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:

of the risk that a liquidator appointed to their landlord may use the disclaimer power to extinguish their leases; and
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.