Balancing the candid disclosure of information to regulators, with the desire to maintain privilege: Recent developments regarding voluntary disclosure agreements

A decision by the Federal Court last week in relation to an interlocutory application before it has highlighted the risk of disclosure of communications that otherwise might be privileged under so called limited purpose or voluntary disclosure agreements (VDAs) to Australian regulators.

Voluntary disclosure of privileged communications to regulators, in particular ASIC (Australia’s corporate regulator), has long been thought an accepted method of ensuring the disclosure amounts to a limited waiver of privilege but does not constitute a broader waiver of privilege. Regulators and companies alike have treated the use of VDAs entered into between regulators and companies as being a helpful means of seeking to achieve a public policy goal of furthering the regulators’ ability to conduct effective and efficient regulatory investigations and actions.  

The case highlights the risks for businesses who, on the one hand, want to be seen to co-operate with a regulator as it investigates an issue, and, on the other, may wish to maintain their claims of privilege over the documents when they are being prosecuted or involved in related litigation.

The case

In Australian Securities and Investments Commission v Noumi Ltd [2024] FCA 349, the Federal Court found that Noumi had waived privilege over a PwC report, by reason of its disclosure of the PwC Report to ASIC, and irrespective of the PwC Report being the subject of a VDA that sought to limit the purpose and use of the disclosure.

The substantive proceedings

ASIC commenced substantive proceedings against Noumi and its past directors, alleging contraventions of the Corporations Act 2001 (Cth), regarding issues to do with Noumi’s accounting practices. 

The privilege claim

Noumi sought a declaration that legal professional privilege attached to certain documents, and resisted…