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1. Ms Taylor, the second plaintiff, was an employee at a law practice.

2. Pursuant to a letter dated 14 February 2019 Ms Taylor became a partner of that practice. Ms Taylor paid $500,000 to buy 25% of the shares in the first defendant, Aulich Civil Law Pty Ltd (ACL). ACL was an incorporated legal practice trading as Aulich Civil Law (Aulich Civil Practice).

3. Ms Taylor’s last day at the practice, and as a partner, was 12 April 2024.

4. Ms Taylor relies on a provision in the letter dated 14 February 2019 and claims a refund of the $500,000 that had been paid, because she left within five years.

5. There are several causes of action pleaded. None of them are admitted by the remaining active defendants. I have referred to the active defendants as the defendants in these Reasons.

The Evidence

6. Ms Taylor, Mr Woodhouse (the second defendant), and Mr Aulich (the fourth defendant), gave their evidence in chief by affidavit and were cross examined.

The corporate structure

7. A number of separate legal entities were responsible for different functions at the practice.

8. On 20 July 2007, Aulich Criminal Law Pty Ltd (Aulich Criminal Law) was incorporated. Mr Aulich was the sole director. It traded as a legal practice in the ACT known as Aulich Criminal Law (Aulich Criminal Practice). It is not a party to these proceedings.

9. In 2009, Mr Woodhouse started work as a solicitor at the Aulich Criminal Practice.

10. In December 2012, Mr Woodhouse purchased 50% of the shares in Aulich Criminal Law through Woodsal Investments Pty Ltd (Woodsal) in its capacity as trustee for the Woodsal Family Trust. Mr Woodhouse is a director of Woodsal and he became a director of Aulich Criminal Law.

11. Gracie Gill Pty Ltd (Gracie Gill), the fifth defendant, in its capacity as trustee of the Ben Aulich Family Trust, held the other 50% of the shares in Aulich Criminal Law. Mr Aulich is a director of Gracie Gill.

12. In 2011 Mr Aulich and Mr Woodhouse started to discuss the possibility of establishing a civil law practice in addition to the criminal law practice. Those discussions culminated in the incorporation of ACL on 16 February 2012 with Mr Woodhouse, Mr Aulich and Joanna Scott contributing $10,000 each in capital and being issued one third of the shares each. Mr Aulich’s shares were held by Gracie Gill and Mr Woodhouse’s shares were held by Angiesal Pty Ltd (Angiesal), the third defendant.

13. Pursuant to the letter dated 14 February 2019 (February 2019 Agreement), Ms Taylor became a partner and a director of ACL on 1 July 2019. From then ACL had four shareholders: (a) 25% of the shares were held by the first plaintiff, Lily & Ruby Holdings Pty Ltd (Lily & Ruby Holdings). Ms Taylor is a director. (b) 25% of the shares were held by Angiesal. (c) 25% of the shares were held by Gracie Gill. (d) 25% of the shares were held by Joanna Scott.

14. Each of ACL and Aulich Criminal Law paid management fees to Aulich Pty Ltd, which employed the legal staff for the Aulich Civil Practice and Aulich Criminal Practice.

15. Mr Woodhouse placed ACL into voluntary administration on 19 September 2024. On the same day, Mr Woodhouse placed Angiesal and Aulich Pty Ltd into liquidation. As a consequence these proceedings as against ACL and Angiesal have been stayed.

16. None of the $500,000 paid to buy the shares has been repaid.

Outline of the causes of action

Contract claim

17. The plaintiffs say that ACL, Angiesal and/or Gracie Gill has/have breached clause 5 of the agreement by failing to purchase Lily & Rubys Holdings’ shares for $500,000.

18. Next, the plaintiffs say that Mr Woodhouse and Mr Aulich personally are parties to the contract and, since 12 April 2024, each of them has breached a term implied into the agreement by failing to procure the buy back of the shares of Lily & Ruby Holdings in ACL by any of ACL, Angiesal and/or Gracie Gill.

19. Next, the plaintiffs say that since at least 22 March 2024, Mr Woodhouse breached clause 5 of the agreement by only being prepared to purchase the shares of Lily & Ruby Holdings on terms other than the express terms of the February 2019 Agreement, and has accordingly repudiated the February 2019 Agreement. Partnership Claim

20. The plaintiffs say that Ms Taylor, Mr Woodhouse and Mr Aulich were partners.

21. As partners, Mr Woodhouse and Mr Aulich breached their fiduciary obligations to Ms Taylor.

22. The conduct relied on is considered further later in these Reasons.

Oppressive Conduct

23. The plaintiffs say that since September 2023, each of Mr Woodhouse and Mr Aulich (both in their personal capacities, and in their respective capacities as directors of ACL, Angiesal and Gracie Gill), have engaged in oppressive conduct against Lily & Ruby Holdings.

24. The conduct relied on is considered further later in these Reasons.

Breaches of Statutory and Fiduciary Duties to ACL

25. The plaintiffs say that Mr Woodhouse and Mr Aulich, as directors, breached the statutory and fiduciary duties they owed to ACL.

26. The conduct relied on is considered further later in these Reasons.

Breach of Fiduciary Duties to Shareholders

27. The plaintiffs say Mr Woodhouse and Mr Aulich owed and breached their fiduciary duties to the shareholders of ACL.

28. The conduct relied on is considered further later in these Reasons.

Background

29. In October 2015, Ms Taylor started work at ACL as an associate solicitor.

30. In March 2018, Ms Taylor and Mr Aulich commenced a personal relationship.

31. As I have said, Ms Taylor became a partner on 1 July 2019. The February 2019 Agreement relevantly provided that: Peter Woodhouse, director of Aulich Civil Law Pty Ltd ACN 155 746 777 ("ACL"), and Benjamin Aulich, Director of ACL are delighted to offer you the role of Partner to commence on 1 July 2019. As you are aware ACL is a law firm run by corporate entity. The role of Partner is therefore offered to you on the following basis: 1. Appointment of you as Director of ACL; 2. You purchase 25% of the shares in ACL for the sum of $500,000. We understand the purchase of the shares may be made and ownership held by a corporate entity controlled by you, which may also act as a corporate trustee; 3. You are entitled to 6 weeks' holiday per annum; 4. You are entitled to a Director's salary in the sum of no less than $220,000 (inclusive of superannuation) – to be reviewed per annum; 5. Should you leave the Partnership (for whatever reason) within the first 5 years, the existing shareholders or ACL, will purchase your shares in ACL for the sum of $500,000; 6. Should you leave the Partnership (for whatever reason) after 5 years the existing shareholders or ACL, may purchase your shares in ACL for market value; and 7. You will NOT be required to personally guarantee any of the existing debt, loans or overdraft facilities available to ACL. Yours faithfully, Aulich Civil Law (Signature) (Signature) Peter Woodhouse Ben Aulich Partner Partner

32. Ms Taylor paid $500,00 for the shares in ACL between July and August 2019.

33. On 24 April 2020, Lily & Ruby Holdings purchased an additional 33,300 shares in ACL. Ms Taylor does not claim that those additional shares are the subject of any agreement to repurchase.

34. In early September 2023, the personal relationship between Ms Taylor and Mr Aulich ended, and Ms Taylor moved out of their home.

35. The professional relationship between Ms Taylor, Mr Aulich and Mr Woodhouse became strained and Ms Taylor found that her mental health was being affected.

36. On 7 February 2024, Ms Taylor and Mr Aulich had a discussion in a cafe about the structure of ACL and managing workloads. That meeting ended abruptly with Mr Aulich telling Ms Taylor to “get fucked and fuck off” while he raised his middle finger at her before he walked off with his middle finger raised over his shoulder. This occurred in front of a colleague and a client. Mr Aulich agreed in cross examination that he had publicly humiliated Ms Taylor.

37. On 13 February 2024, Ms Taylor sent an email to Mr Woodhouse. In that email Ms Taylor said: I don’t want you … [to be] under the impression that if I left it would be at the risk of the firm not having enough to pay me and employee entitlements etc … It isn't the firm who would have to pay me -it's the shareholders, as in you and Ben.

38. Mr Woodhouse replied: Whilst I can't speak for Ben, I will not be buying you out personally.

39. Mr Woodhouse agreed in cross examination that, even before Ms Taylor left the firm his position was that he would not be buying her out personally.

40. Mr Woodhouse then said in his reply to Ms Taylor: I think ACL will fail very quickly if you go and we directors will be on the hook for its liabilities. I do not accept it’s just a matter of reassigning the workload. Bobbi is telling us that we don’t have enough fee earners now to generate enough cash flow. What happens when we take our highest fee earner out of that? Why would I buy additional shares in that company?

41. In cross examination, Mr Woodhouse was asked whether Angiesal would have bought the shares. Mr Woodhouse said that he had not decided at that stage.

42. Immediately after sending that email to Ms Taylor, Mr Woodhouse forwarded it to Mr Aulich. Mr Woodhouse said: I felt it important that she knows I will not be buying her out. She may well implode (or explode) once she realises that. We can discuss later today. Don't let on that I sent it to you. I just want to catch you up in case she starts hammering you.”

43. Mr Aulich replied, “Thanks – she will start hammering me I think. She needs to get some help.”

44. On 19 March 2024, Ms Taylor informed Mr Aulich and Mr Woodhouse that she would be working from home for the foreseeable future because she had gastro symptoms all night which she thought was from the “stress of all this”. Neither Mr Aulich nor Mr Woodhouse replied to the email.

45. On around 20 March 2024, Mr Woodhouse and Mr Aulich agreed that Ms Taylor would be asked to leave the practice. They decided that Mr Woodhouse would ask Ms Taylor to meet with him so he could tell her.

46. Mr Woodhouse prepared a draft email, which he sent to Mr Aulich. He intended to send the email to Ms Taylor if she decided not to meet with him.

47. That draft email said that it was clear that Ms Taylor’s ongoing involvement with the practice was untenable and that the only option Mr Woodhouse could see was for her to leave the practice.

48. However, Ms Taylor did agree to a meeting that day, 21 March 2024, so the email was not sent. Mr Woodhouse told Ms Taylor at the meeting in Ms Taylor’s home that he thought she should leave the firm. In cross examination Mr Woodhouse agreed that he had not presented it to her as something that she could choose to do or not do.

49. Mr Woodhouse added in cross examination that he was not sure whether he and Mr Aulich could terminate Ms Taylor’s employment as two of the three directors of ACL but said he was satisfied he had sufficient authority to tell Ms Taylor that he thought it was in the best interests for her to leave the firm.

50. Mr Woodhouse and Ms Taylor do not agree about what was said in relation to the buy back of the shares. Ms Taylor says that Mr Woodhouse said, "We will buy your shares. We just need some time and we're happy for you to take some of your files". Mr Woodhouse denied he said this.

51. The office manager had attended the meeting with Ms Taylor and Mr Woodhouse. She did not give evidence, but she made a file note which is in evidence. That file note says, inter alia, “Peter said that he didn’t want to fuck [Ms Taylor] over either and that they plan to do what was right by [Ms Taylor]". In cross examination in these proceedings Mr Woodhouse agreed that was what he had said to Ms Taylor.

52. Ms Taylor confirmed by email later that day that she would be leaving. She asked: I would like in writing that: 1. You will pay me in accordance with our written terms; …

53. Mr Woodhouse replied on the following day, 22 March 2024: In terms of buy out, the position is as I said yesterday. We are not in a position to buy you out. We are prepared for you [to] remain as a shareholder until such time when the firm can hopefully trade through the difficult times and recover enough to be in a position where we can buy your shares in 6 - 12 months, if the firm makes it through. There is a chance that it [won’t]. I am not sure I can put it higher than that. We need the firm to continue as best we can in order to be in any position to pay anything for your shares. I do not want to get ahead of that process but if you are not restrained, take clients with you and go to a rival firm then that may effect the amount we pay for the shares.

54. Mr Woodhouse said in cross examination that, from the outset, he treated the obligation to rebuy the shares as being contingent on whether or not the firm made it through because ACL or the shareholders would need money to buy the shares.

