Mir v Mir

WARD P: Before the Court for hearing on 6 March 2025 were related proceedings arising out of a dispute between members of the Mir family and related interests. The main protagonists are John Mir, his brother Anthony Mir (referred to as Tony) and their nephew, Leo Mir (the eldest son of their late brother, George Mir, and executor of his estate). Various other entities and family members are also parties to one or more of the proceedings. In these reasons, I will refer to the family members by their first names and the associated groups of parties simply by reference to the relevant brother or, in Leo’s case, nephew with whom the parties are associated.

At the conclusion of the hearing, without opposition from the parties, the Court made directions for a mediation of the dispute to take place, having regard to potential tax issues that had been raised during the course of the hearing as to the consequences that might arise from the positions for which one or other of the opposing parties contended (see AT 74.42-49). After acceding to requests for an extension of time for the mediation, the Court was ultimately advised that the mediation was unsuccessful. These, therefore, are the reasons for determination of the respective appeal proceedings.

Briefly by way of introduction, in 2019, John (and entities associated with him, as well as his wife, Marie, and their eldest son, Samuel) commenced proceedings in the Equity Division seeking orders in effect for the winding up of the property investment and development business which had traded for many years under the name “the Mir Group of Companies” (Mir Group) and for the division of assets of the business equally between the three brothers (John, George and Tony), their holding companies or their immediate families. The Mir Group business had been conducted since the late 1950s and by 2019 held (through various corporate entities, discretionary trusts and unit trusts) a substantial real estate portfolio. By the time of the hearing at first instance, George had died and his estate was represented by Leo.

In those proceedings, John contended that the Mir Group business was carried on by a partnership between the three brothers. John’s primary case was that this partnership was formed partly by express oral agreement and partly by agreement to be inferred by conduct but, further or in the alternative, he contended that the agreement was wholly to be inferred from conduct (see the particulars to [19] of the Second Further Amended Commercial List Summons). John contended that this partnership had been validly dissolved (either by notice given by John pursuant to s 32(c) of the Partnership Act 1892 (NSW) (Partnership Act) on 2 April 2020 or as a consequence of George’s death in December 2020) and that a receiver should be appointed to wind up the partnership and distribute the partnership assets.

In the alternative, John claimed that: the corporations through which the business was carried on should be wound up under s 461(1)(k) of the Corporations Act 2001 (Cth) (Corporations Act) (the just and equitable winding up ground); a receiver should be appointed to the assets of each of the trusts under s 67 of the Supreme Court Act 1970 (NSW); and receivers should be appointed to a number of partnerships (referred to as sub-partnerships) through which part of the business was carried on and which John claimed had also been dissolved by notices given under s 32(c) of the Partnership Act.

In those proceedings, George commenced (and Leo, in his capacity as executor of George’s estate, subsequently continued) a cross-claim against John and Marie, seeking a declaration as to the beneficial ownership of certain land at Blairmount (to which I will refer as the J&M Trust Land although sometimes in submissions and by the primary judge this was referred to as the Blairmount Land). Leo and Tony contended that the J&M Trust Land, which was held by John and Marie on trust for the “J&M Trust” (a discretionary trust settled by deed dated 27 August 1979), formed part of the Mir Group assets and was in fact held on trust for the families of George, John and Tony equally. The J&M Trust Land was a portion of a larger parcel of land that it was accepted by all parties was held by John and Marie personally and on which they had built their family home. In the alternative, Leo and Tony contended that, if John’s partnership claim succeeded, then the J&M Trust Land was partnership property. John and Marie contended to the contrary that the J&M Trust Land was their personal property (outside of the Mir Group).

Leo then sought the removal of John and Marie as trustees of the J&M Trust (an application supported by Tony) on the basis of John’s conduct in denying that the J&M Trust Land was held on trust for the three families and his conduct during the course of the proceedings (as I explain in due course). Leo says (and John does not dispute) that the hearing was conducted on the basis that Marie had simply left the administration of the affairs of the J&M Trust to John and acquiesced in decisions he had made. Marie did not give evidence in the proceedings.

The proceedings were heard in the Commercial List by Ball J (as his Honour then was) in February and March 2023, with a further hearing on 30 May 2024 and yet another hearing on 19 July 2024 (for reasons that I will shortly explain); and culminated in three judgments: Mir v Mir [2023] NSWSC 408; Mir v Mir (No 2) [2024] NSWSC 791 and Mir v Mir (No 3) [2024] NSWSC 899 (to which I will refer, somewhat unimaginatively, as the First, Second and Third Judgments respectively).

The background relating to the Mir Group is set out in the First Judgment ([4]-[23]) as is the history of events relating to the acquisition (in 1979) and subsequent partial development of the land at Blairmount, which comprised seven individual lots ([24]-[57]), and the events leading up to the proceedings ([58]-[81]). This will not here be repeated save as is necessary for the determination of the issues in this Court.

It is, however, convenient at the outset to note the complicated way in which title to the land at Blairmount (including the J&M Trust Land) is now recorded on the Register. That is not least because, after judgment had been reserved and the Court-ordered mediation had unsuccessfully concluded, John sought leave to make supplementary submissions on the issue as to whether the J&M Trust Land could be transferred to a corporate trustee (if he and Marie were replaced as trustees) without a formal subdivision of the land. John maintained that that issue had only been raised for the first time in the course of oral submissions in reply for Leo on Leo’s appeal. Leo cavils with that proposition and says that the issue was raised before the primary judge (as well as on appeal) and that the position John now takes could have been raised before the primary judge or on appeal (and was not). Against the possibility that leave was granted for those supplementary submissions, Leo’s submissions in response also dealt with the substance of John’s supplementary submissions.

Originally, as noted above, there were seven individual lots at Blairmount: three larger lots (referred to as Upper (or larger) Lot 1, Lower (or smaller) Lot 1 and Lot 103) and four smaller lots (Lots 110, 111 and 112/113). Some of that land was zoned for residential use (and potentially developable); part was zoned for scenic protection (and was not developable).

By resolution dated 29 November 1979, the trustees of the J&M Trust (John and Marie) resolved, in effect, that the developable portion of Upper Lot 1, Lower Lot 1 and Lot 103 would be registered in the names of John and Marie on behalf of the J&M Trust and that the remaining portion of those lots (then zoned for scenic protection) was “owned beneficially by John and Marie”.

Over time, the developable portion of Lot 103 and all of Lots 110-113 were the subject of a residential development and became amalgamated into one lot (initially Lot 74, which later became Lot 2).

The complication addressed in the parties’ supplementary submissions arises because the Certificate of Title for Lot 2 (a copy of which was handed up during the course of submissions but not apparently in evidence below) records ownership of different portions of the land by different persons or entities, by reference to various former plans. Hence, although there is only the one lot (not subdivided), the title records different owners of portions of that lot. Relevantly, John and Marie, who as already noted are the trustees of the J&M Trust, are recorded as owners (as joint tenants) of parts of the land formerly in different folios but other Mir Group entities are recorded as owning other parts of the land in various of the former folios. As noted by the primary judge, there was therefore an issue as to how, if John and Marie were to be replaced as trustees of the J&M Trust, their beneficial ownership of part of the land intended to be held by them personally would be preserved (see First Judgment at [149]).

Ultimately, it is not necessary to resolve the issue as to whether (as Leo submits) the part of Lot 2 comprising the J&M Trust Land could be transferred to a new corporate trustee without a subdivision (by the making of a vesting order under s 71 of the Trustee Act 1925 (NSW) and service of that vesting order on the Registrar-General), given the conclusion I have reached that the cross-appeal challenging the primary judge’s refusal to remove John and Marie as trustees of the J&M Trust fails. Therefore the issue sought to be addressed by the supplementary submissions falls away.

The primary judge found that, while much of the evidence was consistent with the existence of a partnership ([101]), there was no partnership as contended for by John (described as an “overarching” one that in some sense sat above the various entities through which the Mir Group caried on the business – see at [82]). His Honour observed (at [82]) that John had not sought to address directly the question as to how the partnership for which he contended could operate consistently with the various entities in the Mir Group but instead had pointed out that the relationship between the brothers had many of the attributes of a partnership and had advanced a case by analogy to other cases (Palermo v Palermo [2015] WASCA 49 (Palermo); Warner Capital Pty Ltd v Shazbot Pty Ltd [2020] NSWCA 121 and Zheng v Deng [2020] NZCA 614). His Honour addressed those cases at [83]-[93], concluding that each provided little or no assistance for the claim advanced by John (see at [86]; [90]; [93]).

The primary judge also noted at [82] the submission (maintained by John on appeal) that the relationship between the three brothers 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”.

His Honour accepted (at [94]) that it was possible for a partnership to hold assets through companies and that it was possible for shares in the companies to be held by a nominee who in effect holds shares on trust for the partnership ([94]) but said that, where the underlying assets are governed by the terms of a trust, they cannot be governed by the terms of a partnership at the same time ([95]). His Honour said that the trust claimed by John (in substance that the real estate belonging to the Mir Group is partnership property held on trust for the partners by the companies in which the real property is vested) was inconsistent with the fact that the companies held the properties on trust in accordance with trust deeds, the beneficiaries of those trusts not being the three brothers alone ([95]). His Honour identified this as a fatal problem with John’s claim that there was an overarching partnership ([97]).

At [97], the primary judge said that the parties, on accounting advice, had chosen a particular structure through which to conduct their business, that structure being inconsistent with the partnership that John asserted existed; and, at [98], that a similar problem existed in relation to the asserted sub-partnerships.

Pausing here, there is in evidence a letter dated 5 September 1969 from O’Connor Davis & Co Solicitors & Attorneys, and addressed to George, which referred to a discussion between Mr O’Connor and another solicitor, Mr Wallace, “in regard to the family affairs generally”. It is clear from the letter that the author (Mr O’Connor) intended that the record of the discussion as to “the overall tax set-up” and “estate planning” would give “everyone concerned” (which no doubt would have included the other two brothers) an opportunity to agree or disagree with the matters set out therein.

