Mir v Mir

Mr George Mir (George), Mr John Mir (John) and Mr Anthony Mir (Tony) are brothers who starting in about 1957 built and, until George’s death in December 2020, together controlled a highly successful property investment and development business which trades under the name “the Mir Group of Companies” (the Mir Group). The business is conducted through a large number of companies and trusts. In these proceedings, John and entities associated with him seek orders the effect of which would be to wind up the business and to divide the assets of the business equally between John, Tony and George’s estate or the immediate families of John, Tony and George.

The claim for that relief is made on two bases. First, John claims that the business was carried on by a partnership between him, George and Tony, that that partnership was validly dissolved either by notice given by him under s 32(c) of the Partnership Act 1892 (NSW) or as a consequence of George’s death, with the result that a receiver should be appointed to wind up the partnership. In the alternative, the plaintiffs claim that (1) the corporations through which the business is carried on should be wound up under s 461(1)(k) of the Corporations Act 2001 (Cth) (which permits the Court to order the winding up of a corporation where it is of the opinion that “it is just and equitable that the company be wound up”); (2) a receiver should be appointed to the assets of each of the trusts under s 67 of the Supreme Court Act 1970 (NSW), with the intention that the assets be sold and any surplus be distributed among the trust beneficiaries in a way that would ensure that each of George, John and Tony and their immediate families received an equal share; and (3) a number of partnerships through which it is said part of the business is carried on (referred to by the plaintiffs as “sub-partnerships”) have been dissolved by notices given under s 32(c) of the Partnership Act, as a consequence of which receivers should be appointed to wind up those partnerships and distribute the surplus assets between the partners equally.

Mr Leo Mir (Leo), George’s oldest son, brings as executor of George’s estate a cross-claim against John and John’s wife, Marie, seeking a declaration that certain land at Blairmount that they hold on trust for a trust known as “the J&M Trust” is held on trust for George, John and Tony’s families equally. They also seek a number of ancillary orders to give effect to that declaration.

George, John and Tony are three of eleven children of Samuel and Sadie Mir. Most of the family migrated to Australia from Lebanon in 1948 and 1950. At the time, Samuel owned a number of properties in Lebanon. When he first arrived in Australia, he carried on a hawking business, selling clothes and fabrics door to door. George and later John and Tony also worked in that business.

The business that became the Mir Group was first established in about 1957 when George, John, Tony and Samuel purchased a property at 194 Marrickville Road, Marrickville, New South Wales, from which they ran a clothing store known as “Hollywood Creations”.

It is John’s evidence that the property in Marrickville was purchased by the three brothers a year or so after a conversation in which their mother had suggested that the three brothers go into business together. According to John, the brothers accepted that proposal. They used some savings they had accumulated to purchase from wholesalers clothing and fabrics, which they then sold from panel vans. John says that Samuel, who by then was moving towards retirement, also participated part-time in the business. The property at Marrickville was acquired so the clothing business could expand. After the property was bought, John and Tony continued to focus on the hawking part of the business and George focussed on running the store. From time to time, other family members also worked in the store. It is John’s evidence that Samuel was included on the title of the property as a mark of respect. The evidence is that Samuel and Sadie paid most of the purchase price for the property. According to Tony, Samuel’s inclusion on the title reflected that fact. Tony says he had no savings. He was 15 years old at the time.

In 1959, George, John, Tony and Samuel bought a property in Dulwich Hill, New South Wales, which was divided into four flats, which were rented out. In 1961, they bought a second investment property in Belmore, New South Wales. Again, it is John’s evidence that Samuel was included on the titles of those two properties as a mark of respect.

In 1962, Mir Bros (Hollywood Creations) Pty Ltd was incorporated. George, John, Tony and Samuel were the directors and equal shareholders of that company which initially operated the family’s retail business. In 1969, it acquired a property at 216 Marrickville Road, Marrickville. The clothing store moved to that property and the property at 196 Marrickville Road was sold.

During the 1960s, the three brothers and Samuel incorporated a number of other companies and through those companies bought a number of additional properties, some of which were redeveloped and sold. In some cases, they bought properties in conjunction with George, John and Tony’s older brother, Mr Norman Mir (Norman), who was a builder and who, on occasions, identified properties for his father and brothers to buy. The properties were redeveloped, with Norman doing the building work. It is unclear how Norman was remunerated for that work, but the likelihood is that he was either paid a fee for his services or given a share of the profits on the sale of the property. On at least one occasion, Norman, but not Samuel, became a director of one of the companies (now known as Mir Bros Development Pty Ltd) that was established to acquire a property. Norman ceased to be a director of that company on his death in May 1998. He ceased to develop projects in conjunction with his brothers in the 1970s.

John says in his affidavit evidence, and I accept, that in about 1964 he, George and Tony agreed that they should focus on property development rather than the clothing business.

In 1970, on the advice of accountants, Samuel Mir Pty Ltd was incorporated and Samuel’s interest in the properties he had acquired with his three sons (apart from one in which he sold his interest) was transferred to it. Samuel remained in control of that company until his death in 1986, when his shareholding in that company passed equally to the three brothers. By about 1970, Samuel had ceased to take an interest in any newly acquired properties.

In 1972, Mir Bros Enterprises Pty Ltd was established and as trustee for the MBE Trust acquired a property in Bankstown, New South Wales, which became and remains an office through which the business of the Mir Group is conducted. The office operated and still operates a single bank account through which income of the business is received and business expenses are paid. Up until about the late 1990s the personal expenses of George, John and Tony and their immediate families were also paid through that account. Those personal expenses were recorded in loan accounts kept by the group.

The Mir Group business continued to grow in the 1970s. It expanded into the development of industrial and commercial developments. It had and continues to have two principal activities. One is the development of land for the purpose of resale at a profit. As part of that business, the Mir Group buys land and holds it sometimes for an extended period of time (referred to as “land banking”) with the intention of developing it in the future, or possibly selling it at a profit. In some cases, pending development, the land is leased out. The other part of the business is the derivation of income from investment properties. The investment properties include properties that were developed by the Mir Group. John has principally been involved in the property development side of the business and George (until his death) and Tony have principally been involved in the property investment side of the business. George also took responsibility for the group’s legal and financial affairs. Generally, the expenses of the business, including the purchase price of further properties, were financed through the sale of properties and income generated by the investment properties.

On 13 April 1976, each of the three brothers established family trusts (the John Mir Family Trust, the George Mir Family Trust and the Anthony Mir Family Trust), the trustees of which were George Mir Holdings Pty Ltd, John Mir Holdings Pty Ltd and Anthony Mir Holdings Pty Ltd respectively. Each of those companies was established to act as trustees respectively of the family trusts of the three brothers.

In 1986, the Mir Group established a second office in Liverpool, New South Wales. John moved to that office and has worked from that office since then. The Liverpool office became responsible for managing a number of investment properties of the group. It also became the office principally responsible for the property development side of the business. It opened one or more bank accounts through which income and expenses incurred by that office were paid. George and Tony continued to be responsible for the Bankstown office and for the properties managed through that office. In 1988, Mr Samuel Mir (Sam), John’s eldest son, commenced work in the Liverpool office. He has worked in that office and has been paid a salary by the office since that time. He is now the family member principally responsible for the property development side of the business. In addition, Mr David Mir (David) and Mr Jason Mir (Jason), two sons of Tony, work in the Liverpool office. Since around 1995, David has been responsible for data entry and managing rental properties managed through the Liverpool office. Since around 2000, Jason has been responsible for the upkeep and maintenance of commercial and industrial properties managed through the Liverpool office as well as development management and sale of residential property in the Campbelltown region. Both David and Jason are paid a salary by the Liverpool office.

Mr Sidney Mir (Sid), Tony’s eldest son and a similar age to Sam, commenced working in the Bankstown office part-time in the mid-1980s. He has worked full-time in the office since about 1988. Together with his father, he manages the Bankstown office’s residential portfolio. Leo also works in the Bankstown office. Since around 1985, he has managed the commercial and industrial properties managed by the Bankstown office as well as performing other tasks such as accounting, insurance and superannuation management. Both Sid and Leo are paid a salary by the Bankstown office.

No formal mechanism developed for the acquisition of investment or development properties. The position appears to be that one of the three brothers would locate a property for purchase, or in some cases, particularly in more recent times, one of their sons working in the business would do so. If the three brothers agreed, and if funds were available within the group to finance the purchase, the property would be bought and the brothers (usually George, but also John in relation to properties bought through the Liverpool office for development) would seek accounting and taxation advice on the most appropriate legal structure to make the acquisition. Normally, a specific legal structure would be created for each acquisition. Mr Michael Mannion, a chartered accountant who (with a gap of four years between 1998 and 2002) has provided accounting and taxation advice to the Mir Group and the three brothers since 1994, explained in affidavit evidence he gave that the setting up of a separate structure for each acquisition made it easier for the group to deal with each property separately and to account for capital gains tax. The trusts through which many of the properties are held also enable the group to distribute the profits to some entities which have negative income. Finally, the structure enabled the group to avoid the consequences of aggregation for land tax purposes, since the precise ownership of each entity differed. For example, different family members held directorships in different group companies.

The three brothers operated with considerable autonomy within their areas of responsibility. John was left to run the Liverpool office and manage the development projects for which it was responsible in a way that he saw fit. Similarly, with the exception of certain matters handled out of the Liverpool office, George was left to manage the financial and legal affairs of the Mir Group and the group’s commercial and industrial investments while Tony was left to manage the residential investments. Each of the brothers had complete trust in the others to run that part of the business for which they were responsible in the interests of all of them and their families. Over time, each started to rely on their eldest son to assist them in running the aspect of the business for which they were responsible.

Over time, the financial affairs of the group have changed somewhat. The various loan accounts established by family members were consolidated. In the late 1990s or early 2000s, the practice of paying personal expenses through the business accounts largely ceased and family members established their own banking arrangements. Mir Bros Enterprises Pty Ltd, as trustee for the Samuel Mir Trust, which owns the Bankstown office, has entered into management agreements with the owners of the properties by which it agrees to pay a fixed annual sum in return for the rights to collect any rent and other income and is obliged to pay all the expenses relating to the property. The Liverpool office was originally owned through Sheraton Homes Pty Ltd as trustee of the Sheraton Trust. In 2006, Sheraton Homes Pty Ltd was replaced as trustee by Mir Group of Companies Pty Ltd and that company has entered into agreements to collect the rent and manage the properties for which the Liverpool office is responsible in return for the payment of a fixed annual sum to the owners of the properties. In about 2010, Mir Group Holdings Pty Ltd was established as a lender to the group. It is managed through the Bankstown office. On its establishment, it opened its own bank account. Companies within the group with excess capital lend it money which it on-lends to other companies in the group requiring capital.

