Court forces disclosure of legal advice in disputed IP transfer case

The background includes a 2018 complaint by the US Securities and Exchange Commission against a Nova director alleging concealment of his role in the company and misuse of some of the roughly US$14 million raised. A final judgment effective October 2021 required disgorgement and a penalty exceeding US$1.4 million. The court noted this history only as context, making no new findings on those allegations. No fraud or theft finding was made in this decision regarding the asset transfer either – ownership and enforceability remain issues for trial.

The more consequential ruling for corporate counsel and compliance teams concerns solicitor-client privilege. Nova sought disclosure of MacuMira’s legal file with its former law firm, arguing that MacuMira’s defence – that it reasonably and in good faith relied on the former executive’s representations about his authority – put MacuMira’s understanding of its own legal position in issue. The court agreed on a limited basis. It found privilege was waived for communications already shared with the former executive, and separately found an implied waiver over specific pre-agreement legal advice addressing whether shareholder approval was required, whether he had authority to sign, and whether the assets transferred represented substantially all of Nova’s assets. The court declined to extend disclosure to post-agreement advice or broader litigation-strategy communications, calling those requests too broad.

The court also denied a separate application by the former executive to replace live questioning with written interrogatories, citing insufficient medical evidence despite claims involving a heart condition. It ordered a modified process instead, capping questioning sessions at 20 minutes with a four-hour daily maximum, with written interrogatories used only for select preliminary matters.

For wealth and investment compliance teams, the lesson is direct: pleading good-faith reliance on an executive’s stated authority can expose otherwise privileged legal advice – a risk worth weighing before raising that defence in any transaction involving investor-funded assets.