The letter advised, among other things, as to the establishment of a “trading partnership” between five Mir Group companies and referred to earlier advice (a letter dated 7 July 1969) which was said to have set out the “important things which indicate the commencement of a partnership for taxation purposes”. The letter also referred to the “necessity of making sure that there was ample evidence of a partnership business having been commenced”. Under the heading “[o]verall arrangement of companies for tax purposes, estate planning purposes etc.”, the letter noted that a lot of the operating companies would probably own land as at 31 October (presumably as at 1969, though the year is not there specified) and that “any lumping together for land tax purposes should be avoided”. Later in the letter there was reference to a number of Mir Group companies that the author termed “operating companies apart from the partnership operation”. The letter provides support for the reference by his Honour to professional advice having been obtained as to the structure of the overall group operation (or at least as to some of the entities in the Mir Group).

Similarly, there is in evidence an extract from what is described by the respondents as a 1969 “Statement of Facts” prepared by Lewis, Newman Reed & Co, Chartered Accountants, which refers to particular partnerships between various of the family members and to the danger that the owners of properties held by those partnerships would be considered co-owners and not partners (and the importance of rectifying this). Again, this provides support for the primary judge’s observation that the parties had structured their affairs on the basis of accounting advice.

Returning to the reasoning in the First Judgment, the primary judge expressly accepted that much of the evidence was consistent with the existence of a partnership ([101]), pointing to the operation of the Mir Group as a single business under control of the three brothers and that, as a result of agreement between them, there was an equal sharing of profits (between them or their holding companies and wives); and that on occasions each of the brothers described themselves as carrying on business in partnership. However, his Honour said that those facts did not overcome the difficulties identified in John’s case (in essence that the structures put in place by the three brothers were not consistent with the overarching partnership for which John had contended) ([101]).

Relevantly, for what next followed in the matter, the primary judge observed at [102] that “[i]t 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”. In that context, his Honour gave, as an example, the apparent agreement by the three brothers that the total profits of the Mir Group entities would be divided between them and their families equally and his Honour further postulated an agreement between the brothers that, to the extent necessary, they would procure that members of their families on the boards of group companies would vote in a way to ensure that result.

However, his Honour pointed out that no such alternative case (i.e., of an overarching agreement between the brothers as to the operation of the Mir Group) had been advanced in the pleadings ([102]) and his Honour made clear that, in the absence of a pleaded case setting out the terms for which John contended, it was neither appropriate nor possible to make findings on those matters except to the extent necessary to deal with the cross-claim.

I interpose here to note that it is clear from his Honour’s reasoning that his Honour did not accept that the agreement he had referred to at [101] (as to the equal sharing of profits arising from the operation of the Mir Group as a single business under the control of the brothers) gave rise to a partnership. Nor was his Honour postulating that the “overarching agreement” (which had not been advanced on the pleadings and the terms of which could not be determined on the evidence before him) gave rise to a partnership of the kind for which John had contended. Nevertheless, the “overarching agreement” as subsequently declared by his Honour (see the Second and Third Judgments) is now sought to be relied upon by John as constituting the relationship between the three brothers as a partnership (as I explain in due course). Unsurprisingly, Leo and Tony complain that it is not now open to John in effect to reopen his partnership case by reference to the overarching agreement the existence of which was determined after the First Judgment.

His Honour then proceeded to consider, and dismiss, the alternative claims for relief under s 461(1)(k) of the Corporations Act in respect of the companies ([104]-[128]) and for relief in respect of the trusts ([129]-[139]) and “sub-partnerships” ([140]-[147]). As to the sub-partnerships, his Honour accepted in principle that they could be wound up but rejected the contention that John had given an effective notice winding up a number of the sub-partnerships (see Second Judgment at [6(2)]). There is no challenge to his Honour’s dismissal of those alternative claims.

As to Leo’s cross-claim, seeking declaratory relief in relation to the disputed J&M Trust Land, the primary judge reiterated his acceptance that the J&M Trust was a Mir Group entity (see First Judgment at [150]), having earlier found that it was more likely than not that the J&M Trust Land was acquired for the Mir Group and not for John and Marie personally ([37]). However, his Honour said that the terms of the J&M Trust for which Leo contended were inconsistent with the terms of the trust deed, noting that the J&M Trust, like the other Mir Group trusts, was a discretionary trust that had as its beneficiaries the three brothers and members of their immediate families ([151]). His Honour declined to grant Leo the declaratory relief he sought.

Relevantly, his Honour repeated ([152]) that there was much to be said for the proposition that the three brothers, by their conduct and the instructions given to advisors, impliedly agreed that they would exercise their powers as trustees, directors or partners of Mir Group entities (or would procure the members of their families who so acted) to ensure that profits of the group would be distributed equally between the three families. His Honour then observed that, if there were such an agreement, questions would arise concerning its status following George’s death (and as to whether it had other terms and other parties) but that no party had advanced an argument in support of such an agreement. His Honour noted that the only agreement advanced by John was a partnership agreement with equal sharing of profits; and said that 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, his Honour said that no finding or declaration could be made concerning the existence of such an agreement or its terms.

At [154], his Honour summarised his conclusions as being that: first, the collection of entities described as the Mir Group had operated over an extended period as a single business originally controlled by the three brothers and, more recently, increasingly by their respective eldest sons; second, the relationship between the three families had broken down to the extent that the business could no longer operate in the way it once did; and, third, the J&M Trust formed part of the Mir Group.

His Honour concluded that no remedy was available to address the first two of those matters because of the structure under which the business operated and that none of the remedies sought by Leo (at least before final oral submissions) was available (either because those remedies involved treating the J&M Trust differently from other trusts that form part of the Mir Group when no agreement to that effect was reached or because no findings had been made concerning the rights and obligations of the parties in relation to the operation of the group as a whole) ([150]).

The primary judge acknowledged that the conclusions he had reached could not be regarded as a satisfactory resolution of the case ([154]) but observed (at [155]) that, to a large extent, this situation had arisen because of the tax driven structure that the three brothers had put in place (the consequences of which they must live with) but also to some extent ([156]) because of the way in which the parties had chosen to present their respective cases (John’s focus being on a division of the assets of the group between the three families, Leo’s focus and that of the other defendants being on obtaining what they regarded as their fair share of the Blairmount development).

His Honour noted that at the end of the hearing Leo had sought to address the issue that no findings had been made as to the rights and obligations that flowed from the findings that the J&M Trust formed part of the Mir Group business by seeking orders that would involve the appointment of a corporate trustee (in place of John and Marie) of the J&M Trust, with a similar structure as other group companies (the effect of which would be to remove control of the J&M Trust from John and Marie and give it to Tony and Leo). His Honour said that this would require the parties to be given a further opportunity to make submissions and possibly lead evidence on that issue (and that might raise questions as to whether there were other issues that ought to be resolved as part of the proceedings, on which it was appropriate to give the parties an opportunity to make submissions) ([157]).

Accordingly, his Honour made directions, among other things, to enable the parties to seek directions in relation to the resolution of any outstanding questions to be determined in the proceedings ([158]).

Following an apparent misunderstanding on the part of the Leo Parties as to whether the primary judge had resolved at least some questions as to the existence and terms of an overarching agreement between the three brothers in the First Judgment (see Second Judgment at [9]), an unsuccessful mediation, and further directions and orders made to enable all outstanding issues to be dealt with, the matter was listed before the primary judge for hearing on 30 May 2024.

John sought declarations concerning the existence of the sub-partnerships and orders for the dissolution of the partnerships of which George was a partner and declarations to the effect that would permit him to give notice of the dissolution of partnerships of which he (or an entity he controlled) was a partner. Additionally, John sought leave to re-open his case to seek, in the alternative to the relief he had unsuccessfully sought, a declaration concerning the terms of an overarching agreement between the parties governing the entities in the Mir Group (see Second Judgment at [11]). The agreement that John asserted included two limbs: that decisions regarding the Mir Group were to be made unanimously as between the three brothers; and that profits were to be split equally between the brothers’ immediate families. Pausing here, John did not (at least expressly) seek to revisit the conclusion his Honour had reached as to there being no partnership by reference to the overarching agreement the existence and terms of which were the subject of the application to reopen the case.

His Honour ultimately proceeded without formal amendment to the commercial list statement, cross-claim and responses ([17]) (acceding to the respondents’ position in this regard). In the respondents’ written submissions in this Court on John’s appeal, emphasis is placed on the fact that the parties by consent asked the primary judge to determine one limited aspect of the overarching agreement relating to the scope of which decisions required unanimity. They contend that it is not now open to John to rely on the overarching agreement as found by his Honour as giving rise to a partnership (i.e., to run an alternative partnership case not put at first instance). I consider this complaint in due course.

In the Second Judgment, his Honour noted the three remaining substantive issues to be resolved ([14]) as: first, the form of the declaration to be made, if any, concerning an overarching agreement between the parties; second, what relief, if any, should be given in relation to the partnerships which form part of the Mir Group (i.e., the so-called sub-partnerships); and, third, what relief should be given in relation to the J&M Trust.

As to the first issue, his Honour noted that there was consent for leave being given to the John Parties to amend their claim to seek a declaration concerning the existence of an agreement between the parties regarding the Mir Group and that this was admitted; the only issue being as to the scope of the agreement ([15]), namely whether it required unanimity between John, Tony and Leo in relation to all matters relating to the Mir Group or only those identified in the orders advanced by Leo and supported by Tony ([18]). His Honour noted that it was accepted by the parties that Leo had become a party to the agreement and had assumed the previous rights and obligations of George on George’s death, if not before ([20]). His Honour also noted (at [15]) that it was common ground that the issue as to the scope of the overarching agreement was to be resolved by reference to the evidence before the Court at the time the First Judgment was delivered.