Although the properties were generally held by corporate entities often as trustees and at least arguably in some cases as partners in partnerships, the corporations held few if any formal meetings and the expenses allocated to them and the disposition of income that they received was determined ultimately by the three brothers on accounting and taxation advice. As I have said, at least until his health declined, George was largely responsible for giving instructions to the accountants and John and Tony were happy to leave it to him to do so.

From about 2010 or so, George started suffering from cognitive difficulties and his health began to deteriorate. In about 2012 or 2013, he ceased working in the office on a full-time basis. In 2017, he was no longer able to manage his financial affairs and for a time his daughter, Rita, did so under an enduring power of attorney. George’s roll in the Bankstown office was largely taken over by Leo.

Despite these changes, two things are clear. First, with one qualification, since Samuel ceased to have any significant involvement in the business, all important decisions (including the acquisition of properties) were, at least up until about 2017, ultimately taken by the three brothers, in later years in consultation with members of their respective families, but otherwise the brothers largely acted autonomously within their respective areas of responsibility. The one qualification is that, as George’s health deteriorated, his role was gradually taken over by Leo. Second, all excess profits of the group were distributed equally to the holding companies of the three brothers or the brothers themselves or their wives, with the exception of a small number of instances where gifts of income were distributed to relatives. Set out below is a table showing the distribution of group profits between 2011 and 2019:

Attached as Annexure A (222455, pdf) to this judgment is a schedule showing the properties held by the Mir Group and the registered proprietors of those properties, which is schedule 1 to the Second Further Amended Commercial List Statement (2FACLS). Attached as Annexure B (193937, pdf) is a schedule identifying each company in the group, the properties it owns, its directors and shareholders, what trusts it is a trustee of and whether those trusts are discretionary or unit trusts. Attached as Annexure C (68037, pdf) is a schedule showing properties which are said to be held by entities in sub-partnerships (other than the companies listed in Annexure B) which is Schedule 5 to the 2FACLS. Not included on these lists is the J&M Trust, which holds part of the land in Blairmount and the trustees of which are John and Marie. It is the plaintiffs’ case that that trust is a personal trust of John and his family. It is the defendants’ case — advanced through Leo’s cross-claim — that the J&M Trust forms part of the Mir Group. More will be said about the J&M Trust shortly.

It is John’s case that as at 1979 his two brothers had both bought and developed spacious homes for their families in Carrs Park and that he was looking to buy a rural block of land to do the same. In early July 1979, he saw an advertisement for the sale of the Blairmount land, which described the land as “30 ha Residential plus 1.5 ha zoned Neibhbourhood [sic] Business with a further 14 ha proposed residential and 101 ha non urban, 146 ha in total”. The land consisted of seven lots. Annexure D (253781, pdf) is a recent aerial photograph showing the location of the Blairmount land, which is bounded by the Hume Motorway at the bottom of the plan (roughly south) and Badgally Road on the right. Marked on the photograph is the location of the seven lots. It is apparent from Annexure D that lot 103 excluded two areas adjacent to Badgally Road. The area consisting of a road leading to an area on which a house is situated is the original Blairmount homestead. The area further along Badgally road travelling in a south easterly direction is a school. The photograph shows that part of the land has now been developed and that John’s home is now located on Lot 103. In 1979, the whole of the land falling within the seven lots was undeveloped. It will be convenient to refer to the lots described on the attached plan as Upper Lot 1, Lower Lot 1 and Original Lot 103 together as “the large lots” and the remaining four lots as “the development lots”.

John says that he thought that the 101 hectares of non-urban land referred to in the advertisement would be perfect for his dream home. He says that he enquired of the agent whether he could buy the lots including that land separately. He was told that he could not. Accordingly, after obtaining further information, he discussed with his brothers the possibility of the Mir Group buying the development lots for the purpose of developing them, while he and Marie would buy the three large lots for their home. After inspecting the land, George and Tony agreed. John negotiated with the agent a price of $525,000 for all the land. After the price was agreed, John says that he and George discussed with Mr Wallace, the Mir Group’s accountant at the time, the best way to structure the acquisition. John told Mr Wallace that part of the three large lots was zoned residential, or had some potential for rezoning, but that he had no intention of developing it except for the construction of an access road. Mr Wallace advised that the lots to be acquired by the Mir Group should be acquired by trusts, and that although John had no present intention of developing his land, in case he changed his mind, a trust should be established immediately so that a base value for the developable component could be established for accounting purposes. As a consequence of that advice, the J&M Trust was established with John and Marie as the trustees (and appointors under the trust deed). John says that he discussed with Mr Wallace using the John Mir Family Trust to acquire the land but thought better of that proposal when Mr Wallace told him that, although he was nominated as the appointor of that trust, the current trustees were George and Tony. He says that he wanted he and Marie to control the trust to ensure that their family was the beneficiaries of it. In common with other trust deeds, the trust deed for the J&M Trust included George, Tony and their families as beneficiaries. John queried Mr Wallace about that, who told him that it did not matter, since it was a discretionary trust. John says he accepted what Mr Wallace said.

In my view, John’s account of events cannot be accepted. John was not a satisfactory witness. He did not answer questions directly and was inclined to give speeches designed to advance his case rather than answer questions to the best of his recollection. John is obviously an intelligent man. Although aged 86, he is still alert and astute. However, it is not plausible that he had such a detailed recollection of events that occurred over 40 years ago as his affidavit and oral evidence suggests. More significantly, his account of the events relating to the Blairmount land was inherently implausible and inconsistent with the objective facts and contemporaneous records.

The Blairmount land was advertised for sale in early to mid-July 1979. There is a dispute concerning which advertisements John saw. However, nothing turns on the resolution of that dispute. John accepts that he saw an advertisement in the Sydney Morning Herald on Saturday, 7 July 1979 advertising a number of properties for sale including the Blairmount land. The version of the advertisement exhibited to John’s affidavit did not include the heading of the advertisement, which read “Special Industrial Investment Commercial Auction” and excluded the bottom part of the advertisement, which referred to several additional properties. It is reasonable to infer that John came across the advertisement while looking at the real estate section of the Saturday edition of the Sydney Morning Herard for investment properties. The title of the advertisement, to which John apparently did not want to draw attention in his evidence, is likely to have caught his attention at the time. As described, the property was likely to be of some interest to the Mir Group.

After seeing the advertisement, John contacted the agent, who provided him with a brochure together with the deposited plans for the seven lots comprising the Blairmount land. The brochure described five “IMPORTANT PROPERTIES FOR SALE”, including the Blairmount land. It included in five boxes descriptions of each of the properties together with a sketch plan of the property. The box for the Blairmount land contained similar information as the information contained in the advertisement John had seen. The plan showed each of the seven lots. John, apparently using information he obtained from the deposited plans, wrote on the sketch plan the area of each lot (combining lots 112 and 113), together with some other notes. It was apparent from the information John had that at least some of the residential land was on the three large lots. It is also apparent that John looked at the plans for each of the other four properties included in the brochure, since he also wrote some figures on those.

After receiving the brochure, John met with a town planner at Campbelltown City Council. During the meeting, the town planner provided John with a copy of the zoning plan for the Blairmount land (which was included in IDO [Interim Development order] 25). The plan showed a large approved residential development zone extending across the four development lots and across large lot 103, which was marked in salmon pink. The planner told John that some areas had been approved for re-zoning. He marked those areas on a transparent sheet that he overlaid on the existing plan and coloured the areas being considered for rezoning to residential in dark pink and areas reserved for drainage in yellow. Annexure E (1633110, pdf) is a copy of part of the plan shown to John which includes the shaded areas marked up by the planner and on which the location of the three large lots is also shown. It is apparent from that plan that it was expected that the rezoning would extend into upper lot 1 and lower lot 1 and that much of the area that was zoned residential or expected to be zoned residential fell within the three large lots. The plan also shows a proposed ring road commencing at the southern end of the school and traversing the Blairmount land, which would be an extension to Clydesdale Drive. It was evident that the Council plan contemplated that parts of the large lots would be developed, and John must have understood that.

John discussed the acquisition of the Blairmount land with George and Tony. It is common ground that John showed his brothers the brochure he had obtained from the agent, which George and Tony also wrote on, and the plan he had obtained from the Council. John also took his brothers to see the land. They agreed to buy it if a suitable price could be negotiated. The land had gone to auction apparently before the brothers inspected it, but had been passed in.

According to John, he told George and Tony that he had decided to buy the three large lots personally to build his family home and that he thought that it would be a good opportunity for the partnership (meaning the Mir Group) to buy the other four lots. That version of events is denied by Tony; and both John and Tony gave extensive evidence both in their affidavits and in cross-examination of what was said about the Blairmount land. It is not plausible that either of them, almost 44 years later, has such a detailed recollection of those events as their evidence suggests. However, it is equally implausible that the three brothers would not have discussed the development potential of the three large lots, given what was shown on the Council plan and what John had been told by the town planner.

By about early August 1979, John had negotiated a price for the land of $525,000, which was acceptable to George and Tony. George instructed Allen Allen & Hemsley to act for the Mir group on the acquisition of the land. He also sought advice from Mr Wallace on how the purchase should be structured. There is no objective evidence that John had any dealings with Allen Allen & Hemsley or Mr Wallace in relation to the acquisition.

On 17 August 1979, Allen Allen & Hemsley wrote to the vendor’s solicitors asking them to prepare six contracts of sale “for stamp duty and other reasons”. It is apparent that the parties treated lots 112 and 113 as a single lot. The letter stated that “[a]t this stage the purchasing entity has not yet been decided upon and the name of the purchaser should be left blank”.

On 23 August 1979, Mr Wallace sent George a letter enclosing trust deeds for four proposed discretionary trusts – the HC Trust (the trustee of which was Mir Bros (Hollywood Creations) Pty Ltd), the P&T Trust (the trustees of which were Mir Bros Projects Pty Ltd and Mr Bros Trading Co Pty Ltd), the HR&I Trust (the trustees of which were Mir Bros Highrise Apartments Pty Ltd and Mir Bros Industries Pty Ltd) and the P&C Trust. The trustees of the first three trusts acquired as trustees for their respective trusts lots 110, 111 and 112/113 respectively. The fourth trust was not used.

On 27 August 1979, Mr Wallace sent George a trust deed for the J&M Trust. The trust deeds for that trust and the HC Trust, the P&T Trust and the HR&I Trust were executed on that day. Contracts for the purchase of the land were exchanged on 4 September 1979 and settled on 30 November 1979. At the time of settlement, the HC Trust paid $90,470.30, the P&T Trust and the HR&I Trust each paid $135,705.45, the J&M Trust paid $78,709.20 and John and Marie personally paid $34,378.72. The balance sheet for each of the four trusts as at 30 June 1980 indicate that the four trusts borrowed the purchase price for which they were liable from the “Mir Group of Companies”. John and Marie lodged a partnership return in respect of the Blairmount land they bought in a personal capacity, which attached a balance sheet of the partnership that showed that they also borrowed their share of the purchase price from the “Mir Group of Companies”. The cheque butts for the various cheques drawn on the Mir Group bank account simply show the trust for which the cheque was drawn, including the J&M Trust. However, the butt for the cheque drawn for John and Marie recorded “Bank Cheque Pur of land at Campbelltown charged against John Mir Personal loans for beneficial ownership Part of lots 4, 5 & 6”.

