Ivy Lian Pty Ltd as trustee for Ivy Lian Superannuation Fund v Charles Warners Bay Pty Ltd

Case •

[2025] NSWSC 1182

•

10 October 2025

No judgment structure available for this case.

Supreme Court


New South Wales

Medium Neutral Citation: Ivy Lian Pty Ltd as trustee for Ivy Lian Superannuation Fund v Charles Warners Bay Pty Ltd [2025] NSWSC 1182
Hearing dates: 24-25 June 2025
Date of orders: 10 October 2025
Decision date: 10 October 2025
Jurisdiction:Equity - Real Property List
Before: Williams J
Decision:

See orders at [146]

Catchwords:

CORPORATIONS – whether now deceased person was duly appointed as a director of the defendant company for a period of three years prior to her death – whether loan agreement between plaintiff (as lender) and defendant (as borrower) and associated documents duly executed by the defendant – whether plaintiff entitled to make assumptions in Corporations Act 2001 (Cth) s 129(2) and s 129(5) – whether defendant established that assumptions incorrect and that plaintiff knew or suspected at the time of its dealings with the defendant that those assumptions were incorrect

Legislation Cited:

Corporations Act 2001 (Cth), ss 127, 128, 129, 1274B

Cases Cited:

Baden v Société Générale pour Favoriser le Développement du Commerce et de l'Industrieen France SA [1992] All ER 161; [1993] 1 WLR 509

City Garden Australia Pty Ltd (in liq)v Meng Dai (2024) 115 NSWLR 468; [2024] NSWCA 238

GLJ v Trustees of Roman Catholic Church for Diocese of Lismore (2023) 280 CLR 442; [2023] HCA 32

Jagatramka v Wollongong Coal Limited [2021] NSWCA 61

Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8

Soyfer v Earlmaze Pty Ltd [2000] NSWSC 1068

Story v Advance Bank Australia Ltd (1993) 31 NSWLR 722

Texts Cited:

N/A

Category:Principal judgment
Parties: Ivy Lian Pty Ltd (ACN 141 357 637) as trustee for Ivy Lian Superannuation Fund (Plaintiff)
Charles Warners Bay Pty Ltd (ACN 645 352 218) (Defendant)
Representation:

Counsel:
Mr N Simone (Plaintiff)
Mr A Maroya (Defendant)

Solicitors:
Stratos Legal (Plaintiff)
Charlesworth Lawyers (Defendant)
File Number(s): 2024/289891
Publication restriction: Nil

JUDGMENT

Introduction

  1. The defendant, Charles Warners Bay Pty Ltd, is the owner of property at 54 Charles Street, Warners Bay, New South Wales (formerly folio identifier XX/XXXXX XX and now folio identifier X/XXXXX XX) (the Property).

  2. The plaintiff, Ivy Lian Pty Ltd, is the corporate trustee for the Ivy Lian Superannuation Fund.

  3. The plaintiff claims that the defendant is indebted to it in the sum of $136,000 (plus interest) pursuant to a Loan Agreement dated 8 March 2021, as amended by an Amendment to Loan Agreement dated 19 June 2023. The plaintiff claims that the debt is secured against the Property by a charge created by a charging clause in the Loan Agreement, and by an equitable mortgage created by a deed dated 8 March 2021 (the Mortgage Deed).

  4. The defendant denies that it entered into the Loan Agreement, Mortgage Deed and Amendment to Loan Agreement. The defendant contends that one of the persons who appears to have signed the Loan Agreement and Mortgage Deed as a director of the defendant, and who appears to have signed the Amendment to Loan Agreement as the director of the defendant, was not duly appointed as a director. The defendant also contends that the other signature which appears on the Loan Agreement and Mortgage Deed is not the genuine signature of that person who was a director of the defendant at the time.

  5. The plaintiff disputes those contentions, and relies on s 128 and the assumptions in ss 129(2) and (5) of the Corporations Act 2001 (Cth).

  6. The defendant relies on s 128(4) of the Corporations Act in disputing that the plaintiff is entitled to make those assumptions.

Salient facts

Incorporation of the defendant and purchase of the Property

  1. Mr Craig Maindonald is a builder. Since 22 December 2023, he has been the sole director of the defendant.

  2. In his affidavit sworn on 21 February 2025, Mr Maindonald deposed that he caused his accountant, Ms Cindy Li, to incorporate the defendant on or about 22 October 2020 after identifying the Property as a potential development site.

  3. According to the extract from the register maintained by the Australian Securities and Investments Commission in relation to the defendant that was tendered in these proceedings, the defendant was incorporated on 23 October 2020, and Ms Mei Ling Anita Cheung and Mr Ricky Paul Quirk were its directors on incorporation.

  4. Mr Quirk was an associate of Mr Mainland who was involved in one or more business ventures with Mr Mainland at the time.

  5. Ms Cheung was an accountant by profession who was involved in various property development projects with Mr Mainland. Ms Chueng, who was known as Anita, has two sisters who were mentioned in the evidence in these proceedings – Ms Ada Cheung and Ms Cora Cheung. References to Ms Cheung in these reasons are references to Ms Anita Cheung, unless otherwise indicated.

  6. In its defence filed on 17 September 2024 and verified by Mr Maindonald, the defendant pleaded that, although Ms Cheung and Mr Quirk were recorded by ASIC as directors of the defendant, “the identification of Cheung and Quirk as directors of the company was effected by Cheung fraudulently and without authority of the company”.

  7. In his affidavit sworn on 21 February 2025, Mr Maindonald deposed that, after he issued the instruction to Ms Li to incorporate the defendant on or about 22 October 2020, Ms Li confirmed that she had set up the defendant company with Ms Cheung and Mr Quirk as directors “and a 60/40 split”. Mr Maindonald also deposed that he “did not instruct Anita to make changes to the directorships or share structure”. Mr Maindonald exhibited to his affidavit an email that Ms Li sent to Ms Cheung and Mr Quirk and copied to him on 23 October 2020 forwarding an email from Easy Companies, with the subject heading “CHARLES WARNERS BAY PTY LTD is now Registered”. Ms Li wrote in the email: “Hi Anita and Ricky, The company has been registered and relevant documents have been attached for your reference”.

  8. Under cross-examination, Mr Maindonald gave evidence that he had intended and instructed Ms Li that he and Mr Quirk would be the directors of the defendant, and that he had not instructed Ms Li to incorporate the defendant with Ms Cheung as one of its directors. Mr Maindonald did not adduce any documentary evidence that he had instructed Ms Li at the time that he was to be a director of the defendant on incorporation, or any evidence that he had consented in writing to be so appointed. Mr Maindonald denied that the email he received from Ms Li on 23 October 2020 alerted him to the fact that Ms Cheung and Mr Quirk had been appointed as the directors of the defendant company. The defendant did not produce the certificate of incorporation, minutes, constitution and ASIC Form 201 that were attached to that email in response to a notice to produce issued by the plaintiff in these proceedings. I infer from the historical information recorded in the ASIC extract that those documents would have identified Ms Cheung and Mr Quirk as the directors of the defendant. Mr Maindonald’s denial that the email alerted him to the appointment of Ms Cheung and Mr Quirk as the directors of the defendant is implausible, and I reject it.

  9. Mr Maindonald was taken to an email exhibited to his affidavit sworn on 21 February 2025 that he sent to Ms Cheung on 22 October 2020, asking her to “send Cindy a photo of your passport, and let her know that you give her authorisation to set up Charles Warners Bay Pty”. Mr Maindonald added: “We need this done today please.” Mr Maindonald denied that he had made those requests of Ms Cheung because he wanted her to be a director of the defendant when it was incorporated. Referring to Ms Cheung, Mr Maindonald asserted that she “was there to set up another company called Donald Street”. At a later stage of the cross-examination, Mr Maindonald said that Ms Cheung was supposed to be a director of the company undertaking the “Church Street developments”, and that she had mistakenly been appointed to the defendant. Both iterations of Mr Maindonald’s evidence about the companies to which he intended Ms Cheung to be appointed as a director on 22 October 2020 are inconsistent with the contents and obvious purpose of his email to Ms Cheung. As the plaintiff submitted, there would be no reason for Ms Cheung, rather than Mr Maindonald, to be the person authorising Ms Li to incorporate the defendant, and to be providing her passport details to Ms Li, if Mr Maindonald had not intended that Ms Cheung would be a founding director of the defendant.

  10. On 26 October 2020, the defendant entered into a contract to purchase the Property for the price of $1,200,000. The Property had the benefit of a development consent for the construction of a mixed-use building containing residential flats and commercial premises. Title to the Property was transferred to the defendant on completion of the contract on or about 5 February 2021.

