Cassegrain v Gerard Cassegrain & Co Pty Ltd

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HIGH COURT OF AUSTRALIA

FRENCH CJ,
HAYNE, BELL, GAGELER AND KEANE JJ

FELICITY CASSEGRAIN  APPELLANT

AND

GERARD CASSEGRAIN & CO PTY LTD  RESPONDENT

Cassegrain v Gerard Cassegrain & Co Pty Ltd

[2015] HCA 2

4 February 2015

S141/2014

ORDER

1.Appeal allowed in part.

2.Set aside paragraphs 2 and 3 of the order of the Court of Appeal of the Supreme Court of New South Wales made on 18 December 2013 and, in their place:

(a)declare that the appellant holds a half interest in the property described in Folio Identifiers 4/792413, 1/798316, 115/754434, 124/754434, 2/720827, 117/754434, 118/754434 and 174/754434 on trust for the respondent absolutely; and

(b)order that the appellant execute a Real Property Act 1900 (NSW) transfer of a one-half interest in the property referred to in paragraph (a) to the respondent.

3.The respondent pay the appellant's costs of the appeal to this Court.

On appeal from the Supreme Court of New South Wales

Representation

D F Jackson QC with P J Gormly and L M Jackson for the appellant (instructed by Peter Condon & Associates)

B W Walker SC with G B Colyer for the respondent (instructed by McCabes Lawyers Pty Limited)

Notice:  This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

Real property – Torrens system land – Indefeasibility of title – Respondent company transferred property to appellant and appellant's husband ("Claude") – Claude acted fraudulently in purchasing property – Claude later transferred his interest in property to appellant for nominal consideration – Whether fraud brought home to appellant as registered proprietor or to her agent – Whether Claude appellant's agent – Whether appellant's title defeasible because Claude had acted as appellant's agent – Whether appellant's title defeasible because Claude and appellant were registered as joint tenants – Whether appellant's title defeasible because of Claude's fraud pursuant to s 118(1)(d) of Real Property Act 1900 (NSW).

Words and phrases – "agent", "brought home to the person whose registered title is impeached or to his agents", "fraud", "joint proprietor", "joint tenant", "registered as proprietor of the land through fraud", "through".

Real Property Act 1900 (NSW), ss 42(1), 100(1), 118(1).

FRENCH CJ, HAYNE, BELL AND GAGELER JJ.

The issues

  1. The registered proprietor of Torrens system land, a company, transferred the land to husband and wife as joint tenants for consideration to be satisfied by debiting the husband's loan account with the company.  The husband knew that the company did not owe him the amount recorded in the loan account.  The debit was not recorded in the company's books until after the transfer had been registered.  The husband subsequently transferred his interest in the land to his wife for a nominal consideration.  Is the wife's title, first as joint proprietor with her husband, or second deriving from or through her husband under the subsequent transfer, defeasible by the company? 

  2. The issues are to be resolved by the proper construction and application of the relevant…

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Details
Case
[2015] HCA 2
Decision Date

CaseChat Overview and Summary

The High Court of Australia considered an appeal by Felicity Cassegrain (the appellant) against Gerard Cassegrain & Co Pty Ltd (the respondent). The dispute concerned the indefeasibility of the appellant's title to a farming property, known as the "Dairy Farm," which she held as a joint tenant with her husband, Claude Cassegrain. The respondent, the former registered proprietor, sought to recover title to the Dairy Farm, alleging that the appellant's title was defeasible due to Claude's fraudulent conduct in acquiring the property from the respondent company.

The central legal issues before the High Court were whether the appellant's title as a registered proprietor was indefeasible under the *Real Property Act 1900* (NSW), despite Claude's fraud. Specifically, the court had to determine if Claude's fraud could be attributed to the appellant, either because he acted as her agent or because their registration as joint tenants rendered her title defeasible. The court also considered whether the appellant's subsequent acquisition of Claude's interest in the property, for nominal consideration, affected the indefeasibility of her title.