The primary judge concluded (at [19]) that it was a term of the agreement that all decisions concerning the Mir Group would be taken unanimously by John, Tony and Leo, explaining what was meant by this at [20]-[22]. In so doing, his Honour said that the three brothers (i.e., George, John and Tony), by their conduct, must have agreed that all decisions in relation to the business, including decisions relating to the way in which the business would operate, would be taken by consensus ([22]) and that, to the extent that this involved delegating particular tasks to one or more of the brothers, those delegations would remain in place at least until the delegation was varied as a result of a further consensus between the three brothers ([22]).

His Honour said that, although to a large extent the three brothers operated independently within their area of responsibility, all major decisions (including the decisions to buy and sell properties owned by the group and the allocation of profits of the group) were taken by consensus ([21]).

His Honour found that neither of the declarations proposed by the parties properly captured the extent to which unanimity was required (John’s proposed declaration being too broad to the extent that it applied to all decisions, even those that were the subject of a previously agreed delegation; the defendants’ proposed declarations being too narrow to the extent that consensus was required in relation to a matter the subject of an existing delegation) ([24]). His Honour gave the parties a further opportunity to address those issues.

As to the second issue (the relief in relation to the sub-partnerships), the primary judge said that it was not open to the plaintiffs (the John Parties) unilaterally to seek to wind up the sub-partnerships since they are Mir Group entities that hold assets that belong to the group and assets of that type can only be disposed of by unanimous agreement between John, Tony and Leo or their delegates ([25]). To the extent that George was a partner of the relevant partnerships, the primary judge considered that the partners must be taken to have agreed that the partnership would not come to an end on the death of an individual partner; rather, it was open to the relevant party to nominate a new person to take over the position of the partner who had died. However, as no submissions had been put to the Court and no declaration sought in that regard, his Honour made no declarations in relation to the sub-partnerships.

As to the third issue (the proposed removal of John and Marie as trustees of the J&M Trust), which the primary judge said was the most contentious between the parties, his Honour said that this was complicated by the fact that there was an overarching agreement governing the relationship between the parties and that the ultimate complaint made by Leo and the other defendants was that John and Marie had not complied with that agreement in respect of the J&M Trust Land ([29]). His Honour said that it was not clear why John and Marie should be removed as trustees of the J&M Trust as a means of securing their compliance with that agreement ([29]).

The primary judge then addressed the five matters relied upon by the defendants to justify the removal of John and Marie ([30]-[35]), those being, in summary: first, that John and Marie had breached the overarching agreement in their capacities as trustees by asserting that that agreement did not bind them as trustees because the assets of the trust did not form part of the assets of the Mir Group (a breach said to be one going to the heart of the purpose for which the trust was established); second, that on occasions John and Marie had denied that the J&M Trust Land formed part of the trust assets; third, that by their conduct John and Marie had demonstrated that they were unsuited to remain as trustees of the trust (accusing John of dishonesty and giving false evidence; and Marie of failure to exercise independent judgment); fourth, that John and Marie had a conflict of interest that made it unsuitable for them to remain as trustees; and fifth, that, as discretionary beneficiaries of the trust, the defendants were at a disadvantage because they may not be able to obtain access to relevant documents. The primary judge attached more weight to the first three of those matters (breach of the overarching agreement, denial that the J&M Trust Land was part of the trust assets and the complaint as to the conduct of John and Marie) than the last two ([38]).

However, at [39], his Honour said that another relevant consideration was that the context in which the issue arose remained unclear. His Honour said that it was unlikely that the agreement governing the Mir Group would continue indefinitely; that, absent novation by the conduct of the parties, it was arguable that it would come to an end on the death of John or Tony; and that it was also arguable that the agreement was capable of termination on reasonable notice by any one of John, Tony and Leo.

At [40], his Honour posed questions as to what would follow (assuming the agreement was capable of termination and was terminated) from termination of the overarching agreement: whether it was an implied term of the agreement that the assets of the business would be sold and the net proceeds distributed equally between the three families; or whether each entity of the Mir Group would continue to operate in accordance with its own constituent documents and agreements. His Honour considered that the answer to those questions might be relevant to the exercise of discretion to remove John and Marie. In that context, his Honour said that the better approach was only to make orders necessary to resolve the existing disputes between the parties and otherwise to preserve the status quo ([41]).

While his Honour accepted that in some respects John’s conduct had been reprehensible (since he had claimed for himself benefits that he knew or must have known belonged to his brothers and, more recently, had compounded the problem by seeking to blame others for what must have been his own decisions), and that this on its own may well have justified the removal of John and Marie as trustees, his Honour accepted that John and Marie were likely to comply with the declarations made by the Court (as they had said they would), noting that if they did not, their removal as trustees of the J&M Trust remained a possibility ([42]). Accordingly, his Honour was not satisfied that the circumstances justified the removal of John and Marie as trustees at that time ([42]).

As adverted to in the course of his reasons, the primary judge gave the parties the opportunity to make further submissions on the final form of the declarations to be made, particularly in relation to the extent that the agreement between them required decisions to be taken unanimously ([43]).

The Third Judgment, handed down after a further hearing on 19 July 2024, dealt with two outstanding questions: the final form of the orders to be made and the question of costs. Only the former is here relevant.

As to the terms of the overarching agreement, the primary judge made the following orders (at [24]):

Perhaps not surprisingly, given the tortured history of the proceedings to date and the apparent inability of the parties co-operatively to resolve their disputes despite (now at least two) attempts at mediation, John and Leo each commenced proceedings in this Court, challenging the primary judge’s decisions in different respects. Tony supports Leo in his submissions in relation to Leo’s appeal and Leo in turn adopted Tony’s submissions in relation to John’s appeal.

By notice of appeal filed 25 October 2024, John appeals from the whole of the decision of the primary judge on the following grounds:

Leo filed a notice of appeal on 25 October 2024, as the executor of George’s estate, appealing from that part of the decision of the primary judge in relation to the first cross-claim (being his Honour’s decision that the circumstances did not justify removal of John and Marie as trustees of the J&M Trust), on the following ground:

Leo subsequently filed a summons seeking leave to appeal on 18 December 2024, accepting that his appeal required leave as the subject matter does not involve a direct monetary value (referring to Gilmore Finance Pty Ltd v Aesthete Pty Ltd [2022] NSWCA 279 at [3]-[9]). The summons for leave to appeal was heard concurrently with the appeal itself in circumstances where the issues arising on the question of leave would substantially overlap with the issues that arise on the substantive appeal and the orders challenged by Leo finally determined at that point the application for the removal of the trustees of the J&M Trust. Leo submitted in that context that the subject matter of the appeal concerns the control of the J&M Trust, which holds large and highly valuable real property in New South Wales.

Turning first to John’s appeal, Grounds 1 and 2 to some extent run together (since Ground 2 focusses on one aspect of the reasoning that led his Honour to conclude that there was no partnership – that conclusion being the subject of challenge in Ground 1). However, I will address them seriatim. As to Ground 3, John accepted that if he does not succeed on the central issue as to the existence of a partnership then Ground 3 does not arise. In what follows I will refer to the submissions of Tony and Leo collectively as the respondents’ submissions.

The essence of John’s challenge to the primary judge’s rejection of his partnership claim (which, as noted earlier, proceeded on the basis that there was an overarching partnership between the three brothers that sat above the various Mir Group entities) is what John identifies as the key feature or critical element in this case of control (the “brute fact of control” – see AT 49.17-27).

However, John makes an anterior complaint that the primary judge erred in his approach to the determination as to whether there was an overarching partnership, by treating “apparent difficulties” in the identification of some of the assets of the partnership as being decisive of the existence of the partnership itself (John here referring to the First Judgment at [95] and [101]). In this regard, John distinguishes between what he identifies as the primary issue (whether there is a partnership) and a secondary issue (what are the partnership assets) and argues that his Honour erred in considering the secondary issue first. I deal with this complaint at [77]-[78] below.

Turning then to the conclusion that there was no partnership of the kind for which John had contended, John argues that each of the elements of the statutory definition of partnership in s 2(1) of the Partnership Act (i.e., persons carrying on a business; in common; with a view to profit) is here established. John says that the first (carrying on of a business) is established by the findings that the Mir Group conducted a successful property investment development business (John here emphasising that his Honour found that the Mir Group operated as a “single business”); the second (that the carrying on of the business be “in common”) by the finding that it operated as a single business “under the control” of the brothers at least until about 2017 and then with Leo’s increasing involvement; the third (that it be with a view to profit) by reference to the evidence as to the distribution of profit from 2011-2019 to the three brothers, their holding companies or families (John referring to the evidence of the Mir Group’s accountant, Mr Mannion, and the forensic accounting expert, Mr Samuel, in this regard).

As already noted, what John here emphasises is the element of “control” (and hence he relies on the overarching agreement, as declared, as giving rise to a partnership). John relies on the finding of fact that each of the individuals and companies agreed to hold his or its assets (shares in the case of individuals or real property and other assets in the case of the companies) and exercise his or its powers on the basis that any decision concerning the business carried on by the Mir Group could only be made with the agreement of the three brothers (and, later, Leo in place of George) and that profits of the business were to be equally shared between the brothers’ immediate families. John relies on this as establishing the alleged partnership.

In addition, though accepting that this is not determinative, John points to the evidence that the three brothers frequently employed the language of “partner” or “partnership” in describing their relationship. The respondents point out that the parties also frequently referred to their dealings as the Mir Group and that the trading name used for the business is and was the Mir Bros Group of Companies (as his Honour noted in the First Judgment at [1]).

The respondents argue that the facts on which John relies for the contention that there is a partnership are at least equally consistent with the Mir Group entities carrying on the business, governed by the overarching agreement; and that the overarching agreement is sufficient to ensure that the brothers control the decisions of the business and that profits are split equally between the three families; and they submit that the fact that the brothers have control over decision-making does not mean they themselves carry on the business.

