- Argyll Park Thoroughbreds Pty Ltd v Glen Pacific Pty Ltd

The Plaintiffs' submission that the loan is not due and payable

The Plaintiffs seeks to set aside the Demands under s 459H(1)(a) or s 459J of the Act on the basis that the "loan" by NAB to the Plaintiffs is not presently due and payable.
The Court has power to set aside a creditor's statutory demand under s 459H(1)(a) of the Corporations Act 2001 (Cth) where there is a genuine dispute between the company and the issuer of the demand about the existence or amount of the debt to which the demand relates. In Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd (1997) 76 FCR 452 at 464; (1997) 24 ACSR 353; [1997] FCA 681, the Full Court of the Federal Court observed that a genuine dispute must be bona fide and truly exist in fact, and the grounds for the dispute must be real and not spurious, hypothetical, illusory or misconceived. The threshold to establish a genuine dispute is not high, and it is necessary to bear in mind the observations of Barrett J (as his Honour then was) in Panel Tech Industries (Australia) Pty Ltd v Australian Skyreach Equipment Pty Ltd (No 2) [2003] NSWSC 896 at [18] that: "Once the company shows that even one issue has a sufficient degree of cogency to be arguable, a finding of genuine dispute must follow. The Court does not engage in any form of balancing exercise between the strengths of competing contentions. If it sees any factor that, on rational grounds, indicates an arguable case on the part of the company, it must find that a genuine dispute exists, even where any case apparently available to be advanced against the company seems stronger."
In TR Administration Pty Ltd v Frank Marchetti & Sons Pty Ltd (2008) 66 ACSR 67; [2008] VSCA 70 at [71] (to which Mr Koch, who appears, for NAB, refers), the Victorian Court of Appeal observed that, in order to set aside a creditor's statutory demand: "The dispute or off-setting claim should have sufficient objective existence and prima facie plausibility to distinguish it from a merely spurious claim, bluster or assertion, and sufficient factual particularity to exclude the merely fanciful or futile. … Something "between mere assertion and the proof that would be necessary in a court of law" may suffice."
In Britten-Norman Pty Ltd v Analysis & Technology Australia Pty Ltd (2013) 85 NSWLR 601; [2013] NSWCA 344 (to which Mr Koch also refers) where the Court of Appeal, in summarising the case law applicable to offsetting claims, conducted a comprehensive review of the cases referable to establishing whether a genuine dispute was established. The Court emphasised that the evidence necessary for that purpose "need not conclusively prove or otherwise be incontrovertible or substantially non-contestable", and also observed (at [46]) that: "In determining whether there is evidence of a genuine dispute as to the debt, or that there is an offsetting claim, except in extreme cases, the Court is not concerned to engage in an inquiry as to the credit of the deponent of the affidavit filed in support of the application." The Court also emphasised (at [47]) that the Court's role was, in such an application: "… to determine whether there was plausible evidence to establish the existence of a genuine dispute, not whether the evidence was disputed or even likely to be accepted on a final hearing of any such claim."
In Ligon 158 Pty Ltd v Huber (2016) 117 ACSR 495; [2016] NSWCA 330 at [8], Barrett JA summarised the applicable principles and approved my observations in Re Wollongong Coal Ltd (2015) 110 ACSR 134; [2015] NSWSC 1680 at [9]-[22], as follows: "(1) A dispute is "genuine" if it is not "plainly vexatious or frivolous" or "may have some substance" or "involves a plausible contention requiring investigation". A genuine dispute requires that it be bona fide and, to that effect, be premised on sufficiently particularised grounds that are "real and not spurious, hypothetical, illusory or misconceived" and which demonstrate the dispute's "objective existence" and "prima facie plausibility". (2) The test is governed by principles analogous to those which underpin an application for an interlocutory injunction or summary judgment. The court must, however, guard against setting the threshold too low for that is liable to defeat the legislative purpose of the section. (3) The task faced by a company challenging a statutory demand on the genuine dispute ground is by no means at all a difficult or demanding one. Once the company shows that even one issue has a sufficient degree of cogency to be arguable, a finding of genuine dispute must follow and the demand will be set aside. A finding to the contrary could only be arrived at if the contentions advanced are so devoid of substance that no further investigation is warranted. (4) The function of the court is merely to determine the existence of a genuine dispute. While this neither requires nor invites it to weigh or assess the merits of the dispute, the court will not exceed its legitimate function by having regard to evidence which bears upon whether the asserted dispute is genuine."'
