Federal Court of Australia

Al Shawi v Ghaffari-Hesari [2026] FCA 68

ORDERS

THE COURT NOTES THAT:

A.    The Second Defendant, Consolidated Realty Group Pty Ltd and Third Defendant, Hobart Business Brokerage Pty Ltd are not represented and have not taken any steps in these proceedings.

THE COURT ORDERS THAT:

1.    Pursuant to r 9.08 of the Federal Court Rules 2011 (Cth) (Rules), the Fourth Defendant be removed on the basis that the Fourth Defendant has been improperly joined as a party.

2.    Pursuant to r 39.05(c) of the Rules, order 1 of the Orders of the Honourable Justice Anderson made on 15 October 2025 (October Orders) be set aside.

3.    The October Orders and the Orders of the Honourable Justice Anderson made on 16 January 2026 be varied to remove all references (express or implied) to the Fourth Defendant.

4.    Pursuant to rr 1.32 and / or 8.21 of the Rules, the Amended Originating Process dated 17 October 2025 be amended to remove the relief sought in paragraphs 9 to 12 (inclusive).

5.    Pursuant to rr 1.32 and 16.21(e) of the Rules, the Statement of Claim dated 17 October 2025 be amended to remove those paragraphs which are referable to the relief sought in paragraphs 9 to 12 (inclusive) of the Amended Originating Process dated 17 October 2025.

6.    Pursuant to r 1.32 of the Rules, the Plaintiff is precluded from pursuing any of the claims for relief against the Fourth Defendant alleged in paragraphs 9 to 13 (inclusive) of the Amended Originating Process dated 17 October 2025 unless or until the Plaintiff obtains leave to bring a derivative proceeding in the name or names of the Second Defendant and / or Third Defendant against the Fourth Defendant pursuant to s 237 of the Corporations Act 2001 (Cth).

7.    Pursuant to r 40.13 of the Rules, the Fourth Defendant’s costs of the Plaintiff’s interlocutory process filed 27 June 2025, payable by the Plaintiff pursuant to the Orders of the Honourable Justice McElwaine made on 27 June 2025, be taxed immediately.

8.    Pursuant to r 40.13 of the Rules, the Plaintiff pay the Fourth Defendant’s costs of and incidental to this proceeding inclusive of the costs of the interlocutory application filed 7 November 2025 with such costs to be taxed forthwith.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

(Delivered ex tempore, revised from transcript)

ANDERSON J:

Background

1    By interlocutory application filed on 7 November 2025, the fourth defendant, Link Franchising Australia Pty Ltd (LFA) seeks orders:

(a)    removing it as a party (Removal Application)

(b)    alternatively, restraining the plaintiff (Mr Al Shawi) from taking further steps against it and/or pursuing relief against it without obtaining derivative leave (Restraint Application); and

(c)    that LFA’s costs of Mr Al Shawi’s 27 June 2025 interlocutory process (June Application) be taxed immediately (Costs Application).

2    Before considering the substance of LFA’s interlocutory application it is relevant to describe the procedural history of the proceeding prior to LFA filing its interlocutory application on 7 November 2025.

3    Mr Al Shawi commenced the proceeding on 21 March 2025 by filing an originating process and an affidavit made by him.

4    On 15 April 2025, the first defendant (Mr Ghaffari-Hesari) filed a responsive affidavit.

5    On 22 April 2025, Wheatley J made orders which required the parties to appoint an independent person to express an opinion on the value of 100 percent of the equity issued in the second defendant, Consolidated Realty Group (CRG), and the third defendant, Hobart Business Brokerage (HBB), (collectively, the Companies). The Companies both operate a real estate agency business and a business broking business in Melbourne and Hobart respectively. The business broking side of the Companies is operated under the Link brand, pursuant to franchise agreements with LFA.

6    The valuation report filed jointly by Mr Al Shawi and Mr Ghaffari-Hesari on 25 June 2025, valued 100 percent of the shares of CRG at approximately $1,914,000 based on the midpoint of the valuation range as at 24 March 2025.

