Byproxy v Ghisoni

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT
CORPORATIONS LIST

S ECI 2022 04981

IN THE MATTER of CLAUDIO GHISONI AND JANETTE GHISONI ATF THE GHISONI SUPERANNUATION FUND (ABN 26 593 191 120)

BETWEEN:

BYPROXY PTY LTD (ACN 642 841 727) ATF SYRACUSE TRUST (ABN 91 585 315 943)	Plaintiff
v
CLAUDIO GHISONI AND JANETTE GHISONI ATF THE GHISONI SUPERANNUATION FUND (ABN 26 593 191 120)	Defendants

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JUDGE:	Gardiner AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	29 March 2023
DATE OF JUDGMENT:	5 July 2023
CASE MAY BE CITED AS:	Byproxy v Ghisoni
MEDIUM NEUTRAL CITATION:	[2023] VSC 381

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CORPORATIONS — Application to set aside a statutory demand pursuant to s 459G of the Corporations Act 2001 (Cth) (‘Act’) — Plaintiff alleges genuine dispute under s 459H(1)(a) of the Act by reason that the loan agreement pursuant to which the defendants’ claim was made was a sham transaction set up to circumvent the operation of Commonwealth legislation regulating the dealings of self-managed superannuation funds and the intention of the parties was that a third party was obliged to repay the defendants — Defendants contended the parties were bound by the written loan agreement and the plaintiff could not go behind the agreement and agitate the alleged dispute — Common personalities in the directorship and shareholding between the three entities that were involved in the negotiation of the transaction — Contested evidence as to the events surrounding the transaction that gave rise to matters which warranted further investigation and a finding that there was a genuine dispute — Malec Holdings Pty Ltd v Scotts Agencies Pty Ltd (in liq) [2015] VSCA 330 — Troutfarms Australia Pty Ltd v Perpetual Nominees Ltd [2013] VSCA 176 — ACN 063 346 707 Pty Ltd (formerly known as South Passage Pty Ltd) v Marshall [2022] NSWSC 1597 — Demand set aside.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr M Black	Kingsford Lawyers Pty Ltd
For the Defendant	Mr S Trewavas	Aitken Whyte Lawyers

TABLE OF CONTENTS

Introduction........................................................................................................................................ 1

Procedural history.............................................................................................................................. 1

Evidence filed in the application................................................................................................ 2

Background......................................................................................................................................... 2

Byproxy’s evidence....................................................................................................................... 3
GSF’s evidence............................................................................................................................. 11
Affidavit of Jason Ghisoni................................................................................................ 16
Affidavit of Andrew Ghisoni........................................................................................... 17

Byproxy’s affidavits in reply..................................................................................................... 19
Mr Gordon’s affidavit in reply........................................................................................ 19

Relevant statutory provisions and legal principles.................................................................. 26

Byproxy’s submissions................................................................................................................... 29

GSF’s submissions........................................................................................................................... 32

The written loan agreement....................................................................................................... 39
Letter of demand from Byproxy to Gardian........................................................................... 40
Books of Gardian......................................................................................................................... 42

Byproxy’s submissions in reply.................................................................................................... 42

Consideration.................................................................................................................................... 44

HIS HONOUR:

Introduction

The plaintiff, Byproxy Pty Ltd (‘Byproxy’), makes an application under s 459G of the Corporations Act 2001 (Cth) (‘Act’) to set aside a statutory demand (‘demand’) served on it on 17 November 2022 by the defendants, Claudio and Janette Ghisoni (‘Ghisonis’), who are the trustees of the Ghisoni Superannuation Fund (‘GSF’).

The demand claims that Byproxy is indebted to the Ghisonis, in their capacities as trustees of GSF, for the sum of $224,510.41. The schedule to the demand describes the debt as comprising the principal debt of $200,000 owing pursuant to a loan agreement dated 16 August 2021 (‘loan agreement’), together with interest accrued under that agreement of $24,510.41.

Byproxy claims there is a genuine dispute in respect of the demand pursuant to s 459H(1)(a) of the Act and that it is not indebted to the Ghisonis.[1]
[1]In these reasons, for reasons of convenience and brevity, I will speak of the alleged obligation as being to GSF, rather than the Ghisonis.

Procedural history

Byproxy’s originating process was filed on 6 December 2022. The matter first came before the Court on 14 December 2022, when orders were made listing two preliminary questions for hearing and determination. The preliminary questions were:

(a) whether the originating process was validly served in accordance with s 459G of the Act; and

(b) the consideration of any application by Byproxy seeking a declaration that the demand was a nullity.

Ultimately, Byproxy did not press its foreshadowed application seeking a declaration in terms of paragraph 4(b) above. The preliminary question described in paragraph 4(a) proceeded to hearing on 8 February 2023. Judgment on that question was reserved. However, the parties subsequently advised the Court that GSF no longer pressed the issue of service, conceded that the originating process and affidavit in support were validly served, and accepted that Byproxy’s s 459G application was made in compliance with that section. Orders were made by the Court reflecting this on 21 February 2023, together with orders regarding the further conduct of the application.

Evidence filed in the application

In support of its application, Byproxy relies on the affidavits of:

(a) Gino Krt sworn on 5 December 2022;

(b) Graham Gordon sworn on 15 March 2023;

(c) Linda Gordon sworn on 15 and 28 March 2023; and

(d) Victor Lee Doree sworn on 23 March 2023.

In opposition to Byproxy’s application, the Ghisonis rely on the following affidavits:

(a)       Claudio Ghisoni affirmed on 2 March 2023;
(b)      Jason Ghisoni affirmed on 1 March 2023; and
(c)       Andrew Ghisoni affirmed on 1 March 2023.
Background

Byproxy contends that the alleged dispute arises from a transaction whereby GSF advanced $200,000 to Gardian Technologies Pty Ltd (‘Gardian’) via Byproxy, apparently interposing Byproxy to circumvent Commonwealth legislation regulating self-managed superannuation funds (‘SMSF’) proscribing loans to related entities. Byproxy contends that the advance was, in reality, an advance by GSF to Gardian and Byproxy’s involvement by its execution of the loan agreement was not intended by the parties to create any obligation for Byproxy to be responsible for repaying GSF. Rather, it was Gardian who had the need for the advance and it was intended that Gardian repay the loan. Gardian went into administration on 27 January 2023 and is presumably insolvent. Byproxy contends it enjoyed no commercial benefit from the loan and its involvement was only for the purpose of creating the appearance of an arm’s length transaction to outsiders, notably GSF’s superannuation fund auditor. It is contended that the first named defendant, Mr Claudio Ghisoni (‘Mr Ghisoni’), was aware of, and indeed involved and instrumental in, the transaction.

The parties and the natural persons behind the corporate entities and their relationship to one another are identified in a schedule to these reasons.[2]
[2]The relevant details concerning the individuals are extracted primarily from the Australian Securities and Investments Commission (‘ASIC’) extracts that are exhibited to the affidavit of Gino Krt sworn on 5 December 2022 (‘Krt affidavit’).

Byproxy’s evidence

Byproxy relies principally on the affidavit of Gino Krt (‘Mr Krt’), a former director of Byproxy.

Gardian was registered in Queensland in July 2020 and before entering into administration it was involved in software development. Mr Krt and Mr Ghisoni were Gardian’s first directors.[3]
[3]For reasons of clarity, in these reasons, I will refer to the first named plaintiff as Mr Ghisoni and his two sons, Jason Ghisoni and Andrew Ghisoni, by their full names.

Mr Krt was a director of Gardian between 3 July 2020 and 3 August 2022. Mr Ghisoni was a director of Gardian between 3 July 2020 to 19 August 2020.[4] When Mr Ghisoni ceased to be director of Gardian, his son, Jason Ghisoni, became a director from 19 August 2020 until 28 September 2022.
[4]The ASIC extract of Gardian Technologies Pty Ltd records that Mr Ghisoni was a director for one day, 3 July 2020. Mr Krt deposes in his affidavit that this is incorrect as Mr Ghisoni was a director until 19 August 2020. GSF did not contradict this.

Mach4G Pty Ltd (‘Mach4G’) holds 8,364,000 of the ordinary shares in Gardian and a company associated with Mike Hammond, MV&B Pty Ltd, holds 3,280,000 ordinary shares. Mr Ghisoni was formerly a director of Mach4G for a period of a month between July and August 2020, after which his son, Jason Ghisoni, became a director. His co-director is Ms Linda Gordon.

Mr Krt deposes that in March 2021, Jason Ghisoni instructed Gardian’s external accountant to change the share structure so that Ondance Solutions Pvt Ltd (‘Ondance’), a software programme developer that was a supplier to Gardian and registered in India, became the holder of 1,640,000 B class shares in consideration of conversion of part of a debt that Gardian owed to Ondance into share capital.

Mr Krt deposes that Mr Ghisoni is a beneficial owner of Gardian through the shareholding held by a related interest in Mach4G.[5] The 8,364,000 shares held by Mach4 constituted 51% of the issued capital in Gardian.
[5]Mr Ghisoni’s shareholding in MACH4G Pty Ltd would appear to be held by Zanneri Pty Ltd according to the ASIC search of MACH4G Pty Ltd, which is exhibited to the Krt affidavit.

On 23 May 2021, Ondance issued an invoice to Gardian for the payment of AU$200,000 (‘Ondance invoice’) owing under a software development contract between Ondance and Gardian. Because Gardian did not have the funds to pay the Ondance invoice, Ondance and Gardian entered into an invoice factoring arrangement whereby the Ondance invoice was factored to Drip Capital Inc (‘Drip Capital’), with it being agreed that Gardian had a further 90 days to pay the invoice.

Mr Krt states that Drip Capital paid Ondance the amount owing under the Ondance invoice and Drip Capital thereby became subrogated to the rights of Ondance in respect of the Ondance invoice.

In July 2021, because of the lack of major orders being placed with Gardian and by reason that the software being developed by Gardian was not yet in a state to attract prospective customers, it became apparent that Gardian would not have sufficient funds to pay Drip Capital the invoice amount by the due date, 21 August 2021.

In this regard, in a later affidavit of Mr Graham Gordon, the former chief executive officer (‘CEO’) of Gardian, he states that on 2 August 2021, he chaired a meeting at which Linda Gordon and Jason Ghisoni were present, with Mr Ghisoni’s other son, Andrew Ghisoni, participating by Zoom. Mr Gordon exhibits copies of the minutes of the meeting of Gardian, which he says are an accurate record of that meeting and record a discussion concerning the payment due to Ondance. The minutes make reference to the Ondance debt and the obligation to Drip Capital. The minutes record that at the meeting, Linda Gordon raised with Andrew Ghisoni a promise by him to cover all of Gardian’s software development costs. Mr Gordon states that Andrew Ghisoni responded by saying he had no money but had deposited a large amount of money into GSF and he would ask his father to access that money. The minutes record that Mr Gordon offered to provide a form of loan agreement.

In his affidavit, Mr Krt states that Gardian agreed to Andrew Ghisoni’s proposal and that Gardian would pay interest at a rate of 9% per annum, with the principal and interest being repayable 12 months from the date of the advance.

