Please be aware that this case turns on the provisions of the NSW Real Property Act. Students in other jurisdictions should be cautious using this case in their coursework.
Facts
- Cassegrain Pty Ltd owned a dairy farm property in NSW
- Gerard Cassegrain was one of the directors of the company
- Gerard fraudulently transferred title in the dairy farm to himself and his wife, Felicity, as joint tenants.
- Felicity was unaware of the fraud.
- Later, Gerard transferred his interest in the property to Felicity for $1
Issues
- Was Felicity’s title indefeasible?
- Specifically –
- Was Gerard acting as an agent of Felicity, therefore meaning her title was void for fraud?
- Were Gerard and Felicity, as joint tenants, one legal person, meaning that both of their interests were affected by fraud?
- Was the later interest Gerard transferred to Felicity indefeasible?
Held
- The majority of the High Court (French CJ, Hayne, Bell, Gageler JJ) held that Felicity’s initial joint tenancy interest was indefeasible.
- They rejected the first argument that Gerard was acting as an agent for Felicity, instead calling her a “passive recipient of an interest in land”. [41]
- The fact that Felicity did not know about or agree to the fraud was crucial, with the majority also stating that, on the facts as presented, there was no evidence that fraud was within the scope of any authority that she had given him. Therefore, she had no knowledge or acceptance of the fraud. [42]
- They also rejected the second argument that Gerard and Felicity were “one legal person” and that thus both joint tenants’ interests were defeasible by reason of fraud. The majority refused to hold that any person who is a registered joint proprietor would be deprived of their property interest if another proprietor had committed fraud. Instead, actual fraud must be “brought home” to the party whose title is in question.
- Overall, therefore, the Court held that Felicity’s interest as joint tenant was indefeasible as it did not meet the requirements for the fraud exception.
- However, in respect of the third argument, Cassegrain succeeded as the Court held that because Felicity was not a bona fide purchaser for value (noting that she only paid $1 for the land, and also that Claude’s interest was obtained through fraud), her title to the second ‘half’ of the land was defeasible.
- Therefore, the Court ordered that while Felicity was entitled to the first portion of the land she obtained in the first transfer, she was not entitled to the second.
Full Text
http://eresources.hcourt.gov.au/downloadPdf/2015/HCA/2
-- Download Cassegrain v Gerard Cassegrain Pty Ltd (2015) 316 ALR 111 as PDF --
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