Gerard Cassegrain & Co Pty Limited v Felicity Cassegrain

Issues on the appeal 8GC & Co, by its amended notice of appeal, raised four grounds of appeal. Those grounds raise the following issues. Ground 1: (1) Whether Felicity was bound by the same issue estoppels that were held to be binding on Claude. Ground 2: (1) Whether his Honour erred in failing to consider whether, independently of the issue estoppels pleaded against Claude, there was sufficient evidence for GC & Co to prove its case against Felicity that Claude had breached his fiduciary duty to the company. Ground 3: (1) Whether Barrett J erred in making a number of findings to the effect that the transfer and registration of the Dairy Farm were not attended by fraud; and (2) Whether, under the Real Property Act 1900, s 118(1)(d), proceedings may be brought for the recovery of the Dairy Farm from Felicity. Ground 4: (1) Whether Felicity's title was defeasible pursuant to the fraud exception in the Real Property Act 1900, s 42; (2) Whether Claude was the agent of Felicity for the purpose of registering her title to the Dairy Farm; and (3) Whether Felicity, as Claude's joint tenant, was affected by notice of her joint tenant's actual dishonesty such that her title was defeasible pursuant to the fraud exception to the Real Property Act 1900, s 42. 9It is convenient to deal with these issues in the order that GC & Co advanced the arguments on the appeal, namely: (i) agency; (ii) the operation of s 118(1)(d)(i) and (ii); (iii) the effect of the joint tenancy and the Real Property Act, s 100; (iv) whether Felicity was bound by the issue estoppels found to be binding on Claude; (v) and whether his Honour erred in otherwise failing to find, on the evidence, that Felicity had sufficient knowledge to be affected by the fraud. 10The appropriate starting point for the consideration of the issues raised on the appeal is the operation of the fraud exception to indefeasibility contained in the Real Property Act, s 42.

General principles relating to indefeasibility and the fraud exception 11Section 42 provides: "Notwithstanding the existence in any other person of any estate or interest which but for this Act might be held to be paramount or to have priority, the registered proprietor for the time being of any estate or interest in land recorded in a folio of the Register shall, except in case of fraud, hold the same, subject to such other estates and interests and such entries, if any, as are recorded in that folio, but absolutely free from all other estates and interests that are not so recorded ..." (emphasis added) 12The first matter to be recognised is that the Torrens system is a system of title by registration: Mayer v Coe [1968] 2 NSWR 747; Breskvar v Wall [1971] HCA 70; 126 CLR 376; Castle Constructions Pty Ltd v Sahab Holdings Pty Ltd [2013] HCA 11; 247 CLR 149 at [20] and cases cited therein. The rights of the registered proprietor thus derive from "the fact of registration and not from an event antecedent thereto": Mayer v Coe at 754. By virtue of s 42, upon registration, the title of the registered proprietor is immediately indefeasible: Frazer v Walker [1967] AC 569 at 580-581; Breskvar v Wall at 385. This, of course, is subject to the exceptions for which the Act provides. The relevant exception is fraud within the meaning of s 42. 13Barrett J noted, at [168], that fraud for the purposes of s 42 meant "something in the nature of personal dishonesty or moral turpitude": see Stuart v Kingston [1923] HCA 17; 32 CLR 309 at 329 per Knox CJ; or "[d]ishonesty on the part of the registered proprietor in securing ... registration as proprietor": Bahr v Nicolay (No 2) [1988] HCA 16; 164 CLR 604 at 614. The requirement that there be "actual fraud, moral turpitude" was again confirmed in Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; 230 CLR 89 at [192]. 14The fraud "must be brought home to the person whose registered title is impeached or to his agents": Assets Co Ltd v Mere Roihi [1905] AC 176 at 210. See also Frazer v Walker. In other words, the fraud must be "fraud for which the person becoming registered is responsible": Registrar of Titles (WA) v Franzon [1975] HCA 41; 132 CLR 611 at 618 per Mason J (Barwick CJ and Jacobs J agreeing). Imputed fraud or dishonesty does not fall within fraud for the purposes of s 42, unless the perpetrator of the fraud was an agent for the person taking title: Butler v Fairclough [1917] HCA 9; 23 CLR 78. There must be something more than the disregard of another's rights of which the person had notice: Wicks v Bennett [1921] HCA 57; 30 CLR 80 at 91. For the purposes of the Act, the fraud must have been practised against the person seeking to set aside the title of the registered proprietor: Munro v Stuart (1924) 41 SR (NSW) 203 at 206. 15Although imputed fraud is not sufficient for the purposes of s 42, "wilful blindness", for example, when a person's suspicions are aroused and the person then abstains from enquiry for fear of learning the truth, is sufficient, as being tantamount to actual fraud: Assets Co Ltd v Mere Roihi at 210. However, a lack of diligence is not sufficient: Grgic v Australian and New Zealand Banking Group Ltd (1994) 33 NSWLR 202 at 221-222. 16The place of equitable fraud in the statutory scheme is uncertain, although there are statements that equitable fraud may suffice. In Bahr v Nicolay (No 2), Mason CJ and Dawson J, at 614, considered that not all species of equitable fraud stood outside s 42. In Bank of South Australia Limited v Ferguson [1998] HCA 12; 192 CLR 248, at [10], the High Court said "[n]ot all species of fraud which attract equitable remedies will amount to fraud in the statutory sense", thus arguably leaving scope for the operation of equitable fraud for the purposes of s 42. An example of equitable fraud within the terms of s 42 may be found in Latec Investments Ltd v Hotel Terrigal Pty Ltd (In Liq) [1965] HCA 17; 113 CLR 265 at 273-274 where there was a collusive sale by a mortgagee to a subsidiary in breach of the mortgagee's duty in the exercise of its power of sale. See also Davis v Williams [2003] NSWCA 371; 11 BPR 21,313 at [226] per Gzell J; Grgic v Australian and New Zealand Banking Group at 221-222. However, there was no evidence of any collusive conduct on the part of Felicity in this case. 17The indefeasibility conferred on a registered proprietor "in no way denies the right of a plaintiff to bring ... a claim in personam, founded in law or in equity, for such relief as a court acting in personam may grant": Frazer v Walker at 385. This is so notwithstanding the fact that an in personam claim is not an exception contained in s 42 of the Real Property Act: see Farah Constructions v Say-Dee at [193] ff and Castle Constructions Pty Ltd v Sahab Holdings Pty Ltd [2013] HCA 11; 247 CLR 149 at [31]. In this case, however, GC & Co is not pursuing an in personam claim. In essence, it seeks the return of the property. 18Claude's title as registered proprietor would have been defeasible pursuant to the fraud exception in the Real Property Act, s 42. Claude knew that he had no entitlement to the $4.25 M credited to his loan account. In my opinion, Claude was fraudulent within the meaning of s 42 when as a Director, he and Anne-Marie resolved that the Dairy Farm be transferred to Claude and Felicity and that the $1 M consideration be satisfied by a debit to Claude's loan account, knowing he had no entitlement to the credit in that account. It is, however, Felicity's title that GC & Co must impugn to succeed on this appeal.

Was Claude Felicity's agent for the purposes of obtaining registration? 19GC & Co contended that Claude was Felicity's agent for the purpose of each transaction resulting in the transfer and registration of title of the Dairy Farm from GC & Co to them as joint tenants (the first transfer) and then from Claude to Felicity as sole registered proprietor (the second transfer). On that argument, Felicity was affected by Claude's fraud in respect of each transfer and registration of title. It was integral to GC & Co's submission on agency that Mr McCarron, conducting himself properly as a solicitor, could only act upon instructions. 20Barrett J, at [155], observed that the evidence as to the circumstances in which Felicity became the registered proprietor of the Dairy Farm was sparse. In this regard, it should be noted that neither Claude nor Felicity gave evidence. However, the documentary evidence established the following. First, Felicity did not sign either transfer. Mr McCarron, solicitor, signed as solicitor for the transferees, that is, for Claude and Felicity on the first transfer, and as solicitor for the transferee, that is, for Felicity, on the second transfer. There was no evidence that Felicity had personally given any instructions to Mr McCarron in relation to signing either transfer. 21The only evidence of any communication with Mr McCarron in relation to the first transfer was a letter dated 27 February 1997, some five months after the date of the transfer, instructing Mr McCarron to "register the transfer as exchanged". The letter was on the letterhead of GC & Co and was signed by Claude above the printed words: "Claude Cassegrain - Managing Director". Barrett J found, at [156], that as the letter was on GC & Co's letterhead and was signed by Claude as Managing Director, it "conveyed an instruction from the transferor". On this finding, therefore, the letter was not an instruction from either Claude or Felicity, or from both, as transferees. His Honour also found that the letter was "unrelated to the execution of the transfer" because the transfer already existed. The transfer had been exchanged and was dated 14 September 1996. 22Barrett J held, at [157], that there was "no evidence" of the circumstances in which Mr McCarron signed the second transfer as solicitor for the transferee. Accordingly, his Honour considered that there was no evidence to establish that Claude had exercised actual or implied authority on behalf of Felicity in the transfer of the property to her: see judgment at [158]. 23GC & Co contended that the following matters tended to a conclusion that the instructions to Mr McCarron to sign as solicitor for Felicity as one of the two transferees must have been given via an agent: neither transfer had been signed by Felicity; there was no evidence of Felicity having given instructions to Mr McCarron; and the only evidence of instructions to Mr McCarron was the letter of 27 February on GC & Co's letterhead. That could only have been Claude. GC & Co submitted that this conclusion was strengthened in circumstances where Felicity did not give evidence and did not call Claude or Mr McCarron to give evidence: see Jones v Dunkel [1959] HCA 8; 101 CLR 298. 24GC & Co also submitted that Barrett J erred in finding that the instruction in the letter of 27 February 1997 was an instruction from GC & Co as transferor. It contended that the fact the instruction to register the title was given on GC & Co's letterhead and signed by Claude as Managing Director was not determinative in circumstances where Claude was acting fraudulently. As that was the only evidence of an instruction to register the transfer, the letter must have been an instruction from or on behalf of the transferees, even if, for some, reason it was an instruction in which GC & Co joined. No one asserted that Mr McCarron was acting other than with due propriety as solicitor for the transferees. Thus, Mr McCarron, acting with propriety as solicitor for the transferees, required instructions from both Claude and Felicity to register the transfer. As Mr McCarron required instructions from both, Claude, in signing the letter of 27 February 1997, could only have been acting on his own behalf and as Felicity's agent for the purpose of sending the letter instructing Mr McCarron to register the transfer. 