ASX Announcements and Waiver of Privilege

The Federal Court of TerraCom Ltd v ASIC [2022] FCA 208 found that a company had waived the legal privilege attached to a report prepared by PwC in letters to shareholders and an ASX announcement that conveyed the proposed conclusion on the subject matter of the report. This decision recalls the difficulties that can arise when it comes to reconciling the need to inform shareholders and the desire not to renounce the professional secrecy of the law.


  • TerraCom Limited (TerraCom) claimed solicitor-client privilege over a report prepared by PwC. The report was seized by an ASIC warrant (as part of an investigation into suspected Companies Act 2001 (Cth) violations by TerraCom and its current and former officers and employees).
  • The PwC report was prepared for TerraCom to receive legal advice from a law firm (the Law office) with respect to the issues raised by allegations of misconduct by a commercial general manager, and with respect to the proceedings he expected him to initiate.
  • The Court found that the privilege was “obviously” attached to the PwC report, but that a letter sent by TerraCom to the shareholders and an announcement by the ASX noting the alleged conclusion of the investigation waived the legal professional privilege on The report. The Court found that TerraCom’s reliance on the PwC report’s finding that its CEO and CFO had committed no wrongdoing “is inconsistent with maintaining the privilege that otherwise attaches to the report.”


TerraCom has been investigated by ASIC for alleged violations of the Companies Act 2001 (Cth) by TerraCom Ltd and its current and former officers and employees in connection with the testing, certification and sale of coal during the period from late 2016 to early 2020.

As part of the investigation, ASIC executed a warrant that resulted in the production of a particular document, a PwC “Project Rex Report” dated December 16, 2019 (the PwC report), to be entered by the ASIC.

TerraCom claimed professional secrecy over the PwC report. ASIC disputed this claim.

TerraCom asked the Federal Court to declare legal privilege attached to the PwC report, so TerraCom was not obligated to produce it to ASIC, and ASIC had no right to file it with ASIC. ‘inspect.

The context of the PwC report

  • August 13, 2019: TerraCom has terminated the employment of a Chief Commercial Officer, Justin Williams, in circumstances where he made serious allegations against the company and its officers and employees regarding the falsification of certificates of analysis of coal exported by TerraCom.
  • TerraCom has retained the law firm to act on its behalf and provide legal advice on the issues raised by Mr. Williams’ allegations of misconduct. To this end, the law firm has engaged PwC to provide forensic support in locating, identifying and providing a report to the law firm on potentially relevant documents and information so that the firm can lawyers can review the report and advise on its content.
  • September 3, 2019: Mr. Williams filed a blanket protection claim against TerraCom with the Fair Work Commission. Mr. Williams made various allegations, including that TerraCom obtained that the certificates of analysis used as the basis for its commercial invoices to customers were fraudulently altered by the monitoring company which produces these certificates of analysis. He alleged that he had detailed discussions with TerraCom’s CEO about this conduct, but was instructed by the CEO to continue with it.
  • October 11, 2019: TerraCom commissioned a communication consultancy company (the Communication consulting firm) to advise on a communications strategy and liaise with the media.
  • December 16, 2019: the PwC report has been produced.
  • February 26, 2020: The communications consultancy emailed an early draft of a statement to TerraCom, which included the wording: “[a] the forensic investigation revealed that the allegations were completely unfounded and that none of our employees did anything wrong”.
  • March 9, 2020: An article was published in the Australian Financial Review (the FRG). He reported that Mr Williams had alleged TerraCom’s coal analysis had been rigged with the help of major labs. He reported that TerraCom stressed that its “independent forensic investigation” found no wrongdoing.
  • March 12, 2020: TerraCom published an open letter to shareholders in the AFR. The letter refers to the dispute with Mr. Williams over the termination of his employment and states the following:

“As previously reported, TerraCom took seriously the allegations that its CEO and CFO were involved in a scheme related to the false analysis of coal samples and an independent forensic investigation has been conducted and has not been found. found no evidence of wrongdoing.

… that Mr. Williams is suggesting that TerraCom was involved in an international conspiracy to undertake bogus testing is ridiculous.

