Sheppard loses jury trial bid

Former shareholders’ association chairman Bruce Sheppard will defend his allegedly defamatory allegation Hanover’s Mark Hotchin and Eric Watson were “crooks” before a judge alone, rather than a jury.

Justice Mark Cooper's decision has just been released.

Justice Cooper says he agrees with the arguments of Messrs Hotchin and Watson’s Queen's counsel Julian Miles that the case will be complex and ordered a judge-alone trial.

Although the decision on the trial's form went in their favour, the Hanover pair's application to strike out parts of Mr Sheppard’s statement of defence, relating to their reputation, is declined.

These 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.

Mr Sheppard wants to cite these alleged misconducts in his defence to the pair’s allegation he defamed them with his allegations in 2009 they had behaved criminally and fraudulently as Hanover Finance’s shareholding frontmen and deserved to be imprisoned.

An earlier attempt by Messrs Hotchin and Watson to strike out those parts of Mr Sheppard’s statement was declined by Associate Judge Jeremy Doogue, but they had asked for that to be reviewed.

Justice Cooper says although the matters are not allegations of criminal wrong doing, they are nevertheless matters which affect the pair's probity as businessmen.

"To define the relevant 'aspect' of their reputation as relating solely to criminal, fraudulent or dishonest actions in business affairs is, in my view, to cast the net too narrowly, and to approach the question of reputation in an overly segmented way," Justice Cooper says in his judgment.

"Arguably, the matters raised by Mr Sheppard might properly be taken into account as diminishing the damages which would otherwise be awarded."

When the trial starts in August, 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, 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 unpacks what the trial is all about here.

NBR ONLINE also reports today that Serious Fraud Office boss Simon McArley is prepared to give evidence in Mr Sheppard’s defamation battle.

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.

gbond@nbr.co.nz