25GC & Co submitted that there was other evidence to support the inference that Claude was acting as agent for Felicity in relation to the first transfer. The letter of 27 February was entitled "Re Purchase of Dairy - C & F Cassegrain". If the letter was truly from GC & Co, it would more likely have been entitled by reference to the sale and not the purchase of the Dairy Farm, GC & Co being the vendor. Mr McCarron's reply was directed to "Mr C Cassegrain, c/- Gerard Cassegrain & Co Pty Ltd", indicating that the company address was an address for Claude, both as Managing Director of GC & Co, and personally. This was reinforced by the fact that the cheque for stamp duty, the payment of which was an obligation of the transferees, was forwarded to Mr McCarron under cover of a "with compliments" slip of GC and Co. In other words, Claude simply used company stationery for all purposes, whether corporate or personal. This was also evidence from which it could be inferred that Claude arranged for payment of the stamp duty. 26GC & Co submitted, therefore, that although the evidence that Claude was acting as Felicity's agent was sparse, it had adduced sufficient evidence to enable it to rely upon the principle in Blatch v Archer (1774) 1 Cowp 63; 98 ER 969. That case is authority for the proposition that where material evidence is peculiarly within a party's knowledge, it may be sufficient for the opposing party to adduce slight evidence of a matter in issue. The other party, in this case Felicity, then faces a tactical decision as to whether to adduce evidence to explain that 'slight evidence' given by the other party. If a decision is made not to call evidence, there is a risk the court may draw inferences contrary to the interests of the other party who chose not to respond to the evidence adduced: De Gioia v Darling Island Stevedoring & Lighterage Company Ltd (1941) 42 SR (NSW) 1 at 4; Blatch v Archer at 970; Hampton Court Ltd v Crooks [1957] HCA 28; 97 CLR 367; Australian Securities and Investments Commission v Hellicar [2012] HCA 17; 247 CLR 345 especially at [250] ff. 27GC & Co's submissions to which I have just referred related only to the first transfer. There was no evidence as to the circumstances in which Mr McCarron acted in signing as solicitor for Felicity as transferee on the second transfer. GC & Co submitted, however, that there was sufficient evidence to establish that Claude had implied authority to act as Felicity's ministerial agent at the time of registration of both transfers. GC & Co further submitted that Felicity, by pleading her indefeasible title, had ratified Claude's actions carried out in her name at the time of registration. The following matters were said to be sufficient to support these arguments: Felicity did not give evidence; there was no evidence of Felicity being engaged in the process of registering her title in respect of either transfer; and there was no evidence that Felicity had any knowledge of either transfer. The purport of the submission was that Mr McCarron, acting properly, had to have received instructions from her agent. That could only have been Claude. 28Felicity submitted there was no evidence that Claude had acted as her agent and that the gaps in the evidence were not filled by Felicity's failure to give evidence. Rather, as was apparent on the face of each transfer, Mr McCarron had acted as her agent in respect of the transfers. Felicity also objected to GC & Co raising any question of agency in respect of the second transfer, which had been pleaded but not otherwise argued in the court below. In the Court below, GC & Co had sought to attack the second transfer on the basis of the Real Property Act, s 118(1)(d). 29Felicity also submitted that no case had been raised below based on ratification. Felicity submitted that a case of ratification based solely upon her pleading that she had an indefeasible title was unavailable as a matter of law as this was to mischaracterise the title conferred by the Torrens system. Her title was not historical or derivative, but was created by virtue of registration: see Mayer v Coe. By pleading indefeasibility she had not thereby ratified some unidentified conduct of Claude. Rather, her pleading was a statement of her title as registered proprietor, namely, that she had an indefeasible title unless it was established that her title was relevantly affected by fraud. Accordingly, she submitted that the concept of ratification was not available to support a plea of indefeasibility. 30There is merit in GC & Co's submission that the letter of 27 February 1997 was a direction from Claude to register the transfer. There are a number of reasons that support such a conclusion. It is the transferee who requires registration so as to obtain a registered title. A transferor will have an interest in a conveyancing transaction being completed, as it is on completion that the purchase monies are paid or other consideration is provided. However, once completion has occurred as a matter of conveyancing practice, it is usually a matter for the transferee, or the financiers of the transferee, to attend to registration. Even if a transferor does have an interest in having the transfer registered, in this case, GC & Co, as the purported transferor, who was being defrauded, had no such interest. The letter of 27 February 1997, therefore, should be viewed in the context in which it written, namely, in the context of Claude's fraud in having the Dairy Farm transferred. The only reasonable inference in the circumstances, therefore, was that Claude wrote the letter in furtherance of the fraud in having the Dairy Farm transferred to him and Felicity. As the solicitor could only act upon the instructions of his clients, who in this case were the transferee(s), Claude must have written the letter on behalf of the transferees. 31Accordingly, given the nature of the transaction and in particular, the premise that Mr McCarron was acting properly in the transaction, Claude's letter of 27 February 1997 giving instructions for registration of the transfer and the payment of stamp duty was evidence that he was acting for both himself and Felicity. The final factor was that Mr McCarron, acting on instructions as he must have done, signed on behalf of both Claude and Felicity. These matters constituted evidence which could be characterised as more than slight, albeit not necessarily determinative, that Claude was acting as Felicity's agent. Felicity, therefore, risked an adverse finding against her on the question of agency by not adducing evidence to the contrary. The question for consideration on this appeal was whether his Honour erred in not drawing that inference. 32As indicated, GC & Co's challenge to his Honour's conclusion on agency was to the finding that it had not established that Claude was acting with Felicity's implied authority. Implied authority is an aspect of actual authority, whereby, notwithstanding the absence of express agreement, the parties "may conduct themselves in such a way that it is proper to infer that the relevant authority has been conferred on the agent": Equiticorp Finance Ltd (in liq) v Bank of New Zealand (1993) 32 NSWLR 50 at 132 per Clarke and Cripps JJA. In that case, their Honours further commented that the court has regard to the conduct of the parties to decide whether the inference of authority should be drawn. Implied authority may also be established by a course of dealing between principal and agent: see G E Dal Pont, Law of Agency, 2nd ed (2008) LexisNexis Butterworths, 183. 33When regard is had to Claude's conduct, taken in conjunction with the manner in which Mr McCarron acted on the transfer, I consider that Claude assumed authority on behalf of Felicity. That, however, is not sufficient to establish implied agency. There has to be evidence of conferral of authority by the other party such that the necessary inference of implied authority can be drawn. That conduct could be an absence of dissent to the other party's assumption of authority. In the present case the evidence was silent as to the manner in which Claude and Felicity conducted their financial arrangements. 34If that was all there was in this case, Felicity would succeed as Barrett J found. However, that silence in the evidence has to be balanced with the evidence that GC & Co adduced that indicate that Claude was acting as Felicity's agent. In accordance with authority, this Court is in as good a position to draw inferences as the trial court: Warren v Coombes [1979] HCA 9; 142 CLR 531. That principle is usually cited in the context of an appellate court itself drawing inferences from undisputed facts or facts as found by the trial judge. 35In accordance with the requirements of the Supreme Court Act 1970, s 75A, this Court is to make its own judgment on the facts and the law. This principle was stated in Fox v Percy [2003] HCA 22; 214 CLR 118 where the plurality (Gleeson CJ, Gummow and Kirby JJ) stated, at [27], that on an appeal by way of rehearing, appellate courts: "... must conduct the appeal by way of rehearing. If, making proper allowance for the advantages of the trial judge, they conclude that an error has been shown, they are authorised, and obliged, to discharge their appellate duties in accordance with the statute." 36The principle was again confirmed in Waterways Authority v Fitzgibbon [2005] HCA 57; 221 ALR 402 where Hayne J stated, at [132]: "The Court of Appeal is bound to rehear the case and the Court, in doing that, may draw inferences and make findings of fact." 37In the present case, I have come to a different view as to the letter of 27 February 1997 from that of the trial judge. I consider that it was a direction by Claude on behalf of himself and Felicity as transferees to Mr McCarron to register the transfer. Notwithstanding that the evidence of agency to which I have referred was not determinative, I am of the opinion that there was sufficient evidence from which an inference may be drawn that Claude was Felicity's agent for the purposes of directing Mr McCarron to register the first transfer. Felicity took the risk that by not giving evidence, or by not calling the two persons, namely, Claude or Mr McCarron, who could have refuted agency, that this inference would be drawn. This does not place any onus on Felicity, either to call or to rebut evidence or to prove an absence of agency. It is only to say that there was evidence from which the inference could be drawn and I consider that the inference ought to be drawn that in respect of the first transfer, Claude acted as Felicity's agent in giving instructions to Mr McCarron. To find otherwise would be to find that Mr McCarron acted without her authority, a matter that was never alleged. 38The consequence of this conclusion is that the title that Felicity took as registered proprietor jointly with Claude was defeasible as a result of the fraud of her agent. 39That leaves for consideration the question whether GC & Co established that Claude was also her agent in respect of the second transfer. There are two matters to be considered in respect of that argument. The first is Felicity's complaint that agency was not relied upon at trial. This appears to be only partially correct. It seems that GC & Co's senior counsel did not address any submissions on the point to the Court. However, it was adverted to by senior counsel for Felicity, indicating that the matter was considered to be in issue. His Honour dealt with the agency question as being relevant to both transfers: see judgment at [158]. GC & Co submitted that in any event, Felicity has not indicated how her case would have been run differently had the agency point been argued. 40A party does not have an entitlement to raise a new issue on an appeal otherwise than in accordance with the principles discussed in Coulton v Holcombe [1986] HCA 33; 162 CLR 1; Suttor v Gundowda [1950] HCA 35; 81 CLR 418. However, in the present case, it appears that the trial judge and Felicity's legal representatives considered that the matter was in issue and the trial judge dealt with it. For those reasons, GC & Co should be permitted to argue that Claude was Felicity's agent in respect of the second transfer. However, this is a more difficult argument for GC & Co to maintain than in respect of the first transfer. This is the second matter that arises for consideration. 41The second transfer was a transfer by Claude of his interest in the Dairy Farm to Felicity. Whilst in the usual case a transfer of title by joint tenants to one joint tenant requires a transfer from both joint tenants, this did not occur in this case. Claude's transfer of his interest was accepted by the Registrar-General and it is the effect of registration of that transfer that resulted in Felicity becoming sole registered proprietor. The transfer was signed by Claude, whose signature was witnessed by Mr McCarron. Mr McCarron signed as solicitor for the transferee, that is, for Felicity. The transfer was signed in the context of it being the second transaction in respect of the same property, both transfers involving Claude and Felicity. The question is whether there was sufficient evidence to permit an inference that Claude again acted on behalf of Felicity in this transaction. 42What is known of the second transfer is that Mr McCarron witnessed Claude's signature as the transferor and signed as solicitor for Felicity, being the transferee. Although the evidence is slight, it is sufficient, in conjunction with my conclusion that Claude acted as agent on the first transfer, to enable GC & Co to again invoke the principles in Blatch v Archer in respect of the second transfer. In my opinion, where Felicity could give evidence of the circumstances by which she became registered as proprietor, I would draw the inference, on the available evidence, that the probabilities are that Claude acted as her agent in respect of the second transfer: It follows that her title as sole registered proprietor will be affected by Claude's fraud, if fraud is proved in her case. I will return to that point below. 43Before leaving this issue, I would only add that I accept Felicity's submission that the ratification submission sought to be argued by GC & Co has minimal if any prospects of success and leave to raise this question on the appeal should be refused.