A similar approach was adopted by the Court of Appeal in in Grandview Ausbuilder Pty Ltd v Budget Demolitions Pty Ltd (2019) 99 NSWLR 397; (2019) 136 ACSR 563; [2019] NSWCA 60. I have partly drawn on my summary of the relevant principles in Re Malosi Group Pty Ltd [2021] NSWSC 633 at [16]ff for the summary of these principles.
However, the better view is that the submission that the Plaintiffs' debt is not due and payable should be addressed under s 459J(1)(b) of the Act rather than under s 459H(1)(a) of the Act for the reasons noted in my decision in Re Tuffrock Pty Ltd [2015] NSWSC 738 to which Mr Knackstredt refers, and on which I have drawn for the summary of the case law below. That section provides that the Court may set aside a creditor's statutory demand if it is satisfied that there is some other reason that the demand should be set aside, and its application in this context has been recognised in NT Resorts Pty Ltd v Deputy Commissioner of Taxation (1998) 153 ALR 359; (1998) 16 ACLC 957; Midland Imports Pty Ltd v Asia Pacific International Pty Ltd [1999] NSWSC 12 at [27]; Re MK Group Phoenix Pty Ltd [2014] NSWSC 1467 at [40]; Streetwise v Higgins [2005] NSWSC 535 at [15]-[19]; Re Carbon Polymers Ltd [2013] NSWSC 376; Re Forza Plumbing Systems Pty Ltd [2013] NSWSC 1234; Re Tuffrock Pty Ltd above at [12]. A debt is due and payable when the time for payment has arrived and an unqualified obligation requiring immediate performance has arisen: Main Camp Teatree Oil Ltd v Australian Rural Group Ltd [2002] NSWSC 219 at [17]. There is an open question as to whether a plaintiff who seeks to set aside a creditor's statutory demand under s 459J(1)(b) on the basis that the debt is not due and payable must establish that matter on the balance of probabilities: MNWA Pty Ltd v Deputy Commissioner of Taxation (2016) 117 ACSR 446; [2016] FCAFC 154.
In Re Essential Media and Entertainment Pty Ltd [2020] NSWSC 990 at [98]ff, Rees J summarised the applicable case law as follows: A company may not dispute the existence of the debt claimed by the creditor, but dispute that the debt is "due and payable". The courts have vacillated as to whether such a dispute should be dealt with under section 459H(1)(a), section 459J(1)(a) or section 459J(1)(b): see Portrait Express at 751 per Bryson J cf NT Resorts Pty Ltd v Deputy Cmr of Taxation (1998) 16 ACLC 957; (1998) 153 ALR 359 at 367 per Finkelstein J; A R Pilot Pty Ltd v Gouriotis [2007] NSWSC 396 per Barrett J at [19] and In the matter of Forza Plumbing Systems Pty Ltd [2013] NSWSC 1234 per Brereton J at [19]. In In the matter of MK Group Phoenix Pty Ltd [2014] NSWSC 1467 , Black J concluded that a statutory demand claiming monies which were not due and payable gave rise to a defect in the demand that would cause substantial injustice for the purposes of section 459J(1)(a), would also be an abuse of the statutory demand procedure for the purposes of section 459J(1)(b), and, in that case, should also be set aside by reason of a genuine dispute as to whether the monies were due and payable: at [27] and [41]. In Tuffrock, Black J noted that a genuine dispute as to whether the debt is due and payable can provide a sufficient basis to set aside a creditor's statutory demand under section 459J(1)(b), and was satisfied in that case that a genuine dispute had been established as to whether the debt was due and payable and set the demand aside under section 459J(1)(b): at [15] and [18]. The same approach was taken by Barrett AJA in In the matter of PostNet Australia Pty Ltd [2017] NSWSC 160 at [16] -[17] and Gleeson JA in In the matter of Longjing Pty Ltd (2017) 123 ACSR 456; [2017] NSWSC 1534 at [44]. More recently, in AspectFP Pty Ltd v Messer [2019] VSC 249 , Gardiner AsJ concluded