55. Ms Taylor replied: As I understand our agreement when I bought in, the share price is set at what I bought in at - $500,000. I’m content for you to have time to pay that - but the firm’s success isn’t directly related to that either because it’s not necessarily the firm that has to pay, you and Ben got the money when I bought in, it’s you and Ben who have that responsibility … If you don’t intend to [h]onour that agreement, then I need to know that.

56. Mr Woodhouse forwarded Ms Taylor’s email to Mr Aulich and also sent him a draft reply which Mr Woodhouse intended to send Ms Taylor. That draft said: I do not agree that it is me and Ben who have the responsibility to buy you out personally. As I said before, I am not prepared to buy shares in a company that may not make it. I did not mention a figure yesterday, but I did mention that I hope we will be in a position to pay you for your shares in 6 – 12 months if the company survives and that we are content for you to hold onto your shares until then. If the company survives and is doing well enough that amount may be what you paid in, but we cannot agree to a figure when we don’t know what’s coming. I know that is vague, but it is the best I can do at this stage.

57. In cross examination, Mr Woodhouse agreed that he had decided that the amount he would pay for the shares would not necessarily be the $500,000 that had been paid in, but instead an amount that the parties would have to agree on. He added that “we” was a reference to Mr Aulich and himself on behalf of the shareholders for ACL.

58. That draft email between Mr Woodhouse and Mr Aulich was not sent to Ms Taylor.

59. Ms Taylor wrote to Mr Woodhouse on the same day: Please don’t cut off my access to emails … I genuinely do not wish to make this hard. Even when you put your position to me per the previous email - all that does is mark our ground - but it doesn't need to be an immediate fight. Just put the position so we are all clear because your email this morning is not what you said last night. You said we'll buy your shares. We just need time. And you can take matters. There were no other caveats. Your email this morning looked more like one Ben had gotten a hold of and not reflective of your position yesterday.

60. In cross examination, Mr Woodhouse agreed that Ms Taylor had been asking him to confirm in writing his position in relation to the buying out of her shares.

61. In his reply, Mr Woodhouse said, “I'm not going to cut off anything. I don't want to make it like that. I'll come back to you on the rest next week.”

62. Mr Woodhouse forwarded the email chain to Mr Aulich. In his covering email he said, “She emailed again. See below. I responded just in relation to emails.”

63. In cross examination, Mr Woodhouse agreed that he was telling Mr Aulich that he had deliberately only responded to her question about access to emails but had not responded to the rest of her email.

64. On 23 March 2024, Ms Taylor sent a lengthy email to Mr Woodhouse. She was concerned that Mr Woodhouse had told others that she was leaving because of mental health issues. She said she was being treated like a piece of rubbish that he wanted to get rid of and instead of trying to help her heal, he was pushing her out of the nest.

65. Mr Woodhouse did not reply to the email.

66. In an email to Mr Aulich on 26 March 2024, Mr Woodhouse said that they needed to be “mindful of not letting civil drag crime down”, by taking on “too much of civil's financial liabilities”, such as rent. He concluded by saying: If there comes a time where we have to kill civil, we don't want to let crime die with it. I know that sounds very drastic but we need to look after ourselves in all of this too.

67. In cross examination, Mr Woodhouse agreed that he was contemplating that he might need to kill ACL at some point and in that scenario, he wanted to make sure that the criminal practice was able to survive. He agreed that part of the reason was to “look after ourselves”. He agreed that he knew Ms Taylor had no interest in the criminal practice and anything done to protect that practice would only benefit Mr Aulich and himself and not Ms Taylor. He denied however that he meant that he and Mr Aulich could look after themselves by improving the financial position of the criminal firm and worsening the financial position of the civil firm, he said he was just concerned to ensure that the financial position of the criminal firm was not degraded.

68. Later that day, 26 March 2024, Ms Taylor sent an email to Mr Woodhouse: Can you come back to me on the exit terms please. It's hard sitting in purgatory wondering how this is going to work out.

69. Mr Woodhouse, in cross examination, said he agreed that he knew that Ms Taylor was still looking for him to give her confirmation as to how this would work out.

70. Later in the email, Ms Taylor said: Both of the positions are either a yes or no. Yes - you will honour the 5 in 5 out deal and need some time, or no you won't (for clarity, it's a no if you are suggesting you are going to pay me on a value because that's not the deal) … We can work out timing after that but while I am sitting and waiting on this equivocal position you put to me in the email, it's really difficult.

71. In cross examination, Mr Woodhouse agreed that Ms Taylor was offering him time to make the payment.

72. Ms Taylor emailed Mr Woodhouse and Mr Aulich again on the next day, 27 March 2024. She relevantly said: … I am in a vulnerable position. My health is severely impacted. I have two young children; I have rent to pay and I had just exchanged contracts on a unit for my kids and I to move into. As you [a]re aware I put $500,000 into this business which you both got the benefit of personally and agreed in writing (either the business or your family trusts) to repay me if I left in the first 5 years for any reason. It concerns me that that is now even a matter for discussion. However, I am prepared to accept that the business at least is not in a position to immediately pay me the $500,000. I [don't] propose to entertain discussions about me not getting the $500,000 back. I prefer a constructive approach where you put a proposal to me in the form of a timeline of instalment payments… So that I am clear, how do you propose … 3. The transfer of the shares can be dealt with in your proposal for repayment of the $500,000.

73. Mr Woodhouse did not respond to this email.

74. On 28 March 2024, the practice received an email from a potential client asking whether Ms Taylor would be available to help with a business purchase. Mr Aulich forwarded the email to Ms Taylor and said, “You can have this one”.

75. In the ensuing email correspondence, Ms Taylor and Mr Aulich agreed that her end date would be 13 April 2024, and Ms Taylor then pointed out that they had not responded to her emails.

76. Mr Woodhouse, in cross examination, agreed that he knew at this time that he had not given her the kind of confirmation she had been seeking about whether or not he would honour the agreement.

77. In an email dated 2 April 2024, Ms Taylor said to Mr Woodhouse: … Will you come back to me on the remainder? I would like to have some time off to recover. I can only do that I if will be paid my salary and my entitlements … What I don't want is nothing to be said and then I am faced with a situation where you withhold my entitlements, which Bobbi was looking at anyway because the leave wasn't accruing at the right rate, or I am slapped with an application for an injunction, or you [slowly] start draining the life out of ACL so you can avoid paying me, or I get a meeting request for a cash call and share issue etc. I have played this with a straight bat, I expect the same.

78. Mr Woodhouse agreed that in this email Ms Taylor had expressed concern about the possible ways that he could prevent her from getting what she believed she was owed, including slowly draining the life out of ACL. However, he said, at this stage it had never crossed his mind that letting ACL die would be a way of avoiding having to pay Ms Taylor, although he agreed it had occurred to him when six months later, they were talking about putting ACL into liquidation.

79. In his reply email, Mr Woodhouse only said he did not intend to withhold her entitlements which would be paid when cashflow allows.

80. Later that day, Ms Taylor replied: Thank you. What about the rest –will you come back to me with a proposal? Or am I to take your silence on that as an indication it will be a fight?

81. Mr Woodhouse replied: If, in terms of “the rest”, you are referring to the buyout of your shares, our position has not changed. That is: We would love to be able to buy your shares in ACL. We are not in a position to do so now. We are not even sure if there will be an ACL in the future so we can't really commit to this. That's not meant to keep you in purgatory but is a realistic view of the situation, which we know you are aware of. We cannot be any more certain than that at this stage.

82. Ms Taylor replied in an email addressed to both Mr Woodhouse and Mr Aulich: … So you won't even offer any sort of instalment payments etc? … There are settlements coming up, Ben left me a list just last week that totalled close to $1mill – your initial position was not that, it was we will buy your shares but we need time. Rather than taking the below approach, can I invite you to reconsider – both of you have money, you can start making payments by instalments – from your own pockets and from the firm when the money comes in. Even if you make an offer that [your office] will make a payment when a settlement comes in triggered by a certain amount etc.

83. In cross examination, Mr Woodhouse agreed that Ms Taylor was looking to him to engage with her to find a pragmatic solution.

84. Fourteen minutes later, Mr Aulich sent a two-word email to Mr Woodhouse, “Stop responding”, to which Mr Woodhouse replied, “Yes – I don’t intend on it.”

85. By way of explanation, Mr Woodhouse said in cross examination that he had no interest in continuing to respond when his position hadn't changed. He also agreed that Ms Taylor had been coming up with ideas that would make it easier for her shares to be bought out, and that he and Mr Aulich decided that what they would do was to just stop responding to her and ignore her.

86. Ms Taylor then sent a formal letter dated 9 April 2024 addressed to ACL, Mr Aulich, Mr Woodhouse, Gracie Gill and Angiesal. She set out her understanding of the Partnership Agreement and then said: In these circumstances, could you please advise me as soon as possible, and in any event no later than 5.00 pm on 19 April 2024, how you intend to effect the purchase of my shares in ACL, including the identity of the intended purchaser, so that we may begin making arrangements to facilitate the sale?

87. Mr Woodhouse did not respond to the letter.

88. In separate email correspondence, there had been a discussion about disbursements totalling about $70,000, which Ms Taylor had paid on behalf of a client of the practice. Mr Aulich prepared a draft email to Ms Taylor dated 11 April 2024. In that draft email he said she should not have made those payments, she knew that there were cash flow problems and he asked her to reimburse the Aulich Civil Practice. It concluded: We would like this sorted before you leave and before we are able to put any position to you about other matters.

89. Mr Aulich sent the draft email to Mr Woodhouse and the office manager. At the outset of that email Mr Aulich stated, “I think this [is] best from Peter. Don’t pay any leave entitlements or anything to her yet.”

90. In cross examination, Mr Woodhouse agreed he had not taken any issue with Mr Aulich’s instruction because, “he can say whatever he likes”. Mr Woodhouse said there had been no deliberate delay in paying Ms Taylor’s leave entitlements which had been paid as soon as they could afford it.

91. On 26 April 2024, Ms Taylor sent another formal letter to the same parties. It concluded: I am providing a final opportunity for you to advise how you intend [your office] effect the purchase of my shares in ACL, including the identity of the intended purchaser. Please respond by no later than 10 May 2024.

92. Mr Woodhouse did not respond to that letter.

93. On 28 April 2024, Ms Taylor asked by SMS for the final calculations for her pay entitlements. Mr Woodhouse replied that there had been an issue with his receiving all of her emails. Ms Taylor then asked whether he had received her email last Friday regarding her shares.

94. Mr Woodhouse did not respond to Ms Taylor’s last message and said he blocked her from contacting him on his mobile phone.

95. On 29 April 2024, Mr Woodhouse sent the text messages he had received the day before from Ms Taylor by email to Mr Aulich and the office manager. The subject line read: “Mad texts from Erin”. Mr Woodhouse said to them:

I received these mad texts from Erin yesterday … Other than my first message back, I didn't reply. I’ve since blocked her.”

96. In relation to Ms Taylor’s final pay, an internal email from Mr Woodhouse to Mr Aulich and the office manager dated 29 April 2024 says: … I think she's after the final payment summary. Bobbi didn't want to do that yet because once that's done in the system we have to pay the PAYG on the total amount. We can do that on Wednesday, I guess and that can be a May tax problem. I will discuss it with Bobbi when she's in.

97. In cross examination Mr Woodhouse did not accept that he was deliberately delaying paying Ms Taylor her final entitlements because he didn't want to have to pay the tax yet.

98. On 30 April 2024, Ms Taylor asked for a payment summary. Mr Woodhouse wrote to Mr Aulich and said, “We obviously can’t pay her tomorrow”. In cross examination he said that was because they couldn’t afford it. He agreed that no other employees were having their entitlements held back.

99. On 30 April 2024, Mr Woodhouse and Mr Aulich decided to block Ms Taylor from sending any more emails to the firm.

100. Before that came into effect, Ms Taylor sent an email on 1 May 2024 asking about how her leave had been apportioned and calculated. Mr Woodhouse did not reply.

101. Mr Woodhouse then sent an internal SMS asking for emails from Ms Taylor to be blocked because she was “not sending anything productive. Just being a cunt”. He later added: She can get someone else to send emails or send letters if she wants. It may make her stop and think a bit about it. I think we'd all be better off if she just fucks off and leaves us alone.

