Posts Tagged ‘Seven Network (Operations) Limited v Amber Harrison [2017] NSWSC 129’

Amber Harrison and joking Justice MacDougall

February 27, 2017

Plenty have been transfixed by the feud between Amber Harrison and Channel 7.

In December 2012, Harrison, who worked for Nick Chan, in charge of Pacific Magazines, a Seven subsidiary, embarked on an affair with Tim Worner, CEO of the Seven Network.  Worner was older than Harrison, and married.

The main shareholder and chairman of Seven West is Kerry Stokes, a very rich and powerful man.

The Pacific Magazines offices were in Redfern (you can see the Seven offices, in the Eveleigh precinct, when you go past in the train). Worner worked at Jones Bay Wharf, in Pyrmont.

In October 2013, Ms Harrison’s work relocated to Jones Bay Wharf.  According to Harrison, that was when the difficulties with the affair began.  Amongst other things, she felt he was ignoring her and disregarding her during work hours.

Excuse me?

What part of a clandestine affair with a married man did Harrison not understand?  OK: theory is one thing but coming up against the practice could be another.

Harrison asked to be transferred somewhere else within the organization so she wouldn’t have to endure this.  Nothing came of this.  You might wonder about the governance implications if it had.

One thing Harrison also apparently wasn’t ready for (though again surely she should have been)  was the possibility that there might be other other women.  That seems to have precipitated the end of the “relationship” in mid 2014.

Right at the same time, Harrison became the target of an investigation about corporate credit card misuse.  Harrison doesn’t see that as a coincidence and you can see why she might see it that way.

Harrison agreed to pay back $14K of expenses and Seven paid her $100K.  But Seven wasn’t leaving things there.  It commissioned a report from Deloittes which identified $262K of unjustified expenses over a period of some years.

In November a second deed was entered into.  Under that deed, Harrison was made redundant.  Seven agreed to pay Harrison various amounts upfront and a further $150K in monthly instalments over 12 months.  A procedure was established for Harrison to be given access to documentation concerning the $262K.  To the extent that Harrison could establish that these expenses were legitimate, she would also receive those amounts.  A Mr Kite SC was appointed as a kind of referee for this.

There were other obligations on both sides, including “non-disparagement” clauses – though critically Seven’s obligation to not disparage Harrison was conditional on Harrison keeping her side of the bargain, whereas Harrison’s obligation was not so conditional.

Bruce McWilliam, Seven director and former Allens partner was in charge of things on Seven’s side and signed the deed for Seven.

Seven stopped performing its part of the bargain, including making the instalment payments, in March 2015.  Seven says that was because Harrison wasn’t performing her side of the deal, and in particular did not hand over her phone so that Seven could be sure that she had not retained any dirt on Seven or on Worner.  Given what has happened since there has to be something in that.

There must have been much more that went on.  In December 2016, Harrison went public with “explosive” allegations.

Some of Harrison’s more inflammatory claims were of affairs by Worner with other women (including some prominent broadcast personalities).  These were given internet exposure by muckraker, Stokes-hater and serial disregarder of court orders Shane Dowling, despite various court orders seeking to shut him down (1, 2, 3 and see als0 4).

Harrison also made claims of illegal drug use by Worner.  Nothing particularly out of the ordinary – just your usual cocaine stuff –  but potentially the most damaging allegations of all given the alleged criminality.

Seven was embarrassed.  It’s a bit of a governance issue if a company is paying $300+K to a discarded lover of a CEO, even if, as may be the case, some of this was taken off the top of bonuses which were otherwise to be paid to Worner.  And that’s before it became public that if Harrison could vouch for all the disputed credit card transactions she would have received over half a million dollars.

Seven commissioned Richard Harris of Allens to undertake an “independent review” of Worner’s conduct.

The review concluded that Worner hadn’t done anything wrong within the company apart from the affair itself, and that (unsurprisingly) the claims about illicit drug use could not be substantiated.  Nothing to see here.  The Seven board said that Worner had been punished enough already and that it was on with business.

