Supreme Court New South Wales Medium Neutral Citation: In the matter of Gorji Property Investment Pty Limited [2018] NSWSC 1671 Hearing dates: 12 October 2018 Decision date: 12 October 2018 Jurisdiction: Equity - Corporations List Before: Black J Decision: The creditor's statutory demand dated 2 May 2018 issued by the Defendant to the Plaintiff is set aside. The Defendant pay the Plaintiff's costs of the proceedings as agreed or as assessed. Catchwords: CORPORATIONS – winding up – application to set aside creditor's statutory demand under Corporations Act 2001 (Cth) s 459H – where serious question to be tried as to whether the terms of the mortgage under which the debt is claimed could be found to be unconscionable – whether a genuine dispute has been established –whether condition should be imposed on an order setting aside the demand under Corporations Act s 459M. Legislation Cited: - Australian Consumer Law - Australian Securities and Investments Commission Act 2001 (Cth) s 12CC - Contracts Review Act 1980 (NSW) - Corporations Act 2001 (Cth) ss 127, 459H, 459M Cases Cited: - Britten-Norman Pty Ltd v Analysis & Technology Australia Pty Ltd [2013] NSWCA 344; (2013) 85 NSWLR 601 - Get'm Pty Ltd v Triulcio [2004] NSWSC 291 - Ipstar Australia Pty Ltd v APS Satellite Pty Ltd [2018] NSWCA 15 - Knight Frank Australia Pty Ltd v Paley Properties Pty Ltd [2014] SASCFC 103; (2014) 120 SASR 532 - Paciocco v Australia and New Zealand Banking Group Ltd (2015) 236 FCR 199 - Panel Tech Industries (Aust) Pty Ltd v Australian Skyreach Equipment Pty Ltd (No 2) [2003] NSWSC 896 - Re Erma Properties Pty Ltd [2017] NSWSC 1748 - Re Wabbits Pty Ltd [2018] NSWSC 532 - Re Wollongong Coal Ltd [2015] NSWSC 1680; (2015) 110 ACSR 134 - Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd [1997] FCA 681; (1997) 76 FCR 452 - TR Administration Pty Ltd v Frank Marchetti & Sons Pty Ltd [2008] VSCA 70; (2008) 66 ACLR 67 - The Trust Company (PTAL) Pty Ltd v Romeo (No 3) [2013] NSWSC 347 Category: Principal judgment Parties: Gorji Property Investment Pty Limited (Plaintiff) Nu Horizon property Holdings Pty Limited (Defendant) Representation: Counsel: M W Young SC (Plaintiff) D Pritchard SC/W J Nathan (Defendant) Solicitors: Vatandoust Lawyers (Plaintiff) Contracts Specialist (Defendant) File Number(s): 2018/161648 Judgment – ex tempore (revised 17 october 2018) Background 1. By Originating Process filed on 23 May 2018, the Plaintiff, Gorji Property Investments Pty Ltd ("Gorji"), applies to set aside a creditor's statutory demand ("Demand") dated 2 May 2018 served on it by the Defendant, Nu Horizon Property Holdings Pty Limited ("Nu Horizon"). That Demand was a claim for the amount of $300,000, being the amount of a debt described in the schedule as "Mortgage loan $300,000". That amount reflected the amount of the principal that was the subject of a document described as "mortgage" ("Mortgage"), which had much in common with a loan agreement, dated 25 September 2017 between Gorji, an entity described as Nu Horizon Holdings Limited and Mr Marco Fathabadi as guarantor. I pause to note, that, whereas the Mortgage referred to Nu Horizon Holdings Pty Ltd, and a company search refers to a company with that name, the Demand was issued by an entity named Nu Horizon Property Holdings Pty Ltd. No party took any point that the Mortgage and the Demand showed different names and it appears that the companies with different names have the same Australian company number. I proceed on the basis that the lender under the Mortgage, the issuer of the Demand and the Defendant are the same entity, where no party contended to the contrary. 2. The application ultimately turned on whether there was a genuine dispute as to the claim made by the Demand. A question also arose as to whether the Court should make an order under s 459M of the Corporations Act 2005 (Cth), if it were otherwise satisfied that there was a genuine dispute as to the debt claimed, setting aside the Demand on condition. Evidence and chronology of events 1. It will be convenient to refer, first, briefly to the evidence, then to the applicable principles, and then to the parties' submissions as to how those principles apply in the relevant circumstances, which will found a determination to the application. 