  11. Under cross-examination, Mr Maindonald gave evidence that he signed the contract on behalf of the purchaser. Upon being shown the contract, Mr Maindonald accepted that he did not in fact sign it on behalf of the purchaser.

  12. The signatures for the purchaser on the front page of the contract appear to my eye to be written in the same way as the signatures of the two directors of the purchaser under special condition 46 of the contract, pursuant to which those directors jointly and severally guaranteed the purchaser’s performance of its obligations under the contract. Those directors are named in the execution block below special condition 46 as Ms Cheung and Mr Quirk. Mr Maindonald is named as the witness to both of their signatures on that page. Mr Maindonald acknowledged in cross-examination that his signature does appear twice on that page as the witness to each director’s signature. He identified those signatures as his genuine signature, but asserted that they had been cut and paste by Ms Cheung from another document that he signed. As the cross-examiner put to Mr Maindonald, there are subtle but clearly visible differences between his two signatures on that page. The two signatures cannot have been cut and paste from one signature on some other document as Mr Maindonald asserted. That assertion was baseless, and I reject it. I find that Mr Maindonald did in fact sign that page of the contract as the witness to the signatures of each of Ms Cheung and Mr Quirk in their capacity as directors of the defendant and guarantors of the defendant’s obligations under the contract. The inescapable inference is that Mr Maindonald knew, at that time, that Ms Cheung and Mr Quirk were the directors of the defendant, and that he (Mr Maindonald) was not a director, and I so find. In the absence of any evidence that Mr Maindonald complained about that at the time, or that he took any step to seek to have himself appointed as a director, I infer that this was consistent with Mr Maindonald’s intentions at the time. I reject his evidence to the contrary.

  13. As referred to later in these reasons, Mr Quirk resigned or was removed as a director of the defendant on 18 March 2022. Mr Maindonald exhibited to his affidavit an email that he received from Ms Li two days later, stating: “Hi Craig, Both Ricky and Anita are directors with 60/40 share holding each when the company was set up as attached.” Despite having exhibited that email to his affidavit, Mr Maindonald said that he did not recall receiving it. He did not deny receiving it, but denied that it had brought to his attention the fact that Ms Cheung and Mr Quirk had been made directors of the defendant on incorporation. Mr Maindonald accepted that he did not make any complaint about Ms Cheung’s appointment as a director, or apply to ASIC to correct the register, after receiving Ms Li’s 20 March 2022 email. It is highly probable that Ms Li’s email would have attracted his attention at the time and caused him to take such action if Mr Maindonald had intended that he, rather than Ms Cheung, was to be a director of the defendant from the time of its incorporation. His failure to take such action at the time provides further support for the conclusion that he did in fact intend Ms Cheung to be a director of the defendant, and did not intend to be a director of the defendant himself, when it was incorporated in October 2020 or when he received Ms Li’s email on 20 March 2022.

  14. Mr Maindonald was forced under cross-examination to resile from his evidence that Ms Cheung was the defendant’s accountant and had no other role in the affairs of the defendant when he was confronted with contemporaneous documents evidencing a different or broader role, including marketing units in the Warners Bay development to potential investors.

  15. In summary, Mr Maindonald’s evidence about the directors that he intended and instructed to be appointed to the defendant at the time of its incorporation lacks credibility due to the irreconcilable inconsistency between his affidavit and oral testimony, the further inconsistency between both his affidavit and oral testimony and the defence that he verified, the inconsistency between his oral testimony and the contemporaneous documents referred to above, the implausible and internally inconsistent explanations that Mr Maindonald advanced under cross-examination for those inconsistencies, and his attempts in cross-examination to evade questions put to him about those inconsistencies by thrusting non-responsive assertions at the cross-examiner which he apparently perceived would assist the defendant’s defence of these proceedings.

  16. For all of the reasons explained above, I find that Mr Maindonald instructed Ms Cheung and/or Ms Li on or about 20 October 2022 to cause the defendant to be incorporated and for Ms Cheung and Mr Quirk to be appointed as directors of the defendant, and that he was aware at all times thereafter that Ms Cheung was a director of the defendant until her death on 16 November 2023. There is no evidence that Mr Maindonald or any other person on the part of the defendant ever took steps to remove Ms Cheung as a director. The defendant has failed to establish its pleaded allegation that Ms Cheung became, or remained, a director “fraudulently” and “without authority of the company”. As the plaintiff submitted, there is no evidence to the contrary of the prima facie evidence in the ASIC extract that Ms Cheung was a director of the defendant from its incorporation until 16 November 2023. [1]

    1. Corporations Act 2001 (Cth), s 1274B.

The plaintiff’s introduction to the defendant

  1. Ms Ivy Lian is a certified public accountant and a director and secretary of the plaintiff. Ms Lian’s husband, Mr Christopher Van Duin, is the other director of the plaintiff.

  2. Ms Lian was first introduced to the defendant and Ms Cheung through a property development investor Facebook group run by a firm of solicitors known as DGI Lawyers. Ms Lian had previously instructed DGI Lawyers to act for her, or entities associated with her, on several matters.

  3. According to Ms Lian’s evidence, DGI Lawyers drafted all of the documents recording the transaction that is the subject of these proceedings, acting for both the plaintiff and the defendant with the consent of each of them. That evidence is corroborated by the Loan Agreement, Mortgage Deed and Loan Amendment referred to below, the contemporaneous correspondence, costs agreements, and conflict disclosure and consent forms that were tendered in evidence. The contemporaneous correspondence between DGI Lawyers and Ms Cheung confirms that DGI Lawyers was accepting Ms Cheung’s instructions as the instructions of the defendant. DGI Lawyers later changed their name to Assure Lawyers at some time before the Loan Amendment was executed.

The Loan Agreement and Mortgage Deed

  1. A document entitled “Loan Agreement” was executed on 2 March 2021. The named parties to the document are the plaintiff (as “Lender”), the defendant (as “Borrower”), and Ms Cheung and Mr Quirk (referred to as “Cheung” and “Quirk”, and defined as “Guarantors”).

  2. The Recitals record that:

“A.    The Borrower has entered into a Contract for the Sale and Purchase of Land dated 26 October 2020 to purchase the Property.

B.    The Borrower has requested the Lender to lend the Loan Amount to the Borrower, secured by an equitable mortgage over the Property, to assist the Borrower, to purchase the Property, to develop a strata scheme and sell the completed strata units within the Development Project.

C.   Cheung and Quirk have agreed to guarantee the Borrower’s performance of its obligations under this Agreement.

D.   The Lender has agreed to lend the Loan Amount to the Borrower on the terms and conditions set out below, and the Borrower has agreed to pay the Interest and repay the Loan Amount on the said terms and conditions.”

  1. The “Property” defined the Schedule is the property at 54 Charles Street, Warners Bay, which I refer to as the Property in these reasons. The “Development Project” is defined as: “The development of a strata scheme on the Property”.

  2. Clause 1 provides (emphasis added):

“(a)   Loan Amount

On the Loan Date, the Lender will advance the Loan Amount (being an amount of $100,000) to Borrower’s bank account.

(b)   Borrower’s Repayment

The Borrower shall repay the Lender the entire Loan Amount, balance of Interest and Other Monies on the Loan Repayment Date.”

  1. The Schedule defines the “Loan Date” as “the date that the Loan Amount is advanced by the Lender, which is to occur no later than 5 March 2021”, and the “Loan Repayment Date” as two years from the Loan Date.

  2. Clause 2, read together with the Schedule, provides that interest accrues daily on the unpaid balance of the Loan Amount at a fixed rate of 18% per annum, and is payable in full on the Loan Repayment Date. The default interest rate stipulated in the Schedule is the same fixed rate of 18% per annum.

  3. Clause 3 provides:

“(a)   Borrower Charges Property as Security

i.    The Borrower hereby charges the Property for the repayment of the Loan Amount, Interest and Other Monies payable by the Borrower under this Agreement.

ii.    The Lender acknowledges that, as part of the Development Project, separate certificate of titles may be issued in respect of each new strata unit and the Borrower undertakes to notify the Lender immediately upon registration of the Strata Plan. Subject to the registration of a Strata Plan with the relevant Land Titles Office, the Borrower hereby charges each of the Strata Units for repayment of the Loan Amount, Interest and Other Monies payable by the Borrower under this Agreement.

(b)   Borrower to grant Equitable Mortgage

The Borrower shall prepare and provide to the Lender a signed Equitable Mortgage which shall be entered into contemporaneously with this Agreement.

