In the matter of Brickworks Limited; In the matter of Washington H. Soul Pattinson and Company Limited

Case •

[2025] NSWSC 905

•

12 August 2025

No judgment structure available for this case.

Supreme Court


New South Wales

Medium Neutral Citation: In the matter of Brickworks Limited; In the matter of Washington H. Soul Pattinson and Company Limited [2025] NSWSC 905
Hearing dates: 1 August 2025
Date of orders: 1 August 2025
Decision date: 12 August 2025
Jurisdiction:Equity - Corporations List
Before: Black J
Decision:

Order convening scheme meetings and associated orders made.

Catchwords:

CORPORATIONS — arrangements and reconstructions — schemes of arrangement or compromise — application under s 411 of the Corporations Act 2001 (Cth) for orders convening meetings of members to consider and, if thought fit, to agree to linked schemes of arrangement — whether requirements to order scheme meetings are satisfied

Legislation Cited:

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

- Supreme Court Corporations Rules 1999 (NSW), r 3.4

Cases Cited:

- Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485; [1993] HCA 15

- F T Eastment & Sons Pty Ltd v Metal Roof Decking Supplies Pty Ltd (1977) 3 ACLR 69

- Re Absolute Equity Performance Fund Ltd [2022] FCA 933

- Re Advance Bank Australia Ltd (No 2) (1997) 136 FLR 281

- Re Amcor Ltd [2019] FCA 346

- Re Ansarada Group Ltd [2024] NSWSC 411

- Re APN News and Media Ltd (2007) 62 ACSR 400; [2007] FCA 770

- Re Ardent Leisure Ltd [2018] NSWSC 1665

- Re Arthur Yates & Co Ltd (2001) 36 ACSR 758; [2001] NSWSC 40

- Re Asaleo Care Ltd [2021] FCA 406

- Re Cashcard Australia Ltd (2004) 48 ACSR 738; [2004] FCA 223

- Re Cirrus Networks Holdings Ltd [2023] NSWSC 1298

- Re Coca-Cola Amatil Ltd [2021] NSWSC 270

- Re CSR Ltd (2010) 183 FCR 358; [2010] FCAFC 34

- Re Domain Holdings Australia Ltd [2025] NSWSC 701

- Re DuluxGroup Ltd (2019) 136 ACSR 546; [2019] FCA 961

- Re DWS Ltd (2020) 148 ACSR 616; [2020] FCA 1590

- Re Dyno Nobel Ltd [2008] VSC 154

- Re Ellerston Global Investments Ltd [2020] NSWSC 879

- Re ELMO Software Pty Ltd [2023] NSWSC 12

- Re Foster’s Group Ltd (No 2) [2011] VSC 547

- Re Foundation Healthcare Ltd (2002) 42 ACSR 252; [2002] FCA 742

- Re Healthscope Ltd (2019) 139 ACSR 608; [2019] FCA 542

- Re Intega Group Ltd [2021] NSWSC 1434

- Re InvoCare Ltd [2023] NSWSC 1180

- Re Isentia Group Ltd [2021] NSWSC 910

- Re Kidman Resource Ltd (2019) 139 ACSR 122; [2019] FCA 1226

- Re Legend Corporation Ltd [2019] FCA 1249

- Re Link Administration Holdings Ltd [2024] NSWSC 331

- Re McGrath Ltd [2024] NSWSC 555

- Re Mayne Pharma Group Ltd [2025] NSWSC 513

- Re NRMA Ltd (No 1) (2000) 156 FLR 349; [2000] NSWSC 82

- Re NMRA Ltd (No 2) (2000) 156 FLR 412; [2000] NSWSC 408

- Re Origin Energy Ltd [2023] NSWSC 1246

- Re Orion Telecommunications Ltd [2007] FCA 1389

- Re Pendal Group Ltd [2022] NSWSC 1648

- Re Permanent Trustee Co Ltd (2002) 43 ACSR 601; [2002] NSWSC 1177

- Re Staging Connections Group Ltd [2015] FCA 1012

- Re TPG Telecom Ltd [2020] NSWSC 772

- Re Villa World Ltd (2019) 139 ACSR 550; [2019] NSWSC 1207

- Re Vocus Group Ltd [2021] NSWSC 630

- Re Wridgways Australia Ltd [2010] FCA 1187

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

Nature of the application and background

  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 apply 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 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. On 2 June 2025, Brickworks announced to ASX that it had entered into a Combination Deed with WHSP, First Services Company Ltd (“Topco”) and Second Services Company Pty Ltd (“Subco”), which provides for a merger between Brickworks and WHSP to be implemented by two separate and inter-conditional schemes of arrangement, by which shareholders of Brickworks will transfer their shares to Subco and, in consideration, Brickworks shareholders (other than ineligible foreign shareholders) will receive, for each fully paid ordinary share in the capital of Brickworks, 0.82 Topco shares. Ineligible foreign shareholders will instead receive the proceeds of sale of the Topco shares to which they would otherwise have been entitled.

