Re Fordex Pty Ltd (in liq)

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT
CORPORATIONS LIST

S ECI 2024 05823

IN THE MATTER of FORDEX PTY LTD (IN LIQ) (ACN 106 096 655)

BETWEEN:

THE STATE OF VICTORIA	Plaintiff
v
FORDEX PTY LTD (IN LIQUIDATION) (ACN 106 096 655)	First Defendant
- and -
PHILIP NEWMAN IN HIS CAPACITY AS LIQUIDATOR OF FORDEX PTY LTD (IN LIQUIDATION) (ACN 106 096 655)	Second Defendant

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JUDGE:	Steffensen AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	13 March 2025
DATE OF RULING:	13 March 2025 (ex tempore; revised 9 April 2025)
CASE MAY BE CITED AS:	Re Fordex Pty Ltd (in liq)
MEDIUM NEUTRAL CITATION:	[2025] VSC 180

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WINDING UP – Liquidator – Disclaimer of onerous property – Lease – Personal property – Application to set aside disclaimer before it takes effect – Effect of disclaimer on rights accrued between the notional effective date of the disclaimer and the hearing of the application to set aside – Effect of disclaimer on Landlord’s rights in personal property left on the premises – Disclaimer not set aside – Corporations Act 2001 (Cth) ss 568, 568B, 568C, 568D – Willmott Growers Group Inc v Willmott Forests Ltd (recs and mgrs apptd) (in liq) (2013) 251 CLR 592 – Hindcastle Ltd v Barbara Attenborough AssociatesLtd [1997] AC 70.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	S Hogan	Corrs Chambers Westgarth
For the Defendants	V Bell	Lander & Rogers

TABLE OF CONTENTS

A.. Introduction

B.. Legislative scheme

C.. Are all future rights and obligations of a lease terminated?

D.. What is the relevant date for determining whether rights have accrued?

E... What is the effect of the disclaimer?

HER HONOUR:

A Introduction

This ruling concerns the State of Victoria’s application to set aside a disclaimer of property by the liquidator of Fordex Pty Ltd, the first defendant.
On 16 October 2024, the Federal Court of Australia ordered that Fordex be wound up in insolvency and the second defendant be appointed as liquidator. The next day, 17 October 2024, the liquidator issued a notice pursuant to s 568 of the Corporations Act 2001 (Cth) (‘Corporations Act’) disclaiming property of Fordex and a lease entered into between Fordex and its landlord in respect of the premises from which it conducted its business. The disclaimed property is all plant and equipment, stock, waste (including hazardous waste), and containers of waste located on the leased premises. On 23 October 2024, the landlord re-entered the premises pursuant to its right of re-entry that arose because of the liquidator’s appointment.
The State is concerned that if the disclaimer is allowed to come into effect, it will be responsible for the disclaimed hazardous waste material left on the premises by Fordex, by reason of the doctrine of bona vacantia. The effect of bona vacantia is that ownerless personal property situated in the State will vest in the Crown in the right of the State of Victoria. The State is concerned that it will suffer prejudice if the personal property disclaimed vests in the State because it will be financially responsible for the clean-up and disposal of that hazardous waste.
Given that concern, the State has brought this proceeding seeking to set aside the disclaimer pursuant to s 568B of the Corporations Act. The State is only concerned to set aside the disclaimer insofar as it relates to the hazardous waste materials left on the leased premises.
However, cl 5.1.2 of the lease of the premises requires the tenant, Fordex, to remove their installations and property (including hazardous waste) from the premises and make good when the term of the lease ends. Clause 5.1.3 of the lease provides, amongst other things, that the tenant’s property or installations left on the premises at the end of the lease becomes the property of the landlord. The parties agree that if the landlord’s property rights in Fordex’s installations and property pursuant to cl 5.1.3 survive the disclaimer, then the landlord will own the hazardous waste. In that circumstance, the doctrine of bona vacantia will have no application, and the State will have no interest in the disclaimed property.
The question is therefore whether the waste materials will be the responsibility of the State under bona vacantia should the disclaimer take effect, or alternatively, whether the waste materials are the landlord’s property by operation of cl 5.1.3 of the lease?
The landlord was provided with notice of the disclaimer and has not sought for it to be set aside. It was also served with this proceeding and appeared at the hearing on 13 December 2024. As recorded in the Order made at that hearing:
(a)the landlord gave an undertaking to the Court to be bound by the outcome of this proceeding; and
(b)I decided that it was appropriate for the issue of whether the disclaimed property will vest in the State pursuant to the doctrine of bona vacantia if the disclaimer takes effect, to be tried as a separate question (‘Separate Question’).
This is the ruling in respect of the Separate Question.
In order to determine the Separate Question, first, consideration must be given to the relevant principles applicable to the effect of a liquidator’s disclaimer upon a lease. In particular, I need to resolve a disagreement between the parties as to whether the disclaimer has the effect of terminating all of the future rights under the lease of both Fordex and the landlord (as the State contends). Or alternatively, whether a more detailed analysis needs to be undertaken as to the effect of the disclaimer on particular clauses of the lease and the rights associated with those clauses (as the liquidator contends). The parties agree that a disclaimer cannot affect accrued rights of the company or other parties, however, I need to resolve a disagreement between them as to the relevant date for determining when rights have been accrued.
Secondly, I need to apply those principles to the facts at hand in order to ascertain whether or not the landlord’s rights in the hazardous waste under cl 5.1.3 would survive the disclaimer. If the landlord’s rights prevail, such that the hazardous waste is owned by the landlord, the doctrine of bona vacantia will not apply to vest the waste in the State.