In about July 1980, John and Marie signed a trust resolution dated 29 November 1979 (the day before settlement) which attached as Annexure A the plan showing the areas zoned residential and the areas expected to be zoned residential. That annexure is Annexure E to this judgment. The resolution was prepared by Mr Wallace on instructions from George and it was George who provided Mr Wallace with a copy of the plan to annex to the resolution. The resolution relevantly recorded:

Taking these facts together, in my opinion it is more likely than not that the J&M Trust land was acquired for the Mir Group and not for the benefit of John and Marie personally. It is not plausible that John became interested in the land primarily for the purpose of building his home on it. All the objective evidence suggests that up until shortly before 27 August 1979, John was interested in acquiring the land for its development potential. The land was advertised in that way and the analysis that John undertook of each parcel of land shown on the brochure sent to him by the agent suggests that he was looking at the parcels for their development potential. It is not plausible that the town planner who John saw simply volunteered information about the development potential of the three large lots. Rather, he is likely to have done so in response to questions asked by John; and John would only have asked those questions if he was focussed on the land’s development potential. The likelihood is that John also discussed the development potential of the three large lots with his brothers prior to or when they inspected the land and that the intention at that stage was that the Mir Group would acquire the three large lots because of their development potential. Having raised the subject with the planner, it is implausible that John would not have discussed it with his brothers, particularly when he gave them a copy of the Council’s plan. It is equally implausible that at that time John would have contemplated developing the land except in conjunction with his brothers.

I accept the defendants’ submission that the most likely explanation for the establishment of the P&C Trust was to acquire the three large lots. Although the development lots consisted of four lots, lots 112 and 113 were always treated as one. Importantly, a single contract was prepared for those two lots and a single price was allocated to the purchase of them. Consequently, only three trusts were necessary to acquire the development land. There is no other plausible explanation for the fourth trust except that it was originally established to acquire the remaining land and was abandoned because of a change in plans in relation to that land. That change of plans led to the establishment of the J&M Trust and involved John and Marie acquiring part of the three large lots for their family home.

The acquisition of the three large lots was structured in a way that permitted John and Marie to acquire that part of the three large lots that could not be developed for their family home but at the same time carved out of the three large lots that part of the land that could be developed. The only practical way of achieving that result was to have John and Marie acquire the three large lots but hold the developable portion on trust for the three families, which is what happened. Contrary to John’s evidence, the land could not have been acquired by the John Mir Family Trust, since it was proposed that John and Marie, not the trustee of that trust, would be the owner of the land. The arrangements for the establishment of the J&M Trust were handled by George, not by John, as might have been expected (and as John claimed in his evidence) if he and Marie were acquiring the whole of the land for their personal benefit. If the intention from the start was that John and Marie would acquire the whole of the three large lots for their personal benefit, there is no reason why the J&M Trust deed would not have been prepared at the same time as the other trust deeds and there is no reason why it would have as its beneficiaries George and Tony and members of their families. Similarly, if the intention all along was for John and Marie to acquire the three large lots personally, it is to be expected that Allen Allen & Hemsley would have said in their letter dated 17 August 1979 to the vendor that the purchasers of the three large lots would be John and Marie. The purchase price for the land acquired by the J&M Trust was handled in the same way as the purchase price for the development lots. It was funded by loans from other companies in the Mir Group. There is nothing to suggest that John and Marie were to be personally responsible for the repayment of the J&M Trust loan, in contrast to the position in respect of the loan they obtained to acquire part of the land personally.

These conclusions are supported by subsequent events.

In September 1982, the Mir Group obtained registration of a new plan of subdivision the effect of which was to amalgamate large lot 103 with the development lots, which were then subdivided so as to create a large number of smaller individual residential lots on the bottom righthand side of the amalgamated lot (which were subsequently developed and can be seen on Annexure D), a number of medium sized residential lots, including lots 69, 71, 72 and 73 and a large residential lot numbered 74 (which includes the land on which John and Marie’s home was to be built). Lots 72 and 73 previously formed part of large lot 103. In the 1980s, eight villas were constructed on lots 71 and 72. They were retained by the Mir Group and until recently the rent received for them was treated as income of the group, even though lot 72 fell within land owned by John and Marie (as trustees for the J&M Trust).

In 1982, John, in the name of the Mir Group of Companies, submitted a plan of subdivision for residential lot 74 (referred to as stage 4). The plan involved subdividing land that formed part of the land owned by the J&M Trust into 81 new lots of which 76 would be residential lots. However, it included part of a public reserve that fell within one of the original development lots. It may be inferred that the inclusion of that land was necessary to obtain approval to the subdivision of the residential lots. That plan was approved by Council on 13 May 1982. At about the same time, Council also approved a plan (referred to as stage 5) to subdivide a part of lot 74 that had previously fallen within the original development lots to create 85 residential lots. In about 1983 or 1984, the Mir Group undertook work to extend Clydesdale Drive further into residential lot 74, on an area that was formerly part of lot 103, to the point where the road meets the stage 4 development. The extension ran in a westerly direction past the school towards John and Marie’s home. It provided a means of access to the stage 4 development directly from Badgally Road. It is reasonable to infer that the extension was built in anticipation that the stage 4 development would eventually occur.

Further work has been done in relation to the development of the Blairmount land, including the subdivision and sale of 31 residential lots that formerly formed part of lot 103 and consisted of lot 73 and a parcel of land bounded by lot 73 to the southeast, Badgally Road to the northeast and Clydesdale Drive to the northwest and southwest. Alterations have been made to the boundaries of lot 74 and part of it (outside of stage 4) has been transferred to the State for a school. As a result, a new deposited plan has been created which includes what was lot 74 as lot 2 in the new deposited plan. On 10 March 2016, Sam completed and submitted an application in the name of the Mir Group of Companies to modify the stage 4 development consent. He obtained a number of reports in support of that application. Most recently, Sam has worked on the creation of a master plan for the development of almost the whole of the Blairmount land, including John and Marie’s personal land. The details of that work are not important for present purposes. Two points, however, are important. First, up until 30 June 2020 all profits of the J&M Trust were shared equally between the three families. Initially, that was done by distributing the profits equally to George Mir Holdings Pty Ltd, John Mir Holdings Pty Ltd and Anthony Mir Holdings Pty Ltd. Since about the mid-2000s, the profit has been distributed to the trustee of the Sheraton Trust. Second, the evidence suggests that the expenses associated with developing the Blairmount land, including the development of lot 103 and the preparation of the master plan for the land have been borne by the group.

Any analysis of expenses is complicated by the fact that it is the practice of the group to allocate expenses in a tax effective manner, the fact that many expenses are accounted for through loan accounts, including loan accounts held by each of George, John and Tony, and the fact that not all the accounts are in evidence. However, it is apparent that up until 30 June 2020, the J&M Trust was treated like any other trust of the Mir Group. There is no suggestion that it opened its own bank accounts or operated separately from the group when George, John and Tony, and their families, stopped using the Mir Group bank account for personal expenses. Nor is there any accounting evidence to suggest that expenses of the J&M Trust were accounted for through John’s personal loan account.

Consistently with the fact that the J&M Trust was treated as an entity of the Mir Group, there is evidence that other Mir Group companies paid expenses that might properly be attributed to it. For example, on 29 June 1999 the Mir Group paid a Sydney Water Major Works Contribution in respect of the stage 4 development in the sum of $223,680.00. The amount of that contribution together with a contribution for the stage 5 development of $25,132.05 is shown as a non-current asset of the HR&I Trust, indicating that the costs of that contribution were attributed to that trust. Another example given by the defendants is the costs of the Clydesdale Drive extension, which were shared with the Department of Education (since the extension benefitted the school) and were allocated across the four Blairmount land trusts. A third example is the fact that it appears that the costs of obtaining various reports in 2016-17 and 2018-19 in relation to the master plan for the Blairmount land were paid by the Mir Group and none was treated as an expense of the J&M Trust.

Three principal points are evident from these facts. First, shortly after the Blairmount land was acquired, the Liverpool office commenced work on redeveloping the land, which included plans and some work on the land owned by the J&M Trust. Second, there was no clear distinction drawn between the development lots and the land owned by the J&M Trust both in terms of the plans for development and the costs of development. Third, the profits earned by the J&M Trust were shared equally between the three families. All those matters support the conclusion that the land held by the J&M Trust was regarded as Mir Group land.

John sought to answer each of the points made in the previous paragraph. He submitted that it was necessary to prepare the stage 4 plans and to obtain approval to them to enable stage 5, which concerned the development lots, to proceed. He also pointed out that after 40 or more years very little development has occurred on the J&M Trust land. The explanation for why stage 4 was necessary for stage 5 cannot be accepted. According to John, stage 4 was necessary because a drainage reserve had to be constructed into a riparian corridor in stage 4 before stage 5 could proceed. Even accepting that proposition, it does not explain why that necessitated approval to a substantial subdivision of the land owned by the J&M Trust. In my opinion, little turns on the fact that stage 4 has not yet been developed. The point is that almost immediately after the Blairmount land was acquired, John started work on the development of the land owned by the J&M Trust, which is quite contrary to what he said his intention was at the time. The fact that the subdivided land has not yet been developed or sold is consistent with the long-term nature of the investment.

John gave a complex and convoluted explanation for why a small part of lot 103 was developed. He says that it was logical because of the position of a pathway draining down to a drainage reserve and the position of that part of Clydesdale Drive that joined Badgally Road, which meant that that part of the land in original large lot 103 to the west of Badgally Road would be “isolated”. He also points out that there was a clear line between the developed land that originally fell within lot 103 and the subdivided land that fell within the development lots. But the first point, assuming it is correct, simply points to the fact that it was logical to develop the land falling within original large lot 103 and land falling within the development lots together. It does not explain why the land had to be developed. It is difficult to see what turns on the second point, since no distinction was drawn between the costs of developing the development lots and those that comprised part of original lot 103 or the profits earned from the development. In addition, John is unable to give a satisfactory explanation for why part of the reserve located in the development lots was included as part of the stage 4 development.

John is also unable to give a satisfactory explanation for why the HR&I Trust apparently paid the Sydney Water Major Works Contribution in respect of stage 4. Nor is he able to give a satisfactory explanation for why the J&M Trust apparently made no contribution to the development of the master plan, although it is the principal beneficiary of the development contemplated by that plan. John did suggest that the costs of extending Clydesdale Drive benefitted the development on the development lots because it provided another means of access to those lots. But even accepting that, it does not explain why the extension extended to stage 4. The only explanation can be that the intention at the time the extension was built was to develop stage 4 at some stage.