  4. Brickworks established an Independent Board Committee to address its consideration and negotiation of the terms of the proposed Combination Deed, and its members’ interests in the scheme are disclosed in section 11.1 of the Brickworks Combination Booklet. Two other Brickworks directors, Mr Robert Millner AO and Mr Todd Barlow, who are also WHSP directors and have other interests in WHSP, were not members of the Independent Board Committee and did not participate in Brickworks’ consideration or negotiation of the terms of the proposed Combination Deed. That Independent Board Committee has unanimously recommended that Brickworks shareholders vote in favour of the proposed scheme, in the absence of a superior proposal, and subject to the independent expert retained by Brickworks continuing to conclude that the Brickworks scheme is in the best interests of Brickworks shareholders. Subject to the same qualifications, each Brickworks independent director (and each other Brickworks director) intends to vote all Brickworks shares held or controlled by them in favour of the Brickworks scheme. Brickworks has also obtained a report from Kroll Australia Pty Ltd (“Kroll”) as to whether, in the expert’s opinion, the Brickworks scheme is fair and reasonable and in the best interests of Brickworks shareholders, and Kroll expresses the opinion that that scheme is fair and reasonable and therefore is in the best interests of those shareholders.

  5. On 2 June 2025, WHSP also announced that it had entered into a binding Combination Deed with Brickworks relating to the proposed merger. That merger is also to be affected by a proposed scheme of arrangement, which is inter-conditional with the scheme of arrangement in respect of Brickworks, under which all WHSP shares (except those held by Brickworks) would be transferred to Subco and, in consideration, WHSP shareholders (again excluding ineligible foreign shareholders) will be entitled to receive one share in Topco for each fully paid ordinary share in the capital of WHSP.

  6. WHSP’s board of directors has unanimously recommended that WHSP shareholders vote in favour of the scheme at the scheme meeting in the absence of a superior proposal and provided that the independent expert continues to conclude that the scheme is in the best interests of WHSP shareholders; and each WHSP director intends to vote for the scheme in respect of their personal holdings of WHSP shares and any proxies placed at their discretion, subject to those matters. The unanimous recommendation of WHSP’s board includes recommendations made by directors who hold an interest in WHSP and the proposed scheme, which I address below. WHSP in turn obtained an independent expert’s report from Lonergan Edwards & Associates Ltd (“Lonergan Edwards”) as to whether the WHSP scheme is in the best interests of WHSP shareholders. Lonergan Edwards there expressed the view that the advantages of the proposed scheme significantly outweighed its disadvantages from the perspective of WHSP shareholders and that the scheme was in the best interest of WHSP shareholders, in the absence of a superior proposal.

  7. Prior to implementation, but conditional on approval of the Brickworks and WHSP schemes, Topco is expected to issue at least 34 million Topco Shares (representing about 9% of its issued share capital) to new investors to raise about $1.4 billion (“Topco Equity Raising”), and Topco has already received underwritten equity commitments for 34.1 million shares.

  8. If both schemes become effective, the existing listed cross shareholding between Brickworks and WHSP will be removed; Brickworks and WHSP will become subsidiaries of Topco; each Brickworks shareholder (other than ineligible foreign shareholders) will receive 0.82 Topco Shares for each Brickworks share and each WHSP scheme shareholder (other than ineligible foreign shareholders) will receive one Topco share for each WHSP share; another cross-shareholding between WHSP and Topco will arise, but will be removed by way of a selective buy-back of Topco shares from WHSP, which I address below; Brickworks and WHSP will be delisted from ASX; and Topco will be listed on ASX and renamed as Washington H. Soul Pattinson and Company Limited. After implementation of the schemes and the Topco Equity Raising, the existing WHSP shareholders, Brickworks shareholders and Topco investors will each in aggregate hold approximately 72%, 19% and 9% of the Topco shares on issue, respectively.

  9. I made the orders sought by Brickworks and WHSP at the conclusion of the hearing on 1 August 2025. These are my reasons for doing so. I have drawn on the helpful submissions of Mr Thomas, with whom Ms Doyle-Markwick appears for Brickworks. and Mr Hutley, with whom Ms Scott and Ms Leitch appeared for WHSP, in this judgment.

Affidavit and other evidence

  1. Brickworks reads the affidavit dated 23 June 2025 of its solicitor, Mr Alexander Morris, who refers to the nature of Brickworks’ business, which I have noted above, and to the circumstances leading to this application.

  2. Brickworks also reads the affidavit dated 31 July 2025 of Mr Robert Kelly, who is also a solicitor acting for Brickworks in the application. Mr Kelly also outlines the nature of Brickworks’ business and sets out an overview of the proposed scheme. He also refers to the equity raising by Topco and to exclusivity arrangements in respect of the proposed scheme. Mr Kelly also addresses employee incentive plans that are maintained by Brickworks, including an executive rights plan, two employee share plans, an exempt employee share plan and a short term incentive plan and the manner in which those arrangements will be treated under the scheme. Mr Kelly also outlines the manner in which the proposed scheme meeting for the Brickworks scheme will be conducted and addresses the consent of the proposed chair and alternate chair of that scheme meeting.

  3. Mr Kelly also addresses the preparation of a Combination Booklet in respect of the proposed scheme which contains explanatory material in respect of the scheme and the proposed dispatch of documents relating to the scheme to Brickworks shareholders and to participants in relevant share plans who are beneficiaries of relevant trusts. Mr Kelly also refers to the verification of the Combination Booklet, which was in customary form, to proposed reminder communications to Brickworks’ shareholders, to a shareholder information line and an outbound call campaign, and to Brickworks’ proposed engagement with proxy advisers. My attention has been drawn to the proposed communications although, in accordance with current scheme practice, the Court’s approval has not been sought for those communications.

