendry would get £10,000 and a plane ticket back to her native Philippines.

The children offered Mrs Hendry the terms of the prenuptial agreement, which she declined.  They later offered to divide the estate into equal thirds, which was also refused.  Mrs Hendry sought to raise her claim in April 2018, contending that she had been left with only £63 from a pension plan.

Although Mrs Hendry, as the surviving spouse, was a valid applicant, the judge gave significant weight to Mr Hendry’s testamentary wishes, the modest size of the estate, and the precarious financial positions of the children.  She therefore determined that Mrs Hendry’s Inheritance Act claim was not a strong one and furthermore that she had been aware of her ability to claim but did not act promptly.  She was therefore refused permission to issue a claim out of time.

Summary

The 6-month deadline for Inheritance Act claims is not the end of the road for a potential claim.  The Court continues to have a wide discretion when considering whether to grant permission to issue out of time.

Whilst defendants cannot rely on the deadline as an absolute bar to 1975 Act claims, potential applicants should be wary that the Court will delve into the reasons for any delay and genuine attempts made to resolve the dispute.  They should act as swiftly as possible once they become aware of a potential claim.

Standstill Agreements remain a useful tool for genuine attempts to settle where there is an impending deadline and it is unlikely that the Court would take issue with an agreement between the parties that requires only their consent.  However, the Court ultimately retains discretion to grant permission and that is a continuing risk to the applicant.

If you require advice and assistance in relation to the Inheritance Act claims procedure in respect of a claim for reasonable financial provision, please contact our Inheritance & Trust Disputes Team on 01803 202020.

 

 

07/08/19

About the author

Kitsons Solicitors - Avril Simister

Avril SimisterTrainee Chartered Legal Executive

Avril is a Trainee Chartered Legal Executive in our Inheritance & Trust Disputes team

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