High-profile media buyer Harold Mitchell breached his duties as a director of Tennis Australia in his dealings with the Seven network over TV rights, a court has found.
But Mitchell looks set to be able to keep his seat on the board of James Packer’s casino group, Crown Resorts, after the judge hearing the case threw out most of the allegations levelled against him by the corporate regulator.
In a ruling handed down on Friday, federal court judge Jonathan Beach said Mitchell “stepped over the line” and breached his duties as a Tennis Australia director three times in dealings with Seven’s commercial director, the “colourful character” Bruce McWilliam, during negotiations in late 2012.
But he dismissed completely allegations that former Tennis Australia president Steve Healy breached his duties as a director of the body and criticised aspects of the case advanced against the two men by the Australian Securities and Investments Commission as a misconceived conspiracy theory.
Penalties are to be decided at a later date but Mitchell looks set to escape disqualification from corporate life after Beach said he was inclined to make a declaration about Mitchell’s breach of duties and impose a “moderate pecuniary penalty”.
The case revolved around Tennis Australia’s decision in May 2013 to accept a $195m offer from Seven, controlled by West Australian billionaire Kerry Stokes, to extend its existing broadcast deal for another five years after it expired the following year.
At the time, international sports management group IMG and Network Ten were also interested in buying the tennis rights.
Asic accused Mitchell and Healy of failing to exercise proper care and diligence during the negotiations, and also accused Mitchell of improperly using his position at Tennis Australia to benefit Seven.
But Beach said the the way Asic presented its evidence displayed “confirmatory bias” and that “the various cover-up and conspiracy theories that it floated turned out to lack substance”.
The deal struck with Seven “was anticipated to be and was very advantageous” for Tennis Australia and the peak body’s directors were entitled to take it rather than risk going to market, he said.
Beach said Mitchell was “keen to do a deal with Seven” as quickly as possible and “was not a details man”.
“But Asic’s case that Mr Mitchell deliberately sought to prefer Seven’s interests over TA’s interests fails,” Beach said. “I am satisfied that although some of his conduct could be criticised, nevertheless he acted in what he perceived to be TA’s interests.”
However, he said Mitchell’s conduct undermined the approach taken by Tennis Australia’s chief executive, Steve Wood.
“There were some things that he communicated to Mr McWilliam that he ought not to have done, particularly in the latter part of 2012,” Beach said. “Now none of this ultimately caused damage to TA. And none of this was motivated by anything other than Mr Mitchell’s perception that he thought that it was in the interests of TA that a deal with Seven should be stitched up sooner rather than later.”
Beach said Mitchell breached his duties to Tennis Australia by forwarding emails between him and Wood to Seven on 1 December 2012.
“His conduct disclosed TA’s internal deliberations to Seven to gain an advantage for Seven by weakening TA’s negotiating position,” Beach said.
“But I reject Asic’s case that Mr Mitchell gave Seven information with a view to assisting them to win the contract and worked together with Seven to give Seven the inside running to get this contract.”
He said Mitchell was instead “seeking to keep the negotiations moving” and avoid them getting bogged down in peripheral issues.
Mitchell breached his duties a second time the same day by telling McWilliam he had stopped Wood from appointing IMG to sell the TV rights, which Seven opposed.
And he breached his duties a third time by sending McWilliam an email on 13 December 2012 in which he advised Seven not to give Wood information on aspects of the broadcaster’s bid ahead of a meeting scheduled to take place that weekend.
“Think we should hold it until Sunday!,” Mitchell said in the email. “He talks to the people on his staff [a]nd gets pushed into a corner! To [sic] much thinking time!”
“It was simply not appropriate for Mr Mitchell to advise Mr McWilliam to hold off on sending points to Mr Wood that Seven was going to concede and instead to present them at the proposed meeting on 16 December 2012,” Beach said.
Both sides have 28 days to lodge an appeal to the full federal court.