that the plaintiff's proposed construction of a loan agreement was completely untenable, being that interest would only be payable at the plaintiff's whim if and when it decided to repay the principal debt: at [23]. On the proper construction of the loan agreement, interest was due and payable. There was thus no genuine dispute under section 459H that the interest was due and payable. As to the onus and standard of proof, Gleeson JA noted in Longjing at [46]: … it is common ground that the same approach in terms of "onus" should apply under s 459J(1)(b) to the issue whether the debt the subject of the demand is not presently due and payable, as would be the case if the issue arose in the context of whether there was a "genuine dispute" in relation to the debt under s 459H(1). That is, the relevant question is whether there is a "plausible contention requiring investigation" that the debt is not presently due and payable: Britten-Norman Pty Ltd v Analysis & Technology Australia Pty Ltd (2013) 85 NSWLR 601 at [55] (Beazley P, Meagher JA and Gleeson JA). In this regard, Gleeson JA expressed doubt as to the majority view in MNWA Pty Ltd v Deputy Cmr of Taxation (2016) 250 FCR 381; [2016] FCAFC 154 that proof on the balance of probabilities applied, noting that the majority's comments were obiter: at [47]-[48]. Those doubts were shared by Black J in In the matter of JF Essential Power Pty Limited [2018] NSWSC 435 at [24] , where his Honour followed the dissenting judgment in MNWA: … It is only necessary for [the plaintiff] to establish that there is a plausible contention requiring investigation that the debt is not presently due and payable, and it need not establish that matter on the balance of probabilities: MNWA Pty Ltd v Deputy Commissioner of Taxation [2016] FCAFC 154; (2016) 117 ACSR 446 at [131]; Re Longjing Pty Ltd … at [46]. In JF Essential Power, there was a genuine dispute whether there was a loan as opposed to an investment of capital or a gift in an inter-family transaction. The evidence established that there was a serious question to be tried as to whether any debt owed was due and payable on demand or only when the borrower had the capacity to pay it, a condition which was not then satisfied."
Mr Knackstredt submits that there is no evidence of any loan agreement or terms governing the "alleged" debt; the reference to an "alleged" debt is here surprising where it could scarcely be thought that NAB was providing in excess of $1.55 million to the Plaintiffs by way of, for example, a gift, and the correspondence to which I refer above made clear that Mr Alexander-Erber knew that repayment was expected and had represented it would occur by various dates. Mr Knackstredt also submits that: "There is no evidence of any written terms and conditions having been disclosed to Mr Alexander-Erber, which would require repayment of overdrawn amounts at a particular time, or which would require the payment of interest."
Mr Koch responds that each of the GRRI Account, the Scratches Account, the Dippindot Account and the ABEI Account are subject to terms and conditions governing the repayment of overdrawn balances and, as I noted above, cl 1.7 of the NAB Business Products Terms and Conditions provides for what is to occur if a Business Everyday Account is overdrawn. As I noted above, NAB's Terms and Conditions provided that, if a company's account was overdrawn without an approved overdraft limit, it must put the account in credit promptly and must pay NAB interest on the amount overdrawn at the overdrawn debit interest rate charged by NAB for the account from time to time. It appears that the Plaintiffs contend that they are not bound by that requirement, because no-one drew it to Mr Alexander-Erber's attention.
Mr Koch also submits that, even if cl 1.7 of the NAB Business Products Terms and Conditions did not apply to the several accounts, then a cause of action for repayment of the money overdrawn from each of the accounts arose immediately upon the overdrawing of the accounts, relying on Ogilvie v Adams [1981] VR 1041 at 1043, observing that: "The common law has always regarded the fact of indebtedness as a continuing detention by the debtor of the creditor's money, and this whether the creditor brought an action of debt or an action in indebitatus assumpsit. Therefore if A lends money to B, then instantly B is detaining A's money. In order to prevent a cause of action for recovery arising in A instantaneously on paying the money, the parties must expressly contract out of that situation by words clearly inconsistent with that situation. The courts have long since settled it that a mere statement or agreement that the money is repayable on demand (or request or at call) is not sufficient to contract out of that situation where all else that is known of the terms of the contract is that A has paid money to B by way of loan. The lender's cause of action still arises instanter on the receipt of the money by the borrower…"
Mr Knackstredt fairly recognises that that decision is authority that, where a loan is found to exist and terms of repayment are absent, the loan is repayable on demand, and Mr Knackstredt accepts the correctness of that proposition. However, Mr Knackstredt submits that the principal debts that are claimed, being overdraft accounts withdrawn from four bank accounts, are not yet due and payable because the agreement does not require repayment at the time of the issue of the Demands and because a "reasonable demand" was not issued. Mr Knackstredt submits that there was an agreed term as regards repayment; the debts were to be repaid when the Plaintiffs were "in a position to do so", relying on the representation by the NAB employee that the Plaintiffs, or each Plaintiff, or Mr Alexander-Erber, should "just bring the account back to a credit when you can." Mr Koch responds that: "on no reasonable construction of the alleged statement of [the NAB employee] could it be said that it constitutes an agreement by NAB to indefinitely defer its right to repayment of the overdrawn balances such that "the debts were to be repaid when the Plaintiffs were in a position to do so". The interpretation that the plaintiffs seek to put upon the words attributed to [the NAB employee] is that the overdrawing of the funds from the relevant accounts was on terms that permitted the monies to be retained indefinitely if the plaintiffs did not find themselves in a position to repay the monies. Such a patently uncommercial and absurd term would need to be expressed in the clearest language which, even on the plaintiffs' case taken at its highest, it was not. In those circumstances there are no words that expressly contract out of the principle expressed in Ogilvie v Adams."
Mr Koch also relies on the representation by Mr Alexander-Erber on 4 January 2021, to which I referred above, that he would ensure that the funds to be received at the end of January were "primarily used to settle in full the overdraft on all the accounts and put them in a positive position up to approx. $250k each" and submits that this representation indicates that Mr Alexander-Erber (and thereby the Plaintiffs) were aware of the requirement that overdrawn amounts be repaid within a reasonable timeframe. It is not necessary to determine that matter given the finding I reach on other grounds below. Mr Koch also submits that, even if it is accepted that the NAB employee's alleged statement to the effect of "just bring the account back to a credit when you can" was made (which I treat as arguable in an application of this kind) and such a statement can be construed as a term that "the debts were to be repaid when the Plaintiffs were in a position to do so", such a term is illusory and void for uncertainty.
I will proceed on the basis that the Plaintiffs need only establish a serious question to be tried that the debts are not due and payable in order to set aside the Demands under s 459H(1)(a) (if it applies) or otherwise under s 459J(1)(b). It seems to me they cannot do so, because here the contractual term on which they rely is either too uncertain to be enforceable; or it applies a subjective standard for whether the Plaintiffs are able to repay the debt and is unenforceable under the case law; or it applies an objective standard that would be enforceable, but the Plaintiffs have led no evidence to raise any case that each of them, or the four of them collectively, or Mr Alexander-Erber, cannot objectively repay the debts, although plainly they have not done so. It is not necessary to decide between these propositions, where no arguable case is shown that would take the Plaintiffs outside them, and there is no reason to set aside the Demands whichever of them applies.
The first possibility is that the NAB employee's representation to Mr Alexander-Erber that the Plaintiffs or each plaintiff or he could "bring the account back to a credit when you can" is too uncertain to take effect as a contractual term that avoids the relevant loans being repayable on demand. The case law requires that the language used in a contract be "certain in the sense that it provides a criterion by reference to which the rights of the parties may ultimately and logically be worked out, if not by the parties then by the courts": Thorby v Goldberg (1964) 112 CLR 597 at 607; Upper Hunter County District Council v Australian Chilling & Freezing Co Ltd (1968) 118 CLR 429 at 437; [1968] HCA 8; Braude v Kaye [2013] VSC 705 at [321]. A contract may be void for uncertainty where, inter alia, various meanings are open and it is impossible to say which one of them was intended: Brown v Gould [1972] Ch 53 at 61-2; Braude v Kaye above at [321]; Re Leslie Muir Holdings Pty Limited [2019] NSWSC 1519 at [37]ff. There is plainly a question whether the term on which the Plaintiffs rely is uncertain, where it does not define whether the standard of whether "you" can repay the loan applies to the particular company which went into overdraft, or the several companies which went into overdraft collectively or Mr Alexander-Erber, and does not define whether that was to be determined subjectively, by reference to whether Mr Alexander-Erber or the companies considered that he, or they, were able to repay that amount, or objectively. If that representation is too uncertain to have contractual effect, the debts are repayable on demand and there is no reason to set aside the Demands under s 459H(1)(a) or s 459J of the Act.
The first issue is whether the "you" referred to in that term refers only to the relevant company or the companies collectively or also to Mr Alexander-Erber. That issue is highlighted by the parties' subsequent conduct which is likely to be admissible to establish the terms of what would be, on any view, an informal arrangement. In a subsequent conversation on 26 October 2020 (Alexander-Erber 8.6.21 [92]), Mr Alexander-Erber appears to have asserted the existence of an agreement that "I [apparently meaning Mr Alexander-Erber] could pay it [meaning the loans] back whenever I can". On the other hand, a letter dated 9 March 2021 from the Plaintiffs' solicitors to NAB's solicitors appears to treat the question whether the Plaintiffs were in a financial position to repay the loans as to be determined only by the companies' financial position, although it did not address whether that was to be done individually in respect of each company or collectively.
The second issue is whether that terms depends on an unfettered discretionary judgment of the Plaintiffs or Mr Alexander-Erber as to when they "can" bring the accounts back to credit and is unenforceable on that basis. Mr Knackstredt recognised that possibility and sought to distinguish the decision in Dynamic Window Systems Pty Ltd v Robinson [2016] VSC 152 at [22]-[26] that a creditor's statutory demand should not be set aside where term for repayment which would have enabled a borrower to decide for itself when to repay, is void for uncertainty. The Courts have also considered the implications of such a term in several other cases, to which I now turn.
In Head v Kelk [1963] 63 SR (NSW) 340, the plaintiff claimed the repayment of moneys lent. The defendant pleaded that the money was lent upon the terms and conditions that the defendant would be bound to repay when he was financially able to do so and not before. The plaintiff was not successful with a demurrer to the plea in the defence on the ground that the agreement alleged in the plea did not constitute a contract as it was so vague and uncertain as to be unenforceable. In Bailes v Modern Amusements Pty Ltd [1964] VR 436, Sholl J held that a clause was unenforceable where it provided for repayment of loans when the company to which they were lent "considered that it was in a position to pay them" and distinguished cases including Head v Kelk, where it had been held that "'objective but very generally worded conditions qualifying the obligation to pay a debt were valid and effective". His Honour held that agreement imported an obligation to repay, at least on demand, with a condition purporting to limit the right to repayment and (at 441) that: "Notwithstanding Head v Kelk and the other authorities referred to, I have come to the conclusion, after careful consideration of the wording of this alleged term, that I ought not to hold it to be valid. Either it is illusory or it is not sufficiently certain to be enforceable. If it confers on 'the company' … an arbitrary discretion to determine whether and to what extent (if at all) the moneys are to be repaid, it is an attempt to cut down to an illusory obligation what would otherwise, as I have held, be an obligation to repay on demand. If, however, it is to be understood as imposing an obligation to repay whenever, acting bona fide, the company ... is bound properly to consider itself in a position to repay, nevertheless in my opinion it is still too uncertain to be valid. It appears to me to admit of a number of alternative meanings." On that basis, he held the term limiting the right to repayment to be void for uncertainty and that, in its absence, there remained an agreement of loan.
In Argyll Park Thoroughbreds Pty Ltd v Glen Pacific Pty Ltd (rec and mgr apptd) (1993) 11 ACSR 1 (on which Mr Koch relies) which related to an application to set aside a statutory demand, Drummond J similarly held that a term that loans were repayable only when the borrower's directors believed that the borrower was in a position to repay was not an answer to a demand for the repayment of the loan. In that case, the plaintiff company claimed that it was a term of the loan that "the creditor company could not call for repayment, nor could it enforce payment of the loans from the borrower company if the debtor company lacked the capacity to pay the debt" and that "[t]he loans were only repayable in part or in whole when the directors of the debtor company felt the debtor company was in a position to make repayment in part or in whole." Drummond J observed that: "…if the agreed time for repayment operates in a subjective way by leaving it to the borrower to decide for himself when, if ever, he will repay, the term will be void as illusory [citations omitted]). … if there was an agreement between Argyll and [the creditor] that was intended to have contractual effect and under which the moneys now demanded were loaned, it seems clear, and counsel for Argyll was not able to make any countervailing submissions, that the stipulation as to repayment is such as to leave it to the subjective determination of Argyll when, if ever, it will repay. This would be enough to make the whole agreement of loan void. But it is quite clear that the moneys in question were loaned by [the creditor] to Argyll… Although the term as to repayment contended for has gone as an illusory stipulation, there remains an agreement for a loan." … The law is that where there is an agreement for a loan and the time for repayment is not fixed by the agreement, any money advanced will be repayable on demand."
