Hotchin: Threats drove me away

Former CEO of Hanover Finance Mark Hotchin. Photo / Paul Estcourt

Hanover Finance founder Mark Hotchin says he moved to Australia after receiving death threats, and appears to have no intention of returning home to live.

More details of his life were revealed yesterday as his bid to overturn a court order freezing his New Zealand assets was dismissed.

Mr Hotchin is being investigated for possible breaches of the Securities Act in his capacity as director of companies with the Hanover Finance group.

The Securities Commission used its extended powers to freeze Mr Hotchin's assets late last year to ensure money would be available for investors if they wish to take civil claims against him.

In February, Mr Hotchin went to the High Court to try to overturn that order, but in a decision released yesterday Justice Helen Winkelmann said it should continue.

Read the decision here.

It means assets such as a mansion in Paritai Drive - which appears to have cost up to $37 million to develop and which Mr Hotchin says is owned by a trust - should remain frozen.

But the judge made a slight alteration to the order, giving him access to his "general household belongings".

"It is unnecessarily intrusive to the family to retain those in New Zealand when the family now reside outside New Zealand," she said.

"These are general household items of uncertain value and of a personal nature. Retaining them in New Zealand when the family is living outside New Zealand is harsh, and would likely produce little in the way of benefit for aggrieved persons should they ultimately succeed in a claim against Mr Hotchin."

Mr Hotchin last night welcomed the unfreezing of his personal belongings.

"I do believe that the Securities Commission acted prematurely and has been unfair in seeking the asset preservation orders in the first place, particularly as no charges have been laid against either me or the directors of Hanover.

"On a positive note, Justice Winklemann is now requiring the Financial Markets Authority to file a report on the progress of their investigations by May 20."

Earlier, Mr Hotchin argued that the freeze order should be revoked for several reasons, one being that there there was no risk of dissipation of his assets.

But Justice Winkelmann noted: "Mr Hotchin typically utilises complex ownership structures when conducting business, which would tend to make any attempt to recover assets from him more difficult."

According to her decision, Mr Hotchin said he moved from New Zealand late in 2009 when he received death threats from some borrowers to whom Hanover group entities had advanced money and against whom enforcement action had been taken.

He said that when he and his family moved to Australia, they had intended to return once media interest quietened down.

But Justice Winkelmann said the Hotchin family were now resident in Australia and "it would seem they have no immediate plans for return to New Zealand".

"They have sold their principal place of resident in New Zealand and abandoned plans to live in the property being developed in Paritai Drive."

More details about the Paritai Drive property are revealed in the decision.

Mr Hotchin, who is understood to have invested about $12 million in the property, said the KA4 Trust has invested $25 million in the property but as of July 2008 it had a capital value of $18 million, although that was pre-construction.

Justice Winkelmann said it was apparent that the investment by Mr Hotchin in the property was a "substantial asset".

"From Mr Hotchin's evidence it seems likely that he intends to deal further with this asset to resolve matters between himself and the KA4 Trust in a manner which may see him receive back much less than he expected.

"There clearly is a risk that Mr Hotchin will substantially compromise his rights in an attempt to reach such an arrangement."

Mr Hotchin said claims he breached the Securities Act were "under particularised and without merit".

But Justice Winkelmann found there was "substantial potential" for dissipation of assets, and was satisfied it was "necessary and desirable" that the orders continue for the "purpose of protecting aggrieved persons".

"These orders undoubtedly limited Mr Hotchin's ability to enjoy the normal incidents of ownership, but that of course is their intended effect."