The respondents submit that the evidence demonstrates that an overarching partnership was contrary to the parties’ intentions and would entail certain incidents of partnership which are inherently unlikely to have been intended by the brothers. As to the former, the respondents point to the legal and accounting advice obtained as to the structure of the Mir Group (to which I have referred above). As to the latter, the respondents note that carrying on a business in common usually entails mutual agency, rights and obligations between the persons said to be partners and that the decisions and actions of one partner can bind the others (s 5 of the Partnership Act) but that this is contrary to the overarching agreement declared by the primary judge, requiring unanimity. The respondents also submit that, referring to s 9 of the Partnership Act, there is no evidence that the three brothers agreed to take responsibility for debts owed by the companies to other persons, nor was there any record of an agreement intended to operate outside the corporate structure whereby the parties preserved the risk of personal liability. The respondents thus submit that an overarching agreement short of a partnership makes more commercial sense; and is therefore more likely to have been intended.

The respondents argue that the evidence demonstrates that the three brothers deliberately structured their affairs to take advantage of the taxation regime to manage income effectively by the use of companies and trusts and say that there is no basis to infer a partnership agreement between the three brothers which would likely undermine those advantages (invoking the observations of Young J, as his Honour then was, in Morgan v 45 Flers Avenue Pty Ltd (1986) 10 ACLR 692 (Morgan) at 694-695). John argues in response that the decision in Morgan does not assist the respondents, pointing out that in the present case he does not ask the Court to treat the Mir Group structure as a “sham” and that all of the parties asked the Court to recognise that an undocumented overarching agreement which gave control to the three brothers was imposed on the documented corporate and trust structures.

The respondents further argue that the overarching partnership advanced by John is inconsistent with the various discrete partnerships within the Mir Group. They point out that there were discrete partnerships between the three brothers for which financial statements and tax returns were prepared and in respect of which partnership distributions were made from 2011 to 2021 (unlike the position in relation to the partnership for which John contends). The respondents also argue that the partnership which John propounds would mean that the profit of the discrete partnerships would have been the profits of the three brothers, which they would have been required to declare and on which they would have paid tax (which they did not do). The respondents submit that any agreement which obliged the brothers to do so would have undermined the tax-efficiencies underpinning the ownership structures advised by the accountants and adopted by the Mir Group for decades; and they emphasise that the propounded partnership is not supported by contemporaneous documents.

As to those matters, in oral submissions for John it was accepted that no partnership returns had been filed consistent with the asserted partnership (AT 42.47-50) and that the structures through which the Mir Group assets were held were set up with the assistance of professional advice (AT 43.2-5) with a view to achieving a tax effective outcome (AT 49.8-10). Indeed, it was accepted that the advice depended on diffusing or spreading ownership of control (AT 49.16-20). However, John argues that where, as he says is here the case, there is no doubt as to the relationship of control (i.e., following the finding as to the overarching agreement), matters such as the lack of partnership tax returns and the fact of advice as to the structure of the group entities do not tend against a finding of partnership.

As to the respondents’ submissions regarding tax efficiency, John argues that this is not a case where the three brothers met, took detailed advice, and comprehensively arranged the governance of their whole business accordingly; rather, John says that the manner in which a new property would be held was decided on each occasion in discussions with the relevant adviser at the time and varied from property to property. John submits that tax efficiency is unlikely to have influenced the brothers’ intentions as to the overall governance of their business and their rights and obligations as between one another concerning the business; and he submits that the respondents’ submission as to the likely intent of the brothers that their relationships to be governed by the company and trust structures that they had put in place following tax advice does not take into account the unwritten overarching agreement, which John argues causes control of the Mir Group to diverge markedly from what would otherwise be the case under the formal company and trust structure.

John submits that the lack of evidence of any advice being taken on the tax implications of the unwritten overarching agreement significantly weakens the inference said to arise from the taking of tax advice. Further, John does not accept that the tax advantages of putting real properties in separate entities and the ability to direct funds within the Mir Group are not available, or would not have been available, under a form of partnership as alleged. As to the fact that the partnership was undocumented, John points out that so too is the overarching agreement and argues that this weakens the strength of any comparison with the fact that there were discrete partnerships that were documented.

It was further suggested by John that the fact that no partnership returns were submitted must mean that there was a misconception as to the nature of the entity or corporate group (AT 49.27-30). Apart from the fact that this is no more than speculation, it seems to me that this is squarely contradicted by the fact that professional advice was sought as to precisely the issue as to the structure of the entities in the overall group as far back as 1969, from which it is clear that there can have been no misconception as to what was required to establish a partnership between the three brothers; and also by the fact that the Mir Group had the benefit of accounting advice in relation to the operation of the business and its taxation position.

In apparent response to the submission by Leo that the overarching agreement can loosely be described as a joint venture agreement, John says that this is not a joint venture scenario because in that scenario there is not a business carried on in common with a view to profit (AT 50.21-25). (With respect, that reasoning is somewhat circular but, in any event, it is inconsistent with the fact that joint ventures may well have the same features as a partnership but not ultimately be characterised as such – see below.)

The respondents say that John’s “new” partnership case (i.e., his case relying on the overarching agreement as giving rise to the partnership) is inconsistent with John’s case at first instance (including as to the identification of the partnership property as comprising or including rights or choses in action pursuant to the overarching agreement – a proposition with which Leo cavils as I explain in relation to Ground 2). The respondents contend that the overarching agreement case (when the case was reopened) was an alternative to John’s partnership case and predicated on there being no partnership. They maintain that it is artificial and circular for John now to characterise the property of the partnership as the rights and choses in action exercisable pursuant to the overarching agreement and they say that it does not cohere with John’s claim that the brothers carried on business in common.

In that regard, the respondents argue that the primary judge cannot logically be said to have erred by rejecting the existence of a partnership having regard to conceptual difficulties now said to be met by an overarching agreement that had not been found to exist at the time the partnership case was determined. They maintain that John is bound by the case that he conducted at first instance and they say that, had John taken the position at first instance that he now takes, they would not have consented to the declaration that there was an overarching agreement and could have adduced evidence (including by cross-examination as to the tax advantages or disadvantages of the way the Mir Group was structured) to meet that case.

Complaint is also made that, had John been allowed to re-open his partnership case (as opposed to re-opening to seek declaratory relief as to the alternative overarching agreement case), the respondents would likely have sought to ventilate and have declared other terms of the overarching agreement, which they now have no opportunity to do. The respondents point out that in the relief now sought on the appeal, John seeks orders setting aside the declaration (to which he consented) as to the overarching agreement and, in lieu thereof, seeks the orders he sought below concerning the existence of a partnership.

As to those complaints, John says that: in the Second Further Amended Commercial List Statement it was alleged that the agreement from which the alleged partnership resulted was “wholly to be inferred from conduct” which included equality of control and equal distribution of profits; the opening submissions referred to the partnership stemming from an “overarching agreement”; and the closing submissions identified the conduct of the business involving consensus decision-making between the three brothers, the appointment of immediate family members to positions within the business (including company directorships) as “representatives” of the three brothers and thus subject to their direction, and equal sharing of profits. John accepts that he did not initially seek any declaratory relief as to the terms of the agreement but says that this was in a context where, had the alleged implied agreement been found to constitute the business as a partnership between the three brothers, no further declarations would have been necessary to resolve the dispute.

Further, John contends that the partnership case and the overarching agreement are not true alternatives (in the sense of depending on different and inconsistent facts) but are alternatives only in the sense that John sought declaratory relief as to the terms of the implied agreement as a fallback given that his primary case of partnership had failed before the primary judge on the basis of the reasoning that is challenged by this appeal. John cavils with the proposition that the existence of the overarching agreement is “predicated on there being no partnership” (as the respondents suggest). Rather, John says that the findings which provide the foundation for the declaration as to the terms of the agreement were sought as part of his partnership case and made by the primary judge on the basis of the evidence advanced in that case (and he emphasises that none of those findings is challenged by the respondents).

As to the respondents’ assertion that they would not have consented to a declaration being made that there was an overarching agreement had they understood that John would rely on it in appealing the finding on partnership, John argues that the respondents had good reason to agree to a declaration as to the terms of the implied agreement (on the basis that, without that declaration their success on the issue of whether the J&M Trust was a “Mir Group entity” would have been of no benefit to them).

At the outset, I do not accept the premise of John’s anterior complaint. What his Honour was referring to at [95] and [101] is the structural difficulty inherent in the concept of an overarching partnership sitting above the entities through which the Mir Group business operates; not difficulties in the identification of partnership assets per se. In reply submissions, John appears to accept that whether a partnership exists may be informed by the manner in which property is held and that matters such as joint control and co-ownership may be a relevant factor in the analysis (though noting that co-ownership of itself is not determinative (s 2(1) of the Partnership Act)).

It is clear from the primary judge’s reasons that his Honour approached consideration of the issue as to whether there was a partnership by addressing the basis on which John had contended that there was an “overarching” partnership that sat above the various entities of the Mir Group. In that context, his Honour explained how the structure of the various group entities was inconsistent with the partnership for which John contended. There was no error in adopting that approach. It was not necessary for his Honour to adopt some formulaic consideration of the three elements in the statutory definition of partnership (s 2(1) of the Partnership Act).

As to the “new” case complaint, there is, to my mind, much force in the respondents’ contention that John is now seeking to advance a partnership case that was not put at first instance and is inconsistent with the case that was put to his Honour. The fact that the partnership case was particularised as arising in part by reference to an oral agreement (alternatively wholly by conduct) does not assist John. His Honour rejected that partnership case. His Honour was not positing the overarching agreement as an alternative route to the conclusion that there was a partnership (he was postulating a contractual arrangement that governed certain aspects of the dealings within the Mir Group); nor was that put to him. Rather, following the First Judgment, John sought to reopen his case in order to obtain declaratory relief as to the existence and terms of the overarching agreement that his Honour had posited. In so doing, it is significant that John did not seek to reopen the conclusion that there was no partnership.