Joint tenancy and the operation of the Real Property Act s 100 44The next issue which arises for consideration is the significance of Felicity's registered title as joint tenant pursuant to the first transfer. GC & Co contended that his Honour failed to consider its separate argument that s 100 preserved the common law in respect of joint tenancies including the principle that persons who take as joint tenants take the same interest ("per my et per tout") and thus are all affected by notice of fraud given to or acquired by one of them. 45His Honour's starting point, at [161], was the principle that where two persons hold as joint tenants neither has a separate estate or interest that can be encumbered to the exclusion of an estate or interest of the other: Big River Timbers Pty Ltd v Stewart (1998) 9 BPR 16,599, per Young J (as his Honour then was). Barrett J noted that a consequence of joint tenancy was that if the joint tenancy was taken in circumstances which bound the conscience of one joint tenant in a way that gave rise to an equitable encumbrance, that encumbrance affected the title of both joint tenants. The position is different if, after the joint tenancy was created, one joint tenant acted alone in a way that would create an encumbrance. In that case, such conduct would be inconsistent with the joint tenancy and evidence an intention to sever the tenancy. In this case, Claude's fraud, if established, occurred prior to the first transfer. 46Barrett J, at [163], characterised GC & Co's complaint as being akin to the situation where property was purchased with "stolen money", although Felicity may not have known at the time of either transfer that there was any impropriety in either transaction. His Honour considered that this was analogous to Heperu Pty Ltd v Belle [2009] NSWCA 252; 76 NSWLR 230 where Allsop P (Campbell JA and Handley AJA agreeing) said, at [93]: "The well-known principle is that a person entirely innocent of a fraud who comes to know that he or she has received and still retains the proceeds of, or taken advantage of, a fraud to which he or she was not party, cannot knowingly seek to retain those proceeds or that advantage, without, in effect, becoming a party to that fraud and liable accordingly: Black v S Freedman & Company [[1910] HCA 58; 12 CLR 104] per Griffith CJ (at 109), per Barton J (at 110), per O'Connor J (at 110-111)." 47His Honour observed, at [164], that as there was no allegation that Felicity knew of or participated in Claude's fraud at the time of the transfer to them as joint tenants, there was no basis for a claim against her under either limb of Barnes v Addy (1874) LR 9 Ch App 244. 48However, his Honour considered that Felicity may have become aware of the fraud subsequently. His Honour observed that Felicity was certainly aware of the allegations in these proceedings and that may be sufficient to cause her to be accountable, in the eyes of equity, to GC & Co. However, his Honour held that the principle in Heperu did not apply where a transfer of real property was involved. Barrett J held, at [67], that Felicity's registered title was indefeasible. In his Honour's view, her title was not affected by the fraud exception within that provision. 49It was in that context that his Honour considered the operation of s 42. His Honour had rejected, at [160], that equitable fraud was sufficient to defeat the indefeasibility conferred by s 42. His Honour considered that although Felicity, in taking as a joint tenant upon the registration of the first transfer, may have been affected by fraud of some kind, that did not warrant the conclusion her present title was tainted. It was central to this aspect of his Honour's determination that the relevant title GC & Co needed to impugn in order to have the Dairy Farm transferred back to it was Felicity's title as sole registered proprietor: see at [171]. This was a distinct title from the title Felicity held as joint tenant with Claude which had been extinguished upon registration of Claude's transfer resulting in the property being registered in her sole name: Peldan v Anderson [2007] HCA 48; 227 CLR 471 at [20]-[21]. 50Barrett J found, at [172], that at worst, at the time of the second transfer, Felicity had notice of Claude's conduct "arguably giving rise to an unregistered interest on the part of GC & Co". His Honour considered that her position was as described in Heggies Bulkhaul Ltd v Global Minerals Australia Pty Ltd [2003] NSWSC 851; 59 NSWLR 312 where Austin J stated, at [96]: "... there is no fraud for the purposes of s 42 if a person does no more than to acquire title and become the registered proprietor with notice of a prior unregistered interest, and assert that his title is free of that interest: Mills v Stokman [1967] HCA 15; (1967) 116 CLR 61, at 78 per Kitto J; the Leros case, 174 CLR at 418 per Mason CJ, Dawson and McHugh JJ; Friedman v Barrett [1962] Qd R 498." 51Barrett J also considered that Felicity was not denied the protection of s 42 by the fact that she gave no valuable consideration for the second transfer: see Bogdanovic v Koteff (1988) 12 NSWLR 472. Barrett J held, at [173]-[174], that s 42 did not preclude her from asserting indefeasibility against GC & Co even if she took with notice of any equitable interest it might have. 52As I have already indicated, no allegation was made that Felicity had actual knowledge of Claude's dishonest dealing in relation to the Dairy Farm. The evidence only established that Claude and Mr McCarron acted in respect of each of the transfers in the way described above. It is necessary, however, to consider the circumstances of each transfer and subsequent registration of title to determine whether the circumstances under which Felicity acquired title as a joint tenant is sufficient to impugn her title as sole registered proprietor. 53As Barrett J observed, at [161], a consequence of joint tenancy is that if a joint tenancy is taken in circumstances which bound the conscience of one joint tenant in a way that gives rise to an equitable encumbrance, that encumbrance affects the title of both joint tenants. On the assumption that there is proof of Claude's fraud in Felicity's case, a consequence of Claude's fraud in taking a transfer of the Dairy Farm affected both Claude and Felicity as joint tenants. At that point of time, therefore, their registered title was liable to be impugned by operation of the fraud exception in s 42. 54The next question is whether a subsequent registered proprietor can take free of an encumbrance affecting the title of joint registered proprietors due to fraud. The answer is clear in the case where the third party is unconnected with the circumstances in which the encumbrance came to affect the title of the previous joint tenants. Such a third party transferee would take free of the prior encumbrance affecting the title of the transferors. 55The question here, however, is whether a person, in the absence of actual notice of the fraud, whose joint title is impugned by the fraud of the other joint tenant, may acquire an indefeasible title as sole proprietor, free of the prior encumbrance that arose due to that fraud. In posing this question, I am doing so in the absence of any consideration of agency. 56Although this issue was argued as a separate point, it is connected with GC & Co's submissions relating to the Real Property Act, s 100. Section 100 provides: "Registered co-tenants (1) Two or more persons who may be registered as joint proprietors of an estate or interest in land under the provisions of this Act, shall be deemed to be entitled to the same as joint tenants." In Hircock v Windsor Homes (Development No 3) Pty Ltd [1979] 1 NSWLR 501 Hutley JA (Hope and Samuels JJ agreeing), in considering s 100, stated, at 506, that "the incidents of joint tenancy [are] to be determined by the common law". The two arguments should therefore be considered together. 57Whilst Felicity agreed that the trial judge did not expressly refer to the Real Property Act, s 100 and Hircock v Windsor Homes, she submitted that his Honour dealt with the underlying argument raised by GC & Co at [170]-[174]. I agree that his Honour effectively dealt with the s 100 point, save that GC & Co in its argument on the appeal also raised the question as to the point of time at which s 100 operates. 58GC & Co submitted, in accordance with the Conveyancing Act, s 26(2), that as the first transfer specified that Claude and Felicity were to hold as joint tenants, the joint tenancy operated from the time the transfer was signed. Accordingly, the usual incidents of joint tenancy applied as from the date of execution of the transfer. This included the principle that where the conscience of one joint tenant was bound in a way that gave rise to an equitable encumbrance, that encumbrance affected the title of both joint tenants. GC & Co also submitted that the relationship of joint tenants was at least as intimate a juristic relation as agent/principal and that the better view was that the relationship of joint tenancy was closer than that of principal and agent. It followed on this argument that Felicity's interest in the property must have been affected from the time that the first transfer was executed. 59Felicity contended that s 100(1) was concerned with the manner in which title was held and in that regard only operated from the time of registration and in any event was not concerned with the circumstances in which a joint tenant was affected by the fraud of the co-tenant prior to registration. Felicity also submitted that a joint tenant was not the agent of the other joint tenant and that that each joint proprietor was individually entitled to the protection afforded by s 42. She contended that there was no room for attribution of knowledge for the purpose of the fraud exception merely by the fact of joint tenancy. 60In my opinion, the Conveyancing Act, s 26 does not assist GC & Co. Felicity's title, if unaffected by fraud, is indefeasible. Fraud for the purposes of s 42 must exist prior to or at the point of registration. If GC & Co is to successfully impugn Felicity's title as sole registered proprietor, it has to establish that that title is affected by fraud. Leaving aside the question of agency, whether Felicity's registered title is defeasible because her jointly owned title was affected by Claude's fraud does not mean that her present title is defeasible. The transfer that resulted in the registration of title in her sole name was a transfer of Claude's interest to her in circumstances where she had no knowledge of the fraud. It was not as a result of a transfer by both as joint tenants to Felicity solely. 61Agency aside, therefore, there was no relevant fraud of which Felicity had knowledge such as to impugn her indefeasible title as the sole joint tenant. Had I not reached the conclusion as to agency, I would have concluded that Felicity's sole registered title was not affected by fraud within the meaning of s 42.

