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Mark Hotchin and the Hanover boys have lost another bid to share blame for any Securities Act breaches with Hanover’s trustees.
Mr Hotchin and co had tried to make NZ Guardian Trust Company and Perpetual Trust parties in the Financial Markets Authority’s civil action against them.
The FMA is suing directors and promoters of Hanover and two related companies to recover lost millions for investors.
When the Hanover group of companies collapsed in July 2008, it owed about $554 million.
Mr Hotchin's claim that the trustees did not monitor the affairs of Hanover properly and should have to contribute to any penalties they have to pay if the FMA’s case against them succeeds, had already been dismissed by the High Court in July last year.
In a judgment released today, a Court of Appeal panel of Justice Rhys Harrison, Justice Doug White and Justice Christine French agreed with chief High Court judge Justice Helen Winkelmann’s approach. (see the judgment attached)
The court said Mr Hotchin owed the investors a duty to make accurate statements in prospectuses and certificates.
“The trustees cannot be liable in respect of the damage suffered by the investors where they did not owe a duty to protect them against the harm of inaccuracies in the directors’ statements.”
It dismissed the appeal, saying the trustees’ duties were of a very different nature and not the same obligations owed by Mr Hotchin.
The Hanover trial is to take place over 12 weeks in July next year.
Last week Nathan Gedye QC, Mr Hotchin’s lawyer, sought access to FMA investigation files about his client, saying the defence needed to know why the Securities Commission (as it was then known) might have been able to investigate earlier but didn’t.