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20-175MR Court finds former Tennis Australia director Harold Mitchell breached his duties
Today the former Vice President of Tennis Australia (TA), Harold Mitchell, was found by the Federal Court of Australia to have breached his director’s duties in connection with a 2013 decision by the TA Board to award the domestic television broadcast rights for the Australian Open tennis tournament to the Seven Network. Stephen Healy, the former Chairman and President of TA who was also sued by ASIC, was found not to have breached his director’s duties.
The findings follow a five-week trial before his Honour Justice Beach that concluded in December 2019.
The Court found that Mr Mitchell contravened s 180(1) of the Corporations Act on three occasions in December 2012.
His Honour stated that Mr Mitchell “stepped over the line” in his dealings with Bruce McWilliam of the Seven Network, which had the tendency to “undermine the stance and approach of Mr [Steven] Wood” (the then CEO of TA) in his negotiations for the broadcast rights.
The three occasions of contravention by Mr Mitchell were:
- forwarding internal TA emails to Mr McWilliam;
- disclosing internal TA deliberations by telling Mr McWilliam that he [Mr Mitchell] had “stamped on” Mr Wood in respect of his proposal for a non-binding clause in the rights agreement and had “jumped on” Mr Wood regarding the possibility of awarding the broadcast rights to another party; and
- telling Mr McWilliam not to send Mr Wood material information in advance of a meeting to discuss the broadcast rights.
ASIC also alleged breaches of sections 182 and 183 of the Corporations Act by Mr Mitchell. Those allegations were dismissed by his Honour.
ASIC Deputy Chair Daniel Crennan QC welcomed the Court’s findings today in acknowledgement of the message it sends about the important obligations of company officers in discharging their duties.
A directions hearing regarding the determination of the orders to be made against Mr Mitchell will be held on a date to be fixed.
ASIC is seeking the following against Mr Mitchell:
- declarations that he has contravened the Corporations Act;
- a period of disqualification from managing corporations; and
- pecuniary penalties.
The maximum pecuniary penalty that may be ordered against a person for a single contravention of section 180of the Corporations Act is $200,000.
On 16 November 2018, ASIC commenced civil penalty proceedings in the Federal Court of Australia against Mr Mitchell and Mr Healy. The matter was heard in November and December 2019 and today Justice Beach handed down his decision.
TA is the governing body of tennis in Australia. Its members are the six state and two territory tennis associations.
The revenue TA receives includes proceeds from the sale of television rights and grants from Commonwealth and State agencies. TA primarily uses its revenue for the development of tennis within Australia and to support the state and territory tennis associations.
Mr Mitchell was a director of TA from October 2008 to October 2015 and was reappointed in December 2015. Between October 2010 and October 2015, and then again from December 2015 until his retirement in October 2018, Mr Mitchell was the Vice President of TA.
Mr Healy was a director of TA between October 2008 and April 2017. Between October 2010 and April 2017, he was the President of TA.
The decision in 2013 to award the Australian Open tournament domestic broadcast rights to the Seven Network was for the period 2014 to 2019.
In March 2018, TA awarded the broadcast rights for the Australian Open for 2020 to 2024 to the Nine Network.
Having considered his Honour’s reasons for decision, ASIC does not
intend to seek disqualification orders against Mr Mitchell in respect of the contraventions found to have occurred.