Mike Pero Mortgages Ltd v Pero - [2017] NZHC 2486

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2014-404-002193 [2017] NZHC 2486

BETWEEN
MIKE PERO MORTGAGES LIM ITED

Plaintiff

AND

MIKE PERO First Defendant

MIKE PERO MARKETING LIMITED Second Defendant

MPRE LTD Third Defendant

MP REAL ESTATE LTD Fourth Defendant

Hearing: 30 June 2017 (final submissions received 10 July 2017)

Counsel:

G P Blanchard QC and J E M Lethbridge for the Plaintiff
D R Bigio QC and A E Malone for the Defendants

Judgment:

10 October 2017

Reissued:

12 December 2017

JUDGMENT OF KATZ J

This judgment was delivered by me on 10 October 2017 at 4:30pm
Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

Solicitors: Lowndes, Auckland
Duncan Cotterill, Auckland

Counsel: G P Blanchard QC, Auckland
D Bigio QC, Auckland

MIKE PERO MORTGAGES LIM ITED v MIKE PERO & ORS [2017] NZHC 2486 [10 October 2017]

Introduction1

[1] On 21 December 2016 I delivered an interim judgment (“Judgment”) in these proceedings.2 I found that various company resolutions passed by Mike Pero (as sole director) on behalf of MPRE Ltd (“MPRE”) and MP Real Estate Ltd (“MP Real Estate”) were invalid. In particular, I found that Mr Pero’s attempts to unilaterally increase his remuneration as Chief Executive Officer of MPRE and MP Real Estate (together, “the MPRE Companies”) were unlawful. The relevant resolutions contravened provisions of MPRE’s constitution and also the Shareholders’ Agreement between Mike Pero Mortgages Ltd (“MP Mortgages”) and Mike Pero Marketing Ltd (“MP Marketing”).

[2] I ordered Mr Pero and MP Marketing to repay (together with interest) all amounts received by them or their related entities in excess of $200,000 per annum for services provided by them in relation to the businesses of MPRE and MP Real Estate and their related entities. I also made various ancillary orders, including an order for disclosure of documentation to enable quantification of the relevant sum.

[3] The parties have been able to agree, based on the disclosure that has been provided to date, that the amount that must be repaid is at least $2,381,725.45. MP Mortgages believes, however, that the disclosure provided by Mr Pero and MP Marketing has been inadequate, and that further disclosure may well reveal that additional sums are owing.

[4] Against this background, the issues currently before me for determination are:

(a) whether the order set out in the Judgment (“Order”) has been

adequately complied with; and

1 This judgment was reissued on 12 December 2017, pursuant to the “slip” rule, to correct the sum
referred to at [35].
2 Mike Pero Mortgages Ltd v Mike Pero [2016] NZHC 3185.

(b)whether the interest payable by Mr Pero and MP Marketing on the sums owing to the MPRE Companies should properly be calculated on a GST-inclusive or GST-exclusive basis.

Background

The declarations and orders

[5] The Judgment provided as follows:

[62] The Court declares that:

(a) [Mr Pero’s] decision to increase his remuneration by [MPRE] and/or [MP Real Estate] above $200,000 prior to…

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.

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Details

Case: [2017] NZHC 2486
Decision Date: 10 October 2017

CaseChat Overview and Summary

Mike Pero Mortgages Ltd brought an action against Mike Pero, Mike Pero Marketing Limited, MPRE Limited, and MP Real Estate Limited, asserting that Mike Pero had unlawfully increased his remuneration beyond the agreed limit of $200,000 per annum. The court found in favour of Mike Pero Mortgages Ltd, declaring that Mike Pero's decision to increase his remuneration was invalid and ordering him and Mike Pero Marketing Limited to repay any sums received in excess of $200,000 per annum for services provided in relation to the businesses of MPRE Limited and MP Real Estate Limited and their related entities. The court also ordered that from the date of the order, Mike Pero and Mike Pero Marketing Limited and their related entities must be paid no more than $200,000 per annum for services provided in relation to the businesses of MPRE Limited and MP Real Estate Limited and their related entities.

The issues before the court were whether the order had been adequately complied with and whether the interest payable by Mike Pero and Mike Pero Marketing Limited should be calculated on a GST-inclusive or GST-exclusive basis. The court found that Mike Pero and Mike Pero Marketing Limited had not adequately complied with the order as they had not disclosed all documents relevant to quantifying the amount in excess of $200,000 per annum that they had received for services provided in relation to the businesses of MPRE Limited and MP Real Estate Limited and their related entities. The court also found that the interest payable by Mike Pero and Mike Pero Marketing Limited should be calculated on a GST-inclusive basis.

In conclusion, the court found that the further documentation sought by Mike Pero Mortgages Ltd was not required to be disclosed pursuant to the order, other than as set out in the judgment. The court also found that Mike Pero and Mike Pero Marketing Ltd were required by the order to pay interest on the GST-inclusive sum of $2,179,370.34. If the parties were unable to agree the issue of costs, then any memorandum on behalf of Mike Pero and Mike Pero Marketing Ltd was to be filed by 20 October 2017, with any response on behalf of Mike Pero Mortgages Ltd to be filed by 27 October 2017.

Orders