Cottrell v Miglic [No 2]
[2025] VSCA 177
•1 August 2025
| SUPREME COURT OF VICTORIA COURT OF APPEAL |
| S EAPCI 2024 0032 S EAPCI 2024 0043 |
| STEPHEN COTTRELL & ORS (ACCORDING TO THE ATTACHED SCHEDULE) | Appellants/Cross-respondents |
| v | |
| LISA MIGLIC & ORS (ACCORDING TO THE ATTACHED SCHEDULE) | Respondents/Cross-appellants |
| [NO 2] |
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| JUDGES: | McLEISH, LYONS and KENNY JJA |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | On the papers |
| DATE OF JUDGMENT: | 1 August 2025 |
| MEDIUM NEUTRAL CITATION: | [2025] VSCA 177 |
| JUDGMENT APPEALED FROM: | Re Miglic [2024] VSC 20; Re Miglic [Nos 2 and 3] (Supreme Court of Victoria, Gorton J, 8 February 2024) |
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COSTS – Appeal – Offer of compromise – Challenge to finding of mutual wills – Tracing claim – Trial judgment $60,000 in favour of appellants – Application for leave to appeal granted – Appeal dismissed – Offer by respondents to pay $350,000 inclusive of costs – Non-acceptance of offer – Mutual wills claim worth approximately $6.9 million – Tracing claim approximately $1.1 million – Onus on party seeking indemnity costs – Whether non-acceptance of offer unreasonable in all the circumstances – Not unreasonable for appellants not to accept offer – Appellants to pay respondents’ costs on standard basis – Supreme Court (General Civil Procedure) Rules 2015, r 26.12 – Hazeldene’s Chicken Farm Pty Ltd v WorkCover Authority (Vic) [No 2] (2005) 13 VR 435, applied.
TRUSTS AND ESTATES – Trustee’s indemnity – Administrator of deceased estate not taking part in appeal – Administrator seeking order for indemnity out of estate in respect of costs – No dispute before Court as to indemnity – No basis for identifying extent of indemnity – No extant or potential controversy – Not appropriate to make orders regarding administrator’s indemnity.
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| Counsel | |||
| Appellants/Cross-respondents | Mr JP Moore KC with Mr P Reynolds | ||
| Respondents/Cross-appellants: | Mr P Collinson KC with Mr A Verspaandonk | ||
Solicitors | |||
| Appellants/Cross-respondents: | WJ Gilbert & Co Lawyers | ||
| Respondents/Cross-appellants: | Rigby Cooke Lawyers | ||
MCLEISH JA
LYONS JA
KENNY JA:
On 27 June 2025, the Court granted leave to appeal and to cross-appeal in this matter and dismissed both the appeal and the cross-appeal. The parties were invited to file short submissions as to costs. These reasons should be read along with the Court’s reasons for its substantive orders.[1]
[1]Cottrell v Miglic [2025] VSCA 145.
The parties are in agreement that the cross-appellants should pay the first, second and third cross-respondents’ costs of the cross appeal on the standard basis. We agree that is the appropriate order with respect to the cross-appeal.
The parties also agree that the appellants should pay the first and second respondents’ costs of the appeal, but differ as to the basis upon which those costs should be assessed. The first and second respondents seek their costs on the indemnity basis. We shall return to that matter. First, it is convenient to address the costs of Ms Kallweit, the administrator of the deceased estate, who is the third respondent and the fourth cross-respondent.
The administrator did not seek any order for payment of her own costs, and the other parties did not seek an order for costs against the administrator. However, the administrator sought an order to ‘confirm’ that ‘any’ of her costs that are not met by the other parties ‘are to be paid or retained out of the estate’. She relied on the trustee’s right of indemnity in s 36(2) of the Trustee Act 1958.
It is to be expected, and may be assumed for present purposes, that the administrator has a right of indemnity from the estate. There is, however, no material before the Court which would enable it to identify the extent of that indemnity in the circumstances of the present case. Nor has the Court been apprised of any extant or potential dispute as to that issue, or as to any need to confirm that the indemnity operates in the manner suggested. Yet the order sought would have the potential to foreclose any challenge about the extent of the administrator’s right of indemnity.
In those circumstances, we do not think it is appropriate to make the order the administrator seeks. To do so would either resolve no controversy between the parties, or resolve a controversy or potential controversy that has not been raised in the proceeding.
