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The balance sheet was an internal record only f was

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detrimental action. The balance sheet was an internal record only. F was not induced to do anything. His ignorance of the forgery did not induce him to do anything – although the forgery was dishonest. HC declared that F was indebted to the bank. F’s counterclaim was remitted to the lower court to reconsider. > Fraud MUST be operative on the mind of the defrauded person Bar v Nicolai Facts: Mr and Mrs Bar owned a block of land in a coastal town in WA. They entered into a sale and buy back arrangement with Mr Nicolai (1 st agreement). Bars sold the land to Nicolai and leased it back from him for three years and gave them the option to buy the land back for $45 000. N ended up selling the land to Mr and Mrs Thompson. In the second agreement clause 4 referred to the 1 st agreement. Bars confirmed that they intended to purchase and sent a 27
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cheque for the deposit. Thompson’s solicitor sent cheque back saying that they no longer wished to sell. HCA: Found in favour of the Bars. All reiterated that mere notice of the bars previous equitable interest was notof itself enough to amount to fraud within the meaning of the TLA. Fraud was only used as an alternative basis – Mason and Dawson JJ. Situation was not upheld as fraud by the other judges. Mason and Dawson JJ maintained that there was an express trust. Wilson and Toohey JJ: Found in favour of the Bars (in personum exception) on the basis of a constructive trust. Considered fraud briefly but say that the evidence did not support that the Thomsons intended to ensure that the Bars would not be able to buy the land back. Although the Thomson’s hoped that that would be the case. Brennan J: Relied on inpersonum exception – on the basis of a contractual undertaking or --- agreement. A RP who repudiates an unregistered interest (having given an undertaking) – you are acting fraudulently. Even though fraud is not the primary basis for the decision. The undertaking was given by the Thompson’s honestly but later repudiated. (Mason and Dawson JJ) Registered proprietor’s conduct can lead to an equity. Statutory fraud is narrower than equitable fraud. But these comments do not mean that all types of equitable fraud stand outside the statutory fraud context under the TLA. Latec – a collusive sale by a company to its own subsidiary is fraud under the TLA. Locu – fraudulent undertaking/ misrepresentation. Pyramid v Scorpion Hotels Facts: Mortgage was executed by Scorpion. But the company’s article’s of association required that a director witness the affixing of the seal. The person who witnessed the seal being administered was a director’s wife. The mortgage was not properly authorised by the company. It was argued that Pyramid was wilfully blind to the mortgage. Held:
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The balance sheet was an internal record only F was not...

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