Out of the money and out of court

Justice David Hammerschlag dismissed a case yesterday that Bateman brought against his former accounting firm, Face Accountants, based on the alleged lack of advice that the exercising of the options would result in a hefty tax bill.

Bateman's legal team had argued that had he been told of the $3 million tax liability stemming from his exercising of the options in 2006 (and generating a taxable gain of $6.2 million), he would have never entered into the transaction the way he did.

The tax liability was only discovered when Bateman's personal accountant was preparing his tax returns.

Bateman said he ended up in a "negative position" of $3.5 million, due to the $4 million borrowed to exercise the options and later margin-called, the tax bill, and his inability as an insider to sell the shares just as the company's share price started to slump.

In September 2007 Bateman sent an email to the Primary chairman, Greg Gardiner, seeking advice, given he was "going to be in a position where I expect I will need to sell approximately 300,000 Primary shares to fund that tax bill".

"Mr Gardiner's response was that the plaintiff should 'go broke' before he traded the shares," Justice Hammerschlag said in his judgment.

"Although they are presently not in the money, the options have an intrinsic value which is still in his hands and of which account must be taken," said Justice Hammerschlag.

He said "the plaintiff did not lead any evidence of this value".

"There is an absence of raw material to which good sense may be applied, and justice does not dictate that a figure should be plucked out of the air."

Primary shares closed at $3.29 yesterday. Bateman exercised 900,000 $4.50 options in June 2006 when Primary was trading at $11.40.

ADJOURNED

The Mirvac retail shareholder Phillip Robson is under pressure to prepare some questions of "substance" at the underperforming property group's next annual meeting.

Going by an interview on ABC's Lateline Business on Tuesday night, the Mirvac chairman, James MacKenzie, seems to be using Robson's questions from the company's recent annual meeting as ammunition in his campaign to do away with yearly shareholder get-togethers.

"At none of the meetings were there any questions of substance asked other than by the Australian Shareholders Association," MacKenzie said in the interview.

"The types of questions that I got this year, when I got questions, were which hotel did I stay at the night before the meeting and how much did it cost," MacKenzie said. That was a reference to a question from Robson. MacKenzie did not refer to other questions asked by Robson about the remuneration of Mirvac's management and directors. "I think we're getting a rough deal," Robson said at the November 11 meeting.

In the Lateline interview, MacKenzie argued it might be more democratic for all shareholders to instead ask questions over the internet, rather than in person.

"Truly, it would be better to provide a forum for all shareholders to ask questions, say online," he said. "During the year, rather than just on a once-a-year occasion, shareholders get an opportunity to ask questions of the directors that are responsible for the operations of their companies."

MacKenzie argued that only 0.1 per cent of the capital of the three public companies of which he is chairman was represented at the annual meetings that he chaired.

"No one is running away from the fact that companies and boards need to be accountable," he said.

RAW TELEVISION

The Liberal senator Bill Heffernan allowed time for some last minute touch-ups before the Senate hearing into pilot training and airline safety got under way yesterday.

After agreeing to have television cameras in the hearing, two pilot representatives were asked by Heffernan: "Have you got enough make-up on?"

The pilots, who included the Australian and International Pilots Association's vice-president, Richard Woodward, said yes.

"We will do it in the raw then," said Heffernan.

MOTOR ANNUALS

The acting executive director of the Motor Trades Association of Australia, Sue Scanlan, hit out yesterday at a CBD report, which noted the group's tardiness in posting its annual report on its website.

"If you had requested a copy I would have been pleased to provide it to you," Scanlan said in an email to CBD. Attached to the email was the MTAA annual report.

"Without having to defend what is on our website or when documents are posted, there is no obligation for me to post our annual report by any particular date - and the delay this year is only in relation to some background IT work that has limited for a period our capacity to post documents to the website," she said.

Scanlan added: "I don't think you will find that there are any comments by PwC in the annual report of the association."

She was right.

The glossy annual report sent by Scanlan did not provide the comments provided by PricewaterhouseCoopers in the audited accounts sent to the Australian Securities & Investments Commission, where concerns were raised about the association's ability to continue as a going concern.

The non-financial annual report also made no mention of the MTAA losing a lucrative service agreement with the 288,100-member MTAA Super.

"MTAA's annual report (which is not an elaborate 'glossy' publication as you seem to want to suggest) is a report to the association's member bodies on the association's policy and representation activities, not an account of its finances. They are found in its audit report," Scanlan said in response to some follow-up questions.

The annual report notes how the MTAA's executive director, Michael Delaney, retired in May.

"Mr Delaney's retirement resulted from him receiving an offer from the MTAA Super trustee to become the chief executive officer and fund secretary of MTAA Super, which he duly accepted," the report says.

Delaney was previously the principal executive officer of the $5.8 billion super fund.

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