Memduh Cihan and Mehmet Cihan trading v Cihan Family Pty Limited

In this case, Memduh Cihan and Mehmet Cihan, trading as Memduh Cihan and Mehmet Cihan, filed an action against Cihan Family Pty Limited, a company that held title to certain real property. The dispute centred around the transfer of a 27.38% interest in the real property from a family trust to a self-managed superannuation fund, an act orchestrated by the father of the plaintiffs. The plaintiffs argued that this transfer, which occurred at the behest of the adult son, was executed under circumstances that constituted unconscionable conduct and potentially fraud, given the father's special disability — his inability to read or understand English and his reliance on his son for guidance.

The court was tasked with determining whether the transfer constituted fraud under the Real Property Act 1900 (NSW) and whether the plaintiffs had established unconscionable conduct. Fraud required a specific act to be identified, which the plaintiffs failed to do with sufficient clarity. Consequently, the court rejected the fraud claim. However, the court found that the plaintiffs had successfully established the special disability of the father, which created an equitable presumption of invalidity regarding the transfer. The defendant did not appear to rebut this presumption.

The court's reasoning led to the conclusion that the transfer was indeed unconscionable, as the father, due to his special disability, was at a significant disadvantage in understanding the implications of the transfer. The plaintiffs had effectively demonstrated that the transfer was to the overwhelming benefit of the adult son and his family, and away from the father. The court set aside the transfer of the 27.38% interest in the real property back to the family trust. Given the rejection of the fraud claim, the court did not proceed to address the additional issue of the procedural fairness in relation to the fraud allegations.