The Real Property Act, s 118(1)(d) 62GC & Co relied, as an alternative basis upon which to impugn Felicity's title, upon the Real Property Act, s 118(1)(d). 63Section 118 falls within Pt 13: "Civil rights and remedies"; Div 1: "Proceedings for the possession or recovery of land". 64Section 118(1) provides that proceedings do not lie against a registered proprietor for the possession or recovery of land except in the circumstances specified in the section namely, proceedings by: a mortgagor against a mortgagee in default: para (a); chargee or covenant chargee against a charger or covenant charger in default: para (b); a lessor against lessee in default: para (c); a person deprived of land by fraud against a person registered as proprietor through fraud or a person deriving from of through that person: para (d); a person deprived of land by reason of misdescription: para (e); a person registered under an earlier folio where two folios have been created for the same land: para (f). 65The terms of s 118(1)(d) are as follows: "118(1) Proceedings for the possession or recovery of land do not lie against the registered proprietor of the land, except as follows: ... (d) proceedings brought by a person deprived of land by fraud against: (i) a person who has been registered as proprietor of the land through fraud, or (ii) a person deriving (otherwise than as a transferee bona fide for valuable consideration) from or through a person registered as proprietor of the land through fraud ..." 66I should mention at this stage that, for the reasons which I explain, s 118(1)(d)(i) does not provide a legal basis upon which Felicity's title may be impugned; rather, it recognises that a proceeding may be brought if there is a basis to impugn her title. 67Section 118(1)(d) is one of a number of provisions in the Act relating to the circumstance where a registered title is affected by fraud. The relevant provisions, in this regard, are s 42 and s 45. Section 42, which provides, relevantly for the indefeasible title of the registered proprietor "except in case of fraud", is set out above at [11]. Section 45 provides, relevantly: "45 Bona fide purchasers and mortgagees protected in relation to fraudulent and other transactions (1) Except to the extent to which this Act otherwise expressly provides, nothing in this Act is to be construed so as to deprive any purchaser or mortgagee bona fide for valuable consideration of any estate or interest in land under the provisions of this Act in respect of which the person is the registered proprietor. (2) Despite any other provision of this Act, proceedings for the recovery of damages, or for the possession or recovery of land, do not lie against a purchaser or mortgagee bona fide for valuable consideration of land under the provisions of this Act merely because the vendor or mortgagor of the land: (a) may have been registered as proprietor through fraud or error, or by means of a void or voidable instrument, or (b) may have procured the registration of the relevant transfer or mortgage to the purchaser or mortgagee through fraud or error, or by means of a void or voidable instrument, or (c) may have derived his or her right to registration as proprietor from or through a person who has been registered as proprietor through fraud or error, or by means of a void or voidable instrument ..." 68Thus, by virtue of s 45, proceedings may not be brought against a registered proprietor who purchased real property bona fide for valuable consideration merely because of fraud on the part of the vendor in the circumstances specified in subs (2). It is relevant to note that subs (2) refers to both registration as proprietor through fraud and the procuring of registration of the transfer through fraud. I will return to this later. 69It has been observed that there is a substantial but incomplete correspondence between the provisions of s 42 and s 118(1)(d): see Breskvar v Wall at 384. Barwick CJ in Breskvar did not indicate where the lack of correspondence lay, but observed that the Real Property Act (Qld), s 123 (the effective equivalent of s 118(1)(d)) was one of a number of provisions that were "central to the Torrens system of title by registration". His Honour further observed, at 385, that a suit not within the exceptions specified in s 123 "would effectively be barred" by the section. His Honour continued that: "... except in and for the purposes of such excepted proceedings, the conclusiveness of the certificate of title is definitive of the title of the registered proprietor." 70Section 118(1) thus complements s 42 and s 45 in that it provides for a prohibition on bringing proceedings for the possession or recovery of land against a registered proprietor except in defined circumstances: see RA v Woodman et al, The Torrens System in NSW, 2013, Thomson Lawbook Co at [118.20]. Insofar as is relevant to these proceedings, s 118(1)(d)(i) permits proceedings against a person who has been registered as proprietor through fraud. Fraud as used in this provision must bear the same meaning as in s 42. In Registrar of Titles (WA) v Franzon at 618, Mason J stated: "It is a sound rule of construction to give the same meaning to the same words appearing in different parts of a statute unless there is reason to do otherwise." See generally DC Pearce & RS Geddes, Statutory Interpretation in Australia, 7th ed (2011) LexisNexis Butterworths, at [4.6]. Thus, s 42, insofar as it refers to fraud, specifies an exception to the statutory scheme of immediately indefeasibility by registration. Pursuant to s 118(1)(d)(i) a remedy is available where that exception applies. 71Barrett J held, at [176], that Felicity was not "registered ... through fraud" so that s 118(1)(d)(i) was inapplicable because the fraud in this case was Claude's fraud and GC & Co's attempt to establish agency failed. I have reached the contrary conclusion on the question of agency. If fraud is established on Claude's part in these proceedings, then as I understand the operation of s 42 and s 118(1)(d)(i), GC & Co was entitled to bring these proceedings for the recovery of the Dairy Farm. On this premise, it is unnecessary to consider the application of s 118(1)(d)(ii). However, it is appropriate that I do so should I be wrong on the question of agency. 72Barrett J, at [180], rejected GC & Co's claim that GC & Co could recover the Dairy Farm by recourse to s 118(1)(d)(ii). His Honour considered, at [178], that s 118(1)(d)(ii) was directed to the process of registration itself and not to whether the transaction was procured by fraud. It followed, on his Honour's approach, that although Felicity may have derived her title through Claude and had not acquired her title for valuable consideration, s 118(1)(d)(ii) was not satisfied because Claude, being the person from whom Felicity derived her interest, was not "registered as proprietor of the land through fraud". His Honour's reasons that lead him to that conclusion were as follows: "178 Notwithstanding that the elements on which s 118(1)(d)(ii) depends may be, to that extent, satisfied, one important thing is lacking. Claude, the person 'from or through' whom Felicity derived her interest, was not 'registered as proprietor of the land through fraud'. These are the operative words of the section. Their focus is exclusively on the process by which registration as proprietor was achieved and the question whether that process was achieved by fraud. This is the effect of the words 'registered ... through'. Section 118(1)(d)(ii) thus deals with a much narrower and more specific subject-matter than the 'except in case of fraud' exception in s 42." (emphasis added) 73In his Honour's view, Claude had become registered as a proprietor of the land by means of the lodgement of a memorandum of transfer followed by registration itself. His Honour considered, at [179], that the transfer was regularly executed by GC & Co under the company seal and was a "genuine instrument regular on its face and suitable to be registered". It followed, there being no evidence to the contrary, that there was "nothing calling in question the integrity of the transfer or of the registration process to which it was subjected following its lodgment". His Honour held that the fact that Claude "gave illusory consideration" for the transfer of the Dairy Farm was "remote from the process of registration and therefore beside the point". 74Felicity's position was that the trial judge's construction of s 118(1)(d)(ii) was correct. She pointed out that there was no appeal against the factual findings concerning the process by which Claude was registered as a joint tenant in March 1997 and no error had been demonstrated in his Honour's reasoning concerning the remoteness of the breaches of Claude's fiduciary duty from the process of registration. Felicity also emphasised that there was no allegation that the Dairy Farm was transferred to her and Claude at an undervalue. Claude's relevant breach of fiduciary duty in relation to the transfer was in utilising the loan account to effect payment in circumstances where he had no entitlement to the credit balance in the loan account. 75It followed, on Felicity's submission, that title to the Dairy Farm had not been obtained from GC & Co by fraud. Rather, by utilising the loan account, Claude had deprived the company of the purchase price: see judgment at [125]-[126]; [238]-[239]. In other words, the distinction was between the transaction between GC & Co as vendor and Felicity and Claude as purchasers, which in itself was a proper transaction for value, and the means of payment for the Dairy Farm by debiting the loan account, which was improper. 76For its part, GC & Co contended that Barrett J's construction of the section was erroneous and that there was no basis to construe the meaning of the word "fraud" in s 118(1)(d)(ii) more narrowly than its meaning in s 42. Nor, on its proper construction, was the section and, in particular, the phrase "registered ... through fraud" confined to the "process" by which registration was obtained. Rather, s 118(1)(d)(ii) was a particular provision governing the position where the transferee was a volunteer, whereas s 42 was not so confined. GC & Co submitted its construction of the section was underscored by the fact that the provision was beneficial legislation. 77GC & Co also sought to amend ground 3 of its notice of appeal to explicitly challenge the findings at [179] that "[t]he transfer was regularly executed under the common seal of GC & Co" and that "[t]here is nothing calling in question the integrity of the transfer". GC & Co submitted that the act of proceeding to registration could not, in this case, be severed from the dishonest getting of the transfer from the company. GC & Co submitted that there was an unbreakable integration between the debiting of the loan account which Claude knew he had no entitlement to and the company agreeing to the transfer. The appellant characterised the fraud as the transfer of the property without payment. Accordingly, the appellant submitted that Claude was registered as proprietor of the land through fraud for the purposes of s 118(1)(d)(ii). 78It followed, therefore, on GC & Co's submission, that his Honour erred in his conclusion that s 118(1)(d)(ii) was not engaged in this case because "[t]he process by which the registration of Claude as a registered proprietor was achieved was not attended by fraud". GC & Co contended that every stage in the process of Claude and Felicity obtaining legal title was attended by the requisite degree of actual dishonesty and moral turpitude so as to constitute fraud for the purposes of s 118(1)(d)(ii). For example, although the transfer was executed under GC & Co's common seal, Claude had signed as director. The transfer itself was an instrumental part of the fraud practised upon GC & Co. Without Claude's fraud, the transfer would never have been prepared, executed or lodged for registration. 79Bogdanovic v Koteff was concerned with a claim by a person living in premises who allegedly had an agreement with the then registered proprietor, since deceased, for a life interest in the land. The life interest was unregistered. The property was transmitted to the deceased's son, who was the beneficiary under the will. The son became registered as proprietor. 80Priestley JA (Hope and Samuels JJA agreeing) held, at 480, that whilst the appellant could have enforced her life interest against the deceased and perhaps his executor, the appellant had no personal right against the son and there was no provision in the Real Property Act that prevented s 42 operating in his favour as a volunteer. He held his interest absolutely free from any estate or interest of the appellant. In coming to this conclusion, the Court had regard, relevantly, to ss 42, 43 and 124 (now s 118). 81The importance of the decision in Bogdanovic v Koteff was that the Court rejected a stream of academic commentary to the effect that s 42 did not give indefeasibility to the registered title of a volunteer. There was support for that view in a series of Victorian decisions including King v Smail [1958] VR 273. In Bogdanovic v Koteff the Court took the view that the reasoning in Frazer v Walker applied to the New South Wales Real Property Act. Priestley JA, at 479, considered that in Frazer v Walker the Privy Council: "... took the more limited view that the sections from which the general proposition was derived by those who said volunteers were not within the meaning of s 42, did not support such a general proposition, but created only such exceptions to the general operative part of s 42 as were specifically stated in the sections themselves." 82His Honour referred to the statement of Lord Wilberforce, speaking for the Privy Council, at 580-581, that the concept of indefeasibility of title: "... is central in the system of registration. It does not involve that the registered proprietor is protected against any claim whatsoever; ... there are provisions by which the entry on which he relies may be cancelled or corrected, or he may be exposed to claims in personam. These are matters not to be overlooked when a total description of his rights is required. But as registered proprietor, and while he remains such, no adverse claim (except as specifically admitted) may be brought against him." 83In Farah Constructions v Say-Dee the High Court, at [198], appeared to accept that volunteers have the protection of indefeasibility, when it concluded that "the registered proprietors prevail over [the defendants], even if [the registered proprietors] are volunteers". 