Baird v Smee - [2000] NSWCA 253

NEW SOUTH WALES COURT OF APPEAL

CITATION: Baird & Anor v Smee [2000] NSWCA 253

FILE NUMBER(S):
40635/99

HEARING DATE(S): 13 March 2000

JUDGMENT DATE: 11/09/2000

PARTIES:
Lorraine Noeline BAIRD - First Appellant
James Robert McDONNELL - Second Appellant
Dolores SMEE - Respondent

JUDGMENT OF: Mason P Handley JA Giles JA

LOWER COURT JURISDICTION: Supreme Court - Equity Division

LOWER COURT FILE NUMBER(S): EQ 2954/98

LOWER COURT JUDICIAL OFFICER: Master Macready

COUNSEL:
C J Bevan & A Iuliano - Appellants
P H Blackburn-Hart - Respondent

SOLICITORS:
Turner Freeman, Sydney - Appellants
Warren McKeon Dickson, Engadine - Respondent

CATCHWORDS:
TESTAMENTARY DISPOSITION - mutual wills made - one testator died - other testator changed will - other testator died - whether trust for beneficiaries under original will - must find agreement not to revoke original wills, intended to have legal effect - fact made mutual wills does not of itself establish requisite agreement - agreement not to be lightly inferred - insufficient evidence from which requisite agreement can be inferred. D

LEGISLATION CITED:

DECISION:
(1) Extend time to apply for leave to appeal and grant leave to appeal; (2) Appeal dismissed with costs.

JUDGMENT:

THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40635/99
EQ 2954/98
MASON P
HANDLEY JA
GILES JA
Monday 11 September 2000

BAIRD & ANOR v SMEE

JUDGMENT

1 MASON P: I have had the benefit of reading the judgment of Giles JA. I agree with the orders proposed and with his Honour's reasons.

2 Mr Derek McDonnell and Mrs Gwendoline McDonnell made separate mutual wills on 12 March 1986. Each testator appointed the Public Trustee as executor and trustee and disposed of the entire estate in favour of the other “absolutely” if he or she survived by 30 days. If this did not happen residue was to be divided equally between the children of Derek and Gwendoline's former marriages and their respective families. The wills were not expressed to be mutual wills, nor do they contain any express provision relevant to non-revocation.

3 There is no evidence as to the age of Derek or Gwendoline in 1986 beyond what can be inferred from the fact that Derek's first marriage was dissolved in 1963 at a time when there were two children of that marriage and the fact that Derek and Gwendoline married each other in 1967.

4 Derek died in 1992. Neither of the 1986 wills had been revoked by that time. Upon Derek’s death his share in a jointly owned home unit at Eastlakes passed to his widow. Upon her surviving him by 30 days, approximately $20,000 also passed to her under the 1986 will. Almost a year after Derek’s death, Gwendoline made a new will revoking her 1986 will and leaving her entire estate to the two children of her first marriage (ie to the exclusion of her two stepchildren, the appellants). Gwendoline died in 1996.

5 To succeed in their claim, the appellants must establish that Derek and Gwendoline had agreed not to revoke their mutual wills, at least without notice to the other, during their joint lives. They failed to persuade Master Macready that such an agreement could be implied from the available evidence. This Court is in as good a position as the Master to assess the undisputed primary facts. I agree with the Master.

6 Two legal propositions are, in my view, clearly established:

(1) an express or implied agreement may be constituted or evidenced on the face of mutual wills;
(2) the mere fact that two persons simultaneously make wills with mutually similar provisions does not itself establish an agreement not to revoke.

7 As to (1) see Dufour v Pereira (1769) 1 Dick 419, 21 ER 332. As to (2) see Re Oldham [1925] Ch 75, Gray v Perpetual Trustee Co Ltd [1928] AC 391, Birmingham v Renfrew (1937) 57 CLR 666, Bigg v Queensland Trustees Ltd [1990] 2 Qd R 11 at 13, Aslan v Kopf, Court of Appeal, unreported, 16 May 1995.

8 The standard of proof is the balance of probabilities, but the Court is to take into account the nature of the claim or subject-matter of the proceeding (Evidence Act 1995, s140). Cautious scrutiny is therefore required in cases, such as the present, where an implied agreement is invoked to defeat the effect of a solemn testamentary disposition by a person (Gwendoline) who is unable to give evidence to explain her actions. Cf Re Newey (Deceased) [1994] 2 NZLR 590 at 595. Especially is this so where absence of contract may be explicable by the trust which the testators placed in each other to do the right thing as circumstances may dictate.