7    The valuation report concluded that as at 24 March 2025, the shares issued by HBB had no value because the liabilities exceeded the value of the assets by some $484,850.

8    On 27 June 2025, Mr Al Shawi filed an interlocutory process seeking urgent interlocutory relief before the Commercial and Corporations duty judge, McElwaine J. The interlocutory process sought:

(1)    leave for the plaintiff to file an amended originating process;

(2)    an order, pursuant to r 9.05(1) of the Federal Court Rules 2011 (Cth) that LFA and Sydney Brokerage Pty Ltd (SB) be added as fourth and fifth defendants respectively;

(3)    an order restraining LFA, pending the final determination of the proceeding, or further order, from terminating any or all of the franchise agreements between it and CRG dated 14 May 2021; HBB dated 24 February 2018; or SB dated 2 July 2024.

9    McElwaine J heard the application as duty judge on 27 June 2025. The transcript of the hearing records, relevantly, the following:

T2.38-40: Well, as I understand it, [orders] were sent to my chambers. It's hardly appropriate to send orders described as consent orders to my chambers when they are not agreed".

T3.10:"Well, doesn't your client have a fundamental problem? How does he have standing to seek an injunction?

T3.16-20: Where do I see an application for derivative leave? And even if that were granted, doesn't it follow that he doesn't prosecute it in his own name? He prosecutes it in the name of the company, and that's not what's proposed in your originating application as proposed to be amended, is it?

T6.6-7: I mean, I'm sitting here thinking why don't I just appoint a receiver to all these companies, and it might sort it all out.

T7.11-16: But if you now know that this matter is not screamingly urgent, that is, you've got 30 days notice up your sleeve, why shouldn't I just dismiss your application, and if your client is advised to bring an application in proper form that addresses the question of leave to bring a derivative proceeding, you can bring another application?

10    McElwaine J dismissed the June Application and delivered an ex tempore judgment in which his Honour stated the following:

This matter has been listed before me at 4 o'clock this afternoon, which has its origin in a certificate of urgency given by the solicitor, Mr Warren Scott, on 25 June 2025 that the plaintiff sought urgent interlocutory injunctive relief to restrain Link Franchising Australia Proprietary Limited as the franchisor from giving what are described as "pending termination notices" of three franchise agreements to three corporate entities.

The application was ultimately supported by an interlocutory process filed on 27 June 2025, described as an application by the plaintiff, Mr Shawi, for injunctive relief and derivative relief pursuant to sections 232, 233, 236, 237, and 1324 of the Corporations Act, amongst other statutes. It was stated that on the facts stated in the supporting affidavit of Mr Shawi, he applied for relief being, one, leave to amend the originating process substantially in the form as annexed to his affidavit, two, an order joining the franchisor and Sydney Brokerage as defendants, three, an order restraining the franchisor pending the final determination of this proceeding or further order from terminating the franchise agreements in reliance on the breaches set out in the notice of pending termination.

When one turns to the affidavit in support and one looks at the proposed form of the amended originating application, what is immediately striking is that the application doesn't grapple with the threshold issue; that is whether Mr Shawi should have leave either pursuant to section 233 or section 236 of the Corporations Act to bring a derivative proceeding in the name of the three franchisee companies the subject of his application for interlocutory relief. It seems to me that unless that leave is granted, there is a fundamental defect with the entirety of the proceeding; that is that Mr Shawi simply doesn't have standing to bring it. None of that is proposed to be addressed in orders two through to seven as proposed by the plaintiff and handed to me earlier. That is a matter which weighs heavily in favour of dismissing the interlocutory application. The other matter is that, accepting there may have been a degree of ambiguity in the letter of 26 May 2025. Although, as I read it, I didn't see the ambiguity that the plaintiff asserts, but, nonetheless, let that be assumed in favour of the plaintiff.

It became clear, beyond any question, as set out in the affidavit of Mr Tobin, made 27 June 2025, that as of Wednesday evening/Thursday morning of this week, there was no urgency or any urgency that sat behind the interlocutory application had evaporated. That is, it was made expressly clear that the franchisor has not given notice of termination under the agreement, so any need to issue an injunction has dissipated. That is clear on my reading from the attached letter of 25 June 2025 to that affidavit. Nonetheless, the plaintiff saw it fit to press on with this appointment this afternoon. That was not, in my view, consistent with the plaintiff's obligations under the overarching purpose. Another matter is that the orders sought by the plaintiff to progress the hearing of the interlocutory application, in my view, proceed on the wrong premise and that is, that there is any need or any present need to proceed with an application for urgent interlocutory injunctive relief, given the contents of the affidavit of Mr Tobin.

If those facts were to change at some time in the future, and if the plaintiff obtains a favourable grant of derivative leave, then it is open to the plaintiff to bring a new interlocutory application, properly formulated, for urgent interlocutory relief. Those reasons, in my view, compel an order that the interlocutory application of the plaintiff filed on 27 June 2025 be dismissed.

11    McElwaine J ordered that:

(1)    The interlocutory application filed by the plaintiff on 27 June 2025 be dismissed.

(2)    The plaintiff pay the costs of the first defendant, proposed fourth defendant, and proposed fifth defendant of, and incidental to, the interlocutory application.

12    On 8 July 2025, the proceeding was docketed to me. On 6 August 2025, I made orders by consent, including that:

(1)    The plaintiff, by 28 August 2025, serve on the first defendant a proposed statement of claim and proposed amended originating process.

(2)    By 4 September 2025, the first defendant shall notify the plaintiff if he consents to the filing of the proposed statement of claim and proposed amended originating process, and other facilitating orders.

(3)    The proceeding be listed for further case management on 16 October 2025.

13    On 8 August 2025, LFA’s solicitors, Aintree Group Legal, sent an email to Mr Al-Shawi’s solicitors, Archer Scott, stating:

Our client, as franchisor, has no direct involvement in the commercial dispute between the franchisee principals and strongly objects to any suggestion that it should be joined to the proceedings. Should your client or any party seek orders to this effect, our client will oppose any application vigorously and, yet again, seek costs associated with responding to unnecessary or misconceived litigation.

14    On 14 October 2025, Mr Al-Shawi's solicitors, Archer Scott, sent to my chambers “proposed orders, agreed between the parties”. My chambers sought clarification as to the basis upon which leave was sought to add LFA as fourth defendant to the proceeding. On 15 October 2025, Archer Scott sent an email to my chambers as follows:

Thank you for your email below. This response is sent as a joint communication from the plaintiff and first defendant.

In relation to point 1 of your email, it is proposed that Link Franchising Australia Pty Ltd (LFA) be added as the fourth defendant to the proceeding pursuant to rule 9.05(1) of the Federal Court Rules 2011 (Cth). Paragraph 1 of the attached updated draft orders has been updated accordingly.

In relation to point 2 of your email, the reference to ‘fifth defendant’ was a typographical error, and was intended to refer to the fourth defendant, and has now been updated in the attached updated draft orders.

15    On 15 October 2025, on the basis that Mr Al Shawi and Mr Ghaffari-Herasi had consented to the orders submitted to chambers, I made orders by consent (October Orders) that:

(1)    The plaintiff has leave to join LFA as the fourth defendant to the proceeding pursuant to r 9.05(1) of the Rules.

(2)    On or before 4 pm on 17 October 2025, the plaintiff file and serve:

(a)    an originating process; and

(b)    a statement of claim.

16    Orders three to five dealt with timetabling orders for the filing of defences and any crossclaims. Order six referred the matter to a Registrar of the Court for mediation, to be conducted no later than 13 February 2026. Order seven provided for discovery, pursuant to the Redfern Discovery Procedure described in the Commercial and Corporations practice note. Order eight adjourned the case management hearing listed on 16 October 2025 to 9.30am on 2 April 2026.

