Mir v Mir (No 2)

[2024] NSWSC 791

Supreme Court

New South Wales

Medium Neutral Citation:

Mir v Mir (No 2) [2024] NSWSC 791

Hearing dates:

30 May 2024

Decision date:

28 June 2024

Jurisdiction:

Equity - Commercial List

Before:

Ball J

Decision:

(1)   By 12 July 2024 each party provide to my Associate and serve on each other separately represented party proposed short minutes of order giving effect to these reasons for judgment and setting out the order for costs that they seek together with an outline of written submissions not exceeding 3 pages dealing with the question of costs;

(2)   Stand the matter over to 19 July 2024 or such other date as is agreed with my Associate.

Catchwords:

CONTRACTS — Terms — Where terms of agreement between parties are inferred by parties’ conduct — Where parties disagree on scope of agreement — Where parties seek declarations concerning terms of the agreement

EQUITY — Trusts and trustees — Court’s supervision of — Appointment and removal of trustees — Application of section 70 of Trustee Act 1925 (NSW) — Application of Miller v Cameron (1936) 54 CLR 572 — Where circumstances of trust management do not justify removal of trustees

Legislation Cited:

Corporations Act 2001 (Cth)

Partnership Act 1892 (NSW)

Trustee Act 1925 (NSW)

Cases Cited:

Miller v Cameron (1936) 54 CLR 572

Mir v Mir [2023] NSWSC 408

Welker v Rinehart [2012] NSWSC 1330

Category:

Consequential orders

Parties:

John Mir (First Plaintiff | First Cross Defendant on Cross-Claim)
John Mir Holdings Pty Ltd (Second Plaintiff)
Samuel Mir (Third Plaintiff)
Acclaim (Australia) Pty Ltd (Fourth Plaintiff | Thirty Sixth Defendant)
Marie Mir (Fifth Plaintiff | Second Cross Defendant on Cross-Claim)
Leo Mir as executor of the Estate of the late George Mir (First Defendant | Cross Claimant)
Anthony Mir (Second Defendant | Third Cross Defendant on Cross-Claim)
Mir Bros Unit Constructions Pty Ltd (Third Defendant)
Mir Bros Community Planning Pty Ltd (Fourth Defendant)
Mir Bros West Side Investments Pty Ltd (Fifth Defendant)
Mir Bros Residential Development Pty Ltd (Sixth Defendant)
Mir Bros Rural and Urban Industries Pty Ltd (Seventh Defendant)
GM Amalgamated Investments (Dulwich Hill) Pty Ltd (Eighth Defendant)
JM Associated Investments (Dulwich Hill) Pty Ltd (Ninth Defendant)
Demalle Corporation Pty Ltd (Tenth Defendant)
Mir Bros Enterprises Pty Ltd (Eleventh Defendant)
Mir Bros Constructions Pty Ltd (Twelfth Defendant)
Southern Highlands Pastoral Pty Ltd (Thirteenth Defendant)
Sheraton Homes Pty Ltd (Fourteenth Defendant)
Mir Brothers Developments Pty Ltd (Fifteenth Defendant)
Mir Bros Trading Co Pty Ltd (Sixteenth Defendant | Seventh Cross Defendant on Cross-Claim)
Samuel Mir Pty Ltd (Seventeenth Defendant)
Mirco Finance Pty Ltd (Eighteenth Defendant | Sixth Cross Defendant on Cross-Claim)
Mir Bros (Hollywood Creations) Pty Ltd (Nineteenth Defendant | Eighth Cross Defendant on Cross-Claim)
Mir Bros Holdings Pty Ltd (Twentieth Defendant)
Mir Bros Properties Pty Ltd (Twenty First Defendant)
Mir Bros Real Estate Pty Ltd (Twenty Second Defendant)
Mir Bros Industries Pty Ltd (Twenty Third Defendant | Fifth Cross Defendant on Cross-Claim)
Regot Pty Ltd (Twenty Fourth Defendant)
Mir Bros High Rise Apartments Pty Ltd (Twenty Fifth Defendant | Fourth Cross Defendant on Cross-Claim)
Mir Group Holding Company Pty Ltd (Twenty Sixth Defendant)
Mircorp (Australia) Pty Ltd (Twenty Seventh Defendant)
Mir Group of Companies Pty Ltd (Twenty Eighth Defendant)
Mir Group Pty Ltd (Twenty Ninth Defendant)
Glenmore Rural Pty Ltd (Thirtieth Defendant)
Jedda Farm Pty Ltd (Thirty First Defendant)
Leafs Gully Farm Pty Ltd (Thirty Second Defendant)
Pommier Enterprises Pty Ltd (Thirty Third Defendant)
Mir Bros Investments Pty Ltd (Thirty Fourth Defendant)
Mirage Real Estate Pty Ltd (Thirty Fifth Defendant)
George Mir Holdings Pty Ltd (Thirty Seventh Defendant)
Anthony Mir Holdings Pty Ltd (Thirty Eighth Defendant)
Anthony Charles Mir (Thirty Ninth Defendant)
Sidney Mir (Fortieth Defendant)
Stephen Mir (Forty First Defendant)
David Mir (Forty Second Defendant)
Mary Mir (Forty Third Defendant)
Leo Mir (Forty Fourth Defendant)