9 There is evidence from which a contract might be inferred. I refer to the terms of the wills, the family circumstances of the couple in 1986, the apparently concurrent execution of the wills and the fact that the couple were at least middle-aged in 1986. There is also the non-revocation of the 1986 wills during the joint lives of the testator and testatrix. But these facts are not enough to persuade me that this couple did in fact promise each other in 1986 or thereafter that, in the event that neither revoked his or her will during their joint lives and gave notice of this fact to the other, then upon the death of the first the survivor would be bound in law not to change or revoke his or her will thereafter. It is not a question of what the parties would have done had they been asked to turn their minds to the issue of entering into the putative contract. The appellants must show that the couple did enter into that contract, whether expressly or impliedly.

There were potentially so many imponderables facing this couple, to the regrettably limited extent that the evidence casts light upon their personal circumstances, that I cannot infer to the requisite standard that they would have and therefore did enter into a contract not to revoke. The main concern of each was for the other, as evidenced by the primary and operative gift of the entire estate absolutely in the event of survivorship beyond 30 days. A gift of this nature does not preclude a contract not to revoke mutual wills, but it does mean that (if such contract existed) the “absolute” beneficiary of the first operative will would be recognised as entitled to substantially full enjoyment of the fruits of the gift in favour of the survivor (cf Re Oldham at 87, Birmingham at 689).
This leads to a second point. One is driven to ask whether the couple might have discussed between themselves the possibility that the survivor might remarry or find the need to make special provision out of his or her estate in favour of a particular care-giver. Alternatively, they might conceivably have discussed what might happen in the event of death or bankruptcy of one or more of the secondary beneficiaries, being the children from the two earlier marriages. These matters may not have been considered or they may have been considered and dismissed. The problem for the appellants is that the Court simply does not know, with the result that reasonable speculation that these possibilities did occur to the two testators must be weighed in the balance against whatever may favour the alleged contract.
Thirdly, there is the absence of any hard evidence that Derek and Gwendoline perceived the need to take the matter beyond trusting the survivor in point of honour to deal fairly and reasonably in the light of circumstances as they might arise during the survivor’s lifetime. Like Astbury J in Re Oldham (at 88):
I cannot build up a trust on conjecture, and there are many reasons which may have operated on the minds of these mutual will makers. Each may have thought it quite safe to trust the other, and to believe that, having regard to their ages, nothing was likely to occur in the future substantially to diminish the property taken by the survivor, who could be trusted to give effect to the other’s obvious wishes. But that is a very different thing from saying that they bound themselves by a trust that should be operative in all circumstances and in all cases.
See also In re Goodchild [1997] 1 WLR 1216 at 1225-6; Birmingham at 674-5, 691-2.
Fourthly, there is nothing to indicate that the couple were significantly better off in 1986 than at the time of Derek's death. One might therefore infer that they always had in contemplation that the estate passing to the survivor (including the home unit) would not be a large one. Unlike some mutual will cases, this was not a case where one party is shown to have brought substantially more property into the marriage than the other. And there is nothing to exclude the possibility that the couple may have contemplated that the survivor might live for many years after the death of his or her spouse. For obvious reasons these factors make the appellants' case all the harder.
I have not overlooked the material relied upon by the appellants which consists of statements by Derek to his former wife and his son. These referred to the two wills and indicated Derek’s belief that both sets of children would be provided for. As Giles JA points out, these statements reflect Derek’s reasonable expectation at the time but they do not persuade me of the existence of a contractual arrangement to that effect.
This Court has no knowledge of the circumstances which led Gwendoline to make a new will in 1993. More importantly, it is not the business of the Court to concern itself with such matters unless they have any bearing upon the legal rights of the parties and nothing suggests that they do.
The wills were prepared by an officer of the Public Trustee. Had such officer been instructed to ensure that the survivor could not revoke the mutual will, then one would expect the matter to have been put beyond doubt by provision to that effect in the wills or in a contemporaneous memorandum (see Re Newey (Deceased) at 594-5). However, it must also be borne in mind that a solicitor instructed to prepare contractually binding mutual wills in the circumstances would be risking a negligence claim if he or she omitted to explain the impact of such a contract. The prudent solicitor would also have to ensure that the clients realised that a contract would impede the survivor from dealing with supervening contingencies such as remarriage, or the death or bankruptcy of one of the secondary beneficiaries.
It is hardly surprising that binding mutual wills are treated with considerable reserve by academic lawyers. Thus, Robert Burgess concluded his article “A Fresh Look at Mutual Wills” (1970) 34 Conv(NS) 230 at 246 with the following:
From a practical point of view, while submitting that the difficulties of mutual wills are not as insuperable as they seem at first sight, this must not be taken as advocating the wholesale adoption of mutual will by intending testators. While this device might be appropriate in the case of an elderly married couple wishing to settle their affairs in the same way before they die, in other circumstances the use of the mutual will can at best be inconvenient and at worst be little short of disastrous, especially in the case of a young married couple with long life expectancies. In these circumstances the present writer would avoid mutual wills like the plague.
Hanbury and Martin, Modern Equity 15th ed concludes the discussion about mutual wills in the following terms (at pp311-12):
For the present, persons who wish to leave property by way of mutual wills should be advised to consider most carefully the trusts on which they wish the property to be held; what property is to be included; the position during the survivor’s lifetime; who they wish to be trustees; what administrative powers the trustees should have; and how best the scheme desired can be carried out from an inheritance tax point of view. Merely to draft mutual wills and then leave the law to sort out such a host of problems is no service to the testator. The law in this context, as in most other areas of constructive trusts, imposes a trust in an attempt to prevent one party from committing a fraud on the other. It is a kind of salvage operation; a salvage of a wreck which competent legal advice would have avoided in the first place.
In New South Wales the broad reaches of the “notional estate” provisions of the Family Provision Act 1982 will also bear upon the advice given by the competent solicitor to persons situated in the position of Mr and Mrs McDonnell. Suffice it to say that the Act has a dual impact. It may allow the trust otherwise stemming from a mutual will contract to be modified in its practical effect. Conversely, the judicial power to make proper provision in favour of a person who is in need at the time of the death of the survivor means that testators have the “comfort” of knowing that certain types of inappropriate testamentary conduct by the survivor can be put to nought. These possibilities reinforce my conclusion that a contract should not lightly be inferred in circumstances such as the present.
HANDLEY JA: Mr Derek McDonnell and Mrs Gwendoline McDonnell made mutual wills in reciprocal form on 12 March 1986. They had married on 13 May 1967, having both been married before and divorced. Both had children from their prior marriages but they had no children from their marriage to each other. In 1986 Mrs McDonnell was 68. Mr McDonnell was presumably older but his age was not proved.
Each will gave the maker’s estate to the survivor, and in default half the estate went to the children of Mr McDonnell and the other half to the children of Mrs McDonnell. This was an eminently sensible and fair arrangement which ensured that the order in which the couple died did not affect the inheritance of the next generation on either side. This was not to be a case of survivor take all but an equal division independent of time and chance.
As it happened Mrs McDonnell was the survivor and if Mr McDonnell’s age had been proved this may always have been the probable outcome. Mrs McDonnell had, at the very least, a strong moral obligation to respect the arrangement she had made with her husband, whether or not it was legally binding. Unfortunately her wish to maximise the inheritance of her own children, or their importunities, prevailed, and within 12 months of Mr McDonnell’s death she had made a new will leaving her whole estate to her children. She died 3 years later without changing that will.
Mr McDonnell’s children sued the executrix of Mrs McDonnell’s will seeking to enforce a constructive trust arising from an alleged contract between Mr and Mrs McDonnell to make mutual wills and leave them unrevoked. Their case was dismissed by Master Macready and they have appealed to this Court. I wish that I could have found a proper legal basis for upholding their appeal.
In order to succeed the appellants had to establish that Mr and Mrs McDonnell made a contract. One may readily infer from the form of the wills, the history of their making and their simultaneous execution that Mr and Mrs McDonnell had agreed on the plan of distribution evidenced in their wills. However mere consensus is not enough. There is a legal presumption of some strength that informal agreements between spouses are not intended to be legally binding: see Balfour v Balfour [1919] 2 KB 571; Cohen v Cohen (1929) 42 CLR 91, 96; Birmingham v Renfrew (1937) 57 CLR 666, 682. In the same case Latham CJ said at 674-5:
“Perhaps most husbands and wives make wills ‘by agreement’, but they do not bind themselves not to revoke their wills. They do not intend to undertake or impose any kind of binding obligation”.
In cases of the present kind, as Viscount Haldane said in Gray v Perpetual Trustee Co Limited [1928] AC 391 at 400 a definite agreement to constitute equitable interests must be shown to have been made “and without such a definite agreement there can no more be a trust in equity than a right to damages at law”.
The need to prove a legally binding contract has always been insisted upon in these cases. See In re Cleaver [1981] 1 WLR 939, 947, 949. In a number of the earlier cases the Judges referred to agreements to make mutual wills and leave them unrevoked, but they made it clear, as Viscount Haldane did in the passage quoted above from Gray v Perpetual Trustee Co Limited, that the agreement had to be legally binding. In some recent cases the judges have referred to the need for plaintiffs in such cases to prove “a contract at law”. See In re Dale [1994] Ch 31, 38; Aslan v Kopf (CA 16 May 1995 unrep per Gleeson CJ at pp 3-4); In re Goodchild [1997] 1 WLR 1216, 1224 CA; Bigg v Queensland Trustees Ltd [1990] 2 QdR 11, 13. However in the seminal case Dufour v Pereira (1769) Dick 419 [21 ER 332] Lord Camden, in the passage quoted by Dixon J in Birmingham v Renfrew (1937) 57 CLR 666 at 686, referred to contract more than once.
The making of mutual wills in reciprocal terms is some evidence of the making of such a contract (Gray v Perpetual Trustee Co Ltd at 400), but without more “does not of necessity imply any agreement beyond that so to make them” (Gray v Perpetual Trustee Co Ltd at 400). The existence of such wills is consistent with a consensus between the spouses which they did not intend to be legally binding, or with an agreement that wills be made in that form without any agreement that they could not be revoked. The search for proof of contractual contention is not confined. As Hammond J said In re Newey [1994] 2 NZLR 590 at 595:
“All the surrounding circumstances, the history, the factual matrix, are to be taken into account in deciding whether there was such an arrangement. The Court will look at all the circumstances and draw any appropriate inferences”.
In the present case there is little more than the making of the wills and the situation of the spouses and their families. The wills instruction sheet completed by the officer in the Public Trustee’s Office on 10 March 1986 became Ex A. This recorded that at the start of the interview Mr and Mrs McDonnell had not decided how their property should be divided, but agreement was reached later in the interview, which was reflected in their mutual wills. The trust officer himself was not called, nor was his absence explained. Moreover there was no evidence of any standing instructions to such officers on the advice to be given to parties wishing to make mutual wills, or the form in which such wills should be made.
There was evidence of statements later made by Mr McDonnell about his expectations for the ultimate destination of his property after the death of the survivor. However there was no evidence of any conversations which involved Mrs McDonnell, or which took place in her presence, when silence may have been evidence of assent sufficient to establish contractual intent. See In re Williams [1933] Ch 244, 250.
The wills themselves may evidence the making of a contract as in Dufour v Pereira and In re Hagger [1930] 2 Ch 190 where the parties had made a joint will. However mutual wills in reciprocal form which do not in terms evidence such an agreement have never been sufficient on their own to establish a binding contract. See In re Oldham [1925] 1 Ch 75; Gray v Perpetual Trustee Company Limited [1928] AC 391.
In the other cases there has been direct evidence of a contract. One of the parties may have taken the trouble to have the contract acknowledged by the other in the presence of members of the family, it may have been proved by the solicitor who prepared the wills, or it may have been proved by the survivor. Cases of this nature include In the Estate of Heys [1914] P 192 (evidence of solicitor); In re Williams [1933] Ch 244 (evidence of solicitor); Birmingham v Renfrew (1937) 57 CLR 666 (evidence of family); In re Cleaver [1981] 1 WLR 939 (evidence of family); Bigg v Queensland Trustees Ltd [1990] 2 QdR 11 (evidence of survivor); Re Newey [1994] 2 NZLR 590 (evidence of family).

