Case Note: Monland Pty Ltd v Oman [2026] VSC 240

Introduction

The Supreme Court of Victoria’s decision, earlier this year, in Monland Pty Ltd v Oman provides a useful reminder for lenders and guarantors. The case explores the level of evidence required to establish that an oral representation can affect a lender’s recovery of monies advanced from a guarantor in circumstances where it cannot be recovered from the borrowing company by reason of liquidation.

In short, the decision in this case confirms that a guarantor cannot escape liability scot-free merely by asserting that a lender assured them, informally by phone, that they would not be pursued.

Facts

The proceeding arose when Residence Company Pty Ltd (the borrower) defaulted on repayment of its loan advanced by Monland Pty Ltd (the lender).  

The lender lent the monies for the borrower to fund a property development in Hawthorn East. The parties secured the arrangement by way of a written loan agreement, within which Mr Oman (the guarantor), as director of the borrower, guaranteed the borrower’s repayment obligations to the lender.

Following the borrower’s default of the loan, and its subsequent liquidation, the lender was left to only pursue the guarantor and hence commenced proceedings against the guarantor for the same.

The guarantor alleged that he had a less than 5-minute’ telephone call with the lender’s director alleging that the lender represented that he had no intention of recovering and would not pursue the guarantor personally for the advanced funds, provided that the guarantor acted promptly in selling a particular property that a separate company the guarantor controlled, was selling. The guarantor argued this conversation meant he would not be liable to repay the debt to the lender and argued that in the lender issuing proceedings for the same would give rise to remedies in promissory estoppel and misleading and deceptive conduct pursuant to section 18 of the Australian Consumer Law (ACL). However, this conversation was not recorded and was otherwise unsupported in any contemporaneous evidence when put before the Court.

Issues

The Court considered the following key issues:

1. Whether the oral representation (i.e. the phone call between the lender and guarantor) was in fact made;
2. If the representation was made, was it strong enough for the guarantor to rely upon the remedy of promissory estoppel. That is, whether the conversation gave rise to an assumption on which the guarantor was entitled to rely, and whether the guarantor suffered detriment in relying on the lender's promise; and
3. Was the alleged oral representation considered misleading and deceptive conduct undersection 18 of the ACL and whether the guarantor’s reliance on the same and loss could be established.

The court also considered other issues in this matter, including jurisdictional matters, but they have not been herein due to the limited scope of this article.

Decision & Significance to Lenders

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(a) Was the representation made?

The Court was not satisfied that the alleged oral representation was made, noting the conversation was not recorded nor any supporting documents evidenced the same.

In relation to relying on a persons’ recollection of events alone, with no supporting documents, the Court observed that the human memory is ‘inherently unreliable vehicle in establishing the content of conversations that happened years before trial’ and that ‘confronting a witness during trial may itself further distort that witness’ recollection and versions of events can often change over time’.

This is significant to note for lenders as this case reinforces the court’s view to not displace formal loan agreements based on informal oral representations, particularly in circumstances where they could not be proven in supporting evidence and turns to the witness’ credibility alone and particularly in circumstances where such representations were only raised after the lender commenced proceedings.

(b) Could the guarantor argue the Promissory Estoppel defence?

The Court held that to have a defence of promissory estoppel, there must be:

(a) A clear and unambiguous assumption;

(b) The assumption must have been induced by the promisor (in this case, the lender);

(c) There must be detrimental reliance that can be causally linked to the assumption made.

If the assumption is incomplete, or uncertain, estoppel is not available as a remedy.

What this means for lenders is that it reinforces that informal statements lacking any contractual certainty, clear reliance and detriment are unlikely to be enforceable.  

In this case, as the court held that the oral representation was not made at all, and promissory estoppel must be based on a proven promise or assumption, then the guarantor could not use the promissory estoppel defence.

(c) Was the Lender's conduct misleading and deceptive?

As to the claim for relief under the ACL, the guarantor’s claim was also not upheld. The court found the alleged representation was unable to be established with evidence and even if it had been, there was no quantifiable loss.

For lenders, or guarantors being sued, it is important to be able to quantity your loss that has flowed from the other side’s/promisor’s conduct.

Key Takeaways

This case provides some key takeaways for lenders, namely:

• Oral representations carry a high evidentiary burden. A party seeking to displace a written loan agreement by relying on an oral representation faces a high evidentiary standard — especially where the alleged representation is inconsistent with that party's later conduct or is raised only after proceedings have commenced.
• Promissory estoppel demands certainty. That is, a clear, induced assumption and detrimental reliance that is causally linked to the assumption made. Vague assurances, or reliance that cannot be proven, will not suffice.
• Loss must be identifiable and quantifiable. Both for reliance-based estoppel and for relief under the ACL, a party must be able to point to identifiable, quantifiable loss.
• Courts favour written certainty. The decision reinforces the courts' preference for the certainty of written documents over informal variations.

For lenders in particular, the case underscores the importance of:

1. clear enforcement rights in the guarantee and indemnity clauses of loan agreements;
2. obtaining written confirmation of any agreements made between parties that seek to alter or amend the original written loan agreement; and
3. ensuring that any material conversations with borrowers or guarantors are properly recorded and documented.

Conclusion

Overall, the case of Monland Pty Ltd v Oman serves a practical reminder that certainty in lending is built on paper, not conversations: a guarantor will be held to a written guarantee, and an alleged oral assurance will rarely displace it unless clear, unequivocal, and supported by contemporaneous evidence of reliance and quantifiable loss.

For both lenders and guarantors, the message is the same — when it matters, put it in writing.

How Sharrock Pitman Legal can help?

For lenders, in particular, this case is a loud and clear reminder that lending money and providing finance, is built on paper; in other words, proper documentation and not corridor conversations.

If you are a lender, going guarantor or a borrower, get legal advice before you enter any agreement to ensure that your finance is secure or that a debt owed to you will be repaid.

If we can assist you, please don’t hesitate to contact our Disputes & Litigation team on 1300 205 506 or email sp@sharrockpitman.com.au.

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The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. For advice tailored to your specific circumstances, please consult one of our qualified lawyers.

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