(c)   Lender may register Caveat if Default by Borrower

i.    The Lender shall be entitled to and the Borrower consents to the Lender lodging a Caveat over the Property for the charge of the Property if the Borrower is in default within the meaning of clause 4 of this Agreement.

ii.    The Borrower will be responsible for all costs incurred in respect of and incidental to lodgement of the Caveat.”

  1. Clause 4(a) relevantly provides that the Borrower is in default if it fails to pay any money under the Loan Agreement at the time required by the Loan Agreement. Clause 4(b) provides that, if the Borrower fails to remedy any default within 21 days of a notice in writing issued by the Lender to the Borrower specifying the default, and requiring the remedy thereof, the entire unpaid balance of the Loan Amount plus interest and any “Other Monies” are immediately due and payable.

  2. Clause 5(b) provides that if the Lender obtains a judgment or order against the Borrower, the Borrower shall pay interest on the amount owing under that judgment or order at the higher of the rate stipulated in the judgment or order, or the interest rate under the Loan Agreement of 18%.

  3. Clause 5(c) provides that the Lender must, upon reasonable request by the Borrower, withdraw its caveat upon full payment of the Loan Amount plus interest and the “Other Monies” payable. The “Other Monies” are identified in clause 7 as “Loan Preparation Costs” (defined as including amounts payable by the Lender to a solicitor engaged by it for preparing the Loan Agreement and any security relating to the Loan, and payable on the Loan Date), “Repayment Costs” (defined as including costs payable by the Lender to its solicitor on repayment of the Loan for preparing any discharge of security and withdrawal of caveat, and payable on the Loan Repayment Date), and “Enforcement Costs” (defined as all costs, charges and expenses reasonably and properly incurred by the Lender in connection with the enforcement of the Loan Agreement or any variation or extension of it, on a full indemnity basis, and payable on demand).

  1. Pursuant to clause 9, the Guarantors unconditionally and irrevocably guarantee to the Lender the due and punctual observance and performance by the Borrower of its obligations under the Loan Agreement, and indemnify the Lender against all loss relating directly or indirectly to any failure by the Borrower to pay any monies in relation to the Loan Agreement or to comply with its obligations under the Loan Agreement, and all loss directly or indirectly related to the Loan Agreement becoming void, voidable or otherwise unenforceable in accordance with its terms.

  2. A further Loan Agreement was executed on 8 March 2021. The parties to that agreement, and the terms of that agreement, are the same as the Loan Agreement dated 2 March 2021, except that clause 1 of the Loan Agreement executed on 8 March 2021 provides for the Lender to advance the Loan Amount of $100,000 on the Loan Date “to Guarantor’s bank account” by paying that sum to a specified bank account of Ms Cheung, rather than to “Borrower’s bank account”.

  3. Ms Lian gave evidence under cross-examination that she questioned Ms Cheung at the time about why the Loan Amount was to be paid into an account in her personal name. Ms Cheung told Ms Lian that the defendant company did not have a bank account. Ms Lian asked DGI Lawyers about this, and they had advised her that it was “not an issue”.

  4. I accept Ms Lian’s evidence that Ms Cheung told her at the time the Loan Agreement was entered into, and before Ms Lian caused the plaintiff to pay the Loan Amount into the account specified in clause 1(a) of the Loan Agreement, that the defendant did not have a bank account at that time. I find that the defendant did not in fact have a bank account that time, as Mr Maindonald acknowledged in cross-examination.

  5. I also accept Ms Lian’s evidence that DGI Lawyers told her that payment of the Loan Amount into the nominated account in the name of Ms Cheung was “not an issue”. That is consistent with the inherent probabilities that arise from DGI Lawyers’ role in acting for both the plaintiff and the defendant in relation to the transaction. [2] It is inherently probable that DGI Lawyers would not have drafted Ms Cheung’s bank account details into clause 1(a) of the Loan Agreement if they had seen any problem from the perspective of either of their clients with the plaintiff paying the Loan Amount into that account.

    2. See [23] above.

  6. The Mortgage Deed on which the plaintiff relies is also dated 8 March 2021. The named parties to the Mortgage Deed are the plaintiff (as “Lender”) and the defendant (as “Borrower”).

  7. The Recitals to the Mortgage Deed record that:

“A.   The Borrower has or will have legal title of the property described in the Schedule to this deed.

B.   The Borrower wishes to borrow money described in this deed and have [sic] made an application to the Lender for such loan as described below.

C.   The Lender has agreed to lend money to the Borrower upon the terms and security for repayment as set out in this deed and a loan agreement made contemporaneously with this deed.

D.   The parties wish that the terms of their agreement as to loan and security for repayment be recorded in writing.”

  1. The property described in the Schedule to the Mortgage Deed is the property at 54 Charles Street, Warners Bay, which I refer to as the Property in these reasons.

  2. Clause 1 of the Mortgage Deed provides:

“1.   The Debt: The Borrower declares and acknowledges receipt from the Lender of all monies lent to them by the Lender under this deed from time to time and in the future. A statement in writing from time to time signed by the Lender shall be conclusive proof and prima facie evidence of the amount outstanding and due from the Borrower.”

  1. Clause 2 provides:

“2.   Payments: The loan amount, interest rate and terms of the loan and the Borrower’s liability for repayment are set out in the loan agreement executed by the parties and the terms of that agreement apply to this mortgage as if incorporated in it.”

  1. Clause 3 records that the Borrower is, or will be, the registered proprietor of the Property, which it owns free and clear of all encumbrances except as stated in the Schedule. The encumbrances stated in the Schedule to the Mortgage Deed are a registered first mortgage to AMAL Trustees Pty Ltd securing approximately $720,000, an equitable mortgage to Emjim Pty Ltd securing approximately $50,000, and an equitable mortgage to Mr Timothy Henry securing approximately $100,000.

  2. Clause 3 of the Mortgage Deed then provides that:

“The Borrower hereby pledges and mortgage [sic] the Property and their interests in it to the Lender as security for repayment of the debt upon the terms set out in this deed. In addition, the Borrower agrees as follows:

(a)    If the Lender exercises any rights under this deed, the Borrower will immediately upon demand by the Lender deliver up the Property to the Lender, and in addition to any other remedies available to the Lender of any kind whatsoever, either:

[i]   Execute a registered mortgage in favour of the Lender in the Lender’s standard form for the Lender to register on the title to the Properties [sic] incorporating the terms of this deed including but not limited to the Debt noted above, or

[ii]   Sell the Property and apply the proceeds thereof to repay the Debt in full or as much of the Debt as can be repaid to the Lender from the proceeds, or

[iii]   Both of the above;

…”

  1. Clause 6(e) of the Mortgage Deed provides:

“The Borrower hereby grants the Lender a caveatable interest in the Property acknowledging now that the Lender may register a caveat, subject to the terms of the loan agreement, or other charge at will and no objection or demand for withdrawal or removal of such caveat or charge shall be made by the Borrower in respect thereof and the legal costs and expenses of the Lender associated with the lodging of the caveat or charge and of its removal (upon repayment of all monies due to the Lender by the Borrower) shall be paid by the Lender and the cost shall form part of and be added to the amount of the Debt.”

  1. The execution pages of the Loan Agreements dated 2 March 2021 and 8 March 2021 each state that the document is executed by the defendant in accordance with s 127 of the Corporations Act 2001 (Cth). Signatures that appear on the face of each document to be the signatures of Ms Cheung and Mr Quirk as directors of the defendant, respectively, appear immediately below that statement. Each document also bears signatures attributed to Ms Cheung and Mr Quirk in their personal capacity. Ms Ada Chueng appears to have witnessed Ms Anita Cheung’s signature in her personal capacity. Mr Maindonald appears to have witnessed the signature of Mr Quirk in his personal capacity.

  2. The parties conducted these proceedings on the basis that the Loan Agreement dated 2 March 2021 was superseded by the Loan Agreement dated 8 March 2021, subject to the defendant’s contentions that it did not enter into either of those agreements. In these reasons, all references to the “Loan Agreement” henceforth are references to the Loan Agreement dated 8 March 2021, unless otherwise specified.

  3. The execution page of the Mortgage Deed states that it is executed by the defendant in accordance with s 127 of the Corporations Act 2001 (Cth). Signatures that appear to be the signatures of Ms Cheung and Mr Quirk as directors of the defendant appear immediately below that statement.

  4. According to the ASIC extract, Ms Cheung and Mr Quirk were the only directors of the defendant as at 2 March 2021 and 8 March 2021.

  5. Ms Lian did not conduct a search of the ASIC register to ascertain the identity of the directors of the defendant before executing the Loan Agreements on 2 March and 8 March 2021 and the Mortgage Deed on 8 March 2021. Ms Lian considered that DGI Lawyers would attend to that as part of their usual practice, and she assumed that they had done so.