The onus of proof in these cases is the civil onus, but it is not easily discharged. In Birmingham v Renfrew (above) at 674, Latham CJ said:
“Those who undertake to establish such an agreement assume a heavy burden of proof. It is easy to allege such an agreement after the parties to it have both died”.
Dixon J said at 681:
“Such an agreement can be established only by clear and satisfactory evidence”.
If there was a definite contract between Mr and Mrs McDonnell of the type alleged Mr McDonnell trusted his wife and did not take the precaution of having her acknowledge their bargain before his children.
My initial reaction in this case was that where spouses each have children from an earlier marriage, the making of mutual and reciprocal wills established a case which spoke for itself and was sufficient proof of a contract. This indeed was the view of Isaacs J in Hudson v Gray (1927) 39 CLR 473, which was the subject of the appeal in Gray v Perpetual Trustee Co Limited [1928] AC 391. Isaacs J referred to evidence that the spouses in that case had agreed to make mutual and reciprocal wills and held that a contract had been established. He said at 485, 487:
“Reciprocity of action and benefit (and therefore condition) is imported by an agreement to make mutual wills. I see no reason in the circumstances of this case … for denying to the agreement … the quality of a binding and enforceable and, … specifically enforceable contract. … The wills were necessarily separate instruments, but their dual execution was one transaction springing out of a mutual agreement that was manifestly intended to be reciprocally carried out and faithfully adhered to as a binding obligation. To contemplate either or both of the parties afterwards exercising independent testamentary disposal contrary to the arrangement, would be to contemplate defeating the bargain … where there is such an intended obligation, which is indeed essential to every contract, the nature of the transaction, in the absence of expression to the contrary, may lead to the implication that the will … will not be, in fact, revoked”.
That view did not prevail in the Privy Council and the law has been settled to the contrary ever since. There is no support in the cases for raising an implication of a binding contract from the mere fact that the parties have children from prior marriages.
There are a number of decisions involving couples in this situation, and others where the couple were childless but each had relatives, where a contract was either not established or the family situation was not considered decisive. These include In re Oldham [1925] Ch 75 (childless couple); Birmingham v Renfrew (1937) 57 CLR 666 (childless couple); In re Cleaver [1981] 1 WLR 939 (childless couple, husband having children by earlier marriages); Bigg v Queensland Trustees Limited [1990] 2 QdR 11 (spouses with children from earlier marriages); and Re Newey [1994] 2 NZLR 590 (ditto).
In the state of the evidence, the appellants cannot gain any support from decisions in Canada and the United States either. In re Gillespie (1968) 3 DLR (3d) 317 (Ont CA) a contract was found but the parties had made a joint will, and in Harvey v Estate of Powell (1988) 30 ETR 143 and Patamsis Estate v Bajoraitis (1994) 2 ETR (2d) 200 the plaintiffs failed to prove contracts, although in both cases the spouses had a child or children from previous marriages.
The United States authorities, some of which are referred to below, show that the same broad principles are applied in the many jurisdictions of that country. In Lawrence v Ashba (1945) 59 NE (2d) 568, Draper CJ said at 570:
“The burden of proving that mutual and reciprocal wills were made pursuant to a valid and enforceable contract is upon those who assert such to be true, and the evidence thereof must be full and satisfactory”.
In that case a contract was proved by the evidence of the attorney who prepared the will. See also Stewart v Shelton (1947) 201 SW (2d) 395 (joint will, contract established); Minogue v Lipman (1953) 96 A (2d) 426 (marriage between widow and widower each with children from earlier marriages, evidence of attorney and family established contract); Glueck v McMehen (1958) 318 SW (2d) 371 (joint will, contract established); Larison v Record (1986) 489 NE (2d) 925 (joint will, contract established); Morris v Cullipher (1989) 772 SW (2d) 313 (mutual wills, contract not established); Tierney v Lantz (1993) 505 NW (2d) 513 (marriage between widow and widower each with children from prior marriages, contract not established); Black v Edwards (1994) 445 SE (2d) 107 (contract established on evidence of attorney).
I must therefore concur, with regret, in the order that the appeal be dismissed with costs.
GILES JA: The appellants brought proceedings in the Equity Division claiming that the respondent, the executrix of the deceased, held one half of the deceased’s estate on trust for them. Their case was that the deceased’s husband and the deceased had made mirror wills under which the appellants were beneficiaries as to one half of the estate of the survivor of them, that the deceased’s husband had died without revoking his will, and that by the so-called doctrine of mutual wills effect had to be given to the gift in their favour in the deceased’s will notwithstanding the revocation of the will by a later will.
