El-Cheikh v Miraki

This appeal concerned a dispute between Mr El-Cheikh (the plaintiff) and Ms Miraki (the defendant) regarding a loan agreement and the constitution of a unit trust. The primary judge had made orders in the Equity Division of the Supreme Court of New South Wales, which Mr El-Cheikh appealed.

The Court of Appeal was required to determine whether a loan advance of $450,000 paid by Mr El-Cheikh to Ms Miraki was made pursuant to a loan agreement and, if so, whether it had been repaid. Additionally, the court had to consider whether a unit trust had been validly constituted, notwithstanding that the trust documents were not correctly executed and no unit holders had subscribed for units, and whether, if constituted, unit holders had acquired a beneficial interest in the trust property.

The Court of Appeal found that the primary judge had erred in concluding that the $450,000 was not a loan. The court held that the evidence established the advance was made pursuant to a loan agreement and had not been repaid. Regarding the trust, the court determined that it had been validly constituted and that unit holders had acquired a beneficial interest in the trust property.

The appeal was allowed. The orders of the Equity Division were set aside, and judgment was entered for Mr El-Cheikh against Ms Miraki for $450,000. The court further declared Mr El-Cheikh's entitlement to 50% of the net proceeds from the sale of a specific property, with Ms Miraki to bear all capital gains tax liability on any profit from that sale. The defendants were ordered to pay the plaintiffs' costs in the Division, and the respondents were ordered to pay the appellants' costs in the Court of Appeal.