Fran O'Sullivan: Petricevic ruling common sense

Rod Petricevic's lawyers argued that taxpayers should have picked up the tab for representing him in the criminal trial. Photo / Paul Estcourt

Rod Petricevic was delivered a sharp lesson in the High Court at Auckland yesterday that justice will be served in the Bridgecorp trial irrespective of whether he says he can afford it or not.

Justice Geoffrey Venning's blunt refusal to throw the Petricevic case out simply because Petricevic wants New Zealanders to believe he can't afford to stump up for his legal fees is a victory for common sense.

Sure, Justice Venning admitted that it would be better for Petricevic (and no doubt the orderliness of a High Court trial) if the star defendant in the upcoming Bridgecorp case does have legal representation.

Judges tend to get a bit tetchy when defendants who are unfamiliar with court procedures defend themselves.

In this case, Petricevic is no commercial novice.

The judge will ensure that he gets a fair trial even if he does have to bend over backwards to ensure it.

But out-of-pocket investors in failed Bridgecorp - who have had plenty to say since news broke that Petricevic would use this ploy in an attempt to get a stay of proceedings - will no doubt indulge in considerable schadenfreude at his expense.

Who can blame them?

What gets up the noses of the 14,000 Bridgecorp investors is the staggering $459 million they lost when the company collapsed in 2007. And the gold-plated lifestyle that Petricevic continued to lead while the company was in its death throes.

On paper Petricevic is a bankrupt. He doesn't hold the title to the $4.4 million Remuera home he lives in with wife Mary. That's all tucked up in the family trust. Petricevic is merely a trustee.

Only his wife Mary and their adult children are discretionary beneficiaries.

So using this rationale his lawyers argued the taxpayers should have picked up the tab for representing Petricevic in the upcoming criminal trial.

The former Bridgecorp managing director, and the other Bridgecorp directors Rob Roest, Peter Steigrad, Gary Urwin and Bruce Davidson, face allegations laid under the Securities Act that they made untrue statements in the investment statements and registered prospectuses of Bridgecorp and Bridgecorp Investments.

But hang on. Didn't Petricevic get $3.4 million from the trust in March 2008, the very year he was bankrupted?

No wonder the Legal Services Board effectively said, "in your case, buddy, your wife's resources are clearly also your own".

Particularly when a financial report for the year ending March 31, 2009, revealed the trust had a total equity of $5.2 million, owning six rental properties in Auckland valued at more than $1 million with mortgage liabilities of $535,000.

Petricevic's lawyers have supposedly tossed their rattles out of the cot. Petricevic must now defend himself.

Or persuade his wife to flick him some spare cash from the sale of their luxury home so he can either rehire barrister Charles Cato or get a cut-price brief on board.

This latter avenue poses an interesting choice for any wife to make. Particularly one who is married to a man who on past performance must be deemed a commercial hazard.

In a High Court case in 1989 brought by Petricevic's former flagship Euro-National, Judge Bruce Robertson accepted the financier's words that his assets were well short of his debts. Then - as now - considerable wealth was tied up in a family trust.

The argument goes that this time around Mary Petricevic has to weigh up whether it is in her long-term beneficial interests to allow her husband to have legal representation. Or not.

Frankly, the whole use of family trusts in this fashion is a furphy. The problem is the law is not being consistently applied.

It is particularly egregious in the case of Hanover Finance's Mark Hotchin, who faced an asset freeze even though no charges have been laid.

In Allan Hubbard's case his assets were frozen through statutory management well before criminal charges were laid by the Serious Fraud Office. He cannot personally realise any of those assets to pay his own legal bills.

There may be a strong argument for freezing all assets associated with defendants facing commercial charges - apart from money to defend themselves - whether the assets are conveniently tucked away in family trusts or not.