  4. Mr Kelly also refers to the manner in which Brickworks will make information concerning the proposed scheme available on its website, to proposed ASX announcements and to the manner in which notice of the second Court hearing will be given. Mr Kelly also refers to the possibility that Brickworks will seek approval of its shareholders, in a separate extraordinary general meeting, to the grant of performance rights by Topco to Mr Barlow, a director of Brickworks and WHSP.

  5. In the course of submissions, Mr Thomas also took me to the proposed Combination Booklet in respect of Brickworks, as amended by several replacement pages (Ex B2). Brickworks tendered a letter dated 1 August 2025 from the Australian Securities & Investments Commission (“ASIC”) (Ex B1) which, in common form, reserved its position as to s 411(17)(b) of the Act to the second Court hearing and indicated that it did not currently propose to appear to make submissions or intervene to oppose the scheme. Brickworks also tendered a deed poll dated 31 July 2025 made by First Services and Second Services in favour of shareholders in Brickworks (Ex B3).

  6. WHSP read the affidavit dated 23 June 2025 of its solicitor, Ms John, which set out the background to the transaction in respect of WHSP.

  7. WHSP also read the affidavit dated 31 July 2025 of Mr Barlow, who is managing director and chief executive officer of WHSP and also a director of Brickworks and Topco. Mr Barlow outlines the shareholders, directors and executive leadership of WHSP and referred to the cross shareholdings between WHSP and Brickworks and the proposed schemes of arrangement. He also refers to the proposed equity raising by Topco and to an announcement by WHSP that it would repurchase certain convertible notes in connection with the scheme, which would be cancelled in accordance with their terms. Mr Barlow also refers to a proposed selective buy-back of Topco shares, to remove a new cross-shareholding between WHSP and Topco that would arise on implementation of the scheme, and to the structure by which that selective buy-back would take place.

  8. Mr Barlow refers to the proposed execution of a deed poll by Topco and Subco in favour of WHSP shareholders, which has now taken place, and also referred to the conditions precedent to the scheme and a proposed final dividend to be paid by WHSP. He also addresses exclusivity arrangements in respect of the scheme; the proposed treatment of performance rights in respect of WHSP in connection with the scheme; WHSP’s proposed despatch of the Combination Booklet and the conduct of the proposed scheme meeting. He also addresses a shareholder information line and proposed communications to WHSP shareholders and outlined the steps taken to verify the WHSP Combination Booklet and the Brickworks Combination Booklet, which were in conventional terms. By a second affidavit dated 1 August 2025, Mr Barlow corrected a figure contained in his earlier affidavit.

  9. WHSP also tendered its proposed Combination Booklet and certain amendments made to the draft Combination Booklet (Ex S1), a proposed ASX announcement regarding the second Court hearing (Ex S2); a letter dated 1 August 2025 from ASIC to WHSP in conventional terms (Ex S3); the deed poll made on 31 July 2025 by First Services and Second Services in favour of shareholders in WHSP (Ex S4); and an ASX announcement made on 1 August 2025 in respect of the final dividend to be paid by WHSP (Ex S5).

Applicable principles and general matters relevant to the Court’s determination whether to convene the scheme meetings

  1. Mr Thomas and Mr Hutley both address the applicable principles. It is well-established that the Court’s role at the first Court hearing in respect of a scheme is to determine, in the exercise of its discretion, whether to approve the convening of a scheme meeting and the explanatory statement if it is satisfied of several matters, namely that the plaintiff is a Pt 5.1 body; the proposed scheme is an “arrangement” within the meaning of s 411 of the Act; the scheme is bona fide and properly proposed; ASIC has had a reasonable opportunity to examine the proposed scheme and explanatory statement, to make submissions and has had 14 days’ notice of the proposed hearing date of the first Court hearing; the procedural requirements under the Supreme Court (Corporations) Rules 1999 (NSW) (“Rules”) 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 Orion Telecommunications Ltd [2007] FCA 1389 at [5]; Re Staging Connections Group Ltd [2015] FCA 1012 at [19]; Re Wridgways Australia Ltd [2010] FCA 1187 at [30]; Re Ellerston Global Investments Ltd [2020] NSWSC 879 at [25]–[26]; Re Vocus Group Ltd [2021] NSWSC 630 at [12].

  2. The Court will not ordinarily summon a scheme meeting unless the scheme is of such a nature and cast in such terms that, if it achieves the statutory majority at the meeting, the Court would be likely to approve it. The Court will consider whether the proposed scheme is fit for consideration at the proposed scheme meeting, in the sense that it is of such a nature and cast in such terms that, if it achieves the statutory majority at the meeting, the Court would be likely to approve it on the hearing of a petition which is unopposed, and that members are to be properly informed as to the nature of the scheme before the scheme meeting: F T Eastment & Sons Pty Ltd v Metal Roof Decking Supplies Pty Ltd (1977) 3 ACLR 69 at 72, approved in Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485 at 504; [1993] HCA 15; Re Foundation Healthcare Ltd (2002) 42 ACSR 252; [2002] FCA 742 at [36] and [44], cited with apparent approval in Re CSR Ltd (2010) 183 FCR 358; [2010] FCAFC 34 at [58]; Re InvoCare Ltd [2023] NSWSC 1180 at [16]–[17]; Re Absolute Equity Performance Fund Ltd [2022] FCA 933 at [18]–[22].

