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Cassegrain v Gerard Cassegrain & Co P/L [2015] HCA 2 Facts: Gerard Cassegrain & Co P/L (“Cassegrain”) owned several parcels of land in NSW – dairy farm. Director – Claude Cassegrain. Claude transferred (fraudulently) title of the dairy farm to himself and his wife (Felicity). Felicity was not aware of the fraud. Later, Claude then transferred his interest in the dairy farm to Felicity for $1 (volunteer – love and affection). A shareholder of Cassegrain brought an action on behalf of the company against both Claude and Felicity seeking that the dairy farm be transferred back to Cassegrain because the title was obtained by fraud. Issues on Appeal: Section 42 of the Real Property Act NSW – similar to Victoria’s s42 of the Transfer of Land Act 1958 (Vic) – title paramount barring fraudulent transactions. As Felicity took title without actual knowledge of Claude’s fraud, Cassegrain sought to argue that the fraud of Claude was imputed to Felicity, and thus, title was defeasible. Cassegrain contended that: i.

Claude was Felicity’s agent, and thus, the fraud was “brought home” to Felicity as the principal; or

ii.

The creation of JT had the effect of deeming Claude and Felicity as one person for the purpose of the Act, such that Felicity became “infected” with Claude’s fraud; or

iii.

If fraud could not be imputed to Felicity, Cassegrain was entitled to recover the interest in the dairy farm that Claude transferred to Felicity by reason of s118(d)(ii) of the Real Property Act. Section 118 permits proceedings for the recovery of land in certain limited situations, including where title was acquired without valuable consideration from or through a person who acquired their title by fraud.

Decision: High court rejected the agency argument. Felicity was a “passive recipient” of the JT in the dairy farm, and that committing a fraud to acquire that interest was not within the scope of any authority that Felicity may have conferred on Claude. Felicity’s title was indefeasible on account of her husband’s fraud because it was not proven that he brought home his fraud to her whose title was impeached. However, Cassegrain could still bring proceedings against Felicity under s118 for half of the interest of her husband under the JT. Felicity was not a transferee of interest for valuable consideration and under s118 the respondent could bring recovery proceedings against Felicity who was not a bona fide purchaser for value....