A legal battle among prominent ACT lawyers has culminated in a Federal Court decision awarding a substantial sum to a woman involved in a complex share dispute. The case revolves around shares in two companies founded by Ben Aulich, a former Canberra lawyer. Initially, each company issued 100 shares, with Joanna Scott, the wife of barrister Jack Pappas, holding 25% of the shares. Mr. Aulich and two other lawyers, Peter Woodhouse and Erin Taylor, also held 25% each. However, as the pandemic approached in 2020, the firm's principals became anxious about finances, leading to a decision to increase the number of shares to almost 100,000. This move had a significant impact on Ms. Scott's shareholding, reducing its value from approximately $500,000 to a mere $494.
The court's judgment provides insight into the tense exchanges between the parties. Mr. Pappas offered to lend the firm money to navigate the financial crisis, on the condition that Ms. Scott's shares be redeemed fairly, with a payment mechanism to be agreed upon later. Justice Angus Stewart described Mr. Aulich's response as disparaging, stating that Mr. Aulich had accused Mr. Pappas of going "stark raving mad." The situation escalated, with Ms. Taylor suggesting that "the gloves are off."
Justice Stewart emphasized that Mr. Pappas' proposal was entirely reasonable and conventional under the circumstances. He added that Ms. Scott bore no responsibility for the demise of the Aulich companies, which had undergone liquidation and external administration. Her intention at the time of the oppressive conduct was to sell her interest in the companies, and had she been able to do so, the subsequent diminution in value would not have affected her.
Ultimately, Justice Stewart ruled that Ms. Scott should receive $500,000 in compensation for her shares in Aulich Civil Law, along with additional compensation for her stake in Aulich Property Trading. The case is ongoing, with costs yet to be finalized.
