MIKE PERO MORTGAGES LIMITED v MIKE PERO [2017] NZHC 2647

MIKE PERO MORTGAGES LIMITED v MIKE PERO [2017] NZHC 2647

Leave under s165 was granted because MPRE did not intend to bring enforcement itself due to director conflict, enforcement had a high likelihood of recovering a substantial part of the judgment, anticipated enforcement costs were low relative to the judgment, and MP Mortgages' interests were sufficiently aligned with MPRE's to act in the company's best interests; reputational risks did not outweigh the company's interest in recovery.

Citation
[2017] NZHC 2647
Parties
Plaintiff/applicant: Mike Pero Mortgages Limited; First Defendant/first Respondent: Mike Pero; Second Defendant/second Respondent: MPZ One Limited; Third Defendant/third Respondent: MPRE Limited; Fourth Defendant/fourth Respondent: Mike Pero Real Estate Limited
Court
High Court
Jurisdiction
New Zealand
Judgment Date
27 October 2017
Procedural Posture
Application for Leave to Bring Derivative/enforcement Proceedings Under the Companies Act 1993 Following an Interim Judgment / Leave Application Under S165 and Alternative Enforcement Relief Under S174 After Interim Judgment; Final Directions on Costs Reserved
Outcome
Leave granted under s165 for Mike Pero Mortgages Ltd to enforce the Court's judgments and orders on behalf of MPRE Ltd and Mike Pero Real Estate Ltd against Mike Pero and MPZ One Ltd; MPRE Ltd and Mike Pero Real Estate Ltd to pay the reasonable costs of the enforcement proceedings
Legal Topics
Derivative Proceedings, Enforcement of Judgment, Unfairly Prejudiced Shareholder S174, Directors' Conflicts of Interest, Shareholders' Agreement, Dividend Policy, Companies Act 1993 S165/s166/s174
Company Law Insolvency Law Equity Civil Procedure Derivative Proceedings Enforcement of Judgment Unfairly Prejudiced Shareholder S174 Directors' Conflicts of Interest +3 more

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Parties

Mike Pero Mortgages Limited

Plaintiff/applicant

Mike Pero

First Defendant/first Respondent

MPZ One Limited

Second Defendant/second Respondent

MPRE Limited

Third Defendant/third Respondent

Mike Pero Real Estate Limited

Fourth Defendant/fourth Respondent

Procedural Posture

Application for Leave to Bring Derivative/enforcement Proceedings Under the Companies Act 1993 Following an Interim Judgment / Leave Application Under S165 and Alternative Enforcement Relief Under S174 After Interim Judgment; Final Directions on Costs Reserved

Legal Issues

  1. 1 Whether leave under s165 should be granted to allow a shareholder to bring enforcement/derivative proceedings in the name of the company
  2. 2 Whether enforcement orders as part of final relief under s174 could substitute for derivative leave under s165
  3. 3 Whether enforcement proceedings are in the best interests of the company given reputational and commercial risks

Ratio Decidendi

Leave under s165 was granted because MPRE did not intend to bring enforcement itself due to director conflict, enforcement had a high likelihood of recovering a substantial part of the judgment, anticipated enforcement costs were low relative to the judgment, and MP Mortgages' interests were sufficiently aligned with MPRE's to act in the company's best interests; reputational risks did not outweigh the company's interest in recovery.

Court Disposition

Leave granted under s165 for Mike Pero Mortgages Ltd to enforce the Court's judgments and orders on behalf of MPRE Ltd and Mike Pero Real Estate Ltd against Mike Pero and MPZ One Ltd; MPRE Ltd and Mike Pero Real Estate Ltd to pay the reasonable costs of the enforcement proceedings

Orders

  • Mike Pero Mortgages Ltd is granted leave pursuant to s165 Companies Act 1993 to enforce the judgments and orders of this Court in proceeding CIV-2014-404-2193 in the name and on behalf of MPRE Ltd and Mike Pero Real Estate Ltd against Mike Pero and MPZ One Ltd
  • MPRE Ltd and Mike Pero Real Estate Ltd are to pay the costs of the enforcement proceedings