John gives evidence that he reached an agreement with his brothers that he would be happy to share with them equally the income from the villas erected on lot 72 on the basis that the income was used to pay all development costs and all past and future expenses for the J&M Trust land. He says that he also reached an agreement with them that he would share with them equally the profits from the sale of the 31 residential blocks created on lot 73 and the adjacent block on the basis that the profits were first used to pay all development costs and expenses incurred up to the time of the sale of all the land. Tony denies those agreements. There is no objective evidence that they were reached. There is no evidence that an attempt was made to separate out the development costs of the 31 residential blocks. John has now resiled from the agreement in relation to the income from the villas. In my opinion, his evidence of the agreements must be rejected. Like much of John’s evidence on this subject, it is a contrived explanation that seeks unsuccessfully to explain away a variety of facts which are inconsistent with his case.

One other point should be mentioned in relation to the Blairmount land, if only because it received so much attention in the case. One piece of evidence relied on by Leo in support of his cross-claim was a document created in 1999 setting out the history of the Blairmount land for the purpose of obtaining taxation advice from Stephen Doyle & Associates. The version of the document exhibited to Leo’s affidavit relevantly stated:

It was part of Leo’s case that that document had been prepared by John (something John denies) and contains an important admission that supports Leo’s cross-claim.

In December 2022, John and Sam swore affidavits claiming that they had found in a file given to them by George a floppy disk which contained a different version of the document. Relevantly, that version was in the following terms:

It is Sam’s evidence that he prepared that version, although in cross-examination he said that it was typed by someone called Manooj. Following discovery of that version, John sought to demonstrate that Leo must have had a copy of the latter version at the time he prepared his affidavit and that the former version was created recently for the purposes of this litigation or, at least, that Leo’s affidavit was prepared by reference to the latter version, since his affidavit contained information (that John and Marie held part of the land on trust for the J&M Trust) that was only expressly stated in that version.

In my opinion, both those propositions must be rejected. There is no evidence that the version exhibited to Leo’s affidavit is a recent invention. The original was produced in Court and appears to be old. It was examined by a forensic expert, but no evidence was led from that expert that the document could not have been created in 1999. Moreover, there is little doubt that that version was sent by George to Mr Doyle in 1999.

As to John’s second proposition, that proposition is only said to go to Leo’s credit. However, there is no reason to think that Leo’s only source of information about the Blairmount land at the time he prepared his affidavit was the document he had at that time. It is quite plausible that he obtained other information from George before George’s death and, in particular that John and Marie held part of the land on trust for the J&M Trust. In any event, I am not prepared to conclude that Leo had the latter version of the document at the time he prepared his affidavit.

It remains unclear who the author of the version of the document that was sent to Mr Doyle was. The evidence is that John sent a version of the document to the Bankstown office under cover of a handwritten note. The likelihood is that that was the final version of the document, which George sent to Mr Doyle and that the version found on the floppy disk was an earlier draft prepared in the Liverpool office. There was no reason for George or Leo to amend the version provided to them. In any event, Leo no longer asserts that the version sent to Mr Doyle was prepared by John (his evidence that it was was rejected) and Leo, correctly in my opinion, now seeks to place little weight on the document. Nothing more needs to be said about it.

Before turning to events in 2018 which culminated in these proceedings, it is necessary to say something about the acquisition by John of a property in Eagle Vale in 2006, which is relevant to the later events.

The Eagle Vale land is a long strip of land on the other side of Badgally Road from the Blairmount land. A copy of the master plan for the development of the Blairmount and Eagle Vale land showing the position of the Eagle Vale land to the north of Badgally Road is Annexure F (2314352, pdf) to this judgment.

On 18 April 2006, the Mir Group, through Mir Bros (Hollywood Creations) Pty Ltd and Regot Pty Ltd lodged a tender (signed by Sam) for the Eagle Vale land. That tender was successful. However, on 8 May 2006, Sam sent an email to the vendor’s solicitors asking for the purchaser to be amended to John Mir Holdings Pty Limited as trustee for the John Mir Property Trust, which is what happened.

George and Tony found out about that change at a family wedding sometime later. Understandably, they were very upset. However, according to evidence given by Sid, they agreed that John could keep the land after John explained that he “purchased the Eagle Vale property because he wanted open space near his residence”. Sid says that his father “accepted that explanation from his brother and he, he moved on”. Tony’s evidence was to similar effect. He said:

Leo gave somewhat different evidence. He said this in cross-examination:

And later:

Despite the events of 2006, until mid-2018, the Mir Group continued on much has it had done before. It appears that by about that time considerable hostility had arisen between Sam on the one hand and Leo and some of Tony’s children on the other.

George’s wife, Therese, died in June 2018. Shortly after her death Leo, following a telephone conversation he had had with Marie, sent her a text message in which he said, among other things, the following:

It is not clear from the evidence what prompted this message, although Leo accepted in cross-examination that the reference to what John and Sam had done to his father was a reference to “Eagle Vale”.

At about the same time (on or about 26 June 2018), Tony telephoned John and complained about John and Sam’s treatment of Jason and David in the Liverpool office. Several days later, Sid sent John an email drafted by Tony (Tony does not have an email account) in which Tony apologised for his “outburst”. The email is a long and emotional one in which Tony goes through some of the family history. It starts by saying:

That email prompted an even lengthier email from Sam to Sid, which was sent on 4 July 2018. The tone and general tenor of the email can be obtained from the following extracts:

It is unclear what happened following that exchange of emails. At some stage, Jason started working from home permanently. There is no further correspondence between the families until late November 2018 (referred to below). None of the witnesses gave evidence of what happened over that period. The position appears to be that the business of the two offices carried on much as it had done before, with little contact between those working in the different offices.

On 29 November 2018, Sam sent an email to Sid and Leo attaching a “forthcoming offer I previously advised you of” to purchase a property at Jedda Road, Preston, which was owned by Mir Bros Unit Constructions Pty Ltd. The email asked the recipients “to advise [their] positions in relation to the offer”. Sam said in the email that both he and his father thought that it was a very good offer and that both were in favour of accepting it. Sid replied to that email on behalf of his father on 3 December 2018 saying:

The exchange of emails led to some discussions between John and Tony on a way forward. A meeting was arranged between representatives of the three families at Mr Mannion’s offices which John in a later email described as “a round table meeting with the Group’s Accountant for the purpose of Q & A session as to how the proposed Estate planning procedures can move forward”. It appears that at about that time Tony was giving instructions to his solicitor for the preparation of a will. In the course of giving those instructions, he says that he learned that John and Marie were the trustees of the J&M Trust, which meant that he could not dispose of any right to influence the control of that trust or of the land that it held in his will. Against that background, he arranged for Sid to send the following email on 6 February 2019 to John on his behalf:

John responded to that email on 11 February 2019. In relation to the first matter raised by Tony, John said:

The email went on to complain about “the negative, hateful and resentful attitude you display towards me and my son Sam”. It made various criticisms of David and Jason. It also referred to an “unpleasant” telephone discussion with Tony in which he had called John a “sneak”. The email concluded:

It was plain from the email that what John contemplated was splitting the assets of the group between the three families.

Two issues emerged in April and May 2019. One concerned access to a family vault at Rookwood Cemetery, which was resolved amicably. Another concerned the sale of a property at Wetherill Park which provoked a further exchange of acrimonious correspondence. The acrimony seems to have been exacerbated by John or Sam arranging for the agent who was appointed to sell the property to go to the Bankstown office to seek to persuade Tony and Leo to accept the offer and a misunderstanding of what Tony said to the agent. It appears that John regarded the sale as the first step in dividing the assets of the group and thought that the price that had been offered for the property was attractive, whereas Tony and George’s family thought that the price was inadequate. Some of the correspondence, particularly from John, adopted a more formal tone and was likely drafted by lawyers or with their assistance with the possibility of litigation in mind. For example, in a letter which John sent by email on 1 May 2019 to Sid and Leo but addressed to Tony and Rita (who, by then, acted for George under an enduring power of attorney), John said:

After setting out John’s account of the history of the differences between the three families since July 2018, which referred to Leo’s text message to Marie, the letter concluded:

Tony (through Sid) responded to that letter on 10 May 2019 saying that the meeting requested by John was “not being considered as a formal meeting request because, as we understand, there is no entity by the names proposed”. Tony said, however, that he was prepared to have an informal without prejudice meeting at the time and place stated by John. He pointed out that Rita was away.

As a result of a miscommunication, Tony did not attend the meeting (he mistakenly believed that John was not prepared to attend an informal meeting). On 16 May 2019 John sent an email to Tony (addressed to Sid) and Rita in which he made it clear that the purpose of the meeting he had called was “the dissolution of our partnership and the method of dividing the assets of the partnership”. The email stated that he wished to call “one final time for a meeting of the partnership” for that purpose. He nominated 12.30 pm on 24 May 2019. Rita replied that she had only just got back and would need more time to consider John’s letter. She gave a substantive response on 23 May 2019, in which she denied that there was any partnership and rejected the suggestion that the meeting should be a formal one.

It appears that a meeting occurred on 24 May 2019 and that it was agreed at that meeting that Sam, Leo, Sid and Jason would meet to resolve the division of the assets of the Mir Group business. A number of meetings occurred. In that context, Leo said that he wanted to change the directorships of a number of the companies (so that he replaced George) and Sid said that he wanted to do a similar thing. That proposal was rejected by Sam on the basis that the primary focus should be “on splitting up the partnership in an orderly way” and that a change in directorship would only complicate the process. Also in that context, Sam was asked (by Jason) to provide a schedule of all the Group’s assets that he had prepared so far. In response to that request, on 14 June 2019, Sam sent Leo, Sid and Jason an email attaching “a list of the assts that we have complied that we think can be sold immediately”. The only part of the Blairmount land that was included on that list were the villas on lot 72. That issue was raised by Jason in an email dated 17 June 2019, who sought additional information about the Blairmount land. It was Sid and Jason’s position (shared by Leo) that Sam should supply “ALL current and future documentation/reports on Mir Bros land holdings”.

On 5 July 2019, at Rita’s request, resolutions were passed replacing George and Therese as directors of various Mir Group companies with Leo.

The failure to reach agreement on the Blairmount land proved to be a sticking point. Although on one view John had made his position on the Blairmount land clear in February 2019, it is apparent that it was only brought home to Sid, Jason and Leo in June 2019 that John regarded the land the subject of the J&M Trust as his and was not prepared to supply information in relation to it. As a result, the discussions broke down. These proceedings were commenced on 12 December 2019.

