In a recent Federal Court decision, the former directors of Mosaic Brands, a collapsed fashion group, have been unsuccessful in their bid to prevent the group’s liquidators from accessing their safe harbour legal advice. Mosaic Brands, which owned brands such as Rivers, Millers, Noni B, Katies, and Rockmans, entered voluntary administration on October 28, 2024, and subsequently went into liquidation on July 1, 2025. An investigation by FTI Consulting found that Mosaic Brands’ total liabilities were estimated to be around $385 million.
Justice Brigitte Markovic’s judgement, handed down last week, upheld the waiver of privilege, allowing special purpose liquidators Andrew McCabe, Wenjie (Jessie) Wang, and Joseph Hayes at Wexted Advisory to utilize the advice in their investigation. The liquidators are currently examining possible claims against both current and former directors, as well as the group’s former lawyers, Hamilton Locke.
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The application, brought by the liquidators in May, followed a claim by directors, including David Wilshire, Scott Evans, Jacqueline Frank, and Quentin Gracanin, that the safe harbour advice belonged to them personally, rather than to Mosaic Brands. The court accepted that argument, with Justice Markovic finding that Hamilton Locke had been retained by the directors alone to give the safe harbour advice, which started in March 2020.
According to the court, while the safe harbour course of action is taken for the company’s benefit, the protection afforded by the regime is for the directors. However, the directors’ conduct was found to have waived this protection. In December 2024, director Richard Facioni provided administrators FTI Consulting with a safe harbour timeline, memorandum, and linked documents, which had been approved by the directors. Despite Facioni’s email stating that the directors did not intend to waive privilege, describing any disclosure as “inadvertent and unintentional,” the court found that the handover was an intentional act, taken on legal advice.
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Justice Markovic found the material was provided so the administrators could assess the strength of the directors’ safe harbour defence against any future insolvent trading claim. The waiver was not limited to the administrators. It extended to the general purpose liquidators, the special purpose liquidators and beyond. Additionally, the court found that the recording of safe harbour advice in board minutes also constituted a waiver, as the directors could have noted only that advice had been received or kept it in a separate document.
The court also found that sharing the advice with Mosaic staff did not breach its confidentiality and that the liquidators had not demonstrated a waiver when board minutes were sent to auditor BDO. Whether work done by Deloitte, which supported Hamilton Locke’s advice, is privileged is yet to be decided. The parties have been ordered to submit proposed orders, including on whether a further hearing is needed on the extent of the waiver. If they cannot agree, a case management hearing is listed for November 9.
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