Hotchin asset appeal dismissed

Mark Hotchin. Photo / Paul Estcourt

Fomer Hanover director Mark Hotchin's bid to thaw a freeze on his assets in the High Court in Auckland has been dismissed by the Court of Appeal.

Hotchin's New Zealand-based assets and those owned by two trusts associated with him - including a seven-bedroom Paritai Drive mansion - were put on ice in December 2010 when the Securities Commission (now the Financial Markets Authority) launched an investigation into Hanover Finance, Hanover Capital and United Finance.

The asset preservation orders were put in place to ensure that if any investors wished to take civil action against Hotchin, there would be money available should they win.

Although some of the orders against the trusts were lifted last year, Chief High Court Judge Helen Winkelmann kept the freezing orders against the former Hanover director in place.

Hotchin made a renewed bid to lift the orders in the Court of Appeal last month to replace the freeze with formal undertakings but this was rejected in a decision released today.

Financial Markets Authority chief executive Sean Hughes welcomed the decision and said these orders "were important for enabling FMA to preserve assets for aggrieved investors pending the outcome of the civil proceedings filed by FMA last month".

The FMA has launched civil action against six former Hanover directors and promoters, including Hotchin and Eric Watson.

The markets watchdog is seeking to have fines imposed on the six defandants and to gain compensation for out-of-pocket investors.

In a separate case, two trusts associated with Hotchin caught up in the asset freeze - known as KA3 and KA4 - are due to appeal against a ruling from Justice Winkelmann that kept some orders against them.

The FMA argued last year that these trusts held property as bare nominees, or that they were "shams", and the properties in reality were owned by the former Hanover director.
Lawyers representing the trusts applied to have these pleadings of sham struck out.

Justice Winkelmann struck out the FMA's claim against KA3 but in the case against KA4 she said there were "sufficient particulars to support an arguable case of sham".