B Legislative scheme

Section 568(1) of the Corporations Act provides a liquidator with the power to disclaim onerous property where it is reasonable to expect that the costs, charges and expenses that would be incurred would exceed the proceeds in realising the property. Subsections 568(1)(f), and 568(1A) provide the liquidator with the power to disclaim unprofitable contracts, such as leases.[1]
[1]See also Willmott Growers Group Inc v Willmott Forests Ltd (recs and mgrs apptd) (in liq) (2013) 251 CLR 592 (‘Willmott’).
Section 568B(1) provides that persons who have an interest or may have an interest may apply to set aside the disclaimer ‘before it takes effect’. Relevantly, this application must be made within 14 days of either the person receiving notice from the liquidator of the disclaimer, or the date that the liquidator lodged the notice of disclaimer.
Section s 568C(3) of the Corporations Act provides when a disclaimer will take effect. It relevantly provides that:
568C When disclaimer takes effect
(1) A disclaimer takes effect if, and only if:
(a) in a case where only one application under section 568B for an order setting aside the disclaimer, or each of 2 or more such applications, is made within the period that that section prescribes for making the application—the application, or each of the applications, is unsuccessful; or
(b)no such application is so made.
(2) For the purposes of subsection (1), an application under section 568B is successful if, and only if, the result of the application, and all appeals (if any) arising out of the application, being finally determined or otherwise disposed of is an order setting aside the disclaimer (whether or not further orders are also made).
(3)A disclaimer that takes effect because of subsection (1) is taken to have taken effect on the day after:
(a) if:
(i)the liquidator gave to a person notice of the disclaimer because of paragraph 568A(1)(b); or
(ii)…
(b)otherwise – the day when the liquidator lodged notice of the disclaimer.
(emphasis added)
The effect of s 568C is that where no application has been made to set aside a disclaimer, or any application is unsuccessful, the disclaimer ‘is taken to have taken effect’ on the day after interested persons were given notice of the disclaimer or the liquidator lodged notice of the disclaimer.
Where an application has been made to set aside the disclaimer, the effect of s 568B in conjunction with s 568C is that there is a period of time where the disclaimer has no effect, being the period from the date of the notice of disclaimer until any application under s 568B has been determined. If the Court decides to set aside the disclaimer, the disclaimer will continue to have no effect. If, on the other hand, the court refuses to set aside the disclaimer, the effect of the disclaimer will be backdated to the day after the notice of disclaimer was lodged or served on interested parties by the liquidator. However, in the interim period whilst the s 568B application remains on foot, the disclaimer has no effect. I will refer to this as the ‘non-effective period’.
The effect of a disclaimer is set out in s 568D, which provides:
568D Effect of disclaimer
(1) A disclaimer is taken to have terminated, as from the day on which it is taken because of subsection 568C(3) to take effect, the company’s rights, interests, liabilities and property in or in respect of the disclaimer property, but does not affect any other person’s rights or liabilities except so far as necessary in order to release the company and its property from liability.
(2)A person aggrieved by the operation of a disclaimer is taken to be a creditor of the company to the extent of any loss suffered by the person because of the disclaimer and may prove such a loss as a debt in the winding up.
(emphasis added)
The parties agree that the effect of s 568D is that the disclaimer:
(a)terminates the insolvent company’s rights, interests and liabilities in the disclaimed property;
(b)operates prospectively from its effective date and cannot terminate accrued rights and obligations of the company;[2]
(c)has no effect on the rights and obligations of any other person except so far as it is necessary to prospectively release the company from its rights and obligations in respect of the disclaimed property (s 568D(1));[3]
(d)terminates the liability, interest or right of other persons where the other person’s rights are correlative to the relevant right, interest or liability of the company in liquidation that will be terminated by the disclaimer;[4] and
(e)a person aggrieved by a disclaimer is taken to be a creditor of the company to the extent of any loss suffered by reason of the disclaimer, and may prove that loss as a debt in the winding up of the company (s 568D(2)).
[2]Willmott (n 1) [71] (Gageler J), citing Rothwells Ltd (in liq) & Ors v Spedley Securities Ltd (in liq) & Anor (1990) 20 NSWLR 417, 422 ; Official Assignee of Bowen v Watt [1922] NZLR 702, 704–5.
[3]Willmott (n 1) [71] (Gageler J).
[4]Willmott (n 1) [54] (French CJ, Hayne and Kiefel JJ); [73] (Gageler J).
However, the parties disagree as to how these principles are to be applied to a lease.

