Willmott appeal dismissed – landlord’s Liquidators may disclaim leases

 

The High Court today found that Liquidators of a landlord company can use the disclaimer power in the Corporations Act to extinguish leases granted by that company.

A summary of the decision is available here.

The decision upholds a decision of the Victorian Court of Appeal that has created significant consternation among those acting for tenants.  The implications are likely to be far-reaching.

Those acting for tenants should be advising their clients:

  1. of the risk that a liquidator appointed to their landlord may use the disclaimer power to extinguish their leases;  and
  2. that if this occurs, the tenant may apply to set aside that disclaimer under ss 568B and 568E of the Corporations Act.  This may present a high hurdle for tenants.

The majority left open the question of whether leave to disclaim must be sought by the Liquidator prior to disclaiming a lease.

I will post more on this issue and about setting aside disclaimer after I have had a chance to digest the Court’s reasons.

About Sam Hopper

Sam is a property and insolvency barrister.

View all posts by Sam Hopper

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2 Comments on “Willmott appeal dismissed – landlord’s Liquidators may disclaim leases”

  1. Paul M. Davine Says:

    I am appalled! I look forward to reading the judgments but cannot see the legal, social, economical, logical or moral justification for such an outcome. I would hope the Legislature will deal with this to restore justice and reason.

    Reply

Trackbacks/Pingbacks

  1. Do tenants still need mortgagee’s consent to lease in light of the Willmott decision? | Sam Hopper Barrister - December 9, 2013

    […] have asked whether, in light of the High Court’s decision in Willmott last week (discussed here), tenants still need to insist on the consent of their landlord’s mortgagee before taking a […]

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