Irac problem solving

Duncan and his wife Erina were very enthusiastic about sailing. They decided to launch a business for distributing and selling yachting clothing and equipment in Perth. To operate the business, they established a company Seagull Pty Ltd (Seagull) in 2016. Duncan and Erina are the only shareholders and directors of the company, Duncan holding 60% and Erina 40% of the total shares of the company. In the first directors' meeting, Duncan and Erina were appointed as managing director and company secretary respectively. Apart from a warehouse and attached shop, Seagull owns a large waterfront mansion where the directors live. The constitution of Seagull provides the following provisions: (a) According to art 37, Mr Fred Johnson (solicitor) will act as company solicitor. (b) According to art 57, a member of the Company who is entitled to attend and cast a vote at a meeting of the Company's Members may appoint a person (whether or not a member of the Company) as - (i) proxy, (b) an attorney, or iii) a representative, (iv) of the Member to attend and vote for the Member at the meeting. (c) According to art 40, a resolution must be passed in the board for borrowing funds for the company. Soon after launching, the business flourished rapidly, and the annual turnover of the business stood at $5 million in 2019. However, the relationship between Duncan and Erina had been deteriorating since 2016, and they finally divorced at the beginning of 2020. After the divorce, Erina continued to live at the waterfront mansion and was not involved in the day-to-day operations of the company's business. Duncan lived in a hotel with his son, Mike, and continued running the business as director of Seagull for a while, but then decided to resign from his positions and move to Switzerland with his son Mike. In mid-July 2020, Erina, having found out about Duncan's resignation and move to Switzerland, returned to Seagull from her seclusion and resumed her duties as Director of the company. About two weeks after resuming her duties, Erina received a letter from ABC Finance Led (ABC Finance) dated 02 August 2020 about a default on a loan payment. When Erina inquired into the matter, she came to know that Duncan, without telling her (his then wife) or the company board, borrowed $1.5 million from ABC Finance in April 2020. The loan was secured by a first mortgage over Seagull's waterfront mansion currently occupied by Erina. Duncan told the manager of ABC Finance, Julia, that Seagull needed to borrow $1.5 million to fund its expansion to the eastern states. It already had a large overdraft and had no unencumbered assets to use as security for another loan. Julia agreed to organise a loan of $1.5 million to Seagull on the basis that Seagull would guarantee the loan by executing a mortgage over its waterfront mansion. Duncan signed the mortgage documents as a director of Seagull and forged Erina's signature as the other signatory. However, contrary to art 40 of the company's constitution, board approval was not obtained for the mortgage. Duncan transferred the $1.5 million to his personal account and disappeared with Mike to Switzerland. Erina informs ABC Finance that Seagull is not bound by the mortgage as it was executed through fraudulent means. She further claims that in executing the mortgage, article 40 of the constitution of Seagull Pty Ltd which requires approval of the board before borrowing any money was not complied with. On 05 August 2020, Erina received a letter from Mr Fred Johnson claiming that according to art 37 of the Constitution he should be appointed as company solicitor. He will take legal action unless he is appointed as company solicitor within two weeks of the receipt of the letter. Erina called an extra ordinary general meeting of the company to be held on 02 September 2020 to discuss the ongoing happenings and take appropriate action. When he received the notice for the meeting, Duncan appointed his brother Fred as proxy to attend the meeting and vote on his behalf. Erina does not want to allow Fred to attend the meeting as Duncan's proxy. Also, she is strongly against Fred's appointment as Seagull's company solicitor. Erina seeks your advice: a) whether Seagull is bound by the mortgage with ABC Finance; b) whether Seagull is bound to allow Fred as Duncan's proxy to attend and vote in the meeting; and c) whether Seagull is bound to appoint Mr Fred Johnson as company solicitor. Fully justify your answer, citing the relevant provisions of the Corporations Act 2001 (Cth) and case laws in authority. (Please note that you are not required to discuss "the duties of officers and directors" for this question.) ASSIGNMENT INSTRUCTIONS 1. Type: The online assignment is a problem-solving type and students are required to follow IRAC format (Issue-Rule-Application-Conclusion) for this