2. Gorji relied on the affidavits dated 23 May 2018 and 2 August 2018 of one of its directors, Mr Fathabadi, and the affidavit dated 23 May 2018 of its other director, Ms Ghanavati, who is Mr Fathabadi's wife. Mr Fathabadi's evidence is that he understood he had authority to execute the Mortgage when he executed it on 25 September 2017, although he refers, in evidence admitted as a submission only, to now recognising that he lacked the authority to do so. His evidence is that he did not seek the consent of his wife, who is a director of Gorji as I have noted above, to execute the Mortgage for Gorji because he did not think he needed to. He also refers to not having obtained legal advice at the time he executed the Mortgage and refers to an issue as to whether the Mortgage was properly executed under s 127 of the Corporations Act, in evidence admitted as a submission only. He also refers to the terms of the Mortgage, and indicates that he did not then realise that it contained a reference in the Second Schedule to interest of $150,000. I will return to the significance of that matter when dealing with the terms of the Mortgage below. 3. Mr Fathabadi also refers to circumstances in which the Mortgage was signed, and gives evidence that he was not able to read the Mortgage because he was provided only with the signature page and that it was some time after he signed the Mortgage, in late February 2018, that he was provided with a copy of it. The correspondence in evidence does not suggest that he was provided with a copy of the document prior to that time. 4. Mr Fathabadi was permitted to give oral evidence, by leave, in respect of one part of his affidavit that was not in admissible form, which sought to establish that he had been wrongly informed that the interest rate under the Mortgage was 8 per cent per annum. Mr Fathabadi's oral evidence was inconsistent with that proposition, and did not establish that matter. Mr Pritchard, who appears for Nu Horizon, submits that I should reach adverse conclusions as to whether Gorji's claim to set aside the Demand is a genuine claim, by reason of the difficulties in Mr Fathabadi's evidence in that respect. It seems to me that, although that evidence plainly does not assist Gorji, it is of limited relevance to determining this application. In particular, the question whether there is a serious question to be tried in proceedings to set aside a creditor's statutory demand will not generally depend upon any assessment of the credit of witnesses. 5. Mr Fathabadi was also cross-examined, by leave, and it was established that the funds borrowed from Nu Horizon were necessary for, and had been applied to, Gorji's purchase of a property at Carlingford, for the purposes of development, where its attempts to obtain bank finance for the whole or substantial part of the purchase price had been unsuccessful shortly before settlement was due. 6. Gorji also relied on the affidavit evidence of its second director, Mr Fathabadi's wife, Ms Ghanavati, much of which was admitted as a submission. Ms Ghanavati's evidence was that she was unaware of the Mortgage at the time her husband signed it, and that she never authorised her husband to sign the Mortgage. Ms Ghanavati was cross-examined, by leave, and conceded that it was possible that Mr Fathabadi had discussions as to aspects of the transaction with her. Her evidence on cross-examination, plausibly, was that she would not have authorised her husband to sign a Mortgage containing the particular terms to which I will refer below. Again, I emphasise the question for the Court in an application of this kind is not to determine whether Ms Ghanavati should be believed in respect of that evidence, but instead whether a serious question to be tried is raised, in respect of the debt claimed by the Demand. 7. Nu Horizon relied on the evidence of its director, Ms Wang, which appears to have been directed to establishing the history of Nu Horizon's dealings with Mr Fathabadi, in negotiating the arrangements through Ms Wang's de facto partner, Mr Hiew, who is a mortgage broker, and with her former husband, who is the other shareholder in Nu Horizon. That evidence also goes to establish that Ms Ghanavati had at least some general knowledge of the purchase of the Carlingford property and the funding of it, a matter which Ms Ghanavati did not contest in her cross-examination. 8. Turning now to the chronology of events, and drawing upon a helpful chronology prepared by Mr Pritchard in that respect, it appears that Gorji was incorporated in October 2016 and, on Mr Fathabadi's evidence on cross-examination, entered an option to purchase the Carlingford property some time thereafter. There were subsequent discussions with Mr Hiew, for whom it appears Mr Fathabadi was undertaking building works, as to its need for funding to develop the Carlingford property, and a series of text messages were exchanged immediately prior to settlement. It is plain enough from those text messages, and again it did not seem to be disputed, that the intent was, and the fact was, that funds would be provided by Nu Horizon by way of a bank cheque made out to the vendors of the property, which would be applied for the benefit of Gorji in purchasing the property, and that is what occurred. 