Representation:

Counsel:
J Hutton SC and J Pokoney (Plaintiffs | First and Second Cross Defendants)
MR Elliott SC with AR Langshaw (First, Thirty Seventh and Forty Fourth Defendants | Cross-Claimant)
CN Bova SC with B Michael (Second to Thirty Sixth and Thirty Eighth Defendants | Third to Eighth Cross Defendants)

Solicitors:
Dentons (Plaintiffs | First and Second Cross Defendants)
Horton Rhodes (First, Thirty Seventh and Forty Fourth Defendants | Cross-Claimant)
Cornwalls (Second to Thirty Sixth and Thirty Eighth Defendants | Third to Eighth Cross Defendants)

File Number(s):

2019/391539

Publication restriction:

None

JUDGMENT

Background

1. In these proceedings the plaintiff, Mr John Mir (John), sought orders for the winding up of a partnership which John alleged existed between him and two of his brothers, Mr George Mir (George) and Mr Anthony Mir (Tony). The three brothers had established in the 1960s and since then have carried on a highly successful property investment and development business through a substantial number of companies, trusts and partnerships (referred to by John as “sub‑partnerships”) which together trade under the name “the Mir Group of Companies” (the Mir Group). George died in December 2020. John alleged that the partnership was dissolved as a consequence of George’s death or following notice given by John under s 32(c) of the Partnership Act 1892 (NSW).

2. By a second further amended list statement filed on 3 March 2022, John advanced an alternative case that the corporations through which the business is carried on should be wound up under s 461(1)(k) of the Corporations Act 2001 (Cth) (which permits the Court to order the winding up of a corporation where it is of the opinion that it is just and equitable to do so), a receiver should be appointed to the assets of the trusts and the sub-partnerships should be wound up.

3. On either approach, it was John’s case that the assets of the business should be divided equally between the three brothers (or in George’s case, his estate) or members of their immediate families. That proposed division was consistent with the fact that the Mir Group had operated on the basis that each of John, Tony and George or members of their immediate families had equal control over the entities through which the business was carried on and, with a few minor exceptions, the profits of the business have been shared equally between the three brothers or members of their immediate families.

4. George’s oldest son, Mr Leo Mir (Leo), as executor of George’s estate, denied the existence of an overarching partnership between the three brothers and resisted the orders sought by John in relation to the individual entities through which the business was carried on. John did not advance an alternative case that the three brothers were parties to some other agreement governing their relationship.

