Australian Securities and Investments Commission v Noumi Limited (No 7)

Freedom Foods used an enterprise system to track inventory. The disputed categories included stock that had expired, failed quality requirements, did not meet minimum shelf-life requirements or, in some cases, had never existed as physical stock.

ASIC alleged that at least $20 million of unsaleable inventory had not been properly written down. The evidence also showed that Mr Macleod had put himself in a central approval position: stock was not to be disposed of or written off without his authority.

The half-year accounts included about $9.8 million of lactoferrin invoices. The purchase order required regulatory approval and product meeting the customer's purity requirements.

At the relevant time, approval had not been obtained, sufficient product had not been produced, no product had been supplied or collected, and the customer had not paid. The Court found contraventions linked to the resulting half-year report.

The Court found that Mr Macleod contravened the reasonable-steps reporting duty for the 2020 half-year report. It also found breaches of the care and diligence duty concerning that report and, more narrowly, a failure from November 2019 to qualify, withdraw or correct the 2019 report and inform the board and ASX.

ASIC did not prove all of its case. It failed on the false-information allegation, the continuous-disclosure allegation against Mr Macleod and broader aspects of the 2019 claims. The Court also stressed that dishonesty was not alleged.