Clarifying Partnership Law in Family Businesses: Lessons from Mir v Mir [2025] NSWCA 154

The recent decision of the NSW Court of Appeal in Mir v Mir [2025] NSWCA 154 sheds light on how courts determine whether a partnership exists – especially in complex family business arrangements.

The Facts

This case involved a dispute within the Mir family, who had operated a property investment and development business under the name “Mir Group of Companies” (Mir Group) since the late 1950s. Over time, the business grew to hold a significant real estate portfolio through a mix of trusts, companies, and discrete partnerships.

One key point in contention was the proper characterisation of a parcel of land in Blairmount, (Blairmount Land) held by John and his wife Marie as trustees of the J&M Trust – a discretionary trust established in 1979 which included as its beneficiaries John, George, and Tony (the three Mir brothers) and their immediate families.

After George passed away in December 2020, his son Leo represented his estate in the proceedings.

John claimed that the Mir Group was operated as a partnership between the three brothers, based on both oral agreements and conduct. He asked the Court to make orders:

1. for the winding up of the partnership on the basis that it was dissolved either by:

• notice on 2 April 2020; or
• upon the death of George in December 2020; and

2. appointing a receiver to realise and distribute partnership assets equally between the three Mir brothers, their holding companies or their immediate families.

Leo (as executor of George’s estate) filed a cross-claim. He argued that the Blairmount Land was a Mir Group asset held in trust for all three families. John, however, maintained that the Blairmount Land was personal property belonging to him and Marie (and therefore outside the alleged overarching partnership).

Leo and Tony also sought to remove John and Marie as trustees of the J&M Trust, citing their denial of the existence of any interest by the other parties in that property and concerns about their conduct during the proceedings.

Findings at First Instance

The primary judge, Ball J (as his Honour then was) made two key findings:

1. no partnership existed – his Honour found that while much of the evidence was consistent with the existence of a partnership, several matters pointed against its existence:

• the fact that underlying assets were held by trusts subject to the express terms of trust deeds the beneficiaries in which were different, in this case, additional, to the three brothers (and the purported partners in the alleged partnership) alone – this was found by his Honour as being fatal to the claimed existence of a partnership;
• the existence of documentation which suggested discussions for the formation of partnerships for taxation and operational purposes, but which specifically allowed for the existence of operating companies apart from the partnership operation; and
• in combination with the second point above, the existence of a deliberate and intentional structure established and operated by the brothers apparently on the basis of accounting and tax advice, inconsistent with the claimed overarching partnership – in effect, holding the parties to the consequences of their forensic choices in setting up that structure

His Honour did observe that, while falling short of rising to establishing the existence of a partnership, the evidence was sufficient to find that there existed an overarching agreement between the brothers in respect of the operation of the Mir Group, however such an agreement was not pleaded or advanced.

2. trustees not removed – The primary judge found no sufficient reason to remove John and Marie as trustees, noting they were likely to comply with the court’s declarations now made in respect of the Mir Group, and that:

• that overarching agreement was capable of being terminated by notice now which may lead to the constituent entities being then liquidated and proceeds distributed or continuing on (and this remaining unclear);
• that given declarations and findings had been made, it was open for the parties to apply for this relief should John and Marie engage in further breaches; and
• in the circumstances, and given the discretionary nature of this relief, it was better that the Court resolve only the immediate issues and otherwise preserve the status quo.

John and Leo separately appealed the decision.

Issues on appeal

The appeals focused on the following questions:

1. whether a partnership existed and, if so, what are the partnership assets.
2. whether John and Marie should be removed as trustees of the J&M Trust.

Court of Appeal Decision

The Court of Appeal (Ward P, Leeming and Payne JJA) dismissed the appeals and made the following important observations:

1. no partnership existed – there was no “overarching” partnership that sat above the various entities of the Mir Group. The court found that the Mir Group was deliberately structured using various entities to manage property acquisitions and distribute profits in a tax-effective way, and the parties cannot now depart from this deliberate choice. This structure was inconsistent with the existence of a single overarching partnership as claimed by John.
2. no error in not removing the trustees – The court emphasised that removing trustees is a serious step and not every instance of misconduct or error justifies such an action. There was no requisite House v King error that warranted overturning the original decision.

Takeaways

The decision highlights the importance of giving due, and long-term consideration to the structure of family affairs, including providing for succession, dispute resolution and mechanisms for the potentiality of a separation of the parties and, if one is so desired having an express partnership agreement drafted and executed. Long-standing informal arrangements or family understandings—even if they involve shared profits—may not be enough. The failure to have such an agreement, or to have provisions for dispute resolution or separation in arrangements whether or not involving a partnership could result in costly and protracted Court proceedings.

The decision also emphasised that Courts will be caustious in the exercise of the power to remove trustees.

Contributors:

• Dylan Zhu, Senior Associate
• Angus Dowey, Lawyer