ASIC v Macleod: Lessons for privilege in Voluntary Disclosures to Regulators

Authors: Jonathon Ellis, Jonathan Tay, Evelyn Park, Jonathan Wong

Introduction

A pivotal appeal judgment delivered in December 2024 (lifted from non-publication orders in February 2025) clarified that the production of documents to Australian Securities Investment Commission (ASIC) pursuant to a voluntary disclosure agreement (VDA) did not amount to a waiver of legal professional privilege (LPP).

In the case of Australian Securities and Investments Commission v Macleod [2024] FCAFC 174 (Appeal Judgment), the Full Federal Court found in favour of ASIC and Noumi Limited (formerly Freedom Foods Groups Ltd) (Noumi) that the primary judge did not err in the application of the dominant purpose test but did err in his conclusion that LPP in the documents had been waived.

This article delves into the positive implications of the Appeal Judgment, which removes uncertainty for businesses the subject of any regulatory investigations who may be concerned about the exposure of risks arising from producing documents pursuant to a VDA for cooperation with regulators and its implications on protecting privileged information.

Background

The Appeal Judgement overturns part of an earlier interlocutory decision following orders for the production of documents in Australian Securities and Investments Commission v Noumi Ltd [2024] FCA 349 in April last year (Primary Judgment).

The parties agreed that the answer to whether a “Freedom Foods Group Limited – Investigation Report” dated 28 September 2020 (PwC Report) was protected by LPP would be determinative of other documents subject to a privilege claim. The genesis of the PwC Report followed Noumi’s engagement of Ashurst in July and August 2020 to provide legal advice on certain accounting issues which occurred in 2019.  Ashurst directed PwC to conduct enquiries on matters the subject of the PwC Report. See background and our summary of the Primary Judgement here.

The primary judge ultimately concluded that Noumi had waived privilege in the PwC Report by voluntarily disclosing it to ASIC (which was handed on a confidential basis pursuant to a VDA), thereby laying wide ranging implications for other businesses currently facing or anticipating any regulatory investigations.

Appeal Judgment

ASIC and Noumi (collectively, the Appellants) both filed applications in the Federal Court for leave to appeal the decision.

The Full Federal Court found that:

1. The primary judge did not err in the application of the dominant purpose test that as such, LPP was attached to the PwC Report. The Court observed:

•  Where there are multiple engagements of professional advisers, various engagements should be considered with a degree of specificity to determine the relevant purpose. In this case, though the previous engagements of PwC involved various non-legal purposes, the PwC Report ultimately arose from an engagement letter that expressly requested the report for the purpose of providing legal advice.
• That the mere possibility of a contingent subsequent use of the PwC Report (such as the provision of the Report to ASIC) could not displace the dominant legal purpose for which the Report was commissioned.

2. The primary judge erred in his conclusion that LPP in the PwC Report had been waived. The Court clarified that:

• A privileged document will not be deprived of its confidential character simply because some facts contained in it are established through separate means. For example, though ASIC in its investigations may have used the content of the PwC Report to identify chains of enquiry or witnesses to investigate, such investigations could not be said, of themselves, to amount to disclosure of the confidential information in the PwC Report. Further, to the extent that such use of the content of the PwC Report constituted a disclosure of confidential information, ASIC was expressly prevented by the VDA from doing so.
• It is the inconsistency between the conduct of the client and the maintenance of the confidentiality which effects a waiver of the privilege, not some overriding principle of fairness operating at large. Here, ASIC’s obligations to disclose material to the Parliament or Executive in certain circumstances did not generate the relevant inconsistency or unfairness to give rise to an implied waiver of privilege.

What does this mean for businesses operating in Australia?

The Appeal Judgment provides clarity that documents produced to regulators under a VDA will not necessarily amount to a waiver of any valid privilege claim. However, businesses should take care when entering into any VDA (or any other limited waiver arrangement with a regulator), to ensure that the terms limit the disclosure of any potentially privileged information. This is to ensure that the confidence of the information is not compromised and LLP is not waived.

ASIC’s deputy chair, Ms Court confirmed that “voluntary disclosure agreements have been in use by ASIC for over a decade and are an important tool to enable ASIC to fast track its investigations and for parties to cooperate with ASIC” and was pleased with the Full Court’s judgment as this will “remove uncertainty for parties considering whether to enter into such agreements with ASIC in the future.”