Following the meeting, on 11 August 2021, Ms Sue McKeen of PG&A Accountants and Advisers, Gardian’s external accountants, advised Mr Ghisoni and Jason Ghisoni regarding the process to enable the loan to be made to Gardian. She advised that GSF could not directly lend more than 5% of its assets to Gardian as Gardian was considered to be a related entity for the purpose of Commonwealth superannuation legislation by reason that Jason Ghisoni was then a director of Gardian. She made a statement on 5 September 2022 about the advice she gave, which read as follows:

Statement pertaining to advice given in relation to funds loaned to Gardian Technologies Pty Ltd from the Ghisoni Superannuation Fund
On 11 August 2021, I had a phone discussion with Jason regarding a potential loan from his Father’s self managed super fund to Gardian Technologies Pty Ltd.
I explained to Jason the strict regulation that governs self managed super funds and that I am hesitant to give advice on loans from self managed super funds for that reason. I further explained that under the “in-house assets” rule, self managed super funds are not able to have related party transactions that involve more than 5% of the overall assets of the fund.
I further advised that if they wanted to proceed with the loan, then it would need to go first to a non-related party and then on-loaned to Gardian Technologies Pty Ltd, but that they would need to make sure that all conditions on the loan [were] complied with i.e. interest rate calculation and payments made on time.
Jason then emailed the loan agreement template for me to review, but I emphasised that it would be in relation to Super Funder legislation only and that I couldn’t give legal advice on the Agreement itself. I reviewed the template and advised that it looked to contain all the necessary conditions of a commercial agreement. Claudio subsequently emailed me regarding some working and I responded to him on 15^th August to advised that the wording could be changed to what he suggested.
On 18^th August, I received an email from Graham Gordon confirming my verbal and written advice to Claudio and Jason in respect of the flow of funds and conditions to ensure the loan is compliant for audit purposes of the Super Fund.

Mr Krt deposes that it was Mr Ghisoni who suggested that GSF lend the money to Gardian through a third-party to ‘get around the superannuation laws’ and that ‘the money could be fed back into Gardian through the backdoor’. During a video conference between Andrew Ghisoni and Ms Gordon, at which Mr Krt was present, Andrew Ghisoni told Ms Gordon he would route the funds through Byproxy but that Gardian would be the entity responsible for the loan. Andrew Ghisoni indicated a formal contract needed to be drawn up to establish ‘an audit trail and make the loan look credible’. Mr Krt states this was agreed, but only on the basis that Gardian be responsible for the debt as Byproxy would receive no benefit from the advance. He further states that Mr Ghisoni agreed Gardian would be responsible for paying the loan back, not Byproxy.

On 11 August 2021, Jason Ghisoni emailed Ms McKeen, seeking further guidance. Mr Ghisoni was carbon copied to that email. That email attached the form of agreement that was intended to be used and Jason Ghisoni enquired whether an agreement in that form would satisfy the SMSF compliance requirements.

On 13 August 2021, Ms McKeen responded to Jason Ghisoni, carbon copied to Mr Ghisoni, stating that from an SMSF compliance perspective, she could not see any problems with the agreement. She stated that as no property was being put up as security, GSF should register a Personal Property Securities Register (‘PPSR’) security interest over the assets of the Syracuse Trust (of which Byproxy was trustee) and charge a higher interest rate. She stated:

Main thing will be that everything that happens between the Lender and the Borrower is as set out in the agreement, that’s what the auditors will want to check. Any deviation from what was agreed in the contract will give them reason to query. Any deviations that may arise should be dealt with in writing and signed off by both parties.

Mr Krt exhibits screenshots of a WhatsApp conversation of 8 August 2021 between Jason Ghisoni and Graham Gordon. In response to Mr Gordon stating that ‘we need more than $200k‘, Jason Ghisoni stated ‘[n]o we don’t. We are only paying Drip Capital with this’.

On 17 August 2021, Mr Ghisoni (participating under the username NeoNeo77) and Mr Gordon (participating as Geegerator) engaged in an exchange on the communications app, Discord, as follows:

NeoNeo 77: Hi Graham, I have put the Loan contract on Google Docs … whats the best email address to share this doc with you?...not the Gardian address I believe.

Geegerator: [#]@outlook.com
NoeNeo77: Just to let you know that the plan is my Ghis-Trust $200K outlay will be followed by Jason’s Ghis-Trust $40K outlay (when he’s rolled it out of his super). And at that point $40K of my investment can be returned. So the resultant is still $200K but $160K form me and $40K from Jason … Hope this is all OK?

Geegerator: Understood
Jason Took me through it.

NeoNeo77: Great [thumbs up emoji]

Mr Krt states that on or about 18 August 2021, he executed the loan agreement, which was backdated to 16 August 2021. By that agreement, Mr and Mrs Ghisoni, as trustees of GSF (lender), entered into a loan agreement with Byproxy as trustee for the Syracuse Trust (borrower). The loan agreement was signed by Mr and Mrs Ghisoni on behalf of GSF and by Mr Krt on behalf of Byproxy. The recitals of the loan agreement stated:

AThe Lender has agreed, at the request of the Borrower to provide a loan facility to the Borrower, with the total Advance not to exceed the sum of $200.000.00 AUD.
BThe Borrower has agreed that $40,000 of the Advance will be paid back to Lender, within 30 days (or at a date by agreement between the Borrower and Lender) of the Draw Down Date. The outstanding Principal will have a repayment date of 17th August 2022.
CThe Lender and the Borrower have agreed to enter into this agreement to set out the terms and conditions of the Loan Agreement.

The loan agreement provided for default provisions. Interest on the loan was set at 9.95% per annum, calculated and payable monthly.

On 24 August 2021, Jason Ghisoni emailed Ms Gordon and Mr Krt, requesting that an attempt be made to pay Drip Capital for the Ondance invoice and providing a copy of the relevant bank account details to enable this to be done. On 25 August 2021, $190,030 was transferred by Byproxy to Drip Capital.

Mr Krt exhibits an email of 1 September 2021, in which Mr Gordon responded to an email from Jason Ghisoni regarding a proposal to issue shares in Gardian to Mr Ghisoni for investing a total of $400,000. The proposal was rebuffed in strong terms, with Mr Gordon culminating with ‘[s]imple answer- a loan that is paid back does not get equity. Full stop.’

On 28 October 2021, Mr Ghisoni emailed Mr Gordon at his Gardian email address and Mr Krt, stating:

Just wondering when you’ll be able to catch up with the interest payments to my self-managed super fund?

Mr Gordon did not reply to the 28 October email and Mr Ghisoni sent another email on 31 October 2021:

Hi gents,
Would greatly appreciate a reply to this email??

Mr Krt deposes that the $40,000 required to be paid pursuant to Recital B of the loan agreement was never paid and there was no payment of interest, which was payable on the 19^th day of each month pursuant to cl 3(b) of the loan agreement. Mr Krt states that no payments were made by Byproxy to GSF and an event of default had been triggered under cl 9(b) of the loan agreement, which provides:

Each of the following events is an event of default:
i.If the Borrower fails to repay the loan on the repayment date or fails to pay any other money payable under this agreement on the due date for payment of that money and such failure continues for more than Three (3) calendar Months; …

Mr Krt states that GSF has never taken any steps to register a PPSR security interest in Byproxy as it was entitled to do. In the ‘Definitions’ section of the loan agreement ‘Security Interest’ is defined as:

[T]hat the secured party can take assets of … BYPROXY PTY LTD AS TRUSTEES FOR SYRACUSE TRUST up to the value of this Loan Agreement, including interest and default amounts. This Security Interest will be registered with the Personal Properties Security Register (PPSR).

Mr Krt contends that GSF’s failure to register its PPSR security interest in Byproxy, despite its entitlement under the loan agreement, was indicative of a lack of intention or agreement between the parties for the loan to be enforceable against Byproxy.

On 10 June 2022, Mr Ghisoni emailed Mr Krt and Mr Gordon, stating:

As a Trustee for … “The Trustee for the Ghisoni Superannuation Fund” I wish to draw to your immediate attention that Byproxy Pty Ltd / Syracuse Trust is in gross breach of multiple conditions laid down in our Loan Agreement …
Primarily, your Trust has neglected to make any interest payments for the last 9 months (9.95% per annum on 19th day of each month, since August 2021).
As such, this is my formal request for the loan to be discharged, with immediate effect, as per contract, returning the principal of $200,000 and paying all interest due …

Shortly afterwards, on the same day, Mr Gordon responded:

Claudio
Firstly this comes as a shock — especially given I work closely with Andrew and Jason and they have never mentioned any issues thus far.
I have spoken to Jason and will get hold of Andrew so ALL of us can have a conversation later today …

Mr Krt deposes that on 8 July 2022, Mr Ghisoni, Mr Gordon and Mr Krt met via Zoom to discuss Jason Ghisoni’s alleged promise to Mr Ghisoni to give him 7.5% of the shares in Gardian in exchange for advancing the $200,000, how Gardian was going to repay the loan amount, and the terms of the loan agreement. Minutes of this meeting (‘minutes’), which Mr Krt contends accurately reflect the discussions held, were circulated on 11 July 2022. In summary, the minutes stated:

(a) given that Gardian was the ultimate recipient of the funds from GSF, Mr Gordon took a little over 30 minutes to outline the current status and performance of the Gardian business;

(b) Mr Gordon acknowledged the delay in updates to Mr Ghisoni and apologised for the lack of interest payments. He stated that the Ghisoni family members who introduced GSF to Gardian had previously advised on multiple occasions that monthly interest payments were unnecessary and could be paid at the end of the loan;

(c) Gardian’s cash flow profile was discussed and the offer of $17,287.80 for 10 months of compound interest calculated to 18 June 2022 was made and accepted by Mr Ghisoni on behalf of GSF;

(d) a good faith payment of $40,000 would be made to GSF as an initial repayment of the full $200,000;

(e) the remaining funds of $160,000 plus interest be made as soon as funds from sales or trade financing were received by Gardian; and

(f) payments would be made by Gardian into GSF’s bank account.

Mr Krt states that although not referred to in the minutes, there were ‘robust’ discussions between the parties concerning the 7.5% of share capital in Gardian that Jason Ghisoni allegedly offered Mr Ghisoni without consulting the other shareholders. Mr Krt states that Mr Gordon confirmed for the record that the loan from GSF was a loan to Gardian and not an investment in exchange for capital in Gardian, but if Mr Ghisoni wished to convert the loan into capital, he could do so and receive 2% of the capital. Mr Krt states that Mr Ghisoni advised Mr Gordon he would consider that proposal but that by the end of the meeting, he stated he just wanted the funds returned to GSF.

On 14 July 2022, Mr Gordon emailed Mr Ghisoni, stating:

I have been working with Andrew [Ghisoni] and Jason [Ghisoni] on funds transfer to then forward to you — been some hiccups. Jason tells me he has been keeping you across this BUT I wanted to make sure you know directly from me. Working to close this out asap.

In early September 2022, lawyers acting on behalf of GSF filed a statement of claim in the District Court of New South Wales against Byproxy, making the same claims as those later made in the demand. On 20 September 2022, Byproxy’s lawyers wrote to GSF’s lawyers, denying indebtedness and outlining what were considered to be the shortcomings in GSF’s claim, including observations that the proper forum for the claim was Queensland. On 27 September 2022, GSF’s lawyers indicated they would be withdrawing and discontinuing that claim and be filing a complaint in the District Court of Queensland. The New South Wales proceedings were discontinued on 27 September 2022. However, instead of issuing proceedings in Queensland, GSF issued the demand the subject of this application.