102. Mr Woodhouse, in cross examination, denied that he had blocked Ms Taylor’s emails and messages because he didn't like her demanding to be paid and said he had no issue with her doing so.

103. Around 21 May 2024, Ms Taylor sent an SMS to the office manager asking whether Mr Woodhouse would be answering her questions about her final pay calculations and the transfer of a file. The office manager asked Mr Woodhouse, “Let me know what you want me to reply”, and he said: “I don’t. I don’t have to answer her questions.”

104. Ms Taylor sent another text message to the office manager summarising the content of the emails Mr Woodhouse said he had not received which included references to her leave payments and the share buyout. The office manager told to Mr Woodhouse she was just going to reply that she would pass on the messages, and Mr Woodhouse said to the office manager, “OK. There is no point arguing with her about the rest. Don't engage with her. Coz she'll keep going.”

105. In cross examination Mr Woodhouse agreed that his strategy was to ignore Ms Taylor.

106. On 12 July 2024, Mr Woodhouse received a formal letter of demand from solicitors acting for Ms Taylor. It was addressed to ACL, Angiesal and Gracie Gill. It relevantly said: As you will be aware, Lily & Ruby Holdings holds 33,325 ordinary shares in Aulich Civil Law Pty Ltd (ACL). We are instructed that Lily & Ruby Holdings, by Ms Taylor, has been attempting to obtain some commitment from you, as the directors of both ACL and its primary shareholders, since her resignation of the ACL practice on 9 April 2024. Unfortunately, with Ms Taylor’s attempt to engage with you having fallen on deaf ears, we have been instructed to write to you directly with a view to giving ACL, and your respective companies which hold the majority shares in the company, one final opportunity to purchase the shares of Lily & Ruby Holdings prior to legal proceedings being commenced in the ACT Supreme Court.

107. Attached to the letter was an unfiled originating process that the lawyers had instructions to file and serve 14 days after the letter unless a commitment to purchase the shares had been meaningfully provided in writing in the intervening period.

108. The letter concluded: To this end, please confirm in the following 14 days, which of (or which combination of) your respective entities or ACL intends to make the $500,000 payment to our client, and when that payment is intended to be made.

109. In cross examination, Mr Woodhouse agreed that the letter did not say that he could make an election as to which entity would assume responsibility for the payment and absolve one or more of the potential purchasers of their obligations, it simply asked who would pay and when.

110. On 16 July 2024, the ACT Law Society declined to issue a practising certificate to Mr Aulich. The following month Mr Aulich was committed to stand trial for conspiring to deal with money which was the proceeds of crime and recruiting people to assist in criminal activity.

111. On 29 July 2024, Mr Woodhouse replied to the formal letter of demand from the solicitors. Relevantly, Mr Woodhouse said: We did not understand ”will” at item 5 of the Letter to impose an obligation to purchase the shares. The use of ”will” was a reference to the future, but not to create an obligation on the existing shareholders.

112. Mr Woodhouse, in cross examination, agreed that this was not maintained as a Defence in these proceedings.

113. In the letter, Mr Woodhouse then said: What is consistent with our interpretation is that there was no definition of “existing shareholders”. If we understood the item to bind shareholders to purchase (as interpreted by your client) it would be necessary for a definition of ”existing shareholders”…

114. Mr Woodhouse, in cross examination, agreed that his letter said that if the contract was meant to apply to the existing shareholders, they needed to be specifically identified by name. That proposition is not relied on by the defendants in these proceedings.

115. After explaining some financial issues, the letter states: Even if your client was successful in obtaining the orders in the draft pleadings, ACL or the shareholder companies will not have the funds to satisfy judgment. All of those companies will eventually [be] deregistered in due course.

116. In cross examination, Mr Woodhouse said that because Mr Aulich’s practising certificate had been cancelled he had decided he could not run ACL on his own and thought it was headed for administration or liquidation.

117. These proceedings were then commenced on 1 August 2024.

118. On 19 September 2024, Mr Woodhouse placed ACL and Angiesal into voluntary administration.

119. On 20 September 2024 Mr Woodhouse and Mr Aulich transferred Gracie Gill’s shares in Aulich Criminal Law to Olliegracie Holdings Pty Ltd (Olliegracie) for $1.00. Mr Aulich was the sole director and shareholder of Olliegracie.

120. In respect of payments made from 1 July 2019 to 12 April 2024, the plaintiffs say: (a) each of ACL and Aulich Criminal Law paid management fees to Aulich Pty Ltd, which employed the legal staff for the Aulich Civil Practice and Aulich Criminal Practice; (b) Ms Taylor was paid a salary of at least $220,000 (inclusive of superannuation) by Aulich Pty Ltd for her work in the Aulich Civil Practice; (c) Mr Woodhouse was paid a salary of at least $220,000 (inclusive of superannuation) by Aulich Pty Ltd for his work in the Aulich Criminal Practice; (d) Mr Aulich was paid a salary of at least: (i) $220,000 (inclusive of superannuation) by Aulich Pty Ltd for his work in the Aulich Criminal Practice; and (ii) $220,000 (inclusive of superannuation) by Aulich Pty Ltd for his work in the Aulich Civil Practice, of which he shared $110,000 with Mr Woodhouse to compensate Mr Woodhouse for hours Mr Aulich did not devote to the Aulich Criminal Practice;

Factual findings

121. It is the plaintiffs’ case that Mr Woodhouse and Mr Aulich embarked on a campaign which started with them attempting to deter Ms Taylor from pursuing her contractual entitlements.

122. They also say that, after receiving Ms Taylor's formal letter through solicitors demanding that her shares be bought back, and enclosing an unfiled draft of an originating process, the defendants continued their campaign to deter Ms Taylor from pursuing her contractual entitlements and also started to take steps to frustrate Ms Taylor’s hopes of recovering any money from the corporate defendants in the event that she followed through on her threat of litigation.

123. They rely on the following matters.

Failing to engage with Ms Taylor about the share buy back

124. Earlier in these Reasons I have set out the discussions and correspondence amongst Ms Taylor, Mr Woodhouse and Mr Aulich and the internal correspondence in the practice. This evidence discloses the attitude of Mr Woodhouse and Mr Aulich to Ms Taylor’s attempts to have them tell her how they proposed to pay the $500,000 for the shares in ACL.

125. This is not a case where Ms Taylor simply demanded immediate payment. She first asked them to explain how and when she would be paid and later made suggestions about how they could pay by instalments.

126. It is admitted that Mr Woodhouse and Mr Aulich did not respond to some of the emails sent by Ms Taylor. However, the defendants say that if the correspondence is looked at as a whole, they did send emails discussing their position in relation to the shares.

127. This submission does not engage with the failure by Mr Woodhouse and Mr Aulich to respond directly to Ms Taylor’s requests for them to confirm that they would comply with the terms of the February 2019 Agreement.

128. I find that from the day after Ms Taylor agreed to leave, Mr Woodhouse and Mr Aulich declined to engage with Ms Taylor’s repeated direct queries about how and when the money would be paid. In cross examination, Mr Woodhouse confirmed that he had deliberately avoided answering those questions. Instead, they continued to say to Ms Taylor that ACL was in financial difficulty using emotive language such as, “if the company survives”, and making vague statements about paying as much as they could in the future if ACL’s financial condition improved. This continued until they made a deliberate decision to stop responding to Ms Taylor’s emails as shown in an internal email exchange. Mr Woodhouse then arranged for Ms Taylor to be blocked from contacting them.

129. I am satisfied that they took this course to deter Ms Taylor and Lily & Ruby Holdings from bringing this claim.

Payment of disbursements

130. Mr Saeedi is a solicitor. He was appointed the executor of a will. There was a dispute over the estate. In 2022, proceedings were commenced to determine the validity of the will. Mr Saeedi retained ACL to act for him in those proceedings.

131. Both Mr Woodhouse and Mr Aulich said that ACL had entered into a costs agreement on a deferred fee or speculative basis with Mr Saeedi. Mr Aulich said Ms Taylor had the carriage of the matter.

132. In 2023, ACL paid disbursements including counsel’s fees on behalf of Mr Saeedi from the office account of ACL.

133. Mr Aulich said that when ACL acted on a deferred fee or speculative basis, counsel would ordinarily only be briefed on the same basis. The client was expected to pay other disbursements. If the client could not afford it, then ACL might agree to pay those disbursements, but usually only for amounts under $10,000. He could not recall any other matter where $73,368.10 had been paid for disbursements.

134. Further, Mr Aulich said, there were also cash flow issues for ACL around Christmas.

135. This meant, he said, that Ms Taylor should not have approved the payment of a total of $73,368.10 from the office account of ACL for disbursements on behalf of Mr Saaedi and certainly not approved any payment on 22 December 2023.

136. In her affidavit, Ms Taylor explained that Mr Aulich introduced the file to her. They had discussed the matter being run on a deferred payment basis, meaning that they would be paid on finalisation of the estate, firstly, because Mr Saeedi was the executor of an estate, and secondly, out of respect for Mr Saeedi having referred matters to ACL from time to time.

137. On 10 April 2024, the day after Ms Taylor’s formal letter of demand addressed to ACL, Mr Aulich sent an email to Ms Taylor. He said, “Was there an agreement with Kamy in his matter to pay his disbursements from ACL? There has been $72k paid by ACL.”

138. Ms Taylor responded that day. That email relevantly says: Yes Ben. I told you in my email handover that we had paid the disbursements. We agreed to take this matter on spec because Kamy is the executor of the estate and will be paid out of the estate. You referred this matter to me and at the time we discussed it would be done on spec for him. I informed Kamy it would be done on spec because he will be paid from the estate. I tried to negotiate with counsel to do on spec but they wouldn’t agree and because this is like the PI files where liability is admitted and you have always paid disbursements on behalf of the client when the matter is on spec, I determined it was okay because we will be paid. … The disbursements will be refunded and the costs they may want assessed but we agreed at the mediation that the submitting appearance was subject to costs and I informed all parties what they were at the time. Please don’t use this to suggest there was anything untoward on my behalf or Kamy’s behalf and please don’t try and use this as a bargaining chip for anything. Please don’t also try and use it to make difficulties for Kamy and I or try and offset anything you owe me. I agreed with him at the time (over a year ago and after you and I talked about it and you referred the matter to me) that we would do it on spec because the firm will be paid. The firm will be paid the disbursements and fees from the estate. I am copying Peter in because I don’t want this to be taken out of context.

139. I have previously referred to the draft email concerning this issue prepared by Mr Aulich for Mr Woodhouse to send Ms Taylor on 11 April 2024.. It relevantly said (emphasis in the original): Ben and I … are not comfortable at all with what has happened. There are two issues that present. Firstly, whether it was agreed the matter would be done on a speculative basis and secondly, whether it was agreed we would fund Kamy's disbursements. Ben and I cannot recall agreeing to do any matter for Kamy on a speculative basis. We accept however, it may have been mentioned by you to either Ben and I. It was never discussed that Aulich Civil Law would fund Kamy's disbursements. There can be no misunderstanding about that issue. Both Ben and I would not have agreed to do this. There is no doubt about this. In the last few months of your time here we discussed cash flow issues with Aulich Civil Law on countless occasions. Often it became heated and I know there were numerous emails sent to Ben and many to me too about the reasons for cash flow issues, who was to blame and how we best deal with it. At no stage was this matter ever raised by you and at no stage were we ever told that Aulich Civil Law had paid over $70,000 of Kamy's disbursements. That is telling. Leaving aside any accusation of wrongdoing or comments about the coincidence of you accepting a position at Kamy Saeedi Law, whilst this matter is on foot, we do not wish to argue or fight with you or Kamy. We just want the bill paid so we can all move on. It seems appropriate that once the bill is paid we transfer the file to Kamy and you can chase the costs when the matter settles and from the estate or whoever else is to pay the costs. We do not wish to make a big deal out of this and simply want the bill paid and leave with you to chase costs whenever you see fit. Please discuss this with Kamy. Ben sent him the tax invoice (before he realised we had funded over $70,000 in disbursements from our own pockets) and have not yet heard from him. We would like this sorted before you leave and before we are able to put any position to you about other matters. If you would like us to correspond solely with Kamy about this – we are happy to do that as well.