5. Leo also filed a cross-claim against John and John’s wife, Marie, who are the trustees of the J&M Trust, which owns a large parcel of land at Blairmount. Their home is built on part of the land, which they hold in their own right. They hold the balance of the land as trustees of the J&M Trust, which is a discretionary trust the beneficiaries of which include John, Tony and George and members of their respective families and Mir Group entities. It was Leo’s contention that the land held on trust was part of the business carried on by the Mir Group. To give effect to that contention, Leo sought an order removing John and Marie as trustees of the trust and declarations to the effect that the terms of the trust included the following:

1. Decisions in relation to the trust were to be taken by a majority of the relevant representatives of the three families; and

2. Any distributions from the trust were to be made equally to John, Tony and George’s estate or John, Tony and George’s immediate family members.

6. I delivered judgment in this matter on 21 April 2023: see Mir v Mir [2023] NSWSC 408. In that judgment:

1. I rejected John’s argument that there was an overarching partnership;

2. I accepted the existence of the sub-partnerships identified by John and that, in principle, they could be wound up. However, I rejected the contention that John had given an effective notice winding-up a number of the sub-partnerships. I also rejected the other relief sought by John on the basis that, absent some overriding agreement between the three brothers, the question of what should happen to the entities that together comprised the Mir Group depended on the nature of the particular entity and the facts relevant to that entity, which for the most part had not been addressed by the evidence, but in any event did not justify the orders sought by John;

3. I accepted that the Blairmount land formed part of the business carried on by the Mir Group, but I indicated that I did not think that Leo was entitled to any of the relief claimed in the cross-summons.

7. After explaining that to some extent the situation the parties found themselves in arose from the legal structure they had decided to adopt, I said this:

[156]   To some extent, however, the situation has arisen because of the way in which the parties have chosen to present their respective cases. John’s focus has been on claims and remedies which would bring about a division of the assets of the group between the three families. Leo and for that matter the other defendants’ focus has been on obtaining what they regard as their fair share of the Blairmount development. The result has been findings that the J&M Trust did form part of the Mir Group business, but no findings concerning precisely what rights and obligations flow from that fact.

[157]   Leo sought at the end of the hearing to address the issue referred to in the previous paragraph by seeking orders that would involve the appointment in place of John and Marie of a corporate trustee of the J&M Trust that had a similar structure as other group companies. The effect of those orders would be to remove control of the J&M Trust from John (and Marie) and give it to Tony and Leo. I could not make those orders without at least giving the parties a further opportunity to make submissions and possibly lead evidence on whether those orders should be made. But if I were to do that, that raises the question whether there are other issues that ought to be resolved as part of these proceedings. Again, it is appropriate to give the parties an opportunity to make submissions on that matter.

[158]   Accordingly, the orders of the Court are:

(1)   Direct that the parties bring in short minutes of order that give effect to these reasons for judgment, that deal with the question of costs if costs can be agreed and that set out directions to be given by the Court in relation to the resolution of any outstanding questions to be determined in these proceedings;

(2)   If the parties cannot agree on the form of the orders and directions referred to in (1), direct that by 22 May 2023 each separately represented party serve on the others and provide to my Associate a form of orders and directions that they seek and a short outline of written submissions in support of those orders and directions;

(3)   Stand the matter over for directions at 9.15 am on 29 May 2023 or such other date as agreed with my Associate.

8. In accordance with those orders, the parties exchanged written submissions and the matter was listed for hearing on 31 May 2023.

9. At that time, none of the parties suggested that the case should be re-opened to deal with other issues left unresolved by my judgment. However, it emerged during the course of argument on 31 May 2023 that Leo had proceeded on the basis that my judgment had resolved at least some questions concerning the existence and terms of an overarching agreement between John, Tony and George. After I indicated that that was a misreading of my judgment, the parties agreed that the matter should be stood over for a period of time so that they could discuss whether they could reach agreement on the issues raised by my judgment. As a result, the matter was stood over to 28 June 2023. The matter was then stood over on several occasions by consent while the parties engaged in discussions and subsequently a mediation, which ultimately failed.