84The first proposition that must be accepted, therefore, is that Felicity's title as registered proprietor (on the assumption that Claude was not her agent) is not vulnerable because she is a volunteer per se. The question that then needs to be asked is whether she acquired title "from or through a person registered as proprietor of the land through fraud". The "person" in this case was Claude and it is his fraud, if proved, which is relevant. 85The meaning of the phrase "through or under" was considered in obiter observations by the Court of Appeal in Sahab Holdings Pty Ltd v Registrar-General (No 2) [2012] NSWCA 42. The case concerned whether an easement could be restored to the register. Section 12A(3) of the Act prohibits proceedings against the Registrar General by a person given notice, relevantly, of the removal of an easement, or any person claiming "through or under" that person. 86Campbell JA and Tobias AJA (McColl JA agreeing) made a number of obiter observations about s 118(1)(d)(ii). Their Honours stated, at [28]: "There is a clear difference between the expression 'through or under' in s 12A(3) and 'from or through' in s 118(1)(d)(ii), although the same idea is involved. It is that A claims 'through' B if A has acquired title or rights from B, or from someone who has acquired rights from B, and so on through howsoever many intermediary titleholders or holders of rights there might be between A and B. One is looking at the history through which A's rights have been acquired, but it does not involve any question of whether the title that B has is dependent for its validity upon the title of A." 87Their Honours went on to examine other provisions of the Real Property Act that use the term "through or under" and observed, at [32]: "In accordance with that understanding of 'through', s 118(1)(d)(ii) permits an action for repossession or recovery of land to be brought against a registered proprietor to whom someone, who themselves became registered through fraud, has transferred the land (not being a transferee bona fide for valuable consideration) and whether by way of testamentary devise or by a gift inter vivos. The action for repossession or recovery can be brought even though the donee from the fraudster acquires his or her own title by registration. Section 118(1)(d)(ii) thus has the effect that the title that the donee acquired by registration is subject to attack by reason of the fraud." (emphasis added) 88On appeal to the High Court, it was held that there had been no omission from the register: Castle Constructions v Sahab Holdings. Importantly, the plurality, Hayne, Crennan, Kiefel and Bell JJ, observed, at [19], that the correct starting point in determining whether a registered proprietor's title is indefeasible was s 42. The plurality did not comment on the Court of Appeal's observations in respect of s 118(1)(d)(ii). However, Gageler J, at [51], agreed with the Court of Appeal's construction of the word "through". 89For myself, I would not, for the purposes of subs (1)(d)(ii) endorse the observations of Campbell JA and Tobias AJA at [28] (set out above at [86]). However, their analysis at [32] is, with respect, sound. As Barrett J observed, at [177], on the natural meaning of the words "from or through", Felicity was a person deriving (otherwise than as a transferee for valuable consideration) from Claude. 90The next question is whether Claude was a person "registered ... through fraud". Barrett J correctly identified this phrase as the operative part of the section. His Honour considered it meant whether the process of registration itself was achieved by fraud rather than the transaction being impugned by fraud. 91It is useful at this point to refer back to the two limbs of s 118(1)(d) for two reasons. The first is to consider the similarity in the language used in each paragraph. The second is to ascertain what is captured in each paragraph. It should be noted that "through" is an ordinary English word meaning "by means of", "by reason of" or "in consequence of": Macquarie Online Dictionary. 92Next, it is necessary to observe that both paragraphs of s 118(1)(d) use the phrase "registered as proprietor of the land through fraud". In para (i) this covers a person who obtains title by fraud as I have discussed. In this case, on the conclusion I have reached, Felicity obtained her title through, that is, by or as a result or in consequence of, the fraud of her agent. There was no suggestion in the argument, or in the reasons of Barrett J, that the provision meant otherwise. Nor could it mean anything else. Otherwise, there would effectively be no provision governing the bringing of proceedings for the possession or the recovery of land against a registered proprietor who obtained title by fraud. 93Given that in para (ii) the same expression, "registered as proprietor of the land through fraud" appears, there is no reason either from the text or context of the provision why a different meaning would be attributed to it. If that is right, there is no basis for confining para (ii) to the registration process. This then leads to a consideration of the interrelationship of s 42, s 45 and s 118(1)(d)(ii). 94Section 42 provides an exception to indefeasibility in the case of fraud. Pursuant to s 45, bona fide purchasers for value are protected notwithstanding the fraud of the vendor. Section 118(1)(d) specifies what proceedings are or are not available in relation to the fraud exception. Paragraph (i) permits proceedings for recovery of land against a registered proprietor who is affected by fraud, whether the person has given value or is a volunteer. Paragraph (ii), on an ordinary reading of its terms, provides for the availability of suit against a person, who is not a transferee bona fide for valuable consideration if they derive title from or through a person registered as proprietor through fraud. Thus, the title of the volunteer, who may be entirely innocent of any fraud, is defeasible if they derived their title "from or through" a person who was registered through fraud. On this approach, assuming that it is established that Claude was fraudulent, Felicity's title is vulnerable at the suit of GC & Co. 95This is not to say, however, that a volunteer does not obtain the benefit of indefeasibility. As Lord Wilberforce observed, in Frazer v Walker at 580-581, the concept of indefeasibility does not mean that the "registered proprietor is protected against any claim whatsoever". As I understand the scheme of the Act, a volunteer taking in the circumstances described by s 118(1)(d)(ii) would have the benefit of indefeasibility against all interests except for a person deprived of their land through the fraud. As Barwick CJ stated in Breskvar v Wall at 385: "The stated exceptions to the prohibition on actions for recovery of land against a registered proprietor do not mean that that 'indefeasibility' is not effective. It is really no impairment of the conclusiveness of the register that the proprietor remains liable to one of the excepted actions any more than his liability for 'personal equities' derogates from that conclusiveness." 96Approached in that way, the scheme of the Act is relatively simple. Section 42 provides for immediate indefeasibility except, relevantly, in the case of fraud. That is the general provision. The Act, in s 118(1)(d) specifies the circumstances in which the fraud exception operates. This gives effect to each section and also retains conformity in the language in each of para (i) and para (ii). 97The defeasibility of the title of a person who took from or through a person who was registered through fraud is in apparent conflict with the principle that the fraud must be "fraud for which the person becoming registered is responsible": Registrar of Titles (WA) v Franzon at 618. This is, however, a necessary consequence of the plain meaning of the language employed by s 118(1)(d)(ii). Nor does this construction mean that s 118(1)(d)(ii) has a wider operation than s 42, which uses the phrase "except in case of fraud". 98Before concluding upon the construction of s 118(1)(d)(ii), I would also differ from the conclusion of the primary judge that s 118(1)(d)(ii) was directed to the process by which registration was achieved, having regard to the rest of the section. This is best illustrated by the contrast to be drawn with the text of s 45(2), which refers both to a person becoming registered as proprietor through fraud: see para (a) and to a person who may have procured registration of, relevantly, the transfer through fraud: see para (b). Section 118(1)(d)(ii) does not replicate that language and in my view, there is no warrant in the text to confine it to the process of registration. 99It follows in my opinion that GC & Co was entitled to bring proceedings against Felicity under both limbs of s 118(1)(d). Having regard to this conclusion, it is not necessary to consider GC & Co's application to amend ground 3 (see [77] above).

Was Felicity bound by the issue estoppels found to bind Claude? 100The trial judge held, at [152]-[153], that Felicity was not bound by the issue estoppels that bound Claude, because, not having been a defendant in the Federal Court proceedings, she was a not a privy in interest of Claude. (The trial judge's reference, at [42], to Felicity being the twentieth respondent in the Federal Court proceedings was an error). Barrett J reached this conclusion notwithstanding that the Dairy Farm was a relevant consideration in Davies J making the declaration. This was not sufficient, in Barrett J's view, as Claude was not "defending anything in which Felicity had an interest" and that "[t]he title to the dairy farm was simply not in issue". 101It will be recalled that the issue estoppels found by his Honour were: (a) that Claude treated the $4.25 M loan account with GC & Co as his entitlement to be drawn down at his will; (b) that Claude drew upon the loan account as he saw fit; (c) that Claude caused the passing of a resolution of directors of GC & Co allowing for the payment of retrospective interest on the loan account; and (d) that the actions in the foregoing (a), (b) and (c) were "oppressive and unfairly prejudicial" to the members of GC & Co. I have concluded in Claude's appeal that only the findings in (c) and (d) constituted issue estoppels. The same applies in this case. 102In Ramsay v Pigram [1968] HCA 34; 118 CLR 271 at 279, Barwick CJ stated that the "basic requirement of a privy in interest" is that "the privy must claim under or through the person of whom he is said to be a privy". Taylor J, at 287, observed that the same rule applied whether two or more persons were subject to a joint or concurrent liability. As Barrett J correctly explained, at [151], where: "... the question is of privity between a defendant and another person, the requirement must be that the defence by the defendant is such that it is defence by the privy under or through the defendant." 103GC & Co contended that although Barrett J's statement of principle was correct, his Honour misapplied the test in determining whether Felicity was Claude's privy so as to be bound in that his Honour determined the matter by reference to what Claude was doing when he defended the Federal Court proceedings. The question his Honour should have asked was whether Felicity, in these proceedings, was defending her registered title, under or through Claude (Orange 16). GC & Co submitted that Felicity was Claude's privy in interest according to Barwick CJ's test in Ramsay v Pigram, at 279, because, as the recipient of a gift, she necessarily derived her interest in the land from him and, as a donee, she necessarily claimed under or through Claude's purported right to draw upon the loan account to acquire the Dairy Farm. 104In oral submissions, GC & Co further contended that privity was established by reason of Felicity's position as joint tenant or because she was a principal and Claude was her agent in matters relating to acquiring title to the Dairy Farm. Thus, although the transfer of the Dairy Farm was not directly in issue in the Federal Court proceedings, the means by which the Dairy Farm was purchased was in issue. GC & Co alleged that, in reality, no consideration passed for the purchase of the Dairy Farm, because Claude purportedly paid for it by debiting the loan account. In the Federal Court proceedings, he was defending the propriety of all debits to the loan account, including the $1 M purchase price for the Dairy Farm. 105Felicity contended that as she was not a party to the Federal Court proceedings, she had no interest in the oppression proceedings and the relief in those proceedings did not seek to impugn the title to the Dairy Farm, held jointly by her and Claude. Thus, the decision against Claude could not truly be said to be in substance a decision against Felicity: Champerslife Pty Ltd v Manojlovski [2010] NSWCA 33; 75 NSWLR 245 at 267. Further, Felicity's claim to an indefeasible title arose by virtue of registration. She did not, therefore, claim any right by virtue of Claude's right: Breskvar v Wall at 385. Felicity also contended that no issue estoppels arose from the Federal Court proceedings. She argued that the issues involved in the oppression proceedings under s 260 of the Corporations Law were intractably different to the current concern with the fraud exception to indefeasibility. 106The claim in the Federal Court proceedings was that Claude had acted improperly in claiming an entitlement to $4.25 M of the settlement moneys. The findings made by Davies J that underpinned the Declaration included, relevantly, that "Gerard and Claude did not at the time regard the sum of $4.25M as Claude's money". This was directly in issue in the claim against Felicity.