C Are all future rights and obligations of a lease terminated?

The State submits that all of the landlord’s rights and obligations under a lease are correlative to the lessee’s obligations, such that disclaimer of the lease by either party will result in the termination of all rights and obligations of the other party, except insofar as they are accrued rights as at the effective date of the disclaimer. In support of this submission, the State relies upon Willmott Growers Group Inc v Willmott Forests Ltd (recs and mgrs apptd) (in liq) (‘Willmott’).
The liquidator submits that a more detailed analysis is required as to whether or not particular rights and obligations of the landlord are correlative to the relevant right, interest or liability which is sought to be terminated by the company in liquidation, and whether or not it is necessary to terminate the landlord’s rights in order to release the company from that liability.
In Willmott, the High Court considered the effect of the liquidator’s disclaimer of a lease where a company in liquidation was the landlord. In that case, the lessee argued that the company's obligation under the disclaimed leases to provide quiet enjoyment of the leased property was not a liability of the company, and hence, was not terminated by reason of the disclaimer, and nor was the tenant’s correlative right to quiet enjoyment and exclusive possession. The majority of the High Court rejected this argument, finding that from the effective date of the disclaimer, the tenant’s right to quiet enjoyment of the property was terminated.
In doing so, French CJ, Hayne and Kiefel JJ approached the issue in the following manner:[5]
(a)first, what are the rights, interests or liabilities of the company in liquidation that would be terminated by the disclaimer in order to release the company from liability under s 568D(1)?; and
(b)secondly, what are the correlative rights, interests or liabilities that are necessarily brought to an end as a result in order to release the company from that liability?
[5]Willmott (n 1) [54]–[55] (French CJ, Hayne and Kiefel JJ), [74], [78] (Gageler J).
The High Court found that:[6]
(a)in order to release the liability of the landlord company under the disclaimed lease, the disclaimer would operate to release the company from its obligations as lessor, which necessarily included a release of its obligation to provide quiet enjoyment and exclusive possession of the land to the tenant;
(b)the liability, interest or right which is correlative to this is the tenant’s right to quiet enjoyment and exclusive possession of the land; and
(c)in order to release the company from its obligation to provide quiet enjoyment and exclusive possession, it was necessary to terminate the tenant’s right to quiet enjoyment and exclusive possession, thus leaving the tenant to prove in the winding up as creditors for whatever damage has been inflicted.
[6]Ibid.
In doing so, the majority judgment cited Hindcastle Ltd v Barbara Attenborough AssociatesLtd (‘Hindcastle’)[7] as authority for the proposition that in every case, the tenant is the party that has the liability, interest or right which is correlative to the relevant right, interest or liability of the landlord company.[8]
[7][1997] AC 70 (‘Hindcastle’).
[8]Willmott (n 1) [54]; Hindcastle, 87 (Lord Nicholls of Birkenhead).
In Hindcastle, the House of Lords considered the effect of the disclaimer of a lease by the tenant’s liquidator, and held that the disclaimer did not impact the contractual obligation provided in the lease by a third party to guarantee the tenant's obligations under that lease. The disclaimer did, however, terminate any obligation of the insolvent company to indemnify that guarantor. The reason the guarantee was found not to be affected was that it was not necessary to terminate the guarantor’s obligations to the landlord in order to terminate the insolvent company’s obligations as tenant under the lease, or by extension, its obligations to indemnify the third-party guarantor.[9]
[9]Hindcastle (n 7) 87-88.
Hindcastle was also referred to in a separate judgment delivered by Gageler J (as his Honour then was) as authority for the proposition that determination of the lease will determine the leasehold estate.[10] Gageler J set out the following quote form Lord Nicholls of Birkenhead’s decision:
