Cassegrain v Gerard Cassegrain & Co Pty Ltd

A majority of the High Court has allowed in part an appeal from the decision of the New South Wales Court of Appeal in Cassegrain, relating to the fraud exception to the indefeasibility of title. In a related judgment, the NSWCA found that Claude Cassegrain, a director of the respondent company, had breached his fiduciary duties to the company by using its loan account to buy a dairy farm for himself. That farm was then transferred to his wife Felicity, and held by them both as registered joint tenants. There was no allegation that Felicity knew of Claude’s fraud in using the loan account to purchase the farm. The NSWCA held that Felicity’s title to the farm was defeasible due to Claude’s fraud, either via Claude acting as her agent, or due to their joint tenancy. The High Court declined to grant special leave in Claude’s appeal, but did hear Felicity’s appeal.

The Court (French CJ, Hayne, Bell and Gageler JJ, Keane J dissenting) partly allowed the appeal, holding that Felicity Cassegrain held a half interest in the property on trust for the respondent company, and ordered that she transfer her half of the property to the company. The majority rejected the argument that Felicity’s title was defeasible due to Claude’s fraud on the basis that in committing the fraud he had not acted as her agent. The lower courts had treated the question of agency as one of fact (at [37]), but the majority of the Court of Appeal had wrongly imputed knowledge of the fraud as part of the agency relationship. The majority stated at [38]: ‘what was seen as a factual inquiry about whether Claude brought about the transfer to Claude and Felicity as joint tenants with her knowledge (but without her knowing of the fraud) was treated as concluding the legal issue presented by s 42(1). But why that step should be taken was not explained. Rather, the word “agent” was used as a statement of conclusion’ (see also at [41]–[42]). Nor was Felicity’s title as joint tenant deemed through s 100(1) defeasible on the basis of her registration as joint tenant: again, absent Claude’s fraud being brought home to her, her registration remained valid ([52]–[55]). However, the interest in the land that Felicity gained from or through Claude could be recovered by the respondent company because Claude had become the registered proprietor through fraud ([60]–[62]). Thus Felicity retained half of her interest, but held the other half (gained from or through Claude) on trust for the respondent. Keane J would have dismissed the appeal, and treated the registration of Felicity and Claude as joint proprietors (and without any separate title being acquired by Felicity) as effecting the deprivation (see at [108]–[110]).

High Court Judgment [2015] HCA 2 4 February 2015
Result Appeal allowed in part
High Court Documents Cassegrain
Full Court Hearing [2014] HCATrans 249 13 November 2014
Special Leave Hearing [2014] HCATrans 138 20 June 2014
Appeal from NSWCA [2013] NSWCA 453 18 December 2013
Trial Judgment, NSWSC
[2011] NSWSC 1156 29 September 2011
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About Martin Clark

Martin Clark is a PhD Candidate and Judge Dame Rosalyn Higgins Scholar at the London School of Economics and Political Science and Research Fellow at Melbourne Law School. He holds honours degrees in law, history and philosophy from the University of Melbourne, and an MPhil in Law from MLS. While at MLS, he worked as a researcher for several senior faculty members, was a 2012 Editor of the Melbourne Journal of International Law, tutor at MLS and various colleges, a Jessie Legatt Scholar, and attended the Center for Transnational Legal Studies Program.

3 thoughts on “Cassegrain v Gerard Cassegrain & Co Pty Ltd

  1. Extremely well written, Mr Clark.

    I found the judgment (but not the decision) of the High Court confusing, and I also found an online summary of the case prepared by a member of a leading firm of solicitors confusing.

  2. The majority [at 53] held that s 100(1) should not be seen as denying the protection to all other joint proprietors when one of them has committed fraud. Isn’t that the risk a person undertakes when she or he chose joint tenancy rather than tenancy in common? If the view of the majority is correct then from the point of view of risk allocation, is there any point left in having the 2 options?

  3. Pingback: A Statutory Exception to Immediate Indefeasibility Explained: Cassegrain v Gerard Cassegrain & Co Pty Ltd | Opinions on High

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