9. I pause at this point to return to the terms of the Mortgage, which was signed on 25 September 2017. That document provides, in cl 3.3, for the payment of interest, specified at both a higher and lower rate in a conventional way, on the principal of $300,000. However, a schedule to the Mortgage also provides, beside the reference to the date for the first interest payment, for a fixed rate of interest and repayment being $150,000 in addition to the principal of $300,000, so that a total of $450,000 was payable on the repayment date, which was some six months after the loan was advanced. That reference raised the possibilities that the Mortgage required a payment of the lower rate, or the higher rate in appropriate circumstances; or the fixed amount of interest; or both the lower rate or higher rate and the fixed amount of interest. In subsequent correspondence, Nu Horizon appears to have advanced the proposition that the Mortgage required the payment of the fixed amount of interest of $150,000, and implicitly treated the provisions for payment of the rate of interest at 8 per cent or 10 per cent as mere surplusage. In this application, Nu Horizon seeks to avoid that complexity by claiming, in the Demand, the recovery of the principal alone. 10. Nu Horizon lodged a caveat in respect of its interest in the Carlingford property, arising under the Mortgage. The amount lent was not repaid when due and, by letter dated 26 February 2018, Nu Horizon's solicitors demanded repayment, at that point in the amount of $300,000 plus fixed interest in the amount of a further $150,000, and attached a copy of the executed Mortgage. That was, as I noted above, the first point that the evidence indicates that the Mortgage had been provided to Mr Fathabadi. By letter dated 13 March 2018, solicitors who described themselves as acting for Mr Fathabadi, rather than Gorji, referred to the circumstances in which the Mortgage had been arranged; contended that he was not given an opportunity to review the Mortgage at the time it had been signed and was not given a copy of the Mortgage at that time; referred to subsequent requests for copies of the Mortgage; and contended that Nu Horizon could not demand or enforce payment of the fixed interest amount of $150,000 under the Mortgage. That letter advanced a proposal which appeared to contemplate that the loan would remain in place for a further six months, at the 8 per cent interest rate, although it had then fallen due for repayment. Not surprisingly, Nu Horizon did not accept that proposal. 11. Subsequent correspondence followed, in which Nu Horizon continued to press the claim for repayment of the principal of $300,000 and fixed interest of $150,000, and its solicitors advised that if the amount required was not paid, Nu Horizon would terminate the agreement and commence proceedings against Mr Fathabadi and Gorji without further notice. In the event, that was not done, and what was instead done was to serve the Demand. The applicable legal principles 1. With that background, I now turn to the well-established principles which are applicable in determining whether a genuine dispute is established. The Court has power to set aside a creditor's statutory demand under s 459H(1)(a) of the Corporations Act where there is a genuine dispute between a company and the issuer of the demand about the existence or amount of a debt to which the demand relates. In Spencer Constructions Pty Ltd v G & M Aldridge Pty Ltd [1997] FCA 681; (1997) 76 FCR 452 at 464, the Full Court of the Federal Court held that a "genuine dispute" must be bona fide and truly exist in fact, and the ground for that dispute must be real and not spurious, hypothetical, illusory or misconceived. In Panel Tech Industries (Aust) Pty Ltd v Australian Skyreach Equipment Pty Ltd (No 2) [2003] NSWSC 896 at [18], Barrett J (as his Honour then was) formulated that proposition as follows, in a proposition applied in subsequent cases: "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. In TR Administration Pty Ltd v Frank Marchetti & Sons Pty Ltd [2008] VSCA 70; (2008) 66 ACLR 67 at [71], Dodds-Streeton JA in turn observed that a genuine dispute required only that a claim 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." 