One member of the board resigned at about this time, though she’s kept quiet about why.

Harrison was furious.  As far as she was concerned, the report was a whitewash and the investigation perfunctory and a foregone conclusion.  She started releasing material damaging to Seven which she still had (which you might think rather vindicated Seven’s claim that they were justified in breaking off the deal when she wouldn’t hand over her phone back in 2015) and tweeting about material which she had brought to Harris’s attention which she felt should have led to a different outcome.

Seven went to court and got an ex parte interlocutory injunction from Justice MacDougall shutting Harrison up – that is, without giving Harrison a chance to be heard. It was due to come back a week later, on 21 February  when Harrison would have her chance  to argue that the injunction be lifted or varied.

In the meantime, Jeff Kennett, a director of Seven, engaged in a twitter debate with Harrison.  Asked some needling questions in a press conference Kerry Stokes bridled at a question which referred to ‘alleged stealing’ by Amber Harrison.  He responded: “You say alleged stealing.  The facts of the matter are there were significant amounts of our money taken by her and no other excuse for it than just plain taken.”

It didn’t seem fair that Harrison should be subject to a gag order whilst Seven directors were free to take a kick at her.  That became a big part of her lawyer’s argument when the matter was back in court before Justice MacDougall on the 21st.  Not that it got very far.  Andrew Bell SC persuaded MacDougall to continue the injunction until further order.  The interventions by Stokes and Kennett were tut-tutted over but not so as to disentitle Seven to the continuation of the orders.

One of Harrison’s complaints was that, as well as stopping the payments to her, Seven had stopped the process of reviewing documentation for the credit card in order to vouch for the payments – which she was to receive if they were found to be legit.  So not only was the injunction preventing her from defending herself, but Seven’s halting of this process had prevented her from vindicating herself.

Here is the relevant passage of her affidavit:

harrison-affa-pars-35-36

harrison-36-40

The reference to paragraph 14 is to an earlier part of her narrative, about when the credit card discrepancies were first raised with her:

harrison-para-14

If I read this correctly, that means that of the $262K she was accused of misappropriating (on top of the $14K she had repaid) she had proved about $70K was legit in November 2014 (though possibly Kite SC had yet to determine this), found documents which would substantiate another $130K up to March 2015.  That’s about $200K out of $262 or $276K.  It’s not clear if paragraph 40 takes things much further – does she mean that overall she could justify a majority of the expenses?  200/276 is already a “majority.”   Maybe she meant “most.”

In his judgment, MacDougall summarises this evidence and this argument as follows (emphasis added):

Next, as to the submission that Ms Harrison could not respond to Seven’s campaign of “vilification”, it is enough to point out that she has had a full opportunity of putting her case before the Court, in an affidavit that would be read in open Court. She has done so. She has said what she wishes to say as to the matter of expenses. Her response was, if I may put it this way, a little coy. She said that, had she but world enough and time, she would be able to justify “the majority” of the suspect expenses identified in the Deloitte report. That is far from a complete disavowal of any improper use of the cards.

First, I don’t think that’s a fair summary of Harrison’s evidence.

And as for the allusion to Marvell’s “To his coy mistress” – I suppose that counts as a kind of judicial joke.  If so it is just plain unseemly, especially since his Honour downed the “mistress” by his decision.

Postscript

Harrison has foreshadowed a cross-claim.  In my opinion it is simply a rational response to MacDougall’s acceptance of an argument that the deed between her and Seven was on foot and she was bound by it.  Harrison has always claimed that Seven broke the deal.  If she wants to pursue that argument that is probably the only course she can take.

The link reports that Justice Sackar has given Harrison two weeks to file a cross claim. That strikes me as an unnecessarily brisk timetable when Harrison is the less-well-resourced party (whether she is right or wrong) who has already been forced to respond in very limited time frame to Seven’s ex parte application.  That can only be a limitation on her right to bring her claim as a cross claim – she would in my opinion always be free to take much longer to bring a claim in separate proceedings.