In Universal Greening Pty Ltd v Sabine (1999) 17 ACLC 880; [1999] FCA 529 (on which Mr Koch also relies), again dealing with an application to set aside a creditor's statutory demand, the alleged term was that monies would be repaid by it only when the borrower could afford to do so and Kenny J followed Argyll Park and held that the monies were repayable on demand. Her Honour observed (at [20], [22]) that: "Let it be assumed that the respondents made the loans (or part of them) upon terms that they were repayable by Universal Greening only when Universal Greening could afford to make repayment. If such were the case, then, in my view, the term as to repayment was void for uncertainty. That conclusion is supported by the decision of Sholl J in Bailes v Modern Amusements Pty Ltd [1964] VR 436 and by the decision of Drummond J in Argyll Park Thoroughbreds Pty Ltd v Glen Pacific Pty Ltd (1993) 11 ACSR 1. … If there was an agreement such as Universal Greening claims, between it and the respondents, that was intended to have contractual effect and under which the moneys demanded were lent, then that agreement was void for uncertainty. A term to the effect that none of the loans were repayable until Universal Greening could afford to make repayment leaves it to the borrower to decide when, if at all, the occasion for repayment might arise. As Sholl J observed in Bailes at 438, a term of this kind would "prompt in the mind of the reader a whole series of questions as to what the parties intended". First, who was to determine when the company could afford to repay? Secondly, what is meant by "afford to make repayment". To adapt the observations of Sholl J in Bailes at 440: Does it meant out of capital, or out of income only? Or out of gross profits? Or out of net profits? Would it be inconsistent with the intention of the parties if the board determined that the company was not in a position to pay because to do so would inhibit plans to expand its operations? Finally, how long was the stipulation to operate? Was it was to extend beyond liquidation, with the result that the loans become irrecoverable?"
The same view was taken by Owen J in Bell Group Ltd (in liq) v Westpac Banking Corp [No 9] (2008) 39 WAR 1; (2008) 70 ACSR 1; [2008] WASC 239 at [1887] in respect of an undertaking not to call for repayment of a loan until the debtor company was able to pay.
In Dynamic Window Systems Pty Ltd v Robinson above at [22]-[26], Efthim AsJ, in declining to set aside a creditor's statutory demand, reviewed the case law and observed that: "In Bailes v Modern Amusements Pty Ltd [above], Sholl J considered a claim by a shareholder for repayment of a loan made to a company. There was an agreement in place that loans by the shareholders would be repaid to the company when the company considered that it was in a position to repay them. His Honour held that the agreement was void for uncertainty. That decision was referred to and applied by Drummond J in Argyll Park Thoroughbreds Pty Ltd v Glen Pacific Pty Ltd (rec and mgr apptd) [above]. That case related to an application to set aside a statutory demand. The plaintiff had borrowed money from the defendant. The directors of the plaintiff deposed that there were loans owed, however the loans were only repayable when the plaintiff was in a position to repay the loans. Drummond J dismissed the application to set aside the statutory demand and held that the term of the borrowing arrangements was void for uncertainty. His Honour said: "It may be that the true distinction between Head v Kelk [above] and Bailes [above] is that if the question whether the agreed time for repayment has arisen can be determined objectively, then the term will be valid; but, if the agreed time for repayment operates in a subjective way by leaving it to the borrower to decide for himself when, if ever, he will repay, the term will be void as illusory (citations omitted). … if there was an agreement between Argyll and Glen Pacific that was intended to have contractual effect and under which the moneys now demanded were loaned, it seems clear, and counsel for Argyll was not able to make any countervailing submissions, that the stipulation as to repayment is such as to leave it to the subjective determination of Argyll when, if ever, it will repay. This would be enough to make the whole agreement of loan void. …Although the term as to repayment contended for has gone as an illusory stipulation, there remains an agreement for a