The reliance now placed by John on the overarching agreement as giving rise to a partnership has all the hallmarks of an opportunistic restructuring of his claim to take advantage of the declaration of an overarching agreement. I accept that, as John submits, the fact that the respondents consented to that declaration did not overcome the need for his Honour to be satisfied of its existence and terms. Nevertheless, there is force to the respondents’ complaint that, had John raised his “new” partnership case at that time, they would have had an opportunity to contest the issue (and to raise issues as to the terms of the overarching agreement that were left undetermined – such as, for example, as to what would flow from its termination in the future) and they now have lost the opportunity to do so.

Therefore, I consider that it is not open to John now to rely on the overarching agreement (declared at the time of the Third Judgment) as giving rise to the alleged partnership but, even if it were open to him to do so, that would not change the result.

As to his Honour’s conclusion (on the case before him that did not include a pleaded overarching agreement) that there was no partnership, I do not accept that his Honour erred in so finding.

True it is that his Honour accepted that the Mir Group had operated as a single business under the control of the brothers and that, by agreement between them, the profits of the business had been shared equally across not only themselves but also their holding companies and wives (no doubt for tax effective purposes). However, the real issue was as to the objective intention of the brothers when they reached agreement as to the operation of the Mir Group business. It is trite to note that not all commercial arrangements which display the indicia of partnership (and satisfy the elements of the statutory definition) will be characterised as partnerships in the legal sense.

So, for example, in United Dominions Corporation Ltd v Brian Pty Ltd and others (1985) 157 CLR 1; [1985] HCA 49 (UDC), Mason, Brennan and Deanne JJ (at 10) noted that the term “joint venture” was not a technical one with a settled common law meaning. Their Honours said that as a matter of ordinary language the term connoted an association of persons for the purposes of a particular trading, commercial, mining or other financial undertaking or endeavour with a view to profit, with each participant usually but not necessarily contributing money, property or skill. Their Honours said that such a joint venture will often be a partnership but that the term joint venture is apposite to refer to a joint undertaking or activity carried out through a medium other than partnership. Further, their Honours went on to say that “[t]he borderline between what can properly be described as a “joint venture” and what should more properly be seen as no more than a simple contractual relationship may on occasion be blurred”. Both in UDC and in Industrial Equity Ltd v Lyons (Supreme Court (NSW), Cohen J, 15 October 1991, unrep), it was recognised that there may be a joint venture which does not constitute a partnership.

In that regard, I note the discussion by Professor Duncan in Joint Ventures Law In Australia 3rd ed Federation Press 2012 from pp 24-28 as to joint ventures and partnership; particularly the author’s recognition that in Australia usages and models law grown up as a result of taxation accounting and risk strategies that expressly reject the partnership model; and the observation that adoption of an approach assimilating joint ventures and partnership “would be profoundly disturbing to the legal and commercial objectives of the joint venture participants and their advisers" (see at p 25). That is an apt observation in the present case.

In essence, the distinction between a partnership and an arrangement (whether that be described as a joint venture or as a joint undertaking) that is no more than a simple contractual relationship is the distinction reflected in his Honour’s findings. His Honour expressly rejected the partnership case (in the First Judgment) but found that there was an overarching agreement between the three brothers as to how the various entities in the Mir Group were to operate (as declared in the Third Judgment).

That conclusion accords with the way that the entities within the Mir Group were established (on the basis of professional advice with a view to the tax effective operation of the Mir Group’s business) and with the fact that, despite the Mir Group having the benefit of accounting advice, no partnership returns were submitted for the overarching partnership for which John now contends nor did the so-called partners account for the distribution of income received by them as partnership income.

The respondents have pointed to the evidence of Mr Mannion to the effect that the main reason for setting up a separate structure for each property acquisition was that it was easier for the Mir Group to deal with each property separately and to account for capital gains tax (and they note that land tax assessment notices issued to the Mir Group companies, partnerships and individuals confirm that the properties held across the Mir Group have not been aggregated for the purposes of applying the relevant land tax threshold). Where the use within the Mir Group of corporate and trust structures for the acquisition of properties has clearly allowed profits and losses to be distributed around the Mir Group entities in a tax effective manner, the attempt now to rely on an overarching partnership (inconsistent with such a structure) relying on the “brute fact of control” cannot be accepted. It is inconsistent with the objective intention of the putative partners, as reflected in the accounting and legal advice given to them and the manner in which the Mir Group operated from a tax perspective.

The submissions made by John (see as summarised at [67] above) taking issue with the respondents’ submissions regarding the tax efficiency of the structure in which properties were acquired within the Mir Group do not accord with the careful taking of advice in the early years in which the Mir Group operated; nor do they reflect the concession in submissions that there was professional advice obtained in relation to the structure of the Mir Group. Further, as noted above, there was evidence from the Mir Group accountant as to the main reason for the way in which the acquisition of properties was structured.

As to the submissions made by John (see as summarised at [68] above) pointing to the lack of evidence of any advice as to the tax implications of the unwritten overarching agreement and suggesting that the tax advantages under the structure adopted might have been available under the alleged partnership, the first fails to take into account that the overarching agreement was one inferred from conduct over the years and the second reinforces the respondents’ complaint that, had a partnership arising out of the overarching agreement been expressly run at first instance they would have had an opportunity, among other things, to test the evidence as to the tax advantages or disadvantages of such an arrangement.

Further, the reliance by John on “control” as the critical element does not adequately grapple with the difficulty to which his Honour pointed of the inconsistency in the structures adopted in the Mir Group. What John postulates in effect is that the three brothers (now with Leo replacing George) could override or direct decisions to be taken by the controlling minds of the various Mir Group entities without consideration of the duties owed by the relevant directors or trustees of those entities to person or entities other than the brothers themselves.

I consider that weight must be placed on the deliberate structuring of the Mir Group entities (and the manner of acquisition of the properties acquired by them) to achieve what was apparently regarded at the relevant times as a tax effective outcome across the Mir Group (and for the brothers themselves). The partnership for which John now contends is fundamentally inconsistent with that structure, as his Honour correctly found.

Therefore, Ground 1 is not made good.

Ground 2 of John’s appeal asserts error by the primary judge in finding that the acquisition of properties held by trustees of discretionary and unit trusts was inconsistent with the Mir Group business constituting a partnership (i.e., the conclusion at [97] that the structure through which the parties had chosen to conduct their business was inconsistent with the partnership that John asserted existed).

In written submissions, John devotes no little space to a consideration of what constitutes “partnership property” and the legal principles in relation to the identification of partnership property (which I do not propose here to recount). John argues that, on the premise that the Mir Group business was a partnership between the three brothers (a premise not made good in light of the conclusion as to Ground 1 above), the next stage of the enquiry was to look to the identification of the assets of that partnership.

John identifies the Mir Group’s landholdings as falling within the following categories: first, land not subject to any express trust (variously being land held by a Mir Group company, a number of individuals as tenants in common, a number of Mir Group companies as tenants in common; in one instance, the three brothers’ respective holding companies as tenants in common; or in another instance, by the three brothers as joint tenants); second, land held by the Mir Group or in one instance the J&M Trust, John and Marie through a discretionary trust; and, third, land held by the Mir Group through a unit trust. John then proceeds to an analysis of whether the holding of real estate in each of those categories is inconsistent with the recognition of an overarching partnership (submitting that it was not; and, as to the third category of unit trusts, complaining that his Honour did not separately consider the position of unit trusts).

John also complains that the primary judge proceeded on the basis that the appellants’ case was that the real property was partnership property “held on trust for the partners” ([95]) and says that this did not wholly reflect his case (and overlooked the circumstance that 17 of the properties were held without the interposition of an express trust).

As to the first of those propositions, John argues that his case encompassed the contention that, in the case of real property held by corporate trustees, the partnership property comprised the rights and choses in action available to the partners, exercisable through those trustees, by which the value of the real property could be realised. John submits that the ultimate finding as to the overarching agreement governing the conduct of the Mir Group business ([24(3)] of the Third Judgment) amounts to a finding that each trustee’s right of control in respect of the trust is curtailed by that overarching agreement, notwithstanding the expansive discretions conferred on the trustees by the terms of the trust deeds (referring to Third Judgment at [24(3)(b)]). John applies the same reasoning in relation to the position of unit trusts, noting that the only unit holders of those trusts are the three brothers.

In this regard, John submits that the primary judge erroneously distinguished Palermo. John argues that the Court of Appeal in Western Australia did not decide the question whether the trust and corporate structures were consistent with partnership but, rather, whether an agreement with the pleaded characteristics was consistent with those structures, noting that the Court overturned the conclusion by the primary judge in that case (see observations by Newnes JA in Palermo at [159]), McKechnie J having held that there was no scope for a contractual relationship “in terms which amounted to a partnership or a relationship giving rise to fiduciary obligations” (see Palermo v Palermo (No 2) [2014] WASC 6 (Palermo (First Instance)) at [4]) in the context of a corporate structure (see Palermo (First Instance) at [71]).

John argues that, in the present case, it was open to the three brothers to agree that they would hold all of their rights and interests in each of the corporate trustees, and in relation to the administration of each of the trusts, including pursuant to the overarching agreement, for the benefit of the partnership; and that such a conclusion does not involve finding that the trustee simultaneously holds the land on trust for the beneficiaries and for the partners (cf the primary judge’s conclusion at [96]).

Insofar as his Honour referred to the fact that some of the discretionary trusts named third parties as beneficial objects (see at [96]), John says that in relation to unvested discretionary trusts the beneficiaries do not have any equitable proprietary interest in the land comprising the trust property (citing Kennon v Spry; Spry v Kennon (2008) 238 CLR 366 at 368; [2008] HCA 56); and argues that the circumstance that persons not within the brothers’ immediate families may be named as discretionary beneficiaries is no impediment to recognising the rights and choses in action exercisable by the partners (pursuant to the overarching agreement) by which the land, and the income it generates, may be realised by the partners.