John’s primary case is that the business conducted by the Mir Group was a business conducted by John, George and Tony in partnership. Originally, John’s case was that that partnership was established by an oral agreement reached between them in about 1957 at the suggestion of their mother. That case was all but abandoned in final submissions and, as finally put, John’s case was that at some time well before 2018 the three brothers by their conduct established a partnership which carried on the Mir Group business. The partnership is described as an “overarching” one because in some sense or another it sat above the various entities through which the Mir Group carried on business. Put in that way, the case raised the question of how it could be said that the partnership sat above the various entitles in the Mir Group and how that partnership could operate consistently with those entities. The plaintiffs never sought to address those questions directly. Instead, they pointed out that the relationship between George, John and Tony had many of the attributes of a partnership and they advanced a case by analogy to other cases in which it was said the Court had held that the use of corporate entities and trusts by persons in partnership is not inconsistent with the characterisation of their business relationship as a partnership. In the present case, it was said that the relationship between John, George and Tony was properly characterised as a partnership because it satisfied the requirements set out in s 1 of the Partnership Act – namely “the relation which exists between persons carrying on a business in common with a view of profit”. Consistently with the analogous cases, John, George and Tony had chosen to carry on that business through the various entities that comprised the Mir Group.

The first case relied on by the plaintiffs is the decision of the Western Australian Court of Appeal in Palermo v Palermo [2015] WASCA 49. In that case, two brothers were involved in various business activities involving property development, share dealing, corporate consulting, farming and an accounting practice over a period of 35 years. As Newnes JA (with whom Buss and Mazza JJA agreed) observed (at [2]) the businesses “led to the creation of a complex and extensive network of companies and trusts commonly referred to in the litigation as the ‘Palermo group’ or the ‘group entities’”. The brothers fell out. Following correspondence between the parties’ solicitors in which the appellant’s solicitors asserted that there was a partnership between their client and his brother that “exists outside and beyond the companies through which the Businesses were, and are, conducted”, the respondent commenced proceedings seeking declarations to the effect that they were not partners in the businesses. The appellant filed a counterclaim seeking declarations to the effect that (to quote Newnes at [3]) “it was to be inferred from their conduct over the years that there was an agreement between them that the businesses were to be conducted on the basis that the appellant and the respondent would share equally in the overall after-tax profit”.

At first instance, McKechnie J held that a partnership was inconsistent with the corporate and trust structures the brothers had established. He therefore made the declarations sought by the respondent and dismissed the appellant’s claim.

On appeal, the Court of Appeal overturned the decision at first instance and ordered that there be a retrial. In reaching that conclusion, Newnes JA said:

It is plain from these paragraphs that the Court of Appeal did not decide that the corporate and trust structures were, or were arguably, consistent with the existence of a partnership. Indeed, the Court of Appeal did not overturn the trial judge’s finding that there was no partnership. Rather, it held that the existence of an agreement having the pleaded characteristics – in particular, an agreement that as between the brothers the rights to capital and income or the burden of losses of the various entities under their individual or collective control were to be dealt with so that the total wealth generated would be shared equally – was not inconsistent with the corporate and trust structures they had established. The court ordered a new trial essentially on the question whether the parties had, as a matter of fact, reached such an agreement. The decision provides no support for the claim advanced by the plaintiffs in this case.

The second case relied on by the plaintiffs is the decision of the Court of Appeal in Warner Capital Pty Ltd v Shazbot Pty Ltd [2020] NSWCA 121 (Warner Capital). In that case, a Mr Warner and a Mr Kugel conducted an insolvency practice under the name “CRS Warner Kugel” between 20 September 2007 and 22 September 2014. On the day the practice was established, they also incorporated CRS Warner Kugel Pty Ltd (CWK). Each was a director, and their nominee companies were equal shareholders. CWK became the trustee of a unit trust known as the “CRS Warner Kugel Unit Trust”. The beneficiaries and equal unit holders in the trust were Warner Capital Pty Ltd (a company controlled by Mr Warner) and Shazbot Pty Ltd (a company controlled by Mr Kugel), to which equal distributions were made from time to time. In conducting the practice, Mr Kugel focused on corporate insolvency and administration and Mr Warner focused on personal insolvency administrations, although most corporate appointments were joint. Income derived by them both was paid to CWK by endorsing cheques drawn in their favour for remuneration. CWK employed the professional and administrative staff, who worked under the direction of Mr Warner and Mr Kugel, and leased premises and incurred other liabilities and expenses of the practice. In addition, Warner Capital and Shazbot acquired shares in a company known as Debtfree Pty Limited, which provided services of administering debt agreements under Part IX of the Bankruptcy Act 1966 (Cth). Mr Warner was principally responsible for running that business. On 22 September 2014, Mr Warner and Mr Kugel agreed to cease working together. Mr Kugel left the office and did not return. He resigned from his joint liquidation appointments and at the request of Mr Warner, Shazbot transferred its one share in Debtfree to Warner Capital for $1.00. Relevantly, one question before the Court was whether Mr Warner and Mr Kugel had carried on business in partnership and, if they had, the scope of the partnership.

Gleeson JA (with whom Macfarlan and Meagher JJA agreed), held that Parker J at first instance was correct to conclude that they carried on business in partnership, although the partnership did not extend to the Debtfree business. In reaching that conclusion, Gleeson JA pointed out that Mr Warner and Mr Kugel did the work and were paid fees for that work. They were not employees of CWK. There was no contractual relationship between CWK and the entities for whom the work was done. When Mr Warner and MR Kugel paid the fees they received to CWK they “were distributing “their” income to CWK” (at [67]). In relation to CWK, his Honour said (at [70]):

As to the fact that no partnership accounts or tax returns were prepared or lodged, his Honour said at [75]:

The decision in Warner Capital is of no assistance to the plaintiffs in this case. The evidence in that case established that Mr Warner and Mr Kugel were in a professional partnership which was provided with administrative services by a company they controlled. As a result of a misconception, Mr Warner and Mr Kugel paid the whole of the income of the partnership to that company. There was no “overarching” partnership, and the assets, income and expenses of the partnership were quite distinct from those of the company.

The third case relied on by the plaintiffs is Zheng v Deng [2020] NZCA 614. In that case, Mr Zheng and Mr Deng who were friends had over a number of years carried on a number of property development and construction projects through various companies. They agreed to separate their affairs from 31 May 2015. They negotiated the terms of a document setting out how the assets and liabilities of the various projects would be divided. However, they could not reach agreement on several outstanding issues between them. Eventually, Mr Zheng and a company he controlled commenced proceedings against Mr Deng and eight other defendants in which Mr Zheng alleged that he and Mr Deng had been in partnership and that the assets of the partnership included shares held by one or both of them in a number of companies that undertook particular projects. The companies themselves were controlled by Mr Zheng or Mr Deng or, in some cases, friends and relatives acting as nominees.

The trial judge rejected Mr Zheng’s claim largely on the basis that the existence of a partnership was inconsistent with the corporate structures Mr Zheng and Mr Deng had put in place and depended on evidence given my Mr Zheng that his Honour did not accept. The Court of Appeal overturned the decision at first instance and held that there was a partnership. It rejected the trial judge’s view that a partnership was inconsistent with the corporate structure that the parties had adopted. The question was whether, as a matter of fact, Mr Zheng and Mr Deng had carried on business in common. An important factor in reaching the conclusion they had was a set of internal accounts kept by Mr Zheng and Mr Deng “which sought to ensure equal contributions to the capital of the overall venture, and an equal sharing of benefits and burdens from the venture and the various projects it undertook” (at [99]). The Court of Appeal also thought that “conclusive evidence” of the existence of a partnership could be found in the separation document that they negotiated, which clearly proceeded on the basis that they were in an equal partnership: at [102].

The decision in Zheng v Deng is also of limited assistance in this case since the outcome turned on the particular facts of the case.

As Zheng v Deng illustrates, it is quite possible for a partnership to hold assets through companies. In that case, the assets of the partnership are the shares in the companies. To the extent that the shares are not held equally by the partners of an equal partnership, it is open to the partners to agree that they are held on trust for the partners in equal shares. Similarly, it is possible for the shares to be held by a nominee, who in effect holds the shares on trust for the partnership. If the partnership is dissolved, the shares can be sold or the companies can be wound up and the assets of the company distributed to the partnership and then in accordance with the partnership agreement.

However, the same principles cannot apply where the underlying assets are the subject of a trust. In that case, the rights to the underlying assets are governed by the terms of the trust. They cannot be governed by the terms of a partnership at the same time. Of course, a partnership itself could be a beneficiary of a trust, in which case the rights of the partnership to the trust assets are governed by the terms of the trust. But in the present case, it is not suggested that the partnership is a beneficiary of the various trusts the parties established. Rather, John in substance claims that the real property belonging to the Mir Group is partnership property – that is, it is held on trust for the partners, presumably by the companies in which the real property is vested. But such a trust is inconsistent with the fact that the companies hold the properties on trust in accordance with trust deeds and the beneficiaries of those trusts are not John, George and Tony, or not them alone.

As Tony points out in his written submissions, in the case of some of the trusts, the beneficiaries include persons outside the immediate families of the three of them. For example, Mir Bros Constructions Pty Ltd and Mir Bros Industries Pty Ltd are the trustees of the MBC Trust established on 7 December 1978, which holds a factory and warehouse in Belmore. Norman’s daughter, Sarah, is a beneficiary of that trust. Similarly, Mir Bros Enterprises Pty Ltd is the trustee of the Samuel Mir Trust established on 10 April 1972, which holds property at St Helens Park. Sidney Mir (another brother of John and Tony), Salam Mir (Sidney’s wife) and Diane Pack (a sister) are named as income beneficiaries of that trust. Mir Bros Enterprises Pty Ltd is the trustee for the MBE Trust established on 7 December 1978, and in that capacity holds a property in Bankstown. The corpus of that trust can only be distributed at the date of distribution to the children of George, John and Tony. The trustees cannot both hold the properties on trust in accordance with the relevant trust deeds and for those beneficiaries (among others) and at the same time hold the assets on trust for a partnership between John, George and Tony.

The point made in the previous paragraph is illustrated by considering the relief claimed by John. John seeks the appointment of a receiver to the partnership for the purpose of winding up the partnership. But if that order is made, what could the receiver do in relation to the various trusts that hold Mir Group property? Even assuming that the receiver could take control of the property held on trust, he could only do so in accordance with the terms of the relevant trust deeds. Then what could the receiver do? John does not and cannot provide an answer to this question. In my opinion, this is a fatal problem with John’s claim that there was an overarching partnership. The parties, on accounting advice, chose a particular structure through which to conduct their business. That structure is inconsistent with the partnership John asserts exists. The fact that George, John and Tony described their relationship as a partnership and may have believed that they were partners cannot alter the position.

