El-Cheikh v Miraki (No 2)

THE COURT: Judgment in this matter was delivered on 8 November 2021: El-Cheikh v Miraki [2021] NSWCA 271.

Order 3 declared that the appellant, Mr Omar El-Cheikh was entitled to 50 per cent of the amount payable to the respondent, Ms Sepideh Miraki, on the sale of a commercial office unit located at Gladstone Road, Castle Hill (the property). This was on the basis that Ms Miraki held half of her interest in the property on trust for Mr El-Cheikh and that he should be entitled to 50 per cent of the proceeds of sale with Ms Miraki bearing any liability for capital gains tax arising from any profit made on the sale.

Ms Miraki now seeks to set aside Order 3 made on 8 November 2021 and to substitute a declaration that Mr El-Cheikh is entitled to 50 per cent of the profits arising from the sale of the property in accordance with Special Condition 1(e) of the Loan Agreement dated 12 October 2016.

The basis for such an application, as disclosed in Ms Miraki’s affidavit of 22 November 2021, is that as trustee she is entitled to a right of recoupment, having discharged liabilities in the trust from her personal funds. If Ms Miraki has paid out money in respect of the trust property, then prima facie she would be entitled to claim an indemnity as trustee.

If Ms Miraki does have such an entitlement, the orders made by the Court do not have the effect of taking away this right. As was pointed out by each member of the Court, the judgment left open a number of outstanding issues which, unless resolved by the parties, would need to be determined by a judge of the Equity Division: see El-Cheikh v Miraki at [8] (Bathurst CJ), [20] (Basten JA), [101] (Emmett AJA). Order 5 of the orders made on 8 November 2021 granted the parties liberty to apply to a judge of the Equity Division in respect of any matter arising out of the orders made. This would include any claim by Ms Miraki for indemnity or recoupment as a trustee.

In those circumstances there is no need to make any variation to the order. The motion should be dismissed with costs.