10. As a result, on 9 February 2024, I directed that by 15 March 2024 each separately represented party serve on the others and provide to my Associate a form or orders and directions they sought and a short outline of written submissions. On 5 April 2024, the Court made orders for the service of any additional evidence and further submissions and the matter was listed on 30 May 2024 to deal with all outstanding questions.

11. In substance, John seeks two types of order. First, he seeks declarations concerning the existence of the sub-partnerships and orders for the dissolution of the partnerships of which George was a partner and declarations the effect of which would be to permit John to give notice of the dissolution of partnerships of which John or an entity he controls is a partner. Second, he submits that he should be granted leave to reopen his case and file a third further amended commercial list summons and third further amended commercial list statement to seek in the alternative to the relief he claimed a declaration concerning the terms of an over-arching agreement between the parties. The plaintiffs have advanced various alternatives. The final form of the declaration they seek is this:

… [t]here is an agreement between John Mir, Anthony (Tony) Mir, George Mir (by his estate), Leo Mir, each member of the Mir Group and John Mir Holdings Pty Ltd, Anthony Mir Holdings Pty Ltd and George Mir Holdings Pty Ltd, that:

a.   Each of John Mir, Anthony Mir, George Mir (by his estate) and Leo Mir will exercise his powers as a trustee, director or partner of a Mir Group entity, and procure that all persons who he causes or has caused to be appointed as a trustee, director or partner of a Mir Group entity, will exercise their powers, to ensure that the profits of the Mr [sic] Group will be distributed equally between the three immediate families of John Mir, Anthony Mir and the late George Mir; and

b.   Each of John Mir, Tony Mir, George Mir (by his estate) and Leo Mir will exercise his power as a trustee, director or partner of a Mir Group entity, and procure that all persons who he causes or has caused to be appointed as a trustee, director or partner of a Mir Group entity will exercise their powers, to ensure that all decisions of the Mir Group entities will be made only by consensus as between John Mir, Tony Mir and Leo Mir or, in each case, a nominee of John Mir, Tony Mir or Leo Mir.

John also accepts that a declaration should be made to the effect that the J&M Trust is a Mir Group entity.

12. The defendants accept that a declaration substantially in the terms sought by John should be made except that they submit that the matters in respect of which consensus is required should be limited to:

i.   any decision concerning the acquisition, sale, or development of, or any proposed dealing in, any real property or proposed real property of a Mir Group entity;

ii.   any decision that affects the whole, or a substantial part, of the business of a Mir Group entity; and

iii.   any decision that affects significantly the financial standing of a Mir Group entity.

13. Leo also seeks to replace John and Marie as trustees of the J&M Trust with Mir Bros Industries Pty Ltd, the directors of which are John, Tony and Leo. Again, Leo has advanced various forms of the orders he seeks in that respect. Ultimately, he sought the following orders:

2   The Court declares that the J&M Trust is a Mir Group entity.

…

4   The Court orders that John Mir and Marie Mir be removed as trustees of the trust settled by deed dated 27 August 1979 and known as the "J & M Trust" (J&M Trust) and the fifth cross-defendant (New Trustee) appointed in their place.

5    The Court orders that the property of the J&M Trust that comprises the part of the land within Lot 2 of DP1233624, Lot 1 of DP81599, Lot 1 of DP542997, and Lot 72 of DP 262729 that is shown as the shaded area on the plan annexed to these orders (Trust Land), together with all other property of the J&M Trust, vest in the New Trustee.

6   The Court orders John Mir, Marie Mir and the New Trustee to do all things necessary and able to be done on their part in order to obtain a registered a [sic] plan of subdivision such that the Trust Land is held on a separate lot or lots from the balance of the land contained within the lots identified in order 5 above.

By “Mir Group entity” the parties must be understood to mean an entity that is the subject of the overarching agreement the parties now accept exists.