Disclaimer operates to determine all the tenant’s obligations under the tenant’s covenants, and all his rights under the landlord’s covenants. In order to determine these rights and obligations it is necessary, in the nature of things, that the landlord’s obligations and rights, which are the reverse side of the tenant’s rights and obligations, must also be determined. If the tenant’s liabilities to the landlord are to be extinguished, of necessity so also must be the landlord’s rights against the tenant. The one cannot be achieved without the other.[11]
[10]Willmott (n 1) [73], quoting Hindcastle, 87.
[11]Ibid.
I do not accept the State’s submission that Willmott stands for the proposition that disclaimer of a lease by a liquidator will terminate all future rights and obligations of the parties to a lease, without the need to enquire as to whether there are any particular rights of the parties to the lease which are not correlative to the rights and obligations terminated by the disclaimer, such that they might survive the disclaimer.
This is because it is contrary to the approach taken by the High Court in Willmott, and nor was it the approach of the House of Lords in Hindcastle, as the above passage from Lord Nicholls of Birkenhead’s judgment demonstrates. Enquiry needs to be made as to what is the effect of the termination on the company’s obligations as lessee, and what is the minimum necessary effect on the rights of the landlord in order to release the company from that liability. Of course, the tenant’s obligations under the tenant’s covenants will be terminated by the disclaimer (such as the obligation to pay rent) and the tenant’s rights under the landlord’s obligations will also be terminated (such as the right to exclusive possession). As found in Willmott and Hindcastle, the correlative rights upon the landlord in respect of these covenants will similarly be terminated (such as the right to receive rent and grant exclusive possession).
But that does not mean that it is not necessary to enquire as to whether the disclaimer of a lease by the liquidator of a tenant will affect other rights and obligations of the landlord contained in the lease. If those rights are not correlative to the company’s obligations as lessee, and they are not necessary to be terminated in order to release the insolvent company from liability, they will survive the disclaimer. This is the effect of s 568D(1) and I find that the approach advocated by the State is contrary to the text of that provision.
Section 568D(1) expressly provides that the disclaimer ‘does not affect any other person's rights or liabilities except so far as necessary in order to release the company and its property from liability’. This requires attention to the minimum necessary impact and the rights of others. As Lord Nicholls of Birkenhead said in Hindcastle:
[t]he rights and obligations of these other persons are to be affected as little as possible. They are to be affected only to the extent necessary to achieve…the release of the company from all liability.[12]
[12]Hindcastle (n 7) 87.
The State submits that the clause-by-clause analysis proposed by the liquidator is not supported by Willmott and Hindcastle. However, I disagree. Each of Willmott and Hindcastle address particular rights and obligations of a landlord and lessee under a lease and whether they survive a disclaimer. In the case of Willmott, the High Court was considering the obligation to grant exclusive possession, and in Hindcastle, the focus was upon the guarantor’s obligations to the landlord. The impact of the disclaimer on other rights of the tenant (in Willmott) or the landlord (in Hindcastle) were not specifically considered. Presumably because it was not necessary to do so in order to resolve the controversies before the courts in those proceedings. Given the questions a court must answer in order to determine the effect of a disclaimer, recourse would need to be had to the specific bundle of rights and obligations the subject of controversy, so as to ensure that the other party’s rights are affected to a minimum extent necessary in order to release the company in liquidation from liability.

