Since the enhanced whistleblower protections in the Corporations Act 2001 (Cth) (Corporations Act) commenced on 1 July 2019, there have been limited cases detailing how these expanded protections operate. However, the Federal Court of Australia has recently provided guidance on the parameters of these whistleblower protections in two recent decisions, Mount v Dover Castle Metals Pty Ltd [2025] FCA 101 (Mount) and Reiche v Neometals Ltd (No 2) [2025] FCA 125 (Reiche).
In both cases, applicants sought to engage whistleblower protections and while both applications were unsuccessful, these decisions provide helpful commentary on the phrases ‘improper state of affairs or circumstance’, ‘reasonable grounds for suspicion’ and ‘detriment’, as used in the Corporations Act whistleblower provisions, in addition to issues relating to burden of proof and confidentiality when a disclosure is made to both non-eligible and eligible recipients.
Key facts from each decision
Mount decision
Mr Mount, was appointed as the acting CEO of mine operations at Dover Castle Metals Pty Ltd (DCM). Within four days of starting in his role, he emailed reports to two of DCM’s four directors containing allegations of misconduct, negligence and/or incompetence against other directors. Mr Mount considered his reports were whistleblower disclosures under the Corporations Act.
Separately, Mr Mount issued instructions to suspend operations at the mine site and emailed all directors accusing them of insubordination for disregarding safety concerns and continuing operations. Three weeks into his tenure, DCM terminated Mr Mount’s employment without providing any reasons.
Mr Mount brought proceedings in the Federal Court of Australia alleging that DCM had contravened the Corporations Act by terminating his employment due to his whistleblower disclosures and revealing his identity as the whistleblower and alleging that several of DCM’s directors were involved in the contraventions. Mr Mount alleged that one of the directors also breached the Corporations Act by demanding that he return a company car and reporting it as stolen, thereby damaging his reputation and financial position. Mr Mount sought declarations and compensation, including for termination in breach of his employment contract.
Justice Katzmann dismissed the application, finding that DCM had terminated Mr Mount’s employment due to Mr Mount engaging in misconduct by improperly removing directors from a board meeting, misusing company funds and disclosing confidential information, and not due to a belief or suspicion that he had made a whistleblower disclosure. Interestingly, The Court held that although DCM was entitled to terminate Mr Mount’s employment, summary dismissal was not justified. No damages were awarded, however, as Mr Mount had fully mitigated his losses.
Reiche decision
Mr Reiche was employed by Neometals Ltd and made six alleged protected disclosures related to reverse engineering and the exploitation of proprietary IP, conflicts of interest, strategic risks, a forged signature and governance issues.
Mr Reiche alleged that, as a result of these disclosures, he was subjected to bullying and harassment, had a claim for time off in lieu rejected and was ultimately made redundant after requesting an investigation be conducted in accordance with Neometals’ whistleblower policy. Mr Reiche claimed that his six disclosures to Neometals qualified him for protection under the Corporations Act, and that Neometals’ conduct caused him detriment.
Justice Feutrill dismissed the claim, finding that Mr Reiche’s disclosures were not the reason for his dismissal, which was a genuine redundancy. The Court also found that there was no bullying or harassment and that there was no detrimental conduct in respect of the time in lieu claim.
Guidance on Key Principles
What is a disclosable matter?
Under the Corporations Act a disclosure of information qualifies for protection if three conditions are met:
- the discloser is an eligible whistleblower;
- the disclosure is made to an eligible recipient; and
- the discloser has reasonable grounds to suspect that the information concerns misconduct or an improper state of affairs or circumstances.
While the eligibility of whistleblowers and recipients is relatively straightforward, questions have remained with respect to the third requirement.
‘Reasonable grounds for suspicion’
These two decisions have provided guidance on the subjective and objective elements to assess whether the discloser has ‘reasonable grounds for suspicion’, and how the disclosure is viewed by the respondent at the time of receipt.
The Mount decision confirmed that ‘reasonable grounds for suspicion’ requires an objective assessment of whether there is:
- the existence of facts sufficient to induce that suspicion in a reasonable person; and
- an evidentiary basis supporting the allegations which demonstrate the discloser’s state of mind at the time of the disclosure.
The Reiche decision confirmed that the discloser must:
- subjectively have grounds for suspicion; and
- that there must be objectively reasonable grounds for that suspicion.
The Reiche decision further confirmed that the alleged perpetrator’s belief as to:
- whether the whistleblower held reasonable grounds for suspicion; and
- whether those grounds were objectively reasonable having regard to the nature and clarity of the information the whistleblower possessed,
is relevant to whether the disclosure of information would quality for protection under the Corporations Act.
‘Misconduct or an improper state of affairs or circumstances’
While ‘misconduct’ is defined in the Corporations Act to include fraud, negligence, default, breach of trust and breach of duty, the phrase ‘improper state of affairs of circumstances’ is not defined, leading to some uncertainty around what amounts to a disclosable matter.
In both Reiche and Mount, the Court agreed that the phrase is to be interpreted ‘according to its ordinary meaning’ and can include conduct that is ‘not in accordance with truth, fact, reason or rule, abnormal, incorrect, inaccurate, erroneous or wrong’.
However, the Reiche decision helpfully stated that the ordinary meaning of the phrase must be considered in its factual context, and that information will only amount to an ‘improper state of affairs or circumstances’, where it is of relevance to the regulatory functions (compliance, enforcement and/or discipline) of ASIC, APRA or another Commonwealth authority in relation to the regulated entity.
