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Hotchin v Sheppard

Hotchin v Sheppard

Case [2012] NZHC 2527 1 October 2012

Strike Out Application

Defamation Law

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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-7120 [2012] NZHC 2527

BETWEEN MARK STEPHEN HOTCHIN First Plaintiff

ANDERIC JOHN WATSON Second Plaintiff

ANDBRUCE SHEPPARD First Defendant

ANDTHE NEW ZEALAND SHAREHOLDERS ASSOCIATION INCORPORATED
Second Defendant

Hearing: 19 September 2012

Appearances: J G Miles QC and J A MacGillivray for Plaintiffs P J P Grace and N W Woods for First Defendant No appearance for Second Defendant

Judgment: 1 October 2012

JUDGMENT OF ASSOCIATE JUDGE J P DOOGUE

This judgment was delivered by me on 1 October 2012 at 4:00pm
pursuant to Rule 11.5 of the High Court Rules.

...................................
Registrar/Deputy Registrar

Solicitors:
Tompkins Wake (J A MacGillivray) , P O Box 258 Hamilton 3240, for Plaintiffs
Email: jmacgillivray@tomwake.conz

Rice Craig (N W Woods) P O Box 72 440 Papakura, for First Defendant
Email: rc@ricecraig.co.nz

Copy for:
J G Miles QC, P O Box 2302 Auckland 1140            Email: miles@shortlandchambers.co.nz
Nathan Gedye, P O Box 2907 Auckland 1140           Email: Nathan.gedye@xtra.co.nz
P J P Grace, P O Box 1144 Pukekohe 2340               Email: p.grace@xtra.co.nz
D H McLellan, P O Box 4338 Auckland 1140           Email: mclellan@shortlandchambers.co.nz

HOTCHIN V SHEPPARD HC AK CIV-2011-404-7120 [1 October 2012]

Background

[1] In the present proceedings, the plaintiffs sue the first defendant for allegedly defamatory statements that he made about them, which are concerned with their involvement in the collapse of the finance company, Hanover Finance Ltd (Hanover), in 2008 and the widespread losses to the public that ensued from that event.

[2] The first defendant, Mr Sheppard, is a chartered accountant. He was at the relevant times the Chairperson of the New Zealand Shareholders’ Association (“NZSA”). This organisation advocates for shareholders in the course of which its officers (including Mr Sheppard at the relevant time) make public comment in news media to regulatory authorities and others about matters of concern or interest regarding the operation and governance of companies. I understand that the organisation also sees its role as exposing unfair and dubious practices that it perceives threaten the interests of shareholders in (principally) public companies.

[3] The first defendant made a number of statements on television, radio and emails and as part of blogs which were severely critical of the plaintiffs. It is obvious from the content of the statements the first defendant made that he had strong views on the subject of whether the proposed debt restructuring and moratorium that the plaintiffs had initiated in regard to the Hanover companies were in the best interests of the creditors of Hanover. It was obviously his view that the debt restructuring proposal was largely to the advantage of the plaintiffs. He particularly seemed to be incensed by the fact that any obligation to inject capital as part of a settlement with creditors was conditional only, and that the obligation to do so never became unconditional. He referred to the plaintiffs as being involved in “malfeasances”. As a result, the plaintiffs issued this proceeding.

[4] The comments which the plaintiffs sue on are said to have given…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Hotchin v Sheppard

Details

AGLC: Hotchin v Sheppard [2012] NZHC 2527
Case: [2012] NZHC 2527
Decision Date: 1 October 2012

CaseChat Overview and Summary

In the case of Hotchin v Sheppard, the plaintiffs, Mark Stephen Hotchin and Anderic John Watson, brought defamation proceedings against the first defendant, Bruce Sheppard, who was the Chairperson of the New Zealand Shareholders’ Association at the relevant time. The dispute centred around statements made by the first defendant, which were critical of the plaintiffs' involvement in the collapse of Hanover Finance Ltd in 2008 and the subsequent losses to the public. The plaintiffs alleged that the first defendant's statements defamed them by implying that they had dishonestly misled investors, were criminals, and had participated in GST fraud. The first defendant sought to establish that the plaintiffs had poor reputations and invoked section 30 of the Defamation Act 1992 to adduce evidence of past misconduct. The plaintiffs applied to strike out these particulars of misconduct, arguing that they were not relevant to the aspects of their reputation that the proceedings related to.

The court considered the scope and breadth of the meanings that were to be attached to the first defendant's statements, and the relevance of the proposed evidence of past misconduct on the part of the plaintiffs. The court held that the plaintiffs were bound by the meanings that they had attributed to the words pleaded in their statement of claim, and the defendant could only prepare to defend the proceeding on the basis of those meanings. The court also noted that references to reputation should be read as references to the relevant sector of the person's reputation which the proceedings bring into question. The court concluded that the insider trading allegations and the negative effect that they must have had upon the reputations of the plaintiffs would not inevitably be disregarded as irrelevant by the court when assessing the proposition that publication of the defamatory statements caused substantial diminishment of reputation. The court determined that the strike out application was to be dismissed.

The defendants made an application for an order for security for costs, which the plaintiffs accepted. The court considered the likelihood of the plaintiffs succeeding with their claim, the possibility of an order being made under section 43 of the Defamation Act, and the financial circumstances of the plaintiffs. The court concluded that an order for security for costs was justified and ordered that the plaintiffs pay security of $100,000, to be paid in two staggered instalments. The court also ordered that costs ought to lie where they fall.

Orders