The hearing of the appellant’s proceedings was referred by order of a Judge to a Master (see Schedule D Pt 3 para 4(a) of the Supreme Court Act 1970 (“the Act”)). The Master dismissed the proceedings with costs. The appellants appealed, their appeal lying to this Court (see s 104 of the Act and Pt 60 r 17(a) of the Supreme Court Rules).
Leave to appeal
By s 101(2)(r) of the Supreme Court Act, leave to appeal is required from -
“(r)A final judgment or order in proceedings of the Court other than an appeal:
(i)that involves a matter at issue amounting to or of the value of $100,000 or more, or
(ii)that involves (directly or indirectly) any claim, demand or question to or respecting any property or civil right amounting to or of the value of $100,000 or more.”
The estate of the deceased was sworn for probate to a value of approximately $123,000, and was said to have since increased to a value of approximately $160,000. The appellants submitted that their proceedings involved a claim respecting property amounting to or of the value of $100,000 or more, because it was a claim to a constructive trust over the entire estate notwithstanding that their beneficial interest under the trust was only as to one half of the estate.
The submission may be doubted, see Beard v Perpetual Trustee Co Ltd (1912) 25 CLR 1; Webb v Hanlon (1939) 61 CLR 313 at 321 (Latham CJ), 322 (Rich J), 327 (Starke J); and Oertel v Crocker (1947) 75 CLR 261 at 267-8 (Latham CJ), 269-70 (Starke J) and 272-3 (Dixon J), in particular the comments on Tipper v Moore (1911) 13 CLR 348. Whatever the position be, however, the substance of the appeal has been fully argued and I consider that in this case it is appropriate to grant leave to appeal if leave be necessary.
Facts
Derek James McDonnell and Gwendoline McDonnell married on 13 May 1967. Without intending any disrespect, I will refer to them as Derek and Gwendoline.
Derek had been previously married, the marriage ending in divorce on 31 May 1963. The appellants were the two children of that marriage. Gwendoline had also been previously married and divorced. There had been two children of that marriage, the respondent being one of the children. There were no children of the marriage between Derek and Gwendoline.
There was no evidence of wills made by Derek or Gwendoline prior to the wills next mentioned.
On 10 March 1986 Derek and Gwendoline attended the office of the Public Trustee and gave instructions for wills. The officer whom they saw did not give evidence, but there was tendered and admitted a wills instruction sheet recording the instructions.
So far as immediately relevant, on the one page noting the names of and information concerning both Derek and Gwendoline there was recorded against the heading “next of kin” -
“Yes - both have children of a 1st marriage - have [?] not decided how to divide”.
After details of the children, under the heading ”instructions” was -
“Whole estate to spouses.
30 days - if predecease - not survive then into 2 PARTS
(1)1 PART to Mr McD’s children James & Lorraine + sub issue
(2)Remaining parts to Mrs McD’s children Dolores & Donald + sub issue
Failure to vest.”
The wills instruction sheet said nothing about mutuality of wills or about an agreement to make mutual wills.
On 12 March 1986 Derek and Gwendoline executed wills prepared by the Public Trustee.
Derek’s will revoked any previous testamentary dispositions (cl 1), appointed the Public Trustee as his executor and trustee (cl 2), gave his trustee certain powers in relation to converting his estate into money and advancing a beneficiary’s interest (cll 3 and 4), and by its dispositive provision provided (cl 5) -
“I GIVE DEVISE AND BEQUEATH the whole of my estate both real and personal to my Trustee UPON TRUST to pay thereout all my just debts funeral and testamentary expenses Probate Estate Death or other Duties AND THEREAFTER for my wife GWENDOLINE McDONNELL absolutely if she be living at the expiration of a period of thirty (3) days from the date of my death OR should my said wife predecease me or survive me and die before the expiration of a such period of thirty (30) days THEN to divide the residue thereof into Two (2) equal parts and to hold such parts upon the following terms and conditions namely:-
(A)As to One (1) of such parts for such of them my children JAMES ROBERT McDONNELL and LORRAINE NOELENE BAIRD who shall be living at my death and if both in equal shares absolutely PROVIDED HOWEVER should my said children or either of them predecease me leaving a child or children living at my death who shall attain or have attained the age of eighteen (18) years such child or children shall take and if more than one in equal shares absolutely the share or interest his her or their parent would have taken under this clause of this my ill (sic) had such parent been living at my death.