  3. Each of the preconditions to the exercise of the Court’s discretion in s 411 of the Act is satisfied in this case. Brickworks and WHSP are each a company registered under the Act and a Pt 5.1 body. The proposed schemes are each an “arrangement” within the scope of s 411 of the Act where they involve the acquisition of the shares in Brickworks and WHSP in exchange for shares in Topco. There is no reason to doubt that the schemes are bona fide and properly proposed, where they provide for the acquisition of shares in Brickworks and WHSP in that manner. The Brickworks Independent Board Committee and WHSP directors have each unanimously recommended that Brickworks and WHSP shareholders respectively vote in favour of the scheme, in the absence of a superior proposal, and subject to the independent experts continuing to conclude that the schemes are in the best interests of Brickworks and WHSP shareholders, respectively. The independent experts, Kroll and Lonergan Edwards, have each expressed the opinion that the respective schemes are fair and reasonable and in the best interests of Brickwork’s and WHSP’s shareholders in the absence of a superior proposal.

  4. ASIC has here had a reasonable opportunity to examine the proposed scheme and scheme booklet and to make submissions; it has had the necessary notice of this hearing; and, as I noted above, it has indicated that it does not currently propose to appear to make submissions or intervene to oppose the orders sought at this hearing. The relevant procedural requirements under the Rules have generally been met, and I will relieve Brickworks and WHSP from compliance with r 3.4 of the Rules on the basis that an announcement will be published on their websites.

Additional matters

  1. Mr Thomas and Mr Hutley each draw additional aspects of the Brickworks scheme and the WHSP scheme to the Court’s attention. First, Mr Thomas addresses the use of proxy to vote at the Buy-Back Arrangement Meeting (as defined). He points out that, as I noted above, the implementation of the Brickworks and WHSP schemes will create a new cross shareholding between WHSP and Topco, since WHSP will hold shares in Topco which will control WHSP. Section 259D of the Act will require that this cross shareholding be removed within 12 months of its creation. It is proposed that the cross-holding be removed through a selective buy-back of WHSP’s shares in Topco, for nil consideration, after implementation of the schemes. Under cl 4 of the schemes, Brickworks and WHSP shareholders each appoint a proxy to vote in favour of the buy-back, although shareholders are able to revoke that proxy. These matters are disclosed in the Brickworks Combination Booklet, which also addresses the steps which would need to be taken if sufficient shareholders revoked their proxies and did not vote in favour of the necessary buy-back resolution.

  1. Mr Thomas submits, and I accept, that scheme proxies of the kind contemplated by these schemes have been considered previously in cases including Re Advance Bank Australia Ltd (No 2) (1997) 136 FLR 281 (“Advance Bank”), Re NRMA Ltd (No 1) (2000) 156 FLR 349; [2000] NSWSC 82 (“NRMA No 1”) and Re NRMA Ltd (No 2) (2000) 156 FLR 412; [2000] NSWSC 408 (“NRMA No 2”). Mr Thomas also submits, and I accept, that several principles emerge from those decisions, which he summarises as follows:

“first, there is no ‘in principle’ objection to a scheme proxy, where ‘exceptional circumstances’ justify its use: Re NRMA No 1, [73];

secondly, it is relevant to enquire whether the earlier (non-proxy) scheme resolution may be treated as a valid surrogate for the proxy resolution: Re NRMA No 1, [69], [72];

thirdly, it is relevant to enquire whether shareholders received appropriate and adequate information in the scheme documents to enable them to make an informed decision about how to vote on the proxy resolutions, including the significance of the proxy proposal: Re NRMA No 1, [70];

fourthly, it is relevant to enquire whether the use of the deemed proxy affects the rights of particular stakeholders and, if so, whether the affected stakeholders support the proposed scheme, and the proxy resolution: Re Advance Bank, 534.

finally, the justifications and advantages of the deemed proxy (such as avoiding the cost, confusion, and complexity of ‘inflicting members with yet another meeting to attend’) are relevant to whether it is a ‘fair’ part of the scheme: Re NRMA No 1, [72].”

  1. Mr Thomas submits, and I accept, that there is here no reason to doubt that, if the scheme were approved, the scheme proxy arrangement contained in cl 4 of the scheme would be legally effective, by operation of s 411, once the Court’s order approving the scheme is lodged with ASIC. Mr Thomas also submits, and I accept, that there are here “exceptional circumstances” which justify the use of a scheme proxy, where the need for the selective buy-back arises because of an uncommon (and possibly unique) cross-holding structure between WHSP and Brickworks which will, once the schemes are implemented, give rise to a new cross-holding between WHSP and Topco, arising from WHSP’s participation in the Brickworks scheme. I also accept that the scheme proxy addresses a consequence of the broader transaction, which is already subject to shareholder approval, and will promote compliance with s 249D of the Act. Mr Thomas also submits, and I also accept, that the scheme proxy is not being used to pass the schemes themselves but to facilitate consequential matters that only arise if and when the schemes become effective, consistent with the position noted in NRMA No 1 at [72]. The Buy Back Arrangement Meeting at which the proxy will be exercised is proposed to be held on 24 September 2025, shortly after the proposed scheme meetings on 10 September 2025 and that allows the Court more readily to find that a vote by shareholders in favour of a schemes indicates their attitude to the later meeting at which the proxy is to be exercised, again consistent with the position noted in NRMA No 1 at [72]. I also recognise that the proposed deemed proxy does not prevent shareholders from making a different choice about the Buy Back Arrangement Resolution by revoking that proxy.

