Verbal Mutual Wills Agreements

Proving a Verbal Mutual Wills Agreement in Court

Verbal mutual wills are rare and hard to prove. Cottrell v Miglic [2025] VSCA 145 explores the legal principles behind them. Understand when an oral promise between spouses may create a binding trust.

Mutual wills involve two or more wills made under a binding agreement, restricting the surviving party from altering the agreed terms after the first person dies. They are designed to ensure that assets are distributed as intended—often to children from the relationship—rather than to a future spouse in the event of remarriage. For such wills to be enforceable, four key elements must be satisfied:

• The agreement must follow a specific form.
• It must have contractual effect;
• The parties must intend it to be irrevocable;
• The survivor must intend the will to reflect that binding agreement.

In Birmingham v Renfrew [1937] 57 CLR 666, Joseph and Grace Russell made Wills on consecutive days in March–April 1932. Each left their residuary estate to the other, and if the other had died first, to four of Grace’s relatives (the Renfrews and the Johnstons). Grace died first, so Joseph inherited her estate. However, she had recently come into a large inheritance. Joseph later changed his Will several times, leaving his estate to his relatives.

Grace’s relatives argued that the mutual wills were made under a binding agreement: Grace agreed to leave her estate to Joseph on the understanding that he would not change his Will and would pass the estate to her named beneficiaries. They sought equitable remedies including specific performance or the imposition of a trust over Joseph’s estate.

Joseph’s relatives disputed the existence and enforceability of any contract, also invoking the Statute of Frauds by arguing that the agreement was related to land and was not in writing.

The High Court upheld the claim: once Grace died without revoking her will, Joseph became bound in equity not to revoke his own. Although he remained free to make new Wills during his lifetime, equity imposed a constructive trust on his estate upon his death, finding

Additionally, Dixon J explained that when two people agree to make corresponding Wills and one dies having relied on the agreement—leaving their Will unchanged—the survivor becomes subject to equitable obligations.

“It is true that he cannot be compelled to make and leave unrevoked a testamentary document and if he dies leaving a last will containing provisions inconsistent with his agreement it is nevertheless valid as a testamentary act. But the doctrines of equity attach the obligation to the property. The effect is, I think, that the survivor becomes a constructive trustee and the terms of the trust are those of the will which he undertook would be his last will.”

While a surviving party cannot be compelled to maintain an unaltered Will, equity creates a ‘floating trust’ (1937) 57 CLR 666 at 689 that does not crystallise until:

• a) the death of the second party to the agreement; or
• b) an attempt to disperse assets inconsistently with the terms of the agreement

Support a claim of mutual Wills by “clear and satisfactory evidence.” Latham CJ cautioned that parties trying to prove such an agreement carry a heavy evidentiary burden, especially where both testators are deceased. Similar or matching Wills alone cannot establish an enforceable mutual Will agreement. Many couples create “mirror Wills” out of mutual trust, rather than to make them legally binding.

1. Two parties can create mutual wills, establishing a contract between them.

2. While both parties are alive, the contract can only be changed or revoked following notice to the other party.

3. Breaking the contract with insufficient notice, either while both parties are alive or following the death of one constitutes fraud.

4. Upon the death of the first party, the contract becomes binding and irrevocable.

5. The survivor can deal with the inherited assets; however, they are obliged to hold those assets in trust for the benefit of the individuals named in the Will.

6. Those named in the Will become beneficiaries of a constructive trust based on the terms of the Will, with the survivor acting as the trustee. The trust capital consists of what remains after the survivor has enjoyed the assets.

7. Any transactions undertaken by the survivor to undermine the intentions of the deceased party will be considered a breach of that trust.

Courts distinguish between legally binding mutual Wills and Wills made in good faith or out of moral obligation, which lack legal enforceability. It is common for spouses to create Wills based on a mutual understanding, without committing themselves to legal obligations that would prevent them from revoking them.

Specific Performance

Specific performance is an equitable remedy, based on fairness and justice granted at the court’s discretion. A court orders a party to fulfil their obligations under a contract, typically in cases where monetary compensation isn’t adequate—especially in contracts involving unique property, like land. A Court will only grant specific performance where:

• Damages are not a sufficient remedy;
• The applicant is willing and able to perform their part;
• Enforcing the order wouldn’t result in unfairness or undue hardship.