(B)As to the remaining One (1) of such parts for such of them my said wife’s children DOLORES SMEE and DONALD WILLIAM STRANEY who will be living at my death and if both in equal shares absolutely PROVIDED HOWEVER should my said wife’s children or either of them predecease me leaving a child or children living at my death who shall attain or have attained the age of eighteen (18) years such child or children shall take and if more than one in equal shares absolutely the share or interest his her or their parent would have taken under this clause of this my Will had such parent been living at my death.
PROVIDED HOWEVER that should any of the abovementioned parts fail to vest then the total number of parts into which residue shall be divided shall be reduced by the number of parts failing to vest and the parts failing to vest shall be construed as nil parts.”
Gwendoline’s will was in the same terms, save for appropriate changes whereby the primary gift was to Derek and the children were referred to as her husband’s children and her own children. In this sense, the wills were mirror wills. The wills said nothing about being mutual wills or about an agreement to make mutual wills.
There was evidence of Derek thereafter referring to the wills. There was no evidence of Gwendoline doing so.
About a year after the wills were made Derek said to his former wife, with whom he maintained cordial relationship:
“Gwen and I have made our wills and they provide for our assets to be left to our two children and to Gwen’s two children so they will all be provided for.”
Much later, several months before Derek’s death in April 1992, Derek said to the first appellant -
“Gwen and I have made our wills. They provide that my half of the unit will go to you and your sister and the other half to Gwen’s children.”
The unit, being the home unit at Eastlakes in which Derek and Gwendoline lived, was in fact held by them as joint tenants. Derek’s half of the unit would go to Gwendoline by survivorship. The wills instruction sheet had noted the joint tenancy, but the evidence did not indicate whether Derek or Gwendoline was aware that it would pass by survivorship.
Shortly before his death Derek said to his former wife -
“I am not well and I really only have a short time left. The children need not worry about the property. What I told you before about Gwen’s and my wills has not changed. Each of the children will be looked after.”
Derek died on 27 April 1992. Probate of his will of 12 March 1986 was granted to the Public Trustee. Derek’s half of the unit vested in Gwendoline on registration of a notice of death, and his estate to a value of approximately $20,000 passed to Gwendoline in accordance with the will.
On 12 March 1993 Gwendoline made a new will in which she revoked her will of 12 March 1986, appointed the respondent as her executrix, and left the whole of her estate to the two children of her first marriage.
Gwendoline died on 23 April 1996. Probate of her will of 12 March 1993 was granted to the respondent. The appellants brought their proceedings in October 1998.
Discussion
A will is by its nature revocable, and may be revoked inter alia by the making of a later will. A testator may, however, enter into a binding contract not to revoke his will. On ordinary principles, breach of the contract by the revocation of the will may entitle the other contracting party to damages (see Synge v Synge (1894) 1 QB 466 at 471; In re Richardson’s Estate (1934) 29 Tas LR 149 at 155; Bigg v Queensland Trustees Ltd (1990) 2 Qd R 11 at 13).
The so-called doctrine of mutual wills goes beyond this. It is founded on finding a binding contract between two testators making corresponding wills to the effect that neither will revoke his will, or that neither will revoke his will without notice to the other testator. Where such a contract is found, and one testator dies leaving his will unrevoked so that the other testator take property under its dispositions, the surviving testator will be regarded in equity as under an obligation to give effect to the terms of the corresponding will, and the obligation will be enforced by the imposition of a constructive trust. The will of the surviving testator remains revocable, and may be revoked by making a new will. The new will is a valid testamentary disposition, but is overridden in that the testator’s estate is nonetheless held subject to the constructive trust. The basis of the doctrine of mutual wills is authoritatively explained in Birmingham v Renfrew (1937) 57 CLR 666, especially in the judgment of Dixon J at 682-91.
The agreement not to revoke the corresponding wills, or not revoke them without notice to the other testator, may be express or may be implied. It must, however, be established by clear and satisfactory evidence.
In Birmingham v Renfrew Latham CJ said of an agreement between husband and wife by which wills would be made in particular terms and not revoked (at 674-5) -
