City Garden Australia Pty Ltd (in liq) v Meng Dai

The appeal concerned loan agreements entered into between City Garden Australia Pty Ltd (in liq) and multiple lenders. The central dispute revolved around the validity of these agreements, which were signed by a director of City Garden without the company's authority and by a secretary who had not been validly appointed. The lenders sought to rely on the statutory assumptions of authority under the *Corporations Act 2001* (Cth), specifically sections 128 and 129, to uphold the agreements. The Court of Appeal of New South Wales heard the matter.

The primary legal issue before the court was whether the lenders could rely on the statutory assumptions of authority under the *Corporations Act 2001* (Cth) when the company's director and secretary lacked the requisite authority to execute the loan agreements. A key aspect of this issue was whether the knowledge of the lenders' solicitor regarding the invalid appointment of the secretary and the director's lack of authority was to be imputed to the lenders themselves, thereby preventing them from relying on the statutory assumptions under section 128(4) of the Act.

The court reasoned that the notification of the secretary's appointment by ASIC constituted sufficient evidence of their authority for the purposes of the statutory assumptions. Furthermore, the court held that the knowledge of the lenders' solicitor was not to be imputed to the lenders for the purpose of section 128(4) of the *Corporations Act 2001* (Cth). The court applied the principles that the statutory assumptions are designed to facilitate commercial dealings and that a party's knowledge or suspicion must be actual, not merely constructive, to displace these assumptions.

The court dismissed the further amended notice of cross-appeal and a motion filed by the third cross-respondent, ordering that the third cross-respondent pay the cross-appellant’s costs of that motion. The court also ordered that the cross-appellant pay the costs of the third and eighth cross-respondents, and the fourth, ninth, and tenth cross-respondents, of the cross-appeal.