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Recent Case Regarding Indefeasibility of Title and Fraud

In the recent High Court decision of Cassegrain v Gerard Cassegrain & Co Pty Ltd [2015] HCA 2, the High Court of Australia was asked to consider whether a wife’s interest in a property as joint tenants with her husband was able to be protected notwithstanding her husband’s fraud.

The company, Gerard Cassegrain & Co Pty Ltd, owned a dairy farm in New South Wales. The Husband, in his capacity as director of the company, transferred title of the land to both himself and his wife as joint tenants in common. The husband later transferred his interest in the property to his wife for $1.

An Application was brought by the company against the husband and wife in the New South Wales Supreme Court seeking that the property be transferred back to the company due to fraudulent actions of the husband. The trial judge ordered that the husband pay compensation to the company, but dismissed the proceedings against the wife as she herself was not a knowing party to the fraud.

The New South Wales Court of Appeal allowed the company’s appeal and concluded that the husband had acted as the wife’s agent in the transfer of the property. The Court therefore held that both the husband and wife’s interest in the land could be defeated as a result of the husband’s fraud.

The Wife appealed this decision to the High Court of Australia. The majority held that the wife was a “passive recipient” of the interest in the property and that committing fraud was not within the scope of any authority the wife had conferred on the husband. As a result of this finding it therefore followed that the wife could not be held accountable for any fraudulent behaviour of her husband.

The Court however held that the wife was not a bona fide purchaser of the husband’s share in the property which was transferred to her for $1. It therefore ordered that the company may recover a half interest in the land.

By Nicholes Family Lawyers

 

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