The case illustrates that the indoor management rule under s 18C(1) of the Companies Act 1955 (NZ) does not protect a party dealing with a company where the documents delivered contain strong indications of irregularity in execution, and where the party ought to have investigated the existence of a power of attorney. The proviso requiring knowledge or constructive knowledge applies where the very dealing itself reveals the irregularity. Separately, claims for equitable compensation arising from the operation of a mortgage are discrete from claims challenging the validity of the mortgage, and Anshun estoppel does not bar the later claims where it was reasonable to resolve the validity question first in confined proceedings.
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