Zhang v BM Sydney Building Materials Pty Ltd

The appeal concerned a dispute arising from a commercial credit facility and supply agreement between BM Sydney Building Materials Pty Ltd (the respondent) and a company, and a deed of guarantee signed by the appellant, Mr Zhang. The central question was whether these documents created primary liability on the part of the company or guarantor liability on the part of Mr Zhang.

The court was required to determine whether the executed documents were effective to create either primary liability on the company's part or guarantor liability on Mr Zhang's part. Further, the court had to consider whether the execution of the documents by an individual holding the offices of both director and company secretary complied with section 127(1) of the *Corporations Act 2001* (Cth), and whether the respondent was entitled to make the assumption under section 129(5) of the *Corporations Act 2001* (Cth) that the credit facility was duly executed.

The court found that the deed of guarantee was validly executed and enforceable against Mr Zhang. It was held that the principle of *strictissimi juris* was not enlivened in this instance, as the language of the guarantee was clear and unambiguous. The court also determined that the execution of the documents by Mr Zhang, acting in his dual capacity as director and company secretary, complied with section 127(1) of the *Corporations Act 2001* (Cth). Consequently, the respondent was entitled to rely on the assumptions provided by section 129(5) of the *Corporations Act 2001* (Cth) regarding the proper execution of the credit facility.

The appeal was dismissed with costs.