A similar problem exists in relation to the sub-partnerships that are said to hold some Mir Group assets. As the editors of R I Banks, Lindley & Banks on Partnership (19th ed, 2010, Sweet & Maxwell) at para 5-67 point out in a passage relied on by the plaintiffs:

There is a question whether a number of the partnerships identified by the plaintiffs exist, to which it will be necessary to return. But assuming the partnerships exist, a number of them do not fall within the description given in Lindley & Banks. For example, one partnership, which acquired several properties, is said to be a partnership between the three brothers’ wives. If the wives hold their interests in the properties beneficially, it is difficult to see how the three brothers have any interest in that partnership at all. If the wives hold their interests on trusts for their husbands, it is difficult to see in what sense the wives could be said to be in partnership.

A number of the alleged partnerships are between Mir Group companies in which the brothers or members of their respective families have a third interest. Again, if the properties were held beneficially by the companies which owned them, it is difficult to see how a partnership between George, John and Tony had an interest in them. It cannot be said that the partnership operated by the brothers had an interest in the partnership. Nor could it be said that the sub-partnership was formed between a group of partners of the head partnership (that is, the partnership between George, John and Tony). On the other hand, if the “partners” in the sub-partnerships held their interests on trust for George, John and Tony, it is difficult to see how those partners were carrying on business in partnership.

As the plaintiffs point out in their submissions, much of the evidence is consistent with the existence of a partnership. It seems clear, for example, that the Mir Group has been operated as a single business under the control of George, John and Tony, at least until about 2017 and that, as a result of an agreement between them, the profits of that business were shared equally between them or their holding companies and their wives. It also seems clear that on occasions, each of the brothers described themselves as carrying on business in partnership. But those facts cannot overcome the difficulties in the plaintiffs’ case that I have referred to.

It may be that the facts on which the plaintiffs rely are sufficient to establish that there was an agreement between George, John and Tony that the Mir Group would be operated in the way described. So, for example, it seems plain that the three brothers agreed that the total profits of the collection of companies, trusts and partnerships that constituted the Mir Group would be divided between them and their families equally. And it seems likely that the brothers agreed for example that to the extent necessary they would procure that members of their families who were on the boards of group companies would vote in a way to ensure that result, and that they were able to deliver on that agreement. It will be necessary to return to this issue in the context of considering the cross-claim. However, no such alternative case was advanced by the plaintiffs in their pleadings and, in the absence of a pleaded case setting out clearly the terms for which the plaintiffs contend, it is neither appropriate nor possible to make findings on those matters except to the extent that those findings may be necessary to deal with the cross-claim.

The plaintiffs’ alternative case is that the corporations that form part of the Mir Group should be wound up on the just and equitable ground set out in s 461(1)(k) of the Corporations Act, that receivers should be appointed to the trusts or alternatively orders should be made requiring the trustees to bring forward the vesting dates of the trusts (although that order was not sought until final submissions), and that the partnerships should be wound up following notice of dissolution given by John or the partners that he controls.

An order is sought under s 461(1)(k) on two interrelated bases. One is that each of the companies is controlled by George, John and Tony or members of their immediate families and that there has been a breakdown in the relations between John and his immediate family on the one hand and George’s immediate family and Tony and his immediate family on the other so as to make it just and equitable that the companies be wound up. The other is that the breakdown in the relationship has meant that the parties are in deadlock over the operation of the property development side of the business.

Both are well recognised categories of case where an order under s 461(1)(k) may be appropriate. The leading authority in relation to the first category is the judgment of Lord Wilberforce in Ebrahimi v Westbourne Galleries Ltd [1973] AC 360 at 379, where his Lordship said:

An example of the second is the decision of Palmer J in Johnny Oceans Restaurant Pty Ltd v Page [2003] NSWSC 952, who ordered that a company be wound up on the just and equitable ground on the basis that there had been “a complete deadlock between the two opposing camps, that there [had] been an irretrievable breakdown in the relationships between the members of the company, and that the company's operations in the future [would], therefore, not be able to be conducted in any commercially viable and sensible way” (at [32]).

What is critical in the first category of case is not simply that there has been a breakdown in the relationship. The breakdown must result in such a departure from the basis on which the company was formed or operated so as to make it just and equitable that the company be wound up. As Brereton J explained in In the matter of Catombal Investments Pty Ltd [2012] NSWSC 775 at [22]:

The plaintiffs’ case is that the breakdown in the relationship between John’s family on the one hand and George and Tony’s families on the other has had two main consequences. One is that previously, important decisions – such as decisions about the acquisition of properties – were taken by consensus between George, John and Tony, whereas now no consensus can be achieved. The other is that previously the trust and confidence that existed between George, John and Tony meant that each could operate largely independently in the different parts of the business for which they were responsible whereas now that cannot happen. These matters are said to justify the winding-up of each company.

The plaintiffs give a number of examples of these consequences, including the fact that no new properties have been bought since 2019, the failure to reach agreement concerning the sale of the Jedda Road property, the failure to sell the properties at Cowpasture Road, Wetherill Park, even though it is said that the group has been attempting to sell them since 2017, and the failure to sell the remaining four subdivided lots at St Helen’s Park. They also point to events that have occurred after these proceedings were commenced, including correspondence in November 2020 with Campbelltown City Council in which Tony and Leo, as the majority directors of the Mir Group of Companies Pty Ltd, gave instructions that going forward Leo was the sole contact on behalf of the applicant in relation to a modification application that had been lodged with the Council, the commencement of court proceedings by John in October 2021 to obtain access to documents stored at the Bankstown office (which were successful) and instructions given to Marsdens Law Group in January 2020 sent by Leo “On behalf of Mir Bros Group of Companies, Other Directors” that going forward they could no longer act on instructions from one director.

Some of those matters are also relied on in support of the claim that the breakdown in the relationship has resulted in a deadlock in relation to the property development aspect of the business. The 2FACLS gives as particulars of that allegation the absence of directors or shareholders’ meetings “to determine the future business activities of the companies”, the fact that Tony and Leo have ceased attending the Liverpool office and John has ceased attending the Bankstown office and the fact that no development has taken place, no new properties have been bought and the parties have been unable to reach agreement on the sale of some properties.

The defendants seek to answer the plaintiffs’ case in two ways. First, they submit that the breakdown in the relationship is not as serious as the plaintiffs contend. They point to the fact that from time-to-time disagreements have arisen between George, John and Tony which have not affected the operations of the group – such as the disagreement over the Eagle Vale land in 2006. They also point out that following Tony’s “outburst” in June 2018, the business of the two offices appears to have continued much as before and that the parties had civil discussions in early 2019 (about resolving their differences) and had no difficulty in dealing amicably with access to the family vault at Rookwood Cemetery.

Second, the defendants submit that the consequences of the alleged breakdown have been exaggerated by the plaintiffs. For example, John relies on the failure to reach agreement in relation to the sale of four lots in a development in St Helens Park, whereas an email dated 25 May 2022 from Leo to John, after pointing out that it appears that the value of those lots has increased substantially since mid-2020, states that “we believe now may be a more opportune time to consider selling the 4 remaining lots we have there. Your views on this, to be put to a Director’s meeting, would be welcome”. John, in his final written submissions describes this as an “artificial and forced exchange of views”. It is certainly a departure from the informal way the business was previously run. But it is not suggested that it does not express a genuine willingness to sell.

John, in his affidavit evidence, points to the fact that the development of properties at Glen Alpine, Corrimal Street Wollongong and Kelso are not progressing. The evidence in relation to the Glen Alpine development is scant. John says that he is not aware of any progress on that development since February 2019. However, he gives no admissible evidence of what steps need to be taken and what has prevented those steps from being taken. As Leo points out in his written submissions, the delays in relation to the other two developments appear to be because of issues specific to those developments. In the case of the development in Wollongong, the Council in June 2019 rejected the high-rise development proposed by the Mir Group, and it appears that the group has decided to wait in the expectation that the Council will change its attitude to high rise developments in the future. In the case of the development at Kelso, there is no evidence that John or Sam have been seeking agreement to some proposal which has been resisted by Tony or Leo.

John also points to the fact that agreement has not been reached on the sale of some properties, such as the properties at Wetherill Park and Jedda Road, Prestons. However, as the defendants’ point out, the Mir Group has received higher offers for the Wetherill Park property than the one that John complains the other families refused to accept. The same is true of the Jedda Road property.

In my opinion, these submissions are not an answer to the plaintiffs’ case. In late 2018, the parties commenced negotiations for the division of the group’s assets between the three families. It seems that those negotiations stalled because Sam and John wanted properties to be sold in advance of a final agreement whereas the other families were seeking a final agreement first. The negotiations ultimately broke down because John insisted that the Blairmount land held by the J&M Trust was not part of the Mir Group’s assets. Not long after, John commenced these proceedings. In my opinion, the negotiations to divide the group’s assets were a recognition by the parties that their relationship had broken down to the point where the best solution was to split the group. The fact that those negotiations were conducted cordially for a time says nothing about the parties’ willingness to work together on an on-going basis. The negotiations and subsequent court proceedings explain why some of the activities of the Mir Group have been put on hold. It would be extraordinary if the position were otherwise. And it would be extraordinary to think that after this litigation the parties could return to a position where the Mir Group worked as it had done under the control of George, John and Tony.

The breakdown in the relationship has led to a fundamental change in the way in which the group operates. It seems apparent that the group can no longer operate based on consensus. In addition, the loss of mutual trust has meant that Tony, and Leo in particular, are no longer willing to leave the development side of the business to be run by John and Sam. Leo’s instructions to Marsdens and the Campbelltown Council are examples of this change. Leo gave this evidence in cross-examination:

It is apparent from this evidence that it is Leo’s view that the group can work by insisting on the legal rights arising from the company structures that have been put in place. Sid gives affidavit evidence to similar effect, when he denies that any of the companies are in deadlock because each relevant company has three directors (a representative from each family and now most often Leo, John and Tony) and decisions can be taken by a majority vote. There can be little doubt that that is a fundamental departure from the way the group has operated in the past.

It does not follow, however, that the plaintiffs are entitled to relief under s 461(1)(k) of the Corporations Act. The question that must be asked in relation to each company in the Mir Group is whether it is just and equitable for that company to be wound up. The plaintiffs’ case appears to be that it is because each company is a member of the Mir Group and there has been a fundamental departure from the way the group has worked in the past. As part of that case, the plaintiffs contend the relationship between the members of John Mir’s family and the other two families has broken down to the point where the none of the companies can operate effectively. There are, however, problems with these contentions.

Each company was established on professional advice, with a particular structure often to fulfill a particular function (such as to hold a specific property). In most cases, the company was established to act as a trustee. Absent a partnership, it is not suggested that there is some over-arching agreement between George, John and Tony, or the members of the companies or anyone else, that affect the companies’ operations. In those circumstances, the question in relation to a specific company must be whether it is just and equitable to wind up that company having regard to its characteristics and circumstances, not whether it should be wound up because of circumstances external to it. No attempt, however, has been made by the plaintiffs to analyse the circumstances of each company with a view to demonstrating that those circumstances indicate that it is just and equitable for the company to be wound up. For example, no submissions have been made on whether the relationship between directors of specific companies has broken down or the consequences for that company if it has. As I have said, in many cases, the company simply holds property on trust as an investment and distributes its income to the beneficiaries of the trust. Assuming that it could be said that the relations between the directors of those companies has broken down, it is difficult to see why that would affect the ability of the company to function.