The High Court reasoned that while Claude's actions in procuring the transfer of the Dairy Farm from the respondent company were fraudulent, this fraud was not "brought home" to the appellant. The court clarified that the indefeasibility provisions of the *Real Property Act* protect a registered proprietor unless the fraud is that of the proprietor whose title is impeached or their agent. Claude was not found to be the appellant's agent in the relevant sense, and the fraud of one joint tenant does not automatically defeat the title of the other joint tenant. However, the court found that the appellant was not a bona fide purchaser for value of Claude's half interest in the property, meaning that this interest could be recovered by the respondent.

Consequently, the High Court allowed the appeal in part. It set aside the orders of the Court of Appeal and declared that the appellant held a half interest in the Dairy Farm on trust for the respondent absolutely. The appellant was ordered to execute a transfer of this half interest to the respondent. Despite the limited success of her appeal, the appellant was awarded her costs of the appeal to the High Court.

Orders

Orders of the court

1. Appeal allowed in part.

2. Set aside paragraphs 2 and 3 of the order of the Court of Appeal of the Supreme Court of New South Wales made on 18 December 2013 and, in their place:

(a) declare that the appellant holds a half interest in the property described in Folio Identifiers 4/792413, 1/798316, 115/754434, 124/754434, 2/720827, 117/754434, 118/754434 and 174/754434 on trust for the respondent absolutely; and

(b) order that the appellant execute a Real Property Act 1900 (NSW) transfer of a one-half interest in the property referred to in paragraph (a) to the respondent.

3. The respondent pay the appellant's costs of the appeal to this Court.

Background

Background to the litigation

As may be expected, the facts which lie behind the issues require some elaboration.The facts The respondent company ("GC&Co") was registered under the RPA as proprietor of an estate in fee simple in land described in a number of Folio Identifiers. The land was referred to in the proceedings as the "Dairy Farm". Transfers of the Dairy Farm were registered, first from GC&Co to Claude Cassegrain and his wife, Felicity, as joint tenants, and second from Claude Cassegrain to Felicity. GC&Co sought to recover title as sole registered proprietor of the Dairy Farm from Felicity (the appellant in this Court). In 1993, GC&Co settled some proceedings it had brought against the Commonwealth Scientific and Industrial Research Organisation ("CSIRO"). In settlement of the claim, CSIRO paid GC&Co $9.5 million. Entries were made in the books of GC&Co to recognise a loan account of $4.25 million on the footing that this part of the money received by GC&Co from CSIRO was owed to Claude Cassegrain, one of the company's two directors. In this Court, it was accepted that Claude Cassegrain was never entitled to any part of the settlement sum and that GC&Co never owed him any part of the amount recorded in the loan account created in the company's books. On 2 September 1996, Claude Cassegrain and his sister, Anne‑Marie Cameron, who were then the directors of GC&Co, resolved to sell the Dairy Farm (and some associated assets) to Claude and Felicity Cassegrain as joint tenants. The directors further resolved, at the same meeting, that GC&Co should "debit the loan account of Claude Cassegrain in the books of the Company for the amount of the consideration payable ... and that the debiting of the ... loan account shall be full satisfaction of the amounts payable to the Company". In February 1997, Claude Cassegrain instructed a solicitor, Mr Chris McCarron, to register "the transfer as exchanged". The transfer was executed, as transferor, by GC&Co under its common seal, attested by its directors (Claude Cassegrain and Anne‑Marie Cameron), and, for Claude and Felicity Cassegrain as transferees, by Mr McCarron as solicitor. There followed some correspondence between Mr McCarron and Claude about the progress of registration. In March 1997, Mr McCarron informed Claude that the transfer had been registered. Although the transfer (dated 14 September 1996) acknowledged receipt of the agreed consideration of $1 million, the books of account of GC&Co recorded that Claude Cassegrain's loan account was debited with that amount on 30 June 1997. In 1996 (exactly when does not appear), four of Claude Cassegrain's siblings (Patrick, John, Denis and Catherine) brought oppression proceedings[1] in the Federal Court of Australia against Claude, Anne‑Marie, their mother, GC&Co, the trustees of the Cassegrain Family Trust and 14 other companies with which members of the family were associated. The plaintiffs alleged that acts by or on behalf of GC&Co (and the other companies) had been oppressive or unfairly prejudicial to them. In July 1998, Davies J declared[2] (among other things) that Claude's conduct in treating the $4.25 million loan account as his entitlement to be drawn down at his will and in drawing upon that account was oppressive and unfairly prejudicial to the members of GC&Co.[1]Under s 260 of the Corporations Law of New South Wales (as set out in s 82 of the Corporations Act 1989 (Cth): Corporations (New South Wales) Act 1990 (NSW), s 7).[2]Cassegrain v Cassegrain [1998] FCA 811.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

