Mike Pero v Mike Pero companies – the battle continues

The judge hearing the latest legal battle between Mike Pero and the companies that bear his name struggles to understand how they can work together. Surprisingly one party says yes they should while the other would happily end the relationship. Miriam Bell has been in court and has filed this report.

Thursday, August 16th 2018, 9:24PM

by Miriam Bell

As TMM reported earlier this week, the owners of Mike Pero Mortgages (MPM) want an adjournment of an Auckland High Court hearing set down for September 3.

They want the adjournment because they are not yet ready to go to trial over whether or not Mike Pero Real Estate, which they are part-owners of, should pay a dividend to shareholders.

And MPM alleges they’re not ready because Pero hasn’t given them full discovery of the relevant documents they need to properly prepare for the hearing.

But Christchurch-based Pero disputes these allegations.

He wants the scheduled hearing to proceed as he wants his dividend to repay a loan which he used to pay a $2.5 million debt to Mike Pero Real Estate.

Pero also wants to pursue his contention that the conduct of MPM in refusing to pay the dividends has led to him being unfairly prejudiced under section 174 of The Companies Act 1993.

In an interesting twist, MPM’s lawyers are arguing that MPM has also been unfairly prejudiced under section 174, although for different reasons.

At this stage, it is anybody’s guess as to which party will prevail – especially as the two sides have actually been battling it out through a series of proceedings since 2014.

This time round, the hearing to adjourn proceedings was originally set down for half a day.

Yet after two days of intense discussion with the presiding judge, Justice Alisa Duffy, a decision on adjournment doesn’t seem much closer.

Anyone who has spent time in a New Zealand court room knows that the way hearings unfold bear little resemblance to those seen in fiery TV legal dramas like Law & Order.

In this case, much of the interrogation has revolved around an issue over the discovery of documents, with lawyers for each of the parties presenting very different interpretations of events.

According to MPM’s lawyer, Greg Blanchard, they have simply not received the detailed financial information about Mike Pero Real Estate they require.

He says that means their experts can’t properly assess the value of Mike Pero Real Estate to make a decision on either paying dividends, or buying out or selling up shares in the company.

Mike Pero’s lawyer, Ian Hunt, rebuts this, saying that as recently as June MPM did not appear to have issues in relation to discovery.

Additionally, he says that, since then, a large amount of documents have been released to MPM and that discovery is an ongoing process.

There’s no agreement that can be reached on this particular issue - a state of play which leaves Justice Duffy visibly frustrated.

After noting that the Mike Pero Real Estate company should have also been a party in the proceedings, Justice Duffy reiterates that her task is to simply decide whether or not the 3 September hearing should be adjourned.

She says she does not need to make a ruling on any of the other issues, which include the section 174 arguments and refinancing offers, that have emerged over the course of the current hearing.

However, Justice Duffy does say she doesn’t see how Mike Pero and MPM could ever continue to work together [as joint venture partners in Mike Pero Real Estate] given the relationship is so dysfunctional.

In response, Hunt says Pero is willing to exit the “oppressive” partnership – either by selling up or buying out – but Blanchard says MPM’s preference is for the partnership to continue.

That returned the discussion squarely to the dividends and their fate and, in turn, the discovery of the disputed documents.

The situation is starting to get Kafka-esque, Justice Duffy says.

She then ordered Blanchard to provide her with a sworn affidavit, from one of MPM’s expert witnesses, which attests that they don’t have the documents necessary to properly prepare for the 3 September hearing.

Hunt was given the opportunity to respond to that document and Justice Duffy indicated that she will then come to a decision on whether or not to adjourn the hearing.

It’s unfortunate, but this call can’t help but bring to mind not just Kafka, but the infamous Jarndyce and Jarndyce case in Charles Dicken’s Bleak House.

That’s because if the 3 September proceedings are adjourned, the case is not likely to get another court fixture before August next year.

As in Jarndyce and Jarndyce, there’s no immediate end in sight to this legal dispute.

Tags: Mike Pero