‘Failing marriage’ aired in Pero case
Businessman Mike Pero suggested expanding his real estate firm to Australia in an attempt to mend a failing business relationship with an Australian millionaire, a court has heard.
Pero made the revelation when he took the stand in the High Court at Auckland yesterday to give evidence in a hearing in which he seeks to end his business relationships with Mike Pero Mortgages directors and shareholders.
Pero founded Mike Pero Mortgages in 1991 but is no longer a director or shareholder. It is now owned by Liberty Financial. He also founded Mike Pero Real Estate, of which he is still CEO.
The long-running and highly complex case has been making its way through the courts since 2014.
The current proceedings have been brought by Pero, who wants to take a dividend from Mike Pero Real Estate to pay back a loan from the Chow brothers’ Inno Capital.
Mike Pero Real Estate is half-owned by Pero and half by Liberty via its ownership of Mike Pero Mortgages.
Pero said there had been a complete breakdown in relationships between the directors and shareholders of Mike Pero Real Estate and he was seeking to end the business relationship through the acquisition of shares by one party or the other.
Pero’s lawyer Nicholas Till, QC, said in particular there was a breakdown in trust between Pero and another Mike Pero Real Estate director, Sherman Ma.
United States-born Ma first featured on Australia’s Financial Review Rich List in 2003 with a A$19 million (NZ$21 million) fortune as founder and managing director of Liberty Financial. Ma had not trusted Pero for a considerable period, Till said.
The relationship breakdown resulted in a deadlock involving the shareholder agreement and its application for payment of the dividend.
Both sides are relying on a section of the Companies Act that allows a shareholder to take a court order if they consider that the affairs of a company have been conducted in a manner that is likely to be unfairly discriminatory, or unfairly prejudicial.
In 2016, the High Court ordered Pero to pay $2.38 million when it found he had overpaid himself without the approval of Mike Pero Mortgages. He did this with the loan from the Chows.
Yesterday Pero said a lack of communication between directors had resulted in the relationship breakdown.
‘‘I’ve found them impossible to work with. It’s quite obvious we don’t get on. We’ll never get on,’’ he said.
Pero, who has been a director of companies since the age of 21, said something as simple as organising board meetings proved to be extremely difficult with Ma and his fellow Mike Pero Mortgages director Mark Collins.
‘‘I’ve never been in a situation like this where we couldn’t have a board meeting.’’
He said the business relationship was ‘‘like a failing marriage’’.
In a desperate bid to ‘‘make the marriage work’’ Pero suggested expanding Mike Pero Real Estate to Australia, where Ma lives.
He said he thought a move into Australia would appeal to Ma’s emotions, common sense and commercial skills.
The hearing continues this week.