GSF’s evidence

I observe at the outset that in his affidavit, Mr Ghisoni does not address the evidence of Mr Krt as to Mr Ghisoni’s involvement in the events leading up to the advancement of the funds, including the purpose for which the funds were required and the communications to which he was party to along with his son, Jason Ghisoni, in respect of the advice from Ms McKeen as to why the transaction was required to be structured in the way it was.

Instead, Mr Ghisoni begins his evidence by deposing that on 18 and 19 August 2021, he caused GSF to advance the sum of $200,000 to Byproxy in two tranches, each of $100,000. He states that those funds were advanced to Byproxy pursuant to a written loan agreement dated 16 August 2021. He states that he digitally signed the loan agreement on or about 18 August 2021 and when he signed it, the date of 16 August 2021 had already been inserted.

Mr Ghisoni states he never told Mr Krt or anyone else that Byproxy did not have to repay GSF the money advanced under the loan agreement. He states he would never have said that as he always expected that Byproxy was liable for the loan and was obliged to repay the loan on the terms set out in the written loan agreement. He states he caused the money to be loaned to Byproxy because he believed that GSF had rights under the loan agreement against Byproxy to recover the loan principal together with interest.

Mr Ghisoni deposes that Mr Krt never told him Byproxy would not repay GSF and if Mr Krt had told him that, he would not have advanced the loan. He adds that nobody else indicated this was the case to him.

He states that the first time that he heard or read of the allegation from Byproxy that the loan agreement was a sham was after the statutory demand, the subject of this proceeding, had been served on Byproxy. The chain of emails that are set out in Mr Krt’s affidavit[6] and extracted above are essentially confirmed by Mr Ghisoni.
[6]See [29]–[32], [36]–[37] of these reasons.

Mr Ghisoni states that he first raised the issue of delayed payments of interest to GSF on 28 October 2021, by an email sent to Mr Krt and Mr Gordon enquiring as to when interest payments would be made and that he pursued the issue in another email to Mr Gordon on 31 October 2021.[7] Mr Gordon replied on 31 October 2021:

Hey Claudio
Been a little busy mate.
I will review and get back to you.

[7]See [31]–[32] of these reasons.

Mr Ghisoni also confirms that he sent an email to Mr Krt and Mr Gordon on 10 June 2022, which raised his concerns regarding breaches of various terms of the loan agreement and formally requested that the loan be immediately repaid together with all outstanding interest.[8]
[8]See [36] of these reasons.

On the same day, Mr Ghisoni exchanged further emails with Mr Gordon, which are referred to above,[9] seeking to arrange a telephone conference.
[9]See [37] of these reasons.

Mr Ghisoni responded:

Hi Graham,
Let’s make it 1PM today as I have something else I need to attend to this afternoon. This will be too early for Andrew, but that’s Ok. My number is [#].
All the best,
Claudio

On 13 June 2022, Mr Gordon emailed Mr Ghisoni from his Gardian email address:

Let me immediately say that I apologise for the delay in paying interest payments. I was (possibly wrongly) under the impression that all monies would be paid out when the term had expired.
For now let me arrange payment of outstanding interest amounts to get you up to date. I will get this sorted as soon as possible.
Please provide BSB and Acct details for payment to the SMSF account you used to make the payment from.

On 15 June 2022, Mr Ghisoni emailed Mr Gordon, stating:

I have spent quite some time considering all the factors of this situation. As a Trustee I am legally bound (and annually audited) to preserve and grow all funds in the Ghisoni Superannuation Fund and I have to take that responsibility very seriously. In hindsight, this investment failed to deliver on a number of promises and not receiving interest payments for 9 months is really just the icing on the cake.
As such and as per contract, I’m choosing to terminate this arrangement as per clauses 9a and 9b but provide two options for your consideration … 1. Pre EFY 2022. – A return of the $200,000 principal + 10 months due interest (as of the 19th June 2022) which totals $214,925.00. Received in the Ghisoni SMSF Trust Account by the 30th June 2022.
2. Post EFY2022. – A return of the $200,000 principal + “Default”, daily compound interest (as per clause 3c). Which just for example, by July 19th 2022 will be $217,287.76.
… I am honestly trying to find the smoothest way through this for all of us, so we can all continue with our normal lives without malice.

On 21 June 2022, Mr Ghisoni received an email from Mr Gordon, which stated:

I have been waiting to speak to the boys. We three wanted to make this logic [sic] and without negativity or aggression.
But given your email.
If you are seeking legal advice then ask what ramifications there will be for you as a trustee that has signed off on a contract that is “not at arm’s length”. I believe deregistration of the SMSF and banned for life from trustee positions is the minimum.
Likely to also be fines.

On the same day, Mr Ghisoni sent an email in reply to Mr Gordon’s email. Mr Krt was copied into the email:

Absolutely chat to the boys by all means because that’s definitely the best thing to do at this time.
But personally do not have (and will never have) any concerns of ramifications. But I do greatly appreciate your statement.
Today is 21^st of June so we all need to have a clear sense of direction in the next few days.

On 24 June 2022, Mr Krt emailed Mr Ghisoni:

I [had] a long phone conversation with both Jason and Andrew last night.
We all concluded it would now be appropriate and beneficial to all concerned for you and I to speak by phone as a first step to with a de-escalating the current situation. I believe that with good will and understanding we can come up with a proposal which is realistic and acceptable to us all.
Continuing with the exchange of emails does not lend itself to addressing your concerns and moving forward.
I would therefore appreciate if you would provide me your phone number and a convenient time to call you.
My number is [#].
Looking forward to speaking with you soon.
Kind Regards
Gino Krt

In late June, Mr Ghisoni exchanged emails with Mr Krt, seeking to arrange a telephone conference. On 30 June 2022, Mr Krt emailed Mr Ghisoni:

As promised I have been working with Graham in order to come up with a proposal which should be acceptable to you. I want to again assure you that we understand your concerns and are committed to ensuring the loan obligations will be fully discharged.
I was hoping to have the proposal ready by tomorrow but I didn’t realise that Jason and Andrew wouldn’t return until this weekend.
Graham and I plan to meet with them then so we can finalise the initial amount of principal and the timeline for the payment of the balance.
At the same time we will have a better idea of Gardian’s end-of-financial-year position so we can use some of those funds to maximise the initial principal payment.
(emphasis in original)

On 14 July 2022, Mr Ghisoni received an email from Mr Gordon, on Gardian email header and signing as the CEO of Gardian, stating:

I’ve been working with Andrew and Jason on funds transfer to then forward to you – been some hiccups. Jason tells me he has been keeping you across this BUT I wanted to make sure you know directly from me working to close this out ASAP. (emphasis in original).

On 30 July 2022, Mr Ghisoni send an email to Mr Gordon stating:

These past few weeks we’ve had a lot of emails, discussions and promises made, yet no ($000,000) payments have been forthcoming (for whatever reasons). Honestly this is not doing anyone’s credibility any good and as such I now need a credible, dependable and imminent action plan from both yourself and Gino’s [sic] ASAP, if not sooner.

On 1 August 2022, Mr Gordon emailed Mr Ghisoni:

You are high on the agenda of payments and will be sorted as soon as funds are available through either larger orders or this Amex method … The only one ahead of you is the ATO – but we are now on a payment plan with them.

Mr Ghisoni replied on the same day, stating:

Honestly it’s not really my place to repeatedly give consideration to Gardian’s priorities, especially after all this time.
The AMEX funds plan doesn’t sound dependable so I really need an alternative action plan from the Syracuse Trust because at this stage nothing else is really sufficient.
(emphasis in original)

On 4 August 2022, Mr Gordon replied to Mr Ghisoni’s email:

This is a Gardian matter — per your email to me requesting payment a few weeks ago and the trail of emails between us all that links the Syracuse deposit of funds to a direct deposit into Gardian — and the Gardian Agreement with Syracuse for funds received from [GSF]. I am not associate[d] with the Syracuse [T]rust therefore you emailing me for payment merely confirms this is a Gardian matter.

The balance of Mr Ghisoni’s affidavit rebuts and denies matters raised in Mr Krt’s affidavit. He states he did not agree that Gardian would be responsible for the loan and if Andrew Ghisoni ever said that Gardian would be responsible and not Byproxy, he does not know why Andrew Ghisoni would have said that and he did not have authority to do so regardless. He admits he did not arrange for the registration of the security interest of GSF on the PPSR, but says he did seek to enforce the terms of the loan agreement requiring interest to be paid in his emails of 28 October 2021 and 10 June 2022.

As to the minutes of the meeting of 8 July 2022 exhibited to Mr Krt’s affidavit,[10] he denies the assertions that the loan was confirmed to be a loan to Gardian and that the minutes do not reflect that this was the position. Mr Ghisoni states the loan agreement was always between GSF and Byproxy. If Byproxy subsequently loaned monies to Gardian, that was a matter for Byproxy and Byproxy was always obliged to repay the loan to GSF under the terms of the loan agreement.
[10]See [38] of these reasons.

Affidavit of Jason Ghisoni

In his affidavit affirmed on 1 March 2023, Jason Ghisoni confirms he was a director of Gardian between 19 August 2020 and 28 September 2022. He states that Mr Krt was a director between 3 July 2020 and 8 August 2022, Ms Gordon became a director on 2 August 2022, and that Mr Gordon is her husband. He exhibits Gardian’s balance sheet dated 28 September 2022, which records an item described as ‘Loan – Syracuse Trust’, in the sum of $178,378.41, under ‘[n]on-current liabilities’. He also exhibits a document he describes as a transaction report for Gardian, which records a deposit of $200,000 with the narrative ‘Syracuse Trust’.

Jason Ghisoni states that on 15 August 2022 (i.e. exactly one year after the date of the loan agreement), Byproxy sent a letter to Gardian demanding payment ‘pursuant to an oral or written agreement on or about 16 August 2021’. The letter was signed by Ms Gordon on behalf of Byproxy as trustee for the Syracuse Trust.

He states that as far as he is aware, Gardian went into administration without repaying the loan from Byproxy.

Affidavit of Andrew Ghisoni

In his affidavit, Andrew Ghisoni confirms he is a son of the Ghisonis and that he was a co-founder of Gardian. He states he never worked for Byproxy directly, but had a friendship with the Gordons. He further states he looked upon Mr Gordon as a mentor, who advised him on business development strategies and he trusted him to build Gardian into a successful company.

Andrew Ghisoni states he lives permanently overseas but would occasionally visit Gardian’s office while on short visits to Australia. He states he helped Mr Gordon formulate ideas for Gardian. He states that Mr Gordon was always ‘in control’.

He states that he has engaged both Linda and Graham Gordon for a period of time through his company, Uncle Awesome Pty Ltd, of which he is the sole shareholder, to assist them while they were dealing with Mr Gordon’s bankruptcy and with what he describes as ‘another legal case’. In this regard, he states that Ms Gordon was hired as a subcontractor from February 2020 until January 2021. Mr Gordon was hired through the Syracuse Trust (of which Byproxy is trustee) from September 2020 until January 2021.