“Those who undertake to establish such an agreement assume a heavy burden of proof. It is easy to allege such an agreement after the parties to it have both died, and any court should be very careful in accepting the evidence of interested parties upon such a question. Perhaps most husbands and wives make wills ‘by agreement’ but they do not bind themselves not to revoke their wills. They do not intend to undertake or impose any kind of binding obligation. The mere fact that two persons make what may be called corresponding wills in the sense that the existence of each will is naturally explained by the existence of the other will is not sufficient to establish a binding agreement not to revoke wills so made (In re Oldham (1925) Ch 75; Gray v Perpetual Trustee Co (1928) AC 391; and see Lord Walpole v Lord Orford (1797) 3 Ves 402; 30 ER 1076, where attention is directed to many considerations which may go to show that in a particular case no binding agreement was intended).”
In the same case Dixon J said (at 681) -
“Such an agreement can be established only by clear and satisfactory evidence. It is obvious that there is great need for caution in accepting proofs advanced in support of an agreement affecting and possibly defeating testamentary dispositions of valuable property.”
The third member of the court, Evatt J, said (at 691-2) that the implications of the legal propositions involved in enforcement of an agreement for mutual wills were -
“ … so serious and far reaching that it is incumbent upon the court to be quite satisfied that the agreement alleged was entered into for the purpose of creating binding obligations.”
To the same effect are statements in, for example, In re Cleaver Deceased (1981) 1 WLR 939 at 947-8; Re Newey Deceased (1994) 2 NZLR 590 at 594-5; and Low v Perpetual Trustees WA Ltd (1995) 14 WAR 35 at 39-40.
The corresponding wills need not be in the same terms (see Birmingham v Renfrew), although in the present case there are mirror wills. The fact that there are corresponding wills is relevant to whether or not a binding contract was made that the wills would not be revoked, or would only be revoked upon notice to the other testator. But, as the passage from the judgment of Latham CJ in Birmingham v Renfrew indicates, the fact that there are corresponding wills will normally not be sufficient of itself. Persons may make corresponding wills while considering themselves free, certainly free as a matter of law, to alter them as they wish, and something more than the corresponding wills is required before the doctrine of mutual wills has effect: as well as the passage abovementioned, see In re Oldham, Hadwen v Myles (1925) 1 Ch 75 at 87; Gray v Perpetual Trustee Co Ltd (1928) AC 391 at 400; In re Goodchild Deceased (1997) 1 WLR 1216 at 1224-5; and Low v Perpetual Trustees WA Ltd at 40-1.
In Bigg v Queensland Trustees Ltd McPherson J implied a binding contract not to revoke corresponding wills from the fact that the parties agreed to make the corresponding wills, saying (at 14) that -
“[T]here is no point in agreeing to make corresponding wills if the parties to such an agreement are free to revoke immediately after executing them, by which I mean ‘free’ in the sense of immune from the ordinary remedies available for breach of contract.”
His Honour’s reasoning depended upon first finding an agreement to make corresponding wills, and there was direct evidence of such an agreement (see at 12). The agreement is not established simply by the fact of corresponding wills when that fact is otherwise explicable, for example because of matrimonial consensus. The step of adding to matrimonial consensus first, intentions to undertake legal obligations and secondly, legal obligations precluding any change of mind or different testamentary dispositions in changed circumstances, is not to be taken without persuasive evidence warranting the finding that a binding contract not to revoke the corresponding wills, or not revoke them without notice to the other testator, has been made.
The appellants placed some reliance on a passage in the judgment of Gleeson CJ, with whom Kirby P and Priestley JA concurred, in Aslan v Kopf (CA, 16 May 1995, unreported). His Honour said -
“If two persons make mutual wills, and agree, expressly or by implication, and either conditionally or unconditionally, not to revoke their wills, a breach of that agreement gives an entitlement to an equitable remedy. If the agreement is express, equity will give effect to it according to its tenor. If it is implied, it will be important to identify with precision the nature of the implied promise.
It may, in a particular case, and depending upon the circumstances, be proper to conclude that the parties to an agreement to make mutual wills by implication agreed, unconditionally, never to revoke their wills. Ordinarily, however, and especially when all that is relied upon for the implication is the conduct of the parties in making mutual wills, the proper implication is that neither party will revoke his or her will without notice to the others.”

