Zhaos Capitals Pty. Ltd as trustee for the Zhaos investment trust vs. Wang - (28 Dec 2022)

A disclaimer does not affect any right or liability that has already accrued

Commercial

The Plaintiff makes an application by originating summons pursuant to Section 568F(1) of the Corporations Act, 2001 seeking the Units are vest in, or be delivered to the Plaintiff by order of the court, for the Plaintiff to sell.

A disclaimer does not affect any right or liability that has already accrued. Prior to the date that the Units were disclaimed, Smartdevelop was in default of the equitable mortgage pursuant to the 2015 Acknowledgement of Debt as it had not repaid the Debt as required by clause 3 of the 2015 Acknowledgement of Debt. Therefore, the disclaimer of the Units by the Liquidator does not affect Smartdevelop's rights under its equitable mortgage.

Neither the Plaintiff nor the fourth Defendant could direct present Court to any case that has considered whether an equitable mortgagee is entitled to be granted a vesting order pursuant to s 568F(1) of the Act. Nonetheless, this does not mean that a vesting order ought not be granted to an equitable mortgagee.

The underlying rationale for Section 568F of the Act is to cause as little prejudice as possible to all persons interested in the disclaimed property. If the liquidator had not disclaimed the Units, the plaintiff would have been able to enforce its equitable mortgage. Accordingly, to avoid the prejudice to the Plaintiff of not being able to enforce its equitable mortgage, present Court find that it is appropriate that the Units should be vested in the Plaintiff pursuant to Section 568F(1) of the Act.

Tags : UNIT VESTING OF APPLICATION