Australia and New Zealand Banking Group Ltd v Frenmast Pty Ltd

Australia and New Zealand Banking Group Ltd (the appellant) appealed to the Court of Appeal of New South Wales against orders made by Adams J. The dispute concerned a guarantee executed by Frenmast Pty Ltd (the respondent) which was purportedly signed by two directors. However, the signature of one director was forged. The appellant sought to rely on the statutory assumptions available under the *Corporations Act 2001* (Cth) to establish the validity of the guarantee.

The central legal issues before the Court of Appeal were whether the appellant was entitled to rely on the assumption in s 129(5) of the *Corporations Act 2001* that the guarantee was signed in accordance with s 127(1)(a), and whether the appellant had "dealings" with the respondent company for the purposes of the Act. The court also considered whether a person dealing on behalf of a company must have actual or ostensible authority to enter into the transaction that is the subject of the assumption.

The Court of Appeal allowed the appeal, finding that the appellant was able to rely on the statutory assumptions under s 129 of the *Corporations Act 2001*. The court reasoned that the appellant had engaged in "dealings" with the respondent company, and that the assumptions in s 129 were designed to protect third parties who deal with companies in good faith, even where internal formalities have not been complied with, including forged signatures. The court held that the requirement for a person dealing with a company to have actual or ostensible authority to enter into the transaction was not a prerequisite for relying on the assumptions under s 129.

Consequently, the Court of Appeal set aside certain orders made by Adams J and entered judgment for the appellant against the respondent in the sum of $1,724,498.50, including interest. The respondent was also ordered to pay the appellant's costs of the appeal.