We then turn to the costs of the appeal, and specifically the claim for indemnity costs.
On 8 April 2024, the solicitors for the first and second respondents sent to the appellants’ solicitors an offer of compromise under r 26.12 of the Supreme Court (General Civil Procedure) Rules 2015. The operative part of the offer stated:
TAKE NOTICE that the Respondents offer to compromise the Applicants’ Application by the Respondents paying to the Applicants the sum of $350,000, inclusive of costs, in settlement of the Application.
TAKE NOTICE this offer of compromise is open to be accepted by the Applicants for a period of fourteen (14) days after the date of service of this notice.
The time for acceptance of the offer expired on 22 April 2024. The first and second respondents filed their written case on 24 April 2024.
Rule 26.12 relevantly provides:
26.12Appeal to Court of Appeal
(1) Where a copy of—
(a) an application for leave to appeal;
(b) a notice of appeal to the Court of Appeal;
(c) an application for leave to cross-appeal; or
(d) a notice of cross-appeal to the Court of Appeal—
has been served, a party may serve on another party an offer to compromise the application, appeal or cross-appeal (as the case may be) on the terms specified in the offer.
(2)The offer may be on terms that take into account any application, appeal or cross‑appeal of the other party.
(3)Where in relation to a matter being an application for leave to appeal, an appeal, an application for leave to cross-appeal or a cross-appeal—
(a)a party has made an offer in writing to the other party (whether or not expressed to be without prejudice) to compromise the matter on the terms specified in the offer;
(b)the offer was open to be accepted for a reasonable time, but was not accepted; and
(c)the party making the offer obtains an order on the matter no less favourable to that party than the terms of the offer—
the Court of Appeal shall take those things, and also the stage at which the offer was made, into account in determining what order for costs to make in respect of the matter or, where appropriate, in respect of the matter and the proceeding more generally.
(4)The Court of Appeal, in exercising its discretion as to costs in accordance with paragraph (3), may order that the party on whom the offer to compromise was served pay the costs of the party who made the offer, taxed on a basis other than the ordinarily applicable basis—
(a) from the commencement of the matter;
(b) from the day the offer was served; or
(c) from any other time that the Court thinks fit.
…
Rule 26.12 may be contrasted with r 26.08(4), which provides for costs consequences where a plaintiff ‘unreasonably’ fails to accept an offer of compromise made by a defendant. The terms of r 26.12 do not prescribe a criterion of unreasonableness.
Rule 26.12(4) refers to the Court’s general discretion as to costs. That discretion is notoriously broad and adapted to the circumstances of each individual case. Rule 26.12(3) does not create a different discretion, or provide for a prima facie rule as to its exercise, subject only to the Court deciding otherwise (which is the scheme of r 26.08). It goes no further than prescribing matters which the Court must take into account in exercising its discretion.
It is none the less plain that, in exercising the discretion as to costs in accordance with r 26.12(3), the question what order for costs should be made in circumstances where there has been an offer of compromise is to be answered by applying a test of unreasonableness.[2] That is not to say that the test excludes consideration of other matters. It embraces all the circumstances of the case, reasonableness being ‘a protean concept’.[3]
[2]Hazeldene’s Chicken Farm Pty Ltd v WorkCover Authority (Vic) [No 2] (2005) 13 VR 435, 441–2 [23]–[24] (Warren CJ, Maxwell P and Harper AJA) (‘Hazeldene’); Li v So [2021] VSCA 86 [11] (Tate, Emerton and Sifris JJA).
[3]Hazeldene (2005) 13 VR 435, 441–2 [23]–[24] (Warren CJ, Maxwell P and Harper AJA), citing Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 (2003) 77 ALJR 1165, 1170 [20] (Gleeson CJ); [2003] HCA 30.
In support of their application for indemnity costs, to run from the day the offer was served, the first and second respondents submitted that the matter proceeded by reference to the findings of the trial judge and the evidence at trial, and the judge’s findings of fact were not challenged. They pointed out that the counterclaim failed, both at trial and on appeal, for want of evidence. The appellants had sought to rely on new arguments and an unpleaded case for equitable compensation.
The first and second respondents submitted that the offer was a substantial one that constituted a genuine attempt to settle. Finally, they contended that the appellants bore the onus of establishing proper reasons why indemnity costs should not be ordered.
In response, the appellants submitted that there is no presumption that the Court should award indemnity costs unless the offeree can establish ‘proper reasons’ not to do so. Instead, it was for the offeror to establish that the rejection of the offer was unreasonable.
