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Legislation Cited: - Corporations Act 2001 (Cth), ss 411, 412, 413, Pt 5D.6, s 1319

Cases Cited: - Barrick (Australia Pacific Exploration) Pty Ltd v Barrick (PD) Australia Pty Ltd [2017] FCA 998
- FT Eastment & Sons Pty Ltd v Metal Roof Decking Supplies Pty Ltd (1977) 3 ACLR 69
- JP Morgan Operations Australia Ltd v JP Morgan Australia Group Pty Ltd [2018] FCA 1131
- Mercedes-Benz Financial Services Australia Pty Ltd v Daimler Truck Financial Services Australia Pty Ltd [2021] FCA 1279
- Re Absolute Equity Performance Fund Ltd [2022] FCA 933
- Re Anglo-Gaelic Investments Pty Ltd [2019] NSWSC 441
- Re Application of AGL Sydney Ltd (1994) 13 ACSR 597
- Re Australian Pharmaceutical Industries Ltd [2022] FCA 103
- Re Cytopia Ltd [2009] VSC 560
- Re Ellerston Global Investments Ltd [2020] NSWSC 879
- Re InvoCare Ltd [2023] NSWSC 1180
- Re Ovato Print Pty Ltd [2020] NSWSC 1882
- Re Telstra Corp Ltd (2022) 163 ACSR 429; [2022] NSWSC 1180
- Re Warrnambool Cheese and Butter Factory Company Ltd [2017] FCA 302
- Re Woolworths Group Ltd [2019] FCA 1810
- Stork ICM Australia Pty Ltd v Stork Food Systems Australasia Pty Ltd [2006] FCA 1849

Category: Principal judgment

Parties: Perpetual Trustee Company Ltd (Plaintiff)
Perpetual Trustees W.A. Ltd (Defendant)

Representation: Counsel:
Mr J Williams SC / Mr H Atkin (Plaintiff)
Solicitors:
Mallesons (Plaintiff)

File Number(s): 2026/281034

JUDGMENT

1. By Originating Process filed on 8 July 2026, Perpetual Trustee Company Ltd (“PTCo”) applies for orders under ss 411 and 1319 of the Corporations Act 2001 (Cth) (“Act”) in relation to a proposed scheme of arrangement.

2. By way of background, Perpetual Ltd (“Perpetual”) is a public company listed on the Australian Securities Exchange and is the ultimate holding company of a group of companies (“Perpetual Group”) which provide various financial services as part of a wealth management business, a corporate trust business and an asset management business. Its wealth management business is currently conducted by both PTCo and Perpetual Investment Management Ltd, each of which is a wholly owned subsidiary of Perpetual and holds an Australian Financial Services Licence. The proposed scheme would, if implemented, transfer certain assets and liabilities of PTCo and certain litigation to which PTCo is party (being certain assets, liabilities and litigation exclusively related to the operation of the wealth management business) to the Defendant, Perpetual Trustees W.A. Ltd (“PTWA”), which is a wholly owned subsidiary of PWM Services Pty Ltd. Other assets and liabilities of PTCo relating to the wealth management business are proposed to be transferred outside of the scheme, including by individual assignment or novation and a voluntary transfer of PTCo’s traditional trustee business under Part 5D.6 of the Act.

3. I made the orders sought by PTCo at the conclusion of the hearing on 4 August 2026. These are my reasons for doing so. I have drawn on the helpful submissions of Mr Williams, with whom Mr Atkins appears for PTCo, in this judgment.

Affidavit and other evidence

4. PTCo reads an affidavit dated 8 July 2026 of its solicitor, Mr Jeremy Burgess, who refers to an announcement made in March 2026 by Perpetual that it had entered into a binding agreement to sell its wealth management business to Bain Capital Private Equity LP. Mr Burgess there notes that completion of the relevant share sale agreement is conditional on conditions precedent, including the issue of a “Separation Certificate” in accordance with a Separation Deed. The Separation Deed in turn provides that the Separation Certificate will be issued after a restructuring and separation actions and transactions required to separate the Wealth Management Group (as defined) and the wealth management business from the rest of the Perpetual Group, including its asset management business and corporate trust business, have occurred. Mr Burgess also notes that the scheme is one component of the separation of the relevant parts of Perpetual’s business with other components occurring outside the scheme.

