Australia and New Zealand Banking Group Limited v State of Queensland, in the matter of McFarlane (a Bankrupt)

The case before the court involved Australia and New Zealand Banking Group Limited as the applicant, seeking to have property vested in it, and the State of Queensland, in the matter of McFarlane, a bankrupt, as the respondent. The dispute centred on the trustees in bankruptcy disclaiming real property under section 133(1) of the Bankruptcy Act 1966 (Cth), with the bank making an application under section 133(9) to have the property vested in it to enable it to recover its debt. The court was required to decide several legal issues, including whether the trustees could disclaim legal title to real property which was not vested in them, and the effect of escheat to the Crown on the continuing enforceability of a pre-existing mortgage.

The court examined whether the escheat had destroyed the fee simple interest such that the mortgage no longer attached to any relevant interest. It concluded that the fee simple became vested in the Crown separately rather than being absorbed into its superior interest. The court also considered whether all necessary parties were before it and whether the caveator was required to be served, concluding that the caveat had lapsed. Regarding the recording of a notification of action on title for the commencement of proceedings, the court referred to the Land Title Practice Manual (Queensland) – Administrative Advices.

The court found in favour of the applicant, vesting the estate in fee simple in the property in the bank, and provided detailed orders for the sale and distribution of proceeds from the properties. The bank was granted the right to sell the properties and apply the proceeds in a specified order, including paying costs and discharging the debt owed by the bankrupts. The court also specified that the bank was not required to serve certain notices prior to selling the properties. The orders concluded without any costs being awarded against the respondent.