Hanover 'crooks’ defamation trial adjourned

Former shareholders’ association chairman Bruce Sheppard wants to call 25 witnesses when he defends his allegedly defamatory allegation Hanover's Mark Hotchin and Eric Watson were "crooks" .

But the defamation trial, due to start in August, is now unlikely to take place this year after Mr Sheppard was granted an adjournment at Auckland High Court today.

His Queen’s counsel, Bruce Gray, said the three weeks that had been allowed for the judge-alone trial was inadequate because of the number of witnesses to be called.

Mr Gray said his best estimate was that five weeks should be set aside for the trial.

Justice Mark Cooper agreed it would be silly to start a trial that could not be completed within the timeframe and vacated the fixture to October 21, where it is set down for 5 weeks.

Messrs Hotchin and Watson’s Queen’s counsel, Nathan Gedye, said he was “alarmed” 25 witnesses were to be called.

His clients did not consent to an adjournment, but they would abide by the position of the court, he said.

Other matters relating to Mr Sheppard’s application were declared to be in chambers, at the request of Mr Gedye, and media were not permitted to stay in the court.

Messrs Hotchin and Watson are suing Mr Sheppard for $7 million in their joint-claim for reputational damage.

When the trial starts, Mr Sheppard says he will defend his use of the word “crooks” to describe Messrs Hotchin and Watson, who allege a defamatory meaning implying criminally and fraudulent behaviour.

Honest opinion

Mr Sheppard will be relying on honest opinion and qualified privilege to defend his statements about the pair – some broadcast in a November 2009 television interview with Mark Sainsbury, who was the presenter of TVNZ’s former weeknight current affairs programme Close Up.

About 36,500 investors were affected when Hanover Finance froze $550 million of assets in July 2008.

NBR ONLINE has reported that Serious Fraud Office boss Simon McArley is prepared to give evidence in Mr Sheppard’s defamation battle if he is asked.

That means information the SFO gathered in its Hanover investigation, which Mr McArley says raises “serious questions”, could also be brought into the trial as evidence.

Mr Sheppard says he has asked to see the material the SFO gathered on Hanover, which would be released at the SFO’s discretion.
The SFO needs time to consider his request.

Although Mr Sheppard lost his bid for a jury trial, he has been permitted to introduce evidence relating to Messrs Hotchin and Watson's reputations as businessmen. 

Particulars of past alleged misconduct, which can be admitted at trial, include claims Mr Hotchin breached insider trading in relation to the sale and purchase of Pacific Retail Group shares in 1999 and Mr Watson's 1998 censure by the Securities Commission for a transaction relating to McCollam Print.

Find out more about what the trial is about here.

The directors and promoters of Hanover, including Messrs Hotchin and Watson, still face a civil suit taken by the Financial Markets Authority over some $35 million in deposits taken in the period leading up to when the lender froze investor repayments. A date for the trial has yet to be set down.

gbond@nbr.co.nz