17    On 28 October 2025, Mr Ghaffari-Herasi’s solicitors, Danaher Moulton, sent a letter to Mr Al Shawi’s solicitors, Archer Scott, which stated:

We specifically refer to paragraph 9 of the Originating Process, where the Plaintiff seeks leave pursuant to sections 236(1)(a) and/or 237 of the Corporations Act 2001 (Cth) to bring proceedings on behalf of Consolidated Realty Group (“CRG”) and Hobart Business Brokerage (“HBB”) against the fourth defendant, Link Franchising Australia (“LFA”), for the purpose of seeking the relief set out in paragraphs 10 to 12 of the Originating Process.

For the avoidance of any doubt, our client does not consent to the Plaintiff bringing proceedings on behalf of CRG and HBB. In order to do so, and as sought in the Originating Process which our client has provided consent for your client to file, the Plaintiff will need to make an application pursuant to ss 236 and 237 of the Corporations Act 2001 to bring a derivative action against LFA as at no time has our client consented to that position. In the absence of such leave, the Plaintiff is not entitled to pursue the relief sought in paragraphs 10 to 12 of the Originating Process.

In circumstances where our client has not consented for the Plaintiff to bring proceedings on behalf of CRG or HBB and no order from the Court has been made that would allow the Plaintiff to do so, any steps taken in defiance of our client’s objection and without an appropriate Court order are inappropriate and without proper legal foundation.

18    Mr Al Shawi’s solicitors, Archer Scott, who sent the joint communication from Mr Al Shawi and Mr Ghaffari-Herasi on 15 October 2025 proposing the consent orders joining LFA as fourth defendant to the proceeding, did not inform me that the same application had been made to McElwaine J in the June Application, and was the subject of a contested hearing. That application was dismissed on the basis that Mr Al Shawi had no standing to pursue derivative relief against LFA as Mr Al Shawi had failed to obtain leave either pursuant to s 233 or s 236 of the Corporations Act 2001 (Cth) to bring derivative proceedings in the name of the three franchise companies the subject of the application for interlocutory relief.

19    McElwaine J was, I respectfully say, correct to find that Mr Al Shawi simply did not have standing to seek the relief sought as he had not sought leave to commence a derivative proceeding under s 233 or 236 of the Corporations Act.

20    When I made the October Orders by consent joining LFA as the fourth defendant to the proceeding, I was not informed of the contested hearing that had taken place before McElwaine J on 27 June 2025, nor of the correspondence of 8 August 2025 between Archer Scott and Aintree Group Legal.

21    The failure of Mr Al Shawi and his legal advisors to inform me of the substance of the hearing before McElwaine J on 27 June 2025, that an order pursuant to r 9.05(1) of the Rules joining LFA as the fourth defendant to this proceeding was dismissed after a contested hearing upon which McElwaine J delivered an ex tempore judgment, amounts to an abuse of process as the Court was not informed that the joinder of LFA as fourth defendant pursuant to r 9.05(1) of the Rules had been heard, determined and dismissed by McElwaine J.

22    Mr Al Shawi and his legal advisors also failed to inform me of LFA’s correspondence on 8 August 2025 strongly objecting to LFA being joined to the proceeding.

23    Mr Cromb of counsel, who appears for the Mr Al Shawi, appeared on the June Application before McElwaine J and before me today. I asked Mr Cromb why I was not informed of the correspondence referred to above and the hearing before McElwaine J.

24    I set out my questions to Mr Cromb and his answers, as they appear in the transcript:

[T11.1-37]: HIS HONOUR: The issue I’m raising with you, Mr Cromb, is that I should have been informed, with the consent order coming to my chambers on 15 October, of a number of things: firstly, that the same application had been made in front of McElwaine J on 27 June, was heard at a contested hearing in which you appeared as counsel; it was dismissed, and cost ordered against your clients. I was not informed of that fact. Why not?

MR CROMB: Because, your Honour, it wasn’t something that crossed our minds as something that was relevant - - -

HIS HONOUR: It didn’t cross your mind that a contested application before McElwaine J, which dismissed the very relief that you seek to press now in this proceeding, was not a germane matter that should have been brought to my attention?