Discretionary Decisions

House v The King (1936) 55 CLR 499 remains a foundational authority on the appellate review of discretionary decisions in Australia. It sets a high threshold for intervention and affirms that appellate courts should be cautious in overturning discretionary rulings unless clear error is shown or inferred.

Mr House was convicted under s 210(3)(c) of the Bankruptcy Act 1924–1933 for pawning goods (two bath-heaters) he had obtained on credit but had not paid for, within six months of a creditor filing a bankruptcy petition. This act, done outside the ordinary course of business, was unlawful. He was sentenced to three months’ imprisonment with hard labour and appealed to the High Court, claiming the sentence was excessive.

The High Court dismissed the appeal, finding no error in exercising the sentencing judge’s discretion. The Court reaffirmed that appellate courts should not interfere with a discretionary decision merely because they would have decided differently. Intervention is only warranted where there is:

• A misapplication of legal principles;
• Reliance on irrelevant or improper factors;
• Mistake of fact;
• Failure to consider relevant matters; or
• An outcome so unreasonable or unjust that error can be inferred.

Dixon J, Evatt J and McTiernan J confirmed the limits of appellate review in discretionary decisions, that:

• Judicial discretion is central to sentencing.
• Appeals must demonstrate error or such an unreasonable result that a mistake can be presumed.
• The appeal court may affirm, vary, reverse, or remit the decision if error is established.

Background

Lisa Miglic and Andrea Esnouf, the plaintiff/respondents, are the adult daughters of Kurt and Kate Miglic, who separated in the 1960s. Their father, Kurt, later married Marilyn Cottrell, daughter of Gertrude Cottrell, who took the Miglic surname. Kurt and Marilyn had no children together, and Marilyn had no biological children But her brother Gavin, was the father of Stephen Cottrell, Louise Austin, and Victoria Hardy (the second to fourth defendants/appellants). In 1976, Marilyn and her husband Kurt became co-owners of a property in Toorak.

Kurt executed two wills, one in 1981 and a subsequent one in 1988, which designated certain assets to the respondents and the remainder of his estate to Marilyn for her lifetime. Marilyn also created a Will in 1988, allocating $60,000 to the appellants as repayment for a debt owed to Gertrude’s estate and distributing her jewelry and clothing to the respondents.

In 1977 Marilyn’s mother Gertrude left her estate in trust to provide income for Gavin and Marilyn during their lifetimes, with the capital ultimately to pass to the appellants. Marilyn and Gavin became the executors of the Will and shared the estate’s income equally. Upon Gavin’s death in 2018, Marilyn became solely entitled to the income; however, distribution of the capital to the appellants after her death.

Over time, Marilyn’s Wills evolved significantly. While her 1993 Will leaves almost everything to Kurt or the respondents, her 2018 Will splits the sale proceeds of an $11.5M property equally between the plaintiffs and the appellants.

In 2022, the plaintiffs/respondents commenced proceedings alleging that Kurt and Marilyn had agreed not to change their 1993 wills without the other’s consent (a mutual wills agreement). The appellants denied such an agreement. After the trial began, the appellants counterclaimed that Marilyn had improperly used capital from Gertrude’s testamentary trust for her benefit. Seeking a trust to hold $4.25 million or an alternative fair amount with the appellants as beneficiaries.

The matter

In Re Miglic [2024] VSC 20; Re Miglic [Nos 2 and 3] , the Supreme Court of Victoria considered whether Kurt and Marilyn Miglic were bound by a mutual wills agreement made in 1993—an agreement the respondents (Kurt’s daughters) argued prevented Marilyn from later changing her estate plan.

The first defendant, Ines Kallweit, administrator of Marilyn’s estate, did not play an active role in the proceedings.

Gorton J acknowledged the serious evidentiary challenges in proving an oral mutual wills agreement allegedly made 30 years earlier, especially as both Kurt and Marilyn were deceased and much of the case relied on hearsay. Given these difficulties and the significance of finding such an agreement, his honour scrutinised the evidence closely. Ultimately, concluding that, on the balance of probabilities, Kurt and Marilyn had entered into a mutual wills agreement in 1993, supported by oral evidence and surrounding circumstances that aligned with ordinary human behaviour and family dynamics.

Highlighting significant changes in Kurt’s and Marilyn’s 1993 Wills compared to their earlier testamentary arrangements, including removing prior bequests to Kurt’s children and new reciprocal provisions favouring each other. Gorton J found a meeting took place in August 1993 where Kurt explained to Lisa and Andrea that Marilyn agreed to leave her estate to them, and accepted corroborative testimony from various witnesses—Stuart Esnouf, Kate, Lisa and Andrea—all of whom provided consistent and credible accounts supporting the existence of the agreement.

Gorton J also found that Marilyn’s later conduct, such as making new wills or managing her assets freely, did not negate the existence of the mutual wills agreement. Marilyn’s later actions could be explained either as mistaken or as a breach of the agreement. The respondents’ consistent belief in the binding nature of the 1993 arrangement, and their conduct following Kurt’s death, further supported the court’s conclusion.

Gorton J upheld the existence of a binding mutual Will agreement between Kurt and Marilyn Miglic; no express or implied term has been proposed that would allow either party to revoke or amend their Will in certain circumstances. Nor has there been any allegation of “unpardonable” conduct by either of the respondents. Additionally Marilyn held $60,000 from her mother’s estate in trust for the defendants/appellants. The counterclaim by the defendants/appellants sought to increase this amount to $100,000 and trace that to a larger sum of $4.25 million, which forms the basis of the ongoing appeal.

The defendants/appellants relied on case law that suggests mutual wills must reflect intentions that are irrevocable “in all circumstances.” For example, in Re Goodchild [1997] 3 All ER 63, Leggatt LJ stated:

“A key feature of the concept of mutual wills is the irrevocability of the mutual intentions. Not only must they be binding when made, but the testators must have undertaken, and so must be bound, not to change their intentions after the death of the first testator. The test must always be, ‘Suppose that during the lifetime of the surviving testator the intended beneficiary did something which the survivor regarded as unpardonable, would he or she be free not to leave the combined estate to him?’ The answer must be that the survivor is so entitled unless the testators agreed otherwise when they executed their wills. Hence the need for clear agreement.”

Both written and oral contracts can include exceptions. The Court also questioned why exceptions must be express and not implied, noting that standard contractual principles (such as those in BP Refinery v Shire of Hastings[1977] UKPCHCA 1; (1977) 180 CLR 266), implied terms may also apply. A Court might resolve the question of whether a party can change their Will in response to unworthy conduct by a beneficiary through an implied term, rather than assuming there was no binding agreement at all.

The judge acknowledged the serious evidentiary challenges in proving an oral mutual wills agreement allegedly made 30 years earlier, especially as both Kurt and Marilyn were deceased and much of the case relied on hearsay. Given these difficulties and the significance of finding such an agreement, the judge scrutinised the evidence closely. Ultimately, the judge concluded that, on the balance of probabilities, Kurt and Marilyn had entered into a mutual wills agreement in 1993, supported by oral evidence and surrounding circumstances that aligned with ordinary human behaviour and family dynamics.

Highlighting significant changes in Kurt’s and Marilyn’s 1993 wills compared to their earlier testamentary arrangements, including the removal of prior bequests to Kurt’s children and new reciprocal provisions favouring each other his honour found a meeting took place in August 1993 where Kurt explained to Lisa and Andrea that Marilyn agreed to leave her estate to them, and accepted corroborative testimony from various witnesses—Stuart Esnouf, Kate, Lisa and Andrea—all of whom provided consistent and credible accounts supporting the existence of the agreement.

Additionally, Gorton J found that Marilyn’s later conduct, such as making new wills or managing her assets freely, did not negate the existence of the mutual wills agreement. Her later actions could be explained either as mistaken or as a breach of the contract. The plaintiffs/respondents’ consistent belief in the binding nature of the 1993 arrangement and their conduct following Kurt’s death further supported the court’s conclusion.

Gorton J found that Marilyn and Kurt had made a mutual will agreement in 1993. As a result, Kurt’s children (the respondents) were entitled to benefit from Marilyn’s estate under that agreement, overriding the terms of her later will, which left her estate to her nephew and nieces (the appellants) – giving rise to the first proposed grounds of appeal.