2. These principles were reviewed, at some length, by the Court of Appeal in Britten-Norman Pty Ltd v Analysis & Technology Australia Pty Ltd [2013] NSWCA 344; (2013) 85 NSWLR 601, although that case was directed primarily to the question whether an offsetting claim was established. I also summarised the applicable principles in Re Wollongong Coal Ltd [2015] NSWSC 1680; (2015) 110 ACSR 134 at [9]–[22] and in Re Erma Properties Pty Ltd [2017] NSWSC 1748 on which I have partly drawn for the summary which appears above. It follows, and both Counsel recognised, that the threshold to establish a genuine dispute in respect of a creditor's statutory demand is a relatively low one. 3. Gorji, by its Counsel Mr Young, identifies a range of matters that are said to establish genuine disputes as to the claim under the Mortgage. First, Mr Young raises a question whether the Mortgage binds Gorji, which turns upon whether it was properly executed for the purposes of s 127 of the Corporations Act. There is potentially a question as to that matter, so far as it appears that Mr Fathabadi signed the document both as director/company secretary and as director, and there is authority that the application of s 127(1)(b) of the Corporations Act, where a company has at least two directors, requires that two people sign, one a director and the other a director or secretary: Knight Frank Australia Pty Ltd v Paley Properties Pty Ltd [2014] SASCFC 103; (2014) 120 SASR 532 at [15], [83]. It may be that little ultimately turns upon that matter in this case since, as Mr Young fairly recognised, it would be possible for the Mortgage to take effect as an agreement, even if it did not comply with the requirements for execution under s 127 of the Corporations Act, if it could be established that Mr Fathabadi had implied authority of Gorji to enter the agreement. 4. Mr Young points out, however, and I also accept, that there is also a question whether that implied authority could be established. Ms Ghanavati's evidence on cross-examination indicates that she generally leaves Mr Fathabadi to conduct a building business, conducted through another company, without a significant level of intervention on her part. That, however, says little as to the position in respect of Gorji, which is a separate entity, engaging in a different property development business, with the purchase of the Carlingford property being the first property purchased in that separate business. This transaction is, as Mr Young points out, plainly a substantial one, and involves somewhat unusual terms so far as the Mortgage is concerned, and it is by no means clear that there was any practice within Gorji that would give rise to implied authority, or ostensible authority, of Mr Fathabadi to execute that document, if s 127 of the Act was not otherwise satisfied. 5. Mr Young submits, and I accept, that there is a serious question as to whether Mr Fathabadi had actual authority to execute the Mortgage. Mr Fathabadi accepted, in cross-examination, that there had at least been discussions with his wife, and went some way towards suggesting that there was some general authority to raise the relevant loan funds, and Ms Ghanavati's evidence in cross-examination was, as I have noted above, that she accepted that it was possible that there were discussions of these matters, without indicating recollection of such a discussion. It is clear enough that there is a real question as to whether there was any formal decision, involving both Mr Fathabadi and Ms Ghanavati, authorising the execution of the Mortgage in its particular terms. Ms Ghanavati's evidence is to the contrary, so far as she says that she would not have authorised the execution of a Mortgage providing for payment of an amount of $150,000 of interest on a loan of $300,000 for a six month period. It seems to me that, in these circumstances, a seriously arguable case is likely to be established as to the question whether the Mortgage binds Gorji in the relevant circumstances. It is ultimately not necessary to reach a final view as to that question given the conclusions that I have reached on other grounds. 6. Second, Mr Young advanced a case in misrepresentation and in unconscionability. The claim as to unconscionability was put in written submissions as relating to the misrepresentation and also as involving the fact that Mr Fathabadi had not read the Mortgage before it was executed. Mr Young also contended, in written submissions, that, if Gorji were found to be bound by the Mortgage, then it would be likely that any attempt by Nu Horizon to enforce it could be answered by a defence that the Mortgage should not be enforced by reason of unconscionable conduct under the Australian Consumer Law. As I noted above, Mr Fathabadi's oral evidence did not support a case of a positive misrepresentation as to the level of the interest, since his evidence was that there was no discussion of that question. Not surprisingly, Mr Young then put greater focus in oral submissions on the question of unconscionability. 