Contents
Introduction
A recent Supreme Court decision, Mir v Mir [2025] NSWCA 154, highlights the risks associated with undocumented or informal business decisions made by family members. This case demonstrates the potential complications that can arise when property is acquired without proper consideration of future ownership rights.
Facts of the Case
The dispute arose from the property and business dealings of three brothers, John, Tony, and George Mir, dating back to the 1950s.These dealings were generally referred to as dealings by the ‘Mir Group of Companies’. Following George’s death, his son Leo sought declarations that the brothers’ business arrangements constituted a partnership that should be dissolved. If the partnership were dissolved, all partnership assets would be divided equally among the families of the three brothers.
At the centre of the dispute was a large parcel of land registered in the names of John and Marie Mir. The issue was whether this land was their personal property or part of the partnership assets. Leo also sought orders to remove John and Marie as trustees of the J&M Trust, citing concerns regarding their conduct during the proceedings.
The Court found that no partnership agreement existed. After reviewing the relevant documentation, the court concluded that the corporate entities established by the brothers were created specifically for tax planning purposes and expressly excluded the formation of a partnership. The Court also declined to remove the trustees, accepting that they would comply with any declarations made by the Court. Leo had not demonstrated grave misconduct or error sufficient to justify such action.
Are you involved in complex family business transactions?
If you’re considering property acquisition with other members of your family, it is critical to give long term consideration to the structure of the acquisition and how succession can be planned.
Informal discussions and agreements about the underlying beneficial ownership of the assets will not be helpful in the event of a dispute.
The Importance of Planning
It is strongly recommended that any property acquired within a family group be the subject of a formal co-ownership agreement or other appropriate legal arrangement. Clear succession planning and the inclusion of dispute resolution mechanisms are essential to prevent expensive litigation.
Conclusion
If you have concerns about how your family property or business arrangements are structured, please do not hesitate to contact Victoria on (02) 4288 0150 or admin@pdclaw.au today!
Victoria advises on a wide range of property and commercial matters, including contract negotiations and real estate transactions. She has a passion for assisting clients in understanding complex legal issues so that they can successfully achieve their business goals.