It might be argued that each of the companies was established as a trustee with the intention that, notwithstanding the precise terms of the relevant trust deed, the trust’s income and capital (when it becomes distributable) will be distributed equally between the three families. Accepting that that is the case, there is no suggestion that any breakdown in relations has affected the ability or willingness of each company to do that.

Moreover, it is difficult to see what would be achieved by winding up the trustee companies. That would not lead to the winding up of the trusts. More likely, it would lead to the replacement of the trustees. The new trustees would continue to hold the properties in accordance with the terms of the relevant trust deeds.

As is apparent from Annexure B, not all the companies that form part of the Mir Group and that hold properties do so as trustees and not all companies in the group own property. For example, Mir Bros Unit Constructions Pty Ltd, Mir Bros Rural and Urban Industries Pty Limited, Mir Bros Community Planning Pty Limited, Mir Bros Residential Developments Pty Ltd and Mir Bros Westside Investments Pty Ltd hold as tenants in common a property at Allingham Street, Condell Park, NSW. Leo, John and Tony are the directors of each of those companies. The property consists of 17 factory units and four office suites, which currently generate rent of approximately $662,423.00. Mir Bros Unit Constructions Pty Ltd and Mir Bros Westside Investments Pty Ltd also act as trustees of (different) discretionary trusts. In the case of properties held by group companies but not as trustees, including the property at Allingham Street, Condell Park, it is asserted that those properties are held in a sub-partnership. More will be said about the sub-partnerships shortly. However, it is not apparent why the five companies that hold the property at Allingham Street, Condell Park should be wound-up. It is true that the directors of those companies are Leo, John and Tony and that on the findings I have made the relationship between them has broken down. However, there is no evidence that that breakdown has affected the administration of those companies.

Sheraton Homes Pty Ltd is an example of a company that holds no property. Its directors are John, Jason and David. According to evidence given by Sid, Sheraton Homes Pty Ltd has no material assets. It is the company that in the past has undertaken building works for the Mir Group and is still used by both the Liverpool and Bankstown Offices to provide repairs and maintenance quotations to other group companies. There is some evidence that the relationship between John on the one hand and Jason and David on the other has broken down. Of particular relevance is Tony’s complaint to John concerning the way that Jason and David were treated in the Liverpool office and the fact that Jason now works from home. But assuming the relationship has broken down, it is unclear how that breakdown has affected the operation of the company.

Two things may be said in summary in relation to the plaintiffs’ alternative case under s 461(1)(k) of the Corporations Act. First, that case cannot succeed in relation to companies which simply hold investment properties on trust. There is no evidence that those companies are unable, because of any breakdown in the relationship between members of the Mir family, to discharge their obligations as trustees. Moreover, there is little utility in winding up those companies, since what John really seeks is the winding up of the trusts which hold the relevant properties and the distribution of the assets of those trusts between the three families. Second, in the case of other companies, in the absence of submissions directed to the specific circumstances of those companies, it is not possible to conclude that the companies should be wound up. It is not for the Court to seek to identify in the evidence material that might justify a conclusion that the relevant company ought to be wound up. As the examples referred to earlier demonstrate, it is not obvious from the mere finding that there has at some level been a breakdown in the relationship between family members who are most involved in the business of the group that it would be just and equitable for the companies to be wound up.

Two other points should be made about the case based on s 461(1)(k) of the Corporations Act. First, the defendants submit that, even if the Court were otherwise minded to make an order under s 461(1)(k), it should refuse to do so in the exercise of its discretion because the breakdown in the relationship was caused by John. Second, Sam (as a director of Acclaim Pty Ltd (Acclaim)) seeks leave to bring a derivative action on behalf of Acclaim under sections 236 and 237 of the Corporations Act to windup Jedda Farm Pty Ltd (Jedda Farm). Acclaim has standing to seek that relief under s 462(2)(c). That relief is necessary because Acclaim is the sole shareholder of Jedda Farm, which owns the property at Jedda Road, Prestons.

The Court may refuse relief under s 461(1)(k) where the plaintiff is the primary contributor to the breakdown of the relationship: see In the matter of Amazon Pest Control Pty Limited [2012] NSWSC 1568 at [22] per Black J and the cases cited there. The defendants submit that John was the principal cause of the breakdown of the relationship because of the position he took on the Blairmount land. I do not accept that submission. The relationship had broken down over a period of time and before ownership of the Blairmount land had become an issue. The cause of the breakdown is unclear and complicated. No doubt there were residual resentments arising from the acquisition of the Eagle Vale land by John. But most likely it has been caused by the increasing involvement of the next generation of the three families in the Mir Group business and differing views on the respective contributions that members of that generation are making to the business. I accept that John has contributed to the disharmony that has arisen as a result. But I do not think it could be said that he bears primary responsibility for the current situation.

It follows that, if the issue had required determination, I would not have refused relief because John lacked clean hands.

Having regard to the conclusions I have reached, it is unnecessary to consider Sam’s application to bring proceedings in the name of Acclaim further.

The plaintiffs seek two forms of relief in relation to the trusts. First, they seek the appointment of receivers to the assets of each of the trusts. Second, they seek dissolution of the trusts said to form part of the Mir Group on the basis that the purpose of the trusts is now at an end. In my opinion, there is no basis for granting either form of relief in this case.

The purpose of the appointment of a receiver to trust assets is to safe-guard those assets where they appear to be in jeopardy: JD Heydon and MJ Leeming, Jacobs’ Law of Trusts in Australia (8th ed, 2016, LexisNexis Butterworths) at 563; Yunghanns v Candoora No 19 Pty Ltd (No 2) [2000] VSC 300; (2000) 35 ACSR 34 at [66] (Warren J); Re Equititrust Ltd [2011] QSC 353; (2011) 288 ALR 800 at [53] (Applegarth J); Middleton v Dodswell (1806) 13 Ves 266; 33 ER 294; Barkeley v Reay (1842) 2 Hare 308; 67 ER 127. As Warren J said in Yunghanns (at [64], citing an earlier edition of P Walton, Kerr & Hunter on Receivers and Administrators (21st ed, 2020, Sweet & Maxwell)):

These principles have been extended to cases where the trust carries on a loss-making business which is eroding the value of the trust assets. Basecove Pty Ltd v Dolores Lavin Management Pty Ltd [2009] NSWSC 1315, a case relied on by the plaintiffs, is an example. In that case, the plaintiff, of which Ms Toppi was the principal, and the defendant, of which Ms Lavin was the principal, were the equal and only unit holders in a unit trust, the chief asset of which was a property in Darlinghurst that was purpose-designed for use as photographic studios. The second defendant, Luxe Studios Pty Ltd, was the trustee of the trust. Ms Toppi and Ms Lavin each held one of the two issued shares and were the directors of Luxe Studios. The property was occupied by the third defendant, Luxe Productions Pty Ltd, in which each of Ms Toppi and Ms Lavin held one of the two issued shares and of which each was also a director. The relationship between Ms Toppi and Ms Lavin broke down. The plaintiff sought, among other relief, an order that a receiver be appointed to the trust assets. Although Brereton J placed emphasis on the fact that the companies and trust were in the nature of a quasi-partnership where the relationship between the individuals involved in the business had broken down, critical to the decision to appoint receivers to the assets of the trust was the fact that “the entities, if they are not technically insolvent, are, on the evidence, apparently affected by a substantial deficiency of funds and are trading at losses, and one cannot have the slightest confidence that that is going to be reversed” (at [11]). Consequently, the appointment of a receiver was necessary to protect the remaining value in the trust property.

In the present case, there is no evidence that the trust assets are in jeopardy. It is not suggested that any of the corporate trustees are trading at a loss or that the trust assets are at risk for some other reason. The plaintiffs do suggest that some developments are not proceeding as they should because of the breakdown in the relationship between the parties. However, as I have explained, the evidence in support of that proposition is weak. Moreover, no attempt has been made to tie particular developments to particular trusts and to analyse the consequences for that trust of any delays in the development. There is no evidence that the value of the trust assets has been diminished.

As to the second form of relief, there is no basis for it. As Barrett J explained in Re Gayton [2001] NSWSC 473 at [29] (cited with approval in Baba v Sheehan [2019] NSWSC 1281 at [74] per Parker J):

The same point was made by Brereton JA in Re Austec Wagga Wagga Pty Limited (in liquidation) [2018] NSWSC 1476, where his Honour said:

Broadly speaking, the trusts in this case fall into two categories. Many of the trusts are discretionary trusts which provide for the distribution of the income of the trusts to George, John, Tony, their respective wives and children and corporations nominated by those beneficiaries. In some cases, the beneficiaries include other members of the Mir family and charities. In some cases, the trustee is given power to make distributions of capital as well as income. The trustee is generally given a power to bring forward the vesting date of the trust, at which time the trustee is to hold the trust property for such of the children of George, John and Tony as may be alive at that time in the proportions determined by the trustee in its absolute discretion.

Some trusts are unit trusts. In those cases, the respective holding companies of George, John and Tony hold equal numbers of units in the trust, which entitle the unitholders to equal distributions of the income and capital of the trust. The unit trust deeds generally provide a mechanism for unitholders to sell their units after first giving the remaining unitholders a right to buy the units to be sold at a price nominated by the seller or a price determined by an independent and competent valuer appointed by the trustee. Many of the unit trust deeds also provide a mechanism by which a unitholder can redeem its units at a price reflecting the then current value of the units.

In the case of the unit trusts, the trust deeds provide mechanisms by which a unitholder can dispose of its units. There is no suggestion that John has sought to use those mechanisms to sell or to redeem the units held by his holding company, and no reason to think that the trustee would not comply with that mechanism if John sought to use it.

The only mechanism under the discretionary trust deeds for winding up the trusts is the mechanism of bringing forward the vesting date, with the result that generally speaking the trust assets are to be distributed to the children of George, John and Tony in such proportions as the trustee determines. As Parker J points out in Baba v Sheehan [2019] NSWSC 1281 at [76], the Court does have power under Part 54 of the Uniform Civil Procedure Rules 2005 (NSW) to order a trustee to take steps in the administration of a trust, including bringing the vesting date forward. However, it would only do so if the interests of the beneficiaries demanded it.

