In the matter of Brickworks Limited; In the matter of Washington H. Soul Pattinson and Company Limited (No 2)

Decision: Orders approving connected schemes of arrangement made.

Catchwords: CORPORATIONS — arrangements and reconstructions — schemes of arrangement or compromise — application under s 411 of the Corporations Act 2001 (Cth) for orders approving scheme of arrangement and ancillary orders

Legislation Cited: - Corporations Act 2001 (Cth), ss 259D, 411, 1319

Cases Cited: - Re Altium Ltd (No 2) [2024] NSWSC 935
- Re Ansarada Group Ltd [2024] NSWSC 1121
- Re Anaconda Nickel Holdings Pty Ltd (2003) 44 ACSR 229; [2003] WASC 19
- Re Brickworks Ltd; Re Washington H. Soul Pattinson and Company Ltd [2025] NSWSC 905
- Re Donaco International Ltd (No 2) [2025] NSWSC 915
- Re GBST Holdings [2019] NSWSC 1503
- Re Investa Listed Funds Management Ltd [2016] NSWSC 344
- Re Invocare Ltd (No 2) [2023] NSWSC 1350
- Re Permanent Trustee Co Ltd (2002) 43 ACSR 601; [2002] NSWSC 1177
- Re Prime Infrastructure Holdings Ltd [2010] NSWSC 1337
- Re ResApp Health Ltd [2022] NSWSC 1353
- Re Sino Gold Mining Ltd (2009) 74 ACSR 647; [2009] FCA 1277
- Re Southern Cross Gold Ltd (No 2) [2025] NSWSC 2
- Re Tabcorp Holdings Ltd [2022] NSWSC 448
- Re Tassal Group Ltd (No 2) [2022] NSWSC 1619
- Re Walsh and Company Investments Ltd [2020] NSWSC 1746

Category: Principal judgment

Parties: Proceedings 2025/239415
Brickworks Limited (Plaintiff)
Proceedings 2025/239604
Washington H. Soul Pattinson and Company Limited (Plaintiff)

Representation: Counsel:
Proceedings 2025/239415
DFC Thomas SC / E Doyle-Markwick (Plaintiff)
Proceedings 2025/239604
NC Hutley SC / S Scott / F Leitch (Plaintiff)
Solicitors:
Proceedings 2025/239415
King & Wood Mallesons (Plaintiff)
Proceedings 2025/239604
Ashurst (Plaintiff)

File Number(s): 2025/239415
2025/239604

Judgment

1. By Originating Processes each filed on 23 June 2025, the Plaintiffs in these two proceedings, Brickworks Limited (“Brickworks”) and Washington H. Soul Pattinson and Company Limited (“WHSP”) respectively applied for orders under ss 411 and 1319 of the Corporations Act 2001 (Cth) (“Act”) relating to proposed linked schemes of arrangement and associated orders.

2. By way of background, Brickworks is an Australian public company limited by shares that is listed on the Australian Securities Exchange (“ASX”). Brickworks conducts its business in four divisions, comprising Building Products Australia, Building Products North America, Industrial Property and Investments. WHSP is also an Australian public company limited by shares; its shares are also listed on the ASX; and it is a diversified investment company with investments across a range of industries and asset classes, including listed equities, private equity, credit and property. Brickworks currently holds a 26.13% interest in WHSP which in turn holds a 43.25% shareholding in Brickworks. The cross-shareholding has been in place since 1969 and predates the prohibition on such structures in s 259D of the Act.

3. I made the orders sought by Brickworks and WHSP to convene the scheme meetings at the conclusion of the hearing on 1 August 2025 for the reasons set out in my judgment in Re Brickworks Ltd; Re Washington H. Soul Pattinson and Company Ltd [2025] NSWSC 905.

4. The scheme meetings were subsequently held and the scheme was then approved by the requisite majorities of Brickworks and WHPL shareholders for the purposes of s 411(4)(a)(ii) of the Act. Approximately 98.81% of Brickworks shares by value and approximately 97.4% of Brickworks shareholders by number present and voting at the Brickworks scheme meeting, voted in favour of the Brickworks scheme. Approximately 92.42% of WHSP shares and approximately 96.84% of WHSP shareholders by number voted in favour of the WHSP scheme.

5. At these second Court hearings, each of Brickworks and WHSP seek orders approving the respective schemes. No WHPL shareholder or other person indicated an intention to appear at this hearing, or appeared, to oppose the approval of the schemes and I made the orders sought by Brickworks and WHSP at the conclusion of the second Court hearings. These are my reasons for making those orders, and I have drawn on the helpful submissions of Counsel who appeared for Brickworks and WHSP respectively in this judgment.

Affidavit evidence

6. Brickworks reads the affidavit dated 11 September 2025 of its solicitor, Mr Robert Kelly, who addressed the registration of the explanatory booklet (titled “Combination Booklet”) with Australian Securities and Investments Commission (“ASIC”); the dispatch of materials regarding the scheme meeting to Brickworks shareholders; the dispatch to Brickworks shareholders of materials regarding the extraordinary general meeting of Brickworks that sought approval for the grant of performance rights to Mr Barlow, the proposed chief executive officer and managing director or the merged entity (“EGM”); and other shareholder communications, including incoming and outgoing shareholder calls and communications with proxy advisers and Brickworks’ larger shareholders. Mr Kelly also refers to the holding of the scheme meeting in respect of Brickworks, the passage of the scheme resolution and the voting participation rate at that meeting; the holding of the EGM; and the publication of an ASX Announcement giving notice of the second Court hearing.

7. WHSP in turn reads the affidavit dated 10 September 2025 of Mr Todd Barlow, its managing director and chief executive officer, who addresses the ASX announcements made by WHSP regarding the first Court hearing, registration of the WHSP Combination Booklet and notice of the second Court hearing; the distribution of the WHSP Combination Booklet; shareholder engagement by WHSP; the status of conditions precedent in respect of WHSP; the fact that there has been no notice of any appearances at the second Court hearing; and the result of a separate general meeting, where WHSP shareholders voted on an ordinary resolution which relates to the award of annual long term incentive for financial year ended 31 July 2026 to Mr Barlow (“General Meeting Resolution”). WHSP also reads the affidavit dated 10 September 2025 of Mr David Baxby, a non-executive director of WHSP, who addresses proxy adviser engagement by WHSP; the conduct of the WHSP scheme meeting and voter turnout at the scheme meeting.

8. Brickworks and WHSP also each tendered conditions precedent certificates executed by them and letters dated 11 September 2025 from ASIC stating that ASIC has no objection to the scheme pursuant to s 411(17)(1)(b) of the Act.

Applicable principles, submissions and determination

9. The principles that apply to the role of the Court in approving a scheme of arrangement under s 411(4)(b) of the Act are well established. I summarised them in Re Invocare Ltd (No 2) [2023] NSWSC 1350 at [8]–[9] and Re Southern Cross Gold Ltd (No 2) [2025] NSWSC 2 at [8], where I observed that:

