Commonwealth Bank of Australia v State of Queensland, in the matter of Hewton

In the case of Commonwealth Bank of Australia v State of Queensland, in the matter of Hewton, the central issue revolved around the disclaimer of real property by trustees in bankruptcy under section 133(1) of the Bankruptcy Act 1966 (Cth). The Commonwealth Bank of Australia sought the vesting of the property to recover a debt owed by the bankrupts, Mr and Ms Hewton. The trustees in bankruptcy had disclaimed the property, and the bank applied for the property to be vested in it under section 133(9) of the Act. This application required the Court to determine the ability of a trustee in bankruptcy to disclaim legal title to real property not vested in them and the effect of escheat to the Crown on the enforceability of a pre-existing mortgage.

The Court considered whether the trustees in bankruptcy could disclaim legal title to real property that had not been vested in them. It was established that the trustees had disclaimed the property, and legal title remained with the Hewtons until the disclaimer. The Court further examined the impact of the escheat of the property to the Crown on the mortgage's enforceability. Given that the property had escheated to the Crown, the mortgage remained enforceable against the Crown. The Court concluded that the Bank was entitled to the orders it sought, allowing the vesting of the property to facilitate the recovery of the debt. The Court emphasised the importance of prompt determination of such applications.

The Court ordered that the estate in fee simple of the property should vest in the Commonwealth Bank of Australia. The bank was granted the discretion to deal with the property as a mortgagee in possession and sell it without the need to serve certain notices. The bank was also entitled to calculate the debt secured by the mortgage and apply the proceeds of sale to discharge the debt, costs, and any subsequent mortgages. The bank was required to provide an account of its payments and receipts to relevant parties and pay any surplus into Court. The Court made no order as to costs against the State of Queensland.