A rent roll deal gone wrong is the genesis of six years of bitter litigation between the would-be seller and its colourful buyer with still more contests to come.
In July 2015, Bundaberg agent, Real Estate Now agreed in a “poorly worded” contract to acquire Ian Brookfield’s rent roll for $101k.
Its owner Mark Mergard – a 20 yr career agent – was to take over the rent roll immediately but until completion, the profits of were to remain with Brookfield.
Mergard contends though that he did not sign the seller’s paperwork and acquired the rent roll under a different arrangement and it is that argument that is yet to be decided by a court.
The hurdle upon which Brookfield – a local whale watching tour operator – stumbled was to issue winding up proceedings against Real Estate Now for its alleged default to pay the rent roll purchase price, without having first obtained a judgment.
His first winding up application in the Federal Court – claiming a debt of $285k – was dismissed by Justice John Reeves in September 2017.
In a reprise of the same process, a further winding up application in the Qld Supreme Court was dismissed by Justice Susan Brown in September 2017 when a costs order was made in favour of Mergard’s company.
Seizing his opportunity, Mergard presented a bankruptcy petition against Brookfield for non-payment of the costs order but Judge Michael Jarrett of the Federal Circuit Court refused – in October 2018 – to make a sequestration order given the competing rent roll claim.
In July 2019 Brookfield initiated further winding up proceedings with a statutory demand in respect of the same contract debt the existence of which REN initially did not deny.
Justice Roger Derrington – observing in his Federal Court judgement that there was genuine dispute concerning the money said to be owing – gave leave to the company to defend the winding up application on the basis of a denial of the debt.
Brookfield filed his fourth application to wind up Real Estate Now in Federal Court in November 2019. When that came before the court, Justice Andrew Greenwood again dismissed the application with costs, because of the underlying dispute.
Against this background the parties faced other court issues.
Brookfield was charged with harassment and stalking of Mergard in 2019 and was placed on bail pending committal with conditions requiring him to have no contact with his antagonist and not to come within 50 m of him.
Mergard – also in 2019 – pleaded guilty to misuse of a $50k property purchase deposit as a result of which he was slapped with an $18k fine and had his real estate license suspended for five years.
Brookfield’s next salvo was to issue debt collection proceedings in the Qld District Court in April 2021. Those proceedings were stayed by Judge Bernard Porter for logistical reasons until the outcome of Brookfield’s committal proceedings on the stalking charge was known.
Despite the stay order, he filed “virtually identical” proceedings in the same court in July 2021 in response to which the company – represented by Mergard – applied for orders that Brookfield be required to put up security for its legal costs.
That application together with further applications by Brookfield to prevent Mergard from representing the company, “coincidentally” came before the same judge – Judge Porter – in September.
His Honour refused all applications. Rather than admonishing Brookfield for filing the duplicate proceedings as an abuse of process, he concluded him to be genuinely concerned about the rent roll claim and not to be conducting abusive proceedings.
The unsatisfactory history of the proceedings was – according to Judge Porter – a result of Brookfield’s misunderstanding of correct winding up procedure.
No order for costs was made against Brookfield because Real Estate Now had not engaged solicitors. The substantive dispute will presumably be finalised in the District Court in early 2022.