Hotchin fights for his assets

Mark and Amanda Hotchin's $30 million mansion on three sections in Paritai Drive is now owned by a trust and is on the market. Photo / Richard Robinson

Former Hanover boss Mark Hotchin is in an unprecedented legal fight over his personal assets - believed to include his palatial new Auckland home - after they were frozen in a High Court order.

The Securities Commission announced yesterday that Mr Hotchin's assets had been frozen to ensure compensation was available to meet any civil claims that might be brought by investors.

The commission says the move - the first time it has used the power since the Securities Act was changed in 2006 - was made in the "public interest".

Law experts said last night that Mr Hotchin would not be able to sell or mortgage his properties.

The court document was not available to the media, but if the order has also been served on Mr Hotchin's bank, it means his accounts will also be blocked.

Mr Hotchin is trying to have the order revoked, but his case is not expected to be heard until February.

Mr Hotchin sold his Parnell home for about $4 million this year, and his almost-finished $30 million Paritai Drive mansion is on the market.

It has a 12-car garage, seven bedrooms, a car wash and wine cellar. Interests associated with Mr Hotchin own a 4.5ha property at Boatshed bay on Waiheke Island which is valued at $9.8 million.

Mr Hotchin is also a director of the Warriors rugby league club.

Property financier Hanover froze $554 million owed to 16,500 investors in 2008. Mr Hotchin and co-founder Eric Watson took $91 million in dividends in the years before the company defaulted on payments to investors.

The investors subsequently approved a moratorium that pledged to pay them back over five years.

Then a year later, in December last year, Hanover investors agreed to swap their Hanover debentures for shares in Allied Farmers.

Investors were last night buoyed by the court order, but did not hold high hopes of receiving any money.

Some said they wanted to see Mr Hotchin and Mr Watson struggle, as they had struggled since the collapse of Hanover.

No one has tried to sue Mr Hotchin.

Aucklander Glen Stanton had $50,000 of his money in Hanover, and his family had a further $200,000 in the company.

He said he ended up with "a squillion shares in Allied Farmers which are worth almost nothing".

"It's been a very stressful time for everyone, I think a majority of investors would like to see Hotchin and Watson suffer the consequences because they've been living the lap of luxury, while, for us, it's been terrible."

The Securities Commission's director of investigations and litigation, Sue Brown, said criminal and civil charges had not been filed against Mr Hotchin and the court order was a "preventative measure".

Two trusts have also been named in the proceedings, but they are not controlled by Mr Hotchin.

The commission is still investigating Hanover's collapse, and charges could be filed if the investigation finds a breach of the Securities Act.

Ms Brown said that under the Securities Act, a director was personally liable for any untrue statements made in offer documents.

Ms Brown said Mr Watson was not a director of Hanover Finance - Mr Hotchin was the sole director - so he had not been targeted by the commission in this case.

Commission chairwoman Jane Diplock said the court order was in the public interest.

"It is in no way indicative of civil or criminal liability or of the commission's views in that regard. The investigation had not concluded.

"The investigation has been complex and involves a team including investigators, forensic accountants, financial analysts and lawyers.

"Commission members will meet before Christmas to decide whether criminal charges will be laid against directors of the companies.

"Although no decision has yet been made, it is likely any charges will be laid in the new year."

Because the court order was obtained without notice, Mr Hotchin has not had an opportunity to fight it.

Commercial lawyer Phillip Merfield said the commission would have had to give a "pretty good" reason for not notifying Mr Hotchin of the pending order.

"If notice is given, then the lawyers can get in and delay things a bit," he said. "In the meantime, the person involved could do something with all of their assets.

"This is quite draconian. They had a right of appeal, but that's not going to be heard until February. So in the meantime he can't do much."

Mr Merfield said Mr Hotchin would not be able sell or mortgage his frozen assets.

"It puts him in an awkward position as he can't do anything with his property."

Mr Merfield said the aim of the freeze was to prevent assets being stripped before civil cases were heard.

Such claims would relate to investors in Hanover Finance, Hanover Capital and United Finance.

The Serious Fraud Office is also investigating Hanover over transactions made immediately before the deal with Allied Farmers.

- Additional reporting, Isaac Davison