RBC Investor Services Australia Nominees Pty Limited v Brickworks Limited

In RBC Investor Services Australia Nominees Pty Limited v Brickworks Limited, the applicant, RBC, acting on behalf of its client Perpetual, sought relief against Brickworks and Soul Pattinson on the basis of oppression under section 232 of the Corporations Act 2001 (Cth). The crux of the dispute was whether the maintenance of a cross shareholding arrangement between the two companies, where each company holds a significant percentage of the other's shares, was oppressive to the minority shareholders of both entities.

The primary legal issues the court had to address were whether the cross shareholding arrangement constituted an oppression of minority shareholders and if there was any agreement, arrangement, or understanding between the directors to maintain the cross shareholding in a manner that was oppressive. The court also needed to determine if the cross shareholding depressed the value of shares in the companies, entrenched the position of the incumbent boards, and disenfranchised shareholders. Furthermore, the court had to assess whether the cross shareholding arrangement was in the best interests of the companies and their shareholders.

The court examined the historical context and legal framework surrounding the cross shareholding, noting that while the arrangement was permissible at the time it was established, it would not now be allowed under current legislation. The court found that there was no evidence that the cross shareholding arrangement had depressed the value of the shares or entrenched the position of the incumbent boards to the detriment of the minority shareholders. The court also held that Perpetual had not provided sufficient evidence to support the claim that the cross shareholding arrangement was oppressive or that it had led to the disenfranchisement of shareholders. Consequently, the court dismissed the application, finding that the cross shareholding arrangement was not oppressive within the meaning of the Corporations Act.

The orders of the court were that the second cross-claim be dismissed, the cross-claimant pay the cross-defendants’ costs of the second cross-claim as agreed or taxed, and that publication of the reasons for judgment be suppressed for 48 hours to allow the parties to identify any confidential matters. Any application to vary the costs order could be made within 14 days by email to the Associate to Jagot J.