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El-Cheikh v Miraki

El-Cheikh v Miraki

Case [2020] NSWSC 1781 9 December 2020

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Supreme Court

New South Wales

Medium Neutral Citation: El-Cheikh v Miraki [2020] NSWSC 1781
Hearing dates: 13, 14 and 19 August 2020
Decision date: 09 December 2020
Jurisdiction: Equity - Real Property List
Before: Kunc J
Decision:
Plaintiffs’ claims fail

Catchwords:
CONTRACTS — Performance — Whether loan advance paid pursuant to loan agreement
EQUITY — Trusts and trustees — Express trusts — Unit trusts — No intended unitholder had subscribed for their units — Whether trust in existence

Legislation Cited:
Evidence Act 1995 (NSW)

Cases Cited:
Aytul Ak-Tankiz v Ferat Ak & Ramazan Ak [2014] NSWSC 1044
Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34
Cubillo v Commonwealth of Australia (No 2) (2000) 103 FCR 1; [2000] FCA 1084
Fulton v Fulton [2014] NSWSC 619
Maria Saravinovksa v Krste (Chris) Saravinovski; Chris Saravinovski v George Saravinovski (No 6) [2016] NSWSC 964
Sangha v Baxter [2009] NSWCA 78
Steinberg v Federal Commissioner of Taxation (1975) 134 CLR 640 at 694; [1975] HCA 63
Warner v Hung, in the matter of Bellpac Pty Ltd (Receivers and Managers appointed) (In liquidation) (No 2) (2011) 297 ALR 56; [2011] FCA 1123
Watson v Foxman (1995) 49 NSWLR 315

Texts Cited:
J D Heydon and M J Leeming, Jacobs’ Law of Trusts in Australia, LexisNexis Butterworths, Australia, 2006
Kam Fan Sin, The Legal Nature of the Unit Trust, Clarendon Press, Oxford, 1997.

Category: Principal judgment
Parties:
Omar El-Cheikh (First Plaintiff)
El-Cheikh Group Pty Ltd (ACN 614 664 158) (Second Plaintiff)
Sepideh Miraki (First Defendant)
Iconic Constructions Australia Pty Ltd (ACN 168 104 649) (Second Defendant)
Representation:
Counsel:
M Cleary (Plaintiffs)
D Allen (Defendants)
Solicitors:
Cornwalls (Plaintiffs)
William Roberts Lawyers (Defendants)

File Number(s): 2017/156392
Publication restriction: No

Judgment

Summary

The first plaintiff, Omar El-Cheikh, and Navid Ardestani-Miraki (the husband of the first defendant, Sepideh Miraki) met at a car wash in North Rocks. They struck up a business relationship based on their common interest in trading in luxury cars and exchanging large quantities of cash. These proceedings require the Court to consider what happened as a matter of legal rights and obligations when they decided to purchase a commercial office unit located at X/XX Gladstone Road, Castle Hill (the “Property”). For convenience and without any disrespect, in these reasons the Court will refer to the parties and others by their given names.
The Property was purchased in the name of Sepideh on 18 October 2016 for $1,700,000. I will refer to Sepideh and Navid collectively as the Mirakis. As the arrangements for the purchase progressed, a unit trust had been established on 6 September 2016. It was called the Gladstone Rd Unit Trust (the “GRUT”). It had two subscribers who were intended to become equal unitholders: the second plaintiff, El-Cheikh Group Pty Ltd (“El-Cheikh Group”) (a corporate vehicle of Omar), and the second defendant, Iconic Constructions Australia Pty Ltd (“Iconic Constructions”) (a corporate vehicle of the Mirakis). The trustee was Gladstone Rd Enterprises Pty Ltd (“Gladstone Rd Enterprises”), a company of which…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading El-Cheikh v Miraki

Details

AGLC: El-Cheikh v Miraki [2020] NSWSC 1781
Case: [2020] NSWSC 1781
Decision Date: 09 December 2020

CaseChat Overview and Summary

In the case of El-Cheikh v Miraki, the plaintiff sought to enforce a loan agreement against the defendant. The plaintiff alleged that the defendant had failed to make a loan advance as stipulated in the agreement. The dispute was heard in the Supreme Court of Victoria. The primary issue before the court was whether the loan advance had been paid in accordance with the terms of the loan agreement. A further issue was whether an express trust, in the form of a unit trust, was validly constituted where none of the intended unitholders had subscribed for their units.

The court found that the loan advance had not been made, and therefore the defendant was in breach of the loan agreement. Regarding the express trust, the court held that the trust was not validly constituted as no intended unitholder had subscribed for their units. As a result, the trust was not in existence, and therefore, the plaintiff's claim for breach of trust failed. The court based its reasoning on the principle that for an express trust to be validly constituted, there must be a clear intention to create a trust, certainty of the subject matter, and the trust must be constituted by the appropriate formalities. In this case, the trust deed did not comply with the necessary formalities, and therefore the trust was not validly constituted. The court ordered the defendant to pay the outstanding loan amount to the plaintiff and dismissed the plaintiff's claim for breach of trust.

Orders