“The Court must be satisfied of several matters in order to approve a scheme of arrangement at the second Court hearing, namely that the plaintiff has complied with the orders of the Court convening the meeting of members; the meeting of members so convened has approved the scheme with the requisite majorities; all other statutory requirements have been satisfied; the scheme is fair and reasonable so that an intelligent and honest person who was a member of the relevant class, properly informed and acting alone, might approve it; the plaintiff has brought to the attention of the Court all matters that could be considered relevant to the exercise of the Court’s discretion; and there was full and fair disclosure to members of all information material to the decision whether to vote for or against the applicable scheme: Re Permanent Trustee Co Ltd (2002) 43 ACSR 601; [2002] NSWSC 1177 at [8]-[10]; Re Central Pacific Minerals NL [2002] FCA 239 (“Central Pacific Minerals”) at [8]-[14]; Re Seven Network (No 3) (2010) 267 ALR 583; [2010] FCA 400 … at [35]-[39]; Re Solution 6 Holdings Ltd (2004) 50 ACSR 113; [2004] FCA 1049 at [18]-[24]; Re Redcape Property Fund Ltd and the Trust Company (RE Services) Ltd (as the responsible entity for the Redcape Property Trust) [2012] NSWSC 486 at [7]; Re Amcor Ltd (No 2) [2019] FCA 842 at [7]-[11]; Re Ellerston Global Investments Ltd [2020] NSWSC 1108 (“Ellerston”) at [10]-[12]; Re Coca-Cola Amatil Ltd [2021] NSWSC 489 at [9]; Re Pendal Group Ltd (No 3) [2023] NSWSC 14 at [9]. The Court will also have regard to shareholders’ assessment of their interests as manifested in the voting results on the scheme resolution in recognising that shareholders are “the best judges of whether an arrangement is to their commercial advantage”: Central Pacific Minerals at [13]; Ellerston at [10].”

10. In submissions, Mr Thomas, with whom Ms Doyle-Markwick appears for Brickworks, addresses the applicable principles, the passage of the resolution to approve the scheme at the Brickworks scheme meeting, the registration and dispatch of the Combination Booklet relating to Brickworks; the making of an ASX announcement concerning the scheme meeting, the satisfaction of conditions precent to the scheme and further matters that I address below. Mr Hutley, with whom Ms Scott and Ms Leitch appear for WHSP, also addresses the applicable principles and the position in respect of WHSP’s shareholder engagement.

11. As I noted above, Mr Thomas addresses the question of communications between Brickworks and its shareholders. He points out that Brickworks communicated with its shareholders through several avenues, in advance of the scheme meeting, and provided the proposed communications and scripts to the Court at, or shortly after, the first Court hearing; although, in accordance with now common practice, it did not seek the Court’s approval of its proposed communications. First, Brickworks engaged a third party to operate a “shareholder information line”, in accordance with a script and another third party to make outbound calls to the largest 2000 shareholders (excluding the largest 75), also according to a script. These communications are addressed by the evidence at this hearing and no issue arises from them. Brickworks also engaged individually with the largest 75 Brickworks Shareholders, and with proxy advisers, with the assistance of a third party. As Mr Thomas points out, the Courts have accepted that “it may be appropriate for a company’s chair, its directors or its executives to communicate with major shareholders in respect of a scheme, or with shareholders who feel strongly in respect of the scheme”: Re ResApp Health Ltd [2022] NSWSC 1353 at [44] (“ResApp”). The content of these communications was also addressed in evidence at this hearing and again no issue arises from them. Mr Thomas points out that other ad hoc communications were recorded in a “Shareholder and Beneficiaries Communication Log”, which is in evidence, and I accept that those communications reflect matters that were disclosed in the Combination Booklet and also give rise to no matter that would prevent approval of the scheme.

12. Mr Hutley in turn addressed inbound and outbound calls in respect of WHSP, proxy adviser engagement, shareholder inquiries made to WHSP, WHSP’s communications with institutional and large shareholders and the records maintained in respect of those communications. Mr Hutley submits, and I accept, that no difficulty arises from communication which mirror the information contained in the Combination Booklet and draw attention to the need to read the Combination Booklet: Re Tabcorp Holdings Ltd [2022] NSWSC 448 at [22]. He also submits, and I accept, that the communications with institutional and large shareholders did not compromise the integrity of the voting process at the scheme meeting or the adequacy of the disclosure in respect of the scheme and that it was not, without more, inappropriate for WHSP’s directors and executives to communicate with its large and institutional shareholders in respect of the scheme, and that a degree of advocacy can be accepted so long as it is fair and honest: Re Investa Listed Funds Management Ltd [2016] NSWSC 344; ResApp at [33], [38]; Re Walsh and Company Investments Ltd [2020] NSWSC 1746 at [66]–[67]; Re Altium Ltd (No 2) [2024] NSWSC 935 at [11]; Re Ansarada Group Ltd [2024] NSWSC 1121 at [17].

