Background
Special purpose liquidators of Mosaic Brands Limited and twelve related companies sought to conduct public examinations into the companies’ affairs, including possible claims against current and former directors and former legal advisers Hamilton Locke. A dispute arose over documents recording or relating to safe-harbour advice provided by Hamilton Locke, with assistance from Deloitte, between 2020 and 2024.
Several current and former directors argued that the advice was privileged jointly in their favour, to the exclusion of the Mosaic companies. The liquidators contended that any privilege belonged jointly to the companies or, alternatively, that the directors had waived any exclusive privilege. The Court first addressed ownership and waiver of privilege, leaving disputes about particular sample documents for later determination if necessary.
The Court’s Holding
Justice Markovic held that the directors from time to time had retained Hamilton Locke to provide safe-harbour advice for their benefit, to the exclusion of the Mosaic companies. The directors therefore held exclusive legal professional privilege in that advice, notwithstanding the companies’ practical interest in safe-harbour planning and their payment of professional fees.
The Court nevertheless held that the directors waived that privilege to the extent the advice was recorded in board minutes. It also found waiver over the safe-harbour advice and related materials concerning events after 21 June 2021 that were supplied to the administrators under cover of a 12 December email, including a timeline, memorandum and related documents. That disclosure was not a waiver limited to the administrators; the privilege was lost more generally. Because there was no evidence that former director Sue Morphet had joined in the waiver, materials concerning events on or before her resignation on 21 June 2021 were not waived on that disclosure basis. The evidence did not establish a separate waiver merely from providing board minutes to the auditor, BDO.
The Court directed the parties to propose orders implementing the reasons, addressing costs and identifying whether a further hearing was needed to determine waiver across the sample document categories. A case-management hearing was reserved if agreement could not be reached.
Key Takeaways
- Safe-harbour advice may be privileged exclusively to directors where the retainer and surrounding circumstances show that they, rather than the company, were the legal adviser’s clients.
- Recording the substance of privileged advice in ordinary board minutes can be conduct inconsistent with confidentiality and therefore waive privilege.
- Providing privileged material to administrators may produce a general waiver, while joint privilege can preserve protection where not every privilege holder consented to disclosure.
Why It Matters
The decision highlights the need to define clearly who retains restructuring counsel and who owns privilege in safe-harbour advice. Engagement documents, communications and document-handling practices should consistently reflect the intended client relationship.
Directors seeking to preserve personal privilege should also consider keeping substantive legal advice out of ordinary company minutes and carefully controlling disclosures to administrators and other third parties. A confidentiality claim may fail even where the directors originally held the privilege exclusively.