Colquhoun v Registrar-General [2013] NSWSC 730

The borrowers had defaulted on their loan agreement and mortgage. The secured land was community title. The bank believed the best way to realise its security was to take the lands out of the community lands scheme and re-subdivide it as ordinary freehold land. Receivers and managers of the property had been appointed under powers granted by the mortgage and made an application to terminate the community title. Notice had been given of the proceedings to the individual borrowers and the bank but there had not been a response.

The preliminary issue was whether the receivers had authority to bring the application in the name of the borrowers. The judge determined that they did have that power under the terms of the mortgage, and under the general law.

The primary issue the judge was required to determine was whether the continuation of the scheme had become “impracticable”, in which case the court may vary or terminate the scheme. The judge determined that the scheme had become “impracticable” in this case because of the apparent inability to fund the development and the failure to be able to deal with the mortgage.

The judge ordered that the appropriate order was that the community title should be wound up and liquidators be appointed.

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