13. I am satisfied that Brickworks and WHSP each complied with the Court’s orders in respect of the distribution of scheme documents to their respective shareholders. Brickworks and WHSP shareholders voted in favour of the scheme by the requisite statutory majorities. There is evidence as to voter turnout and no reason to think there was any defect in the notice of the scheme given to Brickworks and WHSP shareholders. The other statutory requirements for the scheme have been satisfied. There is no reason to doubt that the schemes are fair and reasonable so that an intelligent and honest shareholder in each of Brickworks and WHSP, properly informed and acting alone, might approve them. There is otherwise no reason to doubt that Brickworks and WHSP have brought all matters that could be considered relevant to the exercise of the Court’s discretion to the Court’s attention or that there was full and fair disclosure to shareholders of all information material to the decision whether to vote for or against the scheme. I am therefore satisfied that the schemes are appropriate for the Court’s approval.

14. Mr Thomas also points out that the Combination Booklet for the Brickworks scheme includes the following statement, under the heading ‘Important Notices’:

“Topco Shares issued in connection with the consummation of the BKW Share Scheme to BKW Scheme Shareholders who are US persons will not be registered in the United States. Topco, with respect to the Topco Shares, intends to rely on an exemption from the registration requirements of the US Securities Act of 1933, as amended (US Securities Act) provided by Section 3(a)(10) thereof.”

15. Mr Thomas rightly notes that Brickworks raised this matter during the first Court hearing, but consideration of it was deferred to the second Court hearing. When considering an application under s 411(4)(b) of the Act, the Court does not express a view as to whether the procedures and processes of the Court or under the Act are sufficient to satisfy the requirements for exemption under the US Securities Act: Re Permanent Trustee Co Ltd (2002) 43 ACSR 601; [2002] NSWSC 1177 at [11]–[20]; Re Sino Gold Mining Ltd (2009) 74 ACSR 647; [2009] FCA 1277 at [19]. However, in accordance with the well-established practice that facilitates reliance on the exemption under the US Securities Act, I recognise and record that (1) the Court was advised before the approval hearing that reliance would be placed on the exemption under s 3(a)(10) of the US Securities Act on the basis of the Court’s approval of the scheme, and Brickworks shareholders were informed of this in the Combination Booklet; (2) the Court has been informed of the securities to be offered as scheme consideration, and an independent expert report has concluded that the proposal is in the best interests of Brickworks shareholders; (3) the Court has held a hearing to consider the fairness and reasonableness of the proposed scheme; (4) that hearing was open to the public, any person to whom Topco shares are to be issued had standing to appear, and notice of the time and date of the approval hearing was made clear through an ASX announcement.

16. The only Excluded Shareholder in WHSP is Brickworks and, on that basis, I will make the order sought by WHSP under s 411(6) of the Act to amend the scheme to identify Brickworks as the Excluded Shareholder, consistent with the usual approach of identifying excluded shareholders by name: Re Prime Infrastructure Holdings Ltd [2010] NSWSC 1337 at [6]–[7]; Re Tassal Group Ltd (No 2) [2022] NSWSC 1619 at [12] (“Tassal (No 2)”); Re Donaco International Ltd (No 2) [2025] NSWSC 915 at [9].

17. Brickworks and WHSP each seek an order exempting it from compliance with s 411(11) of the Act. I am satisfied that there is here no utility in having the Court order annexed to the companies’ respective constitutions, where neither scheme will involve any modification of any rights of Brickworks or WHSP shareholders or of creditors or persons dealing with Brickworks or WHSP, and there is no need to require compliance with s 411(11) of the Act: Re Anaconda Nickel Holdings Pty Ltd (2003) 44 ACSR 229 at [65]; [2003] WASC 19; Re GBST Holdings [2019] NSWSC 1503 at [15]; Tassal (No 2) at [14].

Orders

18. For these reasons, I made the orders sought by Brickworks and WHSP at the conclusion of the second Court hearings on 12 September 2025.

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