Equatorial Launch Australia wants to sue its founder and former chairman, Scott Wallis, if former CEO Carley Scott’s claim against them succeeds.
A December 9 Federal Court hearing in Melbourne heard that Equatorial Launch Australia (ELA) wanted to commence a cross-claim against Wallis, saying that he breached his fiduciary duties as a director when he agreed to remove funding benchmarks from Scott’s salary package.
Wallis founded ELA in 2016. The company went on to develop the Arnhem Space Centre, a commercial spaceport near Nhulunbuy in the Northern Territory that is best known as the site of NASA’s non-orbital sounding rocket launches in 2022.
Scott says ELA hired her as CEO in 2018 based on her ability to raise capital. Her salary package totalled around AUD5 million. However, the price tag for Scott’s services raised investor concerns. To alleviate that, a series of funding targets were put in place that Scott needed to reach to receive the full amount. However, Wallis, then a board director and chairman of ELA, agreed with Scott to remove the targets.
Concerns about Carley Scott’s ability to deliver
In the lead up to the NASA launches, relations between Wallis, Scott, and ELA’s board and management broke down. Wallis resigned as chairman in August 2021 and as a director 12 months later.
Replacing him, current CEO and then Group Chief Executive Michael Jones remained unimpressed by Scott’s performance. He reportedly told people that investors were concerned about her ability to deliver and that she acted like a “deer in the headlights” on site development.
Scott alleges ELA terminated her in March 2022 after she refused to sign a revised contract. Scott subsequently launched an AUD4.8 million breach of contract lawsuit against ELA. She also commenced five Fair Work Commission claims, including a bullying claim against Jones which was later struck out and dismissed. Of the remaining FWC matters, a technical matter was settled and the remainder dismissed.
“ELA dismissed Scott for fraud, misleading conduct, and an inability to do the job,” Jones told Space & Defense. Equatorial Launch Australia also has a counterclaim running against Scott concerning these allegations.
ELA says Scott Wallis breached his fiduciary duties
Scott’s lawsuit is due to go to trial in February 2025. If her claim succeeds, ELA wants to sue their founder for damages. ELA’s counsel Sergio Freire told the court this week that Wallis breached his fiduciary duties and potentially put the company at a commercial disadvantage when he made the “unusual” decision to set aside the funding targets.
“If ELA is liable to Ms Scott, ELA is entitled to recover damages from Mr Wallis,” said Freire. “Mr Wallis is on notice. If he goes into the witness box, his evidence may be used against him.”
Equatorial Launch Australia wants to sue and run its cross-claim during Scott’s matter. Wallis will appear as a subpoenaed witness in the Scott lawsuit. Freire said dealing with the two matters together would “be advantageous” and avoid “prolonging the dispute for everyone.”
Siobhan Kelly, appearing for Scott, is unenthused about this prospect. In a testy series of bar table exchanges, Kelly denied her client had stonewalled or failed to engage with ELA on discovery and said the legally unrepresented Wallis, who “we have some access to but is not entirely in our camp” has struggled to engage with the subpoena process and was not capable of meeting an expedited trial in February.
The court will decide on ELA’s cross-claim application later this month. Space & Defense has contacted Wallis for comment.
16.45 AEDT. 10.12.24: Article updated with input from ELA