I do not think this passage supports the ordinary implication from the fact of corresponding wills of a binding contract not to revoke the wills without notice to the other testator. The Chief Justice was concerned with a binding contract not to revoke the wills at all, on the one hand, and a binding contract not to revoke the wills without notice to the testator, on the other hand: on the facts of that case, only an agreement of the former kind would avail the plaintiff. He was saying that, if the circumstances warranted finding a binding contract, it would ordinarily be of the latter kind.
In the present case Derek and Gwendoline made mirror wills, but there is no evidence, apart from the wills themselves, that they did so pursuant to or together with an agreement intended to give rise to legal obligations. Nor in my view is there sufficient reason to conclude that they agreed that the wills would not be revoked, or would not be revoked without notice to the other of them.
It appears that Derek and Gwendoline decided upon an equitable division between their children while at the office of the Public Trustee. If the wills instruction sheet be a running record, initially they had not decided upon a division, but by their instructions they made one. However, it does not follow that they undertook legal obligations whereby each could not change his or her mind. The future could bring changed circumstances, and silence as to future testamentary disposition falls short of establishing a restriction on such disposition.
The appellants submitted that the fact that the secondary beneficiaries under the mirror wills were children of the respective previous marriages provided something more than the wills themselves. While a husband and wife might leave at the level of matrimonial consensus testamentary dispositions in favour of children of their marriage to each other, it was said, when each made a will in part benefiting the children of the other’s previous marriage it should more readily be found that they intended to bind themselves to maintain the gifts. No doubt this may be taken into account, but I do not find it persuasive in the present case. There was no evidence at all from which the attitudes of Derek and Gwendoline to each other’s children could be assessed, and in my view it would be no more than speculation to find in the step-relationships occasion to imply the requisite agreement.
That Derek and Gwendoline left their wills unrevoked until Derek’s death is neutral as to a binding contract not to revoke the wills, or not to revoke them without notice to the other testator. Derek’s statements to his former wife and to the first appellant suggest that he expected that the wills would take effect, but that does not take the matter any further. His expectation was no doubt reasonable at the time, but that does not mean that it was, or should be, underpinned by the relevant binding legal obligations. Indeed, that Derek said shortly before his death that what he had originally told his first wife had not changed could indicate that he, at least, saw room for change.
Unfortunately for the appellants, in my view, the evidence is insufficient to warrant the implication of an agreement by Gwendoline that she would not revoke her will of 12 March 1986, or would not do so without notice to Derek.
Orders
I propose the following orders -
(1)Extend the time to apply for leave to appeal and grant leave to appeal;
(2) Appeal dismissed with costs.
_________

LAST UPDATED: 13/09/2000