14. Accordingly, there are three remaining substantive issues to be resolved. The first is the form of the declaration to be made if any concerning an overarching agreement between the parties. The second is what relief, if any, should be given in relation to the partnerships which form part of the Mir Group. The third is what relief should be given in relation to the J&M Trust.

The over-arching agreement

15. As I have said, despite the fact that the issue was not raised until after I delivered judgment, the defendants now consent to leave being given to the plaintiffs to amend their claim to seek a declaration concerning the existence of an agreement between the parties regarding the Mir Group, and they admit the existence of such an agreement and the parties to it. The only issue is the scope of the agreement. It is also common ground that the issue between the parties concerning the scope of the agreement is to be resolved by reference to the evidence before the Court at the time my first judgment was delivered.

16. In principle, there is no reason why such a declaration could not be made. It is now common ground between the parties that the relationship between them is governed by an agreement. As I pointed out in my earlier judgment, there was strong evidence before the Court to support the view that there was an agreement between at least John, Tony and George, and it is the existence and subject-matter of that agreement which defines “the Mir Group”. This is not a case where the declaration is sought simply as an expedient way of regulating the parties’ relationship going forward. Moreover, there are plainly issues between the parties which can be resolved by reference to declarations concerning the terms of their agreement. Although subsidiary to the main issues at trial, there were clearly issues between the parties concerning how the various entities said to comprise the Mir Group should operate following George’s death that will be resolved by the declarations sought.

17. It may be that it would have been better if those issues had been exposed by amendments to the list statement, cross-claim and responses. However, that has not occurred. The plaintiffs did seek leave to amend their list statement to plead the existence of the agreement, but the amendments did not plead breaches or threatened breaches that would justify any relief. And no response to that amended list statement was prepared by the defendants. Initially, it was my view that I should give directions for the filing of an amended list statement and response. Mr Hutton SC, who appeared for the plaintiffs, embraced that view. I was, however, persuaded by Mr Elliott SC, who appeared for Leo and entities controlled by him, that the better approach was to press ahead with the hearing. The Commercial List is not a court of strict pleading. All parties had willingly departed from the case identified by their list statements and responses. The gap between delivery of my reasons for judgment and final orders was already too long and the dispute between the parties concerning the form of declaration in relation to the agreement fell within a relatively narrow compass. Having said that, any declaration made by the Court must satisfy two requirements. First, it should be made to resolve existing disputes between the parties. It is neither necessary nor appropriate to make declarations concerning the terms of the agreement that go beyond what is necessary to resolve an existing dispute. That is particularly so where the terms of the agreement must be implied from the conduct of the parties. Second, any declaration must be capable of clear expression.

15. As I have said, the only issue between the parties is whether the agreement requires 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).

16. In my opinion, it is a term of the agreement that all decisions concerning the Mir Group will be taken unanimously, although it is important to understand what that means.

17. The parties accept that the terms of the agreement are to be implied largely from the conduct of George, John and Tony. They also accept that on George’s death if not before Leo became a party to the agreement and assumed the same rights and obligations that had previously been rights and obligations of George. No party advanced a case that following the replacement of George by Leo the nature of those rights and obligations changed.

18. It is apparent from the evidence that over time, George, John and Tony developed structures and procedures to manage what has become a large and complex group. Those structures and procedures included the establishment of two offices and the allocation of responsibility for managing the group’s business between George and John and Tony and members of their respective families. As I pointed out in my earlier judgment, to a large extent George, John and Tony operated independently within their areas of responsibility, although all major decisions including decisions to buy and to sell properties owned by the group and the allocation of profits of the group were taken by consensus. There is no evidence that any decision in relation to the business was taken by a majority of the three brothers.

19. In that context, it seems to me that George, John and Tony must by their conduct 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. To the extent that that involved delegating particular tasks to one or more of the brothers, it appears that it was agreed that those delegations would remain in place, at least until the delegation was varied, again as a result of a further consensus between the three brothers.

20. As I have said, it is common ground that Leo has assumed the position of George in exercising the rights and discharging the obligations under the agreement which were originally those of George. It is accepted that Mr Samuel Mir (John’s eldest son) and Mr Sidney Mir (Tony’s eldest son) have also become parties to the agreement and it may be that they are entitled to exercise the rights originally given by the agreement to John and Tony respectively. It is, however, unnecessary to decide that question for the purposes of the current proceedings. There may also be a question of what falls within the scope of the delegations given to each of John, Tony and now Leo and what decisions must be taken by consensus (that is to say, unanimously). But that question should only be determined in the context of a dispute concerning the scope of a particular delegation. No such dispute has been crystallised by the list statement or responses or the evidence led by the parties. The only disputes that have crystallised so far concerns the sale of properties. It is plain from what I have said that those decisions can only be taken unanimously.

21. Accordingly, in my opinion, neither of the declarations proposed by the parties properly capture the extent to which unanimity is required. The declaration proposed by John is too broad to the extent that it applies to all decisions, even those that are the subject of a previously agreed delegation. The declarations proposed by the defendants are too narrow to the extent that consensus is required in relation to a matter that is the subject of an existing delegation. Before making any declaration, I propose to give the parties a further opportunity to address these issues.

The sub-partnerships

25. It follows from what I have said, and the plaintiffs properly concede, that it is not open to them unilaterally to seek to wind-up the sub-partnerships. They are Mir Group entities which hold assets that “belong” to the group. It is common ground that assets of that type can only be disposed of by the unanimous agreement between John, Tony and Leo or their delegates. To the extent that George was a partner of the relevant partnerships, the partners must be taken to have agreed that the partnership was not to come to an end as a consequence of the death of an individual partner. Instead, the partners must be taken to have agreed that on the death of one of them, it was open to the relevant party to the over-riding agreement to nominate a new person to take the position of the partner who had died. But no submissions were put to the Court and no declaration was sought in that regard. The result is that no declarations should be made in relation to the sub-partnerships.

The J&M Trust

26. The most contentious issue between the parties is whether John and Marie should be removed as trustees of the J&M Trust.

27. The Court has jurisdiction under s 70 of the Trustee Act 1925 (NSW) to appoint a new trustee to a trust “whenever it is expedient to appoint a new trustee or new trustees, and it is inexpedient difficult or impracticable so to do without the assistance of the Court”. It also has an inherent power of the Court to remove a trustee and to appoint a new one in its place where that is necessary for the proper administration of the trust. As Dixon J (with whom Evatt and McTiernan JJ agreed) explained in Miller v Cameron (1936) 54 CLR 572 at 580-1:

The jurisdiction to remove a trustee is 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. In deciding to remove a trustee the Court forms a judgment based upon considerations, possibly large in number and varied in character, which combine to show that the welfare of the beneficiaries is opposed to his continued occupation of the office. Such a judgment must be largely discretionary. A trustee is not to be removed unless circumstances exist which afford ground upon which the jurisdiction may be exercised.

28. Although protection of the trust property is an important consideration, that is only one aspect of the proper administration of the trust. Consequently, if the Court is satisfied that the trustee does not understand the nature of his or her fiduciary obligations or has manifested an inclination to act contrary to them that may be sufficient to justify removal even if there is no evidence that the trust property is in jeopardy: Welker v Rinehart [2012] NSWSC 1330 at [10] per Brereton J.

29. A consideration of these issues in this case is complicated by the fact that there is an over-arching agreement governing the relationship between the parties and the ultimate complaint made by Leo (and the other defendants) is that John and Marie have not complied with that agreement in respect of the Blairmount land. It is 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. If they have breached an agreement, the appropriate remedies are those available for breach of contract.

30. The defendants point to five matters which they say justify the removal of John and Marie as trustees of the J&M Trust.