  2. Mr Thomas also points out, and I also accept, that Brickworks’ Combination Booklet adequately discloses the position as to the proposed buy-back, including why it is necessary and its effect; includes information about the voting considerations relevant to the proposed buy-back; and indicates how a shareholder may revoke the proxy, and that should allow shareholders to make an informed decision about the proxy as part of a shareholder’s overall assessment of the merits of the Brickworks scheme. I also accept that only WHSP’s rights will be directly affected by the proposed buy-back and the acquisition of its shares in Topco for nil consideration would have no detrimental impact on other shareholders’ rights. It is also relevant that, as Mr Thomas points out, the use of a scheme proxy will enable Topco to ensure compliance with s 259D of the Act, without the cost and complexity of convening a further meeting of members within twelve months of the schemes being implemented, as would likely be required by that section, again consistent with the position noted in NRMA No 1 at [72].

  3. Mr Thomas also fairly draws attention to ASIC Regulatory Guide 60 which expresses the view, by reference to Advance Bank, that “such proxies are only likely to be allowed when the resolutions would be passed in any event without reliance on the proxies” (RG 60.99). Mr Thomas submits that that decision and the later decisions in NRMA No 1 and NRMA No 2 had regard to several factors and did not establish a precondition of that kind. There is force in that submission and, in any event, there is every reason to think that shareholders would here pass the buy-back resolution in any event, given the requirements of s 259D of the Act and the likelihood that shareholders who voted in favour of the schemes, which extinguish one cross-shareholding, would likely not favour another cross-shareholding. For these reasons, I accept Mr Thomas’ submission that the existence of the proxy arrangement does not warrant the court declining to convene the scheme meeting.

  4. Mr Hutley in turn submits, in respect of the WHSP scheme, that:

“The selective buy-back of shares in Topco held by [WHSP] will be approved and ratified by Topco shareholders at two general meetings, one before implementation and the other after implementation. The [WHSP and Brickworks] [s]chemes contain a mechanism for [WHSP and Brickworks] [s]hareholders to appoint a representative of Topco to act as their proxy for the purpose of voting in favour of the resolution to approve the selective buy-back. This appears in section 4 of the [s]cheme which is Annexure C to the [WHSP] Combination Booklet.

The selective buy-back is disclosed in section 4.9 of the [WHSP] Combination Booklet.”

  1. Mr Hutley also refers to the authorities which I have noted above and submits that:

“The effect of those decisions is that a court will carefully consider all the unique circumstances of each when assessing the fairness of a scheme proxy including whether shareholders have been adequately informed, whether the proposed proxy affects their rights and whether the earlier (non-proxy) scheme resolution may be treated as a valid surrogate for the proxy resolution and whether exceptional circumstances justify their use.

There are exceptional circumstances which justify the use of a scheme proxy in this Scheme. The transaction itself is unique. By historical artifact, [Brickworks and WHSP] hold… cross-shareholdings in each other and the purpose of this transaction is to remove those shareholdings. An incident of the implementation of the [s]hare [s]cheme is the creation of a new cross-shareholding, due to [WHSP]’s participation in the [s]cheme. To this end, the scheme proxy is not being used to pass the [s]cheme itself but rather is proposed to enable the restructure to be completed in a way that allows the affected companies to comply with section 249D of the Corporations Act.

Second, the earlier (non-proxy) scheme resolution may be treated as a valid surrogate for the later meeting. This arises from the disclosure of its use in the Combination Booklet and the fact that the meetings are close in time.

Third, any [WHSP] [s]cheme [s]hareholder may withdraw their scheme proxy: (4.9(c)).

Fourth, as in NRMA, the use of a scheme proxy presents considerable cost savings.

Fifth, the Combination Booklet explains clearly to shareholders the purpose of the scheme proxy and the considerations of shareholders relevant to it.”

  1. Mr Hutley submits, and I accept, for these reasons and those I have noted in addressing Mr Thomas’ submission, that the Court can be satisfied that the use of a scheme proxy by WHSP is fair and justified in the circumstances of these schemes. This matter does not give rise to any reason not to convene either scheme meeting.

  2. Second, Mr Thomas addresses Brickworks employee incentive plans. He points to section 5.14 of the proposed Brickworks Combination Booklet, which indicates that Brickworks operates several equity plans, which allow its employees, executives and senior leaders to be granted or receive Brickworks shares or performance rights which, subject to satisfaction of performance hurdles and/or service-based conditions, will, if vested, allow participants to receive fully paid ordinary shares in Brickworks (“BKW Employee Share Rights”). Mr Thomas also points out that cl 4.13 of the Combination Deed provides that Brickworks may deal with the BKW Employee Share Rights at its discretion but must ensure that there are no outstanding BKW Employee Share Rights by 5.00pm on the Effective Date of the Brickworks scheme. Section 5.14 of the Brickworks Combination Booklet indicates that Brickworks’ independent directors have resolved that all BKW Employee Share Rights will vest as fully paid ordinary shares prior to the BKW Share Scheme Record Date. Mr Thomas submits, and I accept, that holders of performance rights or similar rights who will receive Brickworks shares are not in a separate class of members by reason only that they also hold such rights: Re Cashcard Australia Ltd (2004) 48 ACSR 738; [2004] FCA 223; Re Foster’s Group Ltd (No 2) [2011] VSC 547 at [38]–[43]; Re Link Administration Holdings Ltd [2024] NSWSC 331 at [13]; Re Ansarada Group Ltd [2024] NSWSC 411 at [20] (“Ansarada”); Re Mayne Pharma Group Ltd [2025] NSWSC 513 at [16].

