Anil, along with his wife, Billy, and family friend, Charlie, started a property development business in 2015. The main activities of the business are to purchase land and develop buildings, and sell these to clients, especially ‘mum and dad’ investors. The business is conducted through a corporate structure called Vision Property Investments Pty Ltd (“Vision”). Anil, Billy, and Charlie are the only shareholders and directors of the company. Anil is a director and secretary, Billy is a director, and Charlie is a director and solicitor of the company.

The constitution of “Vision” nominates that Charlie will be the solicitor for any land purchases or sales made by the company. The articles also provide that any disputes which may arise between the company and its members should be first referred to an arbitrator before there are any court proceedings.

In 2020, Anil and Billy met another solicitor, Doug, who they believed to be more efficient than Charlie and they appointed him (Doug) as solicitor for “Vision”. Since then, Charlie has brought legal action against “Vision” over the matter.

In January 2021, Billy went to the bank NBC Bank Ltd (“NBC”) where “Vision” holds its accounts and she told the bank manager that the company needs to borrow $900,000 for purchasing new land. The bank manager agreed to this, on condition that the bank take security over the major asset of the company, which is the building from which “Vision” operates and in which Anil and Billy live. However, Billy intends to use the money to run away with Evan, who she has recently met at a corporate event. Anil has no knowledge of her (Billy) activity. Billy obtained the loan and mortgage documents from the bank. She (Billy) affixed the common seal of “Vision” and forged her husband’s signature as secretary. The bank advanced the money and Billy absconded with it to Switzerland.

In this circumstances Anil, on behalf of “Vision, seeks your advice:

1. Is “Vision” liable under the loan contract and mortgage with the NBC Bank Ltd?
2. Is Charlie entitled to challenge the Board’s decision to remove Charlie from the position of company solicitor and the appointment of Doug, as company solicitor?

Fully justify your answer, citing the relevant provisions of the Corporations Act 2001 (Cth) and case laws in authority.

Answer rating: 100% (QA)

Answer Yes Vision liable under the loan contract and mortgage with the NBC Bank Ltd Yes Charlie is entitled to challenge the Boards decision to remove ... View the full answer