140. In cross examination, Mr Woodhouse agreed that the effect of the email was to suggest that $70,000 had been improperly paid and that Ms Taylor needed to get Mr Saeedi to repay that amount. He also agreed that raising the issue with Ms Taylor would possibly put pressure on Ms Taylor to drop her claim.

141. In relation to the comment about “the coincidence” of Ms Taylor making the payment and Ms Taylor working for Mr Saeedi’s firm, I note that the subject payment was made in December 2023, and Ms Taylor was not asked to leave the Aulich Civil Practice until March 2024.

142. The email, with minor alterations, was sent to Ms Taylor that day.

143. On 29 July 2024, Mr Woodhouse wrote to Ms Taylor's solicitors. Relevantly that letter said: There is also a concerning matter involving the payment of disbursements in the sum of $73,368.10 in a matter in which ACL is acting for Ms Taylor's current employer. I do not wish to inflame matters with your client and will write you about that issue in [separate] correspondence in due course. I ask, with respect, that you obtain instructions to receive correspondence and court process in that dispute.

144. No such correspondence or court process was ever sent.

145. It is common ground that on 15 October 2025, an order was made in the estate proceedings for the costs of Mr Saeedi to be paid out of the estate on an indemnity basis.

146. I am satisfied that the chronology – being the sending of the email on 10 April 2024, which was the day after ACL had received Ms Taylor’s letter of demand and four and a half months after the last of the payments had been made on behalf of Mr Saeedi, together with the implied suggestion that Ms Taylor had paid the disbursements to get a job with Mr Saeedi, and the later threat to sue her – is consistent with Mr Aulich and Mr Woodhouse applying pressure on Ms Taylor and Lily & Ruby Holdings to abandon their claim.

Leave entitlements

147. Counsel for the plaintiffs invited me to find that there was a deliberate delay by Mr Woodhouse and Mr Aulich in paying Ms Taylor her leave entitlements as part of their campaign.

148. Mr Woodhouse and Mr Aulich say that Ms Taylor’s leave entitlements were paid when ACL had the funds. However, this does not explain the following: (a) Mr Woodhouse not responding to Ms Taylor’s several requests to provide information about how they had calculated her leave entitlements and asking when she would be paid. (b) Mr Woodhouse directing the office manager in an SMS not to engage with Ms Taylor after she had again requested the information. (c) The email from Mr Aulich to Mr Woodhouse and the office manager on 11 April 2024, directing that no leave entitlements or anything else be paid to Ms Taylor yet. (d) Mr Woodhouse’s concession in cross examination that no other employees were having their entitlements held back.

149. I find Mr Woodhouse and Mr Aulich deliberately delayed paying Ms Taylor her leave entitlements as part of their strategy to ignore her claims and deter her from pursuing the claim for the share buyback.

The Scott Invoice

150. Ms Scott held 25% of the shares in ACL.

151. Ms Scott commenced proceedings in the Federal Court of Australia in 2022. At the time of the hearing, the defendants were Mr Aulich, Mr Woodhouse, Gracie Gill, Angiesal, ACL and Aulich Property Trading Pty Ltd (APT).

152. I have already mentioned the issue of additional shares in ACL after Ms Taylor became a partner. In the Federal Court proceedings, Ms Scott claimed that the directors had issued those new shares at par value which was considerably below what she said was their true value, thereby dramatically diluting her shareholding and its value.

153. Ms Taylor and Lily & Ruby Holdings were named as defendants when the proceedings were filed, but the claims and cross claims against them were discontinued on 12 November 2024, which was before the hearing commenced.

154. All eight defendants had filed a common defence.

155. The costs agreement is in evidence as an attachment to the affidavit of Mr Woodhouse. It shows the client as ACL and the law firm as Aulich Criminal Law. There is no evidence of a costs agreement to which Ms Taylor was a party personally.

156. In oral submissions, after the evidence had closed, counsel for the defendants informed me that he had only noticed the day before that the document in evidence was not a speculative or deferred fee agreement so that technically the amount was recoverable by Aulich Criminal Law against ACL. I do not accept this submission. None of the three witnesses gave evidence which could support the submission. As suggested by counsel for the plaintiffs there could be an explanation – for example, the written costs agreement could have been varied orally. In circumstances where this was not explored in evidence, I refuse to make such a finding.

157. Returning to the chronology, in his letter dated 29 July 2024 to the plaintiffs’ solicitors, Mr Woodhouse asserted that a tax invoice had not yet been issued “to your clients” for the work done by Aulich Criminal Law. He estimated the amount payable as $386,724.43. The letter continued: It is Aulich Criminal Law’s position that your clients are liable for the above fees. Your clients are sophisticated clients, and as such cost disclosure should not really be an issue… There is no doubt that Aulich Criminal Law is owed a significant debt by your clients.

158. In his affidavit, Mr Woodhouse concedes that invoices were not sent to any of the other defendants.

159. On 2 August 2024, Mr Woodhouse caused an invoice to be issued by Aulich Criminal Law. It is addressed to ACL, not the plaintiffs. It is for $319,091.80 for legal fees for services it says were provided in the Federal Court proceedings.

160. In respect of the letter dated 29 July 2024, I decline to find that there was any legal basis on which Mr Woodhouse could have made a demand for Ms Taylor to personally pay the estimated costs. The invoice was ultimately rendered to ACL and not Ms Taylor and, in any event, was not supported by the terms of the costs agreement.

161. I am satisfied that that part of the letter dated 29 July 2024 was intended by Mr Woodhouse to deter the plaintiffs from bringing a claim.

162. In respect of the invoice, I make the following findings: (a) The invoice was issued the day after these proceedings were commenced. (b) The invoice was for three years’ work and sought payment of a sum ten times in excess of the upper-end of the estimate provided in the costs agreement, being $30,000. (c) Aulich Criminal Law had been retained to act on a speculative basis, so that fees were only payable on a successful outcome. When the invoice was issued, the proceedings had not yet concluded. In fact, on 31 October 2025 the defendants lost, with Mr Aulich and Mr Woodhouse being ordered to pay Ms Scott $500,000 in respect of her shareholding in ACL. (d) I do not accept the explanation offered by Mr Woodhouse – that he was entitled to issue the invoice because ACL had decided to terminate the costs agreement with Aulich Criminal Law. He, in fact, said: I thought if the cost agreement was terminated that it would also be liable to pay, but I accept I might be wrong about that.

163. I find that no legal basis has been shown on which the defendants could have issued the invoice.

164. I find that Mr Woodhouse sent the invoice to deter the plaintiffs from making a claim for $500,000 pursuant to the February 2019 Agreement.

165. I also make the following additional findings in respect of whether the invoice was issued to frustrate the plaintiffs from being able to make a claim: (a) Mr Woodhouse agreed that he had represented to the liquidator that the work detailed in the invoice had been done and was the amount that was owed to Aulich Criminal Law, although he added that he had left it up to the liquidator to decide whether to pay it. (b) Mr Woodhouse said that whatever view the liquidator might take, his position was that the Scott invoice is an actual debt owed by ACL to Aulich Criminal Law that is due and payable. (c) If ACL paid the amount claimed in the invoice to Aulich Criminal Law, $319,091.80 would not be available to ACL to pay Ms Taylor and/or Lily & Ruby Holdings for the shares.

166. I am satisfied that the issuance of the invoice by Mr Woodhouse is consistent with Mr Woodhouse taking steps to deplete the funds available to ACL to pay Ms Taylor and/or Lily & Ruby Holdings pursuant to the February 2019 Agreement.

Nomination of ACL

167. Mr Woodhouse, in a letter to the plaintiffs’ solicitors dated 12 August 2024, said: To the extent it is necessary, and without admission, ACL is nominated as the entity in which shares would be bought (if your client is successful in obtaining orders). In the event that orders against the second – fifth defendants (inclusive) are not discontinued within 7 days, we will rely on this letter in relation to indemnity costs for those defendants from here on.

168. In their Amended Defence, the defendants say they elected ACL to purchase Ms Taylor’s shares in answer to a demand from the plaintiffs. They rely on these words in the letter from the plaintiffs’ solicitors dated 12 July 2024 (which I have also set out earlier in these Reasons): To this end, please confirm in the following 14 days, which of (or which combination of) your respective entities or ACL intends to make the $500,000 payment to our client, and when that payment is intended to be made.

169. In cross examination, Mr Woodhouse initially maintained that he could nominate ACL as the entity to buy the shares in response to that letter. He did then agree that the word “election” did not appear in the letter. He also agreed the letter did not say that, if he confirmed one entity would make the payment, the other potential purchasers would be relieved of their obligation to pay.

170. This ground of the Amended Defence was not pressed.

171. Even though it was not pursued, I accept the submission made by counsel for the plaintiffs that the attempt to nominate ACL by Mr Woodhouse in that letter is consistent with Mr Aulich and/or Mr Woodhouse seeking to narrow the scope of Ms Taylor’s and/or Lily & Ruby Holdings’ ability to recover the money which had been paid for the shares.

The Pappas invoice

172. Mr Pappas is a barrister. He was, at the relevant time, married to Ms Scott.

173. Mr Pappas had been briefed by ACL in respect of a personal injury matter brought in the Supreme Court of the ACT.

174. Mr Pappas subsequently filed an application against ACL for a costs assessment concerning his professional fees.

175. Ms Taylor had signed a cost agreement on behalf of ACL with Mr Pappas in which they agreed to record time on the file of Aulich Criminal Law, which shared a common computing system with ACL.

176. On 5 September 2024, Mr Woodhouse caused an invoice to be issued by Aulich Criminal Law to ACL in the sum of $122,905.05 for legal services purportedly performed by the Aulich Criminal Practice (the Pappas invoice).

177. The invoice related to three years’ work and sought payment of a sum nearly five times greater than the upper-end of the estimated costs provided in the costs agreement, being $25,000.

178. Mr Woodhouse says the invoice was generated from the software used by both the Aulich Criminal Practice and Aulich Civil Practice to record time entries and disbursements and to issue invoices to clients. As far as he knows, Mr Woodhouse says, the entries and disbursements entered into that software and recorded in the Pappas invoice are genuine.

179. Counsel for the defendants made the same submission as he made in relation to the Scott invoice on the question of whether the costs agreement in evidence was made on a speculative or deferred basis, after having read it once the evidence had closed. I again decline to find that the costs agreement was made on any basis other than on a speculative or deferred basis, for the reasons I have already given in relation to the Scott invoice.

180. Mr Woodhouse submitted a proof of debt for the total amount of the Pappas invoice to the administrator.

181. I find: (a) The costs agreement provided that Aulich Criminal Law was acting on a speculative basis so that fees were only payable on a successful outcome. However, ACL did not obtain a costs order in its favour. This meant that Aulich Criminal Law was not entitled to issue the invoice pursuant to the costs agreement and there was no legal basis on which to issue the invoice. (b) Mr Woodhouse conceded in cross examination that he had represented, by issuing the invoice, that this was an amount that ACL had to pay. (c) The last item of work had been done five months before the invoice was issued. (d) Again, Mr Woodhouse claimed that this invoice was validly issued on the basis that ACL had caused the retainer to be terminated, thereby making ACL liable to Aulich Criminal Law for its fees. I do not accept the explanation offered by Mr Woodhouse for the reason I gave in relation to the Scott invoice. (e) Mr Woodhouse agreed that he had represented to the liquidator that the work had been done and that was the amount owed, although he said he had left it up to the liquidator to decide whether to pay it. He added that, whatever view the liquidator might take, his position is that the Pappas invoice is an actual debt owed by ACL to Aulich Criminal Law that is due and payable. (f) Payment of the invoice by ACL to Aulich Criminal Law would mean that $122,905.05 would not be available to ACL to pay Ms Taylor and/or Lily & Ruby Holdings.

182. I am satisfied that the issuing of this invoice is consistent with Mr Aulich and/or Mr Woodhouse taking steps to deplete the funds available to ACL to pay Ms Taylor and/or Lily & Ruby Holdings for the shares.