FRENCH CJ, HAYNE, BELL AND GAGELER JJ KEANE J (dissent)
Hitherto, Felicity has made no claim for allowances on account of improvements to the land. No evidence was led at trial about improvements. It is now too late for her to make such a claim. The principles discussed and applied in cases like Suttor v Gundowda Pty Ltd[60] and Coulton v Holcombe[61] preclude her from doing so.[60](1950) 81 CLR 418; [1950] HCA 35.[61](1986) 162 CLR 1; [1986] HCA 33.Conclusion and orders Felicity's title as joint tenant was not defeasible on account of Claude's fraud. Claude was not her "agent" in any relevant sense. Nor did it follow from Felicity's registration as joint tenant that her title was defeasible. Section 100(1) does not require that the fraud of one of the persons registered as joint proprietors denies all those persons the protection otherwise given by s 42(1). The fraud must be brought home to the person whose title is impeached. Claude's fraud was not brought home to Felicity. But the interest which Felicity derived from or through Claude (an interest as tenant in common as to half) may be recovered by GC&Co. Felicity was not a bona fide purchaser for value of Claude's interest in the land. For these reasons the appeal to this Court should be allowed and there should be orders in the form proposed by Basten JA in the Court of Appeal and sought in this Court by Felicity Cassegrain if her appeal succeeded to the extent these reasons would allow. Orders 2 and 3 of the Court of Appeal of the Supreme Court of New South Wales made on 18 December 2013 should be set aside and, in their place, there should be (a) a declaration that Felicity Cassegrain holds a half interest in the property described in Folio Identifiers 4/792413, 1/798316, 115/754434, 124/754434, 2/720827, 117/754434, 118/754434 and 174/754434 on trust for Gerard Cassegrain & Co Pty Ltd absolutely; and (b) an order that Felicity Cassegrain execute a Real Property Act transfer of a one‑half interest in the property referred to in par (a) to Gerard Cassegrain & Co Pty Ltd. Although the appellant has had only limited success in her appeal to this Court, she should have her costs of the appeal. The appellant is the registered proprietor of a farming property in New South Wales ("the Dairy Farm") which was previously owned by the respondent. The appellant's title to the Dairy Farm is the subject of the respondent's claim in these proceedings. The appellant's title was acquired through the fraudulent conduct of her husband, Claude Cassegrain ("Claude"), as a director of the respondent. The issue in these proceedings is whether the appellant's title as registered proprietor is indefeasible. The resolution of this issue depends on the operation of the Real Property Act 1900 (NSW) ("the Real Property Act"). Before turning to the relevant provisions of the Real Property Act, and the differing views of the courts below as to their operation in this case, the facts which gave rise to the issue should be briefly summarised.Factual background On 2 September 1996, Claude and Anne‑Marie Cameron, the directors of the respondent at that time, resolved that the respondent should transfer the Dairy Farm to Claude and the appellant as joint tenants for a consideration of $1 million and the performance of some other obligations. The instrument of transfer was executed on 14 September 1996 by the respondent as transferor under its common seal, attested by Claude and Anne‑Marie Cameron, and Mr Chris McCarron as solicitor for Claude and the appellant as transferees[62]. [62]There was no allegation that the $1 million consideration was an undervalue, nor was there any allegation of wrongdoing by Anne‑Marie Cameron or Mr McCarron.

Ratio Decidendi

Legal Principle Established

Established by: FRENCH CJ, HAYNE, BELL AND GAGELER JJ,

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