Statutory Fraud

• Statutory Exception to Indefeasibility

  Section 42 TLA sets out Estate of Registered Proprietor paramount unless: Fraud, Prior folio or certificate of title, Erroneous description of land, Paramount interests
• Statutory Fraud

  An exception to indefeasibility in s 42(1) and the doctrine of notice in s 43
• Effect of fraud


  Voids against person defrauded; no party privy to the fraud can benefit from it
• Fraud criteria


  Intend to deceive; suspicions aroused; wilful ignorance
• No actual definition of fraud in the TLA
• Mere notice does not constitute fraud
• Fraud must be brought home


  To the registered proprietor/interest holder to operate
• Failure to uphold express assurance was part of overall fraudulent scheme to acquire the land in Loke Yew case
• On the facts, the Respondent obtained the transfer by fraud and misrepresentation in Loke Yew case
• Lord Moulton: 'The formal transfer of all the rights under the original grant was obtained by the deliberate fraud of Mr Glass'
• Bahr v Nicolay involved a contractual right to repurchase after three years
• Fraud in Bahr v Nicolay


  Notice of prior interest plus express assurance = fraud
• Fraud committed after not before registration in Bahr v Nicolay case
• Fraud must involve dishonesty


  Brought home to registered proprietor
• In Russo v Bendigo Bank, no fraud was found by the bank
• Statutory fraud should be actual not equitable fraud


  Must involve dishonesty brought home to registered proprietor
• High Court held no fraud by Bank in Bank of South Australia v Ferguson case
• Fraud must operate on the mind of the defrauded party

  To induce detrimental behaviour
• Gerard Cassegrain v Felicity Cassegrain involved a dispute over land and fraudulent actions
• Indefeasibility provisions


  Primacy of indefeasibility provisions means rescind must operate prior to registration
• The High Court decided Claude was not acting as Felicity’s agent
• There was no allegation that Felicity knew of Claude’s fraud in using the loan account to purchase the farm
• Claude organized for the title to be transferred to his wife’s name solely for consideration of $1
• Some of Gerard’s other children argued on behalf of the company that the transfer to Claude should be rescinded
• Any right to rescind would have had to operate prior to the registration given the primacy of the indefeasibility provisions
• Arguments raised regarding why indefeasibility should not operate

  • Claude was acting as Felicity’s agent
  • Fraud exceptions applied
  • Felicity’s title was defeasible due to fraud
• Indefeasibility

  The principle that a registered title cannot be defeated except in cases of fraud
• The High Court unanimously decided that Claude was not acting as Felicity’s agent
• The argument that Claude’s agency tainted Felicity’s title was derived from the decision of the Privy Council in Assets Company Ltd v Mere Roihi
• Agency

  Requires more than an allegation of fact that one person had carried out a task which was to the advantage of another
• The High Court found that no such knowledge could be imputed to Felicity
• Gerard Cassegrain & Co sought to rely on s 100(1) of the Real Property Act 1900 (NSW)
• s 100(1) of the Real Property Act 1900 (NSW)


  Two or more persons who may be registered as joint proprietors of an estate or interest in land shall be deemed to be entitled to the same as joint tenants
• This argument presumed that joint tenants are to be treated in law as one person
• The majority of the High Court held that Felicity was not automatically affected by Claude’s fraud simply because she was a joint title holder with Claude
• French CJ, Hayne, Bell and Gageler JJ: 'The issue in this case arises, and can only arise, in the context of a statutory system for title by registration'
• Questions of indefeasibility of registered title simply do not arise in the general law of real property
• The accepted principle is that actual fraud must be brought home to the person whose title is impeached
• When Felicity obtained joint title under the first transfer, her half of the title was treated as separable from Claude’s
• She was not infected by his fraud