7. The parties did not give substantial attention to whether any such claim would be brought under the Australian Consumer Law or possibly under similar provisions in the Australian Securities and Investments Commission Act 2001 (Cth), including s 12CC of that Act. Nor did they devote significant attention to the relevant case law. That case law establishes that the concept of unconscionability requires attention to relevant social norms and values, and that unconscionability can be established without evidence of dishonesty: Paciocco v Australia and New Zealand Banking Group Ltd (2015) 236 FCR 199 at [261]–[262], affirmed on appeal to the High Court at (2016) 258 CLR 525. It is sufficient for present purposes to refer to the formulation of that concept by Bathurst CJ (with whom Beazley P agreed) in Ipstar Australia Pty Ltd v APS Satellite Pty Ltd [2018] NSWCA 15 at [195]–[196], where his Honour observed that unconscionable conduct required a "departure from accepted community standards as can objectively be seen to be against conscience" and involved a consideration of all of the circumstances "to conclude whether or not the conduct in question falls below acceptable norms, standards or values such as to warrant it being determined to be unconscionable". 8. It seems to me that a seriously arguable case is established that the terms of the Mortgage could be found to be unconscionable in the relevant circumstances, where the Mortgage variously provides for interest of 8 per cent, 10 per cent, or a fixed amount of $150,000 over a six month period, and there is evidence which might be accepted by a Court that Mr Fathabadi had not read the agreement, and was not provided with a copy of it when it was signed, and did not take advice about it. It is not to the point, where the question of statutory unconscionability arises, to say that Mr Fathabadi personally, or Gorji if he had authority to act on its behalf, are bound by what they signed, or could have read the Mortgage or ensured that they obtained a copy of it, if they acted reasonably or diligently. Unconscionability may be established where a lender takes advantage of a borrower who is less than diligent or vulnerable because of its lack of care. 9. Mr Pritchard in turn submits that, even if a question of authority arose, and a serious question was established, and even if there was a serious question as to the circumstances in which the Mortgage was executed, there would at least be a requirement that Gorji repay the principal to Nu Horizon. Mr Pritchard also submits, and I accept, that it is open to Nu Horizon as a secured creditor to bring an action upon its debt and that, if, as Gorji contends, the Mortgage is void or unenforceable, Nu Horizon may well have a claim for moneys had and received as to the amount that had been paid by it to Gorji. Mr Pritchard submits, and I also accept, that a claim for quantum meruit may, in an appropriate case, give rise to a liability in a fixed amount which can be the subject of a creditor's statutory demand. Initially, it seemed to me that it may be unlikely that, even if Gorji were successful in all other aspects of its claim, it could establish a seriously arguable case that it would not be obliged to repay the principal. 10. However, it seems to me that framing the question in that way mischaracterises the issue which arises in this case. The question here is whether there is a genuine dispute that the debt claimed by the Demand is currently due and payable, in the amount claimed, of $300,000 by way of principal. However, it is not possible for Nu Horizon, by formulating its claim for only the principal amount, to isolate that amount from all of the circumstances of the transaction. It seems to me that, in determining whether there was a claim for moneys had and received in respect of the principal, and whether the principal should be treated as immediately due and payable, the Court should have regard to all of the relevant circumstances, including those to which I have referred above in respect of the suggested unconscionability claim and the fact that (as Mr Young points out) Nu Horizon has placed a caveat on the Carlingford property which would, in ordinary experience, limit Gorji's ability to refinance upon security of that property. 