  3. Mr Hutley also addresses the position of performance rights as to WHSP. He points to Mr Barlow’s evidence that WHSP has in place equity plans that are governed by the “Soul Patts Rights Plan Rules” dated 13 December 2024 and refers to the terms of the Plan Rules, the nature of the rights on issue and the WHSP board’s decision that, if the WHSP scheme becomes effective, vesting conditions for all unvested performance rights (other than for Deferred Short Term Incentives) will be accelerated and converted into WHSP shares, although the holders of performance rights will not vote at the scheme meeting unless those rights have vested in the ordinary course ahead of the scheme meeting. This matter is disclosed in section 5.14 of the WHSP Combination Booklet. Mr Hutley also notes that, as disclosed in section 5.14 of WHSP’s Combination Booklet and Mr Barlow’s affidavit (Barlow 31.07.25 [79]–[85]), a relatively small number of WHSP shareholders have or will be issued shares which have restrictions placed on them (“Restricted SOL Shares”). These shareholders will participate in the scheme and will receive Topco shares, in exchange for their Restricted SOL Shares, which will have equivalent restrictions placed on them, and have consented to the imposition of these restrictions on their Topco shares. Mr Barlow’s evidence (Barlow 31.07.25 [80]–[83]) is also that Topco intends to apply those restrictions to enable those affected shareholders to obtain the benefit of rollover relief in relation to the deferred taxing point on the Restricted SOL Shares. These matters are also disclosed in section 5.14 of the WHSP Combination Booklet. Mr Hutley submits, and I accept, that the acceleration and vesting of performance rights does not place the holders of those rights into a different class and the imposition of disposal restrictions on rights attaching to Topco Shares for some (but not all) WHSP shareholders is similarly not class creating, where their rights are not so dissimilar from the rights of other shareholders so as to make it impossible for them to consult together with a view to their common interest, and adds additional cases to those cited by Mr Thomas for that proposition: Sovereign Life Assurance Company v Dodd [1892] 2 QB 573 at 583; First Pacific Advisers LLC v Boart Longyear Ltd (2017) 121 ACSR 136 at [80], [106]–[107]; [2017] NSWCA 116; Re Healthscope Ltd (2019) 139 ACSR 608 at [107]; [2019] FCA 542; Re Villa World Ltd (2019) 139 ACSR 550; [2019] NSWSC 1207 at [29] (“Villa World”); Re APM Human Services International Ltd [2024] NSWSC 1095 at [20].

  4. Mr Hutley also notes that two employees, who are also WHSP shareholders, were issued “Deferred STI Rights” by WHSP on 4 March 2025 (Barlow 31.07.25 [90]) and that, as disclosed in s 5.14(d) of the WHSP Combination Booklet, the Deferred STI will be cancelled and they will be issued equivalent performance rights in Topco (Barlow 31.07.25 [90]–[91]), relying on an ASX waiver of the applicable requirements of ASX Listing Rule 6.23 (Barlow 31.07.25 [91(a)]). Mr Hutley submits, and I accept, that for the same reasons and by reference to the case law on which Mr Thomas also relied, these employees are not in separate class of members by reason only that they also hold incentive rights.

  5. Third, Mr Thomas addresses the question of performance risk. He points out that the Brickworks scheme adopts a conventional mechanism of making the transfer of Brickworks shares to Subco conditional on the prior issue of the BKW Scheme Consideration (as defined), and Brickworks shareholders are therefore protected against the risk that their shares are transferred without receiving that consideration. Topco and Subco have also entered a deed poll in their favour which is governed by New South Wales law. I accept that these are well-established means of managing performance risk and adequately address that risk: Re ELMO Software Pty Ltd [2023] NSWSC 12 at [27]–[28]. I reach the same conclusion for the same reasons in respect of WHSP.

  6. Fourth, Mr Thomas recognises that the Brickworks Combination Deed contains exclusivity provisions which apply during the “Exclusivity Period”, which is ten months from 2 June 2025 unless the Combination Deed is terminated earlier or the “End Date”, 31 March 2026, is extended by agreement. The exclusivity provisions include “no shop”, “no talk”, and “no due diligence” provisions and, provided the “no shop” restriction has been complied with, the “no talk” and “no due diligence” provisions are subject to Brickworks’ directors’ fiduciary duties. The proposed Brickworks Combination Booklet discloses these provisions in section 11.16 and Mr Kelly’s evidence is that these exclusivity arrangements were the result of arms-length commercial negotiations between Brickworks and WHSP, in which the parties were separately advised (Kelly 31.07.25 [40]–[41]).

