ON 4 FEBRUARY 2015, the High Court of Australia delivered Cassegrain v Gerard Cassegrain & Co Pty Ltd  HCA 2 (4 February 2015).
Felicity Cassegrain and her husband Claude Cassegrain received an interest as joint tenants in land owned by Gerard Cassegrain & Co Pty Ltd. The transfer of the interest was found to be fraudulent on the part of Claude because he nominated the consideration for the transaction to be the debiting of his loan account when he knew that the company did not owe him the money. Gerard subsequently transferred his interest in the land to Felicity for nominal consideration. There was no allegation of Felicity being involved in any fraud.
Proceedings were brought in the NSW Supreme Court to transfer Felicity’s title back to the company because of the fraud. The trial judge concluded that Claude had acted fraudulently and ordered that he pay the company equitable compensation, but dismissed the proceedings against Felicity as there was no fraud by her.
The NSW Court of Appeal allowed the company’s appeal of the NSW Supreme Court decision, concluding that Claude was Felicity’s agent.
The High Court allowed in part Felicity’s appeal of the Court of Appeal decision. The High Court held that Felicity’s title in joint tenancy was not defeated by fraud under s42 of the Real Property Act 1900 (NSW) because Claude acted outside the scope of the authority given to him by her and was therefore not her agent.
The High Court also held that Felicity was not a bona fide purchaser on the transfer of Claude’s interest to her and declared and ordered that the company may recover a half interest in the land as tenant in common by the operation of s118(1)(d)(ii) of the Real Property Act.
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