Hausler v State of Queensland

REEVES J: 1 Ms Hausler, the applicant, has applied for an order under s 133(9) of the Bankruptcy Act 1966 (Cth) (the Act) for the vesting in herself of the home in which she has resided, and of which she has been the registered proprietor, for the past 21 years. The need for this peculiar order has arisen from the following factual context. 2 Ms Hausler purchased her home in 1998. It is a duplex property situated at 1/2 Cayley Street, Trinity Beach, North Queensland. It is formally described as Lot 1 on Building Unit Plan 70316, Title Reference Number 21238144. Ms Hausler's aging parents live in the adjoining unit of the duplex. 3 To purchase her home, Ms Hausler borrowed funds from the First Australian Building Society. That loan was secured by a registered mortgage. Some time later, that original loan was refinanced and the property was re-mortgaged to Westpac Banking Corporation. 4 Consequent upon an internet scam that was perpetrated on her between 2008 and 2010, the details of which I do not need to go into, Ms Hausler was declared bankrupt on her own petition in late 2012. A short time thereafter, her trustee in bankruptcy, Mr Rajendra Khatri, disclaimed the property as onerous property under s 133(1) of the Act. 5 Unaware of the effect of this disclaimer, Ms Hausler continued to reside in her home and to pay all of the usual outgoings associated therewith, including mortgage repayments, body corporate fees, local government rates, insurance premiums, water and sewerage charges and repairs and maintenance. 6 Ms Hausler was discharged from bankruptcy in 2015. 7 In 2018, she arranged to refinance the Westpac loan mentioned above. To facilitate that course, she agreed, among other things, to provide a registered mortgage over the property in favour of the Commonwealth Bank of Australia. She executed that mortgage on 27 August 2018. The refinancing subsequently took place and, in the process, the Commonwealth Bank paid out the balance owing under the Westpac loan. However, when the Commonwealth Bank attempted to register the mortgage Ms Hausler had provided, it was prevented from doing so by an administrative notice that was recorded on the registered title to the property as a result of the trustee's disclaimer mentioned above. 8 The effect of s 157 of the Land Title Act 1994 (Qld) is that a mortgage in the form of the document Ms Hausler signed on 27 August 2018, once lodged for registration and rejected, cannot be re-lodged. I will return to this aspect of this matter later in these reasons. 9 Section 133(9) of the Act provides: 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 It can be seen that this section relevantly prescribes two preconditions for the order Ms Hausler has sought. First, she must claim an interest in the property. Secondly, the Court must hear from such persons as it thinks fit in respect of the application. If these two preconditions are met, the Court may make an order for the vesting of the property in Ms Hausler if that course seems to it to be just and equitable and, if so, it may do so on such terms as it considers just and equitable. 11 As to the first precondition, Ms Hausler has claimed to have an equitable interest in the property based on the following: that she has continued to reside in the property throughout the relevant period; that she has made payments of principal and interest to both Westpac and the Commonwealth Bank under the loan and mortgage arrangements referred to above; and that she has contributed solely to all of the costs connected with residing in, and maintaining, the property, including, but not limited to, those mentioned above. 12 In his written submissions, Ms Hausler's lawyer has referred to a number of judgments where factors similar to these have been taken into account in concluding that the person concerned is able to claim an interest in property for the purposes of s 133(9) of the Act. It is unnecessary to list all those judgments. It will suffice to mention the most recent; the decision of Bennett J in McVey v State of New South Wales, in the matter of McVey (Bankrupt) [2012] FCA 455. Having regard to the factors mentioned above and the observations made in those judgments, I am satisfied that Ms Hausler has duly claimed and has an interest in the property. 13 The second precondition relates to the persons from whom this Court should hear in respect of the application. In context, this requirement plainly refers to persons other than Ms Hausler who may also have an interest in the subject property and who may be affected by the orders sought. 14 There are two respondents to this application: the State of Queensland and the Commonwealth Bank. Without reviewing the judgment of Logan J in Walsh v State of Queensland [2019] FCA 871 at [14]-[17] and [25]-[30], I am satisfied that no issue of escheatment arises in the circumstances of this application. That that is so is supported by the fact that the State has filed a notice in this application that it will submit to whatever orders the Court may make and wishes only to be heard as to costs. On the latter aspect, the State has now stated through counsel that it does not seek an order for costs. 15 As to the Commonwealth Bank, it has filed a set of written submissions in which, subject to the Court's orders including a condition which protects its entitlement to register the mortgage provided in its favour and the debt secured by it, it supports Ms Hausler's application. 16 Since its loan has been paid out, I do not consider it is necessary to hear from Westpac. 17 Finally, I note that Mr Khatri, Ms Hausler's erstwhile trustee in bankruptcy, has sworn an affidavit in this proceeding in which he states he has been made aware of the application and does not wish to be heard. 18 For these reasons, I am satisfied that I have heard from all of the persons who may have an interest in the vesting order Ms Hausler has sought. 19 The final question is whether it is just and equitable to vest the property in Ms Hausler and, if so, on what conditions. In the circumstances outlined earlier in these reasons, I am well satisfied that it is just and equitable to make the vesting order that Ms Hausler has sought. 20 That brings me to the conditions that I consider it is just and equitable to impose. 21 First, to address the difficulty posed by s 157 of the Land Title Act 1994 (Qld), I accept the undertaking of the applicant given by her lawyer that she will sign and execute a mortgage in the same terms as that appearing at exhibit RJH2 to the affidavit of Robyn Jane Hausler sworn 17 September 2019. 22 Secondly, and relatedly, I consider that it is just and equitable that the order vesting the property in Ms Hausler should be subject to the debt that was secured by the mortgage over the property which was executed by Ms Hausler on 27 August 2018 in favour of the Commonwealth Bank. 23 Thirdly and finally, I consider it is just and equitable to impose a condition on the vesting of the property that it be subject to any outstanding charges over the property that may have been imposed by statute or otherwise, including, but not limited to, any unpaid land tax, body corporate fees, local government rates and water and sewerage or similar charges. 24 Accordingly, the orders I will make are as follows: Upon the undertaking of the applicant to sign and execute a mortgage in the same terms as that appearing in exhibit RJH2 to the affidavit of Robyn Jane Hausler sworn 17 September 2019, I order that:

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