  7. I accept that these exclusivity provisions are prominently disclosed in the Brickworks Combination Booklet and that exclusivity provisions in this form are now commonplace in schemes of arrangement and are not inconsistent with the Takeovers Panel’s guidance as to “deal protection”: Villa World at [23]; Ansarada at [23]. The Court is concerned to ensure that any exclusivity period should be for no more than a reasonable period, capable of precise ascertainment; an exclusivity clause directed at dealing with an unsolicited alternative proposal should be subject to a fiduciary carve out; and the provisions should be clearly disclosed in the explanatory statement sent to shareholders: Re Arthur Yates & Co Ltd (2001) 36 ACSR 758; [2001] NSWSC 40 at [9]; Re DuluxGroup Ltd (2019) 136 ACSR 546 at [36]–[37]; [2019] FCA 961; Re TPG Telecom Ltd [2020] NSWSC 772 at [22]; Re Isentia Group Ltd [2021] NSWSC 910 at [23]; Re Asaleo Care Ltd [2021] FCA 406 at [55].

  8. I recognise that the “no talk” and “no due diligence” provisions are subject to a fiduciary carve-out and the exclusivity arrangements have been disclosed in section 11.16 of the proposed Brickworks Combination Booklet. Mr Thomas also submits and I accept that the Exclusivity Period in the Brickworks scheme is reasonable having regard to the size, nature, and complexity of the transaction, and that the specified period of ten months (with eight months remaining) is commensurate with, although at the long end of, exclusivity periods that have previously been accepted as reasonable in comparable transactions: Re Dyno Nobel Ltd [2008] VSC 154 at [26]–[27]; Re Domain Holdings Australia Ltd [2025] NSWSC 701 at [25]. These provisions also provide no reason not to convene a meeting of members to vote on the Brickworks Scheme.

  9. Mr Hutley in turn notes that WHSP Combination Deed also includes “no shop”, “no talk” and “no due diligence” restrictions and a “notification” obligation, and addresses the applicable principles. He submits, and I accept, that the exclusivity clause in the WHSP scheme is also capable of precise ascertainment, where it is restricted to the “Exclusivity Period” which also lasts from 2 June 2025 until 31 March 2026, subject to any extension under cl 3.6 of the Combination Deed. He also submits this is a reasonable period and I accept that submission on the same basis that I have accepted Brickworks’ submission to the same effect. Mr Hutley also submits and I accept that the “no talk” and “no due diligence” restrictions in cl 7.2(a) are subject to the overriding obligation not to breach the directors’ fiduciary or statutory duties (cl 7.2(b)), and the fact that the “no shop” restriction is not subject to fiduciary carve-out is consistent with authority. Mr Hutley also submits, and I accept, that the exclusivity provisions in respect of the WHSP scheme are clearly disclosed in section 11.16 of the WHSP Combination Booklet and relies on Mr Barlow’s evidence that they were the product of arms’ length negotiations between the parties. These matters give rise to no reason not to convene the scheme meetings in both schemes.

  10. Fifth, Mr Thomas points out that cl 3.7(b) of the Brickworks scheme provides that each Brickworks shareholder is taken to have given various warranties to Brickworks, Topco, and Subco, including that, at the time of their Brickworks shares being transferred to Subco, be fully paid and free from all encumbrances and any restrictions on transfer of any kind. Mr Hutley also addresses this matter in respect of the WHSP scheme. I accept that the case law has recognised the legitimacy of deemed warranty provisions, where appropriate disclosure is made, since their purpose and effect is to ensure that a scheme participant whose shares are subject to an encumbrance is not unfairly advantaged: Re APN News and Media Ltd (2007) 62 ACSR 400 at [57]–[63]; [2007] FCA 770; Re Ardent Leisure Ltd [2018] NSWSC 1665 at [26]; Re Intega Group Ltd [2021] NSWSC 1434 at [24]; Re Coca-Cola Amatil Ltd [2021] NSWSC 270 at [25]. The deemed warranties are disclosed in the Brickworks and WHSP Combination Booklets and also provide no reason why the Court would not make orders convening the scheme meetings.

  11. Sixth, Mr Thomas notes that ineligible foreign shareholders in Brickworks will not receive Topco shares by way of consideration for the transfer of their shares to Subco, and Topco will cause the Topco shares to which they would have been entitled to be sold, and the proceeds of sale to be remitted to those shareholders, after deducting the costs of sale. Mr Hutley also addresses the treatment of ineligible shareholders under the WHSP scheme. I accept that this approach reflects common practice in scrip-for-scrip schemes of arrangements and that ineligible foreign shareholders in both schemes are not in a separate class where they will receive the same scheme consideration as other shareholders under the schemes: Re Amcor Ltd [2019] FCA 346 at [41]–[44]; Re Cirrus Networks Holdings Ltd [2023] NSWSC 1298 at [22]–[23].

  12. Seventh, Mr Thomas refers to Mr Kelly’s evidence that Brickworks intends to pay a final dividend to shareholders of 48.4 cents per share in respect of the 2025 financial year, irrespective of whether the scheme proceeds (Kelly 31.07.25 [30]). Mr Hutley also addresses the payment of a dividend of 59 cents per share by WHSP in respect of that financial year. I accept that the payment of these dividends will not affect the scheme consideration and does not amount to financial assistance: Re Legend Corporation Ltd [2019] FCA 1249 at [74]–[75]; Re Origin Energy Ltd [2023] NSWSC 1246 at [38].