For these reasons I do not accept the State’s argument that the disclaimer terminates any rights to the hazardous waste left by Fordex at the premises merely because of the disclaimer is in respect of a lease. A more detailed analysis of the effect of the disclaimer upon cl 5.1.3 of the lease is required to ascertain whether the landlord’s rights pursuant to that clause would survive the disclaimer.

D What is the relevant date for determining whether rights have accrued?

The State contended, in effect, that the analysis to be undertaken under s 568D(1) as to the effect of the disclaimer on the landlord’s rights is to be undertaken as at the deemed effective date of the disclaimer under s 568C, on the assumption that it is not set aside. The State argues that therefore, rights that have accrued during the non-effective period may be terminated by a disclaimer.
I disagree with the approach advocated for by the State because it is artificial, ignores the non-effective period, and further, is contrary to the clear text and meaning of s 568D(1), which provides that third party’s rights will be affected to the minimum extent necessary in order to release the company from liability.
It cannot be said that rights which have accrued during the non-effective period are irrelevant and must be ignored in order to ascertain whether it is necessary for the disclaimer to affect another person’s rights or liabilities. It is necessary for such rights to be considered, so that a conclusion may be reached as to whether it is necessary for them to be affected by the disclaimer in order to release the insolvent company from liability. Ignoring rights that have accrued during the non-effective period would be artificial and would necessarily result in other person’s rights being affected more than is necessary in order to release the insolvency company from liability, which is contrary to s 568D(1). While the effect of a disclaimer is backdated by ss 568C and 568D, this does not affect the analysis required under s 568D(1) in terms of the impact of the disclaimer on the rights of other persons.
In my view, the impact upon rights of other parties affected by the disclaimer must be considered insofar as those rights have accrued as at the date of the hearing of the s 568B application, and not as at the deemed effective date of the disclaimer (should it be allowed to take effect).

E What is the effect of the disclaimer?