Consideration 107In Ramsay v Pigram, the Court held there was no privity in interest in that case. A claim had been brought by a police officer for damages for personal injuries he sustained in a collision with the respondent's vehicle. The jury found a general verdict for the police officer. Subsequently, the respondent brought an action against the appellant, as nominal defendant for the State, for personal injuries he had sustained in the accident. The nominal defendant relied upon an issue estoppel to prevent the respondent asserting negligence on the part of the police officer in the course of his duty. There was no privity of interest, for the reasons explained by Barwick CJ, at 279: "Here it is quite clear that the Government had no interest in the action between the respondent and the police officer: nor can it be said that the action brought by the police officer was brought by him in any sense on behalf of the Government or that in relation to the defence of contributory negligence the respondent could have been treating the Government as the real 'defendant' to that claim. In every respect the action between the respondent and the police officer was personal to each of them, neither being in any sense in relation to the action or any of the issues involved in it, representative of another. Nor can it be said that the Government in any sense claims under or in virtue of the police officer or of any right of his, or that it derives any relevant interest through him." 108The principle in Ramsay v Pigram was applied by the Federal Court in Trawl Industries v Effem Foods (1992) 36 FCR 406. In his judgment at first instance, Gummow J, at 413, explained the operation of the principle as follows: "The requirement of identity of parties between the parties in the concluded action and the action in which the estoppel is raised is satisfied where there is privity in interest. The basic requirement of a privy in interest is that the privy must claim 'under or through' the person to whom he is said to be a privy. Privity was described in Bigelow v Old Dominion Copper Mining and Smelting Co 225 US 111 (1912) at 128-129, in terms consistent with traditional doctrine, as a mutual or successive relationship to the same right of property. Thus, the necessary identity in interest may arise from a successive relationship in a temporal sense. Accordingly, a judgment against the holder of an office will bind successors in that office: see Dundas v Waddell (1880) 5 App Cas 249. The necessary identity in interest in this sense is also seen with privies by operation of law, such as testator and subsequent executor, and intestate and subsequent administrator. Other examples are given in S L Phipson, pp 871-872; Halsbury's Laws of England (4th ed reissue, 1992), Vol 16, pp 874-875. But the privy may also be bound where the relationship, whilst not successive in the above sense, still is mutual. Thus, as Isaacs ACJ explained in Walker v Bowry [1924] HCA 28, (1924) 35 CLR 48], with reference to Kendall v Hamilton (1879) 4 App Cas 504, a judgment against a joint contractor is a bar to any action against the others, not only because the cause of action is merged in the judgment but also because the right of each of them to be sued jointly is gone." 109An appeal to the Full Court of the Federal Court was dismissed: Effem Foods Pty Ltd v Trawl Industries of Australia Pty Ltd (In Liq) (1993) 43 FCR 510. In commenting on whether a privity in interest had been established in that case, Burchett J, at 541, stated, that for there to be a privity in interest, "in the eye of the law there is an identity between the privy and that party, as, for example, in the case of an executor and his testator". His Honour referred to Bain v Cooper (1841) 8 M & W 751; 151 ER 1243 where Parke B said, at 1244: "[I]n all these cases there is a privity between the parties, which constitutes an identity of person. But that is not so in the present case, where the parties are only in the relation of principal and surety, and there is no privity of interest between them, since the surety contracts with the creditor: they are not one person in law, and are not jointly liable to the plaintiff." 110Both Gummow J at first instance in Trawl v Effem and the Full Court of the Federal Court on appeal rejected any extension of privity in interest beyond the principle as stated by Northrop and Lee JJ, at 526, that: "... privity of interest is limited to cases where a person claims a title or right or makes a claim by virtue of a title or right in someone before him." 111This Court was not referred to, and my own researches have not been able to find, any case in which it was held that joint tenants were privies in interest. Perhaps this is because the principle that joint tenants take the same interest, has meant that the question of privity has not been in contention in cases involving joint tenants. Notwithstanding the absence of authority, it seems to me that by virtue of the joint tenancy, there is the "mutual ... relationship to the same right of property" necessary to constitute Felicity a privity in interest so as to be bound by the issue estoppels in Claude's case. 112Before leaving this point, a question was raised as to whether Felicity should have been joined to the Federal Court proceedings and the consequence, for these proceedings of her not being joined: see John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd [2010] HCA 19; 241 CLR 1. In my opinion, there is nothing in this question. There was no question in the John Alexander's Clubs case that it was a privy in interest. It was a proper party to the proceedings because it had a separate interest that was affected by the court orders.

Fraud proved on the evidence 113GC & Co also complained that his Honour failed to deal with their alternative argument that fraud by Claude had been proved on the facts in any event. Having regard to my conclusion on the issue estoppels, this question does not arise. But in any event, fraud was clearly established on the facts. This is apparent from the review of the facts canvassed in GC & Co's appeal against Claude: [2013] NSWCA 454 at [10]-[32]. As the claim against Felicity was brought in the same proceedings, the evidence was adduced in respect of both claims. 114It is to be remembered that the source of the $9.5 M was a settlement in respect of litigation arising out of business dealings between CSIRO and related companies. 115Fraud, in my opinion, was established by the fact, as found by Barrett J at [79]-[80], that at the time it was suggested that $4.25 M of the settlement monies be paid to Claude, namely, GC & Co's solicitor's letters of 6 July 1993, his entitlement to that money was not "tied to any entitlement or loss". Rather, as the correspondence demonstrated, the purpose of the split was to minimise the payment of capital gains tax. In other words, it was a ruse so as to avoid capital gains tax. 116This conclusion is fortified by the manner in which Gerard and Claude explained the purpose of the division of the monies in different ways and at different times: viz, to CSIRO when negotiating the settlement; including GC & Co's advice to CSIRO during the course of a mediation that it proposed to amend its pleading against CSIRO to include a claim by GC & Co in defamation and injurious falsehood, there being no indication that this proposed amendment extended to Claude personally. That no claim was intended to be brought by Claude personally was further evidenced by the fact that the proposed amended pleading did not include a claim for him: see Barrett J at [74]. There was no evidence that supported a conclusion that Claude was entitled to $4.25 M from the settlement. 117Accordingly, even if the issue estoppels did not operate as against Felicity, there was evidence of Claude's fraud in the proceedings.

Conclusion 118For these reasons, I propose the following orders: (1) Allow the appeal and set aside orders 2 and 3 made in the Equity Division on 11 November 2011 and entered on 15 November 2011. (2) Declare that Felicity Cassegrain holds 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. (3) Order that Felicity Cassegrain execute a Real Property Act transfer the property so described to the previous registered proprietor, Gerard Cassegrain & Co Pty Ltd [ACN 000 342 174] by Friday 14 February 2014. (4) Order that Felicity Cassegrain pay Gerard Cassegrain & Co Pty Ltd's [ACN 000 342 174] costs of the trial with respect to the relief claimed against her. (5) Order that Felicity Cassegrain pay the appellant's costs of this appeal. (6) Grant Felicity Cassegrain a certificate under the Suitors' Fund Act 1951 in respect of the costs of the appeal. 119BASTEN JA: This appeal was run concurrently with the appeal by Claude Cassegrain from orders made against him by Barrett J in the Equity Division: Gerard Cassegrain & Co Pty Limited v Cassegrain [2011] NSW 1156. Barrett J dismissed the claims for relief sought against Felicity Cassegrain. Although there was only one proceeding below and the underlying circumstances are the same in each appeal, this Court has decided to prepare separate judgments. These reasons will assume the factual analysis set out in my judgment in the other matter without repeating it. 120From 10 March 1997 until 18 April 2000 Claude and Felicity Cassegrain were registered proprietors of the dairy farm as joint tenants. On the latter date, Claude Cassegrain executed a transfer of his interest in the land in favour of his wife as transferee, for a nominal payment of $1. 121That transfer followed the judgment of Davies J in the Federal Court and the declaration in respect of the conduct of Claude Cassegrain, on 15 July 1998. Felicity Cassegrain was not a party to the Federal Court proceedings: accordingly the company could not rely in the claim against her on the issue estoppels relied on against her husband. 122The ultimate relief available to the company depends upon the defeasibility of the title presently held by Felicity Cassegrain in her own name. That in turn depends in part upon the title she obtained in March 1997, as joint tenant with her husband. Otherwise it depends on the title obtained from her husband in April 2000. The indefeasibility of her title, upon which she relies, derives from registration: Real Property Act 1900 (NSW), s 42. There are exceptions to that principle, falling into two categories. The first, expressly provided by s 42, arises in the case of fraud. The second involves the availability of a cause of action against the owner personally. The latter was not relied on at trial. (a) the first transfer - agency 123The exception based on fraud depends upon proof of actual dishonesty on the part of the transferee: Assets Co Ltd v Mere Roihi [1905] AC 176 at 210 (Lord Lindley). However, the fraud of her husband could not be attributed to Felicity Cassegrain unless he was her agent for the purpose of obtaining an interest in land. The mere fact that she gave no valuable consideration (and thus would be described in equity as a volunteer) does not affect the indefeasibility of her title under s 42 of the Real Property Act: Bogdanovic v Koteff (1988) 12 NSWLR 472. It may be inferred that she knew that payment was to be made, purportedly from her husband's loan account with the company, but that did not entail an understanding or knowledge of fraud, let alone participation in it. Nor did the company suggest otherwise. 124The company argued that Claude Cassegrain acted as agent for his wife for the purposes of the transaction and that she was fixed with knowledge of his fraud. The trial judge dealt with this point at [154]-[158]. Noting that the transfer was signed on behalf of the transferees by a solicitor, he said that the only evidence of the appointment of the solicitor was a letter dated 27 February 1997 on the letterhead of the company signed by Claude Cassegrain as managing director. That did not demonstrate Claude Cassegrain giving directions to the solicitor for the transferees (being himself and his wife) on behalf of the transferees, thus evidencing him acting as his wife's agent. This negative finding was challenged on appeal by the company. 125The letter requested the solicitor, Mr McCarron, to register the transfer "as exchanged". The transfer was dated 14 September 1996 (some five months before the date of the letter) and had been signed by Mr McCarron on behalf of the transferees, being Claude and Felicity Cassegrain. Although there are indications that the instruction to register the transfer was given on behalf of the transferees - the letter was headed "Re: Purchase of diary - C & F Cassegrain" - it could not have provided instructions for Mr McCarron to sign on behalf of both Claude and Felicity Cassegrain: those instructions must have been given some months earlier. There was simply no evidence as to how the initial instructions were given on behalf of Felicity Cassegrain. It is entirely plausible that she spoke to the solicitor directly to give such instructions. (The reason for the letter, requesting registration months after the transaction had been effected is obscure.) Given the serious consequence of drawing an inference that the instructions were in fact given by Claude as her agent, the preferable inference is that she acted on her own behalf. (There is no basis for inferring that Mr McCarron signed on her behalf without instructions from her.) (b) the first transfer - a single defective joint interest 126The next question is whether, because a joint tenancy involves a single interest in land shared by two persons, her interest was infected by the fraud of her husband, accepting that she did not participate in it herself. The company relied on the principle stated Dixon J in Wright v Gibbons [1949] HCA 3; 78 CLR 313, at 329, that "in contemplation of law joint tenants are jointly seised for the whole estate they take in land and no one of them has a distinct or separate title, interest or possession". In the more expansive description in Gray and Gray, Elements of Land Law (OUP, 5th ed, 2009) at [7.4.5]: "Joint tenancy is thus an undifferentiated co-ownership in which an entire estate or interest in land - rather than any defined proportion or aliquot share - is vested simultaneously in all the co-owners. Joint owners are bound up in a 'thorough and intimate union of interest and possession'. So comprehensive is this co-ownership that joint tenants comprise, in the eyes of the law, a collective entity - one composite person - together holding one and the same estate in the subject land, whether that estate be freehold or leasehold. Accordingly any transfer of land to two or more persons as joint tenants 'operates so as to make them, vis a vis the outside world, one single owner'." The last internal quote was that of Lord Browne-Wilkinson in Hammersmith and Fulham LBC v Monk [1992] 1 AC 478 at 492. 127Dixon J further explained that each joint tenant "has a right shared with his co-tenants to the whole common property but no individual right to any undivided share in it ... for this reason joint tenants should not be spoken of as holding undivided shares": Wright v Gibbons at 330, quoting Radclifffe's Real Property Law, p 33. Dixon J noted that Joshua Williams in his Lectures on the Seisin of the Freehold (1878), p 117, "went as far as saying that joint tenants in fact were considered by the law as one person for most purposes". These statements he described as revealing "many traces of the scholasticism of the times in which [the] principles were developed", namely feudal times. Nevertheless, after giving two examples of possible disposition of parts of jointly held interests involving (as that case did) three joint tenants, he concluded at 332: "While these two instances may show that, independently of the Torrens system, by the use of appropriate assurances, A and B could have severed the jointure between C and themselves as well as between one another, the objection still remains that they could not have done so by mutual releases one to another nor by mutual grants one at least of which must have operated, if at all, as a release. That objection is probably a good one." 128However, Dixon J noted that the purity of that logic was qualified, and that the logic must in any event give place to the operation of the Torrens systems of title by registration under the Real Property Acts. Gray and Gray also noted the remarks of Lord Nicholls of Birkenhead in Burton v Camden LBC [2000] 2 AC 399 at 404-405 that the concept of co-ownership is "an esoteric notion ... remote from the realities of life. It should be handled with care and applied with caution". 129Support for the proposition that, even under the general law, a joint tenant who was a bona fide purchaser of a value of a legal estate in land without notice enjoyed that entitlement unaffected by a prior equitable interest of which the other tenant had notice, may be found in Myers v Smith (1992) 5 BPR 11,494 at 11,500. Hodgson J (sitting in the Equity Division) stated: "The circumstance that the joint interest of one co-purchaser is affected by the prior equitable interest, while that of the other co-purchaser is not, does not, in my view, effect a severance of the joint tenancy. It has been established that the grant of a mortgage by way of charge under the Torrens system does not effect a severance: Lyons v Lyons [1967] VR 169; and I think this suggests there is no severance in the present case. This would mean that if the co-purchaser with notice died before any severance was effected or before the equitable interest was secured in some other way, the equitable interest would be extinguished as the property passes by survivorship to the co-purchaser who had no notice; where as if the co-purchaser without notice died before severance or before the equitable interest was somehow otherwise secured, the equitable interest would become enforceable against the survivor's total ownership of the land." 130That authority has been doubted: see Diemasters Pty Ltd v Meadowcorp Pty Ltd [2001] NSWSC 495; 52 NSWLR 572. In that case the sole director of the registered proprietor of land (Meadowcorp) fraudulently obtained a discharge of mortgage from the mortgagees (the plaintiffs) and sold the land to two purchasers. One purchaser was held to be on notice of the fraud, but the other purchaser was held not to be involved. Windeyer J declined to follow Myers v Smith, explaining at [17]: "I have come to the conclusion that I should not follow it as I do not consider there is good reason to make additional inroad on the general concept that joint tenants are considered as one. Where two persons, one taking with notice of and being a party to fraud, take as joint tenants under one instrument - as they must - the doctrine of the unities requires unity of title and unity of interest so that one cannot take more than the other. In such a case there does not seem to me to be any proper justification for any inroad upon pure doctrine.... While the doctrine of bona fide purchaser for value without notice could operate differently for purchasers taking as tenants in common, because each takes a separate title and on sale proves a separate title, I consider that purchasers taking as joint tenants must be treated as one." 131The case, like Myers v Smith, was concerned with the position under the general law. The purchasers from Meadowcorp were not registered as proprietors under the Real Property Act: accordingly no issue arose as to the proper analysis with respect to registered title. Nor is it possible to derive assistance from general law principles relating to the manner in which joint interests are held in other forms of property, in construing the Real Property Act and the consequences of title by registration. 132In Peldan v Anderson [2006] HCA 48; 227 CLR 471 the following statements appears in the joint reasons of the Court at [19]: "That view of the matter accords with historical understandings of the nature of a jointure at common law. Joint tenants were generally regarded as together composing one single owner, each being seised per my et per tout and consequently having nothing to convey to the other. However, in Wright v Gibbons, Dixon J doubted that this proposition could be regarded as an unqualified truth, because 'the aliquot share of each [joint tenant] existed in contemplation of law as a distinct and ascertained proprietary interest' for the purposes of alienation, including alienation to a co-owner." 133Peldan was concerned with the effect of a transfer lodged by a husband of his interest in land held with his wife as a joint tenancy, thus creating a tenancy in common, for the purposes of s 121 of the Bankruptcy Act 1966 (Cth). That provision allows the trustees of a bankrupt to recover property which would probably have been available to creditors if the property had not been transferred away to prevent that consequence. The Court stated at [29]: "The interest of Mrs Pinna as tenant in common of the Carindale property cannot be said to have been 'carved out' of any property of her husband. If anything, it represented the transmogrification of her prior interest as joint tenant. What was 'carved out', in a loose sense, from both Mr Pinna's and Mrs Pinna's prior interest as joint tenants was the right of survivorship." 134However, the joint reasons did identify that, after the transfer, Mrs Pinna acquired an interest which she did not previously have, stating "[t]hat interest as joint tenant was transformed into, or extinguished and replaced by, the interest as tenant in common". In the end, nothing turned on this analysis because the onset of bankruptcy itself worked a severance of the joint tenancy: at [48], referring to the trustees of the property of Cummins v Cummins [2006] HCA 5; 227 CLR 278 at [14], adopting the reasoning of Sackville J at first instance: Prentice v Cummins (No 6) (2003) FCA 1002; 134 FCR 449. 135In the present case the company relied upon the terms of s 100 of the Real Property Act to support a submission that, prior to the transfer in April 2000, there was a single interest in the property, held jointly by Claude Cassegrain and Felicity Cassegrain and affected by the fraud of Claude Cassegrain. Section 100 is in the following terms, so far as relevant: 100 Registered co-tenants (1) Two or more persons who may be registered as joint proprietors of an estate or interest in land under the provisions of this Act, shall be deemed to be entitled to the same as joint tenants." 136The operation of this provision has caused confusion, as it appears to be inconsistent with the terms of the Conveyancing Act 1919 (NSW), s 26, which provides that "a disposition of the beneficial interest in any property ... for two or more persons together beneficially shall be deemed to be made to or for them as tenants in common, and not as joint tenants". In Hircock v Windsor Homes (Development No 3) Pty Ltd [1979] 1 NSWLR 501 at 505-506, Hutley JA considered that the apparent conflict could be resolved by treating the words "who may be registered" as referring, not to their state prior to registration, but as a description of their position on registration. Hircock concerned survivorship as an incident of joint tenancy under the general law. 137On one view, the Real Property Act adopts an allodial system of title by registration which need not reflect the principles of a tenurial system. Nor does s 100(1) of the Real Property Act prescribe that all principles applying to a joint tenancy under the general law operate with respect to registered title, nor indeed that any specific incidents apply. In Wright v Gibbons, Rich J (at 326) noted that "some confusion has occurred by concentrating attention on the principles of common-law conveyancing and not observing the innovation effected by the new or Torrens system". Thus, the Real Property Act recognises that a joint tenant may have an interest in the land which can be severed by unilateral action: s 97. But in any event, under the general law relating to joint tenancy, "the aliquot share of each existed in contemplation of law as a distinct and ascertained proprietary interest": Wright v Gibbons at 333 (Dixon J), cited with approval in Peldan at [19]. 138Although the authorities reveal a degree of ambivalence as to the extent to which feudal incidents attaching to joint tenancy (other than the accepted incident of survivorship) continue to apply, it is preferable in principle to treat the shares of the joint tenants, holding title under the Real Property Act, prior to any severance, as differentially affected by the fraud of one, to which the other was not party. The contrary view would impute fraud to a party who was not herself fraudulent. On that approach, Felicity Cassegrain should be treated as having a half interest in the dairy farm, from March 1997, which was indefeasible, because unaffected by her husband's fraud. 139Thus, in 1997 Felicity Cassegrain enjoyed indefeasibility of title with respect to her interest in the joint tenancy which, despite the fact that she made no contribution to the purchase price, may be assumed to be a one-half interest. Given the absence of proof of circumstances which would warrant the company having a claim in equity against her personally at the time of the transfer in 1997, there is no need to consider any further exception to the principle of indefeasibility at that time. 140A different conclusion arises with respect to Claude Cassegrain. The findings with respect to him involve "actual fraud" and "dishonesty" as described by Mason CJ and Dawson J in Bahr v Nicolay [No 2] [1988] HCA 16; 164 CLR 604 at 614, referred to with approval in Farah Constructions Pty Ltd v Say-dee Pty Ltd [2007] HCA 22; 230 CLR 89 at [192]. The indefeasibility principle would not have protected him from an action by the company at a time when he was registered proprietor as joint tenant. (c) the second transfer - April 2000 141The next question is whether the company has a right as against Felicity Cassegrain as registered sole proprietor of the land. As her right to Claude Cassegrain's interest was not obtained by survivorship, the reasoning of Hodgson J in Myers v Smith is not applicable. Rather, this matter is to be resolved by reference to the terms of s 118 of the Real Property Act, which, so far as relevant provide: 118 Registered proprietor protected except in certain cases (1) Proceedings for the possession or recovery of land do not lie against the registered proprietor of the land, except as follows: ... (d) proceedings brought by a person deprived of land by fraud against: (i) a person who has been registered as proprietor of the land through fraud, or (ii) a person deriving (otherwise than as a transferee bona fide for valuable consideration) from or through a person registered as proprietor of the land through fraud, ... 142In considering the operation of this provision, the trial judge stated at [177]: "Reference has been made to the 'new and different indefeasible title' that arose in Felicity through registration of the second transfer. Felicity must be accepted as a person 'deriving' that new and different title 'from or through' Claude, since, had it not been for the effect of the second transfer (by Claude to Felicity), Felicity would not have attained the new and different title. Furthermore, since the transfer registration of which created Felicity's new and different title was for a purely nominal consideration of $1.00, she was not, in relation to the acquisition of that interest, 'a transferee ... for valuable consideration'." 