When you receive a contract signed by the director and secretary
of a company, is the contract validly executed when it is later
revealed that one of the signatures was forged? This was the
question Australia and New Zealand Banking Group Ltd v Frenmast
Pty Ltd before the NSW Court of Appeal in the case .
ANZ had provided facilities to Frenmast, one of a group of
companies involved in a manufacturing business carried on by three
brothers. ANZ also obtained a guarantee from Frenmast for the loans
it made to one of the other companies and to one of the brothers,
The guarantee was purportedly executed by Frenmast, containing
the signatures of Robert Tiricovski, a director and the company
secretary, and Vlado Tiricovski, a director, in line with s
127(1)(a) or (b) of the Corporations Act 2001 (the Act).
Vlado's signature was revealed to have been forged.
ANZ argued that, despite the forgery, it could rely on the
guarantee as, due to ss 128 and 129(5) of the Act, it was entitled
to 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). Importantly, s 128 allows a person to make those
assumptions "even if an officer or agent of the company acts
fraudulently, or forges a document, in connection with the
The case looked at two key issues regarding the dealing,
were there dealings concerning the guarantee between ANZ and
were the dealings required to be with someone having actual or
ostensible authority to enter into the guarantee.
Were there dealings concerning the guarantee between ANZ and
The Court noted that ANZ had sent letters of offer to Robert to
vary the existing facilities and for a new guarantee from the
company. The letters included acknowledgements and a guarantee to
be signed by the company. These were signed by Robert and contained
Vlado's forged signature. Robert returned them to the ANZ,
purporting to act on Frenmast's behalf.
The Court of Appeal held that these communications were
sufficient dealings concerning the guarantee, as they were dealings
between ANZ and Robert, as a director of Frenmast who purported to
act on the company's behalf, involving the taking of the
Were the dealings required to be with someone having actual or
ostensible authority to enter into the guarantee?
The next question was whether Robert had actual or ostensible
authority to conduct communications on behalf of Frenmast. The
Court noted that Frenmast had allowed Robert to undertake
negotiations with ANZ on similar matters over several years and, as
a result, this had created actual or ostensible authority for
Robert to be the point of communication between ANZ and the
company. This was enough for ANZ to be entitled to assume that the
guarantee was validly executed under s 129 of the Act.
What this means for agencies
While the Court permitted ANZ to rely on the assumptions in s
129 of the Act in this case, a number of questions remain about the
scope of the operation of the section.
In particular, it is unclear what history of dealing is required
to constitute a "dealing", which is needed before the
section can be relied on. For example, what would happen in
circumstances where a third party is seeking to rely on the
statutory assumptions in relation to a document, and there have
been no other dealings?
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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