Case Study on BNZ Bank and Director's Duties

Running Head: CASE STUDY
CASE STUDY
Name of the Student
Name of the University
Author’s Note

CASE STUDY1
Issue:
The first issue in the case is whether BNZ Bank can enforce its mortgage over the
building.
Rules:
Section 129 of the Corporation act deals with the Assumptions that can be made under
section 128 of the Act. This states that the assumption should be relied upon the situation that
states that the company’s constitution or any other provision of this Act are replaceable if such
replacement has been complied with the Director or the Company Secretary. Such director
should have been duly appointed and has the authority to exercise the powers and the duties that
has been bestowed upon to the director of the company. The same should be assumed by the
person at the time of assuming about the replacement. The Act states that it should be assumed
that the directors of the company are assumed to have discharged their duties with proper care
and skill. Such person with the authority shall warrant that the document is true and fair to its
copy by the means of the authority bestowed upon such person to certify that such document is
true and fair.
Section 127 of the Corporation Act deals with the execution of the documents by the
company itself. This means that the document can be executed by the company without the
establishment of a common seal upon certain grounds (D’Angelo 2015). Such grounds include
the signature of a minimum of the two directors of the company or the signatory of a director and
a company secretary of the company. However, if the company is that of a sole proprietorship,
such execution can be done by the sole signatory of the director of the company. These rules

CASE STUDY2
establish the reliance of people upon section 128 (5) of the Act. However if a company with a
common seal executes a document, such company is entitled to undergo the similar requirements
for execution as that explained earlier. However, here the difference lies in the establishment of
the reliance of the people upon then assumptions explained in section 129 (6) of the Act.
Nevertheless, the section or the provision of law does not restrict the ways by which a company
can execute the documents and the assumptions relied upon for such dealings. In Knight Frank
Australia Pty Ltd vs. Paley Properties Pty ltd [2014] SASCFC 103, it has been held by the
court that while signing the section 127 clause, it was held that the dire tor did not qualify as the
agent for the company. This was so because such director signed the document as an incomplete
due to absence of the signatory of the second director or the Company Secretary. As explained in
CCI Holdings Ltd [2007] FCA 1283, it can be explained that the debate is ongoing about the
coverage of the split execution.
Section 128 of the Corporations Act deals with the entitlements to make assumptions. It
has been explained in the provision that a person can make assumptions with respect to the
dealings with a company. Further the provision also lays down that the person can make dealings
with another person who has established the impression of directly or indirectly acquire the title
to the property from any company. Furthermore, such assumptions can also be made if a member
or the agent of the company acts fraudulently with respect to any matter of the company
including forging a document with respect to such dealings. However, dealings and further
proceedings with respect to such contractual dealings cannot be made based upon the incorrect
assumptions. Therefore, it is important for the assumptions to be correct and accurate. Lastly, it
has been explained that the person cannot make an assumption if at the time of the deal or
contractual formality, the person knew that such assumption is incorrect. This means that the