MR CROMB: Your Honour, I accept now that it was, but I would like to set out the - - -

HIS HONOUR: It was a germane matter. Do you accept that?

MR CROMB: I do now - - -

HIS HONOUR: And it should have been brought to my attention?

MR CROMB: Certainly, your Honour.

HIS HONOUR: And was not?

30 MR CROMB: Correct.

HIS HONOUR: Why not?

MR CROMB: Because the circumstances were different, and I would like to explain to your Honour why.

HIS HONOUR: Yes.

…

[T11.46-T47.3]: HIS HONOUR: Let me be blunt with you, Mr Cromb, why shouldn’t I look at an order being sent to my chambers, saying it’s by consent, seeking what was pretty standard orders – why shouldn’t I take it as sharp practice that you didn’t inform me of the hearing before McElwaine J? Because you’ve conceded, correctly, it was plainly germane, and it would have been germane to whether I made the order or not.

…

[T13.28-T1423]: HIS HONOUR: I’m putting to you bluntly a serious allegation, which is that I was misled, and I want you to address me on why I was not informed of the proceeding that had gone on before McElwaine J on 27 June 2025. What appears to have happened, and you’ve correctly conceded I should have been informed by that, that up to my chambers come some benign consent orders, I’m not informed of what has gone before, which was plainly relevant, I make the orders, and the orders should never have been made in the circumstances because leave had not been sought. It’s misconceived. Your client doesn’t have any standing to seek the relief that was being sought. All of those matters I would have taken into account before I made the order by consent, but I was not given that opportunity because you didn’t inform me of what had gone before.

MR CROMB: Your Honour, on the - - -

HIS HONOUR: Is there anything I’ve got wrong on that, Mr Cromb? That’s a correct analysis, isn’t it?

MR CROMB: What I would like to submit to your Honour is that there is more to the story than what has - -

HIS HONOUR: Well, tell me what it is. …Don’t go to the authorities about how you can join later and things. Tell me why, dealing with the order that was proposed on15 October 2025, which you already concede I should have been informed of what had gone before – why was that not done?

MR CROMB: I concede it now because I hear your Honour saying it should have been done, and I accept that, but at the time there was no sharp practice intended, no misleading intended. Couldn’t be further from - - -

HIS HONOUR: It may not have been intended, Mr Cromb, but that was the result.

MR CROMB: And that’s what I would like to - - -

HIS HONOUR: That was the result, that because I did not know of what had gone before and the order – the hearing, the contested hearing, before McElwaine J, the judgment of McElwaine J and what McElwaine J had said on the transcript, I was naive to those matters when I made the consent order. I should never have been put in that position. You should have informed me. You failed to do so, and you breached an obligation which you owe to the court.

MR CROMB: Your Honour, I hear what your Honour says, and I apologise.

HIS HONOUR: And you should.

25    I am not satisfied with Mr Cromb's explanation, as it should have been apparent to any legal practitioner that the correspondence referred to above and the hearing before McElwaine J were germane as to whether I granted or refused the orders which were being proffered by consent. Had I known of the procedural history and LFA’s continued opposition, I would not have made the October Orders by consent. The failure to inform me was a serious error of judgment on the part of the Mr Al Shawi’s legal representatives.

26    As I have said, had I been informed of those matters, I would not have made the October Orders that were submitted by Mr Al Shawi and Mr Ghaffari-Herasi to my chambers on 15 October 2025. The fact of the hearing before McElwaine J and the outcome of that hearing were relevant matters which should have been brought to my attention. The failure to do so has resulted in me making an order by consent in the October Orders, joining LFA as a fourth defendant to the proceeding, which should never have been made.

