The Court of Appeal has today handed down a landmark decision in Cowan v Foreman overturning Mostyn J's refusal to allow Mrs. Cowan to claim reasonable financial provision from the £30 million estate of her late husband Michael Cowan.
Mrs. Cowan said 'I am delighted that the Court of Appeal has recognised my right to be free from the control of others. Michael and I were together for 25 years. He would have been horrified to find those he chose as trustees demanding receipts for my needs.'
Paul Hewitt of Withers LLP, acting for Mrs. Cowan, says 'The Court of Appeal has comprehensively rejected the idea that leaving a widow at the mercy of trustees (who are on the other side of the world) is a reasonable approach. And it has made very clear that trying to resolve claims without rushing to Court is to be encouraged.'
History of the case
Michael Cowan passed away in April 2016. He left almost his entire estate, sworn for probate at just under £30 million [para 11], on trusts with a default to a Charitable Foundation which has never been active. He also left a letter of wishes which stated his Will Trustees were to regard Mrs. Cowan as the principal beneficiary.
The trust structure left Michael's widow Mary (now 77), his partner of 25 years, dependent on the goodwill of trustees to pay her day to day living expenses and uninsured medical expenses (and not even owning her home of 15 years in California).
Mrs. Cowan was surprised when she realised she would not receive funds outright, but she believed the Will Trustees' assurances that they would make funds available for whatever she needed.
In November 2017 the trustees questioned medical expenses [para 20] (described as a trigger event para 71].
Mrs. Cowan gave notice that she would bring a claim for reasonable financial provision from the estate. However, by then more than 6 months had passed since the grant of probate meaning that if she issued the claim she would need the Court's permission.
Nearly twelve months of negotiation followed with both the Will Trustees who agreed a 'standstill', and trustees of the Charitable Foundation.
High Court hearing
After a failed mediation in October 2018 Mrs. Cowan issued her claim. At that point the Will Trustees and the trustees of the Charitable Foundation said for the first time they objected to Mrs. Cowan being allowed to bring her claim as being out of time.
In February 2019 Mr. Justice Mostyn ruled that Mrs. Cowan should not be granted permission because (i) he said her claim for reasonable financial provision was bound to fail and (ii) he said the delay in bringing the claim was not excusable.
He suggested if the trustees failed to follow the Letter of Wishes Mrs. Cowan would be able to sue them for breach of trust [criticised by the Court of Appeal at 61].
He also condemned the common practice of agreeing a standstill to avoid having to incur the cost of issuing proceedings as 'cocking a snook at Parliament' [criticised by the Court of Appeal in particular at 73 and 89].
Court of Appeal's decision
The Court of Appeal described the Judge as 'plainly wrong' [para 79].
It dismissed the Judge's suggestion that the claim was tantamount to 'forced spousal heirship') [para 60], and criticised his failure to pay attention to the length of the relationship, or to the widow's lack of autonomy [para 59].
The Court of Appeal also criticised the Judge's approach to the question of permission as erroneous and incorrectly disciplinary [para 50], and said there was a proper explanation for the delay [para 82].
Lady Justice King devotes a short supplemental judgment purely to the subject of solicitors agreeing a moratorium to avoid the need to submit a claim, making clear that solicitors should feel able to stand-still agreements 'in what are often highly distressing and sensitive cases'.
English law recognises testamentary freedom. The right to choose who inherits. But the Inheritance (Provision for Family and Dependants) Act 1975 means certain categories– including surviving spouses – can apply to court for reasonable financial provision from an estate.
Claims started more than 6 months after the grant of probate issues, need the court's permission to proceed.
If permission is given, the court will consider (i) whether the provision made by a will is reasonable; and if not (ii) what provision is reasonable. For spouses reasonable financial provision equals whatever is reasonable in all the circumstances (including by reference to what would have happened on divorce). For other categories reasonable financial provision is limited by reference to what is needed for maintenance.
Michael Cowan, credited with inventing the black bin liner, was involved in a high profile divorce from his first wife. The financial separation also went to the Court of Appeal https://www.familylawhub.co.
