Commonwealth Bank of Australia v State of Queensland

The Commonwealth Bank of Australia sought an order for two properties to be vested in it under section 133(9) of the Bankruptcy Act 1966 (Cth) following the disclaimer of the bankrupt's interest in the properties by the trustee in bankruptcy. The Commonwealth Bank held mortgages over the properties and the bankrupt was in default of those mortgages. One of the properties was also held by a tenant in common who was not bankrupt. The court had to decide whether it was just and equitable for the court to make the order under section 133(9) of the Bankruptcy Act 1966 (Cth) given the effect of the disclaimer on the tenancy in common.

The court considered the effect of the disclaimer on the tenancy in common and the rights of the tenant in common. The court found that the disclaimer did not affect the tenant in common's interest in the property and that the tenant in common remained a tenant in common with the bankrupt's estate. The court also found that it was just and equitable for the court to make the order under section 133(9) of the Bankruptcy Act 1966 (Cth) as the Commonwealth Bank had a legitimate interest in the properties and the disclaimer had been made as the properties were onerous. The court noted that the tenant in common's interest was not affected by the disclaimer and that the Commonwealth Bank's rights as mortgagee would be protected.

The court made an order vesting the estate in fee simple held before bankruptcy by the bankrupt and disclaimed by the trustee in bankruptcy, and the tenancy-in-common in equal share with Jennifer Maree Down, in the Commonwealth Bank for the purpose of exercising its powers as mortgagee. The court also made orders regarding the calculation of the debt secured and owing pursuant to the mortgages, the discharge of the debt owed to the Commonwealth Bank by the bankrupt and the tenant in common, and the application of the proceeds of sale from the properties. The court made no order as to costs against the respondent.

The court's decision provides guidance on the effect of a disclaimer of real property under section 133 of the Bankruptcy Act 1966 (Cth) on a tenancy in common and the circumstances in which a court may make an order under section 133(9) of the Act. The decision also highlights the importance of considering the rights of tenants in common when making orders under section 133(9) of the Act.