No jury for Hotchin/Watson defamation case

Former Shareholders Association chairman Bruce Sheppard wanted a jury to hear the defamation case being brought against him. Photo / Richard Robinson

Defamation action launched by Hanover's Mark Hotchin and Eric Watson against the former chairman of the Shareholders Association will be heard by a judge alone without a jury, the High Court has ruled.

The businessmen are suing Shareholders' Association founder Bruce Sheppard over allegedly defamatory comments he made about them on television, radio, emails and on blogs.

The statements were concerned with the pair's involvement in the collapse of Hanover Finance in 2008 and the widespread losses that ensued from this event. While the defamation proceedings in chief are not due to take place until later this year, lawyers for both parties appeared in the High Court at Auckland in March over whether they should be heard by only a judge or a judge with a jury.

Hotchin and Watson's lawyer, Julian Miles QC, applied for the case to heard by a judge alone and said it was "effectively major commercial litigation".

There would be a "relatively complex and sophisticated investigation" into facts, judgments, documents and expert evidence on these matters.

"I think I can say with absolute confidence that the documents themselves are, at the very least, complex," he said.

But Sheppard's counsel, Bruce Gray QC, told Justice Mark Cooper that the documents referred to by Miles had been issued to the public:

"All were intended to be understandable by the public," Gray said in opposition to the application for a judge-alone trial.

Although he conceded the proceedings would have a "business focus" Gray said his client believed the proceedings "in principle should be left to a jury".

"It's a matter affecting the working of markets in New Zealand and members of the investing public should not be excluded," the lawyer said.

In a decision today, Justice Cooper ruled that the trial should be before a judge alone, without a jury.

"Overall, I accept the submission made by Mr Miles that the underlying subject matter of the case will involve the consideration of complex financial transactions involving a number of entities and spread over a period of three to four years. The transactions to be considered involve complex legal, accounting. insolvency, property, tax and finance issues," Justice Cooper said.

Justice Cooper also today declined an application by Hotchin and Watson, which sought to strike out particulars from Sheppard's statement of defence.

These particulars included instances of alleged past misconduct, including Watson being censured in 1998 by the Securities Commission for buying shares in McCollam Print while negotiating its takeover by an entity related to him.

They also include claims Hotchin breached Securities Commission guidelines in 1999 on insider trading in relation to the sale and purchase of shares of a company called Pacific Retail Group.

An earlier attempt by Hotchin and Watson to have these struck out from Sheppard's defence had failed and the pair applied in March for a review of this decision. This application for review was declined today.

"While I accept that the matters sought to be raised by Mr Sheppard are not allegations of criminal wrongdoing, they are nevertheless matters which affect the plaintiffs' [Hotchin and Watson] probity as businessmen...arguably, the matters raised by Mr Sheppard might properly be taken into account as diminishing the damages which would otherwise be awarded," the judge said.