Former Hanover boss Mark Hotchin has lost an appeal to make Hanover's trustees liable if he and other directors and promoters of the finance company lose a suit brought by the Financial Markets Authority.
Hotchin brought the action last year, which would have seen New Zealand Guardian Trust and Perpetual Trust brought into the FMA suit as defendants and made jointly liable for any compensation awards, but the High Court struck out the application.
The Court of Appeal this afternoon released its judgment on Hotchin's appeal.
"The directors' duty was to ensure that the Hanover companies complied with the trust deeds; the trustees' duty was to monitor compliance," the judgment said.
"The nature and extent of their liabilities was different. Mr Hotchin's claim for equitable contribution is unarguable."
The FMA is pursuing civil action against the directors and promoters of Hanover and two related companies aimed at recovering some of their investors' lost millions.
The Hanover group failed in July 2008, owing 13,000 investors $554 million.
The case is set down for a 12-week hearing beginning in July next year.
The FMA alleges that during 2007 and 2008 the companies issued prospectuses, advertisements and directors' certificates containing untrue statements.
These included a failure to provide relevant information showing the companies' liquidity position had deteriorated, false claims that the companies had adopted various prudential management techniques and a failure to disclose various related-party transactions.
The authority is seeking penalties and compensation for people who relied on these statements and invested $35m in the Hanover companies.
Hotchin and other defendants have indicated their vigorous opposition to the FMA's claim.