For the reasons given, I propose to make orders in substantially the terms sought by LFA in the proposed minutes provided to my chambers this morning.
[2]
I now turn to consider the costs application. LFA seeks an order pursuant to r 40.13 of the Rules that LFA's costs of the June Application be taxed immediately and, when so taxed, paid by Mr Al Shawi, pursuant to the 27 June 2025 order of McElwaine J.
Mr Al Shawi opposes the costs orders sought by LFA. Mr Al Shawi submits that there is no good reason for the Court to depart from the general rule that it is usually inappropriate to require the unsuccessful party in an interlocutory proceeding to pay costs immediately, since that party might ultimately succeed in the substantive proceeding. I disagree.
There are, in my view, good reasons why LFA should have its costs of the June Application taxed immediately and when so taxed, paid by Mr Al Shawi. The conduct of Mr Al Shawi and his legal representatives warrants the making of such an order. LFA was required to incur significant costs in defending the interlocutory application to join it as a defendant to the proceeding before McElwaine J on 27 June 2025. LFA was successful as Mr Al Shawi had no standing to bring the derivative proceeding in the names of CRG and HBB against LFA. The ex tempore judgment of McElwaine J on 27 June 2025 made it abundantly clear that Mr Al Shawi's approach to the joinder of LFA as a defendant to the proceeding was misconceived.
Notwithstanding, for the reasons which I have explained above, Mr Al Shawi sought to bring the same application before me on 15 October 2025. In light of the orders I propose to make removing LFA as a defendant to the proceeding, and the conduct of Mr Al Shawi's legal representatives which I have described above as amounting to an abuse of process, this warrants a departure from the usual rule. In addition, LFA has also incurred additional unnecessary costs by bringing this application and it should never have been put to that expense. In the circumstances, I will make the orders sought by LFA pursuant to r 40.13 of the Rules and order and direct that LFA's costs of the June Application be taxed immediately and when so taxed, be paid by Mr Al Shawi pursuant to the 27 June 2025 order.
For the same reasons, I will also order that Mr Al Shawi pay LFA's costs of and incidental to its interlocutory application, filed 7 November 2025, with such costs to be taxed forthwith and, when so taxed, paid by Mr Al Shawi.
[3]
I certify that the preceding forty-six (46) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Anderson.
[4]
LINK FRANCHISING AUSTRALIA PTY LTD (ACN 601 562 654)
Parties
Applicant/Plaintiff:
Al Shawi
Respondent/Defendant:
Ghaffari-Hesari [2026] FCA 68
Legislation Cited (1)
Court Rules 2011
Cases Cited (2)
In response Mr Al Shawi has filed written submissions dated 3 February 2026 and his counsel, Mr Cromb, made oral submissions opposing the relief sought by LFA.
Mr Al Shawi submits that LFA was properly and validly joined as a party and there is no basis for it now being removed as a party. Mr Al Shawi submits that there is more than merely an arguable possibility that LFA may be affected by the making of the orders sought in the proceeding and, as such, is a necessary party. I reject that submission. Mr Al Shawi's submissions fail to address the fundamental point that he has no standing to bring a derivative action and, as a consequence, no proper basis to join LFA as a defendant to the proceeding. Mr Al-Shawi also made submissions, both written and orally, to the effect that there was no issue as to whether Mr Al Shawi lacks standing to pursue the claims against LFA as set out in paragraphs [9]-[12] of the Amended Originating Process, because Mr Al Shawi could seek an order pursuant to s 233(1)(g) of the Corporations Act, authorising him to prosecute the proceedings in the name of and on behalf of the Companies. Mr Al-Shawi submitted that such an order could be made at the conclusion of any trial if the Court was satisfied as to a finding of oppression. Mr Cromb referred to the description of the power in s 233(1)(g) as a 'short circuit' and referred to the authority of Fexuto Pty Ltd v Bosnjak Holdings(2001) 37 ACSR 672; [2001] NSWCA 9, and Re Anna BayResort[2022] NSWSC 331.
I reject that submission. First, the AOP filed 17 October 2025, does not, in the relief sought, specifically identify relief under s 233(1)(g) of the Corporations Act. Second, and in any event the cases relied upon are distinguishable from the present circumstances. In Anna Bay Resort, the plaintiffs, Wilson Hu, and his company, Timesgarden Pty Ltd, sued Frank Shi and his company, Wisemans Group Pty Ltd, for oppression in the affairs of Anna Bay Resort - Mr Shi and Mr Hu being directors of Anna Bay Resort and their respective companies being shareholders. Mr Hu and Timesgarden Pty Ltd sought an order under s 233(1)(g) of the Corporations Act to authorise Timesgarden Pty Ltd to institute proceedings in the name of the Anna Bay Resort against Mr Shi, related to the relief sought due to the alleged oppression. Rees J made such an order in the oppression proceeding, as her Honour had first made a finding of oppression on the part of the defendant, Mr Shi, in respect of Anna Bay Resort's affairs. That is totally different to the circumstances of this case. Here, Mr Al-Shawi is alleging oppression on the part of Mr Ghaffari-Herasi in respect of the affairs of the Companies. As the case currently stands, there is no oppression alleged in respect of the affairs of LFA. It is my view, that s 233(1)(g) is not the appropriate vehicle for Mr Al Shawi to pursue the relief set out in the AOP against LFA.
Moreover, any relief under s 233(1)(g) is wholly inconsistent with the relief sought in [9] of the AOP which seeks leave pursuant to s 236(1)(a) and / or 237 to bring a derivative proceeding on behalf of both CRG and HBB against LFA.
The relief sought by LFA should be granted for the following additional reasons.
First, Mr Al Shawi has no right at general law to bring a derivative action on behalf of CRG and / or HBB against LFA, as the franchisor, for the relief claimed under paragraphs [10]-[12] (inclusive) of the AOP.
As was recently observed by Colvin J in Atalanta Investments Pty Ltd v Kalgoorlie Projects Pty Ltd[2025] FCA 607 at [1], where the directors were deadlocked on the issue of whether it is in the best interests of the company (Kalgoorlie Projects) to bring the proposed proceedings: