Plaintiff v POSSABILITY GROUP LIMITED

1. By originating process filed 27 May 2025, the plaintiff sought orders under s 459G of the Corporations Act 2001 (Cth) ('Act') to set aside the defendant's statutory demand dated 7 May 2025 ('Demand').
2. The Demand, based on a loan agreement, is for the sum of $6,082,465.75. The loan agreement is recorded in a letter of offer dated 3 January 2023 and a document entitled 'business loan and line of credit - terms and conditions' dated 20 December 2022 entered into on 3 January 2023 and pursuant to which the defendant loaned to the plaintiff the sum of $5,000,000.00 ('Loan Agreement').
3. The Demand describes the debt as being comprised as follows:

(a) the principal sum of $5,000,000.00 ('Principal Sum') advanced by the defendant to the plaintiff pursuant to the Loan Agreement; and

(b) interest as at 7 May 2025 in the sum of $1,082,465.75 accrued pursuant to the Loan Agreement, calculated at the default rate of 18% for the period 24 February 2024, being the date at the end of the term of the facility, to 7 May 2025 being the date of the Demand.

(a) the Loan Agreement was entered into between the plaintiff and the defendant;

(b) the defendant advanced the Principal Sum to the plaintiff pursuant to the terms of the Loan Agreement;

(c) the Principal Sum has not been repaid; and

(d) the Principal Sum is due and owing for payment by the plaintiff.[1]

1. Notwithstanding those admissions, the plaintiff's position was that the Demand should be set aside on the basis that:

(a) there is a genuine dispute about the existence or amount of the debt to which the Demand relates;[2] and

(b) there is an offsetting claim.

(a) the affidavit of Michael Pesochinsky filed 27 May 2025 ('First Pesochinsky Affidavit');

(b) the affidavit of Michael Pesochinsky filed 19 June 2025 ('Second Pesochinsky Affidavit');

(c) the affidavit of Michael Pesochinsky filed 17 July 2025 ('Third Pesochinsky Affidavit'); and

(d) its written outline of submissions filed 24 July 2025.

1. The defendant opposed the application and relied on the affidavit of Karen Mulraney filed 10 July 2025 ('Mulraney Affidavit') and its written outline of submissions filed 30 July 2025.

1. The legal principles applicable to applications under s 459G of the Act are well-established and uncontroversial. A company seeking to set aside a statutory demand on the basis that there is a genuine dispute bears the onus of establishing, on the balance of probabilities, that such a dispute exists.[3] The following principles emerge from the Court of Appeal in Malec Holdings Pty Ltd v Scotts Agencies Pty Ltd (in liq):[4]

(a) on an application to set aside a statutory demand, the applicant is required only to establish a genuine dispute or offsetting claim;

(b) the applicant is required to evidence the assertions relevant to the alleged dispute or offsetting claim only to the extent necessary for that primary task;

(c) it is not necessary for the applicant to advance a fully evidenced claim. They need only establish that there is a 'plausible contention requiring investigation' of the existence of either a dispute as to the debt or an offsetting claim. Therefore, the task faced by an applicant is by no means at all a difficult or demanding one;

(d) the Court should not engage in an in-depth examination or determination of the merits of the alleged dispute. Determination of the 'ultimate question' of the existence of the debt at a substantive hearing should not be compromised;

(e) the criterion of a 'genuine' dispute requires that the dispute be bona fide and truly exist in fact and that the grounds for alleging the existence of a dispute be real and not spurious, hypothetical, illusory or misconceived;

(f) the dispute or offsetting claim should have a sufficient objective existence and prima facie plausibility to distinguish it from a merely spurious claim, bluster or assertion. It must also have sufficient factual particularity to exclude the merely fanciful or futile;

(g) the Court is not required to accept uncritically, every statement in an affidavit however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself, it may be, as it may not have sufficient prima facie plausibility to merit further investigation as to its truth; and

(h) 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 applicant, it must find that a genuine dispute exists, even where any case apparently available to be advanced against the applicant seems stronger. [5]

1. Offsetting claims are dealt with in s 459H of the Act which provides:

(1) This section applies where, on an application under section 459G, the Court is satisfied of either or both of the following:

(a) that there is a genuine dispute between the company and the respondent about the existence or amount of a debt to which the demand relates;

(b) that the company has an offsetting claim.

(5) a genuine claim that the company has against the respondent by way of counterclaim, set-off or cross-demand (even if it does not arise out of the same transaction or circumstances as a debt to which the demand relates).

1. The principles in relation to what constitutes an offsetting claim are well known and settled.
2. In TR Administration Pty Ltd v Frank Marchetti & Sons Pty Ltd,[6] Dodds-Streeton JA referred to the principles that are to be taken into account in determining a genuine dispute and offsetting claim. Her Honour said:[7]

As the terms of s 459H of the Corporations Act and the authorities make clear, the company is required, in this context, only to establish a genuine dispute or off-setting claim. It is required to evidence the assertions relevant to the alleged dispute or off-setting claim only to the extent necessary for that primary task. The dispute or off-setting claim should have a 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. As counsel for the appellant conceded however, it is not necessary for the company to advance, at this stage, a fully evidenced claim. Something 'between mere assertion and the proof that would be necessary in a court of law' may suffice...

1. For a statutory demand to be set aside by reason of an offsetting claim, the offsetting claim must be genuine.[8] The authorities make clear that the threshold to establish a genuine offsetting claim is not high and the Court should hesitate to resolve legal questions other than straightforward ones of this character.[9] For the Court to be satisfied as to genuineness, the plaintiff must establish:

(a) that the claim 'has sufficient objective existence and prima facie plausibility to distinguish it from a merely spurious claim, bluster or assertion;[10] and

(b) by evidence, that the offsetting claim has been made in good faith and not merely constructed in response to the pressure represented by a statutory demand.[11]

1. In Britten-Norman Pty Ltd v Analysis & Technology Australia Pty Ltd[12] ('Britten-Norman'), the New South Wales Court of Appeal identified some further principles applicable to establishing an offsetting claim:

(a) section 459H requires the Court to be satisfied that there is a 'serious question to be tried', or 'an issue deserving of a hearing' as to whether the company has such a claim against the creditor;[13]

(b) the claim must be made in good faith, with good faith understood to mean that the offsetting claim is arguable on the basis of facts that are asserted with sufficient particularity to enable the Court to determine that the claim is not fanciful;[14]

(c) there must be evidence that satisfies the Court that there is 'a serious question to be tried', or 'an issue deserving of a hearing', or a 'plausible contention requiring investigation' of the existence of either a dispute as to the debt or an offsetting claim;[15]

(d) evidence sufficient to satisfy this test, given the time period in which the affidavit must be filed, cannot and need not, conclusively prove the claim or otherwise be incontrovertible or substantially non‑contestable;[16]

(e) hearsay evidence may be admissible provided evidence of the source of the hearsay is adduced (see s 75 Evidence Act);[17]

(f) the Court's concern is to determine whether there is plausible evidence to establish the existence of a genuine dispute, not whether the evidence is disputed or even likely to be accepted on a final hearing of any such claim;[18] and

(g) the specified limits of the Court's examination are the ascertainment of whether there is a 'genuine dispute' and whether there is a 'genuine claim'. It is often possible to discern the spurious, and to identify mere bluster or assertion. But beyond a perception of genuineness (or the lack of it) the Court has no function.[19]

1. Similar observations were made by Barrett J in Panel Tech Industries (Australia) Pty Ltd v Australian Skyreach Equipment Pty Ltd (No 2),[20] who held:[21]

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.

1. Additionally, the offsetting claim must be capable of being quantified for the purpose of the exercise required of the Court by s 459H(2) of the Act. In calculating the 'substantiated amount', the following principles also apply:[22]

(a) a genuine offsetting claim 'means a claim on a cause of action advanced in good faith, for an amount claimed in good faith'. In this context, 'good faith' means arguable on the basis of facts asserted with sufficient particularity to enable the Court to determine that the claim is not fanciful;

(b) there must be some evidence to indicate the nature of the offsetting claim and the way in which it is calculated, including any loss which is said to arise;

(c) however, it is not necessary to particularise the offsetting claim to the last 'dollar and cent'. The evidence need only be sufficient for the Court to make an estimate of the amount of the offsetting claim, which must be capable of being quantified in monetary terms.

Preliminary issue - admissibility of plaintiff's affidavit material

1. At the commencement of the hearing, counsel for the defendant objected to the admissibility of the following parts of the Second Pesochinsky Affidavit:

(a) paragraph 7, which raised a County Court proceeding issued by the defendant against Mr Pesochinsky and Mr Bragilvesky, the guarantors under the Loan Agreement ('County Court Proceeding'), that was not referred to in the First Pesochinsky Affidavit; and

(b) paragraphs 33 to 62 and exhibits MP1 to MP6A, in which Mr Pesochinsky deposed to factual and legal allegations which the defendant said were not referred to, expressly or by inference, in the First Pesochinsky Affidavit, specifically:

(i) an alleged 'December 2023 agreement' between the parties;

(ii) the existence of a further deed of variation on which it now relies; and

(iii) subsequent conduct of the parties which is said to give rise to an estoppel argument.

1. The defendant contended that these parts of the plaintiff's evidence raised new factual matters and grounds for setting aside the Demand. In particular, the defendant contended that the First Pesochinsky Affidavit made no reference to an alleged December 2023 agreement or a second version of the deed of variation, nor did it include any reference to the parties' subsequent conduct or an estoppel argument. On this basis, it was submitted that the First Pesochinsky Affidavit did not fairly alert the defendant of the possibility of the nature of the case that is now put against it. None of what were said to be the new matters were discernible from the First Pesochinsky Affidavit or its exhibit. Accordingly, the defendant contended that paragraphs 7 and 33 to 62 and exhibits MP-1 to MP-6A of the Second Pesochinsky Affidavit were inadmissible.
2. Section 459G of the Act provides:

(1) A company may apply to the Court for an order setting aside a statutory demand served on the company.

(2) An application may only be made within the statutory period after the demand is so served.

(3) An application is made in accordance with this section only if, within that period:

(a) an affidavit supporting the application is filed with the Court; and

(b) a copy of the application, and a copy of the supporting affidavit, are served on the person who served the demand on the company.

1. In Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund[23] ('Graywinter'), Sundberg J held that a genuine dispute on which a party relies must be identified in the supporting affidavit, observing that where the supporting affidavit did not meet the minimum requirements, the absence of jurisdiction could not be overcome by the filing of a supplementary affidavit after the expiration of the statutory period. Sundberg J described the minimum requirements of an affidavit filed in support of s 459G(3) of the Act in the following terms:

(a) the affidavit 'must, as a minimum, contain a statement of the material facts on which the applicant intends to rely to show a genuine dispute';

(b) the affidavit 'may read like a pleading' and need not detail, in admissible form, all the evidence that supports the contention of a genuine dispute; and

(c) neither a mere assertion that there is a genuine dispute nor a bare claim that the debt is disputed is sufficient.[24]

1. In GoConnect Ltd v Sono Strategic International Ltd (in liq) [25] ('Go Connect'), the Court of Appeal summarised the principles relating to reliance on supplementary affidavits filed after the expiry of the 21-day period to which an application to set aside a statutory demand can be made: [26]

In Malec Holdings Pty Ltd v Scotts Agencies Pty Ltd (in liq), this Court set out the principles relating to reliance on supplementary affidavits filed outside the 21-day period. In particular, the Court referred to the analysis of Sundberg J in Graywinter as to the minimum requirements that had to be satisfied by the supporting affidavit: (a) the affidavit must state material facts which show that there is a genuine dispute; (b) the affidavit may read like a pleading and need not detail, in admissible form, all the evidence that supports the contention of a genuine dispute; and (c) neither a mere assertion that there is a genuine dispute nor a bare claim that the debt is disputed is sufficient. Where the affidavit did not meet the minimum requirements, the Court lacked jurisdiction and the absence of jurisdiction could not be overcome by the filing of a supplementary affidavit after the expiration of the 21-day period. However, where the minimum requirements had been met, the material relied upon in that affidavit could be supplemented by affidavits filed after that period. Affidavits filed outside the 21-day period which raise a new ground to set aside a statutory demand (as opposed to an affidavit which expands on grounds in an earlier affidavit) cannot be relied upon to set aside a statutory demand. The supporting affidavit must 'fairly alert' the respondent to the nature of the case made in support of the application to set aside the statutory demand. It 'must fairly notify the respondent of the evidentiary basis for a submission that the statutory demand should be set aside on the particular ground upon which the applicant seeks to rely'. It will be sufficient if the material facts on which the applicant intends to rely to support the genuine dispute are 'discernible from the supporting affidavit and/or the annexures and exhibits to it'.

1. Similarly, in Sceam Construction Pty Ltd v Clyne[27] ('Sceam'), the Court of Appeal, in considering the application of what is well understood to be the Graywinter principle, stated:[28]

[38] Standing back from all that has been written in the authorities, it is important to bear firmly in mind that what is critical is the language in the legislation. It requires an affidavit supporting the application to be filed with the Court within the statutory period. In the context of a claim to set aside the statutory demand on the basis that there is a genuine dispute as to the existence or amount of the demand, pursuant to s459H(1)(a), the affidavit must support the application by providing the basis for establishing that there is a genuine dispute. Establishing the genuineness of the dispute requires material showing, or from which it can be inferred, that there is a real dispute. Most commonly this will be done by the deponent describing the dispute. That description will delineate the scope of the dispute which may be relied upon to set the demand aside. Where the dispute is based purely on the construction of a written agreement between the parties, the support requirement may be satisfied by exhibiting the agreement without more. But, for example and without being prescriptive, if something beyond the written terms is to be relied upon, then it is highly likely that this will need to be raised in the affidavit and more than mere assertion will be necessary. Ultimately, what is required to satisfy the support requirement must be assessed in the context of the particular application that is made.

[39] In our opinion, while various forms of language are used in the authorities, their effect is the same. Whether the terms 'fair notice' or 'fairly alert' are used or whether it is said that the ground must be raised 'expressly, by necessary inference or by a reasonably available inference', the outcome turns on whether the affidavit supports the application. In their context, we do not understand the Victorian authorities referred to above to have used the terms 'fair notice' and 'fairly alert' in a procedural fairness sense. Rather, in substance and properly understood, those phrases have been used as a shorthand for the lengthier phrase 'expressly, by necessary inference or reasonably available inference'. That phrase requires that the grounds for resisting the statutory demand appear in the affidavit. The phrases 'fair notice' and fairly alert' convey the same requirement. And in several of the cases using that terminology, the Court has used both phrases, in a context indicating that it considered that they conveyed the same requirement. The language of 'fair notice' or 'fairly alerts' has been directed towards the need for the affidavit to show that there is a real dispute, so as to properly be regarded as an affidavit that supports the application to set aside the statutory demand.

...

[43] Finally, we note that Graywinter itself concerned an affidavit that did not state any material facts to show that there was a genuine dispute; it contained mere assertions, and thus was not an affidavit 'in support' of the application. However, in other cases a supporting affidavit has been filed that does identify a genuine dispute on a particular basis, but the party seeking to set aside the statutory demand later seeks to rely on a different genuine dispute, identified in an affidavit filed outside the statutory time period. It is clear from the authorities that an affidavit filed within time that does not identify the dispute later sought to be relied upon is not a 'supporting affidavit' in so far as the different genuine dispute is concerned, and that the party concerned is not permitted to rely on that different genuine dispute if it was not identified in the supporting affidavit filed within the statutory time period. That is, the particular 'genuine dispute' on which an applicant seeks to rely must be identified in the supporting affidavit filed within time; it is not sufficient to identify one genuine dispute in the supporting affidavit, and then to identify a different genuine dispute in later affidavits filed out of time and at the hearing of the application.

1. The issue before me was whether, on an objective analysis, what was sought to be agitated in paragraphs 7 and 33 to 62 of the Second Pesochinsky Affidavit departed from what was raised in the First Pesochinsky Affidavit, such that any fresh grounds raised in these affidavits should not be permitted to be raised by the plaintiff.
2. The material facts on which the plaintiff intended to rely to support the genuine dispute and offsetting claim, and which are discernible from the First Pesochinsky Affidavit and/or the annexures and exhibits to it, appear to be as follows:

(a) that there was a deed (or deeds) of variation entered into on or around 23 January 2024 by which the Loan Agreement was varied. The variation altered the repayment terms and other key provisions such that the amount claimed in the Demand does not represent an accurate statement of the debt;[29] and

(b) the defendant is a registered charity under the Australian Charities not-for-profit Commission Act 2012 (Cth) ('Charities Act') and its activities are limited to charitable purposes, namely disability services and related matters. The purpose of the loan was not consistent with the defendant's charitable objects. As such the Loan Agreement is void ab initio and otherwise unenforceable. The plaintiff did not know that the Loan Agreement was entered into beyond power.[30]

1. Conversely, paragraphs 7 and 33 to 62 of the Second Pesochinsky Affidavit raised the following matters:

(a) the existence of the County Court Proceeding;[31]

(b) an alleged agreement reached in December 2023 concerning an extension to the Loan Agreement,[32] and its alleged performance;[33]

(c) the entry into another deed (or another version of the deed) of variation on or around January 2024;[34] and

(d) requests made on 23 January 2024 by the plaintiff of the defendant for a copy of the 'signed variation documents' allegedly entered into on or around January 2024.[35]

1. A careful examination of the First Pesochinsky Affidavit revealed that there was no reference to the County Court Proceeding or the alleged December 2023 Agreement. Similarly, there was no reference in the First Pesochinsky Affidavit to the alleged performance of the December 2023 agreement.
2. When questioned as to how, in light of the authority in Graywinter, Go Connect and Sceam, I could consider paragraphs 7, and 33 to 62 of the Second Pesochinsky Affidavit, the solicitor for the plaintiff submitted that:

(a) the matters set out at paragraphs 33 to 62 all went to the background to the entry into the loan documents and were relevant to whether the defendant or the defendant's CEO and the defendant's lawyer were acting within authority;[36]

(b) the matters raised were 'submitted to give context as further information to the [C]ourt in relation to the matters of grounds 1 and 3 of the originating process';[37] and

(c) there is nothing in the Go Connect decision that says 'that material in the affidavit cannot be relied upon in relation to any other ground' and that the plaintiff was not seeking to introduce a new ground.[38] In this regard, the plaintiff sought to rely on the following sentence in Go Connect at paragraph 40 of their Honours' judgment:

However, where the minimum requirements had been met, the material relied upon in that affidavit could be supplemented by affidavits filed after that period.[39]

1. In reply, counsel for the defendant submitted that:

(a) the solicitor for the plaintiff had not correctly identified the relevant passages of Go Connect. Counsel for the defendant submitted that the relevant parts of Go Connect are the last two in paragraph 40, being that the defendant needs to be fairly notified of the evidentiary basis for submissions and the material facts on which the plaintiff intends to rely must be discernible from the supporting affidavit, or the annexures or exhibits to that affidavit; and

(b) the matters raised in paragraphs 7 and 33 to 62 of the Second Pesochinsky Affidavit are not matters that are discernible from the First Pesochinsky Affidavit.[40]

1. I was not assisted by the submissions from the solicitor for the plaintiff. They were vague, lacking in precision and did not engage with the objections raised by the defendant. Moreover, I do not consider that the plaintiff's solicitor faithfully or accurately set out the principles arising from Go Connect. Both Sceam and Go Connect clearly establish that an affidavit filed within time that does not identify the dispute later sought to be relied upon is not a 'supporting affidavit' in so far as the different genuine dispute is concerned, and that the party concerned is not permitted to rely on that different genuine dispute if it was not identified in the supporting affidavit filed within the statutory time period. I reject Ms Keily's characterisation of Go Connect and her submissions.
2. The plaintiff's contention that the:

(a) County Court Proceeding was relevant to there being a genuine dispute as to the amount claimed in the Demand, and was therefore no more than an extension of the matters raised in the First Pesochinsky Affidavit, is rejected. This issue was not fairly notified in the First Pesochinsky Affidavit; and

(b) agreement allegedly entered into in December 2023, some 10 months after the Loan Agreement, was relevant to the terms of the Loan Agreement and was therefore no more than an extension of the matters raised in the First Pesochinsky Affidavit, is similarly rejected. This issue was not fairly notified in the First Pesochinsky Affidavit.

1. The plaintiff did not otherwise address the Court as to:

(a) the relevance of the evidence pertaining to the requests allegedly made on 23 January 2024 for a copy of the 'signed variation documents' or how that was a matter fairly notified in the First Pesochinsky Affidavit; or

(b) the inconsistent deeds of variation exhibited to the First Pesochinsky Affidavit and the Second Pesochinsky Affidavit. I will return to this issue in paragraphs 36 to 45 of my reasons below.

1. In my opinion, the matters set out at paragraphs 7, 33 to 44 and 53 to 62 of the Second Pesochinsky Affidavit (including the exhibits) do not fairly give notice that the plaintiff contended that the County Court Proceeding or the earlier alleged December 2023 agreement are relevant to the grounds relied upon to establish a genuine dispute or offsetting claim. Similar issues arise in relation to the claims that copies of the 'signed variation documents' were requested. Those parts of the Second Pesochinsky Affidavit must be read in context of the contents of the First Pesochinsky Affidavit. That affidavit explicitly confines the basis of the genuine dispute to the alleged deed or deeds of variation and the alleged offsetting claim relating to an authority point said to arise under the Charities Act.
2. Paragraphs 45 to 52 of the Second Pesochinsky Affidavit relate to the alleged variations to the Loan Agreement. These are matters that are discernible from the First Pesochinsky Affidavit. Accordingly, I will permit the plaintiff to rely on those parts of the Second Pesochinsky Affidavit notwithstanding the lack of clarity in the plaintiff's solicitors submissions as to whether there was one or more Deeds of Variation.
3. Adopting the language in Sceam, the matters set out at paragraphs 7, 33 to 44 and 53 to 62 of the Second Pesochinsky Affidavit concern a different alleged dispute and the plaintiff is not permitted to rely on that different alleged dispute as it was not raised in the supporting affidavit filed within the statutory time period. In so far as the plaintiff sought to rely on the matters set out at paragraphs 7, 33 to 44 and 53 to 62 of the Second Pesochinsky Affidavit, the plaintiff will not be entitled to rely on that evidence.
4. Even if I am wrong in relation to excluding paragraphs 7, 33 to 44 and 53 to 62, a careful consideration of that evidence demonstrates that these paragraphs raise matters which are not germane to the determination of the application and the grounds raised in relation to genuine dispute and offsetting claim.

1. In support of its application, the plaintiff relied on two grounds of genuine dispute to set aside the Demand.
2. First, the plaintiff said that the parties entered into a deed of variation on or around 23 January 2024.[41] This deed of variation was exhibited to the First Pesochinsky Affidavit. A further deed of variation was exhibited to the Second Pesochinsky Affidavit.[42]
3. Although the plaintiff has adduced evidence of two alleged deeds of variation, it has not identified whether it relied on one or both in relation to the alleged variations to the Loan Agreement. For the purpose of these reasons, I will refer to both documents collectively as the 'Deeds of Variation'.
4. The effect of the alleged Deeds of Variation were to:

(a) provide for a further advance of $375,000.00, taking the total advance to $5,375,000.00;

(b) extend the date for repayment from 23 February 2024 to 31 August 2024; and

(c) remove Alex Bragilevsky, a previous co-director of the plaintiff, as guarantor under a deed of guarantee and indemnity ('Guarantee') pursuant to the Loan Agreement. The Guarantee was put into evidence in the Mulraney Affidavit.

1. Each of the alleged Deeds of Variation contained a schedule entitled 'Schedule 2 - Variations' ('Schedule') which set out the relevant variations.
2. The Schedule to the first deed of variation is in the following terms:

Facility Agreement dated 1 February 2023:

(a) Facility Limit is varied to state::

"$5,375,000"

(b) Loan Term is varied to state:

"the term of the loan extends up to and including 23 February 2024"

Deed of Guarantee and Indemnity dated 1 March 2023:

(a) Mr Alex Bragilevsky be removed as guarantor under the terms and conditions of the Deed of Guarantee and Indemnity.

1. The Schedule to the second deed of variation is in the following terms:

Facility Agreement dated 1 February 2023:

(a) Facility Limit is varied to state:

"$5,375,000"

(b) Loan Term is varied to state:

"the term of the loan extends up to and including 31 August 2024"

Deed of Guarantee and Indemnity dated 1 March 2023:

(a) Mr Alex Bragilevsky be removed as guarantor under the terms and conditions of the Deed of Guarantee and Indemnity.

1. Second, the plaintiff contended that the default interest rate payable under the Loan Agreement constituted an unenforceable penalty. At the hearing before me, the solicitor for the plaintiff abandoned this ground. Accordingly, I need not consider it.
2. Mr Pesochinsky gave the following evidence in support of the alleged genuine dispute:

(a) on or around 23 January 2024, the parties entered into the Deeds of Variation which varied the terms of the Loan Agreement. The effect of the Deeds of Variation were that they altered the repayment terms and other key provisions of the Loan Agreement, such that the amount claimed in the Demand did not represent an accurate statement of the due debt. Accordingly, the plaintiff disputed the existence and amount of the debt claimed in the Demand;[43]

(b) prior to entering into the Deeds of Variation:

(i) the plaintiff made all required interest payments throughout 2023 and although some payments were late, the defendant was notified in advance and permitted the delay without issuing any notice of default;[44]

(ii) from the outset, regular project updates were provided to the defendant by Mr Pesochinsky personally or through his lawyers at the time, Sather Legal;[45]

(iii) the defendant, through its representatives, was generally cooperative and responsive throughout 2023, demonstrated understanding of the prevailing market conditions and never raised any objections about the plaintiff's conduct or performance under the Loan Agreement, nor did the defendant accuse the plaintiff of default or seek to terminate or vary the terms unilaterally and the plaintiff's facility pursuant to the Loan Agreement was not treated as problematic;[46]

(iv) during 2023, the plaintiff undertook multiple sales campaigns for the apartments that were subject of the plaintiff's incorporation but no apartments were sold during that period and the Victorian property market had become the worst-performing in the country;[47]

(v) given the unlikelihood of an apartment sale before the term of the Loan Agreement had expired in February 2024, Mr Pesochinsky raised a prospect of extension with Mr Bird, who acted as a business broker between the plaintiff and defendant, and other representatives of the defendant. These discussions continued into October and November 2023 and during these discussions, Mr Pesochinsky was told there was sufficient time for a sale to occur and that the existing terms of the Loan Agreement should remain in place;[48]

(vi) by November 2023, despite the defendant allegedly acknowledging that the project was being properly managed and not raising any dissatisfaction with the conduct of the plaintiff, it became apparent to Mr Pesochinsky that a sale was not achievable by the time the term of the Loan Agreement had expired; and

(vii) Sather Legal drafted the Deeds of Variation on behalf of the plaintiff. Each of the First and Second Pesochinsky Affidavits exhibit a copy of a deed of variation which Mr Pesochinsky alleges were signed by him and Mr Bragilevsky on or around '24 January 2025'.[49] I presume that the reference to 2025 should be a reference to 2024.

1. Drawing on Mr Pesochinsky's evidence, the plaintiff made the following written and oral submissions:

(a) the Mulraney Affidavit did not cavil with the evidence filed by the plaintiff in the Second Pesochinsky Affidavit regarding the emails written for and on behalf of the defendant;[50]

(b) the Mulraney Affidavit did not seek to grapple with the fact or meaning of the email evidence that has been adduced by the plaintiff as to the entry into the Deeds of Variation, nor to say that it was fanciful;[51]

(c) the Second Pesochinksy Affidavit exhibited a version of a deed of variation allegedly signed by Mr Pesochinksy and Mr Bragilevsky. In that version, the term of the loan was varied to extend up to and including 31 August 2024;[52]

(d) the Deeds of Variation had the effect of changing the parties as Mr Bragilevsky was removed and the terms of the Loan Agreement relied on by the defendant were altered.[53] These are factual disputes and it is not for the 'court to resolve the factual controversy, only to decide that there is a dispute between the parties as to the matters';[54]

(e) the Deeds of Variation changed the amount of the loan;[55]

(f) the Mulraney Affidavit did not cavil with there being two deeds of variation or contested factual matters. This, it was submitted, 'only adds to the contest of fact around what happened in relation to the Deeds of Variation';[56]

(g) the evidence given in the First Pesochinsky Affidavit, the Second Pesochinsky Affidavit and the Mulraney Affidavit, illustrated a complex factual matrix requiring a full hearing to test whether the plaintiff's contentions are correct;[57] and

(h) the Third Pesochinsky Affidavit indicated that there is a dispute of fact as to whether the Guarantee relied on by the defendant in the Mulraney Affidavit was countersigned and exchanged.

1. By reason of the matters set out in paragraphs 35 to 44 above, the plaintiff contended that it has 'clearly demonstrated that there is a dispute as to:

(a) the amount of the debt in question (as to whether it is $5,375,000.00 or $5,000,000.00) and when the 'facility concluded' giving rise as to an issue regarding the amount of interest charged in the Statutory Demand; and

(b) the parties, including who was the guarantor under the Guarantee, which goes to the whole amount of the Debt, either of which is sufficient to satisfy the test of a genuine dispute'.[58]

1. With respect to its offsetting claim, the plaintiff submitted that due to the defendant being a registered charity, the defendant had no power or capacity to enter into the Loan Agreement and that, accordingly, the Loan Agreement is void or otherwise unenforceable. On this basis, the plaintiff's solicitor contended that 'the loan would be irrecoverable'.[59] This, it was submitted, gives rise to an offsetting claim.
2. In support of the offsetting claim Mr Pesochinsky's evidence was that:

(a) the plaintiff is a private entity involved in the development and sale of luxury residential property;

(b) the monies advanced pursuant to the Loan Agreement by the defendant to the plaintiff bears no connection to the defendant's charitable purposes under the defendant's constitution and pursuant to the Charities Act; and

(c) the Loan Agreement exceeded the constitutional authority of the defendant, which he was not aware of at the time of entry into it.

1. Mr Pesochinsky relied on the following clauses 6 and 7 of the defendant's constitution:

6. Object

The company's object is to pursue the following charitable purpose(s):

(a) to carry on business as a financially self-sufficient, not for profit company comprised of members;

(b) to provide care and support to, and promote and encourage the personal development of, vulnerable persons, thereby assisting them to grow, develop and live with agency, dignity, self-determination and acceptance in their communities;

(c) to research, develop, promote, advocate for and encourage opportunities and activities that provide better living conditions and care for vulnerable persons, including opportunities and programs in various social, community, sporting and employment activities thereby assisting them to achieve a better quality and enjoyment of life;

(d) to work with relevant entities including, but not limited to, government, semi-government, non-government, public, private and other authorities, instrumentalities, businesses, companies, individuals, charities and other bodies or interest groups wishing to assist and promote the interests and dignity of, and opportunities for, vulnerable persons;

(e) to provide accommodation and support services which uphold the principles and objectives of the Disability Services Act 1986 (Cth), the Disability Services Act 1992 (Tas), and the Children, Young Persons and their Families Act 1997 (Tas) and equivalent legislation of other States and Territories in which the company provides services;

(f) to provide funding to other entities for the purposes of one or more of the above objects; and

(g) to do all such things as are necessary or incidental to the attainment of the objects of the company.

7. Powers

Subject to clause 8, the company has the following powers, which may only be used to carry out its purpose(s) set out in clause 6:

(a) the powers of an individual; and

(b) all the powers of a company limited by guarantee under the Corporations Act.

1. Drawing on Mr Pesochinsky's evidence, the plaintiff, in its written submissions, contended that:[60]

[41] ...the full amount of the debt would be irrecoverable by the Defendant.

[42] ...the issue as to whether the Defendant was authorised to enter into the Loan Agreement could fall within either test under section 459H. It is capable as being construed as either of both of (1) a dispute as to the existence of the debt at all, by way of defence and counterclaim; or (2) a counterclaim by the Plaintiff for set-off and/or restitutionary damages or loss arising to it from the entry into the unauthorised agreement.

[43] In either case, the test is whether on the facts there is a plausible contention that the Defendant may not have had authority to enter into the Loan Agreement. This is a significant question of law and fact requiring construction of the Defendant's Constitution, the application of the Australian Charities and Not-for-Profits Commission Act 2012 (Cth) the construction of the Loan Agreement, and a determination of facts including knowledge of the parties.

[44] Even if the Plaintiff failed in its argument that the full amount of the loan was irrecoverable, or that it had a counterclaim for that amount, the Plaintiff contends that it has an offsetting claim in the amount of $750,000 being the interest paid. (It is noted that the Second Affidavit states that all interest was paid until 23 February 2024. As per the Affidavit of Karen Mulraney filed for the Defendant, at [9.4], and the Loan Agreement dated 3 January 2023 affixed to the Affidavit accompanying the Statutory Demand, the amount of the interest was 15%.)

1. The plaintiff's solicitor, in her oral submissions, further contended that:

(a) it was 'very unclear' how it was thought to be an appropriate loan within the construction of the constitution of the defendant;[61]

(b) the Loan Agreement was 'beyond power', which gave rise to a 'factual debate' requiring 'examination in court';[62] and

(c) the Loan Agreement related to funding for the development of six luxury apartments in Brighton which had nothing to do with the 'constitutional objective of the charity.'[63]

1. The defendant denies that there is a genuine dispute regarding the debt subject of the Demand and that the plaintiff has an offsetting claim.
2. Ms Mulraney gave the following evidence on behalf of the defendant:

(a) pursuant to the Loan Agreement, the Principal Sum was advanced to the plaintiff in two tranches;

(b) the plaintiff defaulted under the Loan Agreement by failing to repay the Principal Sum at the end of the term;

(c) demands for payment were sent to each of Mr Pesochinsky and Mr Bragilevsky on 20 December 2024 in their capacity as guarantors under the Loan Agreement;

(d) each of Mr Pesochinsky and Mr Bragilevsky failed to pay the sum demanded;

(e) the defendant issued the Demand on 7 May 2025; and

(f) the amount specified in the Demand remains unpaid.[64]

1. Ms Mulraney's evidence on behalf of the defendant is that she denies that the defendant agreed to vary the terms of the Loan Agreement. Her evidence was in the following terms:

(a) the alleged Deeds of Variation were never signed by the defendant;

(b) the plaintiff did not pay any interest during the purported extended period of the Loan Agreement and therefore the plaintiff could not have 'performed' the alleged Deeds of Variation in the way Mr Pesochinsky purported it had at paragraph 23 of the Second Pesochinsky Affidavit; and

(c) the defendant did not receive any benefit from the alleged Deeds of Variation.[65]

1. Drawing on Ms Mulraney's evidence, the defendant made the following written and oral submissions:

(a) with respect to the alleged Deeds of Variation, it is apparent from the face of both deeds that neither is enforceable either as a deed or as a contract. In this regard, it is trite to say that a deed which has not been signed, sealed and delivered by the promisor is not enforceable as a deed. Whilst a partially executed deed might be enforceable as a contract, that will not be the case where there is a total failure of consideration. The effect of the first alleged deed of variation was to increase the facility limit and remove a guarantor. The second alleged deed provided for a six-month extension to the repayment date, an increased facility limit (which effectively enabled the plaintiff to defer interest payments rather than making them monthly in arrears) and the removal of a guarantor. Neither deed conferred any benefit to the defendant;[66]

(b) the obligation to pay interest is illusory consideration as it was a promise by the plaintiff to do no more than perform a (lesser) contractual duty than that which it already owed.[67] Accordingly, the alleged Deeds of Variation are unenforceable as deeds or as contracts;[68]

(c) even if the alleged Deeds of Variation were entered into by the parties (which was denied), the effect of the variation was merely to extend the term of the loan by six months to 23 August 2024 and to increase the facility limit by $375,000.00 being the amount of interest otherwise payable during that six-month period. The plaintiff did not repay the loan amount of $5,000,000.00 plus interest in accordance with the Loan Agreement even as varied by the alleged Deeds of Variation;[69]

(d) the plaintiff's submissions miscomprehend the effect of the alleged Deeds of Variation. They did nothing more than extend the term of the loan by six months and increase the limit of the loan with the ensuing effect that interest that was otherwise payable in that period could be treated as a further drawdown on the loan due to the increase in the facility limit;[70] and

(e) the only practical difference that arises if the alleged Deeds of Variation were effective is the question of when the defendant became entitled to charge default interest. If the alleged Deeds of Variation were validly entered into (which, again, was denied), interest at 15% was payable from 24 February 2024 to 23 August 2024 and interest at 18% was payable thereafter. The effect of that is that the interest component of the $6,082,465.75 debt the subject of the Demand would be overstated by approximately $75,000.00 or 1.23%.

1. In respect of the offsetting claim, Ms Mulraney's evidence on behalf of the defendant was that:

(a) the defendant is a registered charity under the Charities Act;

(b) pursuant to clauses 6 and 7 of the defendant's constitution, the defendant has and had the power to invest surplus funds in order to further its charitable purposes; and

(c) any income generated from the loan to the plaintiff was to be applied to further the defendant's charitable purposes described in clause 6 of its constitution.[71]

1. On the basis of Ms Mulraney's evidence, the defendant submitted that:

(a) there is no genuine offsetting claim. The allegation that the defendant lacked authority to enter into the Loan Agreement is implausible, fanciful and futile for the following reasons:

(i) clauses 6 and 7 of the defendant's constitution permitted the defendant to enter into the loan facility. In particular, clause 6(g) permitted the defendant to invest any surplus funds that it had for the purpose of furthering its charitable objects. The money invested pursuant to the Loan Agreement was, according to Ms Mulraney's evidence, surplus funds;[72]

(ii) even if the defendant's constitution expressly prohibited it from lending, the ultra vires doctrine has been abolished in Australia;[73]

(iii) section 125(2) of the Act provides that an act of a company 'is not invalid merely because it is contrary to or beyond any objects in the company's constitution';[74] and

(iv) there is nothing in the Charities Act that would prevent the defendant from entering into the Loan Agreement.

1. It is necessary to give separate consideration to each of the grounds relied on by the plaintiff.

1. Although some of the plaintiff's submissions were difficult to discern, I apprehend that, with respect to the alleged Deeds of Variation, the central tenant of the plaintiff's argument was that by reason of the existence of the alleged Deeds of Variation, there was some complexity to the transaction underpinning the Loan Agreement such that the entire loan transaction should be reviewed. Precisely what plausible contention warranted investigation was not identified with any specificity. At its highest, the plaintiff's solicitor seemed to suggest that the Deeds of Variation had the effect of changing the parties, namely the guarantors, and accordingly the Loan Agreement relied on by the defendant was altered such that the Demand ought to be set aside.
2. The plaintiff's solicitor then sought to develop her submission by contending that , 'as a matter of practicality', there was a proceeding on foot concerning the guarantors being the County Court Proceeding, 'which would mean that there is no prejudice to the defendant in adding the company to that claim so that all of these matters of the factual matrix can be ventilated'.[75]
3. In my view, the plaintiff's solicitor's submissions demonstrate an impermissible conflation of concepts specific to the statutory demand regime and failure to grasp the intention of Part 5.4 of the Act. The submissions also misstate the import of the Deeds of Variation, particularly in the context of the nature of this application.
4. First, it is no answer to a statutory demand to assert that the defendant would not be prejudiced by having to litigate their claim in an, at best, related proceeding. It is well understood that 'the purpose of the statutory demand procedure is to facilitate a winding up application where there is no apparent reason, other than insolvency, for the corporation's refusal to pay a demanded amount. That is why, in dealing with an application to set aside a statutory demand, the Court must keep in mind that the task which it is performing is the determination of the amount of a genuine dispute or claim, which must exist in fact, rather than resolving the dispute or offsetting claim, or attempting to predict its outcome'.[76]
5. A statutory demand is therefore a means of facilitating proof that a company is unable to pay its debts. It is no answer to a statutory demand to require a defendant to litigate the subject of the demand where it has a debt which is due and payable, and which exceeds the statutory minimum, and where the debt is not the subject of any genuine dispute as to its existence or amount. The suggestion that there is 'no prejudice' to the defendant by requiring it to litigate the subject matter of the Demand misstates and misunderstands the statutory demands regime. The prejudice might very well be requiring a creditor to run costly litigation against an insolvent debtor. I reject the plaintiff's submission. It is unmeritorious.
6. Second, whether by reason of the Deeds of Variation there is a dispute as to the identity of the guarantors under the Loan Agreement, is of no relevance to the claim set out in the Demand. The Demand which is the subject of this application was issued by the lender to the borrower in respect of the Principal Sum due and payable under the Loan Agreement. None of those matters is impacted by the Deeds of Variation.
7. Third, whether the time for repayment of loan pursuant to the Loan Agreement was impacted by the alleged Deeds of Variation has, at best, only limited relevance to the claim set out in the Demand. That limited relevance is in respect of the time period referable to the calculation of interest, and specifically, whether the interest sought has been overstated. I note that this point is not one that was taken by the solicitor for the plaintiff but emerged in my discussions with counsel for the defendant.
8. Before me, there was no dispute by the plaintiff that:

(a) pursuant to the Loan Agreement, the defendant advanced $5,000,000.00 million to the plaintiff in two tranches with $3,000,000.00 million on 23 February 2023 and $2,000,000.00 million on 10 March 2023;

(b) the time stipulated for repayment in the Loan Agreement facility was 23 February 2024, being 12 months from the date of the first advance;

(c) the plaintiff defaulted by failing to repay the Principal Sum and interest due;

(d) on 20 November 2024, a demand for payment was made in accordance with the terms of the Loan Agreement; and

(e) the demand was not satisfied and the defendant issued the Demand on 7 May 2025.

1. A genuine dispute for the purposes of s 459H(1)(a) of the Act requires that there is a genuine dispute between the company and the respondent about the existence or amount of a debt to which the demand relates. Malec makes clear that in order to establish a genuine dispute it is necessary to demonstrate a 'plausible contention requiring investigation'. The claim must be 'bona fide and truly exist in fact' and the grounds for alleging the dispute must be 'real and not spurious, hypothetical, illusory or misconceived'.[77]
2. At its highest, the plaintiff alleged that the Loan Agreement was varied by way of the alleged Deeds of Variation. This is disputed by the defendant who says that it did not sign either of the alleged Deeds of Variation. The task, on this application, is to determine whether there is a plausible contention requiring investigation. Having regard to the evidence before, the matter requiring investigation could only be whether the Deeds of Variation were signed and, if so, what impact that has on the Demand. For the reasons that follow, the outcome of that investigation, has limited impact on the outcome of this application.
3. If the Deeds of Variation apply, the effect of the variations was to do no more than extend the term of the loan by six months to 23 August 2024, to increase the facility limit by $375,000.00 and to allegedly discharge one of the guarantors. The Demand that was served is in respect of the Principal Sum. At the time the Demand was served, even if the Deeds of Variation were executed and enforceable, the time for repayment of the Loan Agreement had expired. Before me, there is no evidence that an additional tranche of $375,000.00 had been loaned under the Deed of Variation. However, even if this occurred, it is not relevant to the determination of the application as the Demand is in respect of the Principal Sum only.
4. I accept the defendant's counsel's submission that the plaintiff's submissions miscomprehend the effect of the alleged Deeds of Variation. They did nothing more than extend the term of the loan by six months and increase the limit of the loan with the ensuing effect that interest that was otherwise payable in that period could be treated as a further drawdown on the loan due to the increase in the facility limit.
5. The defendant has correctly identified that the plaintiff has:

(a) adduced evidence of two different deeds of variation;

(b) made no attempt to clearly articulate why there are two versions of the deed; and

(c) attempted to deploy the deeds to give the perception that there was some complexity to the transaction underpinning the Loan Agreement in order to assert that a factual enquiry into the entirety of the Loan Agreement and dealings between the plaintiff and defendant is necessary.

1. I do not accept the plaintiff's contentions or submissions. Contrary to the submission of the plaintiff's solicitor, there is nothing 'complex' about the entire Loan Agreement transaction that warrants an investigation.
2. There can be no genuine dispute as to the sum claimed in the Demand on account of the Principal Sum advanced under the Loan Agreement.
3. The genuine dispute, to the extent that there is one, must be limited to whether the interest claimed in the Demand has been correctly calculated. This necessitates consideration of the Deeds of Variation.
4. Before me, there was a factual dispute as to whether one or both of the Deeds of Variation were executed. On the one hand, the plaintiff's evidence was that at least a deed of variation was executed. On the other hand, the defendant's evidence was that no deed of variation was executed. I am not able to determine that factual dispute. Given the competing sworn evidence, I conclude that there is a genuine dispute only as to whether the Deeds of Variation were executed. This conclusion, in turn, impacts the amount of $1,082,465.75 sought on account of interest in the Demand.
5. If interest under the Demand had been calculated using the date stipulated in the alleged Deeds of Variation, interest at 15% per annum was payable between 24 February 2024 and 31 August 2024 (inclusive), being a period of 190 days, instead of interest at 18% per annum. Interest of 18% per annum on $5,000,000.00 is $2,465.75 per day, whereas interest of 15% per annum is $2,054.79 per day, resulting in a difference of $410.96 per day. Accordingly, accepting that there is a genuine dispute as to whether the alleged Deeds of Variation were entered into, the interest component on the Principal Sum which is the subject of the Demand would be overstated by $78,082.40.
6. Section 459H of the Act provides that if the substantiated amount is at least as great as the statutory minimum, the Court may make an order varying the demand as specified in the order and declaring the demand to have had effect, as so varied, as from when the demand was served on the company.
7. I do not consider that the overstatement of the interest would, in the circumstances of the case, cause substantial injustice[78] such that the Demand ought to be set aside. No prejudice was identified by the plaintiff or urged upon me. Further, no application has been made to set aside the demand under s 459J(1)(a) of the Act.
8. Accordingly, having determined that there is a genuine dispute as to whether the alleged Deeds of Variation were entered into, the correct course is to vary the Demand to account for the potential overstatement of interest. The Demand will be varied to $6,004,383.35 being the amount in the Demand $6,082,465.75 less $78,082.40 on account of the overstated interest.
9. Otherwise, for completeness, I note that in the Third Pesochinsky Affidavit, Mr Pesochinsky gave evidence that he has 'never before seen or, to the best of [his] knowledge, been provided with the Guarantee exhibited to the Mulraney Affidavit' and that he does not believe the counterpart signatures on the document were exchanged with him. Further, he said that it is his genuine belief that the Guarantee was not signed and exchanged with him at the time of the relevant transaction.[79]
10. Notwithstanding Mr Pesochinsky's evidence on the Guarantee, the plaintiff's written and oral submissions did not engage with the claim that the Guarantee was neither signed nor exchanged by Mr Pesochinsky. The plaintiff in its written outline, stated only that Mr Bragilevsky was removed as guarantor under the first deed of variation.[80] Whether the Deeds of Variation removed one of the guarantors is not a matter which is relevant to the application before me. The Demand was issued by the lender against the borrower. The Demand does not make any claims in respect of the guarantors to the Loan Agreement. I do not accept the plaintiff's submission that any issue relating to who (if anyone) was a guarantor under the Guarantee is a plausible contention requiring investigation such that the Demand ought to be set aside or that there is a serious question to be tried.

1. Concerning the offsetting claim, the evidence filed on behalf of the plaintiff is not sufficient to establish that there is a serious question to be tried.

1. I am not persuaded that there is any merit to the argument concerning the Charities Act that warrants investigation or which gives rise to an offsetting claim.
2. First, no authority was cited by the solicitor for the plaintiff in support of this ground.
3. Second, there is nothing in the Charities Act that would prevent the defendant from entering into the Loan Agreement.
4. Third, the defendant's constitution plainly permits the defendant to invest any surplus funds of the defendant providing that in doing so the money to be generated is used for the defendant's charitable purposes.[81]
5. Fourth, Ms Mulraney's unchallenged evidence is that the income generated from the loan to plaintiff was to be applied to further charitable purposes described in clause 6 of the defendant's constitution.
6. Fifth, even if there was an issue arising in respect of the defendant's entry into the Loan Agreement, s 125(2) of the Act provides that an act of a company 'is not invalid merely because it is contrary to or beyond any objects in the company's constitution'.
7. Sixth, the plaintiff's solicitor otherwise submitted that what was at the core of the argument concerning the Charities Act and the defendant's conduct was a construction point.[82] That construction point was said to give rise to a 'factual debate requiring examination in Court'.[83] When asked whether there were any authorities that the plaintiff wished to take the Court to as to whether the Court is entitled, in the context of a statutory demand hearing, to resolve simple construction points, the plaintiff's solicitor said that there were not.[84] In Infratel Networks Pty Ltd v Gundry's Telco and Rigging Pty Ltd,[85] the Court of Appeal noted that, although the Court may determine questions of construction of a contract in an appropriate case, that would be the exception and an application to set aside a creditor's statutory demand is not ordinarily the occasion for the Court to construe the contract that is in dispute. Here, based on the evidence, I need not go so far as to consider whether it is necessary to construe the terms of the defendant's constitution.
8. There was nothing put before me that provides any evidential support for what is, at best, a mere assertion that the defendant lacked the authority to enter into the Loan Agreement. The mere assertion and inadmissible legal conclusion[86] in the First Pesochinsky Affidavit concerning the alleged lack of authority point do not demonstrate a claim of 'sufficient objective existence and prima facie plausibility'. Rather, in my view, the First Pesochinsky Affidavit demonstrates, that the plaintiff's alleged offsetting claim has been manufactured in response to the pressure of the Demand.

1. Additionally, in the First Pesochinsky Affidavit, the plaintiff contended that it had a claim in restitution or an offsetting claim for amounts of money paid under the Loan Agreement,[87] which it contended the defendant lacked the authority to enter. There is no evidence in any of the affidavits filed by the plaintiff recording the payment of any monies paid by the plaintiff to the defendant under the Loan Agreement. No substantiated amount has been established.
2. In the plaintiff's solicitors written outline, it is asserted that 'the plaintiff contends that it has an offsetting claim in the amount of $750,000.00 being the interest paid'.[88] This submission was not developed orally at the hearing before me. In any event, the submission has no evidential basis and I reject it. Before me, there was no evidence of the plaintiff having paid any amounts to the defendant under the Loan Agreement. Accordingly, I reject the plaintiff's contention that it has an offsetting claim or a restitutionary claim for amounts paid under the Loan Agreement.

1. The creditor's statutory demand dated 7 May 2025 will be varied pursuant to s 459H(2) of the Act by substituting for the sum of $6,082,465.75, the sum of $6,004,383.35.
2. I will otherwise hear the parties on the precise form of order and in relation to costs.

[1] Transcript of Proceedings (5 August 2025) 4.25-5.2.

[2] At the hearing on 5 August 2025, the plaintiff abandoned its argument that the interest payable under the Loan Agreement was a penalty and a basis for establishing genuine dispute.

[3] IMO Speedy Loans Pty Ltd [2014] VSC 273, [17] citing Farid Assaf, Statutory Demand and Winding up in Insolvency (LexisNexis Australia, 2nd ed, 2012).

[4] [2015] VSCA 330 ('Malec').

[5] Ibid, [47]-[51] (citations omitted).

[6] [2008] VSCA 70; (2008) 66 ACSR 67 (Dodds-Streeton JA, Neave JA agreeing, [1] and Kellam JA agreeing, [2]).

[7] Ibid, 79 [71] (Dodds-Streeton JA).

[8] Malec (n 4), [49] (citations omitted); In2Ply Pty Ltd v Amerind Pty Ltd (in liq) (recs and mgrs apptd) (2014) 32 ACLC 14-075, 939-940, [31] citing Diploma Construction (WA) Pty Ltd v KPA Architects Pty Ltd [2014] WASCA 91.

[9] Malec (n 4), [47] (citations omitted).

[10] Malec (n 4), [49] (citations omitted).

[11] Ligon 158 Pty Ltd v Huber [2016] NSWCA 330; (2016) 117 ACSR 495, 499.

[12] [2013] NSWCA 344; (2013) 85 NSWLR 601.

[20] [2003] NSWSC 896.

[22] Re Simmoll Pty Ltd [2021] VSC 693, [15] (citations omitted).

[23] [1996] FCA 822; (1996) 70 FCR 452.

[25] [2016] VSCA 315 ('Go Connect').

[27] [2021] VSCA 270; (2021) 64 VR 404.

[28] Ibid 415-417, [38]-[39], [43] (citations omitted).

[29] Affidavit of Michael Pesochinsky filed 27 May 2025, [4]-[5] ('First Pesochinsky Affidavit').

[31] Affidavit of Michael Pesochinsky filed 19 June 2025, 7 ('Second Pesochinsky Affidavit').

[36] Transcript of proceedings (5 August 2025) 6.1-6.6, 6.15-6.16.

[39] Go Connect (n 25), [40] (citations omitted).

[40] Transcript of Proceedings (5 August 2025) 8.13-8.24.

[41] First Pesochinsky Affidavit, [4].

[42] Second Pesochinsky Affidavit, [47].

[43] First Pesochinsky Affidavit, [4]-[6].

[44] Second Pesochinsky Affidavit, [23].

[50] Plaintiff's Outline of Submissions filed 4 July 2025, [24] ('Plaintiff's Outline').

[53] Transcript of Proceedings (5 August 2025) 11.27-11.31; 13.2-13.3; 14.16-14.17.

[56] Plaintiff's Outline, [26]; Ibid 14.2-14.13.

[57] Plaintiff's Outline, [27]-[29].

[58] Ibid, [31]; Transcript of Proceedings (5 August 2025) 15.21-15. 26.

[59] Plaintiff's Outline, [39]-[41].

[60] Plaintiff's Outline, [41]-[44].

[61] Transcript of Proceedings (5 August 2025) 16.18-16.19.

[64] Affidavit of Karen Mulraney filed 10 July 2025, [8]-[12], [30] ('Mulraney Affidavit').

[65] Mulraney Affidavit, [25]-[29].

[66] Defendant's Outline of Submissions filed 30 July 2025, [17] ('Defendant's Outline').

[67] Wigan v Edwards (1973) 1 ALR 497, 512 (Mason J).

[68] Transcript of Proceedings (5 August 2025) 20.2-20.7.

[70] Transcript of Proceedings (5 August 2025) 19.13-19.31.

[71] Mulraney Affidavit, [19]-[20].

[73] Transcript of Proceedings (5 August 2025) 21.16-21.19.

[75] Transcript of Proceedings (5 August 2025) 11.9-11.14.

[76] CA & Associates Pty Ltd v Fini Group Pty Ltd [2020] WASCA 31, [89].

[77] _Spencer Constructions Pty Ltd v G & M Aldridge Pty Lt_d [1997] FCA 681; (1997) 76 FCR 452, 464.

[78] Equuscorp Pty Ltd (formerly Equus Financial Services Ltd) v Perpetual Trustees WA Ltd [1997] FCA 1366; (1997) 80 FCR 296.

[79] Affidavit of Michael Pesochinsky filed 17 July 2025, [3]-[6].

[82] Transcript of Proceedings (5 August 2025) 17.2-18.21.

[85] [2012] NSWCA 365, [46].

[86] First Pesochinsky Affidavit, [16].

[87] First Pesochinsky Affidavit, [16].