A recent federal case suggests mortgagees should get in quick
for a vesting order when a mortgaged property is disclaimed by a
trustee in bankruptcy or liquidator.
In Australia and New Zealand Banking Group Ltd v State of
Queensland [2018] FCA 464, the
bankrupt defaulted on their mortgage. The mortgagee (ANZ)
obtained possession of the land before it had been disclaimed by
the trustee in bankruptcy.
Generally, trustees/liquidators have the right to disclaim
property held by the bankrupt/corporation in liquidation. Once
disclaimed, the liability of the trustee/liquidator with regards to
that land ends and the land escheats back to the
Crown.1
Any liabilities accrued prior to the disclaiming remain
unaffected and rights are only affected to the extent necessary to
release the trustee/liquidator.2 The Crown therefore,
takes back the land subject to – not free of – existing
rights. One such right being the right of a mortgagee to realise
the security and sell the
