Mike Pero and Mike Pero Mortgages Ltd (MPM) are back in the Auckland High Court this week, battling it out over whether or not they are irrevocably deadlocked on the issue of a dividend pay-out.
While Christchurch-based Pero founded MPM back in 1991, he no longer has holdings in the company, which is owned by Liberty Financial.
However, Pero and MPM are 50/50 partners in Mike Pero Real Estate (MPRE) and, as such, they remain intimately connected.
The current trial is the latest round in a long-running dispute between the two parties, which was kicked off by Pero’s overpayment of himself as chief executive of MPRE back in 2014.
Pero has long wanted a dividend to be paid out to MPRE shareholders to help him pay back his debt to MPRE.
He has now repaid the debt, with the help of a loan from the Chow brothers, but still wants to receive a shareholders dividend.
But MPM’s directors, Sherman Ma and Mark Collins, have always opposed this and Pero contends their inability to agree on the dividend constitutes a deadlock.
Their lawyer, Greg Blanchard QC, told the court on Wednesday that they do not believe the situation is one of deadlock.
That’s because there was never a deadlock on a fundamental issue as MPM’s directors never opposed the dividend pay-out per se, Blanchard says.
“But they didn’t believe a dividend pay-out was prudent until certain things had occurred. All of those things were in Pero’s control and were not completed by a certain date.”
A major factor in this was the limited financial information provided to MPM’s directors by Pero which Blanchard says was simply not sufficient for them to declare a dividend earlier.
Despite this, MPM recently put a $6.75 million dividend offer on the table and that offer is now under consideration from the parties involved.
Blanchard says this means that even if there had been a deadlock previously there wasn’t now.
However, as Justice Ed Wylie pointed out, there is no guarantee the dividend offer will go ahead.
This trial has served to highlight the breakdown in the relationship between Pero and MPM’s directors, particularly Ma.
Under cross-examination by Blanchard earlier on Wednesday, Pero described the relationship as similar to a failed marriage which can’t be expected to work if the parties can’t talk to each other.
Pero says that a general lack of communication from MPM on issues ranging from board meetings to his remuneration requests is the root of all the problems.
In response, Blanchard alleges that Pero has been using the two issues of the dividend and remuneration to manipulate a deadlock because he wants to get out of the relationship with MPM.
While Pero has made it clear that he feels his relationship with MPM’s directors has broken down irrevocably, Blanchard has suggested that they view the situation differently.
Ma is expected to take the stand to give evidence, on behalf of MPM, later this week.
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