Matthew Doyle appeared for Joanna Heath Scott at trial and on appeal, instructed by Russells.
The Full Court (Charlesworth, Goodman and Neskovcin JJ) dismissed, with costs, an appeal from Scott v Aulich, in the Matter of Aulich Civil law Pty Ltd [2025] FCA 1329, in which Stewart J ordered two directors to compensate a shareholder personally for oppressive conduct. The Full Court accepted that the order was within power under s 233 of the Corporations Act 2001 (Cth) and notwithstanding it is the first time such relief has been granted in Australia.
Ms Scott had a 25% interest in two incorporated legal practices. As a result of a breakdown in the relationship between herself and the other director/shareholders, she asked to be bought out in early 2020. In response, and using the COVID-19 crisis as a pretext for a capital raising, the directors issued a significant number of shares at $1.00 each, far below their value. When she did not take them up, her shareholding became negligible. Stewart J held that the share issues were made principally to dilute her shareholding, had no commercial rationale and were for that reason oppressive. Because both companies had since failed for unrelated reasons, his Honour considered that compensation from the directors, measured as a buyout at the time of each dilution, was the only remedy that would meaningfully address her loss. The Full Court upheld those orders, holding that relief may be granted after oppressive conduct has ended and the company has entered liquidation, where its effects remain unremedied.
The judgment can be read by clicking here