  1. Eighth, Mr Thomas draws attention to Brickworks’ proposed communications with shareholders, including the conduct of an inbound shareholder information line; the making of outbound calls to the largest 2000 shareholders (but excluding the top 75 BKW Shareholders; and one on one engagement with the largest 75 BKW shareholders, with reference to an investor guide prepared for that purpose. Brickworks has also forwarded further shareholder communications to the Court since I made orders at the first Court hearing. Mr Hutley also addressed WHSP’s proposed communications with shareholders, comprising an inbound shareholder information line and outbound calls to retail shareholders of WHSP. Consistent with recent practice, Brickworks and WHSP do not seek approval for these communications. No matters arise from them that give rise to concern at this stage, although the content of one on one communications with shareholders will likely need to be addressed at the second Court hearing.

  2. Ninth, Mr Thomas points out that a further meeting of Brickworks shareholders may be held shortly after the Brickworks scheme meeting to consider resolutions approving the grant of performance rights by Topco to Mr Barlow. Mr Hutley also noted that, at the time of the first Court hearing, WHSP was also considering whether to hold a general meeting of holders of its ordinary shares to consider the grant of performance rights by Topco to Mr Barlow. After I made orders at the first Court hearing, the Court was provided with further information concerning notices of these extraordinary general meetings. These matters also provide no reason not to convene the scheme meeting.

  3. Tenth, Mr Hutley points out that, on 2 July 2025, WHSP announced to ASX that it had agreed to repurchase approximately $435 million of senior unsecured convertible notes listed on Singapore Exchange Securities Trading Limited (“SGX Notes”). He points out that, as set out in section 11.8 of the WHSP Combination Booklet, these notes would convert into fully paid ordinary shares in WHSP in 2030. He notes that, on 4 July 2025, WHSP repurchased $218 million (1,089) SGX Notes; on 16 July 2025, WHSP repurchased $15 million (75) SGX Notes; and WHSP intends to repurchase all of the remaining SGX Notes (1,086) for a price to be determined by reference to the closing price of WHSP ordinary shares one business day after shareholder approval at the WHSP and Brickworks scheme vote with a settlement date two business days after that date. Section 8.4 of the WHSP Combination Deed provides, and sections 1.9 and 4.6 of the WHSP Combination Booklet disclose that the Topco Equity Raising is intended to fund the repayment of the outstanding SGX Notes. I note this matter which also does not provide any reason not to convene the scheme meetings.

  4. Eleventh, Mr Hutley points out that all but one WHSP director have relevant interests in WHSP shares; two directors in WHSP (Mr Robert Millner AO and Mr Barlow) have an interest in 6.51% and 0.25% of WHSP’s issued shares respectively; and Mr Barlow holds 60 shares in Topco, as disclosed in sections 3.4, 11.1, 11.3 and 11.5 of the WHSP Combination Booklet. Mr Barlow also holds performance rights which will be accelerated and 524,404 shares will be allocated to him (Barlow 31.07.25 [75]–[76]). These matters are disclosed in WHSP’s Combination Booklet. I accept that it is open to WHSP’s directors to make a recommendation concerning the scheme where their interests arising from these matters are sufficiently disclosed in the scheme booklet: Re Kidman Resource Ltd (2019) 139 ACSR 122; [2019] FCA 1226 at [115]; Re DWS Ltd (2020) 148 ACSR 616; [2020] FCA 1590 at [41]–[49]; Re Pendal Group Ltd [2022] NSWSC 1648 at [25]; Re McGrath Ltd [2024] NSWSC 555 at [25]. These matters also do not give rise to any class issues in respect of the scheme.

  5. The several matters to which my attention has been drawn, and which In have addressed above, give rise to no reason not to convene the scheme meeting.

Exercise of the Court’s discretion whether to convene the scheme meeting

  1. Returning now to the wider issues relevant to the exercise of the Court’s discretion whether to convene the scheme meeting, the independent experts each here express the opinion that the respective schemes are fair and reasonable and therefore are in the best interests of Brickworks and WHSP shareholders, in the absence of a superior proposal. Brickworks’ Independent Board Committee and WHSP’s directors have unanimously recommended the shareholders vote in favour of the scheme in the absence of a superior proposal and provided that the independent experts do not withdraw their conclusions that the scheme is in the best interests of Brickwork’s and WHSP’s shareholders. The disclosure in the scheme booklet has been verified. I am satisfied that there is otherwise nothing in the terms of the schemes or in their effect on Brickwork’s and WHSP’s shareholders that would warrant the Court declining to approve the schemes at the second Court hearing, if they respectively receive the statutory majorities required by s 411(4)(a)(ii) of the Act at the scheme meeting.

US Securities Act

  1. Brickworks also draws the Court’s attention to the statement contained in its Combination Booklet 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.

  1. Mr Thomas points out that Topco will rely on the Court’s approval of the Brickworks scheme in order to qualify for the s 3(a)(10) exemption, and draws the Court’s attention to this matter at the time of the first Court hearing, in accordance with common practice: Re Permanent Trustee Co Ltd (2002) 43 ACSR 601 at [11]–[20]; [2002] NSWSC 1177. This matter is otherwise properly deferred to the second Court hearing.

Orders

  1. For these reasons, I made the orders sought by Brickworks and WHSP at the conclusion of the hearing on 1 August 2025.

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Decision last updated: 13 August 2025

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