Australian Securities and Investments Commission v Mitchell (No 2) [2020] FCA 1098

Australian Securities and Investments Commission v Mitchell (No 2) [2020] FCA 1098

Mr Healy did not contravene his director’s duties under s 180(1), as he properly relied on management regarding board information flow, and at all relevant times the Tennis Australia board had sufficient knowledge to make informed decisions. In relation to Mr Mitchell, only three instances of contravention of s 180(1) were made out in late 2012 for inappropriate communications with Seven, but not the broad range of breaches alleged by ASIC; there was no improper purpose or advantage to Seven shown, nor evidence he acted with conflict, and breaches of ss 182(1) and 183(1) were not established given the lack of a relevant purposive element.

Jurisdiction
Australia
Judgment Date
31 July 2020
Procedural Posture
Civil Penalty Proceeding / Liability Judgment (reasons and Orders on Liability, Penalty Phase to Be Heard)
Outcome
The proceeding as against the second defendant (Healy) is dismissed. ASIC to pay Healy’s costs. As against the first defendant (Mitchell), ASIC succeeds on only three limited breaches of s 180(1); penalty and declarations to be determined after further submissions.
Legal Topics
["directors' Duties" 'improper Use of Position' 'care and Diligence of Directors' 'corporations Act 2001 (cth) S 180' 'corporations Act 2001 (cth) S 182' 'corporations Act 2001 (cth) S 183' 'corporations – Board Governance' 'asic Enforcement' 'civil Penalties' 'disqualification Orders']
['corporations Law' 'commercial Law'] ["directors' Duties" 'improper Use of Position' 'care and Diligence of Directors' 'corporations Act 2001 (cth) S 180' 'corporations Act 2001 (cth) S 182' 'corporations Act 2001 (cth) S 183' 'corporations – Board Governance' 'asic Enforcement' 'civil Penalties' 'disqualification Orders']

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Procedural Posture

Civil Penalty Proceeding / Liability Judgment (reasons and Orders on Liability, Penalty Phase to Be Heard)

Legal Issues

  1. 1 ['Did Mr Mitchell, as a director of Tennis Australia Ltd, contravene sections 180(1), 182(1), and 183(1) of the Corporations Act 2001 (Cth) in relation to negotiations for broadcast rights with Seven Network?' 'Did Mr Healy, as a director, contravene section 180(1) Corporations Act 2001 (Cth) by failing to ensure adequate disclosure to the board regarding alternative broadcast proposals and negotiations?']

Ratio Decidendi

Mr Healy did not contravene his director’s duties under s 180(1), as he properly relied on management regarding board information flow, and at all relevant times the Tennis Australia board had sufficient knowledge to make informed decisions. In relation to Mr Mitchell, only three instances of contravention of s 180(1) were made out in late 2012 for inappropriate communications with Seven, but not the broad range of breaches alleged by ASIC; there was no improper purpose or advantage to Seven shown, nor evidence he acted with conflict, and breaches of ss 182(1) and 183(1) were not established given the lack of a relevant purposive element.

Court Disposition

The proceeding as against the second defendant (Healy) is dismissed. ASIC to pay Healy’s costs. As against the first defendant (Mitchell), ASIC succeeds on only three limited breaches of s 180(1); penalty and declarations to be determined after further submissions.

Orders

  • ['Proceeding against the second defendant dismissed.' "ASIC to pay the second defendant's costs, including reserved costs." 'ASIC to file and serve proposed orders and submissions re declarations and penalty as to the first defendant.' 'First defendant to file and serve responding submissions.' 'Liberty to apply.']