Placing ACL into administration

183. Mr Woodhouse placed ACL into voluntary administration on 19 September 2024.

184. Mr Woodhouse says that in January 2024, aside from Ms Taylor and Mr Aulich, two employed solicitors worked predominantly for ACL. After Ms Taylor left, Mr Aulich took over the management and supervision of all ACL matters and staff. However, Mr Aulich’s practising certificate was not renewed on 16 July 2024. One of the employed solicitors left on 30 August 2024. Mr Woodhouse himself had only worked in the criminal area of the practice.

185. Mr Woodhouse says he took steps to try and sell ACL’s files but was largely unsuccessful save for the sale of some personal injury files. In respect of other ongoing matters, he entered into tripartite arrangements with other firms, and his new firm, CODA Criminal Law, took over four matters.

186. Mr Woodhouse then had meetings with his accountants and said he was warned that he had to be careful to ensure that ACL did not trade insolvently. Mr Woodhouse said he accepted their advice to place ACL into administration.

187. Mr Woodhouse did not say that he had formed the view that ACL was insolvent.

188. Mr Aulich said in his affidavit that whilst he attended the meeting with the accountants, he was not involved in the decision by Mr Woodhouse to place ACL into external administration, and that he had told Mr Woodhouse that he did not want ACL to be placed into external administration.

189. On 26 August 2024, Mr Aulich sent an SMS which relevantly said: I have been thinking about the meeting today for a while. I don’t think I’m going to be helpful. I’m not mad at all - just realistic … I can’t get past us walking away from $1m in WIP that I think we could realise. That can’t happen because Peter’s new firm can’t/won’t work with me. Someone like Rory will buy it from the liquidator for $1 - maybe $2 if we really push him. That’s just awful for me to think about. We have no advantage in litigation against Erin because of this.

190. In cross examination, Mr Woodhouse agreed that he theoretically could have continued to recover the work in progress without placing ACL in administration but said he wasn't prepared to do it on his own. He also agreed that he theoretically could have hired someone to chase the debts but said he was not in a position to pay them.

191. Mr Woodhouse agreed that it was likely that the work in progress would be sold at an undervalue if sold by a liquidator, although he added that he had not given it that much thought at the time. That evidence is difficult to understand given that Mr Aulich had pointed it out to him in his SMS sent on 26 August 2024.

192. Mr Woodhouse also agreed in cross examination that at the time Ms Taylor left the firm, the total amount of equity in ACL must have been between $1.89 million and $1.18 million.

193. I do not consider that the evidence establishes that the reason for placing ACL into voluntary administration was its financial situation. Mr Woodhouse has not given an acceptable explanation for not trying to recover the work in progress, given that it was estimated to be over $1 million.

194. Mr Woodhouse conceded in cross examination that he knew he might get a potential advantage if ACL was placed into administration because the proceedings against it would be stayed and that was something that weighed on his mind when he decided to place ACL into administration.

195. The SMS from Mr Aulich to Mr Woodhouse does suggest that getting an “advantage in litigation against” Ms Taylor was a consideration they had in mind when deciding on a course of action.

196. I find that a motive of Mr Woodhouse placing ACL into administration was for the defendants to obtain an advantage in this litigation, which was the staying of the proceedings against ACL.

197. In addition, Mr Woodhouse’s conduct has depleted the funds available to the plaintiffs to have their claim paid because ACL has had to pay the costs of its administration and liquidation, being $131,830.

Transfer of Gracie Gill’s shares for $1

198. Gracie Gill was one of the companies liable to repay the sum of $500,000 pursuant to the February 2019 Agreement.

199. Gracie Gill as trustee of the Ben Aulich Family Trust, and Woodsal as trustee for the Woodsal Family Trust, were equal shareholders in Aulich Criminal Law.

200. Gracie Gill and Woodsal were also parties to an agreement pursuant to which Gracie Gill and Woodsal were equal partners in a partnership carrying on the business, Aulich Criminal Law. The partnership was commonly referred to as "BAP", which was short for "Ben Aulich Partnership". BAP ceased trading at the end of August 2024.

201. On 20 September 2024, the day after placing ACL into administration, Mr Aulich and Mr Woodhouse agreed to transfer Gracie Gill's shares in Aulich Criminal Law to another company owned and controlled by Mr Aulich, Olliegracie. Apart from its shares in ACL itself, Gracie Gill's shares in Aulich Criminal Law were its only asset.

202. Both Mr Aulich and Mr Woodhouse say that Gracie Gill's shares in Aulich Criminal Law at that time were "effectively worthless".

203. Mr Aulich said he had transferred the shares from Gracie Gill to Olliegracie for sentimental reasons.

204. The Balance Sheet for BAP Office Criminal Law as at 30 June 2024 is in evidence. Mr Woodhouse confirmed that it had been produced by the liquidators. It says the total assets of the Aulich Criminal Law practice was $1,484,285.57 and the liabilities were $287,892.15. Mr Woodhouse agreed that the total equity was $1,196,393.44.

205. I do not accept the explanation offered by Mr Woodhouse – that he was not sure whether the document was accurate because the author may have been using or looking at the wrong software – in circumstances where, as Mr Woodhouse conceded, he had provided the liquidators with the financial records and he had directed the financial manager to produce everything they asked for and as far as he was aware, she had.

206. Gracie Gill’s bank statements from 11 March 2024 to 11 August 2024 are also in evidence. They show that Gracie Gill received profit shares of $8,000 fortnightly through the whole period. Mr Woodhouse said it was a payment made instead of a full-time wage from Aulich Criminal Law and it stopped when Mr Aulich’s practising certificate was cancelled.

207. Also in evidence is the Profit and Loss Statement of BAP Criminal Law as at 30 June 2024 printed on 18 July 2024. Mr Woodhouse agreed it had come from his internal financial records. The profit for the year ended 30 June 2024 was $696,744. Mr Woodhouse agreed that, according to his own financial records, the Aulich Criminal Practice had continued to earn a profit throughout the 2023/2024 financial year.

208. Also in evidence is the Profit and Loss Statement of BAP Criminal Law for the period 1 July 2024 to 31 December 2024 printed on 25 February 2025. The firm made a profit of $74,167.

209. Also in evidence is the Balance Sheet of BAP Criminal Law as at 25 August 2024 printed on 27 February 2025. It shows the business as having total assets of $1,536,562.26 as at 25 August 2024, total liabilities of $290,693.53 and total equities (being the difference between those two totals) as $1,245,868.75. Mr Woodhouse agreed that half of that - $623,000 - was attributable to Gracie Gill which had an entitlement to that money to the extent that it is realised.

210. Counsel for the defendants cast some doubt on the usefulness of this evidence – the balances did not mean that there were liquid funds available to the partners of BAP, including Gracie Gill, as it depended on the extent to which those net assets could be realised, in particular the debtors and unbilled work in progress. However, the precise amounts mentioned in the documents are not relied on by the plaintiffs.

211. Next there is the issue of the relationship between BAP and Aulich Criminal Law. The defendants say that Aulich Criminal Law is a trustee and/or an agent for BAP. The documents relied on by the plaintiffs are BAP’s assets, not Aulich Criminal Law's assets. The defendants submit that Aulich Criminal Law would only have a right to those assets in terms of its right of indemnity as a trustee.

212. The defendants say that the onus remains on the plaintiffs to show that these were funds available to Aulich Criminal Law, and thus, Gracie Gill. Both Mr Woodhouse and Mr Aulich say in their affidavits that after the creation of BAP, Aulich Criminal Law did not operate as an incorporated legal practice, nor did it trade or earn any income or have any assets.

213. However, I was not taken to any documents in evidence to support this oral evidence.

214. I accept the submission by counsel for the defendants that the onus remains on the plaintiffs to establish that funds were available to Gracie Gill before Mr Woodhouse and Mr Aulich transferred its shares in Aulich Criminal Law to Olliegracie.

215. In determining this issue, I make the following findings: (a) I do not place great weight on the oral evidence of Mr Woodhouse and Mr Aulich uncorroborated by contemporaneous documentary evidence because of my previous findings in relation to their campaign against Ms Taylor. (b) All parties relied on the decision in Hudson v Colliers International (NSW) Pty Ltd [2026] NSWCA 88 at [72]-[74] in relation to the steps which must be taken by a party in trying to obtain documents in support of its case from the other party. That decision says that onus will not be discharged even if the documents are in the possession of the other party if they could readily have been sought by court process such as discovery, being a step which would not have involved great difficulty or cost, and where the party did not take issue with what was produced. I am satisfied that this reasoning does not apply. The plaintiffs did mention this issue in litigation concerning discovery: Lily and Ruby Holdings Pty Ltd v Aulich Civil Law Pty Ltd (No 3) (in liq) [2025] ACTSC 353 at [52]. (c) I have already mentioned that the Balance Sheet for BAP as at 30 June 2024 is in evidence showing a total equity of $1,196,393.44. Importantly, Mr Woodhouse conceded Gracie Gill was entitled to half, being around $598,000 assuming it could be realised.

216. While it is possible and even probable that some work in progress and debt may not have been realised, I do not accept that it is likely that this would reduce the various balances I have discussed to $1.00.

217. I also take into account that there is no evidence that Mr Aulich, as the director of Gracie Gill, took any steps to try to cause Gracie Gill to realise its 50% interest in the partnership so as to buy Ms Taylor’s shares.

218. This is not a case where I have to form a view as to the precise value of Gracie Gill’s shares at the time when they were sold to Olliegracie. I do find that on the balance of probabilities the plaintiffs have shown that they were worth significantly more than $1.00.

219. I am satisfied that by transferring the shares to Olliegracie for $1.00, Mr Aulich and Mr Woodhouse were intending to reduce the funds available to Gracie Gill to be able to pay Ms Taylor and/or Lily & Ruby Holdings for the shares. Finding

220. Taking all of these matters into account, I find that Mr Woodhouse and Mr Aulich embarked on a campaign to initially attempt to deter Ms Taylor from pursuing her contractual entitlements, and then, after receiving the letter of demand from Ms Taylor’s solicitor, to frustrate the hopes of Ms Taylor and Lily & Ruby Holdings of recovering any of the money that she had paid for the shares.

Causes of action

Contract claim

221. The plaintiffs' first claim is for breach of contract.

Is there a legally binding contract?

222. The letter from Mr Woodhouse to the plaintiffs’ solicitors dated 29 July 2024, which I have already mentioned, says that the letter dated 14 February 2019 (in which Ms Taylor was offered the partnership): …is probably best described as a heads of agreement, which was never reduced to a deed or even a contract...That a deed or contract was not drafted and executed by the parties is not a criticism of your client, just an explanation why the parties’ understanding of whether certain agreements had been reached, and if so, what those agreements were, may differ.

223. The defendants now admit the February 2019 Agreement was a legally binding contract.

Who are the parties to the contract?

224. The plaintiffs say that Mr Woodhouse and Mr Aulich are personally parties to the February 2019 Agreement, for the following reasons: (a) The chapeau of the letter states that "Peter Woodhouse, director of Aulich Civil Law Pty Ltd ACN 155 746 777 ("ACL"), and Benjamin Aulich, Director of ACL are delighted to offer you the role of the partner". That is, the letter expressly states that the offer emanates from Mr Woodhouse and Mr Aulich. (b) The letter is signed by Mr Woodhouse and Mr Aulich personally; each expressly as a "Partner", not as a director of ACL. The signatures do not say that they are signing solely in their capacity as directors of ACL to the exclusion of their other capacities. (c) The defendants accept that Ms Taylor is personally a party to the February 2019 Agreement. It provides benefits she could only receive personally – six weeks holiday per annum and a director's salary. (d) The plaintiffs say that if the defendants’ submissions are accepted, every company and person involved in the transaction was a party to the February 2019 Agreement except the two men who signed it. (e) The February 2019 Agreement provides for the existing shareholders or ACL to purchase the shares in ACL. Thus, if Mr Woodhouse or Mr Aulich decided to transfer their shareholdings from Angiesal and Gracie Gill to other companies, those new shareholders, because they were not “existing shareholders”, would not be bound to repurchase the shares. A reasonable commercial bystander would not read the February 2019 Agreement as allowing that to occur. Rather, that bystander would read clause 5 as a promise which would be effective, not ineffective. They would understand it as a promise that if Ms Taylor left the partnership, Mr Woodhouse and Mr Aulich would see to it that her shares would be bought back for $500,000.

