In Willmott Growers Group Inc v Willmott Forests Limited (Receivers and Managers Appointed) (In Liquidation)  HCA 51 the High Court decided that the liquidators of a lessor company had the power to disclaim the leases to investors under section 568(1)(f) of the Corporations Act 2001.
A majority of the High Court decided that the liabilities of the lessor (including its obligations to provide quiet enjoyment and not derogate from the grant of exclusive possession) would be terminated from the day on which the disclaimer takes effect, as would the correlative rights of the tenant. Each tenant's estate or interest in the land would be terminated.
The decision has implications for tenants who make substantial improvements to property over which they have a long-term lease or who borrow on the security of their lease: the solvency of their landlord is now a risk factor.
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Posted 12th December 2013 by David Jacobson in Corporations Act, Financial Services, Property, Risk Management