This court case, Ivy Lian Pty Ltd as trustee for Ivy Lian Superannuation Fund v Charles Warners Bay Pty Ltd, heard in the Supreme Court of New South Wales on 10 October 2025, revolved around a loan of $136,000 made by Ivy Lian Pty Ltd (as trustee for a superannuation fund) to Charles Warners Bay Pty Ltd. The plaintiff, Ivy Lian, claimed the loan was secured by the defendant’s property. The defendant, Charles Warners Bay, denied entering into the loan agreement, arguing that a director who signed the documents was not properly appointed and that another signature was forged. The court had to decide whether the plaintiff could rely on certain assumptions under the Corporations Act 2001, which allow parties to assume company documents are properly signed and directors are duly appointed, unless they knew or suspected otherwise.
Key Details of the Case
- Case Name: Ivy Lian Pty Ltd as trustee for Ivy Lian Superannuation Fund v Charles Warners Bay Pty Ltd
- Court: Supreme Court of New South Wales
- Case Number: 2024/289891
- Date of Decision: 10 October 2025
- Parties:
- Plaintiff: Ivy Lian Pty Ltd (as trustee for Ivy Lian Superannuation Fund)
- Defendant: Charles Warners Bay Pty Ltd
- Subject Matter: A loan agreement and a mortgage deed for a property, and whether these documents were validly executed by the defendant company.
- Key Issue: Whether the plaintiff could rely on statutory assumptions under the Corporations Act 2001 (Cth) regarding the appointment and authority of directors and the proper execution of documents, despite the defendant’s claims of fraud and forgery.
- Legislation Involved: Corporations Act 2001 (Cth), particularly sections 127, 128, and 129.
Simple Summary of the Case Judgement
The plaintiff, Ivy Lian Pty Ltd, lent $136,000 to Charles Warners Bay Pty Ltd, claiming it was secured by the defendant’s property. Charles Warners Bay Pty Ltd denied the loan was valid, stating that one of the people who signed the loan and mortgage documents as a director of the company, Ms Anita Cheung, wasn’t properly appointed, and that the other signature, Mr Ricky Quirk’s, was a forgery. They also claimed that the company’s director appointments were fraudulent.
The plaintiff argued they were entitled to assume the documents were validly signed and directors were properly appointed, based on sections 128 and 129 of the Corporations Act 2001. These sections generally allow people dealing with companies to make these assumptions unless they actually knew or suspected they were incorrect. The defendant tried to argue that the plaintiff should have known about the issues because the loan money was to be paid into Ms Cheung’s personal bank account, not the company’s. However, the court found that the defendant failed to prove that Ms Cheung wasn’t a properly appointed director or that the documents weren’t validly signed. The court also found that the defendant’s claims about the plaintiff having knowledge or suspicion of these issues were not proven.
Ultimately, the court ruled in favour of the plaintiff, Ivy Lian Pty Ltd. They declared that the plaintiff had an equitable interest in the defendant’s property due to the loan and mortgage. The court ordered judgment against the defendant for $136,000 plus interest at 18% per annum, and awarded the plaintiff their costs on an indemnity basis. The court rejected the defendant’s arguments about the invalidity of the loan and mortgage documents, finding that the plaintiff was entitled to rely on the statutory assumptions under the Corporations Act.
Q&A
- Q: Is it legal for a company to lend money?
- Q: What are the implications of a director’s appointment being fraudulent?
- Q: Can a company director’s signature be forged on important documents?
- Q: What are the statutory assumptions under the Corporations Act regarding company dealings?
- Q: What does it mean to “know or suspect” an assumption is incorrect?
- Q: Who has the burden of proof when challenging these statutory assumptions?
- Q: What happens if a loan agreement specifies payment into a director’s personal account?
- Q: Can a loan agreement be amended?
- Q: What is an equitable mortgage?
- Q: What is a caveat?
- Q: What does it mean for costs to be awarded on an “indemnity basis”?
- Q: What if a company director dies during legal proceedings?
- Q: Does a company always need its own bank account for transactions?
- Q: What is the role of ASIC in company matters?
- Q: What are the consequences if a company fails to repay a loan?
- Q: What is a guarantor?
A: Yes, it is legal for a company to lend money, provided it is within its corporate powers and properly authorised.
A: A fraudulent appointment can render decisions made by that director invalid. However, third parties who deal with the company in good faith may still be protected by provisions like those in the Corporations Act, assuming the company’s public records (like ASIC) indicated the person was a director.
A: A forged signature on a company document would generally make that document invalid. The court case shows how difficult it can be to prove forgery, especially if the person whose signature was allegedly forged is unavailable to give evidence.
A: Sections 128 and 129 of the Corporations Act 2001 allow people dealing with a company to assume that directors are properly appointed, have authority, and that documents are duly executed, unless they know or suspect otherwise.
A: It means having actual knowledge or a positive apprehension or mistrust that the assumption is false, not just a vague idea or a reason to be put on inquiry.
A: The party challenging the assumptions (in this case, the defendant) has the burden of proving that the other party had actual knowledge or suspicion that the assumptions were incorrect.
A: This can raise red flags. While the court here found it didn’t automatically mean the plaintiff knew or suspected wrongdoing, it’s a situation that could potentially lead to scrutiny, especially if there’s no clear explanation for why the company doesn’t have its own bank account for the transaction.
A: Yes, loan agreements can be amended by mutual agreement of the parties, usually through a formal amendment document that outlines the changes, such as the loan amount or repayment date.
A: An equitable mortgage is a right to security over property that arises in equity, rather than being formally registered. It can be created by a written agreement showing an intention to charge property as security.
A: A caveat is a notice lodged with the land registry that prevents any dealings with a property without the caveator’s consent. It’s often used to protect an unregistered interest, like an equitable mortgage.
A: This is a higher basis for awarding costs, meaning the unsuccessful party has to pay a larger portion of the successful party’s legal costs, typically around 80-90%, compared to a standard “party-party” basis which usually covers around 60-70%.
A: The proceedings may continue against the company, and if the deceased was a director, their estate might be involved if their actions as a director were central to the dispute.
A: While it’s standard practice and highly recommended for transparency, the court acknowledged that in some circumstances, like the defendant’s lack of an account at the time, funds might be temporarily directed elsewhere, though this situation requires careful handling and clear documentation.
A: The Australian Securities and Investments Commission (ASIC) maintains public registers of company information, including directors and shareholders. Information on the ASIC register is generally considered reliable for making assumptions about a company’s structure and directorship.
A: If a company defaults on a loan, the lender can take legal action to recover the debt. If the loan was secured, the lender may be able to enforce the security, such as by taking possession of or selling the secured property.
A: A guarantor is a person or entity that agrees to be responsible for another party’s debt or obligation if the primary party fails to meet it.
You can find more simplified case summaries from New South Wales Supreme Court cases on our website. For the full judgment details of this case, please refer to the original AustLII document.