Mir v Mir

Introduction

1. I have delivered two judgments in this matter. The first was delivered on 21 April 2023: see Mir v Mir [2023] NSWSC 408 (my first judgment). The second was delivered on 28 June 2024: see Mir v Mir (No 2) [2024] NSWSC 791 (my second judgment). Two outstanding questions remain. One is the final form of orders that should be made. The other concerns costs. This judgment deals with those questions. It assumes familiarity with my earlier judgments and uses the same abbreviations as used in those judgments.

Background

1. The proceedings were commenced by John seeking orders for the winding up of the partnership which he claimed existed between him, George and Tony, and the distribution of the partnership assets equally between the three of them or members of their immediate families. It was John's contention that the assets of the partnership did not include the assets held by the J&M Trust, the trustees of which were John and his wife Marie, and the assets of which were a large and valuable parcel of land in Blairmount. Alternatively, John sought orders that each of the various entities that he, George and Tony had established under the name "The Mir Group of Companies" be wound up or receivers be appointed to them and that their assets be distributed equally between the three of them or members of their immediate families. Again, no orders were sought in relation to the J&M Trust, which John claimed was a personal entity and not an entity that formed part of the Mir Group.
2. The orders sought by John were opposed by Tony and by Leo, who is George's oldest son and the executor of George's estate.
3. Leo also filed a cross-claim in the proceedings in which he sought declarations that the land held by the J&M Trust were held for the benefit of John, Tony and George's estate equally and that any decisions relating to the development of the land had to be made by a majority of John, Tony and Leo. At the end of the hearing, Leo sought an alternative order that John and Marie be replaced as trustees of the J&M Trust by a company that did form part of the Mir Group and that was controlled equally by John, Tony and Leo, although there was a question at that time about how precisely that could have been done given that it was accepted that John and Marie held part of the Blairmount land in their own capacities.
4. In my first judgment, I concluded that John had failed to establish the existence of a partnership and that he was not entitled to any of the relief he sought in respect of the individual entities that formed the Mir Group. In relation to the cross-claim, I concluded that the J&M Trust was part of the Mir Group, but that Leo was not entitled to any of the relief he then sought. That was so for two reasons. The first was that Leo had not established that any special agreement had been reached between the parties concerning the way the J&M Trust was to operate. The most that could be said was that there was strong evidence that there was an agreement between John, Tony and George concerning the Mir Group and the way it was to operate, although the existence and terms of that agreement had not been addressed by the parties. The second was that the alternative orders for replacement of John and Marie as trustees were only raised at the end of the hearing and appeared to raise factual issues concerning the ability to subdivide the Blairmount land, which had not been addressed by the parties.
5. I did, however, give the parties an opportunity to address the question whether some form of order should be made to reflect my conclusion that the J&M Trust was a Mir Group entity and whether other issues should be addressed that were left unanswered by my first judgment. One such issue was whether there was an overarching agreement between the parties governing the Mir Group and, if so, its terms.
6. The parties took up that opportunity and those issues were addressed in my second judgment.
7. Prior to the hearing that resulted in my second judgment, the parties accepted that there was an overarching agreement between them that governed their rights and obligations in relation to the Mir Group, which on the findings I had made included the J&M Trust. The parties also agreed that it was a term of that agreement that the profits of the Mir Group should be distributed equally between the three immediate families of John, Tony and George. Ultimately, a disagreement emerged between Tony and Leo on one hand and John on the other about whether other decisions affecting the Mir Group should be taken by consensus (as John contended) or whether the requirement for consensus was limited to decisions falling within certain categories (as Tony and Leo contended). The conclusion I reached in my second judgment was that all decisions were required to be taken by consensus except to the extent that the right to take a particular decision had been delegated to one or more of John, Tony or Leo. My second judgment left open the question of the scope of any delegation and the mechanism by which any such delegation could be revoked.
8. Leo also pressed for relief removing John and Marie as trustees of the J&M Trust. In rejecting that relief I said in para [42] of my second judgment: 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.
9. On 19 July 2024, and following from my second judgment, a further hearing was held to deal with the final form of orders that should be made and the question of costs.
10. So far as the form of orders was concerned, the matter was left on the basis that the parties would agree short minutes of order that reflected the discussion that had occurred during the hearing and that I would resolve any outstanding issues in this judgment.
11. As to costs, I suggested that the plaintiffs should pay the defendants' costs of the proceedings up until the date I delivered my first judgment, but that no order for costs should be made after that date with the intention that each party bear their own costs. The defendants accepted that that order was appropriate. John opposed it. His position was that each party should bear their own costs of the whole proceedings. In support of that position, John pointed out that, as a result of the first hearing, he failed in his claim, but Leo failed in his cross-claim. Ultimately, there were two issues that were the subject of my second judgment. One was the scope of the overarching agreement and in particular which issues effectively required consensus between John, Tony and Leo or their nominees and which issues could be decided by a majority of them. On that issue, no party was entirely successful. The other issue was whether John and Marie should be removed as trustees of the J&M Trust. On that issue, John was successful. Consequently, no claimant enjoyed success on the issues dealt with in the first hearing and John enjoyed success on one of the issues dealt with in the second hearing. Although it would be possible to make separate costs orders in relation to the claim and cross-claim, the easiest and most practical approach was to order that each party bear their own costs.

