Harold Mitchell breached director’s duties, but only on ‘narrow basis’: Federal Court
The one-time adman will escape disqualification for a ‘narrow’ breach in a case over the awarding of tennis broadcast rights.
Melbourne business identity Harold Mitchell has been found to have breached his director’s duties under the Corporations Act in a Federal Court case related to a broadcast deal with Seven West Media while he was director of Tennis Australia, but will escape disqualification as a company director.
Justice Jonathan Beach told the Federal Court in Melbourne on Friday that he found for the Australian Securities and Investments Commission in its case against Mr Mitchell but “on a narrow basis only”.
The decision means, Justice Beach said, that Mr Mitchell would not face disqualification as a company director but “any specific deterrence may well be best served by the making of a declaration and a moderate pecuniary penalty”.
Mr Mitchell was found to have failed to discharge his duties with due care on three occasions during dealings with Seven commercial director Bruce McWilliam, with Justice Beach saying that Mr Mitchell “in my view stepped over the line with his dealings with Mr McWilliam” before Tennis Australia renewed its broadcast deal with Seven in 2013 without putting the rights to tender.
But Justice Beach said Mr Mitchell had not caused damage to Tennis Australia with his actions, even though he had undermined then tennis chief executive Steve Wood in his dealings with Seven.
ASIC had pursued a civil lawsuit against Mr Mitchell and former Tennis Australia president Steve Healy, with Mr Mitchell accused of using his position as director of the sporting body to advantage Kerry Stokes’s Seven Network by passing on confidential information regarding competing bids for tennis broadcast rights.
The case against Mr Healy was dismissed, with ASIC to pay his costs. In a statement, Mr Healy said: “I have always been confident of vindication in the case brought by ASIC against me and so am happy today to have received the judgment of the Court.”
Mr Mitchell, a director of Crown Resorts and once considered the country’s most powerful advertising executive, had strenuously denied allegations that he had colluded with Seven regarding broadcast rights when he was vice-president of Tennis Australia.
ASIC’s case centred on a decision made in 2013 by the Tennis Australia board to award the domestic television broadcast rights for the Australian Open tournament to the Seven Network for a five-year period without a competitive tender process
Rival networks and a sports marketing agency had allegedly been poised to make bigger offers than the eventual Seven deal, worth about $35m annually, but had not been able to lodge official bids.
Tennis Australia did however gain control over the production of the Australian Open broadcast and in 2018 awarded the domestic telecast rights for the Australian Open for 2020 to 2024 to the Nine Network – the first change of broadcaster for 40 years.
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