By Anthony Lo Surdo SC and Jocelyn Williams -
Snapshot
- The High Court in Cassegrain v Gerard Cassegrain & Co Pty Ltd [2015] HCA 2 has affirmed the circumstances in which the ‘fraud’ exception to indefeasibility of title operates.
- The court held, by majority, that the appellant’s title to land as a joint tenant was not defeasible on account of her husband’s fraud, who was also a joint tenant, as that fraud could not be sheeted home to her at the time of registration of the land.
- However, the court found that when the husband, some years later, transferred to her his share in the land for nominal consideration, then that part of the land was defeasible and could be recovered by the respondent, as the appellant was not a transferee bona fide for valuable consideration.
Section 42(1) of the Real Property Act, 1900 (NSW) (RPA) relevantly provides that the registered proprietor of any estate or interest in land recorded in the folio of the Register of Land Titles (the Register) shall, except in the case of fraud, hold that interest subject to any other estate or interest in land recorded in that folio but free from all other estates and interests not so registered.
‘Fraud’ has a distinct meaning in the legislation. It has been often referred to as ‘statutory fraud’ to differentiate it from the common law concept of fraud. ‘Statutory fraud’ is not confined to deceit or fraudulent misrepresentation but is narrower than equitable fraud where dishonesty in the sense of moral turpitude is an essential element (see, for example, Bahr v Nicolay (No 2) (1988) 164 CLR 604).
In Cassegrain v Gerard Cassegrain & Co Pty Ltd [2015] HCA 2 (4 February 2015) the High Court by majority, allowed in part an appeal from a decision of the Court of Appeal of the Supreme Court of New South Wales.
The majority (French CJ, Hayne, Bell and Gageler JJ) held that the appellant’s title to land as a joint tenant was not defeasible on account of her husband’s fraud, who was also a joint tenant, as that fraud could not be sheeted home to her at the time of registration of the land. However, the Court found that when the husband, some years later, transferred to her his share in the land for nominal consideration, then that part of the land was defeasible and could be recovered by the respondent as the appellant was not a transferee bona fide for valuable consideration.
Justice Keane would have dismissed the appeal and treated the registration of the appellant and her husband as joint proprietors (and without any separate title being acquired by the wife) as defeasible (see at [108]–[110]).