Placing emphasis on the finding of the overarching agreement (Third Judgment at [24]), John submits that there is nothing inconsistent or conceptually problematic in the partners agreeing, as between themselves, to exercise their rights over the trustees or the discretionary or unit trusts for and on account of the partnership. Insofar as his Honour regarded it as a fatal problem for the partnership case that the receiver could only take control of the property held on trust in accordance with the terms of the relevant trust deeds ([97]), John argues that the practical difficulties foreseen by the primary judge fall away once the significance of the overarching agreement is recognised because a receiver assuming control over the partnership assets could exercise the partners’ individual or collective rights, powers and interests in respect of the Mir Group companies and trusts (including under the overarching agreement by which the Mir Group is governed), which rights would exist, even after the dissolution of the partnership, to the extent necessary to wind up the affairs of the partnership (citing s 38 of the Partnership Act).

As to the respondents’ submission that the arguments now made by John on this appeal are based on a different understanding of the partnership property and precluded by Suttor v Gundowda (1950) 81 CLR 418 at 438; [1950] HCA 35, John points out that in closing submissions at first instance he submitted that the partnership property could also be seen as the rights of control which the three brothers were able to exercise over all of the assets of the Mir Group (see 02/03/23; T 1206.31-50) (which John says he, Tony and Leo are now able to exercise under the implied agreement as declared). John says that nothing was then said by the respondents about that argument being outside the pleaded case (and John maintains that it was not in fact outside the pleaded case in that the commercial list statement did not restrict how the partnership property could be characterised).

John accepts that prayer 3(b) of the Second Further Amended Summons sought an order that a receiver be empowered to sell “the Partnership assets comprising the properties listed in Schedule 1” but says that the word “comprising” indicated only that John was not seeking to have the receiver liquidate all of the partnership assets (which included assets other than real property, such as cash at bank). John says that, in any event, even if the partnership property is constituted by the partners’ rights of control in respect of the trusts, the winding up of the partnership will ultimately require the exercise by the receiver of the partners’ rights of control to sell the underlying real property.

The respondents argue that John’s characterisation of the partnership property (as comprising the rights and choses in action exercisable by the partners pursuant to the overarching agreement by which the land, or the income therefrom, may be realised by the partners) is artificial for three reasons. First, that each brother has rights under the overarching agreement which only he can exercise (each brother’s rights not being held for the three brothers together). Second, that it is circular reasoning for John in substance to contend that the partnership property comprises the rights the partners have under the partnership. Third, that the proposition that the partnership property simply comprises the rights of each of the brothers under the overarching agreement is inconsistent with the brothers carrying on the Mir Group business in common (rather, the respondents say that the “partnership” would hold rights to participate in an agreement in connection with such a business being conducted by other entities). Thus, the respondents submit that it is not apt to describe the rights of the brothers under the overarching agreement as partnership property.

As to Palermo, the respondents submit that there the Court was not addressing the question of partnership; rather, the Court concluded that the primary judge had failed to address a case put as an alternative to partnership (the respondents noting that the matter was remitted for a new trial on the facts).

In my opinion, the primary judge did not err in finding that the structure adopted for the acquisition of properties (where those properties were acquired within a discretionary or unit trust structure) was inconsistent with or posed difficulties for the assertion that there was an overarching partnership (as identified at [95]-[96] of the First Judgment). I do not accept that the overarching agreement (subsequently found by his Honour in the Third Judgment) necessarily answers the problem identified by the primary judge in that respect. The fact that, exercising rights under the overarching agreement, the three brothers might be in a position to direct the corporate trustees of discretionary or unit trusts to act in a certain manner does not (as I have indicated above) grapple with how those trustees could be compelled to do so if this would breach duties owed in their capacity as trustees of the discretionary or unit trusts.

The fact that there were a number of properties not held in a discretionary or unit trust structure (which John emphasises) is not to the point. Rather, the primary judge was considering how the asserted overarching partnership was consistent with the structure that had been adopted over the years in relation to the acquisition of properties by the Mir Group. The fact that the practical or conceptual difficulty might not have arisen in relation to all of the Mir Group entities does not answer that question (and I note that it was not contended that the overarching partnership might be confined to some but not all of the properties). In those circumstances, it is not necessary to consider whether his Honour erred in distinguishing Palermo. Nor is it necessary to enter into the debate as to whether the closing submissions, insofar as they identified rights and choses in action as part of the assets of the overarching partnership, went beyond the pleaded case.

In any event, even if one treats the putative partnership property as the rights and choses in action under the overarching agreement (rather than the real property identified in the Second Further Amended Commercial List statement as partnership property) and even if one accepts that the practical difficulties identified by the primary judge might not have been fatal to the claim that there was an overarching partnership, the weight I attach to the deliberate structuring, on the basis of legal and accounting advice, of the property acquisitions for the purpose of achieving a tax effective outcome leads me to conclude that whether or not there was error as contended for by Ground 2, the conclusion that there was no overarching partnership was correct.

Ground 2 therefore goes nowhere and should be dismissed.

This Ground does not arise in circumstances where Grounds 1 and 2 have not been made out. Suffice it to note that John’s argument, had those Grounds been made good, is that, as a partnership for an undefined period, the partnership between the three brothers was terminated by notice given on 2 April 2020, or upon the George’s death in December 2020 and John contends that the appropriate order, in such a case, is for the appointment of a receiver to oversee the winding up of the partnership (citing Fordyce v Ryan; Fordyce v Quinn [2016] QSC 307at [60] and referring also to Mitchell v Simons (1862) 1 SCR (NSW) Eq 70 at 73).

Turning then to Leo’s appeal, the complaint by Leo is that, despite having reached the conclusion that the J&M Trust Land formed part of the Mir Group, and despite finding that John had claimed for himself benefits that he knew or must have known also belonged to his brothers (see Second Judgment at [42]), the primary judge declined to make orders removing John and Marie as trustees of the J&M Trust and replacing them with a corporate trustee of which a member of each of the three families was a director and shareholder (the structure adopted in all other discretionary trusts within the Mir Group). Leo here emphasises the primary judge’s assessment of John’s evidence (at [26]) and the rejection by the primary judge of particular aspects of John’s evidence (at [25]; [48] and [50]).

The five matters relied upon by Leo (and Tony) in support of the application for removal of John and Marie as trustees have been summarised above (see at [45] above) as has the primary judge’s reasoning (see from [46] above).

As noted earlier, Leo accepts that he requires leave to appeal. I consider that, having regard to the fact that the issues raised arise in the context of the related appeal by John, it is appropriate to grant leave to appeal but the appeal should be dismissed.

Further, Leo accepts that the decision not to remove John and Marie as trustees of the J&M Trust is the exercise of a discretion and, for him to challenge that decision, he must establish an error “in the House v The King sense” (referring to House v The King (1936) 55 CLR 499; [1936] HCA 40 (House v the King)). The asserted errors relied upon in this regard are as summarised below. Leo submits that by reason of these errors the primary judge’s exercise of discretion miscarried.

In essence, John’s response to Leo’s appeal is to emphasise that the power to remove a trustee is one that is to be exercised cautiously and in exceptional circumstances (John here citing Porteous v Rinehart (1998) 19 WAR 495 at 507 and 518; Quinton v Proctor [1998] 4 VR 469 at 475). John argues that the requirement to demonstrate error in the House v The King sense is particularly onerous in this context since the discretion involves the determination of a “delicate question” and one “upon which the decision of the primary judge is entitled to especial weight” (John here citing Miller v Cameron (1936) 54 CLR 572 at 581; [1936] HCA 13 (Miller v Cameron) (per Dixon J) and Owies v JJE Nominees Pty Ltd [2022] VSCA 142 at [151]-[152]).

John argues that, although relevant, an examination of the past conduct of a trustee should not supplant the dominant considerations described by Dixon J in Miller v Cameron (at 580-581), namely the interests of beneficiaries, the security of trust property and the efficient and faithful execution of the trust (John here referring to the observations of Crispin J in Titterton v Oates (1998) 143 FLR 467 at 480, cited by Henry J in Kanjian Holdings No 1 Pty Ltd v Kanjian (No 3) (2021) 155 ACSR 230; [2021] NSWSC 839 at [1043]). John notes that where alleged misconduct is relied upon as a basis for the removal of a trustee, it has been held that the acts or omissions “must be such as to endanger the trust property or to show a want of honesty or a want of proper capacity to execute the duties, or a want of reasonable fidelity” (see In the matter of Reserve Hotels Pty Ltd [2021] NSWSC 376 at [141] (Reserve Hotels), where Black J cited JD Heydon and MJ Leeming, Jacobs’ Law of Trusts in Australia (8th ed, 2016, LexisNexis Butterworths) at 318-319).

As to the asserted errors, and John’s response thereto, those are as follows.

First, that the primary judge proceeded on the basis of errors of fact or erroneous assumptions when focusing on future possibilities as to the parties’ commercial dealings (i.e., that there was uncertainty as to whether the overarching agreement between the three brothers would subsist in the event of John or Tony’s death, or was otherwise capable of termination, and uncertainty as to the consequences that would follow where it came to an end ([39]-[41])); and that John and Marie were likely to comply with the Court’s declarations as to the overarching agreement (Second Judgment at [42]) (as to which see the fourth asserted error).

As to the uncertainty of the parties’ future dealings and consequences of termination of the overarching agreement, Leo argues that there is no realistic possibility that, if the overarching agreement terminated, governance of the Mir Group entities would be left to their individual constituent documents (noting that almost all of the entities within the Mir Group were formed under the auspices of the overarching agreement). Leo submits that the only realistic possibility that would arise on termination of the overarching agreement would be for the assets of the Mir Group to be realised and all net profits distributed equally between the three families (the equal sharing of profits being one of the fundamental terms of the overarching agreement).

