Property Disputes Involving Siblings – An Incredible Case of Betrayal

Jack had migrated to Australia first and was familiar with its property market. In preparation for joining Jack in Australia, Tom and Tina began applying for resident visas, but wanted to start investing in properties before they had obtained them. So in 2009, Tina approached her brother and decided that she and her husband would provide the funds to buy properties and have him manage them in Australia. In return, they agreed to pay him a management fee and give him 5% interest in any profit in the sale of the properties, like a business partner. As part of this, they incorporated a company ‘ABC Pty Ltd’, where they were all directors. Tom and Tina together held 95% of the shares, and Jack held 5%.

The parties did not sign any written agreement. As sister and brother, they trusted each other and believed that this would be a very secure family arrangement.

Without Tom or Tina’s knowledge, Jack then set up a family trust for the sole benefit of his immediate family and with him as the controlling person, and ABC Pty Ltd was nominated the trustee of the Trust.

In 2009 and 2010 two properties were purchased in the name of ABC Pty Ltd for over $2 million.   Tom and Tina funded the entire purchase price and believed that they held 95% interest in the properties - but that was not the case. When the properties were purchased, they were put in the name of ABC Pty Ltd but as trustee for Jack’s family trust. This actually meant that legally both properties were held for the sole benefit of Jack’s family, and Tom and Tina had no interest in the properties at all. 

In late 2010, Jack also removed Tom and Tina as directors of the Company without their knowledge or consent.

Jack rented the properties out and received rental income which was paid into the company’s account. As the sole director of the company, he also caused funds to be transferred out of the company’s accounts for his sole benefit. While residing in China at that time, his sister opted not to review or access the company's bank account, trusting her brother to manage all financial matters and uphold the agreed-upon arrangements regarding income and profits.

In 2014, Jack also sold one of the properties. He was able to do so and sign the contract without Tom and Tina’s knowledge, as they had been removed as directors. Tom and Tina also did not know what Jack had done with the proceeds of sale.