11. In The Trust Company (PTAL) Pty Ltd v Romeo (No 3) [2013] NSWSC 347, particularly at [52], in dealing with the analogous situation of an application for summary dismissal, Button J recognised that it may be most unusual for a defence under the Contracts Review Act 1980 (NSW) to result in a borrower not being liable to repay a principal, but held that he could not completely rule out the possibility of that occurring in the particular circumstances, so as to grant summary judgment in respect of the principal of the loan. I accept, as Mr Pritchard put, that the considerations raised by the Contracts Review Act are different from those raised by statutory unconscionability and that Gorji does not have access to a remedy under the Contracts Review Act in this case. However, I could not be satisfied that, if a defence of unconscionability were raised in the relevant circumstances, a Court would not fashion a remedy in a manner that allowed Gorji time for repayment of the principal, or required that the caveat be dealt with in a particular way in order to facilitate repayment of the principal. Where I cannot be satisfied of that matter, I cannot be satisfied that a claim for unjust enrichment would succeed, at least in a way that would lead to an order for payment of the principal as a debt that was immediately due and payable, as distinct from an order that provided a more qualified remedy. 12. I should note that Mr Pritchard made detailed submissions as to the circumstances in which the Court would order the redemption of a mortgage and referred to authority in that respect. With great respect to the subtlety of those submissions, I do not consider it necessary to deal with them. The question here is whether a genuine dispute is established in respect of the debt claimed, and the matters that create a seriously arguable question as to whether there would be a statutory intervention on the grounds of unconscionability also create a genuine dispute as to the debt. Once the possibility of statutory intervention is recognised, and a serious question to be tried is established in that regard, then the question of how a redemption application would be treated at general law, absent statutory intervention, no longer arises. Whether a condition should be imposed on an order setting aside the Demand 1. A further question arose as to whether the Court should make an order under s 459M of the Act, imposing conditions on the basis on which the Demand should be set aside if a genuine dispute was established, as it has been, in respect of the debt claimed. In careful submissions, Mr Pritchard drew attention to the relevant provisions, and the case law which has pointed to the circumstances in which they may or may not be exercised. Section 459M of the Act provides that an order under s 459H, relevantly setting aside a creditor's statutory demand, may be made subject to conditions. Mr Pritchard fairly referred to Panel Tech Industries (Aust) Pty Ltd v Australian Skyreach Equipment Pty Ltd (No 2) [2003] NSWSC 896 at [30], where Barrett J referred to the possibility that such an order should be made where a genuine dispute has been established, but the Court has reservations as to whether the defence of the claim will ultimately succeed, and observed that a defendant in those circumstances should not have to pursue the proceedings on an entirely speculative basis. 2. Mr Pritchard also fairly drew attention to the observations of Palmer J in Get'm Pty Ltd v Triulcio [2004] NSWSC 291 at [30] that the Court would not routinely engage with that question, where that would require an assessment of the degree of genuineness of disputes and would require it to investigate the merits of a dispute to a depth which it refuses to do. Of course, it should also be recognised that the Court should properly make such investigation as the exercise of its statutory powers under s 459M of the Act may require. In Re Wabbits Pty Ltd [2018] NSWSC 532, Gleeson JA in turn referred to the applicable principles, and to the cases to which I have referred above, and there held that it was an appropriate course to make such an order. His Honour there set aside a creditor's statutory demand conditional upon a payment into Court, if proceedings were commenced by the claimant in respect of the underlying dispute. 