Leo submits that his Honour’s reasoning proceeded on the erroneous underlying assumption that the respective families of Leo and Tony represented a single set of interests that would work in concert to the exclusion of John. Further, Leo says that the “status quo” sought to be preserved by the primary judge in relation to the J&M Trust is “out of step” with the balance of the entities within the Mir Group (which are effectively subject to equal common ownership and control between the three families).

As to the possibilities flowing from the termination of the overarching agreement ([40]), John submits that there was no error. John notes that, when the overarching agreement was initially raised, Senior Counsel for Leo observed that “rights of termination” were an “obvious” matter that might be addressed in any such agreement; and, separately, that “the broader question of what all of the terms of an overarching agreement might be ... had not been determined” but that no submissions were subsequently made concerning rights of termination in respect of the overarching agreement; and, on 19 July 2024, it was said for Leo that matters such as in what circumstances the overarching agreement would terminate were “all questions for another day”. Further, John says that in the proceedings before the primary judge at first instance, Leo and Tony took the position that, save for the J&M Trust, the Mir Group entities were governed solely by the terms of their constituent documents. In those circumstances, John says that the primary judge did not err in proceeding on the basis that Leo and Tony would take the position that, if the overarching agreement ended, governance would depend on the terms of the corporate constitutions and trust deeds.

As to the complaint that the primary judge assumed that the interests of Leo and Tony would invariably be aligned, John says that his Honour made no such assumption; rather, that his Honour simply recognised that the removal of John and Marie as trustees would place control of the J&M Trust in the hands of a Mir Group entity, which in turn would result in effective control passing to Leo and Tony (see Second Judgment at [40]). Further, John submits that, in light of the manner in which Leo and Tony had conducted the proceedings (both accepting in their list responses that relations between John and his family “on the one hand” and Tony and Leo’s families “on the other” had deteriorated), and their position that the Mir Group companies were not in deadlock as their boards could continue to function on the basis of “majority rule”, the primary judge’s finding (at [40]) was a reasonable hypothesis as to what would occur if the requirement of consensus was removed by termination of the overarching agreement and the trustee of the J&M Trust was a Mir Group company (the board of which would comprise a representative of each of the three families), such that there was the prospect of a return to the “majority rule” approach to governing the Mir Group.

Leo, in reply submissions, maintains that his Honour went further than treating as open the possibility that Leo and Tony would control the J&M Trust on a future termination of the overarching agreement; that this was the principal reason for not removing John and Marie as trustees, referring to what his Honour said at [41].

The second asserted error is that the primary judge’s concerns as to the future possibilities (regarding the dissolution of the overarching agreement and the maintenance of the status quo) were not relevant considerations in a case in which a trustee had deliberately and persistently treated the trust property as effectively his own over a long period of time, and where his attempts to retain it involved, inter alia, lying under oath to the Court. Leo emphasises that the paramount concern in the exercise of the discretion to remove a trustee is to ensure the due administration of the trust for the welfare of the beneficiaries.

As to this asserted error, John points out that it is recognised in the authorities that, in considering the power to remove trustees, all relevant circumstances should be examined. John submits that the prospect of removing John and Marie as trustees might exacerbate future disputes relating to the administration of the trust (the beneficiaries of which included members of John’s immediate family) by potentially delivering control of all Mir Group entities to Leo and Tony’s families; and that there was no error in considering the trustee removal issue in the wider context of the Mir Group. John notes in this regard that the respondents had contended that breach of the overarching agreement could be considered in deciding whether to remove John and Marie as trustees.

The third asserted error (also relied on as a separate ground of appeal) is that there was a denial of procedural fairness in that the future possibilities that his Honour considered were not identified as matters of concern to the primary judge (this being relied on both as a House v King error and a separate ground of appeal). Leo says that had such concerns been raised with the appellant, they could and would have been quickly dispelled before the primary judge (saying, as noted above, that the only realistic possibility that would arise on termination of the overarching agreement would be the realisation of the assets of the Mir Group and equal distribution of the net assets).

As to the allegation of denial of procedural fairness, John says that the primary judge did not need to alert the parties to the uncertainty that they had created by the manner in which they had conducted the proceedings; rather, those uncertainties were self-evident and arose from the many aspects of the overarching agreement left unexplored. John points out that, during the hearing on 31 May 2023, the primary judge invited Senior Counsel for Leo to advance submissions on the rights of termination relating to the overarching agreement but no submissions on this were provided and those issues were expressly left open. John says that Leo’s criticism of the approach of the primary judge ignores the part he played in bringing it about (having opposed the course John proposed of there being further amendments to the pleadings to clarify aspects of the overarching agreement and having urged the primary judge to proceed to determine the question of whether John and Marie should remain as trustee) (see Second Judgment at [17] in this regard).

In reply submissions, Leo submits that it is no answer to say that the issue of termination was not a live one at earlier stages of the hearing, in light of the procedural history of this matter. Leo says that the parties were squarely joined on this issue prior to the last oral hearing regarding the removal of John and Marie, and Leo complains that his Honour’s concern was never raised or put to Leo in order to give him an opportunity to address it either before or at that hearing.

The fourth asserted error is that the finding of likely compliance by John and Marie with the Court’s declarations as to the overarching agreement (Leo here noting that no reasons were given for this) was not reasonably open to the primary judge. Leo says that this finding was not in conformance, and was irreconcilable, with the primary judge’s findings as to the unreliability of John’s evidence regarding the background to and affairs of the J&M Trust.

As to this asserted error, John says that although the primary judge criticised certain aspects of his evidence and conduct (referring to [26]; [43]), his Honour did not make any findings to support the accusations advanced by Leo in his submissions (that he gave “knowingly false evidence” or “sought to put words into the mouth of his dead brother... who he knew was unable to give evidence”; that he had “repeatedly misled the Court” or that he was “lying on his oath to the Court”). John says that the primary judge did not make any findings to the effect that the adverse findings concerning John’s prior conduct or evidence before the Court reflected a dishonest character or as to any fundamental unsuitability to continue as trustee of the J&M Trust which would inform the assessment of future behaviour. (Leo takes issue with the suggestion that he has overstated the primary judge’s findings as to John’s credit.)

Further, John contends that his conduct must be understood in the context of the parties’ dispute and the proceedings. John accepts that “historically” he had adopted a different view as to the ownership of the J&M Trust Land but he says that that view was taken in the belief that the J&M Trust did not form part of the Mir Group. John says that he has accepted the Court’s correction of that view. Similarly, insofar as complaint is made that he treated the J&M Trust assets inconsistently with the overarching agreement, John contends that the conduct of all the parties prior to the determination as to the existence and terms of the overarching conduct must be seen in the context that it occurred at a time when that determination had not yet occurred.

Further, John maintains that there is no established nexus between the alleged misconduct on his part and any risk to the assets of the J&M Trust (citing Reserve Hotels at [141] in support of the argument that an allegation of misconduct without an established nexus between that misconduct and a risk to the assets of the trust is insufficient). John argues that, in the present case, the risk of any default is low; since the trust itself is a passive, income-generating entity within the Mir Group and no development can occur without the consensus of Tony, Leo and John (or their nominees). John also submits that he has consistently performed the principal substantive role of the trustee of the J&M Trust (that of the equal distribution of the profits of the trust equally between the three brothers’ immediate families) with only one minor exception in the 2021 financial year (a $55,000 payment that was identified, disclosed to the respondents and corrected).

In reply submissions, Leo says that the clear nexus between the misconduct and the risk to trust assets is that John positively and unwaveringly advanced the view that he was free to deal with the trust assets as if they were his own, and in fact directed assets to himself with a view to bolstering that position. Leo submits that there was no proper basis to conclude, in the face of that conduct, that John could now be relied upon faithfully to discharge the office of trustee (and Leo maintains that John has here sought to minimise the seriousness of his misconduct).

John argues that Leo’s submissions do little more than proffer a different view as to John and Marie’s suitability to remain as trustees of the J&M Trust. John argues that, even assuming that view to be supported by the evidence and findings of the primary judge, it does not by itself establish any error in the House v The King sense, nor does it justify appellate intervention in the discretion of the primary judge to which special weight attaches (again citing Miller v Cameron at 581 per Dixon J).

The final asserted House v The King error is put on the basis that the decision not to remove John and Marie as trustees was plainly unreasonable or unjust in the result (such that House v The King error can readily be inferred whether or not some other, specific, error can be identified in the primary judge’s reasons). Leo argues that John’s conduct in respect of the J&M Trust property was antithetical to the trust reposed in a trustee to prefer the interests of the class of beneficial objects of the J&M Trust as a whole over their personal interests; and that it cannot have reasonably be concluded that the proper exercise of discretion would result in John and Marie remaining as trustees of the J&M Trust.

John says that this asserted error overlaps with the fourth (see above). John argues that the primary judge in the Second Judgment clearly focused on John’s conduct in denying that the J&M Trust was a Mir Group entity (at [32]-[33]; [38]; [42]) but weighed that consideration against concerns relating to the future administration of the trust ([39]-[41]), the special considerations arising from the proximity of the J&M Trust Land to John and Marie’s family home ([36]), the fact that Tony and George had agreed to John and Marie being trustees of the J&M Trust Land ([36]) and appointors under the J&M Trust ([25]), instead of appointing a commonly-owned corporate trustee ([36]), as they did for every other Mir Group asset held in trust ([41]). John argues that this was quintessentially a matter of evaluative judgment for the primary judge. John submits that nothing in the reasoning of the primary judge establishes that the decision was so unreasonable or unjust that an error must be inferred.