The final form of orders

1. Attached (196471, pdf) to this judgment is a form of orders proposed by the defendants with amendments proposed by the plaintiffs marked up in red. It is apparent from that document that three issues remain between the parties. One is whether the heading "Terms of agreement governing Mir Group" should be included at the beginning of the orders. The second is whether the declaration concerning which decisions should be made by consensus between Tony, Leo and John or their respective nominees should identify those decisions as "all decisions for the Mir Group" or "all decisions of the Mir Group entities". The third is whether the note in order 4 should relate only to the declarations in order 3 or all declarations and whether it should specifically state that "the Court has not made any findings about the existence, terms or scope of any such delegation".
2. In my opinion, the heading is superfluous and should not be included.
3. As to the second issue, neither version of the declaration contained in para 3 (b) satisfactorily captures the conclusions I reached in my judgments. I used the word "consensus" in my second judgment, since that word most accurately reflected the way the Mir Group had operated in the past. "Consensus" was an appropriate word to describe a decision-making process where the parties have shared goals and are not in dispute. However, it is less appropriate to describe the effect of an agreement reached by conduct at that time once the parties have fallen into dispute, as is the position in this case. In my opinion, more precise language is required. Moreover, it is not quite accurate to describe the subject-matter of the consensus as either "decisions for the Mir Group" or "decisions of the Mir Group entities". A better description would be "the business carried on by the Mir Group". Accordingly, the declaration in paragraph 3(b) should be in the following terms: "any decision concerning the business carried on by the Mir Group can only be made with the agreement of each of Anthony Mir, Leo Mir and John Mir or in each case, a nominee of Anthony Mir, Leo Mir and John Mir".
4. As to the third issue, the note in paragraph 4 in effect is a qualification to the declarations contained in paragraph 3. Consequently, in my opinion it is appropriate to include a reference to paragraph 3 in the note.
5. I do not think the words that the defendants seek to include in paragraph 3 are necessary. They do not operate as a qualification on paragraph 3. It is enough that the declarations made by the Court leave open the question of the existence, terms and scope of any delegation.

Costs

1. I cannot accept John's submissions in relation to costs. The claims made by John that were the subject of my first judgment were directed at bringing an end to the Mir Group and to the distribution of its assets between the three families. Those claims failed entirely.
2. It is not correct to say that Leo was unsuccessful in obtaining any relief in relation to the cross-claim. He was not successful in obtaining a declaration that decisions relating to the J&M Trust could be taken by a majority. And he was not successful in having John and Marie removed as trustees of the J&M Trust. However, he was successful in establishing the factual basis of his claim (that the J&M Trust was a Mir Group entity) and he has ultimately been successful in obtaining a declaration to that effect and a declaration to the effect that George and Tony together with their immediate families are entitled to an equal share of the profits derived by the trust from the development of the Blairmount land. Those declarations go to the heart of the issues between the parties in relation to the J&M Trust, and the declarations that Leo has obtained represented substantial success on those issues.
3. Consequently, in relation to the issues that were the subject of my first judgment, the plaintiffs were wholly unsuccessful in their claim whereas Leo ultimately enjoyed substantial success in relation to his cross-claim. In my opinion, it follows that the plaintiffs should pay the defendants' costs up until the date of my first judgment.
4. After I delivered my first judgment, several issues were left unresolved including the question whether there was an overarching agreement and, if so, its terms. Some of those issues have been resolved by agreement between the parties, but as I have said two issues remained. In relation to the question which decisions required consensus, I adopted what might be considered a middle ground. I rejected John's contention that all decisions required consensus, but I also rejected the defendants' contention that only decisions falling within certain categories required consensus. Instead, I held that all decisions other than those that had been the subject of a delegation required consensus. But I left unresolved the scope of any delegations and what was required in order to be able to revoke any delegation. As a result, I do not think it could be said that either party enjoyed success in relation to that issue.
5. John enjoyed success in relation to the second issue - that is, whether he and Marie should be removed as trustees of the J&M Trust. Although that was a significant issue, it was only one issue among several that were left open by my first judgment and that were ultimately resolved either by agreement or by my second judgment. Moreover, the only reason John was successful was that, as a matter of discretion, I was not prepared to remove John and Marie as trustees in the particular circumstances of the case. Finally, it would be very difficult to separate out the costs of the issue concerning whether John and Marie should be removed as trustees from the other issues that emerged following delivery of my first judgment. In those circumstances, I think that it is appropriate that each party bear their own costs of the proceedings from 21 April 2023.

Conclusion and orders

1. One of the orders I propose to make is different from the orders sought by either party. Consequently, I should give the parties an opportunity to make submissions on that order.
2. Accordingly, the orders of the Court are: 1. The Court declares that the "Mir Group" comprises: 1. each of the companies, trusts and partnerships listed in Schedules 2, 3 and 4 to the Second Further Amended Commercial List Statement filed on 3 March 2022; and 2. the trust settled by deed dated 27 August 1979 and known as "The J & M Trust" (J&M Trust); 1. The Court declares that the property of the J&M Trust includes the part of the land within Lot 2 of DP1233624, Lot 1 of DP81599 and Lot 1 of DP542997, as well as Lot 72 of DP 262729, that is shown as the shaded area on the plan comprising Annexure A to the resolution of trustees of the J&M Trust dated 29 November 1979; 2. The Court declares that there is an agreement between all parties to these proceedings that: 1. the profits of the Mir Group will be distributed equally between the three immediate families of Anthony Mir, the late George Mir and John Mir; and 2. any decision concerning the business carried on by the Mir Group can only be made with the agreement of each of Anthony Mir, Leo Mir and John Mir or in each case, a nominee of Anthony Mir, Leo Mir and John Mir; 1. The Court notes that the declarations at order 3 above are not intended, and do not operate, to alter any delegation that may presently exist. The practical effect of this notation is to confirm that, if and to the extent a party presently has authority delegated to them to perform a function, that authority remains undisturbed by the making of the declaration in order 3(b) above; 2. The plaintiffs are to pay the defendants' costs up to and including 21 April 2023; 3. The parties are to bear their own costs from 22 April 2023; 4. Liberty to any party within 14 days of the date of this judgment to apply to vary order 3(b).

---

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 25 July 2024