  • April 2, 2020: The communications consultancy emailed TerraCom with a draft media statement, which included the words:

“As previously reported, TerraCom has taken seriously Mr. Williams’ allegations that its CEO and CFO were involved in a scheme relating to the false analysis of coal samples and an independent forensic investigation has been conducted. .

This investigation revealed that the allegations against them were unfounded and that neither had done anything wrong.

The statement was released the following day as an ASX announcement.

The Court’s findings

The PwC report was favored

The Court found that the PwC report was “obviously” privileged on the basis that the purpose of preparing the report was for it to be given to the law firm as a basis for the law firm to give legal advice.

TerraCom has waived privilege

The Court reaffirmed that the test for waiver is whether there was an inconsistency between what a customer did and the maintenance of the privilege.

ASIC relied on three independent categories of disclosure of the substance, gist or conclusion of part or all of the PwC report outside of the privileged attorney-client relationship as amounting to a waiver of privilege on the report: first, to the communications consultancy; second, in the open letter to shareholders; and third, in the ASX announcement on April 3, 2020.

Disclosure to communications consultancy did not constitute waiver of privilege

Before the report was finalized, the executive chairman of TerraCom said a few things to youe communications consultancy on what it expected the report to say or find in order to prepare a draft press release. The Court concluded that youThe communications consultancy was required to maintain reliance on any information provided to it by TerraCom, except that which it had authority to disclose publicly, as is the ordinary incidence of a relationship. with a communications consultant.

In these circumstances, the Court found that the disclosure by TerraCom to youThe disclosure consultancy of facts related to the PwC report to be included in the draft press release in anticipation of future events but not subsequently publicly disclosed was not inconsistent with the maintenance of privilege , and the maintenance of the privilege would result in no injustice.

The shareholder letter and ASX announcements constituted a waiver of privilege

The Court ruled that TerraCom’s reliance on the PwC report’s conclusion that its CEO and CFO did not commit any wrongdoing is inconsistent with maintaining the privilege that otherwise attaches to the report. The Court said:

“TerraCom’s statements about the report’s findings were not made by chance; they were consciously and deliberately formulated in an open letter to shareholders and the market by means of an official ASX announcement. The intention was no doubt to reassure shareholders, the market and its regulators. It would operate a tangible injustice if TerraCom could, in effect, hide behind its statements as to the conclusion of the report while maintaining privilege on the report and thus keeping it beyond being tested by ASIC. Although ASIC itself can investigate the underlying facts and, in that sense, determine whether the reported conclusion of the PwC report is correct or not, it cannot verify whether TerraCom’s exculpatory statement which is supposed to be based on the report accurately reflects what the report concluded without having access to the report itself. Without access to the report, ASIC cannot verify whether TerraCom’s statements to shareholders and to the market are false or misleading in circumstances where it knows from EY’s letter that there are reasonable grounds for suspect that there has been wrongdoing. It is injustice. »

The Court held that voluntary disclosure of the gist or conclusion of a legal opinion is tantamount to a waiver of the entire opinion referred to, including the reasons for the conclusion. .

As a result, TerraCom has waived solicitor-client privilege over the PwC report, at least with respect to the subject matter of the allegations that its CEO and CFO were involved in a scheme relating to the false analysis of coal samples. .

How much of the privileged document was abandoned?

Without disclosing the full nature of the report, the Court summarized that the “relatively narrow” disclosure made by TerraCom necessarily led to at least the waiver of certain sections of the report.

However, in the Court’s view, even deleting these parts of the report would render them incomplete and susceptible to misunderstanding because of the way the report is structured and the way the different concerns intertwine.

Thus, in the circumstances, the partial disclosure of the contents of the report led in this case to the waiver of solicitor-client privilege with respect to the entire report.


This decision is a timely reminder to companies that are (or whose executives are) the subject of a regulatory investigation or other legal proceeding to exercise extreme caution when making public statements regarding the investigation. or the procedure. There may be a natural temptation to use these reports for commercial advantage; that is, seek to maintain the reputation (or reputation) of the company (or its officers) and the company’s share price. However, this temptation must be weighed against the risk of a waiver of solicitor-client privilege.

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