The appellants submitted that the first and second respondents had not submitted that the appellants’ failure to accept the offer was unreasonable. They submitted that, to the contrary, the appeal had merit, as recognised by the fact that leave to appeal was granted. Moreover, the offer was meagre in circumstances where the appellants stood to receive some $6.9 million between them from the proceeds of sale of the Albany Road property, and $1.136 million from Gertrude’s estate, if the appeal had succeeded. In those circumstances, they submitted, the offer of $350,000 inclusive of costs ‘came close to amounting to an invitation to capitulate’.
A further circumstance going to show that the non-acceptance of the offer was not unreasonable was said to be that the time for acceptance of the offer lapsed before the first and second respondents’ written case was filed and the offer was not accompanied by a statement of reasons why it should be accepted.
We have concluded that the appellants should pay the first and second respondents’ costs of the appeal on the standard basis. First, contrary to the first and second respondents’ submissions, there is no presumption, either in r 26.12 or in the authorities, to the effect that an appellant who does not accept an offer of compromise in an appeal should pay costs on the indemnity basis unless the appellant can establish a proper reason for ordering otherwise. The authority of Hazeldene is to the opposite effect.[4]
[4]Hazeldene (2005) 13 VR 435, 440–1 [19]–[20] (Warren CJ, Maxwell P and Harper AJA).
The question is whether, in all the circumstances, there should be a departure from the usual rule as to costs.[5] That is a matter on which the party seeking such a departure bears the onus. There are, however, policy reasons why it may be desirable to order indemnity costs, reference to which may assist in establishing that is appropriate in any given case. Those reasons include the avoidance of unnecessary costs and the saving of resources by promoting early offers of settlement, and the desirability of indemnifying a party who has made a reasonable offer to settle. On the other hand, as the Court pointed out in Hazeldene, there is also a policy reason pointing in the opposite direction, namely the need not to discourage potential litigants from bringing their dispute to the courts.[6]
[5]Ibid.
[6]Ibid 441 [21]–[22].
In the present case, as the appellants submitted, the offer represented a very low proportion of the total amount in issue. That is especially so, given that the offer was inclusive of costs. The total amount in contest was in the order of $8 million.
Moreover, while the appellants had the benefit of the trial judge’s reasons, they had no response from the first and second respondents to their written case or proposed grounds of appeal. While an offer of compromise may support an order for indemnity costs in that situation, the case for such costs is strengthened if the offeror has specifically drawn the offeree’s attention to features of the case that would make non-acceptance of the offer unreasonable. That was not this case.
The fact that the appeal did not involve any challenge to findings of fact is not significant to the reasonableness of the non-acceptance of the offer of compromise. Nor is the fact that the counterclaim failed for want of evidence, or the changed case which the appellants sought to run on the appeal. To the extent that the first and second respondents might have submitted that those matters bear specifically on the making of an order for indemnity costs, irrespective of the offer or compromise, we would disagree. These are not features of the case that warrant an indemnity costs order.
The result is that, viewed objectively, the offer of compromise was not sufficiently attractive or compelling to make it unreasonable for the appellants not to have accepted it. The first and second respondents have not persuaded us that there should be a departure from the usual order for costs. The appropriate order is therefore that the appellants pay the costs of the first and second respondents on the standard basis.
It will therefore be ordered that:
(a)the appellants pay the first and second respondents’ costs of the appeal, including the application for leave to appeal, on the standard basis;
(b)the cross-appellants pay the first, second and third cross-respondents’ costs of the cross-appeal, including the application for leave to cross-appeal, on the standard basis;
(c)there be no order as to the third respondent’s costs (if any) of the appeal, including the application for leave to appeal; and
(d)there be no order as to the fourth cross-respondent’s costs (if any) of the cross-appeal, including the application for leave to cross-appeal.
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SCHEDULE OF PARTIES
STEPHEN COTTRELL First appellant/First cross-respondent LOUISE AUSTIN Second appellant/Second cross-respondent VICTORIA HARDY Third appellant/Third cross-respondent and LISA MIGLIC First respondent/First cross-appellant ANDREA ESNOUF Second respondent/Second cross-appellant INES KALLWEIT (in her capacity as the administrator of the estate of MARILYN MARJORIE MIGLIC, deceased) Third respondent/Fourth cross-respondent
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