Hotchin trustee case off to Supreme Court

Mark Hotchin. Photo / Paul Estcourt

Mark Hotchin is heading to the Supreme Court in his attempt to join Hanover trustees into the Financial Market Authority's civil action against him.

The former Hanover director is continuing to challenge the High Court throwing out his bid to join the trustees into the case.

Today he won leave to appeal to the Supreme Court in a decision from Justices John McGrath, William Young and Susan Glazebrook.

Hotchin and five others associated with Hanover companies are being sued by the Financial Markets Authority for allegedly misleading or untrue statements in finance company prospectuses.

The case is due to go to trial in July next year and is expected to take up 12 weeks in the High Court at Auckland.

The FMA is seeking compensation for investors who put $35 million into Hanover Finance, Hanover Capital and United Finance between December 2007 and July 22, 2008.

Hotchin last year attempted to join two trustee companies - New Zealand Guardian Trust Company and Perpetual Trust - into the FMA's civil case against him.

Hotchin argued the trustees held a duty of care to investors and that they should contribute to any damages payable if the FMA's case succeeds. But the trustees fought the attempt and the Chief High Court Judge Helen Winkelmann struck out Hotchin's application to join them in the civil action.

Hotchin then challenged the decision in the Court of Appeal, but it was dismissed in August. The Court of Appeal's Justice Rhys Harrison said Hotchin's claim for equitable contribution was "unarguable".

Justice Harrison said Hotchin and trustees owed investors different duties.

"Mr Hotchin owed the investors a duty to make accurate statements in prospectuses and certificates. The damage suffered by the Hanover investors as a result of Mr Hotchin's alleged breach of duty was the loss of their deposits made in reliance on those statements or the excessive prices paid," Justice Harrison said.

Hotchin today was granted leave to appeal that ruling to the Supreme Court.

The approved question is: "Whether the Court of Appeal was right to uphold the striking out of Mr Hotchin's third party claims against the respondents [Guardian and Perpetual]."