3. In this case, Mr Pritchard originally formulated the order that would be sought under s 459M of the Act as having the effect that the Demand should be set aside on the basis that, if proceedings were commenced by Nu Horizon to seek to recover the amount claimed, then that amount would be paid into Court by Gorji within a specified period, or otherwise the order setting aside the Demand would cease to have effect. I indicated, in the course of submissions, that it was unlikely that I would make such an order in that form, while not expressing a final view in that regard. I took that view because of the difficulties to which Mr Young referred, that, in the present circumstances, there must be a real question as to whether it would be practicable for Gorji to refinance the relevant property, where Nu Horizon had placed a caveat over the property. In forming that preliminary view, I had not neglected Mr Pritchard's submission that the evidence did not indicate, other than by inference from Gorji's difficulties in obtaining the loan to begin with, that it lacked the capacity to repay the loan without borrowing on the security of the Carlingford property. It seems to me, however, that an inference is available in the relevant circumstances that that is a real possibility. 4. Nu Horizon then proposed an alternative form of such a condition, which would provide for the Demand to be set aside on condition that Gorji pay the amount of $300,000 together with interest within a specified period, at the lower rate specified in the mortgage, and on an undertaking by Nu Horizon that it would release the caveat after that was done. That order specifically sought to preserve Nu Horizon's rights, in respect of its claim to interest at the higher rate and other rights arising from the advance of the relevant funds, if the Mortgage was unenforceable. 5. That proposed alternative condition seemed to me to be a constructive approach to the particular difficulties which arise in this case. However, I have ultimately concluded that I should not impose a condition under s 459M of the Act in these circumstances. There would be a potential difficulty, in implementing such a condition, as Mr Young points out, so far as it would require Gorji to engage with a new lender, while the caveat remained in place, and while there was a continuing dispute as to the high claims for interest by Nu Horizon, whether at a higher 10 per cent interest rate, or for $150,000, or possibly an as yet unarticulated claim for both the higher rate of interest and the $150,000. It would be anticipated, as a matter of practical common sense, that a potential lender dealing with Gorji in those circumstances would exercise a high degree of caution. It seems to me, in practical terms, that the making of such an order would place Gorji under pressure to refinance, within a short period, and if it failed to do so, then a presumption of insolvency would arise from failure to satisfy the Demand, notwithstanding that I have found that a genuine dispute as to the debt existed. Such a condition could also, in practical terms, deprive Gorji of potential relief that would be available to it for unconscionability, including the possibility that the Court would grant relief on terms that provided, for example, for the removal of the caveat prior to repayment of the debt, to allow a refinancing, or for repayment of the debt over a longer period. That is not to say that the Court will ultimately make such an order, and it may be that it would not do so. However, this is an application to set aside a creditor's statutory demand, and not the occasion on which to determine the nature of the relief that the Court might have made, had Nu Horizon instead chosen to bring substantive proceedings as it has initially suggested that it would do. Orders and costs 1. In these circumstances, I am satisfied that the Demand should be set aside. It may be, ultimately, that Nu Horizon is successful in full, as to the principal, and as to the interest claimed either at the 8 or 10 per cent rate or in the fixed amount that it claims. However, this is another example, of which there are many in the case law, where an application involved complexities and contested issues, such that the issue of a creditor's statutory demand was not an appropriate means of resolving the relevant claim. In those circumstances, consistent with the authorities, the Demand should be set aside. 2. Accordingly, I make the following orders: 1. The creditor's statutory demand dated 2 May 2018 issued by Nu Horizon Property Holdings Pty Ltd to Gorji Property Investment Pty Ltd be set aside. 2. The Defendant pay the Plaintiff's costs of the proceedings as agreed or as assessed. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 02 November 2018