Andrew Ghisoni states that on 25 September 2020, he received an invoice by email issued by the Syracuse Trust for $12,500, directed to Uncle Awesome Pty Ltd from Mr Gordon, which had in turn been forwarded to him from Linda Gordon. In the email, Mr Gordon stated:

Hi Andrew
Invoice attached. Not sure what company you want it invoiced too [sic]… need it to go into our trust so I can manage the legal issues.
Regards, GG
Graham Gordon

Andrew Ghisoni states that when he subcontracted the Gordons, under Mr Gordon’s instructions, he would pay the amount owing to Mr Gordon directly to the Syracuse Trust and the amount owing to Linda Gordon to her ABN. All of these payments were made by his company, Uncle Awesome Pty Ltd.

Andrew Ghisoni states that from conversations he has had with Mr and Mrs Gordon, the Syracuse Trust is a trust operated by Linda and Graham Gordon and Mr Krt, which they used for their house settlement when Mr Gordon was declared bankrupt and that they used the trust as a means of protecting their assets.

Andrew Ghisoni denies the evidence of Mr Krt where he deposed that he, Andrew Ghisoni, stated he would loan $200,000 from his personal funds. He stated that he did not have that money to loan. He stated that he recalls discussions involving a loan of $200,000 from his parents’ superannuation fund, but there was no agreement reached in the discussions in late July and early August 2021 because it was not his money to loan.

Andrew Ghisoni deposes that his companies, Uncle Awesome Pty Ltd and Investments AG Pty Ltd, initially funded Gardian. Gardian used offices that his company, WIVO Pty Ltd, rented. Andrew Ghisoni states that during 2020 and 2021, he invested more than $400,000 in Gardian and that he was without further funds.

Andrew Ghisoni also denies the evidence of Mr Krt that he, Andrew Ghisoni, had told Linda Gordon that Gardian would be the responsible party for the loan from GSF and not Byproxy. He also denies that he told Linda Gordon he would ‘reroute’ the money as he did not have access to that money nor the authority to manage it. He states that he understood from his discussions at the time with Ms Gordon, Mr Krt and Mr Gordon that GSF was loaning $200,000 to Byproxy. He recalls being involved in discussions at the time with Ms Gordon, Mr Krt and Mr Gordon about what Byproxy would do with that money that it received from GSF, but that was ‘separate’ to Byproxy borrowing money from GSF and its obligation to repay the money to GSF.

Andrew Ghisoni states that on 15 August 2022, he received an email from his brother, Jason Ghisoni, which forwarded an email Jason Ghisoni had received from Mr Gordon. That email was circulated to Linda Gordon and it attached a letter of demand sent by Byproxy to Gardian.

Byproxy’s affidavits in reply
Mr Gordon’s affidavit in reply

In his affidavit of 15 March 2023, Mr Gordon responds to the affidavits of Mr Ghisoni and his sons, Andrew and Jason Ghisoni. Mr Gordon states that from 2020 to 2022, he was the CEO of Gardian. He states that he co-founded the business of Gardian with Linda Gordon, Mike,[11] Jason Ghisoni and Andrew Ghisoni in July 2020. He confirms that in January 2023, Gardian was placed into administration.
[11]Apparently a reference to Mike Hammond (see Ms Gordon’s affidavit of 15 March 2023, [3]).

In response to Andrew Ghisoni’s affidavit, he states that both Andrew and Jason Ghisoni, contrary to their evidence, told him on numerous occasions that the $200,000 loan was made from their money and was not their father’s. Andrew Ghisoni told him that his father just managed the money for him, and that he had ‘parked’ his money in GSF to hide it.

In response to Jason Ghisoni’s affidavit, he agreed that Gardian was in debt to Ondance, Gardian’s software developer. He states that on 2 August 2021, he chaired a meeting at which Linda and Jason Gordon and Andrew Ghisoni were present. He exhibits copies of the minutes of the meeting of Gardian, which he says are an accurate record of that meeting and record a discussion concerning the payment due to Ondance and that Linda Gordon raised with Andrew Ghisoni his promise to cover all of Gardian’s software development costs. Mr Gordon states that Andrew Ghisoni responded by saying he had no money, but had deposited a large amount of money into GSF and he would ask his father to access that money.

As to the reference by Jason Ghisoni to a copy of the profit and loss and balance sheets showing that the Syracuse Trust had a debt owed to it by Gardian in the sum of $178,378.41 and the transaction report for that loan from Byproxy, Mr Gordon states he has never seen that report before and does not believe it to be a true record of Gardian.

As to Mr Ghisoni’s affidavit, he states that in reference to the email correspondence to him, exhibited by Mr Ghisoni, where demands for payment are made, this was in the context of a time when Mr Ghisoni was endeavouring to get Gardian to issue shares to him, however this approach was rejected. Mr Gordon states that shortly after this email exchange, Mr Ghisoni sent his first demands for payment. He responded to Mr Ghisoni and then spoke to Jason Ghisoni about Mr Ghisoni’s demands, who said he ‘would sort it out’.

Mr Gordon states that in early June 2022, Andrew Ghisoni telephoned him from Dubai to tell him that he had had a falling out with his father and needed to catch up with Mr Gordon urgently. Andrew Ghisoni flew back from Dubai to Australia, where he met Mr Gordon, Ms Gordon, Jason Ghisoni and Gino Krt at Mr Gordon’s home. He states that at this meeting, he recalls Andrew Ghisoni saying ‘his father had lost his mind’. He says that Andrew Ghisoni said he had stopped paying Mr Ghisoni a wage from his company, Uncle Awesome Pty Ltd, and explained that Mr Ghisoni would be unable to cover his day-to-day bills and was desperate for money.

Mr Gordon states that shortly after this meeting, on the morning of 10 June 2022, Mr Ghisoni sent an email to his Gardian email account attaching a demand notice to pay back GSF’s loan. Mr Gordon states that at the time, he was the CEO of Gardian and had nothing to do with Byproxy.

He says further, in response to Mr Ghisoni’s evidence as to the transmission of emails to him, that he was the CEO of Gardian at the time and had nothing to do with Byproxy.

In response to Mr Ghisoni’s evidence that he directed Mr Gordon to speak to his sons regarding the loan, Mr Gordon states that he did so. Jason Ghisoni told Mr Gordon ‘not to worry he would sort it out’. This process went on for the next several months and included Jason Ghisoni attempting to draw down money on the Gardian Amex card to pay Mr Ghisoni directly.

Mr Gordon states that all of the emails attaching demands which were sent by Mr Ghisoni were directed to Mr Gordon, not Ms Gordon, who was the director of Byproxy. At the time the emails were sent to him, he was the CEO of Gardian and had no interest in Byproxy, whether as director or shareholder.

In response to Mr Ghisoni’s evidence that the first time he heard the loan was a ‘sham’ was after the statutory demand was issued, he says that this is not true and that he told him on numerous occasions that the loan was a sham, including in his email of 21 June 2022, which is exhibited to Mr Ghisoni’s affidavit.[12] Mr Gordon states that he composed some of those emails and he was carbon copied into others.[13] The 21 June 2022 email was sent by Mr Gordon and he states that this clearly raised the issue of Mr Ghisoni signing off on a ‘not at arm’s length’ contract. He states that he also told Mr Ghisoni that the likely legal consequences of the sham transaction for Mr Ghisoni as trustee of the GSF might include deregistration of the SMSF and his banning from holding office.
[12]Mr Gordon’s email states the loan was ‘not at arm’s length’.
[13]See [53] of these reasons.

Mr Gordon states that on the morning of 13 June 2022, he sent an email to Mr Ghisoni, stating that Gardian would ‘catch up on the interest payments’. He states that he was writing that email in his capacity as CEO of Gardian.

On 15 June 2022, Mr Ghisoni sent an email to Mr Gordon’s email address at Gardian, which purported to terminate the loan. Mr Gordon states that he was not a director or shareholder of Byproxy.

Mr Gordon states that in another email composed by Mr Krt on 30 June 2022 and sent that evening to Mr Ghisoni, which he was carbon copied to, Mr Krt speaks of Gardian making a payment at the end of the financial year.

Mr Gordon states that on the morning of 4 August 2022, he sent the email to Mr Ghisoni extracted at paragraph 61 above telling Mr Ghisoni that the debt was a ‘Gardian matter’.

In her affidavit in reply of 15 March 2023, Linda Gordon also replies to the affidavits of Mr Ghisoni and his sons. She describes herself as the director of Gardian although she did not hold that position at the time of negotiation of the loan.

Ms Gordon states that Andrew Ghisoni’s involvement in Gardian came about in or around March 2020, when he requested that he be involved in a software development project that she and her husband, Mr Gordon, were working on with an associate from Sydney, Mike Hammond. Andrew Ghisoni said he wanted to be involved and that a company should be incorporated to do this. The name Gardian was agreed to and Andrew Ghisoni told Ms Gordon and her husband that in exchange for his shares in Gardian, he would provide all necessary funding to develop the Gardian software. Gardian was incorporated together with Mach4G and 50% of the shares of Mach4G were allocated to Andrew Ghisoni and herself. Andrew Ghisoni also told her and her husband that because he lived overseas he wanted to involve Mr Ghisoni and his brother Jason in the Gardian business to protect his money.

Ms Gordon states that on 3 July 2020, Gardian was incorporated and her father, Mr Krt, and Mr Ghisoni became the first directors. Andrew Ghisoni and Ms Gordon became the first shareholders. In August 2020, Jason Ghisoni was appointed director of Gardian and Mr Ghisoni resigned. Ms Gordon states that the shareholding was also amended to include Mr Hammond’s family trust and Mach4G as the primary shareholders. For the first 12 months that Gardian operated, Jason Ghisoni was paid by one of Andrew Ghisoni’s companies, which Ms Gordon believes was AG Investments Pty Ltd, a shareholder in Gardian via its shareholding in Mach4G, which, in turn, is the majority shareholder in Gardian.[14]
[14]Mach4G Pty Ltd holds 51% of the shares in Gardian.

Ms Gordon deposes that in about September 2021, Jason Ghisoni went onto Gardian’s payroll because Jason Ghisoni and Andrew Ghisoni said that Andrew Ghisoni could not afford to continue to pay Jason. In March 2021, Gardian engaged Ondance to develop its test tracking software.

As to Andrew Ghisoni’s affidavit where he deposes that he did not say he had invested the $200,000 which was to be loaned to Gardian, Ms Gordon states that that statement is not true. On about 17 August 2021, Ms Gordon was on a call with Jason Ghisoni and Mr Gordon, during which they discussed how Gardian would pay Drip Capital, a factoring company that had factored invoices raised by Ondance. Ondance had stopped work on the software design, which was important for Gardian to function, and Ms Gordon states that this was causing distress to all concerned.

Ms Gordon refers to the evidence of Andrew Ghisoni where he exhibits a copy of a demand sent by Byproxy to Jason Ghisoni. Ms Gordon states that demand was sent by her in direct response to Mr Ghisoni sending an email to Mr Gordon in June 2022 purporting to terminate and call up what she describes as the ‘sham loan’ to Byproxy. She states that at this point, in early June 2022, Andrew Ghisoni flew to Australia from Dubai and met with her, Mr Gordon, and Jason Ghisoni at her home. Andrew Ghisoni told all those present that he had had a falling out with his father, Mr Ghisoni, and had cut off all payments of money which he paid to his father. Ms Gordon states that it is her understanding that Andrew Ghisoni paid Mr Ghisoni a weekly wage for looking after his money that he invested in GSF. Andrew Ghisoni said words to the effect that his father had ‘flipped out’ or ‘gone mad’.