  6. For the reasons explained at [7]-[20] above, the defendant has not established that Ms Cheung and Mr Quirk were not duly appointed directors of the defendant at the time the Loan Agreement and Mortgage Deed were executed.

  7. The defendant did not adduce any evidence from Mr Quirk, or any expert evidence, in support of its contention that the Loan Agreement and Mortgage Deed were not signed by Mr Quirk as a director. The defendant relied on: (1) a visual comparison between the appearance of Mr Quirk’s signatures on the Loan Agreement and Mortgage Deed and Mr Quirk’s signatures on the contract for the purchase of the Property; (2) evidence given by Mr Maindonald asserting that he is familiar with Mr Quirk’s signature and he does not recognise the signatures on the Loan Agreement and Mortgage Deed as Mr Quirk’s signatures; and (3) Mr Maindonald’s evidence that he did not sign the Loan Agreement as witness to Mr Quirk’s signature as guarantor.

  8. To my untrained eye, there appear to be some differences between Mr Quirk’s signatures on the Loan Agreement and Mortgage Deed and his signatures on the contract for the purchase of the Property. However, in the absence of a large sample of signatures of Mr Quirk the authenticity of which is proven or not in dispute, the nature and extent of those observable differences is not sufficient to support a finding on the balance of probabilities that Mr Quirk did not sign the Loan Agreement as a director of the defendant and as guarantor, and that he did not sign the Mortgage Deed as a director of the defendant.

  9. In view of Mr Maindonald’s false evidence concerning Mr Quirk to which I refer below, [3] I do not regard his asserted ability to recognise Mr Quirk’s signature as credible.

    3. See [114] below.

  10. There are marked differences between the signature above Mr Maindonald’s name as witness to Mr Quirk’s signature on the Loan Agreement and Mr Maindonald’s authentic signatures on the contract for the purchase of the Property. [4] Mr Maindonald’s authentic signature has a “C” before the name “Maindonald” that is missing from the signature on the Loan Agreement. Several letters in the name “Maindonald” are formed differently in the authentic signatures compared to the signature on the Loan Agreement. The nature and extent of those differences support a finding that Mr Maindonald did not witness Mr Quirk’s signature on the Loan Agreement. Although that raises questions about whether Mr Quirk signed the Loan Agreement as a director of the defendant and as guarantor, and about whether he signed the Mortgage Deed bearing the same date as a director of the defendant, I do not feel actual persuasion that he did not do so, in the absence of evidence from Mr Quirk himself. [5]

    4. See [13]-[16] above.

    5. GLJ v Trustees of Roman Catholic Church for Diocese of Lismore (2023) 280 CLR 442; [2023] HCA 32 at [60] (Kiefel CJ, Gageler and Jagot JJ).

  11. Mr Quirk is a witness who would be expected to be called by the defendant, as the party alleging that he did not sign those documents, rather than by the plaintiff. The defendant’s failure to call Mr Quirk was not explained by any coherent evidence. When questioned about any steps that he had taken, and further steps that it would have been open to him to take, in order to contact Mr Quirk and call him as a witness in these proceedings, Mr Maindonald belligerently argued with the cross-examiner and sought to question him about why the plaintiff had not called Mr Quirk. I am not persuaded by Mr Maindonald’s evidence that the defendant was unable to call Mr Quirk, and I accept the plaintiff’s submission that the defendant’s failure to call him gives rise to an inference that any evidence that Mr Quirk could have given about the signatures appearing on the Loan Agreement and the Mortgage Deed would not have assisted the defendant. [6] I draw that inference.

    6. Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8; Jagatramka v Wollongong Coal Limited [2021] NSWCA 61 at [49] (Bathurst CJ, Bell P and White JA).

Deed of Priority

  1. On 1 March 2021 – one day prior to the execution of the Loan Agreement dated 2 March 2021 – the plaintiff had executed a Deed of Priority.

  2. The named parties to the Deed of Priority were the defendant (as “Borrower”), Emjim Pty Ltd (as “First Lender”), Mr Timothy Henry (as “Second Lender”), and the plaintiff (as “Third Lender”).

  3. By clause 1 of the Deed of Priority, the First, Second and Third Lenders acknowledged and accepted that the defendant would execute and register against the title to the Property a first mortgage in favour of AMAL Trustees Pty Ltd securing repayment of a loan of $720,000 (defined as the “Mortgagee” and the “Mortgage Loan Amount” respectively).

  4. Clause 2 recorded the amounts of the loans made by each of the First Lender ($50,000), the Second Lender ($100,000) and the Third Lender ($100,000).

  5. By clause 3, each of the First, Second and Third Lenders consented to the creation of an equitable mortgage in favour of each of the other Lenders, and consented to each other Lender registering a caveat against the title to the Property.

  6. By clauses 4 and 5, the Lenders agreed that the Mortgagee has priority over them until the Mortgage Loan Amount has been repaid, and that the First, Second and Third Lenders would have equal priority between themselves.

  7. The Deed of Priority appears to have been executed by each of the three Lenders, and by the defendant. The execution page states that it is executed by the defendant in accordance with s 127 of the Corporations Act. Signatures that appear to be the signatures of Ms Cheung and Mr Quirk as directors of the defendant appear immediately below that statement.

  8. The plaintiff does not sue on the Deed of Priority. I mention it only because Ms Lian was cross-examined about the fact that she had not made inquiries about who the other two Lenders were. Ms Lian gave evidence to the effect that she had not seen any need to do so because DGI Lawyers advised that the Deed of Priority was favourable to the plaintiff. That is plainly the case, as it confers on the plaintiff equal priority with the two earlier Lenders. In closing submissions, counsel for the defendant sought to make something of the fact that Ms Lian had not made inquiries about the other Lenders, but counsel failed to articulate any reason why Ms Lian needed to know anything other than that they were prior equitable mortgagees (as recorded in clause 3 and the Schedule to the Mortgage Deed) and the amount of the loans secured by their mortgages (as recorded in clause 2 of the Deed of Priority).

Payment of the Loan Amount to Ms Cheung’s account

  1. The plaintiff’s ledger and banking transaction records, together with bank statements for Ms Cheung’s bank account nominated in clause 1(a) of the Loan Agreement, establish that the plaintiff paid the Loan Amount into that account in several instalments between 10 March 2021 and 16 March 2021.

  2. Ms Lian gave evidence under cross-examination that she was not concerned at the time to make sure that the defendant was in fact going to receive the funds that she paid into Ms Cheung’s bank account, because she trusted Ms Cheung, who was an experienced accountant like Ms Lian, and because she believed that DGI Lawyers were good lawyers acting in the interests of both parties. I have accepted Ms Lian’s evidence that DGI Lawyers advised her that it was “not an issue” that the defendant did not have its own bank account. [7] Ms Lian held no concern that Ms Cheung might fail to “credit the money to” the defendant. I accept Ms Lian’s denial of the proposition put to her in cross-examination that she did not care one way or the other. That proposition that Ms Lian was content to cause the plaintiff to loan $100,000 without caring one way or the other whether the loan funds were received by the borrower is implausible, in the context of this arm’s length transaction and in the absence of any evidence suggesting that Ms Lian or the plaintiff would have stood to gain anything from such alleged reckless behaviour.

    7. See [38] above.

  3. The nomination of Ms Cheung’s personal bank account in clause 1(a) of the Loan Agreement is explained by the undisputed fact that the defendant did not have its own bank account at the time.

  4. The bank statements for Ms Cheung’s account that were tendered in evidence record numerous transactions that are described in terms which indicate that they were made for the benefit or on behalf of the defendant in connection with the development of the Property. For example, the sum of $14,000 was transferred from Ms Cheung’s account to the account of Kathryn O’Sullivan, the solicitor who acted for the defendant in connection with its purchase of the Property, on 18 September 2020. This transaction, made prior to the incorporation of the defendant, was described as “Warners Bay Deposit”. A BPAY payment made out of Ms Cheung’s account on 28 January 2021 in the sum of $959.74 is described in the bank statement as “Warners Bay Insura”. A withdrawal of $160,000 from Ms Cheung’s account on 3 February 2021, shortly before settlement of the defendant’s purchase of the Property, corresponds with an entry on the same date in Ms O’Sullivan’s trust account ledger for that matter described as a “deposit from Anita”. A payment made from Ms Cheung’s account on 8 March 2021 in the sum of $6,904.11 is described in the bank statement as “ASEJ Business Solutions Pty Ltd 1 Charles Warners Bay Interest”. I reject the submission made on behalf of the defendant that an adverse inference arises from the plaintiff’s failure to call Ms O’Sullivan to give evidence about the entries in her trust ledger. There was no call for any explanation of that business record.