225. The defendants say that the only parties to the February 2019 Agreement were ACL, Angiesal, Gracie Gill, Lily & Ruby Holdings and Ms Taylor, and made the following submissions: (a) The letter was an offer to Lily & Ruby Holdings and Ms Taylor, from ACL and the existing shareholders of ACL, for Ms Taylor to become a director of ACL and for her, or a corporate entity controlled by her, to become a shareholder of ACL, which offer was subsequently accepted by Ms Taylor and Lily & Ruby Holdings. (b) The opening words of the letter show that the offer was being made by ACL when it said that Mr Woodhouse and Mr Aulich, as directors of ACL, were delighted to offer Ms Taylor the role of partner. (c) Mr Woodhouse and Mr Aulich signed the letter, in their capacity as directors of ACL. The use of the word “Partner” under each of their names was simply a colloquial way of referring to their positions as directors of ACL given that ACL was an incorporated legal practice rather than a traditional law firm partnership. (d) That Mr Woodhouse and Mr Aulich were not parties is apparent from the express terms of the letter. No obligations or rights were conferred or imposed on them, as opposed to the rights or obligations conferred or imposed on each of ACL, Angiesal, Gracie Gill, Ms Taylor and Lily & Ruby Holdings, being that: (i) Ms Taylor be appointed a director of ACL on 1 July 2019; (ii) Ms Taylor purchase 25% of the shares in ACL for $500,000 on 1 July 2019, which purchase could be made, and ownership held, by a corporate entity controlled by Ms Taylor, which could also act as a corporate trustee; (iii) ACL was obliged to ensure that Ms Taylor was paid a salary of no less than $220,000 a year inclusive of superannuation and was given six weeks of holiday pay per annum; (iv) On becoming a director, Ms Taylor was entitled to a director’s salary of no less than $220,000 a year, inclusive of superannuation, which was to be reviewed each year; (v) On becoming a director, Ms Taylor was entitled to six weeks holiday a year; (vi) Should Ms Taylor or her corporate entity decide to sell their shares in ACL on or before 30 June 2024, those shares would be purchased by ACL or the existing shareholders of ACL for $500,000; and (vii) Ms Taylor would not be required to personally guarantee any of the existing debt, loans or overdraft facilities available to ACL. (e) None of these terms necessitated either Mr Woodhouse or Mr Aulich being parties to the February 2019 Agreement. (f) A reasonable person would conclude that neither Mr Woodhouse nor Mr Aulich were parties to the February 2019 Agreement.

Finding – who are the parties to the contract

226. The relevant legal principle is set out in Mills v Walsh [2022] NSWCA 255 at [73]: The parties to a contract are identified according to the objective theory of contract, which involves ascertaining the intention of the parties from their communications and the circumstances in their mutual knowledge, including their evident commercial aims and expectations; their subjective beliefs and intentions are irrelevant, save insofar as they are manifest and shared. However, the post-contractual conduct of the parties may more readily be resorted to for this purpose than for the purpose of construing contractual terms.

227. I am satisfied that the expressions, “partner” and “director”, are used inconsistently in the letter and are of no real assistance in identifying the objective intention of the parties.

228. I accept the submission made by the plaintiffs that one of the evident commercial aims of the February 2019 Agreement is to provide for the repayment of the $500,000 if Ms Taylor left in five years.

229. I also accept that unless Mr Woodhouse and Mr Aulich are personally parties to the February 2019 Agreement, that commercial aim could easily be thwarted by transferring the shares held by Angiesal and Gracie Gill in ACL to other companies. I accept the submission that clause 5 is to be understood as a promise, by the use of the word “will”, that Mr Aulich and Mr Woodhouse would see that Ms Taylor gets paid, and clause 5 is not interested in the identity of which particular shareholding entity might be deployed to make that purchase, it simply says the people signing the February 2019 Agreement will see that it occurs.

230. I find that Mr Woodhouse and Mr Aulich are parties to the February 2019 Agreement set out in the letter dated 14 February 2019.

Breach of contract A breach of clause 5 of the February 2019 Agreement

231. The plaintiffs say that ACL, Angiesal and/or Gracie Gill have breached clause 5 of the February 2019 Agreement by failing to purchase Lily & Ruby Holdings’ shares for $500,000. While proceedings against ACL and Angiesal have been stayed, Gracie Gill is not in administration, and so it, it was submitted, at least, should be ordered to pay damages.

232. The defendants concede that there is an express obligation in the February 2019 Agreement for ACL, Angiesal and Gracie Gill to acquire Lily & Ruby Holdings' shares.

233. The defendants point out that the February 2019 Agreement does not specify when the payment should be made. Relying on York Air Conditioning and Refrigeration (A/sia) Pty Ltd v The Commonwealth [1949] HCA 23; 80 CLR 11 at 62, they submit that the “ordinary prima facie rule” is that “it must be done within a reasonable time”.

234. The defendants say that what is a reasonable time is to be determined in the circumstances of the particular dispute: Campbelltown City Council v WSN Environmental Solutions Pty Ltd [2015] NSWCA 299 at [26]. Its limit is determined by reference to what is fair to both parties: Perri v Coolangatta Investments Pty Ltd [1982] HCA 29;149 CLR 537 at 568.

235. The defendants say that a reasonable period of time for ACL, Angiesal or Gracie Gill to pay was not before the time at which ACL was placed into external administration on 19 September 2024, being less than six months from when Ms Taylor resigned as a director of ACL. They say six months because: The time between the signing of the February 2019 Agreement and Ms Taylor becoming a director, and Lily & Ruby Holdings becoming a shareholder, was approximately four and a half months. In addition, the time between the signing of the February 2019 Agreement and Ms Taylor and Lily & Ruby Holdings paying $500,000 in August 2019, was approximately six months. I do not accept the submission. The February 2019 Agreement expressly provided for Ms Taylor to become a director on 1 July 2019, and the money was paid shortly afterwards. (a) Between April 2024 and up until both ACL and Angiesal were placed into external administration, neither had sufficient assets to purchase the shares held by Lily & Ruby Holdings in ACL for $500,000. (b) Since at least April 2024, Gracie Gill has not had sufficient assets to purchase the shares held by Lily & Ruby Holdings in ACL for $500,000.

236. The plaintiffs say that a reasonable time to comply with clause 5 would have been by no later than the final day of Ms Taylor’s employment, with the defendants having the benefit of a one-month termination notice period enabling them to prepare to make the payment. Alternatively, at the very latest, a reasonable time could not have been more than one month after Ms Taylor’s final day, as that would bring the clause into alignment with the statutory requirement to pay Ms Taylor's final employee entitlements within one month of her last day.

237. I am not persuaded that the lengthy delay suggested by the defendants is fair or reasonable. While the capacity of various entities to be able to pay may be relevant as to the issue of fairness, that is only fairness to the defendants, it is not determinative and, I am satisfied, would not be fair to the plaintiffs.

238. In any event, the final two submissions made by the defendants are unsupported by the contemporaneous documentary evidence. It is true that these assertions have been made. However, there is no suggestion in the evidence that anyone actually looked at whether there were sufficient assets available to each of those entities. The evidence is more consistent with Mr Woodhouse and Mr Aulich deciding to ignore Ms Taylor’s emails, messages and letters, and not engage with her. In fact, when Mr Woodhouse accepted in cross examination that there might have been some level at which they could have done a payment plan, he did not suggest that any work had been done by them to see whether it was feasible or not.

239. I decline to find that a reasonable period of time for ACL, Angiesal or Gracie Gill to pay was not before 19 September 2024 and accept the submission made by counsel for the plaintiffs that it should have been paid by one month after Ms Taylor’s final day.

Finding - Breach of clause 5

240. I find that ACL, Angiesal and/or Gracie Gill breached clause 5 of the February 2019 Agreement by failing to purchase Lily & Ruby's shares for $500,000 within one month after Ms Taylor’s final day at the practice.

Breach of implied term to co-operate

241. The plaintiffs say Mr Aulich and Mr Woodhouse breached a term implied at law to do all such things as are necessary to enable the other party to have the benefit of the contract.

242. The defendants admit that there is an implied duty to cooperate.

243. The plaintiffs say that the duty was breached.

244. The parties agree that the relevant authority is Les & Zelda Investments Pty Ltd (as trustee for Les & Zelda Family Trust) v Whitehaven Coal Limited (No 4) [2026] NSWSC 107 at [1148]-[1150] (emphasis in original): In summary, the duty to cooperate implied by law into contracts generally consists of two aspects: a positive aspect and a negative aspect, broadly formulated as follows: 1. It is a general rule applicable to all contracts that each party agrees, by implication, to do all things reasonably necessary on their part to enable the other party to have the benefit of the contract (positive aspect): Secured Income at 607; Australis at 123; Barker at [25], [29] and [37]; Adaz Nominees at [117]. 2. The law also implies a negative covenant into contracts not to hinder or prevent the fulfilment of the purpose of the express promises made in the contract (negative aspect): Peters at [36]; Australis at 123; Adaz Nominees at [117]; Bensons at [127]–[128]. In all of these variously expressed principles, it should not be forgotten that what is “necessary” to be done by the party under the implied duty to cooperate in contracts generally must depend on the circumstances (to adopt the words used in Mackay v Dick) and the intention of the parties as manifested by the contract itself (to adopt the words used in Secured Income). As mentioned, the duty of a party to cooperate is informed by the express terms of the contract such that it only requires cooperation in providing the benefits promised by that party and does not extend to bringing about something which the contract does not require to happen: Australis at 123; Beerens at [54].

245. The defendants say that the duty to cooperate does not require Mr Woodhouse and/or Mr Aulich to take all steps necessary to ensure that ACL, Angiesal or Gracie Gill performed their obligation to acquire Lily & Ruby Holdings’ shares in ACL, because such a term would be a guarantee by them of the obligations of ACL, Angiesal and Gracie Gill. This would be commercially advantageous to Lily & Ruby Holdings, which is not provided for by the February 2019 Agreement.

246. I do not accept this characterisation of the operation of the duty. It is an obligation to co-operate so that the other party gets the fundamental promises in the contract.

247. The February 2019 Agreement says, “the existing shareholders or ACL, will purchase your shares”. This is an express obligation in the February 2019 Agreement. I accept the submission made by counsel for the plaintiffs that, in these circumstances, the implied duty to co-operate means that Mr Woodhouse and Mr Aulich must do all things reasonably necessary on their part to enable Lily & Ruby Holdings to have the benefit of the contract. It is not inconsistent with any of the express terms in the February 2019 Agreement.

Finding – breach of implied term to co-operate

248. I find that Mr Woodhouse and Mr Aulich breached the implied duty to co-operate and do all things reasonably necessary on their part to enable Lily & Ruby Holdings to have the benefit of clause 5 of the February 2019 Agreement.

Repudiation

249. The plaintiffs say that Mr Woodhouse repudiated the February 2019 Agreement when he said in two emails on 22 March 2024 that he would only buy Ms Taylor's shares in 6 to 12 months if ACL made it through and was doing well enough, and that he could not agree to a repayment figure as he did not know whether ACL would survive. The plaintiffs submit that this is a departure from the terms of the February 2019 Agreement, which contained a binding obligation.

250. The defendants say that Mr Woodhouse cannot be in breach of any express obligation to acquire Lily & Ruby Holdings shares in ACL as it is plain that the only express obligations in the February 2019 Agreement are on ACL, Angiesal and Gracie Gill to acquire the shares.

251. I prefer the submission of the plaintiffs, who say that the statement was intended to convey the position of the defendants generally and it was treating the binding obligation in clause 5 as though it was something that was merely a matter of discretion for the defendants. I find that this was a repudiation of the February 2019 Agreement. Partnership claim Were Mr Aulich, Mr Woodhouse and Ms Taylor partners?

