Cowan v Foreman & Ors [2019] EWCA Civ 1336

Mrs Cowan, widow of a wealthy deceased, sought permission to bring an Inheritance Act 1975 claim out of time after negotiations with trustees failed. The Court of Appeal overturned the refusal, granting permission and clarifying the proper approach to section 4 extensions.

Facts

Mrs Mary Cowan was the widow of Michael Cowan, who died in April 2016 leaving an estate worth approximately £29 million. They had been in a relationship since 1991 and married in February 2016, shortly before his death. Under his Will dated 24 March 2016, the Deceased left his business assets on discretionary trust (the Business Property Trust), and the residue (including the Montecito, California property which was Mrs Cowan’s home) on a life interest trust subject to overriding powers of appointment (the Residuary Trust). A Letter of Wishes indicated Mrs Cowan was to be the principal beneficiary and her reasonable needs met.

Probate was granted on 16 December 2016, making the six-month deadline under section 4 of the Inheritance (Provision for Family and Dependants) Act 1975 expire on 16 June 2017. Mrs Cowan received some preliminary advice from Withers in March 2017 regarding a potential 1975 Act claim. Monthly payments from the trust commenced in April 2017. Following knee surgery and difficulties with reimbursement in late 2017, Mrs Cowan received fuller advice in December 2017, and a claim was intimated on 7 December 2017. A stand-still agreement/moratorium was agreed on 25 January 2018. Negotiations and a mediation on 16 October 2018 proved unsuccessful. Proceedings were issued on 12 November 2018, nearly 17 months out of time.

Mostyn J refused permission to bring the claim out of time. Mrs Cowan appealed.

Issues

The appeal raised the following issues:

• The proper approach to the exercise of the section 4 power to extend time;
• Whether it is arguable that provision via a discretionary trust, rather than outright provision for a spouse, fails to constitute reasonable financial provision;
• The weight and relevance of stand-still agreements/moratoria entered into after the six-month period has expired;
• Whether the Judge erred in finding no good reason for the delay and no arguable claim.

Arguments

Appellant (Mrs Cowan)

Miss Reed QC argued that given the size of the estate, length of relationship, and Mrs Cowan’s lack of security (being a discretionary beneficiary with a defeasible life interest), there was a real prospect of establishing that reasonable financial provision required outright provision. The Judge wrongly treated the claim as seeking “forced spousal heirship”, speculated on the Deceased’s motivation, and wrongly assumed trustees would invariably comply with the Letter of Wishes. The Judge adopted an erroneous disciplinary approach, wrongly drawing analogies with the Denton relief from sanctions jurisprudence and mischaracterising the claim as a “stale claim”.

Respondents (Trustees and Foundation)

Mr Wilson QC and Miss Angus QC contended that there was no external trigger for the delayed claim, the stand-still agreement should not save Mrs Cowan, no negotiations occurred within the time limit, the estate had substantially been distributed, payments to Mrs Cowan were adequate, and she had alternative remedies against her professional advisers.

Judgment

Approach to section 4

Asplin LJ (with whom Baker LJ and King LJ agreed) held that the Judge erred in his approach to section 4. The concept of a “stale claim” was inapposite, being borrowed from Limitation Act contexts; section 4 contains no long-stop, and section 20 protects personal representatives. The Judge’s analogy with CPR 1.1(2)(d)-(f) and the Denton jurisprudence was misplaced: section 4 has no disciplinary element and the time limit is not enforced for its own sake. As Chief Master Marsh observed in Bhusate v Patel, conflating these issues involves matters that are

“at best distant cousins”

.

The Court confirmed the relevant principles remain those distilled by Black LJ in Berger v Berger, derived from Re Salmon and Re Dennis. While an applicant must make out a substantial case, it is not necessarily required that there be a “good reason” for every period of delay: each case turns on its own facts.

Arguable case

The Judge erred in concluding the substantive claim lacked a real prospect of success. He speculated impermissibly about the Deceased’s motivation, wrongly framed the claim as seeking “forced spousal heirship”, and wrongly assumed the Letter of Wishes (being unenforceable per Pitt v Holt) would necessarily be complied with. Given the size of the estate, length of relationship, Mrs Cowan’s lack of outright provision, autonomy, and security — even in her home of 20 years — there was a real prospect of succeeding on the substantive claim.

Delay

The Judge’s findings that Mrs Cowan and her sons had been informed of the 1975 Act and the deadline in March 2017 were entitled to stand, being based on oral evidence. However, the Judge wrongly gave no weight to the explanation for the period 16 June to 7 December 2017: Mrs Cowan only came to appreciate her true position as payments began in April 2017, and received substantive advice only during Ms Clarke’s visit in December 2017, following which a claim was intimated almost immediately.

Stand-still agreements

The Judge’s obiter criticism of stand-still agreements was rejected. While the ultimate power to extend time belongs to the court and such agreements cannot bind it, without prejudice negotiations should be encouraged. Where parties are legally represented and have agreed a moratorium in writing with all potential parties involved, it is unlikely the court would refuse to endorse such an approach.

Post-letter of claim period

The Judge was wrong to treat the period from 1 May to November 2018 as unexplained delay. Negotiations continued, the Will Trustees funded Mrs Cowan’s costs and encouraged mediation, and no point was taken on delay until after the mediation failed.

Other factors

The Judge failed to consider whether the estate had been distributed (a relevant though not decisive factor per Berger) and the availability of alternative remedies against advisers.

Exercise of the section 4 power

The Court of Appeal exercised the section 4 power itself, granting permission. The delay was explained, Mrs Cowan acted promptly once her position was understood, negotiations were properly encouraged, the substantive claim had a real prospect of success, and no beneficiary would be prejudiced such as to outweigh the factors favouring an extension.

Implications

The decision clarifies that section 4 of the 1975 Act is not to be approached with a disciplinary mindset analogous to the Denton relief from sanctions regime. The time limit serves primarily to bring certainty to estate administration and protect personal representatives (who are in any event protected by section 20), not to prevent “stale claims”. The Berger v Berger factors remain the appropriate framework, and all relevant circumstances must be weighed in the round.

Importantly, the judgment affirms that a properly evidenced stand-still agreement, entered into by legally represented parties involving all potential claimants, will ordinarily be respected by the court, though the final decision always rests with the court. King LJ specifically emphasised that in sensitive cases involving bereavement, such agreements may avoid the hardening of attitudes that issuing proceedings can provoke. Any such agreement should be clear, in writing, and specify terms and duration, with all potential parties included.

On the substantive side, the decision signals that provision by way of discretionary trust rather than outright provision may — depending on the facts — fail to constitute reasonable financial provision for a surviving spouse, particularly in large estates involving long relationships. However, the Court was careful not to endorse any principle of “forced spousal heirship”: each case turns on its facts and on the statutory factors in section 3.

The decision is significant for private client practitioners, estate administrators, and potential 1975 Act claimants, providing guidance on both procedural and substantive aspects of such claims.

Verdict: Appeal allowed. The Court of Appeal granted Mrs Cowan permission under section 4 of the Inheritance (Provision for Family and Dependants) Act 1975 to bring her application out of time.

Source: Cowan v Foreman & Ors [2019] EWCA Civ 1336