Client conflict sees law firm barred

Mike Pero left the board of Mike Pero Mortgages in June this year. Photo / Simon Baker

National law firm Buddle Findlay has been barred by the High Court from acting in two cases involving either current or former clients in the space of a month.

This week Christchurch businessman Mike Pero stopped the firm from acting in a claim brought against him by the mortgage business he set up more than 20 years ago.

Pero's lawyer, David Bigio, described the decision as "precedent-setting".

Mike Pero Mortgages, which claims to be New Zealand's largest mortgage broking company, has filed two sets of High Court proceedings against Pero or a firm he directs.

Although he is its public face and founder, Pero no longer owns any of the mortgage business and left its board in June this year.

The allegations in the proceedings were kept under wraps last month by a High Court judge when Pero applied to stop law firm Buddle Findlay acting for the mortgage business in the case.

Pero had enjoyed a relationship with Buddle Findlay for seven years, the court heard, and the firm was already acting for Pero on unrelated litigation in Christchurch when it was instructed by the mortgage business for the present disputes.

The firm was therefore acting on litigation against one of its existing clients, although lawyers from different cities were handling the two separate cases.

"The interests of Mr Pero and [a company he directs] are directly adverse to the interests of MP Mortgages in the matters on which Buddle Findlay is acting," Associate Judge John Matthews said in his decision this week restraining the firm from acting in the case.

"Buddle Findlay owes a fiduciary duty to its existing clients. A fundamental element of that duty is loyalty. It cannot fulfil its duty on its present course," the judge said.

In a separate decision, Buddle Findlay was last month barred from acting against interests associated with businessman George Kerr, a former client who generated some $10 million in fees for the firm.

Buddle Findlay partner Graeme Hall did not consider the firm needed to review its procedures for dealing with conflicts of interest.

Neither the Pero nor Kerr judgment was critical of the firm, Hall said.