Ms Gordon seeks to explain why a demand was served by Byproxy on Gardian (which is at odds with Byproxy’s position in this proceeding that the loan, in reality, was one between GSF and Gardian). She states that after Mr Gordon had received the demand, she and Mr Gordon:

[T]hought it best to send a demand to Gardian from Byproxy to protect it from Mr Ghisoni’s unconscionable actions in trying to exert pressure on [Byproxy] when he knew it was Gardian that was going to pay him and not [Byproxy].

She states that it was never intended, nor was it to be construed, that the demand she sent to Jason Ghisoni on behalf of Byproxy was an acknowledgment of the sham loan or that it owed any debt at all.

In reply to the matters raised in Jason Ghisoni’s affidavit, Ms Gordon states that on 24 August 2021, Jason Ghisoni sent her a WhatsApp message, asking her to pay Drip Capital.

Ms Gordon makes reference to the evidence in Jason Ghisoni’s affidavit where he refers to a copy of the profit and loss and balance sheet, which shows that the Syracuse Trust, of which Byproxy is the trustee, had a debt owed to it by Gardian in the sum of $178,378.41. In addition, there is exhibited a copy of what Jason Ghisoni describes as the ‘transaction report’ for that loan from Byproxy. Ms Gordon states that she has never seen that report before and does not believe that it is a true record of Gardian.

Ms Gordon states that she was on the premises shortly after Gardian was placed into administration, when the administrators arrived at the business premises and took control over all of Gardian’s books and records. These included the cloud-based MYOB accounting software and all historical files for the finance and operations of Gardian.

Ms Gordon states that on 2 March 2023, Byproxy’s lawyers contacted Nadhea Zulaman, an employee of Gardian’s liquidators, Mr Robson and Mr Cotter of the firm Robson Cotter, and obtained a copy of Byproxy’s running loan account summary from the MYOB system in the liquidator’s possession. That document, headed up ‘General Ledger Report’ on Gardian Technology’s letter head, contains an entry for 30 June 2022, with the narrative ‘year-end balancing’ showing a credit of $178,535.66.

Ms Gordon exhibits an email of 7 October 2021 that Jason Ghisoni sent to the external accountant, Danielle Webb, asking her to insert a loan into the balance sheet of Gardian in the sum of $350,000. This sum was said to be ‘on account of Byproxy’. Jason Ghisoni explained in his email that the loan comprised of directors’ wages, on account of work completed between 3 July 2021 to 1 October 2021. Jason Ghisoni further identified $262,500 as being owed for the period ending 30 June 2021, and a further sum of $88,000 was owed for the previous year between 3 July 2020 and 1 October 2021.

Ms Gordon states that she is aware, from reading a copy of the WhatsApp discussion on 22 February 2022 between Jason Ghisoni and her husband Mr Gordon, which she contends is a book and record of Gardian, that Jason Ghisoni states in that communication that when he was a director of Gardian, he had instructed a person he identifies as ‘Amy’, who was Gardian’s accountant, that:

We have never listed the debt against Gardian and I told her we needed to. Cause [sic] currently only Syracuse is liable. And I don’t want you guys getting fucked over.

In conclusion, Ms Gordon states that the emails to which Mr Ghisoni refers in his affidavit,[15] were never sent to her. They are all directed to her husband, who was the CEO of Gardian. Mr Gordon was not a director or shareholder of Byproxy.
[15]See [47]–[61] of these reasons.

In her affidavit of 28 March 2023, described as a supplementary affidavit, Ms Gordon seeks to explain various transactions between Gardian and Byproxy. She deposes that on 28 September 2022, Byproxy transferred the sum of $15,000 to Gardian and when transferring the funds, recorded the payment as a ‘short term loan’, which was recorded on Byproxy’s bank statement as such. The ‘short term loan’, she states, was made to Gardian to cover the wages for Gardian’s staff. The loan was repaid to Byproxy on 12 October 2022.

Ms Gordon states that on 9 September 2022, Byproxy’s bank statement shows the sum of $22,132 was paid into its account by Gardian. Byproxy’s bank statement had a corresponding reference against the transfer sum, ‘INV 01359’. She states that invoice 01359 was raised by Byproxy for her wages due and payable by Gardian, which Gardian paid to her as consulting fees.

Ms Gordon states that on 11 August 2022, Byproxy was paid a further sum of $22,542 by Gardian into Byproxy’s bank account. Byproxy’s bank statement has a corresponding reference number ‘INV 01357’. Byproxy’s invoice number 01357 was also a payment on account of her wages, paid by Gardian as consulting fees. Ms Gordon concludes by stating that none of the payments to which she refers in her supplementary affidavit paid to Byproxy were, or are associated with, the $200,000 loan the subject of the demand.

In his affidavit of 23 March 2023, the solicitor for Byproxy, Mr Doree, exhibits an email transmission he sent to Mr Peter Maatouk, one of the defendant’s solicitors on 18 August 2022, in which it was contended that the subject transaction was a sham. This affidavit was filed in response to a contention by GSF that the position that Byproxy now adopts was of recent invention and only came into existence to resist payment of the demand by reason of there being a genuine dispute.

Relevant statutory provisions and legal principles

Section 459G of the Act states:

Company may apply
(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.

Section 459H(1) of the Act provides:

Determination of application where there is a dispute or offsetting claim
(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.

The principles concerning an application to set aside a statutory demand on the basis of a genuine dispute under s 459H of the Act are well-settled.[16] In Malec Holdings Pty Ltd v Scotts Agencies Pty Ltd (in liq) (‘Malec’),[17] Kyrou, Ferguson and Kaye JJA of the Victorian Court of Appeal collected the principles applying in such applications:[18]
[16]See MSA Renex Corp Pty Ltd v Create Environment Pty Ltd [2021] VSCA 178, [28] (Ferguson CJ and Walker JA), citing Malec Holdings Pty Ltd v Scotts Agencies Pty Ltd (in liq) [2015] VSCA 330 (‘Malec’).
[17]Malec (n 16).
[18]Ibid [47]–[51] (citations omitted).

The terms of s 459H of the Corporations Act and the authorities make clear that, on an application to set aside a statutory demand, the applicant is required only to establish a genuine dispute or offsetting claim. 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. It is not necessary for the applicant to advance a fully evidenced claim. Therefore, the task faced by an applicant is by no means at all a difficult or demanding one.
In determining such an application, it is not necessary or appropriate for a court to engage in an in-depth examination or determination of the merits of the alleged dispute. This is because an application alleging a genuine dispute or offsetting claim is akin to one for an interlocutory injunction and requires the applicant to establish that there is a ‘plausible contention requiring investigation’ of the existence of either a dispute as to the debt or an offsetting claim. It is therefore not helpful to perceive that one party is more likely than the other to succeed or that the eventual state of the account between the parties is more likely to be one result than another. Further, the determination of the ‘ultimate question’ of the existence of the debt at a substantive hearing should not be compromised.
The court is required to determine whether the dispute or offsetting claim is ‘genuine’. It has been said that 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. It has also been observed that 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. A rigorous curial approach is essential to the effective operation of the statutory scheme.
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. The court is also not required to accept uncritically a patently feeble legal argument or an assertion of facts unsupported by evidence, although this should not be read as suggesting that the applicant must formally or comprehensively evidence the basis of its dispute or off-setting claim. Except in such extreme cases, the court should not embark upon an inquiry as to the credit of a witness or a deponent whose evidence is relied on by the applicant to set aside a statutory demand.

Solarite Air Conditioning Pty Ltd v York International Australia Pty Ltd [[2002] NSWSC 411] involved a demand for payment of a debt alleged to be due under a contract for the supply of goods. The applicant relied on four matters, each of which had the potential to affect the respondent’s entitlement to be paid the entire amount of the debt. Barrett J held that all four matters were sufficiently plausible to raise a genuine dispute. He relevantly stated:
The [applicant] will fail in [the] task [of establishing a genuine dispute] only if … the contentions upon which it seeks to rely … are so devoid of substance that no further investigation is warranted. Once the [applicant] 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 [applicant], it must find that a genuine dispute exists, even where any case apparently available to be advanced against the [applicant] seems stronger.

Additionally, in Citation Resources Ltd v IBT Holdings Pty Ltd (‘Citation Resources’),[19] McKerracher J said:
[19](2016) 116 ACSR 274.

In short then:
(a) For there to be a genuine dispute, there must be a ‘plausible contention requiring investigation’. It raises the same sort of considerations as the ‘serious question to be tried’ criterion applicable to interlocutory injunctions.
(b) The company will fail in that task only if it is found upon the hearing of its s 459G application that the contentions upon which it seeks to rely in mounting its challenge are so devoid of substance that no further investigation is warranted. Once the company shows that even one issue has a sufficient degree of cogency to be arguable, a finding of genuine dispute must follow.
(c) The Court is not called on to determine the merits of, or to resolve, the dispute.
(d)The threshold is not high or demanding; however the claim must have some merit and be genuine. That requirement has been described variously as the claim must be ‘real and not spurious’, the claim must have ‘a real chance of success’, there must be ‘a serious question to be tried’.
(e) The Court does not engage in any form of balancing exercise between the strengths of competing contentions.
(f) The essential task is relatively simple - to identify the genuine level of a claim (not the likely result of it).

(g) A mere assertion of an oral agreement will not necessarily suffice.[20]
[20]Ibid 282 [17].

Byproxy’s submissions

In his submissions, Mr Black of counsel for Byproxy submits that the loan agreement is a sham, designed to circumvent the restrictions imposed on a superannuation fund, which prevent it from advancing monies to a related entity. It was contended that Byproxy was interposed between GSF and the true borrower, Gardian, to provide a veneer of legitimacy to the loan and the parties always intended that the loan be repaid by Gardian. For this reason, Byproxy contends this gives rise to a genuine dispute in relation to the claim made in the demand.

Byproxy’s submissions placed emphasis on the evidence of Mr Krt that it was Mr Ghisoni’s suggestion that the loan be routed through a third party to circumvent the operation of the superannuation laws and that Andrew Ghisoni had suggested that Gardian would be the responsible party for repayment, not Byproxy. I did not understand GSF to take issue with this contention. Mr Krt’s evidence was that Andrew Ghisoni suggested that a formal contract would need to be drawn up to create an audit trail and give the appearance of there being an arm’s length transaction but the parties intended that Gardian would be responsible for repaying the loan to GSF.

Reference was made to the WhatsApp messages of 17 August 2021 between Jason Ghisoni and Mr Gordon in which the deposit of funds into Byproxy’s account was discussed. Mr Gordon had stated that Gardian needed more than $200,000, to which Jason Ghisoni responded that ‘we are only paying Drip Capital with this’. Byproxy contended this is evidence that the funds were earmarked for Gardian to discharge the Drip Capital liability and were not to be applied for other purposes.

On the same day, Mr Ghisoni and Mr Gordon exchanged messages on the Discord app. Mr Ghisoni enquired as to the best email address to send the loan agreement to, adding ‘not the Gardian address I believe’. Mr Ghisoni stated that $40,000 of his ‘investment’ could be returned as part of the funding of the Loan Agreement. Byproxy submits that the only relevant entity in which Mr Ghisoni would have been investing in was Gardian, not Byproxy.

The submissions point to the involvement of Jason Ghisoni as a director of Gardian at the time of the subject transaction and the majority shareholding of Mach4G Pty Ltd in Gardian. Jason Ghisoni is currently a director of that company. Mr Ghisoni was a director of Gardian for a short period in July to August 2020. This was emphasised as a reason as to why it might have been in the Ghisonis’ interests, particularly Jason Ghisoni, to financially support Gardian at the time the loan was made, but this could only be done through Byproxy as an intermediary because of the provisions of the superannuation legislation proscribing loans to related entities.

The submissions refer to the evidence that after the funds were transferred to Byproxy, all of the communications from Mr Ghisoni in relation to the funds and the repayment were with Mr Gordon and Mr Krt. It is said that whilst Mr Krt was a director of Byproxy, he was also a director of Gardian; Mr Gordon had no connection with Byproxy and was the CEO of Gardian.

Further, it was submitted there is no reason suggested as to why Byproxy needed to borrow the loan amount. While Mr Ghisoni asserted the money was lent to Byproxy pursuant to the loan agreement, it is said that GSF does not offer any explanation as to why Byproxy sought to borrow those funds or the underlying commerciality to the transaction.

Mr Black submitted that one of the most prominent features of the evidence is the involvement of Ms McKeen and the memorandum she composed, which revealed why the transaction was structured in the way it was. Ms McKeen’s memorandum speaks of a conversation with Jason Ghisoni of 11 August 2021 in respect of a potential loan from GSF to Gardian and went on to elaborate that ‘it would need to go first to a non-related party and then on loaned to [Gardian]’. On the same day, Jason Ghisoni emailed Ms McKeen, carbon copied to Mr Ghisoni, attaching a form of loan agreement and enquired whether that document would satisfy SMSF compliance requirements. Jason Ghisoni was conducting that communication in his capacity as a director of Gardian and Mr Ghisoni was kept informed of the situation. Ms McKeen responded that from an SMSF perspective, she could not see any problems with the agreement. Mr Black observed that GSF does not deal with this at all in their evidence and indeed, there was no evidence from GSF concerning the circumstances surrounding the establishment of the loan.

Additionally, it is said that while Jason Ghisoni deposes to Gardian being indebted to Ondance for $200,000, to having discussions with Mr Krt, Mr and Ms Gordon about how Gardian would pay its debts, and to Gardian agreeing to borrow $200,000 from Byproxy, he fails to explain that the loan amount was borrowed from GSF to advance that sum to Gardian.

Mr Black went to the supplementary affidavit of Ms Gordon, which dealt with the issue of funds passing between Byproxy and Gardian. In GSF’s written submissions, it had been contended that these payments were evidence of repayment by Gardian of the loan to Byproxy. Mr Black contended that Ms Gordon’s evidence established that these payments were in respect of repayments of other short term advances made to Gardian by Byproxy for wages of Gardian’s staff and were not in discharge of any obligation in respect of the transaction the subject of this proceeding.

Byproxy contends that the most logical explanation for the arrangement between the relevant parties was to allow the loan amount to be ‘routed’ through Byproxy because of the restriction on GSF lending the money directly to Gardian, and again I do not understand GSF to take issue with this. It is contended that if this construction of events is accepted, Byproxy is not liable to GSF for the loan amount. Byproxy submitted it has, at the very least, an arguable case that it was never intended that it was obliged to pay GSF. Referring to Citation Resources, Byproxy emphasises that it need not establish it would succeed on its claimed defence to the debt to establish a genuine dispute in relation to the debt, it merely has to show it has an arguable case.

At the hearing of this matter, Mr Black was asked how, if GSF’s claim was the subject of a conventional inter partes trial, what matters would Byproxy plead in resistance to GSF’s claim. Mr Black responded that Byproxy’s case would be that it was unconscionable for GSF to rely on the loan agreement in circumstances where it was entered into in order to circumvent superannuation regulations when it was known and intended by Mr Ghisoni that Gardian was the ultimate recipient of the funds and would be repaying the loan. Mr Black stated that Byproxy would also contend that the transaction involved an illegality and that it was contrary to public policy to enforce it as it was an artifice designed to circumvent the SMSF regulations. Mr Black also contended that the transaction involved a misrepresentation on the basis that Byproxy was induced into signing the document on the understanding that Byproxy was not liable to pay.

Mr Black also submitted that GSF’s contention that the dispute agitated by Byproxy was not genuine and was ‘reverse engineered’ in order to resist the demand cannot be sustained. Mr Black contended that the promises to pay which were pointed to by GSF in this regard all emanated from Gardian.

GSF’s submissions

In his submissions, Mr Trewavas, counsel for GSF, contended at the outset that there is no genuine dispute in respect of the claim made in the demand and that the case is one where Byproxy dislikes the legal consequences of the agreement it signed. GSF contends the defence it describes in its evidence and submissions was created or constructed in response to the pressure represented by the demand and there are authorities that indicate that a dispute which has that character, even if it is arguable, is not a ‘genuine dispute’.[21]
[21]Citing Creata (Aust) Pty Ltd v Faull (2017) 125 ACSR 212, 224 [47] (Barrett AJA).

Mr Trewavas observed that Byproxy speaks of the loan agreement as being a ‘sham’, but does not deny receiving the advance of the funds. He referred to Byproxy’s evidence filed in this proceeding, which used the descriptor ‘sham’ in respect of the loan agreement on seven occasions, and submitted that this commenced only after the demand was issued by GSF. The submissions then set out communications that followed, which contained no contentions that the subject transaction was a sham. Mr Gordon deposes in his affidavit that he had told Mr Ghisoni on numerous occasions that the loan was a sham, including in an email dated 21 June 2022.[22] GSF submits that the email does not allege that the loan agreement was a ‘sham’. Rather, the email alleges that Mr Ghisoni signed off on a contract that was ‘not [at] arm’s length’.
[22]See [53] of these reasons.

Mr Trewavas made reference to the email of 10 June 2022 from Mr Ghisoni to Mr Krt and Mr Gordon, in which Mr Ghisoni had stated that Byproxy was in gross breach of multiple conditions of the loan agreement, which was met with no response from Byproxy asserting that the loan agreement was a sham. This was followed by the issue of the demand by Byproxy to Gardian, the subject line of such letter being ‘DEBT OWED TO BYPROXY PTY LTD ATF SYRACUSE TRUST (ABN 91 585 315 943) (“Lender”)’.

Mr Trewavas referred to a decision of Kunc J of the Supreme Court of New South Wales in Re ACN 063 346 070 Pty Ltd (formerly known as South Passage Pty Ltd) v Marshall,[23] where his Honour had to consider whether a mortgage document and associated loan documents were a sham and an equitable fraud. Justice Kunc made the relevant finding that the subject transaction was a sham arrangement,[24] but prior to that, his Honour summarises the High Court and English authorities, together with those of the Federal Court of Australia and the New Zealand Court of Appeal in relation to what is a ‘sham’.[25]
[23][2022] NSWSC 1597.
[24]Ibid [43].
[25]Ibid [39].

Justice Kunc made reference to the decision of Lewis v Condon (‘Lewis’),[26] which collected the principles of what constituted a sham. In Lewis, Leeming JA stated:
[26](2013) 85 NSWLR 99.

It is well-recognised that “sham” is an ambiguous term and uncertainty surrounds its meaning and application in various legal contexts: Sharrment Pty Ltd v Official Trustee in Bankruptcy [1988] FCA 179; (1988) 18 FCR 449 at 453; Raftland Pty Ltd v Federal Commissioner of Taxation[2008] HCA 21; (2008) 238 CLR 516 at [35]. It is necessary to use the term precisely.
The essence of a sham for present purposes is as stated by the High Court in Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471 at [46]:
“[Sham] refers to steps which take the form of a legally effective transaction but which the parties intend should not have the apparent, or any, legal consequences.”

That is to say, it is essential that there be an intention that the true transaction is different from that which would ordinarily be attributed to the transaction on the face of the documents. As Lord Wilberforce put it, “to say that a document or transaction is a ‘sham’ means that while professing to be one thing, it is in fact something different”: WT Ramsay v Inland Revenue Commissioners [1981] UKHL 1; [1982] AC 300 at 323.
Basic to the legal notion of sham is that it is a confined and exceptional aspect of the process of giving legal meaning to a document, as Professor Conaglen has pointed out (“Sham Trusts” (2008) 67 CLJ 176 at 206):
“The relevance of the sham doctrine, and the difference between it and normal processes of construction, lies in the fact that it justifies the court in ignoring (as opposed to construing) the usual primary material regarding that transaction, and focusing its attention instead on all other material factors which indicate the arrangement that the parties in fact intended.”

That echoes the words of Windeyer J in Scott v Commissioner of Taxation (Cth) (No 2) (1966) 40 ALJR 265 at 279:
“The difficult and debatable philosophic questions of the meaning and relationship of reality, substance and form are for the purposes of our law generally resolved by asking did the parties who entered into the ostensible transaction mean it to be in truth their transaction, or did they mean it to be, and in fact use it as, merely a disguise, a facade, a sham, a false front ... concealing their real transaction.”

The sham doctrine is thus one of those relatively rare doctrines in the law where legal meaning is given to a document by reference to a subjective intention. Other examples are a plea of non est factum at law and a claim for rectification in equity. All these doctrines “must necessarily be kept within narrow limits”, for all subtract from the objective theory of contractual obligation, and if unchecked would cause “serious mischief”: see Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 at [46]-[47]. This has long been the law: see for example Jordan CJ’s reasons in Perpetual Trustee Co (Ltd) v Bligh [1937] NSWStRp 38; (1940) 38 SR NSW 33 at 39-40. In all these areas, strong evidence is required in order to displace the orthodox approach to construction. Hence the “heavy onus” that must be discharged by the plaintiff in a non est factum case (Petelin v Cullen [1975] HCA 24; (1975) 132 CLR 355 at 360) and the need for “clear and convincing proof” in a rectification suit (Franklins Pty Ltd v Metcash Pty Ltd[2009] NSWCA 407; (2009) 76 NSWLR 603 at [451]-[460]).
Because a finding of sham requires a finding of an intent to deceive, considerations associated with Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 require a cautious approach: Raftland Pty Ltd v Commission of Taxation at [36]. Thus there is a “strong and natural presumption against holding a provision or a document a sham”: National Westminster Bank plc v Jones[2001] 1 BCLC 98 at [59] (Neuberger J). “A court will only look behind a transaction’s ostensible validity if there is a good reason to do so, and ‘good reason’ is a high threshold, since a premium is placed on commercial certainty”: Official Assignee v Wilson[2007] NZCA 122; [2008] 3 NZLR 45 at [52] (Robertson and O’Regan JJ). Lockhart J referred to “a strong finding, and one which cannot be made if another inference is at least equally open” in Sharrment Pty Ltd v Official Trustee in Bankruptcy at 461.[27]

[27]Ibid 111–12 [57]–[63] (McColl JA agreeing at 102 [1] and Sackville AJA agreeing at 124 [118]).

Mr Trewavas stated that he could find no case where a court has found there was a sham arrangement when there were in fact funds advanced under an agreement and demands are made for repayment.

GSF submitted that there are various features of Mr Gordon’s evidence that demonstrate the dispute sought to be raised is not genuine:

(a) Mr Gordon’s email to Mr Ghisoni on 4 August 2022 at 10:49am, which stated:

I am not associate (sic) with the Syracuse trust therefore you emailing me for payment merely confirms this is a Gardian matter.

(b) Mr Gordon received the letter of demand from his wife Ms Gordon, the director of Byproxy, on 15 August 2022, demanding payment of over $200,000 pursuant to the loan agreement entered into 12 months before. The letter of demand, which contained the subject line ‘Debt owed to Byproxy lender’ stated:

Take notice that pursuant to an oral and written agreement on or about 16 August 2021, which is on or about the time of the loan agreement between Byproxy and GSF, the lender agreed to lend Gardian the sum of $220,000 plus change payable with accrued interest calculated at 9.5 per cent per annum.

(c) On the same day, Mr Gordon sent an email to Jason Ghisoni with a copy of that letter of demand from Byproxy, stating:

As the CEO of Gardian I need to advise you as a director, that as of this afternoon I received a letter of demand from Ghisoni Superannuation fund which I forwarded to Linda Gordon as I am not connected in any way to Byproxy, nor is Gino who also received the letter of demand. Linda is the only office bearer of Byproxy, and although she did not receive it directly, having been made aware of it, she on behalf of Byproxy, immediately initiated a letter of demand due to the back to back agreement between Gardian and Byproxy.

Mr Trewavas criticised Mr Gordon’s evidence where he contended that he was the CEO of Gardian at the time and had nothing to do with Byproxy either as a director or a shareholder. Mr Gordon does not say, however, that he had no interest in Byproxy and, in that regard, referred to Mr Ghisoni’s evidence that Mr Gordon used the Syracuse Trust as his family trust. Mr Trewavas contended Mr Gordon did have an interest in the Syracuse Trust and he had referred to the Syracuse Trust (of which Byproxy is trustee) in an email to Andrew Ghisoni as ‘our trust’ and issued an invoice to Andrew Ghisoni with the bank details of ‘Syracuse Trust’.

Mr Gordon asserted that Mr Krt is not connected in any way to Byproxy, but Mr Krt deposes in his affidavit that he is authorised to make that affidavit on behalf of Byproxy.

Mr Trewavas referred to Mr Gordon’s affidavit where he makes reference to the minutes of meeting of 2 August 2021, which he contended were an accurate record of that meeting. He observed that Mr Krt’s evidence is that those minutes are incomplete and other matters were discussed at that meeting which were not recorded in the minutes. He noted that the minutes were only ever signed by Mr Gordon and that there is no evidence as to when the minutes were created. For that reason, Mr Trewavas said very little weight should be put upon the minutes by reason of them being a self-serving document.

In respect of Mr Krt’s affidavit, he makes reference to the letter of 20 September 2022 from Gardian’s lawyers to GSF’s New South Wales lawyers, advising them that Byproxy was not indebted to GSF in any sum whatsoever. Mr Trewavas says the New South Wales proceedings were discontinued by reason of a jurisdictional issue, more particularly a venue objection and pointed to this as an example of embellishment by Byproxy’s witnesses.

Mr Trewavas then moved to the evidence filed by his client and noted that Mr Ghisoni’s evidence in respect of the signing of the loan agreement and the advance were not denied by Byproxy. He drew attention to Mr Ghisoni’s evidence that the only time he heard the expression ‘sham’ was after the statutory demand was served.

Reference was then made to the evidence of Jason Ghisoni, where he exhibits the balance sheet for Gardian showing the loan owing to Byproxy. It will be recalled that the evidence of Byproxy’s deponents is that that document had never been sighted by Mr or Ms Gordon.

On the issue of Mr Gordon’s association with the Syracuse Trust, Mr Trewavas referred to Jason Ghisoni’s evidence that under Mr Gordon’s instructions he would pay the amount payable to Mr Gordon directly to the Syracuse Trust. Mr Trewavas submitted that this indicates Mr Gordon clearly has an interest in the Syracuse Trust, despite what he describes as the very carefully crafted evidence that he is not a shareholder or director. Emphasis was also placed on the letter of demand sent by Byproxy to Gardian, which was not denied by Byproxy, yet, Mr Trewavas said, is sought to be explained away only after the filing of Mr Andrew Ghisoni’s affidavit. Byproxy did not produce that letter of demand in its evidence and it was only raised when GSF discovered it and put it into evidence. Mr Trewavas submitted that there was no real explanation for why that letter was sent, apart from that it was sent to support Byproxy’s case.

Mr Trewavas said that, as regards Mr Black’s submission that the transaction between Byproxy and Gardian was uncommercial, that the letter of demand did in fact make reference to a charge for interest and thus had an aspect of commerciality. Mr Trewavas submitted that the letter of demand is completely inconsistent with the argument that is now advanced on behalf of Byproxy, that the transaction was a sham. He said this is compounded by the fact that Byproxy did not produce the letter in evidence, even though Ms Gordon had signed that letter, and the inference to be drawn is that Byproxy deliberately chose not to introduce evidence that was adverse to the case it sought to advance. Further, the explanation given by Ms Gordon for the letter of demand is incoherent and, in addition, it points to Mr Gordon’s intimate involvement in the transactions.

GSF contends there are five key documents Byproxy must deal with to establish a genuine dispute as to the existence of the debt:

(a) the written loan agreement;

(b) evidence of payments from GSF to Byproxy under the loan agreement;

(c) an email dated 10 June 2022 from Mr Ghisoni terminating the loan agreement;

(d) the letter of demand sent by Byproxy to Gardian demanding repayment of the loan amount; and

(e) the books and records of Gardian.

GSF contends that Byproxy fails to address these key documents. Rather, it seeks to muddy the waters by seeking to introduce irrelevant and inadmissible evidence in an attempt to manufacture a dispute.

The written loan agreement

GSF submits that the evidence that Byproxy presents in relation to the background to the loan agreement and what was said on various occasions is inadmissible for two reasons.

First, it is irrelevant. The subjective intentions of the parties are irrelevant to the construction of a commercial agreement. There is no ambiguity identified in the loan agreement that would potentially allow such evidence to be introduced.

Second, it is submitted that admission of that evidence offends the parole evidence rule, that is the principle that:

[W]here a contract is reduced into writing, where the contract appears in the writing to be entire, it is presumed that the writing contains all the terms of it and evidence will not be admitted for any previous or contemporaneous agreement which would have the effect of adding to or varying it in anyway.[28]

[28]Frikton v Jelekainen [2007] QCA 451, [50], citing with approval Mercantile Bank of Sydney v Taylor (1891) 12 LR (NSW) 252, 262.

GSF contends that Byproxy’s position in relation to the loan agreement is misguided. There is no attempt to explain why a written document signed by Byproxy is not enforceable in accordance with its terms.

It is said that Byproxy’s argument, at its highest, would appear to be that the parties all agreed that Byproxy would not have to repay the loan (which is not accepted by the GSF). GSF asserts this argument, on the basis of High Court authority, is insufficient in law:

In the absence of fraud or some other of the special circumstances of the character mentioned, a man cannot escape the consequences of signing a document by saying, and proving, that he did not understand it. Unless he was prepared to take the chance of being bound by the terms of the document, whatever they might be, it was for him to protect himself by abstaining from signing the document until he understood it and was satisfied with it. Any weakening of these principles would make chaos of every-day business transactions.[29]

[29]Wilton v Farnworth (1948) 76 CLR 646, 649 (Latham CJ), cited with approval in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165, 180 [43] (Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ).

GSF also contends the argument ignores the other evidence, which tells against such an agreement:

(a) the emails from Mr Ghisoni clearly show that he never considered that Byproxy was not liable to repay the loan; and

(b) the letter of demand sent by Byproxy to Gardian.

Letter of demand from Byproxy to Gardian

In this regard, GSF observes that Byproxy did not put the letter of demand into evidence and it was GSF who first produced that document, which is a key document, and the explanation from Byproxy is unsatisfactory.[30]
[30]See [98] of these reasons. In her affidavit, Ms Gordon she explains why she sent the demand.

GSF contends that Byproxy’s response to the production of the letter of demand does not demonstrate the existence of any genuine dispute.

GSF further contends that Byproxy fails to address the issue that at no time after receiving the 10 June 2022 email from Mr Ghisoni terminating the loan agreement did Byproxy say anything about:

(a) not being liable for the repayment of the loan;

(b) the loan agreement being a sham;

(c) the subsequent emails between the parties where no statement was ever made that the loan agreement being a sham; and

(d) the email on 1 August 2022 requiring payment from Byproxy.

GSF submits that this is a case where Byproxy is asking the Court to ignore the clear and unambiguous terms of a written agreement on the basis that the agreement is not what is expressed in writing, but some other agreement that is inconsistent the written agreement. Byproxy has failed to adequately explain why the contemporaneous documents do not support its argument that the loan agreement was a sham.

After making reference to the passage of the judgment of the Court of Appeal in Malec, GSF referred to the decision of the Court of Appeal in Troutfarms Australia Pty Ltd v Perpetual Nominees Ltd (‘Troutfarms’).[31] In Troutfarms, Osborn JA observed the phrase ‘“a genuine dispute” uses ordinary English words and its meaning in any particular set of circumstances must be a question of fact … although its application is illuminated by the authorities’.[32] The Court paraphrased the dicta of Robson J in Rhagodia Pty Ltd v National Australia Bank Ltd, where it was observed that ‘the establishment of a genuine defence requires an explanation of the contemporaneous and undisputed documents that is consistent with the defence’.[33]
[31][2013] VSCA 176.
[32]Ibid [5] (Ashley JA agreeing at [1]).
[33][2008] VSC 295, [131].

GSF referred to the decision of the New South Wales Court of Appeal in Ligon 158 Pty Ltd v Huber,[34] where Barrett AJA stated:

The issue for the court is not whether the company would succeed on those grounds in defending a debt recovery action brought against it by the person who served the statutory demand. Rather, the court must decide whether the grounds of dispute delineated by the affidavit are grounds which, when viewed in the whole of the circumstances emerging from the evidence, indicate a plausible defence propounded in good faith and not one merely constructed in response to the pressure represented by the statutory demand. Issues of credibility will generally be confined to the question whether the asserted grounds are of that quality, as distinct from questions going to the ultimate merits of the postulated defence itself.
(emphasis added in counsel’s written submissions).

[34](2016) 117 ACSR 495, 499 [10]–[11] (Barrett AJA, McColl JA agreeing at 496 [1] and Meagher JA agreeing at 496 [2]).

GSF also made reference to the decision of the High Court in Equuscorp Pty Ltd v Glengallan Investments Pty Ltd, where it stated:[35]

The respondents each having executed a loan agreement, each is bound by it. Having executed the document, and not having been induced to do so by fraud, mistake, or misrepresentation, the respondents cannot now be heard to say that they are not bound by the agreement recorded in it. The parol evidence rule, the limited operation of the defence of non est factum and the development of the equitable remedy of rectification, all proceed from the premise that a party executing a written agreement is bound by it. Yet fundamental to the respondents’ case that the operative agreements between the parties were wholly oral, and reached earlier than the execution of the written agreements, was the proposition that the written agreements subsequently executed not only may be ignored, they must be. That is not so. Having executed the agreement, each respondent is bound by it unless able to rely on a defence of non est factum, or able to have it rectified. The respondents attempted neither.
[35](2004) 218 CLR 471, 483 [33] (Gleeson CJ, McHugh, Kirby, Hayne and Callinan JJ) (citations omitted).

Books of Gardian

GSF submitted that the books of Gardian showed that Gardian received money from Byproxy on four occasions in 2022 and Gardian paying money to Byproxy on three occasions in the same year. GSF submits that if the transaction was indeed a ‘sham’, as alleged by Byproxy, other than the initial payment of the loan amount, it would not be expected that there would be transactions between Byproxy and Gardian.

In this regard, the books show Gardian’s receipt of money from Byproxy in August and September 2022 and Gardian’s payment of money to Byproxy in October 2022.

GSF contends there is no evidence led by the Byproxy to explain why payments were made to it by Gardian in reduction of the loan amounts between them. If this was a sham transaction as alleged by Byproxy, it was submitted that it would not be expected that there would be any transactions between Byproxy and Gardian, other than the initial payment of the loan amount.

This submission was prepared before the filing of the evidence of Ms Gordon in her supplementary affidavit of 28 March 2023, which is summarised above. That affidavit goes some way to explaining why there were several transactions between Byproxy and Gardian, although the dates and the amounts do not appear to marry with the general ledger report exhibited to Ms Gordon’s affidavit.

Mr Trewavas concluded his submissions by emphasising that GSF has a written agreement with Byproxy and that Byproxy should be held to its terms.

Byproxy’s submissions in reply

In his oral submissions in reply, Mr Black emphasised the authorities that describe the nature of this application. He submits that what is required is for Byproxy to establish an arguable case, not that it will ultimately succeed at an inter partes trial of the proceeding. The material relied on by the parties in this application is not tested under cross-examination and there has not been full discovery as would occur in a conventional trial.

Mr Black then turned to respond to certain of the points raised by Mr Trewavas. While accepting, as Mr Trewavas contended, the parties are free to arrange their legal affairs in such a way as to comply with the legislative requirements, the point is that in these circumstances, the transaction was arranged to provide a semblance of compliance with superannuation legislation and, in the course of doing so, the funds were channelled through Byproxy, and that is where the element of a sham comes into it. It is not a case of simply looking to a written loan agreement between Byproxy and GSF and ignoring the evidence of the surrounding communications leading up to that transaction. In this context, immediately prior to the document being executed, advice was obtained from Ms McKeen that the requirement of an intervening independent party was required. The evidence points to GSF always being the source of the funds and Gardian as the borrower. The introduction of Byproxy only occurred after the advice from Ms McKeen.

Mr Black drew attention to the involvement of Jason Ghisoni as a director of Gardian at all of the significant junctures. While he has sworn an affidavit in this proceeding on behalf of GSF, nowhere in that affidavit does he say that there was a written loan agreement between Gardian and Byproxy and indeed Mr Black contended that nowhere in GSF’s evidence is there an explanation of how Byproxy came to be involved in the transaction.

In response to a question from me as to Ms Gordon’s letter of demand of 15 August 2022, Mr Black sought to explain that document as being one prepared without the benefit of legal advice and that everyone from Byproxy’s perspective was proceeding on the basis that the loan agreement has been prepared for the benefit of Gardian in order that GSF could transfer its funds to Gardian. Mr Black contended it was never intended that the loan agreement was going to be enforced against Byproxy. The loan agreement, he contended, was prepared to satisfy the regulatory body for superannuation funds, and Byproxy’s involvement was in the nature of being a ‘clearing house’, Jason Ghisoni directed that the funds be paid to Drip Capital. Mr Black submitted that it is clear from the emails in evidence and the discussions which preceded the transaction that it was originally intended that GSF pay the funds direct to Gardian. When I pressed Mr Black for an explanation as to why Ms Gordon sent the letter of demand, he ultimately conceded it was very unhelpful to Byproxy’s case, but no ultimate determination ought be made in regard to it in this application.

Mr Black addressed Mr Trewavas’ contention of what was described as the inconsistencies between Mr Gordon and Mr Krt’s evidence in respect of the minutes of the meeting of 2 August 2021, with Mr Krt stating that there were matters which were discussed at the meeting which were not in the minutes. Mr Black made reference to Mr Krt’s affidavit where the context is that Mr Krt was referring to the meeting of 8 July 2022 and it was a reference to minutes of a different meeting.

Mr Black concluded that in the course of the evidence and the submissions made by counsel, the parties had gone into what he described as ‘excruciatingly fine detail’, a submission with which I would not take issue and there are a number of matters for which GSF presses that findings as to credit of the various deponents to be made. He submitted that these are not matters appropriate for an application of this character.

Consideration

GSF contends that the demand is grounded as a claim under a conventional loan agreement entered into by two parties, the dispute that Byproxy raises is not genuine and bona fide, and that the application should be dismissed. I have, however, come to the conclusion that Byproxy has established, on an application of the authorities to which reference has been made, a genuine dispute from the evidence that the transaction by which the advance was made by GSF to Byproxy was part of a wider transaction and might arguably be characterised as a sham. The evidence indicates that the involvement of Byproxy only came about by reason of the need to be seen to comply with regulations governing SMSFs. The interposition of Byproxy was required in order that the funds intended to be advanced by GSF could ultimately be paid to Gardian without apparently offending those regulations. It seems clear that Mr Ghisoni and his sons, Jason Ghisoni and Andrew Ghisoni, were aware of, and indeed involved in, the channelling of the funds through Byproxy to give the overall transaction the appearance of one that did not offend the regulations. In my view, this is demonstrated by the contemporaneous email communications occurring in the period leading up to and at the time when the subject transaction was entered into.

It is to be remembered that this is not a conventional inter partes proceeding with all the procedural mechanisms, including discovery, cross-examination and re-examination to enable final determination of the issues between the parties. I do not consider that the position being put up by Byproxy to be spurious. By reason of the existence of the written agreement and the actual advance of funds to Byproxy, Byproxy may undoubtedly face a difficult task in succeeding in its defence, but the evidence is that it is by no means a straightforward debt claim. The authorities indicate it is not appropriate to perceive that one party or another is likely to succeed only that the position being contended for is arguable.[36]
[36]See Spacorp Australia Pty Ltd v Myer Stores Ltd [2001] VSCA 89, [3]–[4] (Brooking and Charles JJA).

In coming to the conclusion that the demand should be set aside, I consider that there are a number of features of the evidence that weigh in favour of finding the existence of a genuine dispute. Mr Ghisoni and Jason Ghisoni obtained advice from Ms McKeen in respect of funding for Gardian and they were provided with advice on 11 August 2021 that such a transaction was proscribed by reason of GSF being a related entity to Gardian. Mr Ghisoni and Jason Ghisoni were clearly involved at an early stage of the transaction and this is evidenced by Ms McKeen’s memorandum of 5 September 2022. It was the evidence of Mr Krt that it was Mr Ghisoni who suggested GSF lend the money to Gardian through a third party to circumvent superannuation laws. Mr Krt’s evidence is that Mr Ghisoni agreed Gardian would be responsible for paying the loan back, not Byproxy. This is denied by Mr Ghisoni. On 11 August 2021, Jason Ghisoni provided Ms McKeen with a form of loan agreement and enquired whether that document would satisfy the superannuation regulatory authorities. Mr Ghisoni was copied into that email. Ms McKeen responded two days later to both Jason Ghisoni and Mr Ghisoni that from a regulatory compliance perspective, the agreement was in order. Mr Krt’s evidence, in the form of a screenshot of a WhatsApp conversation, is that Jason Ghisoni indicated the money was earmarked for the payment to Drip Capital.

On 17 August 2021, Mr Ghisoni enquired of Mr Gordon as to which email address the form of loan agreement should be sent to. He stated, ‘[n]ot the Gardian address I believe’. This would seem to be an indication that Mr Ghisoni was aware that Gardian’s involvement could not be revealed in email transmissions in the event there was an audit of the transaction. GSF then transferred the funds to Byproxy.

As I have already observed, Mr Ghisoni’s evidence, which begins by deposing as to the circumstances of the advance on 18 and 19 August 2021, does not address the issue of why it was necessary to involve Byproxy in the provision of funds to Gardian. This is despite the fact that it seems clear he was involved and had knowledge of what might be described as the wider transaction. Mr Ghisoni does not take issue with the authenticity of the emails exhibited to Mr Krt’s affidavit. After several months in which there was no remission of interest to GSF, Mr Ghisoni began pursuing payment in late October 2021 by emails to Mr Krt and Mr Gordon. The exchanges continued into 2022.

I do not think that the appearance of an item described as ‘loan Syracuse Trust’ in Gardian’s balance sheet is of particular significance as it might be expected that the books of Gardian would record Byproxy’s seemingly arm’s length advance. Further, it would not be expected that it would record a loan from GSF to Gardian as it seems uncontroversial that the whole purpose of the structure of the transaction, whatever be in law Byproxy’s obligations to GSF, was to create the appearance of an arm’s length transaction.

There are features of the evidence that are counter to the position adopted by Byproxy and not the least of those is the explanation given by Ms Gordon for the sending of the letter of demand by Byproxy to Gardian. I regard the explanation that Ms Gordon gives for sending that letter as being incoherent and may be a significant factor weighing against it at any inter partes trial of this matter. Her explanation that it would protect Byproxy from Mr Ghisoni’s claims makes no sense and is completely at odds with Byproxy’s position of there being no intention that the loan agreement be enforced against Byproxy.

In coming to the conclusion that there is a genuine dispute, I am not greatly influenced by whether Byproxy deployed the word ‘sham’ at an earlier or later juncture in the timeline of this matter. A court ultimately considering this matter will presumably have regard to all of the features of the evidence in determining whether, in a legal sense, the transaction between GSF and Byproxy was a sham on an application of the principles identified by the Court of Appeal in New South Wales in Lewis, which are extracted above.

In conclusion, I do not consider that the Court could safely conclude there are not features of this matter that warrant further investigation. In my view, it would not be appropriate to conclude that GSF’s claim is a straightforward debt claim and that Byproxy’s failure to pay on the demand should lead to a presumption of insolvency.

I will order that the statutory demand dated 3 November 2022 and served on Byproxy by GSF be set aside. The normal order would be that costs follow the event but, if there is no agreement that this should be the case, the parties should indicate that promptly to my associate by email and each file and serve short submissions not exceeding three pages in respect of that issue by 4:00pm on 11 August 2023.

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SCHEDULE OF PARTIES

S ECI 2022 04981
BETWEEN:
BYPROXY PTY LTD (ACN 642 841 727) ATF SYRACUSE TRUST (ABN 91 585 315 943)	Plaintiff
- v -
CLAUDIO GHISONI AND JANETTE GHISONI ATF THE GHISONI SUPERANNUATION FUND (ABN 26 593 191 120)	Defendant

SCHEDULE A

[2023] VSC 381

5 July 2023