252. Section 6(1) of the Partnership Act 1963 (ACT) defines “Partnership” as “the relation between people carrying on a business in common with a view of profit”.

253. A partnership can be created through an express agreement or an inference drawn from the conduct and actions of the parties: Cobanov v Josifovski (No 2) [2021] ACTSC 111 at [20].

254. Following Yacoub v Commissioner of Taxation [2012] FCA 678 at [24], the indicia of the existence of a partnership include: (a) a mutual interest in the carrying on of the business for the purpose of profit or gain; (b) mutual confidence that the parties will engage in the venture for joint advantage only; (c) sharing of profits and losses from the venture or a so-called community of profit and loss; and (d) mutual agency in the sense that each party is a principal of the business and may bind the other..

255. The fact that the parties describe themselves as partners is not conclusive: Yacoub at [25].

256. The fact that the parties use a corporate structure is not determinative of whether the parties are partners: Momentum Productions Pty Limited v Lewarne [2009] FCAFC 30; 174 FCR 268 at [67].

257. The plaintiffs say that the facts and evidence compelling the conclusion of partnership in this case are: (a) Mr Woodhouse, Mr Aulich and Ms Taylor held weekly partnership meetings, which was confirmed by Mr Woodhouse in cross examination. I do not accept the submission made by counsel for the defendants that these were simply a meeting of the directors of Aulich Civil Law. This is not based on any evidence from Mr Woodhouse. Mr Aulich did not say that they were not partners’ meetings, he described them as “what Ms Taylor refers to … as a “partners’ meeting””. The language accepted by Mr Woodhouse is relevant to determining the question of partnership. (b) Financial decisions such as taking on speculative matters or writing off fees were made together by the three of them. This submission was based on the evidence of Ms Taylor in her affidavit which was not challenged in cross examination. (c) They were the personal guarantors to the lease of the premises. (d) They held out to the world on their website and in their costs agreements that they were the three partners of the firm. (e) They were each signatories on ACL's bank accounts. (f) They had a mutual interest in the business making a profit. This submission is based on the cross examination of Mr Woodhouse who agreed that the three of them had a mutual interest in the business being profitable. (g) They had mutual confidence in each other to promote the interests of the business. This submission is based on the cross examination of Mr Woodhouse who agreed that the three of them had a mutual interest in the business being profitable and had worked together to achieve that purpose. (h) They shared the profits and losses of the business. This submission is based on the cross examination of Mr Woodhouse who agreed that whatever profits the business made would be shared between the three of them.

258. The defendants say: (a) ACL had carried on the business of an incorporated legal practice since 2012. The use of a corporate structure, rather than a partnership, to carry on that business was a deliberate choice. I was not taken to any evidence which supported the submission that the use of a corporate structure rather than a partnership was a deliberate choice, nor that Ms Taylor was involved in any such decision about it. (b) Pursuant to the February 2019 Agreement, Ms Taylor became a “Partner” by becoming a director of ACL and Lily & Ruby Holdings acquiring shares in ACL. I have already found that the word “Partner” was used inconsistently in the February 2019 Agreement and is of no real assistance in identifying the objective intention of the parties. (c) No partnership accounts or tax returns were ever prepared or lodged. It is admitted that there is no evidence of any partnership accounts or tax returns being prepared or lodged. (d) There is no evidence that any profits earned by ACL were split equally between Mr Aulich, Mr Woodhouse and Ms Taylor, as opposed to being received by its shareholders as dividends. As set out above, there are situations in which the courts have found that the fact that the parties use a corporate structure is not determinative of whether there is a partnership. In this case, Mr Woodhouse agreed that whatever profits the business made would be shared between the three of them. (e) There is no evidence that each of Mr Aulich, Mr Woodhouse and Ms Taylor could bind each other personally, as opposed to binding ACL as its directors, or that any one of them could act as the agent of the other as opposed to acting as an agent of ACL. Counsel for the plaintiffs submitted, and I accept, that these are not relevant indicia. The question is whether they could bind the partnership, not each other. The answer to that question is yes. It occurred, for example, when one of them signed a costs agreement or used a bank account. (f) There is no evidence of any mutuality of rights and obligations between each of Mr Aulich, Mr Woodhouse and Ms Taylor, as opposed to between Gracie Gill, Angiesal and Lily & Ruby Holdings, under the terms of the February 2019 Agreement. I do not accept this submission. However, as described by counsel for the plaintiffs, these rights and obligations flow once there is a partnership, they are not indicia of a partnership. (g) Tellingly, it was submitted, Ms Taylor does not assert that she is personally liable, with Mr Woodhouse and Mr Aulich, for the losses and debts of the business operated by ACL. Again, I accept the submissions made by counsel for the plaintiffs. He pointed out that Mr Woodhouse said to Ms Taylor after she had left the firm on multiple occasions that she may be personally liable for the debts of the firm. In addition, she was potentially personally liable for debts of the firm, for example, in her capacity as a guarantor under the lease.

259. Taking all of these matters into account, I am satisfied that Mr Woodhouse, Mr Aulich and Ms Taylor were in partnership carrying on a business in common with a view of profit.

What is the relevant fiduciary duty?

260. As partners, Mr Aulich and Mr Woodhouse owed various fiduciary duties to Ms Taylor, including the two core fiduciary duties, as set out in Chan v Zacharia 154 CLR 178 at 198-9: The first is that which appropriates for the benefit of the person to whom the fiduciary duty is owed any benefit or gain obtained or received by the fiduciary in circumstances where there existed a conflict of personal interest and fiduciary duty or a significant possibility of such conflict: the objective is to preclude the fiduciary from being swayed by considerations of personal interest. The second is that which requires the fiduciary to account for any benefit or gain obtained or received by reason of or by use of his fiduciary position or of opportunity or knowledge resulting from it: the objective is to preclude the fiduciary from actually misusing his position for his personal advantage:

261. These have been described as the “no conflict” rule and the “no profit” rule.

Breach of duty

262. In answer to the whole of the claim, Mr Woodhouse and Mr Aulich say that any fiduciary duties they may have as partners, would be owed to Ms Taylor and not Lily & Ruby Holdings. The alleged breaches assert that Mr Woodhouse and Mr Aulich have frustrated Lily & Ruby Holdings's ability to recover $500,000 from ACL, Angiesal or Gracie Gill. That cannot amount to a breach of the fiduciary duties owed by Mr Woodhouse or Mr Aulich to Ms Taylor.

263. I find breaches of the duty in respect of the following matters: (a) On 2 August 2024 and 5 September 2024 Mr Woodhouse rendered the Scott and Pappas invoices, payable to Aulich Criminal Law. The issue of an invoice which could benefit Mr Woodhouse’s personal financial interests in Aulich Criminal Law over his duty to Ms Taylor as a beneficial owner of ACL is, I am satisfied, a breach of the no conflict rule. Further, to the extent those invoices are to be paid, Aulich Criminal Law and thus Mr Woodhouse will be enriched at the expense of his duty to Ms Taylor as an owner of ACL, being a clear breach of the no profit rule. Contrary to the submission made by the defendants, this is a claim of a breach of duty owed to Ms Taylor, not Lily & Ruby Holdings. (b) On 12 and 21 August 2024, Mr Woodhouse nominated ACL to purchase the shares of Lily & Ruby Holdings. The plaintiffs say that by taking the position that ACL would be the entity that would buy the shares, and seeking to absolve anyone else of the duty to buy the shares, Mr Woodhouse acted to favour his own personal financial interests over his duty to Ms Taylor and sought to relieve his company, Angiesal, of its liability to purchase the shares. Contrary to the submission made by the defendants, this is a claim of a breach of duty owed to Ms Taylor, not Lily & Ruby Holdings. I have previously found that there was no legal basis on which to nominate ACL as the entity liable for the payment. I am satisfied that Mr Woodhouse did act in breach of the fiduciary duty he owed to Ms Taylor, as the nomination of ACL was contrary to the no conflict rule. (c) On 19 September 2024, appointing an administrator over ACL and submitting the Scott and Pappas invoices to the administrator as being debts due and payable to Aulich Criminal Law. I accept the following submissions by the plaintiffs, that by placing ACL into voluntary administration: (i) These proceedings, which had been brought for the recovery of money owed to Ms Taylor, were stayed. (ii) As conceded by Mr Woodhouse, the amount likely to be recovered by ACL for its assets would be depleted as it was likely that the work in progress would be sold at an undervalue if sold by a liquidator; and (iii) ACL was saddled with the liability to pay remuneration to the administrator and liquidator. I am satisfied that Mr Woodhouse did act in breach of the fiduciary duty he owed to Ms Taylor as all of this conduct was contrary to the no conflict rule. (d) Effecting a transfer of Gracie Gill's shares in Aulich Criminal Law for $1.00 only. I have already found that by transferring the shares to Olliegracie for $1.00, Mr Aulich and Mr Woodhouse were intending to reduce the funds available to Gracie Gill to pay the plaintiffs. By making this transfer, I find the defendants were acting to prefer their own interests to the duty owed to Ms Taylor, in breach of the no conflict rule. Further, by failing to preserve the assets in Gracie Gill, which would have been payable to the plaintiffs, they breached the no profit rule. (e) In the case of Mr Woodhouse, since at least 22 March 2024, requiring that ACL "survive" before the shares of Lily & Ruby Holdings would be purchased from Lily & Ruby Holdings. This statement by Mr Woodhouse was inconsistent with the terms of the February 2019 Agreement. I have already found that Mr Woodhouse made the statement as part of a campaign to deter Ms Taylor from bringing a claim. This is a breach of the no conflict rule.

Oppressive conduct

264. Section 232 of the Corporations Act 2001 (Cth) relevantly provides as follows: Grounds for Court order The Court may make an order under section 233 if: (a) the conduct of a company’s affairs; or (b) an actual or proposed act or omission by or on behalf of a company; or (c) a resolution, or a proposed resolution, of members or a class of members of a company; is either: (d) contrary to the interests of the members as a whole; or (e) oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members whether in that capacity or in any other capacity.

265. The issue in these proceedings is whether the conduct comes within s 232(e) of the Corporations Act.

The Law

266. The relevant principles gleaned from the submissions of the parties and the decision in Scott v Aulich, in the matter of Aulich Civil Law Pty Ltd (in liq) [2025] FCA 1329 are the following: (a) The reference to oppression, unfair prejudice and unfair discrimination is to be understood objectively as a composite whole. At its core is the notion of unfairness: Wayde v NSW Rugby League Ltd [1994] HCA 68; 180 CLR 459 at 472. (b) A decision made in good faith by directors which might adversely affect the interests of a shareholder does not mean it is oppressive, unless it is one that no reasonable director could have made: HNA Irish Nominee Ltd v Kinghorn (No 2) (2012) 290 ALR 372 at [507]. (c) Whether it is oppressive will not depend upon the motive or motives for the conduct. It is the effect of the acts that is material: Catalano v Managing Australia Destinations Pty Ltd [2014] FCAFC 55 at [9]. (d) Nevertheless, while motive is not determinative, it may be relevant. For example, if the decision-maker was motivated to make a decision to achieve some particular unfairness, it might be concluded more readily that the effect of the decision is what the decision-maker intended: Wilmar Sugar Australia Ltd v Mackay Sugar Ltd [2017] FCAFC 40 at [73]. (e) It is not my role to assume responsibility for the management of the company: Wayde at 467.

267. There is also an issue as to whether any remedy would be available because ACL is in liquidation. The defendants say that brought the oppression to an end.

268. They made the same submission in Scott v Aulich, in the matter of Aulich Civil Law Pty Ltd (in liq) [2025] FCA 1329. It was rejected. The Federal Court held at [126]: I reject the proposition advanced by the defendants that the demise of the companies represents an intervening event which has “ended” any oppression such that Ms Scott should be left without any remedy due to the vicissitudes of time. While I accept that there is no ongoing oppressive conduct, it is nonetheless the case that Ms Scott’s oppression has remained unremedied. To not recognise the loss caused to a shareholder and fashion an appropriate form of relief for them simply because there is no longer a viable company in which oppression can continue to occur would be a most unjust outcome. She bears no responsibility for what has happened to the Aulich companies. It must be borne in mind that Ms Scott’s intention at the time the oppressive conduct occurred was to sell her interest in the Aulich companies. Had she been able to do so, then the diminution in value caused by the liquidation of ACL and the impending external administration of APT would be irrelevant to her now. It is only because of the defendants’ oppressive conduct that that has not occurred. She is clearly in a worse position than if that conduct had not occurred, irrespective of which valuation would ultimately have been agreed between the parties as to her interests.