31. First, they submit that John and Marie are bound by the over-arching agreement governing the Mir Group in their capacities as trustees of the J&M Trust as well as their personal capacities and that they have breached that agreement in their capacities as trustees by asserting that that agreement does not bind them as trustees because the assets of the trust do not form part of the assets of the Mir Group. The defendants accept that not every breach of contract by a trustee amounts to a breach of trust or conduct that would justify removal of the trustee. But here they submit that the trust and agreement are inextricably linked and that the trust itself was established to give effect to the agreement so that a breach of the agreement goes to the heart of the purpose for which the trust was established.

32. Second, they submit that on occasions John and Marie have denied that the Blairmount land forms part of the trust assets. The clearest example is a letter dated 24 February 2021 that John and Marie wrote to the Campbell City Council in relation to a sub-division application that had been lodged in respect of the Blairmount land. In that letter they said:

We are the sole and legal beneficial owners of the land that is the subject of the Subdivision Application (Land). The detail of the Subdivision Application has just recently come to our attention.

The Subdivision Application was made by our son, Mr Sam Mir, in the name of the Mir Group of Companies. We have also been informed that our nephew, Mr Leo Mir, has recently written to the Council seeking to intervene in the Application, purporting to have rights over the land and authority to deal with the Subdivision Application.

The Subdivision Application should not have been made in the name of Mir Group of Companies. The land is owned by us in our personal capacities and should have been made in our names. …

33. Third, the defendants submit that John and Marie by their conduct have demonstrated that they are unsuited to remain as trustees of the trust. John asserted that the Blairmount land was acquired for the personal benefit of himself and his family in circumstances where he knew that the land the subject of the J&M Trust had been acquired for the Mir Group, with the result that the trust ought to have been administered in accordance with the agreement governing the group. The assertion was dishonest in the sense that John knew that it was not true. More recently, in connection with the hearing that occurred on 30 May 2024, John swore an affidavit it which he suggested that the decision to distribute the whole of the income of the J&M Trust for the financial year ending 30 June 2021 to his private company, John Mir Holdings Pty Ltd, was taken by Mannions (the Mir Group’s accountants) and that Sam obtained legal advice on the issue from the plaintiffs’ solicitors before the distribution was made. Although John was not cross-examined on this evidence, the defendants submitted that this was an example of John, even in the face of the Court’s findings, giving false evidence to support his case, which illustrated his unsuitability to remain as trustee. Although it was not suggested that Marie was involved in John’s dishonesty, it was plain that she did not exercise any independent judgment in relation to the administration of the trust and was for that reason unsuitable to remain as trustee.

34. Fourth, the defendants assert that John and Marie have a conflict of interest which makes it unsuitable for them to remain as trustees. The conflict arises from their ownership in their own right of the balance of the Blairmount land with the result that they may have a personal interest in developing the land owned by the trust in a way which benefits their personal interest to the detriment of the trust.

35. Fifth, the defendants point to the fact that as discretionary beneficiaries of the trust, they are at a disadvantage because they may not be able to obtain access to documents relevant to the development of the land and the distribution of profits and income, although they have a vital interest in those matters.

36. In my opinion, little weight can be attached to the last two matters. The conflict has existed since the J&M Trust was established, but it could not be suggested that John and Marie should never have been the trustees of the trust. The trust itself was established with John and Marie as trustees with the agreement of George and Tony and no doubt on the basis of legal and taxation advice obtained at the time. It might well have been anticipated that John and Marie would be entitled to consider the effect of any development of the J&M trust land on their personal land. Moreover, it has not been suggested that John and Marie have taken decisions in relation to the development of the J&M Trust land for their personal benefit and to the detriment of the J&M Trust that would of itself justify their removal.

37. The right and expectation of the defendants to obtain information about the J&M Trust arises from the fact that the trust is a Mir Group entity. The consequence is that the right to obtain information in relation to the trust arises from the agreement which defines and regulates the Mir Group. That issue was not investigated as part of the hearing, although it is to be expected that the right would be substantially more extensive than the right of a beneficiary of a discretionary trust. In any event, I do not think John and Marie should be replaced as trustees simply to aid the provision of information to Tony and Leo when their interest in being provided with that information and the extent to which they are entitled to it arises not as potential beneficiaries of the trust but as parties to the over-arching agreement governing the group.

38. The other considerations identified by the defendants carry more weight. John and Marie’s principal response to them is to say (in the case of John, in an affidavit) that they accept the findings of the Court, that they intend to comply with them and that there is no reason now to think that they will not do what they say. Their appropriateness to remain trustees should not be judged by reference to conduct that occurred at a time when they asserted that the J&M Trust did not form part of the Mir Group and no finding on that issue had been made by the Court.

39. In my opinion, there is another consideration that is also relevant and that is the fact that the context in which the issue arises remains unclear. It is unlikely that the agreement governing the Mir Group will continue indefinitely. Absent novation of the agreement by the conduct of the parties, it is arguable that the agreement will come to an end on the death of John or Tony. It is also arguable that the agreement is capable of termination on reasonable notice by any one of John, Tony and now Leo. However, neither of those possibilities was investigated during the hearing, and the position remains uncertain. Certainly, the Court should not be understood as expressing any view on those questions.

40. If the agreement is capable of termination and is terminated, there is a question of what follows from termination. One possibility is that it is an implied term of the agreement that the assets of the business will be sold and the net proceeds distributed equally between the three families. Another possibility is that each entity that forms part of the Mir Group will continue to operate in accordance with its own constituent documents and agreements – such as the relevant trust deeds and company constitutions and any agreement that may govern the conduct of the sub-partnerships. But again, none of that was investigated as part of the original hearing or the hearing that occurred on 30 May 2024. Yet the answer to those questions may be relevant to the exercise of the Court’s discretion to remove John and Marie as trustees of the J&M Trust. It would, for example, be one thing to remove them while the over-arching agreement remains in place. It would be another thing to remove them if the result was to give control of the trust to Tony and Leo (who would control the new trustee).

41. Implicit in the submissions made by the defendants is that the J&M Trust is a Mir Group entity, that all other Mir Group entities are controlled by representatives of the three families and that consequently the J&M Trust should be controlled by an entity which itself is controlled by a representative of each of the three families. This submission would have had considerable force if it were made at a time when relations between the parties had not broken down. It has less force now. Whether it is their intention or not, the effect of the orders sought by Tony and Leo would be to cement their control of the whole group in the event that the agreement governing the group is terminated but the individual entities continue to operate. In my opinion, a better approach is only to make orders that are necessary to resolve the existing disputes between the parties and otherwise to preserve the status quo.

42. Obviously, one of the disputes between the parties was whether the assets of the J&M Trust formed part of the Mir Group. That dispute has been resolved in favour of the defendants. The parties accept that the Court should make declarations to give effect to that conclusion. I accept that in some respects John’s conduct has been reprehensible since he has claimed for himself benefits that he knew or must have known also belonged to his brothers. Most recently, John has compounded the problem by seeking to blame others for what must have been his own decisions. If they were the only issues to be considered, they may well justify removing him and Marie as trustees of the J&M Trust. But as I have indicated, there are other issues to be considered. John and Marie have said that they will comply with the declarations that the Court makes. I accept that they are likely to do so, and removal of them as trustees of the J&M Trust remains a possibility if they do not. Taking those matters into account, I am not satisfied that the circumstances justify removal of them as trustees now.

Orders and costs

43. I have already indicated that I should give the parties an opportunity to make submissions on the final form of declarations that should be made, particularly in relation to the extent that the agreement between them requires decisions to be taken unanimously. It will also be necessary to hear the parties in relation to costs. Accordingly, the Court makes the following orders:

1. By 12 July 2024 each party provide to my Associate and serve on each other separately represented party proposed short minutes of order giving effect to these reasons for judgment and setting out the order for costs that they seek together with an outline of written submissions not exceeding 3 pages dealing with the question of costs;

2. Stand the matter over to 19 July 2024 or such other date as is agreed with my Associate.

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Decision last updated: 28 June 2024