I will now turn to the question of terms of the lease and the effect the disclaimer will have on them.
Clause 5.1 of the lease provides:
5.1 When the term ends, the tenant must –
5.1.1 return the premises to the landlord clean and in the condition required by this lease, and
5.1.2 remove the tenant’s installations and other tenant’s property from the premises and make good any damage caused in installing or removing them.
If the tenant leaves any tenant’s installations or other tenant's property on the premises after the end of the lease, unless the landlord and tenant agree otherwise –
5.1.3 all items of tenant’s installations and tenant’s property will be considered abandoned and will become the property of the landlord, but the landlord may remove any of the tenant’s installations or other property of the tenant and recover the costs of removal and making good as a liquidated debt payable on demand; and
5.1.4 the parties intend that clause 5.1.3 operate in relation to tenant’s installations and tenant's property in place of any legislation that might otherwise apply to goods remaining on the premises.
The parties agree that the ordinary rules of contract construction apply to the terms of the lease. The parties referred in particular to the following principles:
(a)first, that where the language of the contract is open to alternative constructions, the court will prefer the interpretation of clauses which renders it harmonious with another; [13]
(b)secondly, to the extent that there is any ambiguity, the Court should construe the contract in a manner which avoids unreasonable or uncommercial consequences, with the assumption that the parties intended to produce a commercial result;^[14] and
(c)thirdly, where the contract does not specify a time by which something should be done, the law will imply that the obligation will be performed within a reasonable time.[15]
[13]Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99, 109; [1973] HCA 36, 7 (Gibbs J).
[14]Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640, 656 [35] (French CJ, Hayne, Crennan and Kiefel JJ).
[15]Canning v Temby (1905) 3 CLR 419, 424 (Griffith CJ); [1905] HCA 45.
Clauses 5.1.1 and 5.1.2 confer positive obligations on Fordex as the tenant to return the premises to the landlord clean and in a condition required by the lease, to remove the tenant’s installation and other tenant's property from the premises, and to make good any damage caused by installing or removing them. It is not contested that the hazardous waste falls within the definition of ‘tenant’s property’, such that pursuant to these clauses, Fordex is required to remove it from the premises.
The obligation on Fordex to comply with cll 5.1.1 and 5.1.2 arises ‘when the term ends’. Clauses 5.1.1 and 5.1.2 do not provide a time by which Fordex should comply with these obligations, and as such, the parties agree that these obligations must be performed within a reasonable time after the term of the lease ends.
The parties also agree that upon the expiry of the reasonable period ‘after the end of the lease’, the tenant’s installations and property will vest in the landlord pursuant to cl 5.1.3. However, there was some disagreement as to the mechanics of cl 5.1.3. The State argued that cl 5.1.3 is, in truth, an obligation on the tenant to transfer title of the left items to the landlord. The State argued that as a consequence, Fordex’s positive, future obligation to transfer title will be terminated by the disclaimer.
I disagree with the State’s construction of cl 5.1.3, as it is contrary to the text of the provision and is also contrary to ordinary commercial sense. The clause does not put any obligation onto Fordex to transfer title of items left to the landlord. Rather, the clause is an agreement which deems the items to be the landlord’s property in the event that they are left on the premises after the end of the lease. This deeming occurs automatically without Fordex having to do anything, or to incur any liability (save for the liability to pay for the landlord’s costs of removal and making good as a liquidated debt on demand). This makes commercial sense because it allows the landlord to clean up the premises in a reasonable time after the lease has ended so as to allow the premises to be relet, with the costs of that clean up being recoverable from the tenant.
The State submitted that if the disclaimer is allowed to stand, the lease, and Fordex’s obligations to remove the tenant’s property under cll 5.1.1 and 5.1.2, will all be taken to have been terminated on 18 October 2023, the deemed effective date.[16] The State contended that therefore, as at 18 October 2024, the landlord’s property rights in the tenant’s property under cl 5.1.3 would not have yet accrued, because a reasonable time had not yet passed since the end of the lease. It was argued that the consequence of this is that the landlord’s rights under cl 5.1.3 were not accrued rights, but rather, were future rights terminated by the disclaimer under s 568D(1). I accept that as at 18 October 2024, the landlord did not have any rights in the personal property disclaimed by the liquidator. However, for the reasons that I have already explained, this is not the end of the enquiry. Rather, what must be considered is whether the landlord’s rights in the disclaimed property have accrued during the non-effective period.
