Hanover goes to court over teenager's $697

Hanover Finance, owned in part by Mark Hotchin, is taking a small investor to court. Photo / Brett Phibbs

Hanover Finance and its part-owner Mark Hotchin are taking a small investor to the High Court over $697.96 owed to the man's teenage daughter.

Michael Fallows lodged a claim with the Disputes Tribunal in Tauranga, saying the company misled his family by lying in its prospectus.

Hanover is opposing the tribunal's authority to hear the claim.

Mr Fallows told the tribunal he put $500 on term deposit with Hanover in 2007 for his 14-year-old daughter Katie.

"Had I known that the information in this prospectus was incorrect and misleading, I would never have made the investment."

The investment was due to mature in January 2012. Mr Fallows, of Te Puke, is claiming the principal plus interest at 8.35 per cent.

The Disputes Tribunal is to hear his claim in Tauranga on September 14.

But Hanover has filed actions in the High Court against Mr Fallows and the tribunal, saying the latter does not have jurisdiction to decide the matter.

The company also says it cannot pay the money because of a moratorium agreed with investors.

The High Court at Auckland is to look at Hanover's application over Mr Fallows' case tomorrow.

The date follows a series of letters written to the tribunal during July and August by Hanover's legal compliance manager, Angela MacDonald.

She said that under the Securities Act, only the High Court could consider allegations of a misleading prospectus.

The issue of the tribunal's jurisdiction should be dealt with at a separate hearing.

Ms MacDonald said that without active control and management, the tribunal's September 14 hearing would be "a circus".

Hanover also says Mr Fallows' claim is part of a campaign by Mark Cooper, a property developer it has been battling in the courts.

In an affidavit, Mr Hotchin said Mr Cooper was "driving and controlling" the claim.

"I expect that Mr Cooper is actively soliciting other investors to issue further Disputes Tribunal claims," he said. "I believe his involvement is an abuse of the process of the tribunal."

Mr Fallows has told the tribunal that documentary evidence provided by Mr Cooper would show that Hanover misled investors by not disclosing related-party loans and loans with no mortgage security it made between 2001 and 2007.

In a letter to the tribunal this week, Mr Cooper said Hanover was trying to "cloud the issues" by bringing his dispute with it into the matter.

He had agreed to help Mr Fallows, but was involved only as a witness.

He said the Disputes Tribunal had the authority to adjudicate over "loss caused by misleading advertising or misleading statements made by someone selling goods or services ... ".

Hanover and Mr Cooper are embroiled in legal actions relating to California condominium developments. Hanover says it is owed about $30 million.

Mr Cooper's luxury holiday home on Waiheke Island was sold in a mortgagee sale this year.

A spokeswoman for Hanover said the finance company would not be making any comment.

Mr Fallows could not be contacted yesterday.