Mike Pero v MPM $2.5 mill debt fight back in court
The long-running legal dispute over a $2.5 million debt between Mike Pero and the current owners of the mortgage advice firm that has his name has hit the courts once again.
Tuesday, August 14th 2018, 4:01PM
by Miriam Bell
Arguments over the non-disclosure of documents mean that lawyers for Pero’s legal foes have asked for a looming trial date to be adjourned till a later date.
At the heart of the matter is the real estate magnate’s approximately $2.5 million debt to Mike Pero Real Estate, which is part-owned by Mike Pero Mortgages Ltd (MPM)
Pero no longer has a stake in MPM - which is now owned by the Liberty Financial Group - but he is in a 50/50 joint venture with them in the ownership of Mike Pero Real Estate.
Back in 2016, Pero, who is also CEO of Mike Pero Real Estate, was found by a High Court judge to have given himself a pay rise without his co-owner's approval.
As a result of court proceedings over the issue, Pero was ordered to pay back $2.5 million to Mike Pero Real Estate.
By late 2017 that money had not been paid and so MPM went back to court to retrieve it – but Pero and MPM couldn’t agree on how the debt should be repaid.
Pero argued that Mike Pero Real Estate should declare a dividend to shareholders, which would allow him to settle his debt, and launched separate legal action to determine whether or not a dividend should be paid.
In light of this, Justice Mary Peters put a stay on MPM’s ability to enforce the debt until this September.
But in a hearing this week, MPM’s lawyer, Greg Blanchard, petitioned the Auckland High Court for an adjournment of the proceedings scheduled for September.
Blanchard says his client agreed to a September hearing under urgency as they were misled by Pero over his ability to repay the loan, but they are not ready for the trial.
He argues that, since the trial was scheduled, Pero has repaid the debt to Mike Pero Real Estate with a loan from the Chow brother’s Inno Capital, and this relieves the urgency of the proceedings.
The reason MPM wants the adjournment is that MPM has not had full discovery of the relevant documents from Pero that it needs to properly prepare for the hearing, according to Blanchard.
In response, Pero’s lawyer, Nicholas Till, argues that Pero doesn’t have the funds to repay the Inno loan apart from his shares in Mike Pero Real Estate and that’s why he wants the dividend payment.
Pero wants the proceedings to go ahead so he can pursue his contention that MPM were standing in the way of him being able to pay the money to Mike Pero Real Estate via the dividend.
Further, Pero disputes the allegation that he has not disclosed relevant documents to MPM, Till says.
Justice Ailsa Duffy says Pero’s loan should have been properly declared and that it appears MPM had been steamrolled meaning a priority hearing had been granted ahead of others.
But she says that postponing the trial scheduled for September would mean they would be unlikely to get another trial fixture till late next year.
That means she needs to look at the circumstances a-new, given the Inno loan to Pero had alleviated the degree of urgency for Pero.
Justice Duffy says she will have to decide if the situation still warrants a priority hearing or whether MPM should be given further time to prepare their case.
But she considered the document discovery issue to be a significant issue and ordered that the documents in question should be provided to the court by Wednesday.
Alternatively, Pero would have to provide a sworn affidavit that the documents don’t exist.
Justice Duffy says this is necessary as both the court and MPM need to know what does or doesn’t exist for clarity’s sake going forward.
The hearing is set to commence again on Wednesday.
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