Mosaic Brands Ltd went into administration in October 2024 and then liquidation. Special purpose liquidators were appointed in December 2025 to investigate possible claims, including against the directors.

From March 2020 the board had obtained safe harbour advice from Hamilton Locke, with Deloitte engaged to assist. In late 2024 the advisers prepared a timeline and memorandum for the administrators, and the material was sent with a statement that privilege was not waived.

The liquidators asked the Court to allow them to inspect and use the advice. In McCabe v Mosaic Brands Ltd [2026] FCA 1569 (22 October 2026), Justice Markovic decided two questions:

• First, the privilege in the safe harbour advice belonged to the directors exclusively – not jointly with the company.
• Second, the directors had waived that privilege. The scope of the waiver is still to be dealt with.

Why it matters

Safe harbour under section 588GA of the Corporations Act protects directors from insolvent trading liability while they develop and pursue a course of action reasonably likely to lead to a better outcome. The advice they rely on is central to that defence – and to any later claim against them.

The decision confirms that directors can hold privilege in that advice in their own right. But it also shows how easily the protection can go. The Court considered whether giving the advice to administrators, producing it under the administrators’ statutory powers, and recording it in board minutes amounted to waiver. A statement that “privilege is not waived” did not save it.

For directors, the result is that the advice they obtained to protect themselves may be used by liquidators investigating them.

What you should do now

• Have directors retain safe harbour advisers in their own names, even if the company pays.
• Keep the advice out of general board papers. Minute that advice was received and considered, not what it says.
• Limit circulation to the directors who need it, and make confidentiality clear to anyone else who sees it.
• Before giving any of it to an administrator or liquidator, get legal advice and the agreement of every director concerned, including former directors, and record the terms in writing.
• If you are a lender or adviser to a company in safe harbour, ask how the directors are protecting their advice.

If you would like to discuss how this affects your business or your board, please contact Angelo Conti, Managing Principal on angelo.conti@madgwicks.com.au

Source: McCabe v Mosaic Brands Ltd, in the matter of Mosaic Brands Ltd (In Liquidation) (Receivers and Managers Appointed) [2026] FCA 1569 – https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2026/2026fca1569

The information provided in this article is general in nature and cannot be relied on as legal advice, nor does it create an engagement. Please contact one our lawyers listed above for advice about your specific situation.