5. PTCo also reads the affidavit dated 30 July 2026 of Ms Suzanne Evans, who is Group Chief Financial Officer of Perpetual. Ms Evans outlines her professional background and her role as Chief Financial Officer of Perpetual since 1 July 2025. Her evidence is that she is a member of Perpetual’s Separation and Implementation Team, established in relation to the proposed sale of Perpetual’s wealth management business; and is also a member of several other committees established by Perpetual under the Separation Deed in respect of the transaction. Ms Evans outlines the background to the transaction and the nature of the services provided by Perpetual’s wealth management business.

6. Ms Evans notes that the proposed scheme will not transfer all of the relevant assets, liabilities and undertakings of PTCo, both because PTCo will continue to provide certain services as part of Perpetual’s corporate trust business following the transaction, and because certain assets and liabilities of PTCo relating to Perpetual’s wealth management business will be transferred to PTWA outside the scheme, including by way of the Traditional Trustee Business Transfer (as defined) and Manual Transfers (as defined). Ms Evans also refers to the process which will be adopted for the Traditional Trustee Business Transfer, which involves an application to the Australian Securities and Investments Commission (“ASIC”) under Pt 5D.6 of the Act and a separate application to the Protective List in this Court in respect of New South Wales protected estates, with a view to discharging PTCo as financial manager and appointing PTWA as financial manager in its place. Ms Evans also notes that the transaction will be implemented by Manual Transfers, including transfers of rights and obligations under specified contracts, which will be novated or assigned by agreement with relevant counterparties, and transfers of fixed and other assets within the business.

7. Ms Evans in turn outlines the terms of a Framework Agreement dated 30 June 2026 between Perpetual, PTCo and PTWA dealing with the implementation of the proposed scheme and the elements of the proposed scheme, including the manner in which it deals with scheme contracts and other matters. She addresses conditions precedent to the scheme, the manner in which the scheme booklet will be despatched to PTCo’s sole shareholder, Perpetual, the proposed conduct of the scheme meeting and steps which have been taken to verify the scheme booklet in an orthodox form. Ms Evans also addresses communications with ASIC in respect of the scheme. Ms Evans also addresses PTCo’s assessment of the effect of the scheme on the interests of scheme creditors and counterparties to contracts with PTCo, and the proposed notice of the scheme to interested persons including all clients of the wealth management business.

8. PTCo also reads an affidavit dated 22 July 2026 of Mr Stephen Wilson, who is the Managing Director of Grant Samuel & Associates Pty Ltd (“Grant Samuel”). Mr Wilson sets out his qualifications and experience; and refers to the engagement of Grant Samuel to prepare an independent expert’s report for the benefit of the directors of Perpetual, PTCo and PTWA and the Court, addressing the question whether, in Grant Samuel’s opinion, the implementation of the proposed scheme would materially prejudice the ability of PTCo or PTWA to meet their respective obligations to creditors. A copy of the draft independent expert’s report prepared by Grant Samuel is exhibited to Mr Wilson’s affidavit. In that draft report, Grant Samuel has had regard both to the immediate effect of the scheme and also the position that will arise on the completion of the transaction, when PTCo and PTWA will cease to have the benefit of the guarantee provided by Perpetual under a Deed of Guarantee, and has concluded that the interests of creditors would not be materially prejudiced by the implementation of the scheme.

9. Mr Wilson also confirms, subject to any matters raised by the Court, his intention to sign that copy of the independent expert’s report, with minor formal amendments. Mr Wilson also confirms, in substance, his compliance with the Expert Witness Code of Conduct in respect of that report. While it is no longer common for an independent expert to lead an affidavit verifying his or her expert report in respect of a scheme, that practice is likely still desirable where, as here, that report is relied on not only as part of the information that is to be provided to shareholders in respect of a scheme, but to establish the fact of the likely impact of the scheme upon third party creditors of the relevant companies.

10. PTCo also tendered a proposed scheme booklet, and Mr Williams took me through the proposed scheme booklet in the course of submissions. PTCo also tendered a letter dated 3 August 2026 from ASIC which, in common form, indicated that ASIC has had sufficient notice of the application, and does not currently propose to appear to make submissions or intervene to oppose the scheme, and reserved its position as to s 411(17) of the Act to the second Court hearing.

