Australia: Fraud exception to indefeasibility considered by High Court

Last Updated: 10 March 2015
Article by Gary Newton and Jackie Cheung

In brief - Joint tenant unaware of fraudulent conduct of husband

On 4 February 2015, the High Court delivered judgment in Cassegrain v Gerard Cassegrain & Co Pty Ltd [2015] HCA 2 which considered the statutory fraud exception to indefeasibility. In allowing the appeal in part, the majority of the High Court held that the applicant registered proprietor held an indefeasible title to half of the land as joint tenant even though the transaction was facilitated by her husband's fraud.

Supreme Court finds that Felicity Cassegrain holds indefeasible title

The respondent, Gerard Cassegrain & Co Pty Ltd (the company) was the registered proprietor of Torrens system land (the land) and in 1997, transferred it to the appellant, Felicity Cassegrain and her husband, Claude Cassegrain as joint tenants (the first transfer).

The consideration for the transfer was to be satisfied by debiting Claude's loan account with the company. Claude was a director of the company and in fact, his claim to debit the loan account was a false claim which was known by him to be false. In 2000, Claude transferred his interest in the land to Felicity for a nominal consideration (the second transfer).

The company commenced proceedings in the New South Wales Supreme Court and sought to recover title of the land from Felicity.

The primary judge concluded that Claude acted fraudulently and in breach of his fiduciary duty as director of the company in facilitating the transfer of the land and debiting his loan account with the company. However, as Felicity was not found to have had knowledge of Claude's fraudulent conduct and Claude did not have any actual or implied authority of Felicity in procuring the first transfer, Felicity's title as sole registered proprietor was indefeasible.

Court of Appeal finds Claude Cassegrain acted as agent on both transfers

The Court of Appeal, by majority, allowed the company's appeal and declared that Felicity holds title to the land on trust for the company absolutely on the ground that Claude acted as an agent for Felicity in procuring the first transfer and the second transfer of the land.

By special leave, Felicity appealed to the High Court.

High Court considers "agent" role and section 118 of the Real Property Act

The High Court considered the following issues:

  • Whether Claude was Felicity's "agent" in procuring the transfer of the Land
  • Did Felicity derive her title in the land "from or through a person registered as proprietor of the land through fraud" for the purposes of section 118 of the Real Property Act 1900 (NSW)?

By majority, the High Court allowed Felicity's appeal in part and held that her title as joint proprietor is indefeasible. However, as she was not a bona fide purchaser for value of her husband's interest in the land, the interest she subsequently acquired from him by the second transfer is defeasible and may be recovered by the company.

High Court finds that knowledge of fraud cannot be imputed in this case

The High Court rejected the approach taken by the majority of the Court of Appeal which held that there was sufficient evidence to infer that Claude was Felicity's agent for the purposes of the transaction.

In particular, the High Court observed that there was no evidence that Felicity knew of Claude's fraudulent conduct or that Claude's fraud was within the scope of any authority she had, or appeared to have given to him in procuring the registration of the transfer from the company. Without more, Claude's knowledge of his fraud could not be imputed to Felicity and accordingly, she was no more than a passive recipient of the interest in the land.

Interest on second transfer was defeasible and recoverable by company

While Felicity's interest from the first transfer was indefeasible, the High Court held that the half share interest she obtained from the second transfer was defeasible and could be recovered by the company.

The High Court considered the application of section 118 of the Real Property Act which entitles a person deprived of land by fraud to bring proceedings or recover the land against a person whose title derives (without valuable consideration) from a person who became registered as proprietor through fraud.

Although Felicity did not derive her initial interest in the land by fraud, the registration of the first transfer and Claude's interest in the land was procured by fraud. Since Claude was registered as proprietor of the land through fraud and Felicity was not a transferee of his interest for valuable consideration, the second transfer of his interest to Felicity gave rise to the operation of section 118(d)(ii).

Fraud may not affect innocent joint tenant's indefeasible title

This reasoning indicates that an innocent joint tenant who obtains interest in land may acquire an indefeasible title even though the registration of the transfer was procured by the fraudulent conduct of the other joint tenant.

However, it is important to note that in this case, it was not alleged in any court that the innocent party was a participant in, or had notice of, any fraudulent conduct at the time the land was transferred. Further, for knowledge of fraud to be imputed onto an "innocent" party, there must be evidence to show that the party was a participant in, had notice of the fraud or otherwise acted in a manner for the court to infer that the knowledge of the fraudulent conduct could be "brought home" to the innocent party.

Gary Newton Jackie Cheung
Property acquisition, development and sale
CBP Lawyers

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Gary Newton
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.