183 Eastwood Pty Ltd v Dragon Property Development & Investment Pty Ltd

The New South Wales Court of Appeal considered a dispute between 183 Eastwood Pty Ltd and Dragon Property Development & Investment Pty Ltd concerning the validity of a contract entered into by a rogue who had fraudulently altered the Australian Securities and Investments Commission (ASIC) register to appear as the sole director and shareholder of 183 Eastwood Pty Ltd. Dragon Property Development & Investment Pty Ltd sought to enforce this contract, arguing that 183 Eastwood Pty Ltd was bound by the rogue's dealings.

The central legal issues before the Court of Appeal were whether 183 Eastwood Pty Ltd was bound by the contract, whether the company's failure to amend the ASIC register after becoming aware of the fraudulent alteration constituted an estoppel by representation, and whether the detriment suffered by Dragon Property Development & Investment Pty Ltd was caused by reliance on the relevant representation.

The Court of Appeal reasoned that the directors of 183 Eastwood Pty Ltd, by becoming aware of the fraudulent alteration to the ASIC register and failing to take steps to rectify it for 57 days, had created a situation where the rogue appeared to have ostensible authority to act on behalf of the company. This inaction amounted to a representation by silence or acquiescence, upon which Dragon Property Development & Investment Pty Ltd relied to its detriment by entering into the contract. The Court applied principles of estoppel by representation, finding that the company was estopped from denying the rogue's authority.

The appeal was dismissed with costs.