St George - A Division of Westpac Banking Corporation v State of Western Australia

St George - A Division of Westpac Banking Corporation applied to the Federal Court of Australia for an order vesting two properties in the applicant to allow the applicant to exercise its powers as mortgagee in possession under the Property Law Act 1969 (WA), the Transfer of Land Act 1893 (WA) and a registered mortgage. The applicant sought to enforce a power of sale pursuant to the Mortgage, following the bankruptcy of the mortgagor, Lorraine Joy Butson. The applicant was the mortgagee under the Mortgage and the mortgagor had become bankrupt. The Trustee in Bankruptcy, Jennifer Elizabeth Low, disclaimed the properties, which meant that they did not form part of the bankrupt's estate. The State of Western Australia, as the second respondent, opposed the application on the basis that the applicant was not the mortgagee in possession of the properties, and therefore, could not exercise the power of sale. The court was required to determine whether the applicant could exercise its powers as mortgagee in possession of the properties in the circumstances where the Trustee in Bankruptcy had disclaimed the properties and did not register a transfer of title.

The court held that the applicant was entitled to have the properties vested in it as mortgagee in possession to allow it to exercise its powers under the Mortgage. The court held that the disclaimer by the Trustee in Bankruptcy did not affect the applicant's rights under the Mortgage. The court held that the applicant could exercise its powers as mortgagee in possession, including the power of sale, in the same way as if it were the mortgagee in possession. The court held that the applicant was entitled to calculate the entirety of the debt secured and owing pursuant to the Mortgage as including all monies that would have been secured by the Mortgage had the Trustee in Bankruptcy not disclaimed the Properties. The court held that the applicant was entitled to apply the proceeds of sale in the order set out in the orders of the court.

The court ordered that the estate in fee simple in the properties vest in the applicant as mortgagee in possession. The court ordered that the applicant may deal with the properties pursuant to its powers as mortgagee, including exercising the right to sell the estate in fee simple of the properties in exercise of its power of sale. The court ordered that the applicant is entitled to calculate the entirety of the debt secured and owing pursuant to the Mortgage as including all monies that would have been secured by the Mortgage had the Trustee in Bankruptcy not disclaimed the Properties. The court ordered that the applicant must apply the proceeds of sale in the order set out in the orders of the court. The court ordered that the applicant's reasonable costs of and incidental to this proceeding are to be treated as reasonable enforcement expenses under its Mortgage over the properties and are to be payable from the proceeds of sale of the properties on the indemnity basis.