In a stunning legal battle that has left the Australian Capital Territory's legal community in shock, a Federal Court judge has awarded a staggering $500,000 to Joanna Scott, a woman who found herself at the center of a bitter share dispute involving companies founded by prominent Canberra lawyer Ben Aulich. But here's where it gets controversial: the case not only highlights a falling out among some of the region's most respected legal minds but also raises questions about corporate governance and the treatment of shareholders during times of financial crisis. And this is the part most people miss: the dramatic drop in share value from $500,000 to a mere $494, which has sparked debates about fairness and ethical business practices.
The dispute revolved around shares in two companies, Aulich Civil Law (ACL) and Aulich Property Trading (APT, both brainchildren of Ben Aulich. Initially, each company issued 100 shares, with Joanna Scott, the wife of barrister Jack Pappas (Aulich's colleague), holding a substantial 25%. Aulich, alongside lawyers Peter Woodhouse and Erin Taylor, also held 25% each. However, as the pandemic approached in 2020, financial concerns led the firm's principals to dilute the shares, increasing them to nearly 100,000. This move had a devastating impact on Scott's holdings, effectively wiping out their value.
Here’s the kicker: the relationship between Aulich and Pappas had already soured by 2018, adding a layer of personal tension to the professional dispute. At the time of the share dilution, Scott sought to sell her shares, but the new issue rendered them nearly worthless. Justice Angus Stewart found that this dilution was not only oppressive but also unfairly targeted Scott's interests. The judge highlighted a series of heated exchanges, including Pappas' offer to lend the firm money on the condition that Scott's shares be redeemed fairly—a proposal Aulich dismissed as 'stark raving mad.'
But here's the controversial part: Justice Stewart noted that Scott bore no responsibility for the companies' eventual demise, yet she was made to suffer the consequences. The judge emphasized that had Scott been allowed to sell her shares at their original value, the subsequent liquidation of ACL and the external administration of APT would have been irrelevant to her. Instead, the defendants' actions left her financially devastated. The ruling awarded Scott $500,000 for her ACL shares, plus additional compensation for her APT stake, though the case remains open for cost finalization.
This case raises thought-provoking questions: Is share dilution ever justified when it disproportionately harms specific shareholders? And how should courts balance corporate survival with individual shareholder rights? We’d love to hear your thoughts—do you think the ruling was fair, or is there another side to this story? Share your opinions in the comments below!