loan. In Bailes at 442, Sholl J stated: In those circumstances I consider that the term limiting the right to repayment is void for uncertainty, but that in its absence there remains an agreement for a loan. The law is that where there is an agreement for a loan and the time for repayment is not fixed by the agreement, any money advanced will be repayable on demand … In Universal Greening Pty Ltd v Sabine [above], Kenny J dismissed an application to set aside two statutory demands. The defendant in that case made loans to the plaintiff which were allegedly to be repaid only when the plaintiff came into funds so it could afford to make the repayments. Kenny J held that the term was void for uncertainty and the loans were repayable on demand. Her Honour said: By his statutory demand, Dr Sabine claims that he is owed $37,275. That amount is constituted by three separate loans in the sums of $5,000, $13,775 and $18,500, made to, or on behalf of, Universal Greening on 4 November 1994 (an earlier date is also mentioned but the parties made nothing of the difference) 1 September 1995 and 15 April 1996 respectively. Sabine Holdings, by its statutory demand, claims that it is owed $52,000, constituted by the sums of $20,000 and $32,000, made to Universal Greening on 3 April 1995 and 20 December 1995 respectively. Universal Greening admits that all these moneys were advanced to it, or on its behalf, as the respondents allege. On this review, Universal Greening principally submitted, that, whilst the moneys were advanced on behalf of the company and for its benefit, the moneys were advanced on the understanding that they would be repaid only when Universal Greening could afford to do so. In other words, the respondent's loans were not repayable on demand. Because the time had not yet come when Universal Greening could afford to repay the loans, it was its counsel's submission that no obligation to repay had yet arisen. In written submissions filed on 10 December 1998, the applicant also asserted that some of the advances relied on by the respondents were made without Universal Greening's authority. Her Honour concluded: Let it be assumed that the respondents made the loans (or part of them) upon terms that they were repayable by Universal Greening only when Universal Greening could afford to make repayment. If such were the case, then, in my view, the term as to repayment was void for uncertainty. That conclusion is supported by the decision of Sholl J in Bailes v Modern Amusements Pty Ltd [1964] VR 436 and by the decision of Drummond J in Argyll Park Thoroughbreds Pty Ltd v Glen Pacific Pty Ltd (1993) 11 ACSR 1. I am of the view that here the agreement is also void for uncertainty. The requirement that "the loan... will be repaid as soon as practible [sic]" is too uncertain and unable to be enforced. It is entirely dependent upon the subjective intention of the plaintiff, via its directors, as to when that will occur, and there are numerous factors which could come in to play. For example, would the plaintiff need to satisfy every liability that it has and then save up enough money to pay the shareholders loans before the defendant's loan was repaid? If the plaintiff needed to buy new plant and equipment, would that be done rather than repay the loans?"
The approach taken in these cases was then approved by a unanimous Court of Appeal in GoConnect Ltd v Sino Strategic International (in liq) [2016] VSCA 315, on which Mr Koch also relies, again in respect of an application to set aside a creditor's statutory demand. The Court of Appeal observed, in relation to a term that provided that a company would repay "the loan or part thereof deemed appropriate" that: "The obligation to repay was wholly within the discretion of the debtor company. As outlined by the authorities …, this type of obligation is illusory and void for uncertainty. As a consequence, the loan is repayable on demand." The same approach was then taken by Griffith J in Aussie Hoist Property Pty Ltd v Mulqueen [2018] FCA 1493.
Here, if the representation on which the Plaintiffs rely is analogous to that which was treated as unenforceable in Universal Greening Pty Ltd v Sabine above, The Bell Group Ltd (in liq) v Westpac Banking Corp (No 9) above and Dynamic Window Systems Pty Ltd v Robinson above, then the suggested contractual term is unenforceable, the debts are repayable on demand and no reason to set aside the Demands is established under s 459H(1)(a) or s 459J of the Act.