269. I was informed that the defendants have appealed from that decision. I also understand that it is not binding on me. Nevertheless, I consider that this view is consistent with other current legal decisions including Aqua Botanical Beverages (Australia) Pty Ltd v Botanical Water Technologies Pty Ltd [2022] NSWSC 435 at[27]-[37] (where the Court held it was arguable) and Re Mobius Distilling Pty Ltd (in liq) [2025] NSWSC 539 at [200]. Further still, s 233 of the Corporations Act confers upon the court the broad power to make any order that it considers appropriate.

270. I decline to find that the cause of action in oppression is not available because ACL is in liquidation.

Finding – oppression

271. It is common ground that the remedy for this cause of action, if established, is only available to Lily & Ruby Holdings, as a shareholder in ACL.

272. Relevantly to this cause of action, I take into account my previous findings that Mr Woodhouse’s and Mr Aulich’s conduct was intended to deter Ms Taylor and Lily & Ruby Holdings from bringing this claim.

273. I also take into account my findings that Mr Woodhouse and Mr Aulich took positive steps to frustrate the claims by Ms Taylor and Lily & Ruby Holdings by depleting the funds available to ACL and Gracie Gill to pay for the shares.

274. The defendants say, that pursuant to section 257A of the Corporations Act, ACL could only buy back its own shares if the buy-back did not materially prejudice the ability of ACL to pay its creditors. Firstly, ACL is not the only relevant party. Secondly, Mr Aulich and Mr Woodhouse have made assertions about ACL’s financial position, but I decline to find that the evidence shows that if ACL had complied with its obligations in the February 2019 Agreement it would have materially prejudiced the ability of ACL to pay its creditors.

275. I am satisfied that the motives of Mr Aulich and Mr Woodhouse in engaging in their course of conduct are plain. They tried to delay and deter Ms Taylor from bringing a claim. They also took steps to deplete the funds available to ACL or its administrator, and then the liquidator, to comply with its obligations under the February 2019 Agreement. That is, their decisions were motivated to achieve unfairness. Of course, motive is not determinative, but it can be relevant. I am satisfied that the effect of the decision is what they intended.

276. Further, there was no obvious commercial purpose for this course of conduct. I decline to find that they made an honest bona fide management decision. The explanation provided by Mr Woodhouse and Mr Aulich, being that ACL could not afford to pay, is not sufficient. They did not at any time acknowledge to Ms Taylor or Lily & Ruby Holdings their obligations under the February 2019 Agreement or even give evidence of checking their records to see whether some accommodation could be reached with the plaintiffs in March to April 2024.

277. I am satisfied that, objectively in the eyes of the commercial bystander, there has been conduct that would be objectively considered unfair by any reasonable director in the position of the defendants.

278. I find this cause of action has been established.

Breach of Statutory and Fiduciary Duties to ACL

279. Each of Mr Woodhouse and Mr Aulich was a director of ACL at all relevant times. Mr Woodhouse was appointed to that position, and Mr Aulich concedes that he was a person who acted in that role, or whose wishes or instructions the company was accustomed to follow, and thus a director pursuant to s 9AC(1)(b) of the Corporations Act.

280. The plaintiffs say, and the defendants admit, that, pursuant to s 181 of the Corporations Act, each of Mr Woodhouse and Mr Aulich owed a statutory duty to exercise his powers and discharge his duties: (a) in good faith in the best interests of ACL; and (b) for a proper purpose.

281. The plaintiffs say, and the defendants admit, that, pursuant to s 182 of the Corporations Act each of Mr Woodhouse and Mr Aulich owed a statutory duty not to use his position as director of ACL to: (a) improperly gain an advantage for himself or someone else; or (b) cause detriment to ACL.

282. The plaintiffs say that each of Mr Woodhouse and Mr Aulich owed a fiduciary duty to ACL: (a) to act honestly, responsibly and loyally. This is admitted by the defendants. (b) to act bona fide and in the best interests of ACL. This is admitted by the defendants. (c) not to make profits or gains for himself or someone else. This is denied by the defendants. It was not the subject of any submissions, but it would seem to me to be a foundational aspect of any such duty. (d) to avoid any conflicts of interest. This is admitted by the defendants.

283. The conduct that is relied on is: (a) in the case of Mr Woodhouse at least, only being willing to buy back the shares of Lily & Ruby Holdings if ACL "survives". In cross examination, Mr Woodhouse: (i) Agreed that when he made this statement he had decided he would not necessarily repay the $500,000. (ii) Said the amount payable was to be negotiated and agreed. (iii) Said he was speaking for himself and Mr Aulich on behalf of the shareholders for ACL. This statement by Mr Woodhouse was inconsistent with the terms of the February 2019 Agreement. While Mr Woodhouse may say that he was advancing the interests of ACL to protect its financial situation, I do not accept that explanation as it is inconsistent with my earlier findings that Mr Woodhouse made the statement as part of a campaign to deter Ms Taylor from bringing a claim and to improperly gain an interest for himself. (b) The issuing of the Scott invoice. Mr Woodhouse was responsible for the issuing of the invoice. I have already found that Aulich Criminal Law, of which only Mr Woodhouse and Mr Aulich were directors, had no legal basis on which to issue the invoice. The issuing of an invoice to ACL by a director of ACL for a liability which was not genuinely payable by ACL is a clear breach of the statutory and fiduciary obligations owed by Mr Woodhouse to ACL. (c) Purporting to "nominate" ACL to purchase the shares of Lily & Ruby Holdings, despite saying in these proceedings that ACL did not have the funds to do so. I have previously found that this conduct occurred. I am satisfied that the statement was not made for a proper purpose, that is, honestly in the interests of ACL. (d) The issuing of the Pappas invoice. Mr Woodhouse was responsible for the issuing of the invoice. I have already found that Aulich Criminal Law, of which only Mr Woodhouse and Mr Aulich were directors, had no legal basis on which to issue the invoice. The issuing of an invoice to ACL by a director of ACL for a liability which was not genuinely payable by ACL is a clear breach of the statutory and fiduciary obligations owed by Mr Woodhouse to ACL. (e) Transferring Gracie Gill's shares in Aulich Criminal Law to Olliegracie for $1. I have already found that at the time of the transfer the shares were worth significantly more than $1. I have also already found that by transferring the shares to Olliegracie for $1, Mr Aulich and Mr Woodhouse were intending to reduce the funds available to Gracie Gill to be able to pay Ms Taylor and/or Lily & Ruby Holdings for the shares. I now further find that this reduction of funds in Gracie Gill exposed ACL to a greater liability as Gracie Gill would not be able to pay for, or alternatively, contribute to, the purchase of the shares. Mr Aulich and Mr Woodhouse were thus acting to improperly gain an advantage for themselves or at least Mr Aulich, and failing to avoid a conflict of interest.

284. The plaintiffs have established these causes of action.

Breach of Fiduciary Duties to Shareholders

285. The plaintiffs say that not only did Mr Woodhouse and Mr Aulich owe and breach their fiduciary duties to ACL itself (which I have already considered) but that Mr Woodhouse owed and breached his fiduciary duties to the shareholders of ACL, including Lily & Ruby Holdings, to deal with the shares of ACL: (a) honestly, responsibly and loyally; (b) in a bona fide manner and in the best interests of ACL; (c) in a way which did not prioritise profits or gains to himself or someone else; and (d) in a way so as to avoid any conflicts of interest.

286. This existence of the duty was admitted in the Defence filed on 23 January 2025.

287. In their opening written submissions filed on 25 May 2026, the defendants foreshadowed that they would seek leave to withdraw the admission at the hearing which commenced on 9 June 2026 because, they said, it is plainly incorrect as a matter of law.

288. In the plaintiff’s opening submissions in reply filed on 4 June 2026, the plaintiffs pointed out that the defendants had not addressed the matters needed on an application for leave to withdraw an admission, such as, the circumstances in which the admission was made, the opportunity the defendants had had to consider their position, and the reason why the defendants had waited so long to seek to withdraw it. The plaintiffs, it was submitted, had relied on and made forensic choices based on the admission. They would have, for example, sought further material by way of discovery and other compulsory production processes had the allegation been denied.

289. On 5 June 2026, the defendants filed an Application in Proceeding returnable on the first day of the hearing seeking leave to file a Further Amended Defence, the effect of which is to deny that cause of action.

290. In support of the Application in Proceeding, the defendants relied on an affidavit from their solicitor. She said: (a) The Defences had not been settled by counsel. (b) Mr Woodhouse and Mr Aulich had erroneously believed that company directors owed shareholders the same fiduciary duties that company directors owed to the company, and that this was a settled legal principle. (c) Their solicitor at the time did not provide advice about the admissions. (d) At the time counsel was preparing his written submissions for the hearing, he gave advice to Mr Woodhouse and Mr Aulich about the admissions, and as a result of which, the application to withdraw the admissions was filed.

291. On 9 June 2026, I declined to grant leave to amend the defence.

292. Counsel for the defendants submitted that, despite this ruling, the cause of action could not be maintained because: (a) In Redbro Investments Pty Ltd v Ceva Logistics (Australia) Pty Ltd [2015] NSWCA 73; 89 NSWLR 104 at [15] the Court relevantly held: The parties’ agreement does not displace the Court’s obligation to identify the applicable law. No court is bound by propositions of law on which the parties agree. (b) While in some cases courts have found a particular or bespoke type of fiduciary duty, in these proceedings the plaintiffs have simply alleged a standard form type of fiduciary duty which would ordinarily be owed by a director to a company.

293. In my view, the second proposition is a concession that, in the appropriate case, a duty or duties will be owed. The content of the duty would, in a contested case, be informed by evidence. I am satisfied that, in this case, the admissions by the defendants concede the nature and extent of the duty owed to ACL’s shareholders.

294. I observe that in the admitted paragraph in the Amended Statement of Claim, the claim is only asserted against Mr Woodhouse and not Mr Aulich.

295. The remaining issue is whether that duty has been breached.

296. The plaintiffs say that the fiduciary duty that Mr Woodhouse owed to Lily & Ruby Holdings was breached by the same conduct relied on for the breach of the partnership fiduciary duties being: (a) on 2 August 2024 and 5 September 2024, rendering the Scott and Pappas invoices, payable to Aulich Criminal Law. (b) on 12 and 21 August 2024, nominating ACL to purchase the shares of Lily & Ruby Holdings. (c) on 19 September 2024, appointing an administrator over ACL and submitting the Scott and Pappas invoices to the administrator as being debts due and payable to Aulich Criminal Law. (d) on the same day, effecting a transfer of Gracie Gill's shares in Aulich Criminal Law for $1 only. (e) In the case of Mr Woodhouse, since at least 22 March 2024 requiring ACL to "survive" before the shares of Lily & Ruby Holdings would be purchased from Lily & Ruby Holdings.

297. I have already found that Ms Taylor has shown that the conduct relied on in each of these particulars was a breach of the fiduciary duties owed to her by Mr Woodhouse and Mr Aulich as a partner.

298. I now find that the conduct is also a breach of the fiduciary duty of care owed by Mr Woodhouse to Lily & Ruby Holdings as a shareholder of ACL.

Orders

299. The orders of the Court are: (1) Reasons published. (2) The remaining active parties are given 28 days to agree on the orders which flow from my findings and any order as to costs. (3) If no such agreement is reached, the parties are to provide the registry with the following within 42 days of the delivery of these Reasons: (a) An agreed timetable for the exchange of written submissions as to the orders which flow from my findings, and any order as to costs; and (b) A statement as to whether the matter needs to be relisted for further oral submissions.

I certify that the preceding two hundred and ninety-nine [299] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Acting Justice Balla. Associate: Date: