Case Of Northside Developments Pty Ltd

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Introduction

Legal cases of seminal nature do serve the purpose of justice in future contexts. In this respect, it has to be noted that there are several legal cases, the verdicts on which have served as precedents that come to the aide of courts during complicated and complex lawsuits that are ingrained with public interest. Sometimes some legal cases have been considered to be of utmost importance in sustaining the principle of balance of power that must be inculcated to ensure that there are checks and balances in the course of dividing power among the different branches of the government. Then there are legal cases that upholds the power of the populace in a democracy, making it possible for the protectors of democracy (the governments) to understand that they are not above the people and such cases also alarms government officials about the fact that breaching public trust or striving to consider themselves as beyond and above the citizenry can bring about dire consequences from the legal perspectives. Hence, considering the importance of lawsuits and legal cases as sources of information and sources of ensuring justice for all, irrespective of their socio-political status, this report will emphasise the case of Northside Developments Pty Ltd v. Registrar-General and Ors (1990) to demonstrate how it is important to study legal cases to understand the way the legal system works and justice is served.

Case Summary

In favour of Barclays Credit Corporations Holdings (Barclays) the Registrar General registered mortgage over some land and Northside Developments Pty Ltd (Northside) was registered as the proprietor of the land (“Northside Developments Pty Ltd v Registrar-General (1990) 93 ALR 385”, n.d.). Purportedly, the mortgage was considered to be executed by Northside under common seal and Robert Sturgess, one of the directors of Northside, affirmed that he attested the affixed seal and along with him, his son, Gerard Sturgess signed the agreement as the company’s secretary (“Northside Developments Pty Ltd v Registrar-General (1990) 93 ALR 385”, n.d.). The case brought to forefront the issue that the articles of association required either two directors should be present while affixing the seal or a director and a company secretary should be present while affixing the seal, but asl Gerard Sturgess was not actually the secretary of the company, the validity of affixing the seal was doubtful (“Northside Developments Pty Ltd v Registrar-General (1990) 93 ALR 385”, n.d.). The mortgage eventually secured a loan to companies that were owned by Sturgess and it was found that Northside did not have any financial, business or other interests in those companies. Hence, following the default of the mortgage, Barclays sold the land at an auction to a third party and this compelled Northside to sue the Registrar General for causing damage to the company. Northside sued the Registrar General under section 127 of the Real Property Act 1900 (NSW) due to the fact that the Registrar General registered the company’s land to another business entity (“Northside Developments Pty Ltd v Registrar-General (1990) 93 ALR 385”, n.d.). The court ruled that the nature of the mortgage should have compelled the Registrar General to inquire into the whole status of the property, but no such query was raised or no such probing was performed. Against the decision, the Registrar General appealed.

The Issue

The concerned legal case raised a crucial issue. The case questioned the validity of common seal as evidence and also threw new lights on the process of determining if companies like Barclays in a similar situation should put on inquiry or they should rely upon the common seal as evidence of an agreement. The case brought to light an important issue that still continues to plague many legal agreements having dual nature that contribute to their nullification or invalidity.

The Ruling

In Northside Developments Pty Ltd v. Registrar-General and Ors (1990), the High Court referred to the verdict given in Turquand’s case. In this respect, the Hight Court examined some specific factors pertaining to the issues that triggered the lawsuit by Northside against the Registrar General. The High Court referred to Section 68A of the Companies Code (CTH) that codified the common law rule known as the indoor management rule that allows persons contracting with a company and dealing in good faith to embark on certain assumptions in the course of signing and concluding the agreement (De Jonge, 1990). The High Court strived for interpreting the concerned rule in the context of its applicability to the concerned case of Northside Developments Pty Ltd v. Registrar General and Ors (1990).

Justice Mason eventually conveyed his verdict in the following manner:

The affixing of the seal to an instrument makes the instrument that of the company itself; the affixing of the seal is in that sense a corporate at, having effect similar to a signature by an individual …Thus it may be said that a contract executed under the common seal evidences the assent of the corporation itself and such a contract is to be distinguished from one made by a director or officer on behalf of the company, that being a contract made by an agent on behalf of the company as principal (High Court of Australia, 1990).

The High Court ruled that any third party who is dealing with a company is actually not entitled to rely on the affixing of a common seal as evidence of the validity of an instrument whenever the nature of the transaction is considered enough to put the third party on inquiry (“Northside Developments Pty. Ltd. v. Registrar-General & Ors., High Court of Australia (Full Court), 28 June 1990”, n.d.). The Court conveyed the verdict that any person who is dealing with a company can be put on inquiry whenever it is ascertained that the nature of the transaction appears to be thoroughly unrelated to the purpose of the transaction and to the business of the company and whenever it is found that the company is not going to gain any benefit from the transaction. Moreover, the Court also held that there was actually no representation from the directors before whom the seals should have been affixed under their authority to approval and hence, the transaction has been found to be completed without actual or apparent authority of Northside. The High Court finally held that the execution of the mortgage was invalid as it lacked proper representation primarily during the process of affixing of a common seal and as the transaction was actually of no interest for Northside (“Northside Developments Pty. Ltd. v. Registrar-General & Ors., High Court of Australia (Full Court), 28 June 1990”, n.d.).

Conclusion

Considering the importance of lawsuits and legal cases as sources of information and sources of ensuring justice for all, irrespective of their socio-political status, this report emphasized the case of Northside Developments Pty Ltd v. Registrar-General and Ors (1990) to demonstrate how it is important to study legal cases to understand the way the legal system works and justice is served. It was found that the case effectively questioned the validity of common seal as evidence and also threw new lights on the process of determining if companies like Barclays in a similar situation should put on inquiry or they should rely upon the common seal as evidence of an agreement.

References

De Jonge, A. (1990). Northside Developments Pty Ltd v Registrar General of NSW and Ors. Informit. https://search.informit.org/doi/abs/10.3316/agispt.19911571

High Court of Australia. (1990). NORTHSIDE DEVELOPMENTS PTY. LTD. v. REGISTRAR-GENERAL (1990) 170 CLR 146. https://jade.io/article/67573

Northside Developments Pty Ltd v Registrar-General (1990) 93 ALR 385. (n.d.). https://lawcasesummaries.com/knowledge-base/northside-developments-pty-ltd-v-registrar-general-1990-93-alr-385/#:~:text=Northside%20sued%20the%20Registrar%20General,The%20Registrar%20General%20aappeale.

Northside Developments Pty. Ltd. v. Registrar-General & Ors., High Court of Australia (Full Court), 28 June 1990. (n.d.). https://iknow.cch.com.au/document/atagUio384868sl10516585/northside-developments-pty-ltd-v-registrar-general-ors