Australia and New Zealand Banking Group Limited v State of Queensland, in the matter of King

Pursuant to s 133(9) of the Bankruptcy Act 1966 (Cth), the estate in fee simple in the property described as Lot 153, Survey Plan 235843, Title Reference 50827984 (Property), vest in the applicant for the purpose of the applicant exercising its powers as mortgagee under the Land Title Act 1994 (Qld), the Property Law Act 1974 (Qld) and registered mortgage number 714063098 (Mortgage).
On the vesting of the Property in the applicant pursuant to s 133(9) of the Bankruptcy Act 1966 (Cth), the applicant: (a) may, but is not bound to, deal with the Property as if it were exercising its powers as mortgagee in possession under the Land Title Act 1994 (Qld), the Property Law Act 1974 (Qld) and the Mortgage, including exercising the right to sell the estate in fee simple of the Property in exercise of its power of sale and all its other rights under the Mortgage; (b) for the purpose of selling the estate in fee simple of the Property in exercise of its power of sale, is not required to serve: (i) a notice of default or demand whether under s 88 of the National Credit Code, being Sch 1 to the National Consumer Credit Protection Act 2009 (Cth) or otherwise; and (ii) a notice pursuant to s 84 of the Property Law Act 1974 (Qld); (c) is entitled to calculate the entirety of the debt secured and owing pursuant to the Mortgage as including all monies that would have been secured by the Mortgage had the trustee in bankruptcy of Peter Darrell King and Sandra Kay King not disclaimed the Property, and to deduct and retain for its own absolute use and property such amount from any proceeds of sale of the Property as if it were money secured by the Mortgage (including costs of this application and all costs properly incurred in selling, and incidental to the sale of, the Property); (d) shall apply the proceeds of sale from the Property as follows: (i) first, in payment of any statutory charges affecting the Property, which the relevant statute provides are payable in priority to the applicant; (ii) secondly, in payment of all costs, charges and expenses properly incurred by the applicant as incidental to the sale, or any attempted sale, or otherwise; (iii) thirdly, in discharge of the debt owed to the applicant secured by the Mortgage; (iv) fourthly, in payment of any subsequent mortgages (if any); and (v) the residue (if any) of the proceeds so received shall be paid into Court in this proceeding; (e) must, after any sale of the Property, provide an account of its payments and receipts to: (i) Morgan Gerard James Lane and Paul Eric Nogueira as joint and several trustees of the bankrupt estate of Peter Darrell King and Sandra Kay King; (ii) Peter Darrell King and Sandra Kay King; and (iii) the Registrar of the Court. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