27    That consent order was procured by Mr Al Shawi and Mr Ghaffari-Herasi, and their legal advisors, by failing to inform the Court of matters which were fundamentally germane to whether the consent order ought or ought not to have been made. In these circumstances, the consent order was procured through the Court being misled as to the true circumstances which had gone before, and which were relevant to whether the order ought or ought not to have been made by consent. This amounts to an abuse of process and, for that reason alone, the interlocutory application, filed 7 November 2025, seeking orders that LFA be removed as fourth defendant will be granted.

Plaintiff’s Contentions

28    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.

29    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 Bay Resort [2022] NSWSC 331.

30    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.

31    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.

Consideration

32    The relief sought by LFA should be granted for the following additional reasons.

33    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.

34    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:

Ordinarily, it is up to the directors of a company to decide whether the company should bring legal proceedings. At general law there was a limited right to bring proceedings, known as a derivative action, on behalf of a company. By s 236(3) of the Corporations Act 2001 (Cth) that general law right has been abolished. Instead, there are now statutory provisions governing who may bring proceedings on behalf of a company and the circumstances in which they may do so. A member of a company may bring proceedings on behalf of (and in the name of) the company if the person is acting with leave granted under s 237.

35    Mr Al Shawi is not a relevant person acting with leave granted under s 237 of the Corporations Act. Accordingly, he is not permitted by force of s 236(3) to bring a proceeding against LFA for the relief claimed under paragraphs [10]-[12] of the AOP.

36    Secondly, despite the contested hearing before McElwaine J on 27 June 2025, resulting in orders made on that date dismissing the application, the minute of proposed order dated “October 2025” was signed on behalf of Mr Al Shawi and Mr Ghaffari-Herasi as the only active parties to the proceeding providing their consent to the proposed joinder of LFA as follows: “[t]he plaintiff has leave to join Link Franchising Pty Ltd as the fourth defendant to the proceeding”.

37    Thirdly, LFA’s joinder was predicated on a false premise, namely, that Mr Al Shawi was in some way entitled to join LFA as a defendant to the proceeding without having obtained leave under s 237 of the Corporations Act to bring derivative proceedings in the names of CRG and HBB against LFA for the relief claimed under paragraphs [10]-[12] of the AOP, although such leave was sought in terms as follows in paragraph [9] of the AOP:

Leave pursuant to s 236(1)(a) and/or s 237 of the Act for the plaintiff to bring proceedings on behalf of each of CRG and HBB against the fourth defendant (LFA) for the purpose of seeking the relief set out in paragraphs 10-12 below”.

38    Paragraph [9] of the AOP inaccurately refers to leave sought inclusive of “pursuant to s 236(1)(a)” which does not authorise such leave. Rather, s 236(1)(a) specifies by whom proceedings may be brought on behalf of a company, inclusive of an officer of the company, such as Mr Al Shawi, who is a co-director with Mr Ghaffari-Herasi of CRG and HBB. Accordingly, such leave is authorised only by s 237.

39    Fourthly, Mr Al Shawi's legal representatives knew, or ought to have known, by reason of the dismissal with costs of the June Application by order of McElwaine J on 27 June 2025, that unless and until Mr Al Shawi obtained leave under s 237, there was no legitimate purpose for joining LFA to the proceeding.

40    Fifthly, in the absence of leave under s 237, the joinder of LFA as a party to the proceeding did not satisfy any of the discretionary requirements under r 9.05(1) of the Rules permitting a person to be joined as a party to a proceeding, given that:

(1)    there was no legitimate purpose for joining LFA as a party to the proceeding which ought to have been apparent after the dismissal with costs of Mr Al Shawi’s joinder application by McElwaine J on 27 June 2025, less than four months before Mr Al Shawi procured LFA’s joinder by the October Orders;

(2)    LFA is not a person whose joinder is necessary to ensure that each issue in dispute in the proceeding is able to be heard and finally determined; and

(3)    LFA is not a person who should have been joined as a party to enable determination of a related dispute and, as a result, avoid multiplicity of proceedings.

41    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.

Costs Application

42    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.

43    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.

44    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.

45    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.

46    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.

Associate:

Dated:    9 February 2026

SCHEDULE OF PARTIES