Federal Court of Australia

Al Shawi v Ghaffari-Hesari (No 2) [2026] FCA 1673

ORDERS

THE COURT ORDERS THAT:

1.    The plaintiff’s interlocutory application dated 21 October 2026 is dismissed.

2.    The plaintiff pay the first defendant’s costs of the interlocutory application.

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)

O’CALLAGHAN J:

1    This is an urgent interlocutory application brought by the plaintiff against the defendants in the proceeding.

2    The proceeding was commenced in March 2025. It involves claims and counterclaims of oppression and misappropriation of company assets, among other things. In essence, each of the rivalling parties seeks to “buy the other out”.

3    The proceeding is in the docket of Anderson J.

4    I heard this application as the Commercial and Corporations Duty Judge.

5    The plaintiff and the first defendant are co-directors and equal shareholders of the second defendant, Consolidated Reality Group Pty Ltd (CRG).

6    CRG is apparently a successful enterprise. It conducts business as a franchisee of a real estate agency business called “Link”.

7    The franchisor threatens to terminate the franchise agreement between it and CRG because CRG has not paid the franchise fees and other amounts due under the franchise agreement in a timely way.

8    The franchisor threatens to issue a notice of termination tomorrow afternoon (6 November 2026).

9    The evidence disclosed that the business conducted by the franchisee constitutes a very significant amount of the business’s revenue.

10    At one point, 18 months or so ago, the business was valued at over $1.9 million, although I was told by counsel for the defendants that the profit and revenue have declined in the last year or so.

11    The plaintiff alleges that his co-director’s conduct, in declining to agree to make certain payments to creditors, constitutes oppression within the meaning of s 232 of the Corporations Act 2001 (Cth).

12    By its interlocutory process the plaintiff seeks three orders.

13    The first is what is described as “an interlocutory injunction” ordering the first defendant to forthwith do all things and provide all consents necessary to cause CRG, the second defendant, to make payments to Link Franchising Australia Pty Ltd (the franchisor) a total of $105,521.42.

14    The second is an interlocutory injunction ordering the first defendant to forthwith do all things and provide all consents necessary to cause CRG to make payment to Scanlon Richardson Financial Group (SRFG, the second defendant’s accountant) of two invoices, one for the sum of $3,916, the other for the sum of $242.

15    The third order sought is an interlocutory injunction ordering the first defendant to forthwith do all things and provide all consents necessary to cause CRG to make an application to the Australian Taxation Office (ATO) to enter into a payment arrangement in respect of CRG’s outstanding debt owing to the ATO in a form identified in the affidavit of the plaintiff, affirmed 21 October 2026.

16    The plaintiff relied on two affidavits that he had affirmed, one on 21 October 2026, the other on 4 November 2026, together with an affidavit of Mr Warren Scott, who is the solicitor for the plaintiff, affirmed 3 November 2026.

17    As the terms of the injunctions sought suggest, the two directors are at loggerheads. Relevantly, they cannot agree on a process or method to address the order in which, or the terms upon which, certain creditors should be paid.

18    In his affidavit affirmed yesterday (4 November 2026), the plaintiff produced a document titled “Aged Payables Summary of CRG as at 30 November 2026”.

19    It shows that CRG has a number of different creditors.

20    It owes the franchisor a little over $106,000, and the plaintiff’s own evidence (see [103] of his affidavit dated 21 October 2026) is that the whole of CRG’s debt to the ATO as at that date, being approximately $333,120, is now payable immediately.

21    The plaintiff's case that a mandatory injunction should go, compelling CRG to pay the sum of a little over $106,000 to the franchisor, was founded on the proposition that I should accept that it is realistic to expect that CRG will be able to enter into a payment plan with the ATO with a lump sum of $100,000 to be paid immediately, and the balance to be paid over the next year.

22    The only evidence concerning the prospects of such a thing occurring is contained at [100] of the plaintiff’s 21 October 2026 affidavit. That paragraph reads as follows:

On or about 1 October 2026 Allyra [the company secretary] telephoned the ATO about CRG’s debt and I was present in the room during that call. The ATO said it would consider a new payment arrangement for CRG with a substantial lump sum (Allyra proposed $100,000) and the balance payable monthly over 12 months. Before it would do so, it required CRG’s overdue June 2026 BAS and FY2025 income tax return to be lodged so that it could see CRG’s full tax position. Allyra can lodge the June BAS, but only SRFG [the accountants to CRG] can lodge the tax return, and SRFG will not do so until its invoices are paid.

23    Hence the second order that is sought.

24    It may or may not be that there is some prospect, reasonable or otherwise, of the ATO entering into some kind of payment arrangement with CRG in respect of its outstanding tax obligations. But the sum of $100,000 upon which the calculations proffered by the plaintiff are founded was merely the suggestion of the company secretary, and there is no evidence to suggest that that sum or anything like it would be acceptable to the ATO.

25    The simple fact of the matter is that the plaintiff’s own evidence is that the whole of the debt, being a little over $333,000, is now payable immediately.

26    The Aged Payables Summary as at 30 November 2026 document, to which I referred, asserts that CRG has cash at bank in the sum of a little over $420,000. But as counsel for the defendant pointed out, part of that cash is “earmarked” for marketing in the sum of a little over $85,000, and payroll and GST obligations in a little over the sum of $27,000.

27    It follows that the cash at bank available to pay creditors, including the ATO and the franchisor, is actually around $307,000, not $420,000. I was also told, and counsel for the plaintiff did not dispute, that there are also other creditors of CRG, including its landlord.

28    The accounts as at 31 October 2026 indicated that CRG’s landlord was owed $55,321 in respect of rent. Counsel for the defendants said from the bar table that that obligation had been met by the first defendant out of his personal funds. So presumably, that means that the first defendant is a creditor in that sum, rather than the landlord.

29    It follows as a simple exercise in mathematics, that there is insufficient cash at bank for all creditors to be fully paid as things currently stand (it was not suggested to me that any other assets are capable of being immediately liquidated).

30    Counsel for the first defendant submitted, among other things, that the orders sought by the plaintiff do not “preserve” any position. He submitted that, on the contrary, they seek to change the status quo by compelling CRG to make payments other than with the authority of the two directors, which is the current arrangement.

31    He also submitted that whether a creditor is paid and in what order is a matter of business judgment for the directors in circumstances where the evidence shows, as it does show, that there is insufficient cash at bank to pay all the creditors.

32    He also submitted that a case in which two directors disagree about how to meet the liabilities of the company, and how to fund them, does not approach conduct capable of amounting to oppression.

33    In my view, those submissions on behalf of the first defendant are to be accepted.

34    The dispute, properly characterised, is one in which the two directors are unable to agree on a process or method to address the order in which, or terms upon which, creditors are to be paid.

35    That is not oppression.

36    More importantly, as I have explained, the plaintiff’s own evidence is that there is currently insufficient cash at bank to pay the amount owing to the franchisor and the full amount owed to the ATO, and amounts owed to employees, or payroll taxes or rent.

37    The effect of the first order sought – which is really the principal issue before me – would be to compel CRG to pay one creditor, the franchisor, in preference to other creditors, including the ATO.

38    I decline to make that order or the order with respect to the accountants, SRFG, because it is self-evidently not an appropriate exercise of the power of the Court to grant mandatory relief.

39    And despite the fact that the application describes the injunctions sought as interlocutory, they would operate as final orders.

40    I also decline to make the third injunction sought because that too is a matter for the directors, and it is intrinsically tied up with the whole question of the disagreement that they have about paying creditors.

41    Obviously, it follows that the plaintiff has not established a prima facie case for relief, and that the balance of convenience does not favour the making of the orders sought.

42    For those reasons, which are necessarily briefer than what might otherwise have been given, and because I am hearing this matter as a duty matter and the urgency is driven by the 5 pm deadline tomorrow – the plaintiff’s interlocutory process dated 21 October 2026 is dismissed, with costs.

43    As I said at the hearing, the nature of the dispute between the directors involves matters of commercial or business judgment, and it is not the Court’s role to act as a referee in such disputes. Company directors acting responsibly must be able to resolve such issues between themselves without resort to expensive, pointless and distracting litigation of this type.

Associate:

Dated:    9 November 2026