In Russell, the parties did not understand the structure and intent of the practical law proposition. The proposal suspends the limitation period, so that the parties are in the same position as they were when they entered into the agreement at the end of the status quo period. If they had one month before the statute of limitations expired, they would still have one month at the end of the status quo period. The parties to Russell confused the issue by referring to variations on the lengthening of the limitation period. They also added a clause that the parties would not establish or serve any proceedings for the duration of the agreement. This conflicted with the structure of the model. This summer, the courts argued in two cases over the importance of certain status quo agreements – Russell v Stone and Muduroglu against Stephenson Harward. We examine the common pitfalls that the parties should be following in the management of status quo agreements. In the case of claims for bodily harm, we often see claims, particularly those for historical abuse, many years after the expiry of the statute of limitations, with the intention of asking the court to exercise its discretion in order to pursue late claims. It is important that claims officers and insurers are aware of the effects of an agreement they make with respect to the restriction and that they do not accidentally renounce an existing restriction defence.
In her judgment, Mostyn J said: “I was told that it was “usual practice” to agree to such an agreement. If this is a common practice, I suggest that it is a practice that should cease immediately. It is not connoisseurs who are in court. If the parties wish to agree on a moratorium for negotiations, the request should be issued in due course and then ask the court to suspend the proceedings during negotiations. Otherwise, as I pointed out in the argument, it is easy to get angry at the clear parliamentary intent…… I propose that under no circumstances, in the future, a private moratorium should ever be regarded as a stop to the watch when it comes to taking into account delays. In other words, a privately agreed moratorium at the end of the deadline should never be considered a good reason for delay in the future. Since a status quo agreement is a contract that often spans several pages, it is important to remember the principles of treaty-compliant interpretation – that an objective approach must be adopted and that the document must be interpreted as a whole (see Arnold/Brittan AC 1619).
It is therefore important to check whether the overall importance is clear to the objective viewer. The use of clear language and accurate data is essential. If you are currently participating in a status quo agreement under the Commission for Family and Dependents Act 1975, then you should be seriously concerned. Limitation should always be at the forefront of legal experts, but above all because of the difficulties encountered by COVID-19. Understanding the instruments you have should help limit the difficulties you face and a turnkey instrument is a moratorium on limits or status quo agreements. These recent cases give the impression that it is difficult to reach a status quo agreement, but that agreements that meet the needs of both parties are concluded every day. Other problems may arise if the parties do not reach an agreement. The parties have two possible types of agreements: the first that suspends the time limit in question; second, the extension of the period in question. Coulson J. in Russell/Stone 1555 (TCC) gave indications of the difference between “suspended” and “extended.”