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Selected cases

Supreme Court of New South Wales · [2026] NSWSC 641

Australian Fulin Agriculture derivative action

A NSW Supreme Court case about a shareholder seeking leave to bring proceedings in the company's name after a long-running founder dispute.

Supreme Court of New South Wales5 June 2026

Plain-English explainers, not legal advice. Check the linked official source before you rely on a specific section, and get advice for your situation.

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Quick read

  • A shareholder cannot always force the company to sue just because there may be a claim.
  • A NSW Supreme Court case about a shareholder seeking leave to bring proceedings in the company's name after a long-running founder dispute.

Use this to check

  • Derivative actions require more than suspicion that a director did something wrong.
  • The Court looks at whether the proposed litigation is in the company's best interests.
  • Funding, costs exposure and security for costs can decide whether leave is granted.

Decision snapshot

  1. 1

    What happened

    • Guangyi Sui sought leave under s 237 of the Corporations Act to bring proceedings in the name of Australian Fulin Agriculture against a former director for alleged fiduciary breaches.
    • The background included a long history of litigation between the parties, unpaid costs orders, limited company assets and a proposed costs undertaking that the Court considered insufficient.
    • Mr Sui also had oppression claims, but this application focused on whether the company itself should be allowed to sue through him.
  2. 2

    What the court had to decide

    • The Court considered whether to grant leave under s 237 of the Corporations Act for a shareholder to bring proceedings in the company's name, including good faith, serious question to be tried, company interests, costs exposure and the adequacy of the proposed undertaking.
  3. 3

    What the court decided

    • The NSW Supreme Court dismissed the s 237 leave application with costs.
    • Although the applicant was acting in good faith and there was a serious question to be tried, the Court was not satisfied the proposed proceeding was in the company's best interests, particularly given costs exposure, limited assets and the inadequate undertaking.

Practical impact

Practical read

  • A shareholder cannot always force the company to sue just because there may be a claim.
  • Derivative-action applications turn on good faith, serious question, costs exposure and whether the litigation is actually in the company's best interests.

Useful next steps

  • Derivative actions require more than suspicion that a director did something wrong.
  • The Court looks at whether the proposed litigation is in the company's best interests.
  • Funding, costs exposure and security for costs can decide whether leave is granted.
  • Oppression claims and company claims may overlap, but they are not the same pathway.
  • Separate personal shareholder claims from claims that belong to the company.

Practical read

This is a founder-dispute case about when a shareholder can make the company litigate. The law recognises that directors may refuse to bring a claim even where the company has been wronged, but it does not let every unhappy shareholder take over the company's name for a lawsuit.

The Court accepted there was a serious question to be tried and that the applicant was acting in good faith. The problem was the overall company-interest analysis. The company had no meaningful assets, there were unpaid costs issues, and the proposed undertaking did not adequately protect the company from litigation risk.

For small companies and startups, the practical lesson is to treat internal claims separately from company claims. If a shareholder wants the company to sue a director, the plan needs to explain funding, costs, evidence, likely recovery and why the company benefits.

Checks to run

Key points

  • Separate personal shareholder claims from claims that belong to the company.
  • Work out who will fund the claim and who bears adverse costs risk.
  • Gather evidence showing the claim would benefit the company, not just one shareholder.
  • Check whether oppression, access-to-books or buyout remedies are more practical.
  • Document director decisions about whether the company should pursue litigation.

Key takeaways

  • Derivative actions require more than suspicion that a director did something wrong.
  • The Court looks at whether the proposed litigation is in the company's best interests.
  • Funding, costs exposure and security for costs can decide whether leave is granted.
  • Oppression claims and company claims may overlap, but they are not the same pathway.

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