Hotchin, Watson say no to Sheppard case jury

Former Shareholders Association chairman Bruce Sheppard wanted a jury to hear the defamation case being brought against him. Photo / Richard Robinson

Mark Hotchin and Eric Watson's defamation action against former Shareholders' Association chairman Bruce Sheppard was "major commercial litigation" involving a complex probe of documents and should be heard by a judge without a jury, says the pair's lawyer.

The businessmen's counsel, Julian Miles QC, also told the High Court at Auckland this morning that he was concerned at the extent "raw prejudice" could be used by the defence in front of a jury.

Hanover Finance's Hotchin and Watson are suing Sheppard over allegedly defamatory comments he made about them on television, radio, emails and on blogs.

These statements included that the pair were "crooks", the court heard today.

The defamation proceedings in chief are not due to take place until later this year and lawyers for both parties are arguing over whether they should be heard by only a judge or a judge with a jury.

Miles said today that the trial would put the two years before Hanover went into moratorium "under the microscope."

"The reason for that is that Mr Sheppard is very critical of a number of decisions made by the company during that period," he said.

"The payment out of dividend during those two years being the most obvious example," Miles said.

Dividends of $45 million were paid in 2008 and some $30 million in 2007, the lawyer said It would also involve looking into the factors leading to moratorium in 2008: "That will require some analysis of the global financial crisis, the GFC, and the extent that could have been anticipated," Miles said.

Miles said later that he couldn't visualise how the case would be handled and "how a jury would get near to understanding" the documents and the evidence expected to be called.

The judge would have a "nightmare" summing up and given directions to a jury at the end of the trial, Miles told Justice Mark Cooper.

"It's just a minefield, your honour. I just do not know how a judge could deal adequately with these in front a jury," he said later.

Miles also said that he had concerns with the way Sheppard and his lawyers will be running its case.

"At the hearing before Associate Judge Doogue, the conduct of both counsel Mr Woods and Mr Grace (Sheppard's lawyers at the time) made it clear that this was going to be a major attack on behalf of all the mums and dads in New Zealand who had suffered as a result of the financial companies - in plural - collapses," Miles said.

Miles said he was concerned at what he was believed was "raw prejudice" and the extent it was going to be used in front of a jury.

Since the hearing referred to by Miles, Sheppard has hired Queens Counsel Bruce Gray, who appeared today in court but had not made submissions at the time of publication.

The Hanover pair also want a review of a decision from the High Court last year relating to whether pleaded instances of Hotchin and Watson's alleged past "misconduct" could form part of Sheppard's defence.

These instances include Watson being censured in 1998 by the Securities Commission for buying shares in McCollam Print while negotiating its takeover by an entity related to him.

They also include claims Hotchin breached Securities Commission guidelines in 1999 on insider trading in relation to the sale and purchase of shares of a company called Pacific Retail Group.

In citing these alleged "misconducts" Sheppard is seeking to show Hotchin and Watson were not persons of "particularly good reputation"in relevant respects and that this should be taken into account.

Hotchin and Watson attempted to have the "particulars of misconduct" struck out by the High Court, but Associate Judge Jeremy Doogue dismissed the application last October.

Submissions on the review of Associate Judge Doogue is expected to be heard today or tomorrow after the application for the judge-alone trial.