  5. Those examples suffice to demonstrate that, at the time the plaintiff advanced the Loan Amount to the defendant by depositing it into Ms Cheung’s account nominated in clause 1(a) of the Loan Agreement, Ms Cheung was operating her account to conduct the defendant’s business, amongst other purposes. Large volumes of bank statements from Ms Cheung’s account were tendered in evidence. The defendant made scant reference to them, and did not produce any analysis of the statements supporting its assertion that the funds advanced by the plaintiff were not applied for the benefit of the defendant.

  6. As the plaintiff submitted, the defendant’s theory that Ms Cheung nominated her personal account for payment of the Loan Amount in order to defraud the company of the benefit of the loan which she personally guaranteed the defendant’s obligation to repay, is implausible.

  7. For those reasons, the defendant has failed to establish that Ms Cheung caused the Loan Amount to be paid into her account because she had orchestrated the loan transaction for her personal benefit.

Mr Quirk ceases to be a director of the defendant

  1. According to the ASIC extract, Mr Quirk ceased to be a director of the defendant on 18 March 2022.

  2. Mr Maindonald was appointed as a director on the same day that Mr Quirk was removed or resigned, but Mr Maindonald ceased to be a director on 15 April 2022. The evidence does not disclose the reasons for the short duration of Mr Maindonald’s appointment as a director at that time.

  3. Ms Cheung was the sole director of the defendant from 15 April 2022 until 23 October 2023.

Amendment to Loan Agreement

  1. The defendant did not repay the Loan Amount by the Loan Repayment Date of 5 March 2023.

  2. A document entitled “Amendment to Loan Agreement” was executed on 19 June 2023 (the Loan Amendment). The named parties to the Loan Amendment are the plaintiff (as “Lender”), the defendant (as “Borrower”), and Ms Cheung.

  3. Clauses 1 and 2 of the Loan Amendment provide that the parties agree to amend the Loan Agreement by increasing the Loan Amount to $136,000 (being the principal of $100,000 plus accrued interest) and by extending the Loan Repayment Date by nine months to 4 December 2023.

  4. Clauses 3 and 4 of the Loan Amendment provide that the interest rate remains 18% per annum, and that interest accrues daily on the Loan Amount of $136,000 until the Loan Repayment Date.

  1. Clause 5 of the Loan Amendment refers to the removal of Mr Quirk as a director of the defendant, and records the parties’ agreement that Mr Quirk is released as a Guarantor under the Loan Agreement.

  2. Clause 6 of the Loan Amendment provides that all of the terms and conditions of the Loan Agreement otherwise remain unchanged and in full force and effect.

  3. Clause 7 of the Loan Amendment provides:

“By executing this Amendment, the Guarantor hereby acknowledges, consents and agrees that all of its obligations and liabilities under the Loan Agreement remain in full force and effect, and that the execution and delivery of this Amendment and any and all documents executed in connection herewith shall not alter, amend, reduce or modify its obligations and liability under the terms of the guarantee as specified in the Loan Agreement.”

  1. The execution page of the Loan Amendment states that it is executed by the defendant in accordance with s 127 of the Corporations Act. The electronic signature of Ms Cheung as director and company secretary of the defendant appears immediately below that statement. Ms Cheung has separately affixed her electronic signature to the Loan Amendment in her personal capacity. Ms Ada Cheung has affixed her electronic signature as witness to Ms Anita Cheung’s execution of the Loan Amendment in her personal capacity.

  2. Ms Cheung was the sole director of the defendant as at 19 June 2023, as I have already mentioned.

  3. Ms Lian gave evidence that Ms Cheung explained to her before the Loan Amendment was executed that Mr Quirk was no longer a director of the defendant, and therefore could not sign the Loan Amendment. Ms Lian checked this with Assure Lawyers, who confirmed that this was correct. Ms Lian did not conduct a search of the ASIC register to ascertain the identity of the directors of the defendant, or make any other inquiries in respect of the defendant to verify that Ms Cheung was its sole director, before executing the Loan Amendment on 19 June 2023. Again, Ms Lian considered that this was for Assure Lawyers to do.

Changes in the directorship of the defendant and the death of Ms Anita Cheung

  1. According to the ASIC extract, Mr Maindonald, Ms Ada Cheung and Ms Cora Cheung were appointed as directors of the defendant on 23 October 2023. Ms Anita Cheung remained a director.

  2. Ms Anita Cheung passed away on 16 November 2023.

  3. The appointments of Ms Ada Cheung and Ms Cora Cheung were of short duration. Ms Cora Cheung ceased to be a director on 7 December 2023 and Ms Ada Cheung ceased to be a director on 22 December 2023.

  4. According to the ASIC extract, Mr Maindonald has been the sole director and secretary of the defendant since 22 December 2023.

The Loan Amount is not repaid

  1. The Loan Amount was not repaid by the extended Loan Repayment Date on 4 December 2023.

  2. Ms Lian sent an email to Ms Cheung asking about payment, but she received no reply. Ms Lian then telephoned Ms Cheung’s mobile phone, and Mr Maindonald answered the call. He informed Ms Lian that Ms Cheung had passed away.

  3. On 13 December 2023, the plaintiff’s solicitors issued a notice to the defendant and to the executors of Ms Cheung’s estate pursuant to clause 4(b) of the Loan Agreement on behalf of the plaintiff, referring to the Loan Agreement dated 8 March 2021 and the Amendment to Loan Agreement dated 19 June 2023 (the Notice).

  4. The Notice stated:

“Pursuant to the Loan Agreement, inter alia:

1.    our client advanced the sum of $100,000.00 to you (Loan Amount) on or around 4 March 2021.

2.    the Loan Amount was repayable with interest at the rate of 18.00% per annum, by the Loan Repayment Date, being 4 March 2023.

3.    the Loan Amount was personally guaranteed [sic] Mei Ling Anita Cheung and Rick Paul Quirk.

Pursuant to the Amended Loan Agreement, the Loan Agreement was amended in the following respects:

1.   the Loan Amount was amended to $136,000.00.

2.   the Loan Repayment Date was amended to 4 December 2023.

3.   Rick Paul Quirk was released as a Guarantor under the Loan Agreement.

We are instructed that you are presently in default of the terms of the Loan Agreement and Amended Loan Agreement by failing to pay the sum of $154,510.90 by 4 December 2023, which amount presently remains due and owing along with interest subsequently accrued.

As at the date of this letter, the sum of $156,136.62 is presently owing to our client. This amount is comprised as follows:

Loan amount

$136,000.00

Interest from 4 March 2023 – 13 December 2023

$19,114.52

Enforcement costs

$1,022.10

TOTAL

$156,136.62

Interest will continue to accrue on the Loan Amount at the rate of $67.07 per day.

This letter is notice pursuant to clause 4(b) of the Loan Agreement that our client requires you to remedy the default within 21 days hereof.

Our client requires full payment of $156,136.62 plus any additional interest accruing up to and including the date of full payment.

If the default is not remedied within the above timeframe, we will seek instructions to commence proceedings for the above amount plus interest at 18.00% per annum and costs on an indemnity basis, pursuant to clauses 7(b) and 9(c) of the Loan Agreement.

In the interim, we have been instructed to register a caveat on the title of [the Property].

…”

  1. Mr Maindonald responded to the Notice on behalf of the defendant by writing to the plaintiff’s solicitors in the following terms on 18 December 2023:

“… I am writing to bring to your attention a matter of utmost importance pertaining to the financial transactions involving Charles Warners Bay Pty Ltd and its former accountant, Mei Ling Anita Cheung.

Enclosed herewith is the Statutory Declaration (Stat Dec) that meticulously illustrates the alleged fraudulent replication of my signature by Ms. Cheung. A comparative analysis between my authentic signature and the one present on the documents submitted by your client reveals unmistakeable discrepancies. Furthermore, Warners Bay did not establish a trust account until after Ms. Cheung’s passing, raising concerns as the funds in question were purportedly directed to her personal account as shown in the documents provided by your client. This is evidenced by the attached bank statement of Charles Warners Bay Pty Ltd trust.

As the original director of Charles Warners Bay Pty Ltd, I wish to emphasise that Ms Cheung, who served as our accountant, possessed access to the ASIC platform. Regrettably, after her passing I discovered irregularities indicating that she had, without my consent as the legal Director and Shareholder, temporarily conferred upon herself exclusive Director and Shareholder rights. This modification appears to have been undertaken with the apparent motive of accessing funds under the pretext of utilising them for development, an action that transpired unbeknownst to me and without my approval.

It is imperative to note that the funds in question were directed to Mei Ling Anita Cheung’s personal bank account, and there exists no substantiation supporting their utilisation for the purported development purposes. Consequently, I propose a prudent course of action, suggesting legal recourse against the estate of the late Mei Ling Anita Cheung or the legal representative responsible for drafting the loan agreement, which facilitated the direction of the funds to be transferred into her personal account.

To reiterate, I, Craig Maindonald, as director of Charles Warners Bay Pty Ltd do not take responsibility for the actions of the late Mei Ling Anita Cheung in the case of Ivy Lian Pty Ltd ATF Ivy Lian Superannuation Fund in question.”

  1. Mr Maindonald’s letter enclosed a statutory declaration made by him on 18 December 2023 in the following terms (spelling and grammatical errors in the original):

“On three separate loan agreements. My signature as witness and as director of the company was copied fraudulently. I can confirm I was not present when signing these loan agreements nor did I agree, as director to be an gaurentour to these loans against Charles St Warner Bay Pty LTD.

Additionally I can confirm that Ricky Qurk’s signiture on the documents is not that of his, and has also been fraudulently copied. As the director of the company, to my knowledge, Mei ling Anita cheung had unlawfully and without my concent agreed to these loans and had used the funds from each loan as a personal liability.”

  1. Mr Maindonald’s claim to be the “original director” or “the legal Director and Shareholder” of the defendant, and his allegation that Ms Cheung had “conferred upon herself exclusive Director and Shareholder rights” without his consent, are contrary to my findings at [20] above.

  2. It appears from Mr Maindonald’s statutory declaration enclosed with his 18 December 2023 letter that he misread the Loan Agreement and other documents that he refers to as bearing his signature as a director of the defendant and as imposing personal liability on him as a guarantor.

  3. On 16 January 2024, the plaintiff lodged caveat ATXXXXX X claiming a charge over the Property pursuant to the charging clause in the Loan Agreement.

  4. The alleged default was not remedied within 21 days of the Notice.

  5. Ms Lian met with Mr Maindonald at his request on about 15 March 2024. A woman whose name Ms Lian cannot recall attended the meeting together with Mr Maindonald. Ms Lian agreed under cross-examination that Mr Maindonald told her at this meeting that he did not sign the Loan Agreement as witness to Mr Quirk’s signature as guarantor.

  6. According to Ms Lian’s evidence, Mr Maindonald telephoned her on 26 March 2024 and conveyed two alternative offers to her to resolve the matter and to have the plaintiff’s caveat withdrawn.

  7. On 26 March 2024, Ms Lian sent an email to Mr Maindonald stating (emphasis in original):

“Following our telephone conversation today, I wish to clarify the two loan repayment options we discussed concerning the Wyner Bay [sic] project:

1.    Repayment of the Principal Amount: This entails repaying only the principal amount upon the project’s completion, with a suggested timeline of 2 years. However, the rationale behind this duration is uncertain due to pending city council approvals.

2.    Application of the Loan Towards Property Purchase: This option involves using the loan amount including the accumulated interest (approximately $160,000) to purchase an apartment within the Wyner Bay [sic] Project. The pricing for a 2-bedroom unit is $925,000, and $1.15 million for a 3-bedroom unit.

Considering these points, I have decided to request the repayment of my loan before April 30, 2024.

To facilitate this process and avoid further costs and inconvenience for both parties, I am prepared to accept a payment of $130,000 in full and final settlement of this matter, provided the payment is made before April 30, 2024. We will write off the $30,000 if repayment is completed within this timeframe.

Please note, this offer is valid until 4pm on April 15, 2024.”

  1. Mr Maindonald replied by email on 2 April 2024, stating:

“I note your decision and accept that we will repay you $130,000.00 in full to settle this matter. Please allow an extension of 1 week as I am awaiting one of my properties to settle on the 1st of May 2024. This will allow me to pay you in full.

With your approval I request the new date of payment to be due by the 7th of May 2024.

Please let me know if you approve.”

  1. Ms Lian responded on 3 April 2024, confirming her approval of Mr Maindonald’s requested extension and nominating the bank account into which the agreed sum of $130,000 should be paid by 7 May 2024.

  2. I will adopt the parties’ convention of referring to the agreement made through the correspondence referred to at [102]-[104] above as the Repayment Agreement.

  3. On 2 May 2024, solicitors acting for the defendant wrote to the plaintiff’s solicitors in response to the Notice. The letter stated that Ms Cheung “was never authorised to become a Director and to enter into the Loan Agreement”, that Mr Maindonald denied having witnessed Mr Quirk’s signature on the Loan Agreement as Guarantor, that Mr Maindonald denied that Mr Quirk had signed the Loan Agreement as a director of the defendant and as Guarantor, and that Mr Maindonald had spoken to Ms Ada Cheung who had denied witnessing Ms Anita Cheung’s signature on the Loan Agreement as Guarantor. The letter stated that the defendant denied the validity of the Loan Agreement and the Loan Amendment, and demanded that the plaintiff withdraw its caveat.

  4. The defendant did not adduce any evidence from Ms Ada Cheung in these proceedings.

  5. On the morning of 3 May 2024, Ms Lian sent an email to Mr Maindonald reminding him that the plaintiff’s “loan payment offer” would expire on 7 May 2024 if payment was not received by that date. Ms Lian advised that she would forward the matter to her solicitor for further action if payment was not received by that date.

  6. Mr Maindonald replied by email that same morning, stating (spelling and grammatical errors in the original):

“I have taken it to my lawyers I never loan the money from you Anita did

You have no case this property was mine not Anita’s you put the money into her personal account your money never went to warners bay

You got ripped off by Anita just like 50 other people I have 32 witness including Anita sister

I have instructed my lawyer to take your caveat off which he has written to your lawyers yesterday

As I said before I never signed that loan agreement

And if you hold this project up anymore I will sue you personal

You need to go after Anita estate

I have told my lawyer throw everything at it Supreme Court is where we will end up

And it’s going to cost you a lot of money in lawyers fees

I have had already 3 people attack the company and losted

Good luck see you in court”

  1. Ms Lian responded to Mr Maindonald’s email on the afternoon of 3 May 2024, stating:

“Noted with this.

I will forward this to my solicitor.”

  1. The defendant caused a lapsing notice to be issued in respect of the plaintiff’s caveat. The lapsing notice was served on the plaintiff on 29 July 2024. These proceedings were commenced by summons on 7 August 2024. On 12 August 2024, this Court made orders extending the operation of the plaintiff’s caveat until further order.

  2. In his affidavit sworn on 21 February 2025, Mr Maindonald gave evidence that, at the date of the Repayment Agreement, he had not been “fully aware of the extent of Anita’s apparent fraud” perpetrated on the plaintiff and the defendant. Mr Maindonald explained under cross-examination that he meant by this that he had not formed the view that Mr Quirk had not signed the Loan Agreement before Mr Maindonald agreed that the defendant would pay $130,000 to the plaintiff in full and final settlement of the loan. Mr Maindonald gave evidence under cross-examination that he had not been able to contact Mr Quirk prior to the Repayment Agreement to ask him whether he had signed the Loan Agreement, and that he has in fact never contacted Mr Quirk to ask him that question or spoken to Mr Quirk about that matter. Mr Maindonald nevertheless asserted that he knows the signatures on the Loan Agreement that appear to have been made by Mr Quirk are not Mr Quirk’s signatures because he is familiar with Mr Quirk’s signature and he does not recognise the signatures on the Loan Agreement as Mr Quirk’s signatures, and because, contrary to what appears on the face of the Loan Agreement, Mr Maindonald did not witness Mr Quirk’s signature as guarantor.

  3. Mr Maindonald’s evidence that he had not formed the opinion prior to 2 April 2024 that Mr Quirk had not signed the Loan Agreement is contradicted by Mr Maindonald’s own statutory declaration made on 18 December 2023 in which he declared: “I can confirm that Ricky Qurk’s [sic] signature on the document is not that of his and has also been fraudulently copied”. [8]

    8. See [95] above.

  4. Mr Maindonald’s evidence given under cross-examination that he had not contacted Mr Quirk to ask him whether he had signed the Loan Agreement is contrary to paragraph 50 of his affidavit sworn on 21 February 2025, in which he deposed: “I have made enquiries of Rick Paul Quirk … Quirk has advised me that he did not sign the Loan Agreement”. Mr Maindonald was cross-examined about this paragraph. Notwithstanding his earlier evidence under cross-examination that he had never contacted or spoken to Mr Quirk about that matter, Mr Maindonald denied that paragraph 50 of his affidavit was false, saying that “it might be a mistake”, and endeavouring to re-direct the questioning by offering a series of non-responsive answers asserting that the signature appearing on the Loan Agreement is not Mr Quirk’s signature. Mr Maindonald denied that he was endeavouring to avoid answering the question about the falsity of paragraph 50 of his affidavit. It was my impression based on his demeanour, tone of voice and the substance of his responses at the time that he was endeavouring to do exactly that. I find that Mr Maindonald gave false evidence in paragraph 50 of his affidavit sworn on 21 February 2025. Mr Maindonald agreed at the commencement of his cross-examination that he had read his affidavit carefully to ensure that it was correct before he swore it. The notion that Mr Maindonald, knowing that he had not made contact with or spoken to Mr Quirk at all about his signatures on the Loan Agreement and Mortgage Deed, might have mistakenly thought that Mr Quirk had told him that he did not sign those documents, is absurd. I find that Mr Maindonald suggested in cross-examination that he might have been mistaken in his affidavit in order to evade giving a truthful answering admitting that paragraph 50 of the affidavit was false. I reject the submissions made by counsel for the defendant that Mr Maindonald’s evidence in paragraph 50 of his affidavit was not false but merely “an incorrect statement [that] should not have been given in the affidavit”.

Overview of the parties’ claims and defences

  1. The plaintiff sues to enforce the Loan Agreement (as amended by the Loan Amendment) and Mortgage Deed. The plaintiff claims:

  1. a declaration that the plaintiff has an equitable interest in the Property;

  2. a declaration that the plaintiff has a caveatable interest in the Property;

  3. judgment in the sum of $136,000, or such other amount as the Court finds representative of the plaintiff’s losses flowing from the defendant’s failure to repay the Loan by the amended Loan Repayment Date of 4 December 2023;

  4. interest on that amount, at the contractually agreed rate of 18% per annum, or otherwise pursuant to s 100 of the Civil Procedure Act 2005; and

  5. costs on the contractually agreed indemnity basis.

  1. The plaintiff claims to have been entitled to make the assumptions in s 129(2) and s 129(5) of the Corporations Act in relation to each of the Loan Agreement, the Mortgage Deed and the Loan Amendment.

  2. If the Court upholds the defendant’s contention that it did not enter into the Loan Agreement, Mortgage Deed, and Loan Amendment, the plaintiff presses its alternative claim for damages for Mr Maindonald’s alleged repudiation of the Repayment Agreement by his 3 May 2024 email referred to at [109] above, which the plaintiff contends it accepted by Ms Lian’s email in response referred to at [110] above.

  3. The plaintiff’s other pleaded claims for relief were not mentioned in its submissions, and so are taken to have been abandoned.

  4. The defendant denies having entered into the Loan Agreement and the Mortgage Deed on 8 March 2021. The pleaded bases of that denial are that:

  1. although those documents appear to have been signed by Ms Cheung as a director of the defendant, she was not duly appointed as a director;

  2. the documents were not signed by Mr Quirk, and Mr Quirk was not a director of the defendant; and

  3. although the ASIC extract identified Ms Cheung and Mr Quirk as the directors of the defendant as at 8 March 2001, this had been “effected by Cheung fraudulently and without authority of the company”.

  1. By the time the defendant served Mr Maindonald’s affidavit sworn on 21 February 2025, it had abandoned its contention that Mr Quirk had not been duly appointed as a director as at the date of the Loan Agreement and Mortgage Deed.

  2. The defendant contends that the plaintiff was not entitled to make the assumptions in ss 129(2) and (5) of the Corporations Act that Ms Cheung was a duly appointed director of the defendant, that she had authority to cause the defendant to enter into the Loan Agreement and the Mortgage Deed, and that the Loan Agreement and Mortgage Deed were duly executed by the defendant, because the plaintiff was “on notice that the Loan Agreement was not for the benefit of the defendant by virtue of the fact that payment of the loan amount was to be made to Cheung’s personal bank account pursuant to clause 1 of the Loan Agreement” and the plaintiff was therefore also “on notice that the Loan Agreement and Mortgage Agreement were for the personal benefit of Cheung rather than the company”.

  3. The defendant denies having entered into the Loan Amendment on 19 June 2023. The pleaded bases of that denial are that:

  1. although ASIC recorded Ms Cheung as the director of the defendant as at 19 June 2023, this had been “effected by Cheung fraudulently and without authority of the company” and she was not a director of the defendant;

  2. although the Loan Amendment appears to have been signed by Ms Cheung, it was not signed by her as a director of the defendant.

  1. The defendant contends that the plaintiff was not entitled to make the assumption in s 129(2) of the Corporations Act that Ms Cheung was a duly appointed director of the defendant, and that she had authority to cause the defendant to enter into the Loan Amendment. The defendant pleads that the plaintiff was “on notice that the assumption was incorrect and that the loan transactions had been orchestrated by Cheung for her personal benefit”.

  2. The defendant contends that the plaintiff was not entitled to make the assumption in s 129(5) of the Corporations Act and that the Loan Amendment was duly executed by the defendant.

  3. The defendant admits that it has not repaid the alleged Loan, but denies that it is obliged to do so on the basis that it denies having entered into the Loan Agreement, Mortgage Deed and Loan Amendment, and it denies having received the benefit of the funds advanced, which it says Ms Cheung directed into her personal account for her own personal benefit.

  4. In opening submissions, the defendant sought to raise an unpleaded contention that, if it is held to have entered into the Loan Agreement, Mortgage Deed and Loan Amendment, the interest rate of 18% per annum is a penalty and should therefore not be enforced by the Court.

  5. In relation to the plaintiff’s alternative claim relying on the Repayment Agreement, the defendant denies that it entered into the Repayment Agreement, and further denies that any such agreement was repudiated by the defendant and that any such repudiation was accepted by the plaintiff.

Consideration and determination

The statutory assumptions

  1. Sections 128 and 129 of the Corporations Act relevantly provide:

128    Entitlement to make assumptions

(1) A person is entitled to make the assumptions in section 129 in relation to dealings with a company. The company is not entitled to assert in proceedings in relation to the dealings that any of the assumptions are incorrect.

…

(3)   The assumptions may be made even if an officer or agent of the company acts fraudulently, or forges a document, in connection with the dealings.    

(4) A person is not entitled to make an assumption in section 129 if at the time of the dealings they knew or suspected that the assumption was incorrect.

129 Assumptions that can be made under section 128

…

(2)   Director or company secretary A person may assume that anyone who appears, from information provided by the company that is available to the public from ASIC, to be a director or company secretary of the company:

(a)   has been duly appointed; and

(b)   has authority to exercise the powers and perform the duties customarily exercised or performed by a director or company secretary of a similar company.

…

(5)   Document duly executed without seal A person may assume that a document has been duly executed by the company if the document appears to have been signed in accordance with subsection 127(1). For the purposes of making the assumption, a person may also assume that, if any person who signs the document states next to their signature that:

(a)   they are a director of the company – that is the case; …”

  1. It is well-established that the reference in s 128(4) to knowledge or suspicion requires actual knowledge or actual suspicion at the time of the relevant dealing that the assumptions were incorrect. [9]

    9. City Garden Australia Pty Ltd (in liq) v Meng Dai (2024) 115 NSWLR 468; [2024] NSWCA 238 (City Garden) at [47] (Basten AJA, Kirk and Stern JJA agreeing).

  2. Actual suspicion requires more than a mere idle wondering whether the assumption is correct. A positive feeling of actual apprehension or mistrust, amounting to a slight opinion that the assumption is incorrect albeit without sufficient evidence that it is incorrect, is required. [10] I reject the defendant’s submission that “notice” – knowledge of circumstances which are such as to put the person relying on the assumptions on inquiry [11] – suffices for the purpose of s 128(4). [12] Notice will not suffice unless, in all the circumstances of the particular case, the failure to make the inquiries supports an inference of actual knowledge or actual suspicion.

    10. Ibid.

    11. Baden v Société Générale pour Favoriser le Développement du Commerce et de l'Industrie en France SA [1992] All ER 161; [1993] 1 WLR 509 at 575-576, 582 (Peter Gibson J).

    12. Cf Companies (New South Wales) Code s 68A(4): see Story v Advance Bank Australia Ltd (1993) 31 NSWLR 722.

  3. The party challenging the entitlement to rely on the relevant assumption in s 129 of the Corporations Act bears the onus of proving that the person relying on the assumption had actual knowledge or suspicion at the time of the dealing in question that the assumption was incorrect. [13]

    13. Soyfer v Earlmaze Pty Ltd [2000] NSWSC 1068 at [70] (Hodgson CJ in Eq).

The defendant has not discharged its onus of proof

  1. As the plaintiff submitted, and as I have explained at [115]-[125] above, the defendant’s pleaded case is the plaintiff was on notice that the assumptions in s 129(2) and s 129(5) were incorrect because it was on notice that the transaction was for the personal benefit of Ms Cheung rather than for the benefit of the defendant by reason of the fact that Ms Cheung nominated her personal bank account as the account into which the Loan Amount was to be paid. That is the sole pleaded circumstance that is alleged to have put the plaintiff on notice that the assumptions in s 129(2) and s 129(5) were incorrect.

  2. It is not in dispute that Ms Cheung nominated her personal bank account in clause 1(a) of the Loan Agreement as the bank account into which the Loan Amount was to be paid by the plaintiff, and that the Loan Amount was in fact paid into that account. However, for the reasons explained at [38]-[40] and [68]-[74] above, the defendant has failed to establish that the transaction was for the benefit of Ms Cheung rather than for the benefit of the defendant. It follows that no question arises about actual knowledge or actual suspicion of that matter, or about actual knowledge or actual suspicion that Ms Cheung was not a duly appointed director of the defendant and/or that the Loan Agreement, Mortgage Deed, and/or Loan Amendment had not been duly executed by the defendant. The defendant has failed to prove those alleged facts.

  3. The basis of the defendant’s contention that Ms Cheung was not a duly appointed director of the defendant is the defendant’s allegation that Ms Cheung fraudulently obtained her appointment as a director of the defendant. The defendant failed to prove that allegation for the reasons explained at [7]-[20] above.

  4. The bases of the defendant’s contention that the Loan Agreement, Mortgage Deed and Loan Amendment were not duly executed by the defendant are the unproved allegation referred to immediately above, and the defendant’s allegations that Mr Quirk did not sign the Loan Agreement and the Mortgage Deed as a director of the defendant.

  5. For the reasons explained at [54]-[58] above, the defendant has failed to prove that Mr Quirk did not sign the Loan Agreement or the Mortgage Deed as a director of the defendant. Mr Quirk had ceased to be a director of the defendant by the time the Loan Amendment was executed. As the plaintiff submitted, the defendant’s execution of the Loan Amendment, by which it agreed that the terms of the Loan Agreement were of full force and effect subject to the increase in the Loan Amount, the extension of the Loan Repayment Date and the release of Mr Quirk as a guarantor, renders irrelevant the question whether Mr Quirk signed the Loan Agreement as a director of the defendant.

  6. In opening submissions, the defendant purported to expand its pleaded case by relying on certain parts of Mr Maindonald’s affidavit sworn on 21 February 2025 and a further affidavit that he swore on 23 June 2025 as comprising facts, matters and circumstances establishing that the plaintiff was “on notice that the transactions were affected by irregularities”. Most of those parts of Mr Maindonald’s affidavit were inadmissible and were rejected. The parts that remained added nothing to the substance of the defendant’s pleaded case. I declined to grant leave to the defendant to read Mr Maindonald’s 23 June 2025 affidavit which had been served exceedingly late and contrary to the orders made by the Court for the filing and service of evidence. The defendant had adduced no evidence explaining the delay, which would have been unfairly prejudicial to the plaintiff if the affidavit had been permitted to be read. Much of it was inadmissible in any event. Thus, the defendant’s first attempt to expand its case informally without seeking leave to amend failed for lack of evidence.

  7. The second attempt was made in closing submissions, when the defendant submitted that the Court should infer from seven matters that Ms Lian, whose state of mind was attributable to the plaintiff, had an actual suspicion that “there was an irregularity or lack of authority”, but preferred not to make inquiries to find out if that suspicion was correct. The seven matters can be disposed of briefly as follows:

  1. Ms Lian’s failure to personally conduct an ASIC search to ascertain the identity of the directors of the defendant. In my opinion, it was entirely reasonable for Ms Lian to rely on DGI Lawyers to carry out that check: see [52] above;

  2. Ms Lian’s failure to make inquiries about the other Lenders who were parties to the Deed of Priority and to question the priorities provided for in that deed. In my opinion, Ms Lian had no cause to do so: see [67] above;

  3. the lack of evidence that Ms Lian made any inquiry of DGI Lawyers about the identity of the directors or shareholders of the defendant. The defendant did not articulate what inquiries should have been made or why: see (1) above;

  4. Ms Lian’s failure to make inquiries of Mr Quirk. The defendant did not articulate what inquiries should have been made or why. See (1) above;

  5. the nomination of Ms Cheung’s personal bank account in clause 1(a) of the Loan Agreement and Ms Lian’s conduct in causing the plaintiff to pay the Loan Amount into that account. I have addressed this at [36]-[39] above.

  6. Ms Lian’s failure to obtain a receipt from the defendant for payment of the Loan Amount. I consider that this is unremarkable in circumstances where the plaintiff had a Loan Agreement that appeared to have been duly executed by the defendant and the plaintiff had its own banking records evidencing the payment of the Loan Amount to the account stipulated in that agreement; and

  7. counsel for the defendant described the seventh matter as Ms Lian’s lack of concern about Mr Quirk being removed as a guarantor by the Loan Amendment without it being made unequivocally clear who the substitute or surviving guarantor was going to be. It was clear from the Loan Amendment that Mr Quirk was being released with the consent of all parties, including Ms Cheung who continued as the sole guarantor and whose obligations survived as expressly provided for in clause 7 of the Loan Amendment: see [76]-[82] above.

  1. Those seven matters, separately and together, do not support the inference for which the defendant contended that the plaintiff had an actual suspicion that “there was an irregularity or lack of authority”, but preferred not to find out. For all of the reasons that I have already explained, the defendant failed to establish any “irregularity” or “lack or authority” relevant to the s 129(2) and s 129(5) assumptions in any event.

  2. In summary, the defendant has failed to prove that the plaintiff had actual knowledge or actual suspicion, at the times that it entered into the Loan Agreement, the Mortgage Deed and the Loan Amendment, that Ms Cheung was not a duly appointed director of the defendant and/or that those documents had not been duly executed by the defendant. Section 128(1) of the Corporations Act precludes the defendant from asserting those matters contrary to the assumptions in s 129(2) and s 129(5) in these proceedings. The defendant has failed to prove the matters that it wishes to assert in any event. For those reasons, the defendant has failed to establish that it did not enter into the Loan Agreement, the Mortgage Deed and the Loan Amendment.

  3. The defendant’s failed contention that it did not enter into the Loan Agreement, the Mortgage Deed and the Loan Amendment was the sole basis on which the defendant resisted the plaintiff’s claims for relief. The defendant effectively abandoned in closing submissions its unpleaded claim that the contractual interest rate of 18% per annum was a penalty. In any event, the defendant had failed to adduce any evidence of interest rates charged by non-bank lenders in the market for loans for projects of this nature, and the plaintiff had not had occasion to do so because the defendant had not pleaded the issue.

The Repayment Agreement

  1. As the plaintiff has succeeded in its primary claims for relief, it is not necessary to address its alternative claim for damages for repudiation of the Repayment Agreement.

Costs

  1. The costs of the proceedings should follow the event, and the plaintiff is entitled under the Loan Agreement to have its costs paid by the defendant on an indemnity basis. [14]

    14. See [35] above.

Conclusion and orders

  1. For all of the foregoing reasons, the declarations and orders of the Court are as follows:

  1. Declare that the plaintiff has an equitable interest in the defendant’s property at 54 Charles Street, Warners Bay, New South Wales (folio identifier X/XXXXX XX) (the Property) by reason of:

  1. a charge granted by the defendant pursuant to clause 3(a) of a Loan Agreement dated 8 March 2021 between inter alia the plaintiff (as lender) and the defendant (as borrower), as amended by an Amendment to Loan Agreement dated 19 June 2023 between inter alia the plaintiff (as lender) and the defendant (as borrower), securing repayment of the Loan Amount, Interest and Other Monies payable by the defendant under the Loan Agreement as amended by the Amendment to Loan Agreement; and

  2. a mortgage granted by the defendant to the plaintiff in respect of the Property pursuant to clause 3 of a Deed dated 8 March 2021 between the plaintiff (as lender) and the defendant (as borrower) as security for repayment of the debt referred to in order 1(a) above.

  1. Note that the interest referred to in order 1(a) above is the subject of caveat ATXXXXX X lodged by the plaintiff against the title to the Property on or about 16 January 2024.

  2. Judgment against the defendant in favour of the plaintiff in the sum of $136,000, plus interest on that amount accruing daily at the rate of 18% per annum from 5 March 2023.

  3. Order that the defendant is to pay the plaintiff’s costs of the proceedings on an indemnity basis in such amount as may be agreed or assessed.

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Endnotes

Decision last updated: 10 October 2025

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