23 October 2014


A company in the business of fire protection owned the family home. It borrowed from the bank secured by a mortgage over the family home. The husband/father was the sole director and shareholder of the company and had also given a personal guarantee.

The business suffered burnout and the company had to be wound-up. The liquidator disclaimed the family home as onerous property because he formed the view that nothing would be recovered for the creditors of the company after the mortgage had been paid out (and taking into account costs of sale).

The wife negotiated with the bank to purchase the property and pay the sale price to the bank, rather than them selling the property as mortgagee in possession.

The price negotiated was somewhat more than what the evidence suggested would be the result on a forced sale but somewhat less than the market value.

The judge pondered whether the State needed to be joined as a party because, in theory, the liquidator's disclaimer meant that title to the house had been contingently ceded to the State. The judge resolved that to require that would be a meaningless formality in the circumstances, adding cost and delay with no benefit, particularly as the bank would still be secured over the property.

The judge granted the wife's application that title in the house be transferred to her.

Click here to read the full judgment

Matthew Bransgrove, Partner

Matthew Bransgrove has practised exclusively in the field of mortgage law and mortgage related litigation since 1998. He is author of Avoiding Mortgage Fraud in Australia (2015) Lexis Nexis. He is co-author of The Essential Guide to Mortgage Law in NSW (2008) Lexis Nexis and its successor The Essential Guide to Mortgage Law in Australia (2013) Lexis Nexis.

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