The third and only other possibility is that the representation on which the Plaintiffs rely applies an objective standard and is enforceable, but, in that case, the Plaintiffs have then led no evidence to raise any serious question to be tried that each of them or the four of them collectively or Mr Alexander-Erber cannot, on an objective standard, repay the debts owed to NAB by, for example, selling or raising funds on the security of their own assets or borrowing from other parties. Mr Knackstredt submits, and I accept, that it is not necessary in an application of this kind for the Plaintiffs to lead all the evidence on which they would rely in substantive proceedings to establish any inability to repay the amounts due to NAB on an objective standard. However, the obviously correct proposition that the Plaintiffs need not lead all evidence on which they would rely in substantive proceedings does not mean they can establish a serious question to be tried without leading any such evidence. That evidence might, for example, have included evidence in general terms as to their respective assets and liabilities, the assets and liabilities of Mr Alexander-Erber and any unsuccessful attempts which they had made, for example, to raise funds to repay the amounts due to NAB from third party lenders or associated entities, on an unsecured basis or on the security of their or Mr Alexander-Erber's assets. No such evidence was led, even in the most general terms. I recognise that there are occasions on which Mr Alexander-Erber has asserted, in communications with NAB, that he or the Plaintiffs could not pay off the amount owed to NAB immediately and would need time to do so: for example, Alexander-Erber 8.6.21 [197], [202]. However, a bare assertion of that matter is not evidence supporting a serious question to be tried as to that matter.
Mr Koch also pointed out that, to the extent that there is other evidence of this matter, it provides no support for the proposition that the Plaintiffs or Mr Alexander-Erber could not raise funds to repay the monies due to NAB, although they have obviously not done so. By an email dated 21 January 2021 (Ex P1, 124-125; Ex D1, 180) Mr Alexander-Erber offered NAB security (which he ultimately did not provide) over a company which was said to own a "large collection of unencumbered classic car[s] in Sydney, NSW Value approx. $8.7 million (conservative)" or over his "main entity or trusts" which he then said had a value of approximately USD $30 million. That evidence plainly does not establish, and tends to undermine, any inability of the Plaintiffs to raise funds from that company or that "main entity or trusts" in order to repay the funds due to NAB. A spreadsheet provided by Mr Alexander-Erber to NAB (Ex P1, 169-171) sought to establish that the value of those cars was at least $7.729 million. Further emails dated 18 February 2021 (Ex P1, 179-185) in turn provided VIN number information as to an apparently impressive collection of classic cars. Numerous emails over the period refer to Mr Alexander-Erber's expectation of the receipt of substantial funds from third parties which would have allowed the Plaintiffs to repay the monies; for example, an email dated 4 January 2021 from Mr Alexander-Erber to NAB referred to the expected receipt of $2.8 - 3.4m by the end of January 2021, although it appears those funds were not received by that date; he reconfirmed the expected receipt of those funds by an email dated 8 January 2021 (Ex D1, 174-175); by an email dated 11 February 2021, Mr Alexander-Erber referred to the expected receipt of funds between 15 and 28 February (Ex D1, 455); by email dated 16 February 2021, the NAB employee confirmed Mr Alexander-Erber's advice in a telephone call that there had been no change as to the expected time of arrival of funds to clear the excess by 28 February (Ex D1, 184); and Mr Alexander-Erber's further email dated 23 February 2021 to NAB (Ex P1, 192) refers to the receipt of the "big payment" next week. On 30 April 2021, the Plaintiffs' solicitors advised NAB that the Plaintiffs would settle all overdrawn accounts by 30 June 2021, a matter which also does not indicate any incapacity to do so (Ex P1, 174).
Irrespective of whether this first issue is dealt with under s 459H(1)(a) of the Act or under s 459J(1)(b) of the Act, it does not seem to me to give rise to a serious question to be tried or to a seriously arguable case that the Demands should be set aside on some other basis, where the contractual term on which the Plaintiffs rely to avoid an obligation to repay on Demand is either too uncertain to have effect or, if it establishes an objective requirement as to the companies' inability to repay the monies, the evidence is not sufficient to establish a seriously arguable case for that proposition. On each of the available views, there is also no seriously arguable case that the debts are not payable on demand and there is no basis to set aside the Demands under s 459H(1)(a) or 459J of the Act.

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