The Federal Court has ordered $500,000 compensation be paid to Joanna Scott after her shares in Aulich Civil Law fell in value from around $500,000 to just $494. The judge found 'oppressive conduct' by fellow shareholders, including company founder Ben Aulich, during a dispute dating back to 2018.
The case centred on shares in Aulich Civil Law (ACL) and Aulich Property Trading (APT), both founded by former Canberra lawyer Ben Aulich. Initially, the two companies had issued 100 shares each, with 25 per cent held by Joanna Scott, the wife of barrister Jack Pappas, who was Mr Aulich's colleague. Mr Aulich held 25 per cent of shares, alongside fellow lawyer Peter Woodhouse and solicitor Erin Taylor.
In 2020, as the pandemic loomed, the firm's principals became concerned about finances and decided to increase the number of shares to almost 100,000. Relations between long-time close colleagues Mr Aulich and Mr Pappas had soured around 2018. At the time of the new share issue, Ms Scott had wanted to sell her existing shares. Justice Angus Stewart found that the effect of the new share issue sent the value of Ms Scott's holding plummeting from around $500,000 to $494.
Justice Stewart rejected suggestions that this was an 'intervening' event ending Ms Scott's claim. 'She bears no responsibility for what has happened to the Aulich companies,' he said. 'Had she been able to sell her interest, then the diminution in value caused by the liquidation of ACL and the impending external administration of APT would be irrelevant. It is only because of the defendants' oppressive conduct that that has not occurred.'
Justice Stewart ruled that Ms Scott should be compensated $500,000 for her shares in Aulich Civil Law, plus additional compensation for her stake in Aulich Property Trading.