143The company's claim against Felicity nevertheless failed for the reasons set out in the following paragraphs: "[178] Notwithstanding that the elements on which s 118(1)(d)(ii) depends may be, to that extent, satisfied, one important thing is lacking. Claude, the person 'from or through' whom Felicity derived her interest, was not 'registered as proprietor of the land through fraud'. These are the operative words of the section. Their focus is exclusively on the process by which registration as proprietor was achieved and the question whether that process was achieved by fraud. This is the effect of the words 'registered ... through'. Section 118(1)(d)(ii) thus deals with a much narrower and more specific subject-matter than the 'except in case of fraud' exception in s 42. [179] The process by which Claude came to be registered as one of two proprietors involved the lodgment of a transfer for registration, followed by registration itself. The transfer was regularly executed under the common seal of GC & Co. It was a genuine instrument, regular on its face and suitable to be registered. There is nothing calling in question the integrity of the transfer or of the registration process to which it was subjected following its lodgment. The process by which the registration of Claude as a registered proprietor was achieved was not attended by fraud. The fact that he had wrongfully drawn funds from GC & Co to satisfy the consideration expressed in the transfer (or, perhaps more accurately, that he gave illusory consideration by reference to the false loan account) is remote from the process of registration and therefore beside the point." 144There are difficulties with this reasoning. First, acceptance that Felicity Cassegrain derived her title "from or through" her husband, adopted a different frame of reference to the consideration of whether Claude Cassegrain became registered as proprietor of the land "through" fraud. Thus it is said that s 118(1) deals with a narrower subject matter than the exception in s 42. That would be surprising, because it would appear to leave no statutory mechanism for the defrauded landowner to recover the land, despite the exception in s 42(1), leaving the transferee's title defeasible. Secondly, the term "through" undoubtedly connotes a connection between the acquisition of title by registration and fraud, but the section does not, as the reasoning suggests, refer to "fraudulent registration". It makes good sense to say that Claude Cassegrain was registered as owner of the land "through fraud", that is through his own act in arranging for the company to transfer title to the land for valuable consideration without that consideration being paid. Just as the company was deprived of its title "by fraud", Claude Cassegrain obtained his title "through fraud". 145No authority was cited by the primary judge (or in this Court) to support a narrower reading of the provision so as to attach the concept of fraud only to the administrative process of registration, nor would such a construction conform to the scheme of the Real Property Act. But even if the narrow view were to be adopted, and accepting the trial judge's construction of the letter directing registration of the transfer on 27 February 1997, the process of registration was the result of a direction given by Claude Cassegrain in his role as managing director of the company, as a step in the execution of the fraud. Thus, on any view the terms of s 118(1)(d) were satisfied. 146The finding that Felicity Cassegrain was not a transferee bona fide for valuable consideration was not challenged. In principle, it appears to have derived from the conclusion that, although Felicity Cassegrain was not party to the Federal Court proceedings, it is probable that she knew of the declaration made by the Federal Court against her husband and the consequence that if the company were to commence appropriate proceedings for recovery of the property from Claude Cassegrain, such an action would probably succeed because he held the property as constructive trustee for the company alone. However, it is not necessary to consider the point further. 147In the result, the company is entitled to obtain an order that Felicity Cassegrain transfer a half share in the dairy farm (being the share obtained from her husband) to the company. 148There remains a question as to whether the company has a personal action against Felicity Cassegrain with respect to the other half share of the land. The company's argument in favour of such a conclusion was explained by the primary judge at [163] in the following terms: "Here, GC & Co contends (and I have found), Claude was guilty of fraudulent breach of fiduciary duty against GC & Co in connection with the acquisition of the Dairy Farm by Felicity and him as joint tenants, in that, to satisfy the unpaid consideration for the transfer, Claude drew on the false loan account and thereby obtained from GC & Co value to which he had no entitlement. The situation was thus, in substance, akin to one in which property was purchased with stolen money, albeit that Felicity may not have known at the time that the particular financial advantage had been improperly obtained by Claude. The circumstances were, in that way, the same as those in Heperu Pty Ltd v Belle [2009] NSWCA 252; (2009) 76 NSWLR 230 where a husband paid into his wife's bank account funds misappropriated by him (she being unaware of the misappropriation at the time), from where they were expended for his benefit and also for hers. As Allsop P said at [93] with the concurrence of Campbell JA and Handley AJA: 'The well-known principle is that a person entirely innocent of a fraud who comes to know that he or she has received and still retains the proceeds of, or taken advantage of, a fraud to which he or she was not party, cannot knowingly seek to retain those proceeds or that advantage, without, in effect, becoming a party to that fraud and liable accordingly: Black v S Freedman & Company [[1910] HCA 58, 12 CLR 105], per Griffith CJ (at 109), per Barton J (at 110), per O'Connor J (at 110-111).'" 149It appears that the trial judge accepted that reasoning but subject to her defence based on s 42 of the Real Property Act: at [165]. However, in considering s 42, the trial judge did not address the question of any personal cause of action that the company may have had against Felicity Cassegrain. That appears to have been because the only order sought against Felicity Cassegrain in the further amended statement of claim was a declaration that she held the legal title to the property "on trust for the company absolutely": Relief, par 4. An 'in personam' action against Felicity Cassegrain could not result in such relief. Conclusions 150In this appeal the Court should make the following orders: (1) Allow the appeal and set aside orders 2 and 3 made in the Equity Division on 11 November 2011 and entered on 15 November 2011. (2) Declare 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. (3) Order that Felicity Cassegrain execute a Real Property Act transfer of a one-half interest in the property so described to the previous registered proprietor, Gerard Cassegrain & Co Pty Ltd [ACN 000 342 174]. (4) Order that Felicity Cassegrain pay the company's costs of the trial with respect to the relief claimed against her. (5) Order that Felicity Cassegrain pay the appellant's costs of this appeal. (6) Grant Felicity Cassegrain a certificate under the Suitors' Fund Act 1951 (NSW) in respect of the costs of the appeal. 151MACFARLAN JA: I agree with Beazley P as to the orders that should be made in this appeal. Subject to what follows, I also agree with her Honour's reasons. 152The questions that arose in this appeal by the company were, first, whether the company proved in its case against Felicity that Claude acted fraudulently and, secondly, whether, if it did, proof of that fact entitled the company to relief against Felicity because her title to the subject property was defeasible.

Proof of fraud 153The first question is answered by my conclusion in Claude's appeal ([2013] NSWCA 454) that Claude's fraud was proved independently of the issue estoppels by the evidence before the primary judge. Felicity was of course a party to the proceedings before the primary judge and is bound by the findings made in them. As a result, it is unnecessary to, and I do not, determine whether Felicity was bound by the issue estoppels arising from Davies J's findings in the Federal Court proceedings on the basis that, although she was not a party to those proceedings, Claude was her privy (see generally Ramsay v Pigram [1968] HCA 34; 118 CLR 271).

Whether Felicity's title indefeasible 154The answer to the second question turns on whether Felicity is affected by Claude's fraud with the result that her title to the subject property is defeasible. For a number of reasons, I consider that it is. 155First, for the reasons given by Beazley P, the inference should be drawn that Claude acted as Felicity's agent for the purposes of their acquisition of the property and its registration in their joint names (at [37]). An inference to this effect available on the evidence called before the primary judge gained strength from the fact that Felicity did not give evidence about the circumstances in which the transfer to herself and Claude occurred (see Jones v Dunkel [1959] HCA 8; 101 CLR 298). Although, to constitute an exception to indefeasibility, fraud must be that of the registered proprietor, the fraud of an agent acting within the ambit of his or her engagement is imputed to the registered proprietor. Thus, in Breskvar v Wall [1971] HCA 70; 126 CLR 376 the fraud of Petrie, who fraudulently inserted the name of his grandson Wall in a transfer and caused it to be registered, was imputed to Wall and rendered his title defeasible (at 377 and 387). 156Secondly, Felicity was infected with Claude's fraud because she and Claude took title from the company as joint tenants. The principle that joint tenants are treated by the law as in effect one person only (State of New South Wales v Loh Min Choo [2012] NSWCA 275 at [72]) was applied by Windeyer J in his forcefully reasoned decision in Diemasters Pty Ltd v Meadowcorp Pty Ltd [2001] NSWSC 495; 52 NSWLR 572 in which his Honour declined to follow the earlier decision of Hodgson J in Myers v Smith (1992) 5 BPR 11,49. Windeyer J found that where one of two joint purchasers of Real Property Act land under a single instrument had participated in fraud, both took title subject to the interests of the defrauded party (at [17]). This conclusion reflected the law's requirement that joint tenants have unity of interest in that their interests in the subject property be identical in nature, extent and duration (Peter Butt, Land Law, 6th ed (2010) Thomson Reuters at [14 07] and [19 70]; see also in the field of secret trusts Jones v Badley [1866 - 1867] L.R. 3 Eq. 635 at 655; (1867 - 1868) L.R. 3 Ch. App. 362 at 365; Rowbotham v Dunnett (1878) 8 Ch. D. 430 at 437; Freeman v Laing [1899] 2 Ch. 355 at 358 - 9). The conclusion is also consistent with that of the High Court in Advance (NSW) Insurance Agencies Pty Ltd v Matthews [1989] HCA 22; 166 CLR 606 (at 618 - 619, 620 - 621) where, in relation to an insured's duty of disclosure, the words "known to the insured" in a policy of joint insurance were held to refer to the collective knowledge of the joint insured, that is, facts that were known to at least one of them. Thus both joint insured were held bound by the knowledge of one of them. 157In my view, it follows that the fraud exception in s 42 of the Real Property Act, as reflected in s 118(1)(d)(i) of the Act, is applicable and that Felicity's title is therefore defeasible. I do not agree with Beazley P that whilst Felicity's interest as joint tenant was defeasible (because Claude acted as her agent), her subsequently acquired interest as the sole registered owner of the property was not (at [60]). As Felicity was infected with Claude's fraud both because he acted as her agent and because they were registered as joint tenants, she was a person who, within the terms of s 118(1)(d)(i), was registered as a joint tenant "through [her own] fraud". She did not shed her (imputed) fraudulent knowledge and character by taking a transfer from her co-tenant in whose fraud she was deemed to have participated. That transfer again led to her registration "through [her own] fraud": it was only possible because of their existing fraudulent registration. 158Thirdly, I agree with Beazley P that s 118(1)(d)(ii) is not directed only to the process by which registration is achieved (at [98]). Thus, that provision rendered Felicity's title defeasible even if the first two bases I have given for that conclusion are not available. The provision rendered her title defeasible because she was a volunteer and obtained her present title to the whole of the property as a consequence of a transfer from Claude, who was registered as a joint proprietor through his own fraud. 159I do not agree with Basten JA's conclusion that this provision, assuming it to be operative, only applied to render one-half of Felicity's interest in the land defeasible because she already had one-half (as joint tenant) before Claude's transfer to her (at [138]-[139], [147]). In my view, the provision applied to render the whole of her title defeasible because the interests of herself and Claude as joint tenants were extinguished by Claude's transfer of his interest to her. This transfer created a new registered interest of Felicity as to the whole of the property, just as the registration by one joint tenant of an instrument of severance of the joint tenancy in Peldan v Anderson [2006] HCA 48; 227 CLR 471 gave rise to new registered interests of them as tenants in common (see [18] - [22]). The transfer by Claude did thus not simply augment Felicity's existing half interest as a joint tenant.

Conclusion on appeal 160It follows that I agree with Beazley P as to the relief that should be granted in this appeal.

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