14 Under the contractual terms which govern the parties' relationship no default is required for the defendant to be entitled to call up the Loan.
15 It was not put on behalf of the plaintiff that the dealings between the parties amounted to a contractual variation of these terms.
16 As put, the defence to repayment would be by way of estoppel inhibiting the defendant from departing from the representation, assumption or understanding asserted which would be unconscionable in the circumstances. As put, the offsetting claim would be by way of damages suffered by reason of the conduct of the defendant being misleading or deceptive or likely to mislead or deceive or being unconscionable, or by way of equitable compensation.
17 It is not necessary to set out at any length the threshold which the plaintiff must meet to raise a genuine dispute for the purposes of s 459H of the Act. It is a low one. It is enough to raise one issue with sufficient degree of cogency to be arguable. The test for determining the existence of an offsetting claim is similar to that of whether there is a genuine dispute. All that is required is a serious question to be tried. This does not mean, however, that the Court must accept uncritically as giving rise to a genuine dispute every statement in an affidavit: Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785 at 787.
18 Where an asserted offsetting claim is for damages there needs to be evidence supporting the quantum of the offsetting claim so that the Court may determine whether or not there is a genuine offsetting claim of a given amount. It is not necessary that the evidence be such that might be advanced at a trial but it is necessary to adduce some evidence in that regard: Sewmail (Australia) Pty Ltd v Booby Traps Pty Ltd (1997) 23 ACSR 339 at 343 per Burley J.
19 It was put on behalf of the plaintiff by Mr Elliott, of counsel, that the representation, assumption or understanding is to be derived from promotional documentation which the defendant provided to the plaintiff, particular discussions which were recounted in the affidavits of Gregory John Huxley, a director of both plaintiffs, of 10 May 2007 and 15 June 2007, and a document embodying the strategy which the plaintiff informed the defendant it was proposing to implement. The material relied upon was fairly voluminous. Volume should, however, not be equated with content.
20 It is neither necessary nor feasible to set out in this judgment the text of the promotional material, in the form of a brochure, provided. A reading of that material discloses nothing (and nothing was identified by counsel) which could be construed (at any threshold) as an indication directly or indirectly that the defendant would not enforce its contractual right to repayment on notice.
21 Although extremely thin, sufficient evidentiary basis can be identified in the material to conclude that there is an arguable case that the plaintiff directly or indirectly communicated to the defendant the strategy it proposed to implement, namely, to purchase stocks and options which would allow the plaintiff to secure finance against positions it took, leaving excess funds to earn interest from which it would discharge its interest obligations to the defendant. It is arguable that this was communicated to the defendant in the strategy paper. It is also arguable that it was conveyed to the defendant that the strategy would be implemented over a period which might be described as long-term, which I have assumed to include up to the end of December 2007. There is nothing to suggest that the defendant indicated any opposition to the plaintiff's strategy. I have assumed that the defendant allowed it.
22 The affidavit material establishes that before the Loan was entered into, Mr Huxley had conversations with a Mr MacKellar, a stock broker with Bell Potter Securities Ltd whose knowledge I shall assume for the purposes of this judgment is to be attributed to the defendant. He also had a conversation with Mr Shane Butler, the Business Development Manager employed by the defendant.
23 The conversations with Mr MacKellar were to the following effect:
"Mr Huxley: I understand that you have an interesting leveraged facility available to enable trading in stocks and options.
Mr MacKellar: Yes I do.
Mr Huxley: I understand the concept of leveraging very well from my experience in the property industry. I understand that this product effectively funds 100% of the purchase price for stocks and interest is charged at bank rates.
Mr MacKellar: Yes, it does.
Mr Huxley: How does this product work?
Mr MacKellar: The funder is Leveraged Equities. They fund a purchase of stock or bought put options which is secured against the value of that stock or bought put options. There are certain stocks that are approved by Leveraged Equities. Here is a brochure for Leveraged Equities. You should call Shane Butler who is the business development manager for Leveraged Equities."
24 The conversation with Mr Butler was to the following effect:
"Mr Huxley: I have been referred to you by Brendan MacKellar from Bell Potter Securities. I understand that Leveraged Equities has a facility that will finance purchase of stocks and bought and sold put options and I've given the application forms to Mr MacKellar to forward to you.
Mr Butler: Yes I have them. Someone will call you when it is approved and you can start then.
Mr Huxley: Okay."
25 In my view, taken at its highest, nothing in the promotional material, strategy paper or conversations is capable of giving rise to an arguable case that the defendant communicated anything to suggest that it would not rely upon the terms of the Loan according to its tenor.
26 A careful and critical reading of the material discloses that the plaintiff's position on its own case is illusory.
27 There is a further fundamental hurdle which, in my opinion, the plaintiff does not overcome. There is no evidence proffered by it that by borrowing the money and implementing the strategy it has (notwithstanding the closing out of its positions) suffered any loss. Candidly, Mr Elliott accepted that this was so. He put that the evidence relied upon was the fact that at the end of the transactions the plaintiff has a net liability to the defendant. That does not establish loss.
28 Moreover, the material before the Court indicates that on trading account with the defendant, the plaintiff bought and sold shares and options and drew amounts from the account for purposes other than those endeavours. At the end of the transactions there is no suggestion that as a consequence of the implementation of the strategy and it being pulled up short, the plaintiff made any loss or suffered any detriment at all let alone sufficient to displace the defendant's contractual right to call up the Loan whether in whole or in part: MK & JA Roche Pty Ltd v Metro Edgley Pty Ltd [2004] NSWSC 744.
29 There was evidence on affidavit from a Mr Douglas, an expert portfolio manager, to the effect that the shortfall on its account with the defendant would have been reduced if the plaintiff's positions had been closed out later, that is, had it not been closed out it would have ended up in a position better than the one in which it ultimately found itself. This may have raised an arguable issue that damages were suffered if the closing out was a breach of contract. However, given the way the case was put and my findings on the failure to raise an arguable issue on the representation, assumption or understanding relied upon, it is not necessary to consider it further.