I note that, if there be a re-exercise of the discretion, Leo points again to the attempts by John to take the J&M Trust Land and the profits derived therefore for himself and his immediate family to the exclusion of the other two families; and to the findings made in relation to John’s evidence and credibility. Leo maintains his position that John is not someone in whom any faith could be placed to discharge the fiduciary duties of a trustee. In any event, Leo submits that, in light of the declarations made by the primary judge as to the existence of an overarching agreement governing the Mir Group including the J&M Trust, it is logical to bring the ownership and control of the J&M Trust into line with all other Mir Group trusts, with a corporate trustee owned and controlled equally by each of the three families. (While there is no little force in Leo’s contentions in this regard, the occasion to re-exercise the discretion has not arisen given the conclusion I have reached below.)

There was no dispute as to the applicable principles on an application to remove a trustee (whether pursuant to the statutory power contained in s 70 of the Trustee Act or as an incident of the Court’s inherent supervisory jurisdiction over the administration of trusts). It was accepted that the power is to be exercised with a view to “the interests of the beneficiaries, to the security of the trust property and to an efficient and satisfactory execution of the trusts and a faithful and sound exercise of the powers conferred upon the trustee” (see Dixon J at 580 in Miller v Cameron).

In Welker v Rinehart (No 10) [2012] NSWSC 1330, Brereton J, rejecting a submission that the “safety of the trust” was the sole or essential consideration in determining whether to remove a trustee, identified one of the Court’s central concerns (if not the predominant one) as being the due administration of the trust (see at [10]).

As noted by John, it is recognised that there must be caution in the exercise of the power to remove a trustee; and not every mistake or misconduct will warrant the removal of a trustee (see Letterstedt v Broers (1884) 9 App Cas 371 at 385; [1881-5] All ER Rep 882). That said, where a trustee has demonstrated a want of honesty, proper capacity to exercise the trustee’s duties, or of reasonable fidelity to the trust with which they have been reposed, this would be a basis on which the court in its supervisory jurisdiction may well decide to remove a trustee (Leo here referring to Guazzini v Pateson (1918) 18 SR (NSW) 275 at 292-293 (Street CJ)).

Turning to the asserted House v The King errors, I am not persuaded that there has been such an error in the present case.

As to the asserted error of fact or of taking into account of irrelevant considerations when the primary judge considered the future possibilities as to the parties’ commercial dealings (including the dissolution of the overarching agreement and the maintenance of the status quo) (the first and second asserted errors), those matters were not in my opinion irrelevant considerations in circumstances where the issue was as to the control by the trustees of the J&M Trust and one of the central concerns in that regard was to ensure the due administration of the trust with a view to the interests of beneficiaries and the safety of the trust property; nor was there an error of fact as contended.

His Honour did not make any findings in respect of what would occur in the event of termination of the overarching agreement; rather, what his Honour did was to point to uncertainty as to what might occur in the future. I accept John’s submission that there was no error in taking into account the uncertainty as to what might occur in the future and that his Honour’s conservative approach in preserving the status quo was not inappropriate, having regard to the caution with which the jurisdiction to remove trustees is exercised (and, at the very least, it was a course open to the primary judge). Nor did his Honour erroneously make an assumption as to the interests of Leo and Tony being a unified set of interests.

It is clear that what his Honour was considering at [39]-[41] was the possible consequences, on a termination of the overarching agreement, for the J&M Trust (and other group entities). One such possibility must surely be that the control of the various group entities would be governed by their respective constituent documents. However, his Honour was not making a finding that this is what would occur. His Honour’s analysis was clearly dealing with hypothetical consequences. It is by no means clear in my opinion that the “only realistic possibility” is that on termination of the overarching agreement the assets of the Mir Group would be realised in accordance with the terms of the (on this hypothesis) terminated agreement (as Leo contends). It is sufficient that this was a possibility that it was not irrelevant for his Honour to take into account in determining whether in all the circumstances to remove John and Marie as trustees.

Similarly, all his Honour was taking into account (when referring to the possibility of Leo and Tony then being in a position to control the J&M Trust, through majority control of a replacement corporate trustee) was the possibility that they could do so if their interests aligned at the time; not that this would necessarily be the case.

As to the third of the asserted errors, I do not accept that the complaint of a denial of procedural fairness (by reference to the fact that his Honour did not draw to the parties’ attention concerns as to the future possibilities that might arise as a consequence of termination of the overarching agreement) is made good. The primary judge made clear in the First Judgment that his Honour was not in a position to make findings as to the existence or terms of any overarching agreement of the kind posited, in the absence of pleadings and submissions on that issue. The parties were given an opportunity to address the issue as to the existence or terms of such an agreement in the second hearing. His Honour raised the question of termination of the overarching agreement (in that context). No submissions were directed to that issue either in the second hearing or the third. It was not for the primary judge to rehearse in oral argument concerns that his Honour might then have had as to the consequences of termination of the overarching agreement. Nor is it clear that any submissions on that topic would have removed the possibilities to which his Honour referred in the Third Judgment. I regard an accusation of denial of procedural fairness as a serious matter. I am not persuaded that it is here made good.

As to the fourth asserted error, that it was not reasonably open to the primary judge to make a finding of likely compliance by John and Marie with declarations as to the overarching agreement (and that no reasons were given for this), the primary judge had the opportunity of assessing John in the witness box. True it is that seriously adverse credibility findings were made against John and I accept that those findings may well have justified a finding that he was an unsuitable person to continue as trustee in the interests of the due administration of the trust and security of trust property with a view to the interests of beneficiaries. However, his Honour was able to weigh the credibility findings against John’s evidence under oath that he would abide by the decision that had been made as to the J&M Trust. His Honour could no doubt also take into account that once the declarations were made John would expose himself to serious consequences if he deliberately breached the overarching agreement the subject of those declarations. I consider that the evaluation of the risk that John would depart from his stated intentions as low was one that was open to the primary judge. While reasonable minds might have differed on that issue, it does not disclose error in the House v The King sense.

Finally, I do not agree that the decision not to remove John and Marie as trustees was plainly unreasonable, capricious or unjust so as to bespeak House v The King error. I do not here minimise the departure by John from the standards required of him as trustee of the J&M Trust (nor do I minimise the seriousness of the credibility findings, such as they were). However, John’s denial that the J&M Trust Land formed part of the Mir Group assets and John’s behaviour in the course of the hearing seeking to substantiate that belief (reprehensible as it was found to be) does not, having regard to the considerations to which his Honour referred, strike me as plainly unreasonable or unjust so as to bespeak House v The King error.

In light of the above conclusions, it is not necessary to consider the issue raised by John’s supplementary submissions (or indeed whether those submissions should have been considered at all given the time at which they were raised).

For the above reasons, I propose the following orders:

LEEMING JA: I agree with the orders proposed by the President, and with her Honour’s reasons. I add the following by way of emphasis, not by way of qualification.

First, the main ground of John’s appeal was whether there was an “overarching partnership”. It is to be borne in mind that the reasoning of the primary judge in the First Judgment concerning overarching agreement rejected the pleaded case of a partnership. The pleaded case of a partnership was not sought to be resurrected on appeal. The primary judge made findings and, ultimately, granted a declaration concerning an agreement binding some 47 parties to the litigation concerning the distribution of profits and decision-making. A prominent element of the reasoning in this Court relied upon that declaration to support a different overriding partnership, one that had not been pleaded. I do not accept that that is a valid mode of reasoning. The findings relied on were part and parcel of the reasoning rejecting the pleaded partnership, and are inconsistent with the new partnership contended for in this Court.

Secondly, the primary judge relied on the not unfamiliar position that the parties had, in accordance with accounting advice, formally adopted a particular structure through which to conduct their business, which is inconsistent with the structure which more recently suits some of them to contend was in place. Many considerations tell against that course, but one concerns the taxation benefits received over many years. The appeal books do not permit a full consideration of the scope of what would be involved, but an example may be seen from the land tax assessment notices in evidence. For example, “the Westside Investment Trust” held land at 376 Illawarra Rd valued at some $8.4 million, upon which land tax was calculated, apparently taking advantage of the $692,000 threshold each year for many years. Three parcels of land (at Hurlstone Park, Stoddart St Roselands, and Nicole St Roselands) were held by the three brothers personally as partnership property. The estimation of land tax proceeded on the basis that the aggregated taxable land value of the three parcels was some $5.6 million, and once again, the partnership obtained the benefit of the threshold of $692,000. Acceptance of the proposition that all four parcels of land were property of the same partnership would carry with it the prima facie need to recalculate decades of assessments of land tax so as to ensure that a single threshold was applied for the entirety of those parcels, and the numerous other parcels of land, said to be partnership assets. It might well be that other taxation consequences, including income tax and capital gains tax, were much more substantial than land tax, which is only chosen because, as it happens, there were documents in evidence which could readily illustrate the point. It was in part with these considerations in mind that the parties acceded to the Court’s suggestion that there be a further mediation.

Thirdly, on Leo’s appeal concerning the removal of John and Marie as trustees, it was rightly conceded that it was necessary to establish House v The King error, and there was no dissent from what Dixon J said in Miller v Cameron (1936) 54 CLR 572 at 581; [1936] HCA 13 that the “delicate question” whether a Court should act to remove a trustee is “one upon which the decision of a primary judge is entitled to especial weight”. Further to that may be added that the primary judge saw John give evidence in chief and be cross-examined over parts of four days at trial.

The primary judge confronted the serious proposition that the trustees had, on a number of occasions prior to the resolution of their claim in the Court, asserted full legal and beneficial ownership of the Claremont land. I agree with Ward P that the weight to be accorded to such considerations, and the probability that the trustees would abide by the Court’s orders, were matters for the primary judge. I also agree that the complaint about a material denial of natural justice is without foundation.

Finally, it is far from clear to me that this appeal, purportedly brought as of right, did not require leave, bearing in mind that it concerns merely the legal ownership of land held on trust: see Gilmore Finance Pty Ltd v Aesthete Pty Ltd [2022] NSWCA 279. But no submissions having been made about the need for a grant of leave, nothing more need be said.

PAYNE JA: I agree with the President. I also agree with the additional remarks of Leeming JA.