There is no basis for making such an order in this case. Some of the trusts include as their beneficiaries charities and Mir family members outside the immediate families of George, John and Tony. Those beneficiaries are not even represented in the proceedings. The effect of bringing forward the vesting date would, in the case of many of the trusts, mean that Tony and John and corporations nominated by them and by George would no longer be income beneficiaries of the trust. How that would be in their interests is not explained. Essentially in this case one group of beneficiaries (John and his family) want the vesting date brought forward because they want access to their share of the trust assets now. But that is not a basis for the Court requiring the trustee to exercise a right conferred by the trust deed. The fact that they seek that relief because their relationship with some of the other beneficiaries has broken down does not alter the position.

The partnerships or sub-partnerships that are said to form part of the Mir group fall into two categories. First, there are what are said to be partnerships between Mir Group companies. In each case, the partnership arises in circumstances where two or more Mir Group companies hold one or more properties but not as trustees. There appear to be three such partnerships still in existence. One is a partnership between Mir Bros Real Estate Pty Limited and Mir Bros Properties Pty Ltd, which developed and retains as an investment a block of 18 units in Georges Road, Wiley Park, NSW. The second is a partnership between West Side Investments Pty Ltd, Mir Bros Community Planning Pty Ltd, Mir Bros Rural & Urban Industries Pty Ltd, Mir Bros Residential Development Pty Ltd, and Mir Bros Unit Constructions Pty Ltd, which holds the property at Allingham Street, Condell Park. The third is a partnership between G M Amalgamated Investments (Dulwich Hill) Pty Ltd and J M Associated Investments (Dulwich Hill) Pty Ltd, which holds a property at St Helens Park. In each of these cases, there is no partnership agreement. However, there is in evidence tax returns lodged by the alleged partnerships and it seems to be common ground that they are partnerships. Certainly, Sid, in his affidavit evidence, proceeds on the basis that they are.

Second, there are partnerships where the partners were George, John and Tony or entities associated with them. These partnerships are identified in Annexure C. As is apparent from that annexure, George is said to have been a partner of many of those partnerships. There is no partnership agreement in respect of any of the alleged partnerships. It is the plaintiffs’ case that a partnership can be inferred from the co-ownership of investment properties, the equal sharing of profits and the fact that with one exception tax returns have been lodged for the alleged partnerships. The exception is a partnership said to have existed between Leo, Sam, Tony, Sid, David and Stephen Mir (one of Tony’s sons) which holds Unit 511, 3 Orchard Avenue Surfers Paradise, Queensland. George, Marie and Mary own unit 509 in the same development and George, John and Tony own unit 510. Partnership returns have been lodged in respect of those two properties. The income from unit 511 is paid to the Sheraton Trust. The property, therefore, is plainly regarded as part of the Mir Group business. I accept that, in those circumstances, the failure to lodge partnership returns in respect of that property is likely to have been an oversight.

I also accept that each entity identified in Annexure C was a partnership. Section 2 of the Partnership Act relevantly provides:

In the present case, the ownership of the relevant properties could not be described simply as the ownership of property as tenants in common and the sharing of the gross returns of the properties. Rather, the properties were acquired as part of a business carried on by George, John and Tony and on the basis that they and their families would share the profits equally. It is true that the partners are often the wives of John and Tony (together with George) and it is also true the parties purported to create different partnerships in relation to different properties. However, there is nothing to prevent a partnership from coming into existence in relation to a single property; and the relationship between the owners of the properties must be understood in the context of the broader business. Although, as I have explained, that broader business cannot be characterised as a partnership, the nature of that business is relevant to the characterisation of the relationship between individuals who hold property that forms part of that broader business. The fact that the relevant individuals have lodged partnership tax returns is not conclusive. It does, however, support the view that they carry on business in partnership. In his affidavit evidence, Sid pointed to the fact that a number of Mir Group companies had lodged partnership tax returns as evidence that those companies were in partnership. None of the parties took issue with that evidence; and it is difficult to see why a different approach should apply to the returns lodged by the individuals (and in some cases companies controlled by George, John and Tony).

Relevantly, there are three bases on which a partnership may be dissolved. First, section 32(c) of the Partnership Act provides that subject to any agreement between the partners, a partnership is dissolved ”[i]f entered into for an undefined time, by any partner giving notice to the other or others of the partner’s intention to dissolve the partnership”. Second, s 33(1) of the Partnership Act provides “[s]ubject to any agreement between the partners, every partnership is dissolved as regards all the partners by the death or bankruptcy of any partner”. Third, under s 35(f) of the Partnership Act, the Court may, on the application of a partner, order a dissolution of the partnership “[w]henever in any case circumstances have arisen, which, in the opinion of the Court, render it just and equitable that the partnership be dissolved”.

These provisions have no application to the three partnerships between Mir Group companies. The partners of those partnerships are the relevant companies. None of them has given notice of dissolution of the partnerships or made an application under s 35(f).

There is no suggestion that in the case of the other partnerships, the partners reached an agreement contrary to ss 32(c) or 33(1). Consequently, the partnerships of which George was a partner were dissolved as a result of his death. In other cases, the partnerships are clearly partnerships for undefined terms. Consequently, any partner can give notice of dissolution of the relevant partnership. There is a question whether John or entities associated with him have given notice of dissolution of the other partnerships. On 6 February 2023 (the day the hearing commenced) Dentons, John’s solicitors, sent an email to the other partners in the partnerships, and their solicitors stating:

This notice cannot ground relief in these proceedings, since, even if it is effective, it depends on a contingency that has not yet occurred.

Leo’s primary claim in the cross-claim is that the Court should grant a declaration that the terms of the J&M Trust include the following:

In the alternative, Leo seeks a declaration to the effect that “the J&M Trust is one of the “Property Trusts” as that term is defined in the Second Further Amended Commercial List Statement”. “Property Trusts” is defined in that document as “each of the trusts listed in Schedule 3 to this Second Further Amended Commercial List Statement [that] was established by the Partnership based on professional advice for tax purposes in acquiring, holding or developing the properties to be acquired by the Partnership”. The “Partnership” is the over-arching partnership contended for by the plaintiffs. Leo also seeks a declaration to the effect that the J&M Trust should be treated in the same way as other Mir Group entities. In final oral submissions, Mr Elliott SC, who appeared for Leo, proposed that the Court should make orders the effect of which would be to require the plaintiffs to lodge a new subdivision of the Blairmount land to separate the land owned by John and Marie in their own capacities from land held on trust for the J&M Trust and to replace John and Marie as the trustees of that trust. Leo had sought in a further amended cross summons an order removing John and Marie as the trustees of the J&M Trust. However, it is clear that that order could not be made since they own the land over which the trust has been declared and part of that land is owned in a personal capacity.

It is apparent from the findings I have made that I accept that the J&M Trust is a Mir Group entity. The only questions remaining are whether the terms contended for by Leo are terms of the J&M Trust and what relief should be granted.

There is nothing in the way in which the J&M Trust was established which suggests that it was to be treated any differently from the other trusts established by the George, John and Tony to acquire property for the Mir Group. Leo submits that what makes it different is that the trustees are John and Marie rather than representatives from each of the three families. However, that was a necessary consequence of the fact that part of the same lots to be acquired by the trust were to be acquired by George and Marie personally for their family home. It does not establish that the parties to the trust deed intended the J&M Trust would operate differently from any of the other trusts. Moreover, the terms for which Leo contends are inconsistent with the terms of the trust deed. Like the other Mir Group trusts, the J&M Trust is a discretionary trust that has as its beneficiaries George, John and Tony and members of their immediate families.

As I have said, on the evidence before the Court, there is much to be said for the proposition that George, John and Tony, by their conduct and by instructions given to advisors, impliedly agreed that they would exercise their powers as trustees, directors or partners of Mir Group entities or would procure that members of their families who acted as trustees, directors or partners of Mir Group entities would exercise their powers to ensure that the profits of the group would be distributed equally between the three families. If there was such an agreement, questions arise concerning its status following George’s death and whether it had other terms and other parties (such as family members). However, no party advanced an argument in support of such an agreement. The only agreement advanced by the plaintiffs was a partnership agreement, which had the equal sharing of profits as one of its terms. No agreement was advanced by Leo, or the other defendants, apart from Leo’s contention that the J&M Trust contained such a term. In those circumstances, no finding or declaration can be made concerning the existence of such an agreement or its terms.

There are other difficulties with the relief claimed by Leo. The alternative declaration sought by him is premised on the existence of the partnership contended for by the plaintiffs. I have rejected the existence of that partnership. The relief foreshadowed in closing oral submissions was not claimed in the cross-summons and raises the question whether there would be any impediment to a new subdivision which divided the J&M Trust land from the land held personally by John and Marie. Understandably, the plaintiffs provided the Court with no submissions on that relief.

The conclusions I have reached could not be regarded as a satisfactory resolution of the case. I have accepted the plaintiffs’ claim that the collection of companies, trusts and partnerships described as the Mir Group has over an extended period operated as a single business which was originally controlled by George, John and Tony and which in more recent times is increasingly controlled by their respective eldest sons (completely now, in Leo’s case). I have also accepted that the relationship between the three families has broken down to the extent that the business can no longer operate in the way it once did. However, I have concluded that no remedy is available to address that situation because of the structure under which the business operates. I have also accepted Leo’s case that the J&M Trust forms part of the Mir Group business, but have concluded that none of the remedies sought by Leo (at least before final oral submissions) are available either because those remedies involve treating that trust differently from other trusts that form part of the Mir Group when no agreement to that effect was reached or because the Court has made no findings concerning the rights and obligations of the parties in relation to the operation of the group as a whole. As things stand, the legal rights and obligations of the parties must depend on the facts and circumstances relevant to each particular company, trust and partnership.

To a large extent this situation has arisen because of the structure the three brothers put in place, which was driven by the tax benefits to be derived from that structure rather than the need to put in place a legal structure which would enable the business as a whole easily to be passed on to their children or wound up if (as has happened) it became evident that their children, for whatever reason, could not continue the business together. Having chosen the structure they did, the parties must live with its consequences. As Young J explained in Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692 at 694-695:

To some extent, however, the situation has arisen because of the way in which the parties have chosen to present their respective cases. John’s focus has been on claims and remedies which would bring about a division of the assets of the group between the three families. Leo and for that matter the other defendants’ focus has been on obtaining what they regard as their fair share of the Blairmount development. The result has been findings that the J&M Trust did form part of the Mir Group business, but no findings concerning precisely what rights and obligations flow from that fact.

Leo sought at the end of the hearing to address the issue referred to in the previous paragraph by seeking orders that would involve the appointment in place of John and Marie of a corporate trustee of the J&M Trust that had a similar structure as other group companies. The effect of those orders would be to remove control of the J&M Trust from John (and Marie) and give it to Tony and Leo. I could not make those orders without at least giving the parties a further opportunity to make submissions and possibly lead evidence on whether those orders should be made. But if I were to do that, that raises the question whether there are other issues that ought to be resolved as part of these proceedings. Again, it is appropriate to give the parties an opportunity to make submissions on that matter.

Accordingly, the orders of the Court are: