Newman (Trustee) v El-Sheikh Investment Holdings, in the matter of El-Sheikh Investment Holdings (Costs) [2026] FCA 512

This Federal Court decision is a costs judgment that followed an earlier dispute about El-Sheikh Investment Holdings Pty Ltd. The plaintiff, Philip Newman, was acting as trustee of the bankrupt estate of Khaled Mohamed El-Sheikh. He asked the Court to wind up the company, correct the company’s share register, and appoint him as liquidator.

Another insolvency officeholder, Nicholas Cooper, was joined as an interested party in his capacity as trustee of the estate of Ms Kylie El-Sheikh under a personal insolvency agreement. His position was not static. The Court recorded that he initially argued that a limited receivership would be more appropriate than liquidation. Later, he consented to the winding up order and took no position on the share register correction order, but opposed Mr Newman being appointed liquidator. Instead, he sought the appointment of Ms Renee Di Carlo.

The earlier substantive decision, delivered on 25 June 2025, gave Mr Newman some but not all of what he wanted. He succeeded in obtaining the winding up order and the share register correction order. He failed, however, on the question of who should be appointed liquidator. The Court refused to appoint him and appointed Ms Di Carlo instead.

The 2026 judgment did not reopen those substantive issues. It dealt with a narrower but commercially important question: whose legal costs should be treated as costs in the winding up of the company and therefore paid in that process.

The proceeding sat at the intersection of insolvency administration and company governance. On the one hand, the plaintiff wanted the company wound up. On the other, he also wanted the company’s share register corrected so that shares recorded in Mr El-Sheikh’s name would instead be recorded in the plaintiff’s name as trustee. He also wanted to be the person appointed to run the liquidation.

That combination matters because it shows how winding up proceedings can become multi-layered. A company may face not only a question about whether it should be wound up, but also disputes about who really owns the shares, who should control the external administration, and whether a proposed appointee has a conflict or perceived conflict.

By the time of the hearing, the Court said the real issue in dispute was the identity of the appointee. But the Court also noted that this had not always been the interested party’s position. Until shortly before the final hearing, the interested party had maintained that a receivership, rather than liquidation, was appropriate. That shift in position became important when the Court later assessed costs.

The legal issue was whether the plaintiff’s costs and the interested party’s costs should both be ordered to be costs in the winding up of the company under ss 466(2) and 556(1)(b) of the Corporations Act. The Court also referred to its broad discretion on costs under s 43(1) of the Federal Court of Australia Act 1976 (Cth).

Section 466(2) says that, unless the Court orders otherwise, the liquidator must reimburse the applicant out of company property for the taxed costs incurred by the applicant in the winding up proceedings. Section 556(1)(b) gives priority in the winding up to costs in respect of the application for the winding up order. The Court noted that the expression in respect of can extend beyond the applicant’s own taxed costs.

The interested party accepted that his own costs should be treated as costs in the winding up, but argued that the plaintiff should not recover all of his costs. He said the plaintiff’s costs should only be allowed up to 1 April 2025 because, by then, the only issue left was whether the plaintiff had a relevant conflict that prevented his appointment as liquidator. Since the plaintiff lost on that issue, the interested party argued that the later costs should not be reimbursed.

The Court therefore had to decide whether the plaintiff’s partial failure on the appointment issue should reduce or defeat his costs recovery, and whether the interested party’s own costs were sufficiently connected to the winding up to receive the same treatment.

The Court ordered that both the plaintiff’s costs and the interested party’s costs in the proceeding be costs in the winding up of the company. In other words, both sets of costs were treated as costs incurred in respect of the winding up.

The judge said it was uncontroversial that a successful applicant is ordinarily entitled to reimbursement for costs incurred in a winding up application out of company property under s 466(2). The real question was whether there was a reason to order otherwise because the plaintiff had failed to obtain his own appointment as liquidator.

The Court was not persuaded that the plaintiff should be deprived of the costs orders he sought. It gave three reasons. First, until the interested party filed submissions on 23 May 2025, shortly before the final hearing on 11 June 2025, his position had been that a receivership rather than liquidation was appropriate. Second, the application was necessary when it was brought in order to seek the winding up order and the share register correction order, both of which the plaintiff obtained. Third, although the plaintiff was unsuccessful on the appointment issue because of the potential for a conflict to arise, the Court accepted his submission that he sought appointment in the interests of cost-effectiveness and efficiency given his background as trustee in Mr El-Sheikh’s bankruptcy.

The Court also accepted that the interested party’s costs should be costs payable in the winding up. The interested party had ultimately been successful on the question of the identity of the appointed liquidator, and his costs were referable to the winding up.

For business owners, the practical value of this case is not limited to insolvency specialists. It shows how quickly a company dispute can expand beyond a simple question of solvency or winding up. Here, the proceeding also involved the company’s share register and a contest over who should control the liquidation. Those issues can affect evidence, timing, leverage and cost exposure.

The decision also shows that courts look at the substance of the proceeding, not just a scorecard of who won each separate point. The plaintiff did not get his preferred liquidator, but he still recovered his costs because he succeeded on the central relief and the Court considered the application necessary when filed. That is important for businesses involved in contested governance or insolvency proceedings. A partial loss on one issue does not automatically mean no costs recovery.

At the same time, the case is a warning that disputes about the identity of the liquidator can become a serious and expensive battleground. If a proposed appointee may face a conflict or perceived conflict, that issue should be identified early. Leaving it to be fought out late in the proceeding can increase costs for everyone involved.

The Court’s reasoning also highlights the importance of documenting changing positions during litigation. The interested party’s earlier stance that a receivership was preferable mattered when the Court assessed whether the plaintiff’s application had been necessary. In practice, a clear record of each party’s position can influence not only the merits but also the eventual costs outcome.

This case underlines the practical importance of records and conduct in company disputes. The plaintiff sought a share register correction order as well as a winding up order. That alone is a reminder that company registers are not just administrative paperwork. They can become central evidence in litigation about ownership, control and who is entitled to act.

It also shows that the conduct of the parties during the proceeding can shape the costs result. The Court paid attention to the fact that the interested party’s position evolved from favouring a limited receivership to supporting liquidation with a different liquidator. That history helped explain why the plaintiff’s application was considered necessary when brought.

For businesses, the practical steps are straightforward. Make sure registers, resolutions and supporting records are complete and internally consistent. If an insolvency practitioner, trustee or related officeholder may seek appointment to a company role, consider early whether there is any conflict issue that could later become contentious. If litigation is already underway, keep a clear written record of what relief each party supports or opposes at each stage.

The originating process was filed on 14 February 2025. The substantive hearing was listed for 11 June 2025, and the earlier merits reasons were delivered on 25 June 2025. The costs question was later determined on the papers, by consent, without an oral hearing. The costs judgment was delivered on 24 April 2026.

This page explains the 2026 costs ruling. It should be read together with the earlier 2025 decision if you need the fuller factual background or the detailed reasons on the winding up order, the share register correction order and the refusal to appoint the plaintiff as liquidator.

The Court expressly referred to the earlier decision, Newman (Trustee) v El-Sheikh Investment Holdings, in the matter of El-Sheikh Investment Holdings [2025] FCA 681, for the background and the substantive issues. This page focuses on the later costs judgment, Newman (Trustee) v El-Sheikh Investment Holdings, in the matter of El-Sheikh Investment Holdings (Costs) [2026] FCA 512.

Because this judgment is confined to costs, some factual detail about the underlying company dispute is necessarily brief. The key points that can be stated confidently are the relief sought, the parties’ positions as recorded in the costs reasons, the procedural outcome in the earlier decision, and the Court’s reasons for making the costs orders.