Commonwealth Bank of Australia v State of Western Australia, in the matter of Arbidans (a Bankrupt)

The Commonwealth Bank of Australia Ltd has applied for orders in relation to the vesting of real property which has been disclaimed by the trustee in bankruptcy of Ms Mellisa Jane Arbidans. The respondents, the State of Western Australia and the Western Australian Registrar of Titles, do not oppose the application. The court must decide whether the Commonwealth Bank of Australia Ltd can exercise its powers as mortgagee in possession after the disclaimer of the real property by the trustee in bankruptcy. The legal issue at the heart of this case is the effect of a disclaimer of real property under section 133 of the Bankruptcy Act 1966 (Cth), and whether a mortgagee can utilise their powers as if they were the mortgagee in possession. The court found that the disclaimer by the trustee in bankruptcy does not prevent the mortgagee from exercising its powers as if it were the mortgagee in possession. The court also found that the mortgagee is entitled to calculate the entirety of each of the debts secured and owing pursuant to each of the Mortgages as including all monies that would have been secured respectively by each of the Mortgages had the Trustee in Bankruptcy of the bankrupt estate of Ms Mellisa Jane Arbidans not disclaimed the Properties. The court further found that the mortgagee must apply the proceeds of sale from each of the Properties in payment of any statutory charges affecting the associated property, in payment of all costs, charges and expenses properly incurred by the applicant as incidental to the sale, in discharge of the debt owed to the applicant by Ms Mellisa Jane Arbidans as secured by each of the respective Mortgages, in payment of any subsequent mortgages (if any), and must provide an account of its payments and receipts to the Trustee in Bankruptcy of the bankrupt estate of Ms Mellisa Jane Arbidans, Ms Mellisa Jane Arbidans, the Registrar of the Court, and the respondents. Finally, the court found that the mortgagee must pay into the Court in this proceeding, the surplus (if any) arising from the sale of the Properties. The orders sought by the Commonwealth Bank of Australia Ltd will be made, and there is no order as to costs against either of the respondents.