Business Editor for the NZ Herald

FMA wants Hotchin repaid $12.2m from mansion job

Mark Hotchin. Photo / Paul Estcourt
Mark Hotchin. Photo / Paul Estcourt

The Financial Markets Authority still wants Mark Hotchin to be repaid the $12.2 million he put towards an Auckland mansion, despite the businessman's lawyer not pursuing the full amount at the end of a High Court dispute.

Hotchin paid the money towards the partial construction of a luxury house on Paritai Drive, built on land belonging to one of his family trusts. He had planned to lease the finished property from the trust - known as KA No 4 - and live there with his family but ran into financial difficulty after the collapse of Hanover and could not afford to complete the project.

The trust then took over and paid for the rest of the construction of the mansion, which will soon be ready to sell.

Hotchin subsequently brought a claim against KA No 4's trustee which was heard in the High Court at Auckland this week.

It is likely to decide how funds from the property's sale will be allocated.

Hotchin said he wanted to be reimbursed for construction costs and that the trust had been enriched as a result of his payments.

But witnesses for the trustees said there was no agreement or obligation for the former Hanover director to be reimbursed.

Hotchin's lawyer Nathan Gedye said a bid for full reimbursement of $12.2 million could not be advanced as it was not supported by the evidence.

Despite this, Hotchin is still pursuing his main "restitutional claim" against the trustee. This deals solely with the businessman's position when funds are distributed from the sale of the mansion.

Hotchin and the trustee disagree over how money from the sale of the mansion should be divided once the bank and creditors are paid.

But the Financial Markets Authority, which has freezing orders over the Paritai Drive property and a civil claim pending against Hotchin, wants the full $12.2 million repaid.

It says it has an interest in Hotchin's asset position because of its action against him, which is seeking compensation for Hanover investors.

FMA Queen's Counsel Colin Carruthers said the $12.2 million had to be treated as an advance from Hotchin to KA4 and should be repaid.

Justice Helen Winkelmann reserved her decision.

- NZ Herald

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