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Directors who deliberately diluted a minority shareholder’s 25 per cent stake in an alleged squeeze-out scheme have been ordered to personally pay more than $700,000 in compensation.
Two directors, Benjamin Aulich and Peter Woodhouse, unsuccessfully appealed a ruling that they had diluted Joanna Scott’s shareholdings through unjustified share issues and were personally liable to compensate her for the loss.
In October 2025, Scott v Aulich [2025] FCA 1329 was heard before Justice Angus Stewart, who had found that the directors had unfairly diluted Scott’s shareholdings through share issues made for an improper purpose.
Heard before Justices Natalie Charlesworth, Scott Goodman, and Penelope Neskovcin on 30 October 30 2026, the appeal from the directors was dismissed in the full court, finding no error in the primary judge’s decision that the directors had engaged in oppressive conduct and were personally liable to compensate Scott for the loss in value of her shareholding.
Scott was a shareholder in Aulich Civil Law (ACL) and Aulich Property Trading (APT), in which she held an interest in both companies and anticipated selling her shares at fair value.
In April 2020 and May 2021, directors Benjamin Aulich and Peter Woodhouse issued additional shares in ACL and APT, substantially diluting Scott’s shareholding and reducing her ownership interests to a negligible amount.
Regarding ground one, the primary judge found that Aulich and Woodhouse engaged in oppressive conduct by issuing shares in ACL and APT, “for the improper purpose of diluting Ms Scott’s shareholding in order to minimise her interest in the company”.
The court considered that the funds raised circulated existing money within the group, the shares were issued at a significant undervalue, and Aulich’s failure to give evidence indicated that he could not provide a “commercial reason for the share issue in ACL rather than in other companies in the group”.
The appellants argued that the primary judge placed too much emphasis on Aulich’s intention to dilute Scott’s shareholding rather than objectively assessing whether the share issues were commercially unfair.
They also challenged the finding that there was no genuine commercial reason for the share issues, arguing that the primary judge had overlooked relevant financial information, despite the court finding that “the absence of any revision to the financial position was relevant”.
However, the full court rejected all five of the appellants’ arguments, agreeing that the share issues were objectively unfair and stating that “constitutional authority to allot shares does not answer the oppression question”.
Regarding ground two of the hearing, the appellants argued that the primary judge erred in ordering them to jointly compensate Scott for the loss in value of the shares, especially because the companies had since gone into liquidation or external administration.
They claimed that the judges failed to properly consider whether compensation was appropriate after the oppressive conduct had ended and whether Scott had actually suffered a proven financial loss.
Section 233 of the Corporations Act gives the court discretion to grant appropriate relief for oppressive conduct, including compensation, even where the oppression is no longer ongoing.
The court upheld the order requiring the appellants to personally compensate Scott, with her shares valued at $710,800 at the time of the oppressive conduct, aiming to place her in the financial state she would have occupied absent the oppressive actions.
The appeal from Aulich and Woodhouse was dismissed by the full court.
Citation: Aulich v Scott [2026] FCAFC 139 (30 October 2026)