EDELMAN J: 1 This is an application by the Australia and New Zealand Banking Group Limited (the ANZ bank) for orders under s 133(9) of the Bankruptcy Act 1966 (Cth) for real property which has been disclaimed by a trustee in bankruptcy to be vested in it so that it can exercise a power of sale. The trustee in bankruptcy was served with this application and was contacted by the solicitors for the ANZ bank. He has indicated that he does not oppose the application and has no desire to be joined. The State of Queensland has filed a submitting notice. 2 This application was heard at the same time as Commonwealth Bank of Australia v State of Queensland, in the matter of Ginn [2016] FCA 1337. In my reasons in that decision I considered the operation of the legislative provisions relevant to these applications, and I incorporate that discussion here without repeating it. For the reasons that follow, the usual orders under s 133(9) of the Bankruptcy Act should be made to provide for the vesting and sale which is sought. 3 Mr and Mrs King were the owners of property located at 52 Lakeside Drive, Emerald in the State of Queensland, more properly described as Lot 153, Survey Plan 235843, Title Reference 50827984 (the Property). 4 On 1 September 2011, Mr and Mrs King executed a mortgage over the Property in favour of the ANZ bank. The mortgage was registered on 15 September 2011. 5 From 19 March 2014, the mortgage secured approximately $340,000 of debt owed by Mr and Mrs King to the ANZ bank. On 12 June 2014, the ANZ bank refinanced the previous loan leading to a principal sum of $420,970.63 secured by the mortgage. The last payment received by the ANZ bank was on 21 March 2016. The loan was in default from April 2015. 6 On 14 and 15 April 2016, trustees in bankruptcy were appointed to Mr and Mrs King respectively. 7 On 3 May 2016 and 26 May 2016 the trustee in bankruptcy for, respectively, Mr and Mrs King gave notice to the ANZ bank of the disclaimer of title to the Property pursuant to s 133(1) of the Bankruptcy Act. 8 On 30 June 2016, notices of default were sent by the ANZ bank to Mr and Mrs King. 9 Section 133 of the Bankruptcy Act relevantly provides: (1AA) Where any part of the property of the bankrupt consists of: (a) land of any tenure burdened with onerous covenants; or (b) property (including land) that is unsaleable or is not readily saleable; subsection (1) applies. … (1) Subject to this section, the trustee may, notwithstanding that he or she has endeavoured to sell or has taken possession of the property or exercised any act of ownership in relation to it and notwithstanding, in the case of property the transfer of which is required by a law of the Commonwealth or of a State or Territory of the Commonwealth to be registered, that he or she has not become the registered owner of that property, by writing signed by him or her, at any time disclaim the property. (1A) Subject to this section, the trustee may at any time, by writing signed by him or her, disclaim any contract that forms part of the property of the bankrupt whether or not the trustee has endeavoured to assign the property or exercised any rights in relation to it. (2) A disclaimer under subsection (1) or (1A) operates to determine forthwith the rights, interests and liabilities of the bankrupt and his or her property in or in respect of the property disclaimed, and discharges the trustee from all personal liability in respect of the property disclaimed as from the date when the property vested in him or her, but does not, except so far as is necessary for the purpose of releasing the bankrupt and his or her property and the trustee from liability, affect the rights or liabilities of any other person. (3) If a trustee disclaims property whose transfer must be registered under a law of the Commonwealth or of a State or Territory of the Commonwealth, the trustee must give notice of the disclaimer as soon as practicable to the officer who has the function of registering the transfer. … (9) The Court may, on application by a person either claiming an interest in, or being under a liability not discharged by this Act in respect of, disclaimed property, and after hearing such persons as it thinks fit, make an order, on such terms as the Court considers just and equitable, for the vesting of the property in, or delivery of the property to, a person entitled to it or a person in whom, or to whom, it seems to the Court to be just and equitable that it should be vested or delivered, or a trustee for that person. (10) Subject to subsection (11), where an order vesting property in a person is made under subsection (9), the property to which it relates vests forthwith in the person named in the order for that purpose without any conveyance, transfer or assignment. 10 The ANZ bank is the only registered mortgagee. The ANZ bank, as a mortgagee, has an interest in the title to the Property. As at today, the total debt outstanding which is secured by the mortgage is $430,371.85. 11 As I explained in Commonwealth Bank of Australia v State of Queensland, in the matter of Ginn, whether or not the title to the Property is vested in the State of Queensland by escheat, the pre-existing charge has not been extinguished. A fee simple interest remains subject to a charge even after disclaimer and escheat: Rams Mortgage Corporation Ltd v Skipworth (No 2) [2007] WASC 75; (2007) 210 FLR 11, 15 [10] (E M Heenan J, citing Sandhurst Trustees, 564 (Bryson J)). This application is therefore by the ANZ bank as a person claiming an interest in respect of disclaimed property (ie in respect of the title to any property which has been the subject of a disclaimer of rights). 12 Further, prior to the bankruptcies, the ANZ had a power of sale arising from the defaults, even though that power of sale may not have been able to be exercised due to the absence of a notice of default being issued prior to bankruptcy. It is just and equitable that orders be made under s 133(9) to ensure that the security that the ANZ bank has in relation to the title to the property is not lost. 13 In these circumstances, I am satisfied that it is just and equitable to make orders vesting the title to the Property to enable the ANZ bank to realise the debt which that Property secures. The orders proposed are in the usual terms, and are appropriate. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Edelman.

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