National Australia Bank Limited v State of Queensland

The National Australia Bank Limited sought an order vesting fee simple in certain property located in Queensland in the bank, following a disclaimer by the trustee in bankruptcy of the property. The State of Queensland, in its right as the potential beneficiary of an escheat of the property, contested the application. The dispute required the Court to determine whether land escheats to the Crown upon the disclaimer of real property by a trustee in bankruptcy, and if not, who holds the legal title of the property until the Court makes an order vesting it in the mortgagee. The Court needed to balance the doctrine of escheat with Torrens title land, statutory powers of disclaimer, and constitutional context, as well as the effect of the disclaimer occurring under Commonwealth law.

The Court held that the better view is that land does not escheat upon disclaimer, rather the legal title is held by the Crown on trust for statutory purposes until the Court makes an order vesting it in the mortgagee. The Court reasoned that escheat is a common law doctrine, and in the case of Torrens title land, the registered proprietor holds legal title to the land. The Court held that the statutory power of disclaimer does not confer upon the Crown an immediate interest in the property, but rather creates a statutory trust for the Crown until the Court exercises its discretion to vest the property in the mortgagee. The Court also held that the disclaimer occurs under Commonwealth law, and the Commonwealth has the power to confer rights and impose obligations in relation to real property.

The Court made an order vesting fee simple in the property in the bank, subject to certain terms and conditions. The Court held that the bank may deal with the property as if it were exercising its powers as mortgagee in possession, but it is not required to serve certain notices before selling the property. The Court also held that the bank is entitled to calculate the debt secured by the mortgage as including all monies that would have been secured by the mortgage had the trustee not disclaimed the property, and to deduct and retain for its own absolute use and property such amount from any proceeds of sale of the property. The Court further held that the bank must provide an account of its payments and receipts to the trustee, the bankrupts, and the Registrar of the Court, and pay into Court the surplus, if any, arising from the sale of the property. The Court made no order as to costs against the respondent.