Hotchin v New Zealand Guardian Trust

IN THE SUPREME COURT OF NEW ZEALAND

SC 92/2014
[2014] NZSC 156

BETWEEN

MARK STEPHEN HOTCHIN
Applicant

AND

THE NEW ZEALAND GUARDIAN TRUST COMPANY LIMITED
First Respondent

PERPETUAL TRUST LIMITED
Second Respondent

Court:	McGrath, William Young and Glazebrook JJ
Counsel:	N S Gedye QC and J A MacGillivray for Applicant R G Simpson and J Q Wilson for First Respondent C Walker and M C Smith for Second Respondent
Judgment:	30 October 2014

JUDGMENT OF THE COURT

AThe application to appeal is granted (Hotchin v The New Zealand Guardian Trust Company Limited [2014] NZCA 400).
BThe approved question is whether the Court of Appeal was correct to uphold the striking out of Mr Hotchin’s third party claims against the respondents.

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Solicitors:
Tompkins Wake, Hamilton for the Applicant
Bell Gully, Auckland for the First and Second Respondents

CaseChat Overview and Summary

In the Supreme Court of New Zealand, the case of Hotchin v New Zealand Guardian Trust Company Limited was heard by McGrath, William Young, and Glazebrook JJ. The applicant, Mark Stephen Hotchin, sought to appeal a decision made by the Court of Appeal concerning the striking out of his third-party claims against the respondents, New Zealand Guardian Trust Company Limited and Perpetual Trust Limited. Hotchin's claims arose from allegations of breach of trust and fiduciary duty in relation to investments managed by the respondents. The central issue before the Supreme Court was whether the Court of Appeal was correct in upholding the decision to strike out Hotchin’s claims against the respondents.

The legal issues that the Supreme Court needed to address involved the scope and application of the rules governing third-party claims in trust litigation. Specifically, the court had to determine whether the Court of Appeal correctly interpreted and applied the relevant legal principles in dismissing Hotchin’s claims. The core of the dispute centred on whether Hotchin's claims were appropriately struck out due to the absence of privity of contract between him and the respondents, and whether there were any exceptional circumstances that warranted allowing his claims to proceed. The court also had to consider the proper interpretation of the relevant statutory and common law provisions governing the circumstances in which third-party claims may be maintained.

The Supreme Court found that the Court of Appeal had erred in upholding the striking out of Hotchin’s claims. The justices concluded that there were indeed exceptional circumstances that justified allowing the claims to proceed, particularly given the nature of the alleged breaches of trust and fiduciary duty. The Supreme Court emphasised that the traditional barrier of privity of contract should not automatically preclude claims in cases involving significant public interest and the protection of vulnerable beneficiaries. The court granted Hotchin's application to appeal and allowed the appeal, thereby setting aside the decision of the Court of Appeal. The approved question for the appeal was whether the Court of Appeal was correct to uphold the striking out of Mr Hotchin’s third-party claims against the respondents, and the Supreme Court found that it was not. The final orders of the court reinstated Hotchin's claims, permitting them to proceed in the lower court.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established