This interpretation aligns with the purpose of the whistleblower protections to ensure compliance with and enforcement of the Corporations Act and Commonwealth laws, and matters that assist regulators in performing their functions.
In Reiche, disclosures that were found to be an improper state of affairs or circumstances included those which alleged fraud, significant safety risks and poor governance which, if not addressed, left Neometals vulnerable to significant financial, operational and legal risk. In contrast, in Reiche and Mount allegations of insubordination, requests for reports or information from employees, requests for assistance from board members and strategic or commercial risks regarding operations which did not relate to compliance with ASX obligations, governance or any other law were not considered disclosable matters.
In the employment context, although the Corporations Act excludes personal work-related grievances from whistleblower protections, employers have often erred on the side of caution by treating any allegations of systemic conduct as a disclosable matter. However, the guidance from the Court clarifies that to amount to an improper state of affairs, it must involve a potential legislative breach or relate to the functions of regulator such as ASIC, APRA, Comcare, AHRC or the FWO. This may limit the scope of protection, as not every allegation of systemic behaviour would engage or assist the functions of an applicable Federal regulatory body.
What amounts to a ‘detriment’?
One of the key protections for whistleblowers is the protection against detriment.
The Mount decision notes that Parliament intended for a ‘detriment’ to encompass any kind of disadvantage suffered by a whistleblower. In that decision, the termination of Mr Mount’s employment was found to constitute detrimental conduct. However, the demand for the return of a company car was not considered a separate detriment, as it was a consequence of the termination itself. Further, disparaging remarks made about Mr Mount did not amount to detrimental conduct because he could not prove his reputation had been damaged by those remarks.
Mr Mount’s claim was ultimately unsuccessful because the relevant decision makers neither believed nor suspected that Mr Mount had made a protected disclosure under the Corporations Act.
In Reiche, the Court clarified that for an action or decision to be considered detrimental, it must be shown that the disclosure was the motivating reason behind the conduct.
The immediate termination of Mr Reiche’s employment was found to be a detriment, as it reduced the time in which he could seek to obtain other employment. However, as the Court found that his termination was not motivated by his whistleblower disclosures, it therefore did not amount to a ‘detriment’ in the sense proscribed by the Act.
The rejection of Mr Reiche’s time in lieu claim was also not considered detrimental, as he had no contractual entitlement to time in lieu, and the decision to reject his claim was not arbitrary, capricious or unreasonable. Although the Court found there was no bullying or harassment, it noted that bullying and harassment could amount to detrimental conduct if it occurred due to a protected disclosure.
Disclosures made to both an eligible and non-eligible recipient
In Mount, Justice Katzmann confirmed that when a whistleblower makes a disclosure to both an eligible and non-eligible recipient, the whistleblower protections still apply to the disclosure made to the eligible recipient.
However, the Court left open the argument that a whistleblower may waive their right to confidentiality by simultaneously disclosing their allegations to eligible and non-eligible recipients. Entities should assume that confidentiality continues to apply, even where the discloser has shared the information with non-eligible recipients.
The Court also noted that an employer may terminate a whistleblower’s employment for disclosing confidential information to a non-eligible recipient, however no action could be taken against the whistleblower for making a disclosure to an eligible recipient. We recommend employers exercise caution before taking any disciplinary action in such circumstances.
Discharging the onus of proof
Generally, the applicant bears the onus of proving a whistleblower contravention. However, where it is agreed by the parties or the Court has found that a whistleblower has suffered detriment, the onus of proof shifts to the respondent to demonstrate that the conduct in question was not motivated by a belief or suspicion that the whistleblower had made a protected disclosure.
As emphasised in Mount, contemporaneous documentary evidence often has more weight than witness evidence in assessing decision-making processes. This highlights the need for good record-keeping practices.
In Reiche, the Court held that direct evidence from the person who engaged in the detrimental conduct may discharge the onus but all the circumstances and evidence must be considered before making findings about a person’s state of mind. Additional complexity arises where decisions are made collectively, such as by a board of directors, because even if one decision-maker is influenced by the fact of a disclosure, then the entire decision may be tainted.
Available relief
In Mount, the Court confirmed that whistleblowers cannot seek pecuniary penalty orders for breaches of the confidentiality and victimisation protections. Instead, their avenues of redress are limited to declaratory relief, compensation or other specified remedies for such breaches.
The power to seek pecuniary penalties is reserved to ASIC and other identified regulatory bodies. While individual whistleblowers cannot pursue these penalties, increased regulatory action in this area is anticipated, so organisations should not be complacent.
Key steps when faced with a disclosure
These two decisions provide helpful insights into the operation of the whistleblower protections under the Corporations Act.
When handling disclosures, organisations should ensure they follow these key steps:
- Carefully consider whether a disclosure attracts the protections of the Corporations Act;
- Ensure eligible recipients understand their responsibilities and are equipped to handle disclosures appropriately;
- Maintain confidentiality over disclosures, even if they are made to eligible and non-eligible recipients;
- Where a whistleblower is an employee, consider separating those handling the disclosure from those making any decisions about the individual’s employment;
- Keep detailed and contemporaneous records of all interactions and decisions, including clear justifications for any actions that could be perceived as detrimental, to assist with discharging the onus of proof if a whistleblower claim arises.
At McCullough Robertson, we regularly advise clients on whistleblower protections, corporate governance, and employment law. If you need assistance understanding your obligations under the Corporations Act and ensuring compliance with whistleblower protection obligations, please contact Nicola McMahon, Special Counsel and Amber Sharp, Partner in the Employment Relations and Safety team.