Applicable principles and the Court’s discretion

11. In exercising the Court’s discretion to order the convening of a scheme meeting, Australian courts have often applied the approach described by Street J (with whom Hutley and Samuels JJA agreed) in FT Eastment & Sons Pty Ltd v Metal Roof Decking Supplies Pty Ltd (1977) 3 ACLR 69:

“The approach taken upon a summons is that the court will not ordinarily summon a meeting unless the scheme is of such a nature and cast in such terms that, if it achieves the statutory majority at the creditors’ meeting the court would be likely to approve it on the hearing of a petition which is unopposed.”

12. I summarised the applicable principles in Re Ellerston Global Investments Ltd [2020] NSWSC 879 (“Ellerston”) at [25]ff as follows:

“It is, of course, well-established that the Court will order the convening of a scheme meeting and approve a draft explanatory statement if it is satisfied that the plaintiff is a Part 5.1 body; the proposed scheme is an arrangement within the meaning of s 411 of the Corporations Act; the scheme booklet will provide proper disclosure to members; the scheme is bona fide and properly proposed; ASIC has had a reasonable opportunity to examine the terms of the scheme and the scheme booklet and make submissions and has had 14 days’ notice of the proposed hearing date; the procedural requirements of the Supreme Court (Corporations) Rules 1999 (NSW) have been met; and there is no apparent reason why the scheme should not, in due course, receive the Court’s approval if the necessary majority of votes is achieved: Re Staging Connections Group Ltd [2015] FCA 1012 at [19]–[20]; Re Atlas Iron Ltd [2016] FCA 366; (2016) 112 ACSR 554 at [30]; Re Duet Finance Ltd [2017] NSWSC 415 at [15]; Re Villa World Ltd [2019] NSWSC 1207 at [15].

The Court will not ordinarily summon a meeting at the first court hearing unless the scheme is of such a nature and cast in such terms that, if it receives the statutory majority at the meeting, the Court would be likely to approve it on the hearing of a petition which is unopposed: F T Eastment & Sons Pty Ltd v Metal Roof Decking Supplies Pty Ltd (1977) 3 ACLR 69 at 72, approved in Australian Securities Commissions v Marlborough Gold Mines Ltd [1993] HCA 15; (1993) 177 CLR 485 at 504. In Re Foundation Healthcare Ltd [2002] FCA 742; (2002) 42 ACSR 252 at [36] and [44] (cited with apparent approval in Re CSR Ltd [2010] FCAFC 34; (2010) 183 FCR 358 at [58]), French J observed that:

‘... by granting leave to convene the meeting, the court does not give its imprimatur to the proposed scheme. If the arrangement is one that seems fit for consideration by the meeting of members or creditors and is a commercial proposition likely to gain the court’s approval if passed by the necessary majorities, then leave should be given: Re ACM Gold Ltd (1992) 34 FCR 530; 107 ALR 359; 7 ACSR 231; 10 ACLC 573 (O’Loughlin J). The court is not required to give close consideration to the effects of the scheme upon individual members of the classes of members or creditors affected. So to do would be to “introduce burdensome and to a large extent ineffectual consideration at this interlocutory stage”: Re Jax Marine Pty Ltd [1967] 1 NSWR 145 at 148 (Street J)....

The court at the stage of ordering a meeting to approve a scheme does not ordinarily go very far into the question of whether the arrangement is one which warrants the approval of the court ... That question is to be answered when the scheme returns to the court for final approval. That is not to exclude the possibility that a scheme may appear on its face so blatantly unfair or otherwise inappropriate that it should be stopped in its tracks before going any further.’

At the first hearing, the Court is not concerned with whether final approval should be given to the scheme, but whether the scheme is one which is adequately explained to those who have a financial interest in it, and whether there is any obvious flaw in the scheme, such that it would be inappropriate even for it to be submitted for consideration: Re Abacus Funds Management Ltd [2005] NSWSC 1309; (2006) 24 ACLC 211 at [23]; Re Villa World above at [18]. The Court is also not required to be satisfied that no better scheme could have been proposed, but with whether sensible business people might consider the arrangement proposed is of benefit to members: Centrebet International Ltd [2011] FCA 870 at [29]; Re SAI Global Ltd [2016] FCA 1312 at [18]; Re BIS Finance Pty Ltd Finance Pty Ltd [2017] NSWSC 1713 at [22].”

13. The applicable principles were summarised in similar terms in Re InvoCare Ltd [2023] NSWSC 1180 at [14]–[17] and Re Absolute Equity Performance Fund Ltd [2022] FCA 933 at [18]–[22]. The authorities also make clear that it is not the Court’s role to express a view on whether the proposed scheme should be approved and the question whether or not to accept particular consideration for shares is a commercial matter for shareholders to assess, once the Court is satisfied that shareholders are acting on sufficient information and with time to consider what they are voting on: Re Cytopia Ltd [2009] VSC 560 at [3]; Ellerston at [27]; Re Australian Pharmaceutical Industries Ltd [2022] FCA 103 at [22].

14. I accept that, here, the statutory prerequisites to the making of an order under s 411(1) of the Act have been satisfied. The application concerns a compromise or arrangement that is proposed between PTCo, which is a Pt 5.1 body, and Perpetual. The internal restructuring contemplated by the scheme also involves an element of compromise or arrangement between PTCo and Perpetual where, on implementation of the scheme, PTCo will cease to hold relevant assets, will cease to be subject to relevant liabilities and will cease to be a party to relevant litigation, and the economic value of the transferred part of its business will be transferred to the transferee: JP Morgan Operations Australia L**td v JP Morgan Australia Group Pty L**td [2018] FCA 1131 at [18] (“JP Morgan Operations”); Re Woolworths Group Ltd [2019] FCA 1810 at [20(6)] (“Woolworths Group”); Re Anglo-Gaelic Investments Pty Ltd [2019] NSWSC 441 (“Re Anglo-Gaelic Investments”); Re Telstra Corp Ltd (2022) 163 ACSR 429; [2022] NSWSC 1180 (“Telstra”). I am also satisfied that the information to be provided to Perpetual in the scheme booklet is sufficient and I am also satisfied, by the evidence led in respect of the verification process, that the explanatory statement sets out the material information to the making of a decision whether or not to agree to the compromise or arrangement. On that basis, I am satisfied that the procedural requirements in respect of the proposed scheme are satisfied.

15. I also recognise that s 413 of the Act allows the Court to make orders to facilitate the reconstruction of a company if three requirements are satisfied. Those requirements are that an application has been made under Pt 5.1 of the Act for the approval of a compromise or arrangement; the compromise or arrangement has been proposed for the purposes of, or in connection with, a scheme for, relevantly, the reconstruction of a Pt 5.1 body or bodies; and the whole or any part of the undertaking or property of a body concerned in the scheme is to be transferred to a company under the scheme: Re Application of AGL Sydney Ltd (1994) 13 ACSR 597; Barrick (Australia Pacific Exploration) Pty Ltd v Barrick (PD) Australia Pty Ltd [2017] FCA 998 at [81]; Re Ovato Print Pty Ltd [2020] NSWSC 1882 at [47]; Telstra at [27]ff.

16. Mr Williams also submits, with reference to authority, that:

“It is well established that an internal corporate reconstruction of the kind contemplated by section 413 of the [Act] may be facilitated by a members’ scheme between the relevant transferring corporate entity and its members, rather than a creditors’ scheme, and that the appropriate protection for creditors is that they have the right to appear at a second court hearing and express any concerns as to the appropriate protection of their interests in light of the transfer of obligations arising from the reconstruction …”

17. Mr Williams also refers to Woolworths Group at [20], where Farrell J identified several matters established by the authorities, namely that the terms “reconstruction” and “amalgamation” in s 413 have the meaning given in commerce and a restrictive interpretation should not be placed on them; a reconstruction occurs when, after the transfer, substantially the same undertaking is carried on by the same shareholders, or, if (in an intragroup situation), the ultimate holding company remains the same; an amalgamation involves the combination of two separate share capital structures into one and it does not matter if the structure of the new share capital does not reflect the structures of the predecessor systems; the transfer of the assets and liabilities of one or more companies in a corporate group to another company or companies in the same corporate group, with the transferor company being deregistered is within the meaning of a reconstruction and amalgamation under s 413; and the fact that the plaintiff has only one member is no obstacle to the Court convening a scheme meeting constituted by that sole member, or to the Court subsequently approving a scheme proposed between the plaintiff and its sole member. I also recognise that several reconstructions approved by the Courts under s 413 have involved the partial transfer of assets and liabilities of the scheme company: Mercedes-Benz Financial Services Australia Pty L**td v Daimler Truck Financial Services Australia Pty L**td [2021] FCA 1279 at [22], [25]; Re Warrnambool Cheese and Butter Factory Company Ltd [2017] FCA 302 at [11] (“Warrnambool Cheese and Butter Factory”).

18. I can here be satisfied, for the purposes of the first Court hearing, that part of the undertaking or property of a body concerned in the scheme, namely PTCo, is to be transferred to PTWA under the scheme. The potential effect of the scheme on creditors, occasioned by the proposed transfer of the relevant assets and liabilities, will be addressed on the second Court hearing as a consideration relevant to the discretion whether to approve the scheme: Re Warrnambool Cheese and Butter Factory at [11]; Re Anglo-Gaelic Investments at [26]. To the extent that it is appropriate to consider that matter in a preliminary way at this hearing, Mr Wilson’s report indicates that PTCo’s creditors will not suffer material prejudice as a result of the scheme. There is also no reason to think that the interests of employees will be adversely affected if the proposed scheme proceeds, and also no reason to think that the scheme will prejudice the interests of counterparties to the litigation. For these reasons, there is no reason to think that the s 413 orders are not capable of being made at the second Court hearing and no reason not to convene the scheme meeting arises from these matters.

19. I now turn to the exercise of the Court’s discretion to make the orders in respect of the scheme. The relevant discretionary considerations involve two main questions being, first, whether the scheme is fit for consideration by Perpetual and, second, whether Perpetual will be properly informed as to the nature of the scheme. I am satisfied of those matters and there is nothing in the terms or structure of the scheme that gives rise to any apparent reason that, if agreed to at the scheme meeting, the Court would not approve the scheme at the second Court hearing.

Particular issues raised by PTCo

20. Mr Williams draws several matters to the Court’s attention, which he submits do not give rise to any reason that the Court would decline to approve the scheme at the second Court hearing.

21. First, Mr Williams notes that PTCo proposes to send communications in respect of the proposed scheme to all clients of the wealth management business to whom services are provided pursuant to the scheme contracts and all third party providers who provide services under (and other counterparties to) the scheme contracts, at least 28 days before the second Court hearing, providing specified information, and the proposed forms of communications were tendered. I accept Mr Williams’ submission that the proposed forms of communication are appropriate means of ensuring that persons whose interests are potentially affected by the scheme are made aware of it, and of their ability to seek to make submissions as to whether it should be approved at the second Court hearing.

22. Second, Mr Williams refers to Ms Evans’ evidence (at [102]ff) as to the due diligence undertaken in order to (1) identify whether any change in control (or any other aspect of the transaction) would enliven any rights of counterparties under provisions of those contracts, for example, termination rights or any requirement to obtain their consent; (2) identify whether those contracts had any foreign elements, for example, if a party to the contract was a foreign entity or the governing law of the contract was the law of a foreign jurisdiction; and (3) inform whether additional contracts should be transferred manually rather than pursuant to the scheme. Mr Williams also submits, and I accept, that the proposed scheme (if approved) would in any case have the effect of transferring a contract even if it contains a provision to the effect that it could not be assigned without a party’s consent, since that transfer would occur by operation of law: Stork ICM Australia Pty Ltd v Stork Food Systems Australasia Pty Ltd [2006] FCA 1849 (“Stork”) at [96]–[99]; JP Morgan Operations at [28]. The rationale, as explained in Stork, is that if the Court makes such orders, then any transfer that occurs, regardless of any contractual restrictions, occurs by operation of law under s 413(2) of the Act. I also recognise that any counterparty that wishes to oppose the approval of the scheme in light of such contractual provisions will have the opportunity to do so at the second Court hearing.

23. Third, Mr Williams points out that the client arrangement documents relate to financial products and services issued and/or provided in Australia and governed by Australian law. He recognises a possibility that some clients may be foreign entities but submits, and I accept, that that does not provide any reason not to make the orders sought.

Orders

24. For these reasons, I was satisfied that the proposed scheme was an arrangement for the purposes of s 411 of the Act and that an order convening the scheme meeting and ancillary orders should be made. I made the orders sought by PTCo at the conclusion of the first Court hearing on 4 August 2026.

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