In Cottrell v Miglic [2025] VSCA 145, the Court held the appellants’ interpretation of Re Goodchild is misplaced. Parties can, expressly or implicitly, agree to exceptions in their arrangement. The test proposed by Leggatt LJ regarding “unpardonable conduct” should not be treated as a universal rule.

Principles of Mutual Wills

In 1993, Kurt and Marilyn made substantially similar wills. Kurt’s will left everything to Marilyn or, if she predeceased him, to Lisa and Andrea. Marilyn’s will mirrored this, except for a $20,000 gift to the defendant/appellants if Kurt died first, with the rest going to the plaintiffs/respondents. The outcome of both Wills was that, if Kurt died first, most of the estate would eventually pass to the plaintiff/respondents.

Birmingham v Renfrew (1937) 57 CLR 666, is the foundational authority for the doctrine of mutual wills particularly Dixon J’s judgment. Where two individuals make corresponding Wills and enter into a binding agreement not to revoke them without the other’s consent. If one dies leaving their will unchanged and the survivor benefits under it, equity may impose a constructive trust requiring the survivor to honour the agreement. While survivors can legally revoke their will, the estate remains subject to the trust.

The Court accepted that a mutual wills agreement existed and that Marilyn breached that agreement. As a result, it imposed a constructive trust over the estate under the 1993 wills. Objective contextual evidence—such as the couple’s relationship, financial arrangements, and consistent representations to family members—supported the plaintiffs’ evidence. Gorton J also determined that Marilyn held $60,000 from her mother’s estate on trust for the applicants. They had argued by counterclaim that the trust amount was $100,000 and sought to trace that sum to up to $4.25 million—this gives rise to the other three proposed appeal grounds.

The plaintiff/respondents claim that Kurt and Marilyn agreed not to change their wills without the other’s consent. The defendant/appellants deny this. However, making similar wills does not, by itself, prove a binding agreement. Often, couples make mirror wills expecting the survivor to act reasonably, without intending to be legally bound. A binding agreement would prevent survivors from updating their Will even if circumstances changed, which courts recognise as a significant commitment.

Assessing Oral Evidence

In Re Miglic [2024] VSC 20; Re Miglic [Nos 2 and 3] Gorton J found that Marilyn and Kurt had made an oral mutual will agreement in 1993. As both testators were deceased, the plaintiffs/respondents relied heavily on hearsay evidence concerning Kurt and Marilyn’s discussionsabout their testamentary intentions. Key evidentiary findings included:

The Court found the plaintiffs/respondents’ evidence credible and compelling. Their success in the case depended not just on honesty but also on the reliability of their recollections. Courts recognise that even honest memories can be mistaken. Nevertheless, after assessing all the evidence, the judge was satisfied with the balance of probabilities that Kurt and Marilyn had made a binding agreement in 1993 not to change their wills without each other’s consent.

Several factors supported this conclusion:

• Circumstances and Relationships: Marilyn’s commitment was consistent with human behaviour given her close relationship with plaintiffs/respondents, her lack of children, the expectation that defendants/appellants would inherit from their father (Gavin), and the fact that Kurt left his estate entirely to Marilyn, making his children’s inheritance dependent on her.
• The 1993 Family Meeting: The judge accepted that a meeting occurred when plaintiffs/respondents returned to Australia to discuss the Wills. It was more likely that this meeting was held to explain that Marilyn had agreed to leave her estate to plaintiffs/respondents, rather than to express a hope she would do so.
• Stuart Esnouf’s Evidence: Stuart’s testimony about a 1998 conversation with Kurt—where Kurt said he couldn’t change his will without Marilyn’s permission—was considered clear, credible, and persuasive. The judge found it particularly compelling, even potentially decisive.
• Kate’s Evidence: Kurt’s ex-wife Kate was honest and reliable despite minor inconsistencies. Her concern for her daughters’ future inheritance made sense, and her testimony that Kurt reassured her his estate would ultimately go to their children was credible.
• Consistency of Andrea and Lisa’s Beliefs: Their consistent view—held since Marilyn’s death—that her later will breached an earlier agreement, supported their claim. Their decision not to contest Kurt’s will when he died also aligned with their understanding that Marilyn would eventually leave the estate to them.
• Marilyn’s Actions: Marilyn later made new wills and sold property, but this did not necessarily mean she hadn’t earlier committed not to change her will. Time may have led her to feel free to act differently, or she may have knowingly violated the original agreement.
• Lack of Mention to the Lawyer: Although it was odd that Kurt and Marilyn did not mention the agreement to the solicitor drafting their wills, the judge did not find this omission sufficient to reject the claim.

Conclusion: Weighing all the evidence, including surrounding circumstances and witness testimony, the Court found it more likely that Kurt and Marilyn made a binding agreement in 1993 not to change their wills without the other’s consent

Findings

Finally, the judge ordered that the trial costs of the defendants (including Marilyn’s nephew and nieces) be paid out of Marilyn’s estate. Kurt’s children have filed a cross-appeal concerning the portion of that order, comprising the nephew and nieces’ costs.

The Court found the respondents’ evidence credible and compelling, notwithstanding that Marilyn did not disclose the mutual wills agreement to the respondent at the time.

Contradictory evidence from:

• The appellants (Marilyn’s beneficiaries),
• Legal file notes disclosed by waiver of privilege.

Counterclaim and Tracing

The defendants raised a counterclaim late in the trial, arguing that Marilyn had held funds from her own mother’s Will for the defendants. They further alleged tracing this money as it had appreciated through investment.

The Court dismissed the tracing claim, finding that:

There was no clear evidence linking the trust funds to specific growth assets.
The tracing argument involved unfounded speculation, contrary to established principles requiring identifiable property or a clear causal link.

The Court held only the initial capital sum (representing the life interest from Marilyn’s mother, held on trust for the defendants).

Significance

• Re Miglic provides authoritative guidance on:
• How courts evaluate oral mutual wills agreements decades after the fact,
• The admissibility and evaluation of hearsay evidence under the Evidence Act,
• The threshold for imposing a constructive trust on the survivor’s estate
• The limits of tracing claims in the absence of clear asset identification.

In Cottrell v Miglic [2025] VSCA 145 the plaintiffs/respondents claim—while the defendants/appellants dispute—that in 1993, Kurt and Marilyn entered into a ‘mutual wills agreement’. The first key issue in Re Miglic is whether this agreement was made. If it were, then although Marilyn’s 2018 Will is legally valid, her estate would be subject to a trust based on the terms of her 1993 Will, meaning that most, if not all, of her estate would pass to Lisa and Andrea.

Lisa Miglic and Andrea Esnouf, the respondents, are the adult daughters of Kurt and Kate Miglic, who separated in 1966. Kurt later married Marilyn in 1971. Despite the separation, relations among Kurt, Kate, and Marilyn remained civil. Marilyn’s mother, Gertrude Cottrell, had another child, Gavin, who was the father of the appellants: Stephen Cottrell, Louise Austin, and Victoria Hardy. Marilyn had no children of her own.

Kurt made several wills over the years. His 1981 and 1988 wills provided for both Marilyn and his daughters, Lisa and Andrea. In 1993, both Kurt and Marilyn made mutual wills leaving everything to each other, or if the other had predeceased them, to Lisa and Andrea.

Marilyn’s 2001 Will retained this arrangement but increased the appellants’ combined legacy to $60,000. In 2005, Marilyn significantly revised her Will, leaving $350,000 to Stephen and Louise, and $500,000 to Victoria, with the residue to Kurt and, failing him, the respondents. Marilyn also severed the joint tenancy in the Albany Road property, making it a tenancy in common.

Following Kurt’s death in 2007, with his 1993 Will unchanged, Marilyn created new Wills in 2011, 2014, and 2018, each of which increasingly favoured the appellants. By 2014, she left $1 million each to the appellants and Andrea, while Lisa and Andrea had yet to receive the residue. However, her 2018 will changed the structure entirely: the equal division of the proceeds from the Albany Road property (later sold for $11.5 million) between the five main family members, and the remainder of Marilyn’s estate among Andrea, Louise, and Victoria.

In 2022, Lisa and Andrea brought a claim alleging that Kurt and Marilyn had agreed not to change their 1993 wills without the other’s consent (a mutual wills agreement). The appellants denied such an agreement. After the trial began, the appellants counterclaimed that Marilyn had improperly used capital from Gertrude’s testamentary trust for her benefit. Seeking a trust to hold $4.25 million or an alternative fair amount with the appellants as beneficiaries.

Cottrell v Miglic [2025] VSCA 145 provides a clear example of the Court’s approach to assessing long-standing oral agreements, hearsay evidence about deceased persons, and evaluating recollections of events decades later, particularly in mutual will claims.

Grounds of appeal:

The appellants bought the following grounds, claiming Gorton J

(i)wrongly found that a mutual Wills agreement legally bound Kurt and Marilyn
(ii)erred in finding that Marilyn did not breach the trust set out in Gertrude’s Will.
(iii)failed to order equitable compensation from Marilyn’s estate.
(iv)did not allow tracing of the $60,000 Marilyn received from Gertrude’s estate into her remaining assets.

Cross-appeal (costs):

The respondents argued that in exercising the discretion as to costs, Gorton J acted upon a wrong principle and allowed extraneous or irrelevant matters to guide or affect the decision, in that:

(a) This was ordinary hostile litigation between beneficiaries.
(b) The so-called rule in probate cases did not apply;
(c) Whether the cross-respondents acted reasonably in defending the proceeding was an irrelevant consideration;
(d) The size of the estate was an irrelevant consideration.

Gertrude Cottrell passed away in 1977, with an estate, valued at approximately $203,500. Gertrude’s Will created a life interest in a trust for her daughter, Marilyn, and son, Gavin, giving them the right to income from the residuary estate. The capital was to pass to Marilyn’s nieces and nephew (the appellants) after both life tenants had died The estate’s value at the time of her death was estimated at around $203,500, including a unit later sold for a significant profit. While some chattels were disposed of separately, they are not relevant for this analysis.

Following Gavin’s death, Marilyn became sole trustee. The grandchildren argued that Marilyn retained half the estate (approximately $100,000) on trust for them, with Gavin having received the other half. However, there was no direct evidence of how much tax was paid on Gertrude’s estate, though it was accepted that significant State and Federal death duties were applicable in 1977. Estimates suggest that tax liabilities could have considerably reduced the net estate available for distribution.

Because of this tax uncertainty and the lack of documentation, the Court declined to find that Marilyn retained $100,000 on trust. However, it accepted that Marilyn did hold $60,000 on trust for the grandchildren. This conclusion was supported by a clause in Marilyn’s 1988 will, which referred to a $60,000 “debt owing to the estate of Gertrude Cottrell,” and by oral evidence that Marilyn herself had expressed dissatisfaction with the amount she received after tax. The judge accepted this as the most reliable evidence of what she held on trust, subject to her right to the income during her lifetime.

Marilyn held $60,000 on trust for the appellants, subject to her right to enjoy the income from it during her lifetime. However, when Marilyn died, the appellants claimed that she had misused the trust capital for her benefit, in breach of trust.

Tracing

The appellants initially sought a declaration of a resulting trust of $4.25 million from Marilyn’s estate in their favour, which was later reduced to $900,000 based on expert growth projections, assuming that the $60,000 would have grown if it had been invested in growth assets.

However, they encountered a fundamental evidentiary problem: they couldn’t prove what Marilyn had done with the money.

At trial, Gorton J found that there was no evidence that the trust capital had been invested or used to acquire specific assets. Without a clear link between the original trust money and anything in Marilyn’s estate, the tracing claim failed. The law of tracing, as the Court emphasised, is about identifying property, not speculating about what might have happened to it.

On appeal, the appellants adopted a new approach, invoking Foskett v McKeown [2000] UKHL 29, and submitting that Marilyn had commingled the trust funds with her assets, which should give rise to an equitable proprietary claim. But again, there was no evidence of mixing, identifiable substitute property, or basis to apply Foskett’s principles. The appellants asked the Court to infer wrongdoing, but unlike cases where a party has chosen not to give evidence, Marilyn was deceased—she couldn’t explain what had occurred. The inference wasn’t open.

Equitable Compensation

The appellants also sought to reframe their case on appeal by claiming equitable compensation for breach of trust. They argued Marilyn had failed to invest the trust funds prudently, particularly that she should have put the money into growth assets.

However, the appellants had neither pleaded nor properly developed this line of argument at trial. It introduced new factual issues and would have required expert evidence. The appeal court was clear: it was too late to raise these matters now.

Even if it had been allowed, the argument faced serious substantive hurdles. The Will directed that income from the residuary estate go to the life tenants, but said nothing about growing the capital. Although trustees generally have duties to preserve the real value of trust assets (under provisions like s 8(1)(d) of the Trustee Act 1958), those duties yield to the terms of the Will. The Court found the respondent had not misled Gorton J in accepting that Marilyn was not under an obligation to pursue capital growth.

Legal Costs

Although Re Miglic [2024] VSC 20 wasn’t a probate matter, Gorton J drew from probate principles—particularly the idea that where a testator’s conduct causes the litigation, estate funds may be appropriate to meet the costs. Here, the litigation arose because Marilyn had breached a mutual Wills agreement by changing her Will without her husband’s consent. The Court also accepted it was reasonable for the appellants to test the validity of the mutual Wills claim, as they had no prior knowledge of it. And given the estate was substantial, the costs order wouldn’t prejudice the beneficiaries.

The Cross-Appeal

The successful respondents challenged the costs order on appeal. They argued that the trial judge had misapplied probate principles to what was in reality adversarial litigation between beneficiaries. In such cases, they said, the usual rule—costs follow the event—should apply. They also objected to the judge’s consideration of the appellants’ reasonableness and the size of the estate, arguing that these factors were irrelevant to the case.

Their position was that the appellants should pay the respondents’ costs and that the Court not make an order in respect of the failed counterclaim (which had sought $4.25 million but recovered only $60,000).

A Nuanced Approach to Costs

The Court of Appeal upheld Gorton J’s order for costs. While confirming that there’s no strict rule entitling costs to be paid from the estate whenever the testator causes the litigation, it accepted that this can be a relevant discretionary factor.

The Court found that the litigation had both adversarial and administrative features, and it was open to the judge to treat it as more than a standard contest between beneficiaries. Gorton J was also entitled to consider Marilyn’s role in causing the dispute, the parties’ conduct, and the size of the estate. None of these considerations involved legal error.

Cross-claim

The appellants argued that appeals against costs orders should be treated as exceptional and approached with caution. They maintained that the trial judge had reasonable grounds to make the costs order and that no error of the kind described in House v The King had been shown. They contended that the case involved hostile litigation between beneficiaries, which the judge recognised, and that their participation helped clarify the administration of the estate. They also claimed that the judge properly considered Marilyn’s role in causing the dispute, and that no rigid probate costs rule was incorrectly applied.

The appellants further submitted that they had conducted the litigation reasonably, which should count in their favour when determining costs. They noted that, even in adversarial estate litigation, a party acting properly may be entitled to costs from the estate. They also argued that the judge was entitled to consider the size of the estate, particularly since paying costs from it would not deprive the respondents of the benefit of their success.

On appeal, the Court reiterated that costs appeals are exceptional and typically require strong reasons to intervene. Leave to appeal is only granted if general principles are at stake or there is a real prospect of success. The Court reviewed principles from Re Buckton, distinguishing between types of trust-related litigation—some warranting costs from the estate, others following the ordinary rule that costs follow the event.

The Court acknowledged that while mutual wills disputes differ from probate matters, the judge was still entitled to consider whether the litigation was effectively caused by the testator’s conduct. Although the Shovelar case rejected a strict probate rule in mutual wills disputes, it did not prohibit consideration of the testator’s conduct altogether. The judge’s decision to treat the case as more than just adversarial litigation between beneficiaries was valid.

Finally, the Court rejected the respondents’ claim that the judge erred by considering the appellants’ conduct and the size of the estate. Both were relevant to the exercise of the court’s discretion on costs. As a result, the cross-appeal was dismissed.

Final Outcome

Both the appeal and cross-appeal were dismissed. The appellants were not permitted to introduce a new equitable compensation claim after trial, and their tracing claim failed due to a lack of evidence. The Court of Appeal affirmed that, in the particular circumstances, it was appropriate for the estate to bear the legal costs of all parties.