[16]The parties agree the deemed effective date under s 568(3) will be 18 October 2024, if the disclaimer takes effect. 18 October 2024 is the day after the notice of disclaimer was given to those who may have, or claim to have, an interest in the disclaimed property and the contract, as provided for in s 568C(3) of the Corporations Act.
The liquidator contends that the lease ended on 23 October 2024, and I agree. This is because cl 7.1.3(a) of the lease provides that the lease is terminated by re-entry where the tenant is a corporation and enters into liquidation. The landlord exercised its right of re-entry on 23 October 2024, which terminated the lease. However, as I have already described, as at 23 October 2024, the disclaimer has not yet taken effect pursuant to s 568C(1), by reason of this proceeding. The impact of this is that the landlord’s re-entry occurred within the non-effective period. Therefore, the lease was terminated not by the liquidator’s disclaimer (because it has not yet taken effect), but by the landlord’s re-entry on 23 October 2024 within the non-effective period.
In my view, the time for Fordex to comply with its obligations to remove the hazardous waste pursuant to cll 5.1.1 and 5.1.2 started to run from the termination of the lease by the landlord’s re-entry on 23 October 2024. The parties agree that a reasonable time has expired since that date.
Clause 5.1.3 provides for what occurs if that reasonable period of time has expired. It provides that:
(a)if Fordex leaves any installations or other tenant's property on the premises at the end of the lease, unless the parties otherwise agree, all items of the tenant's installations and the tenant’s property will be considered abandoned and will become the property of the landlord; and
(b)the landlord may recover its costs of removing and making good from Fordex as a liquidated debt.
In my view, that is precisely what has occurred. A reasonable time has passed after the end of the lease on 23 October 2024 and Fordex has not collected the tenant’s installations or the tenant’s property and they remain on the premises. There is no evidence that the parties have reached some other agreement in relation to the ownership of the tenant’s installations or the tenant’s property. As such, cl 5.1.3 provides the tenant’s installations and the tenant’s property have become the property of the landlord.
Accordingly, as at today, the tenant’s installations and the tenant’s property, including the hazardous waste, are the property of the landlord. The landlord’s property rights in the hazardous waste have accrued during the non-effective period.
Against that background, it is necessary to consider s 568D as to the effect that the disclaimer would have if it is not set aside, and in particular, whether it will affect the landlord’s accrued rights in the hazardous waste.
In my view, the clear answer is no. In order to terminate Fordex’s obligations under the lease or in connection with the tenant’s property, it is not necessary to affect the accrued rights of the landlord in the hazardous waste. The rights, interests and liabilities of Fordex which are terminated by this disclaimer include the obligation to pay rent, remove its installations and its property from the premises pursuant to cll 5.1.1 and 5.1.2. It is also clear is that the disclaimer will operate to terminate Fordex’s liability under cl 5.1.3 to pay the landlord’s costs of removing the hazardous waste. The landlord’s right to recover those costs as a liquidated debt is clearly correlative to Fordex’s responsibility to pay them, and it is necessary to terminate that right in order to release Fordex from the corresponding liability. The consequence of this is that the landlord will be left to recover its costs of removing the hazardous waste and making good as a debt in the winding up of Fordex, as is contemplated by s 568D(2).
However, it is not necessary to bring to an end the landlord’s accrued proprietary rights under cl 5.1.3 in the hazardous waste in order to release Fordex from its liabilities under the lease or in connection with the hazardous waste. Conversely, upholding the landlord’s proprietary rights in the items left at the premises at the end of the lease does not give rise to any liability on Fordex.
For these reasons, in my view, the rights of the landlord pursuant to cl 5.1.3 are not affected by the disclaimer. This is because they are rights which accrued during the non-effective period that are not correlative to Fordex’s liabilities that are released by the disclaimer.
There may be instances where a right of a third party in disclaimed assets or contracts that has accrued during the non-effective period might also be terminated by a the disclaimer. This will occur under s 568D where it is necessary for those rights to be affected in order to release the insolvent company from liability. However, that is not the case here.
I am therefore of the view that the hazardous waste left at the premises is not ownerless. It is owned by the landlord and the disclaimer will not have the effect of rending the waste materials, or any other personal property left on the premises by Fordex at the end of the lease, ownerless. Accordingly, the doctrine of bona vacantia has no role to play and, in my view, it is appropriate therefore to dismiss the State’s application, with costs.

SCHEDULE OF PARTIES

S ECI 2024 05823
BETWEEN:
THE STATE OF VICTORIA	Plaintiff
- v -
FORDEX PTY LTD (IN LIQUIDATION) (ACN 106 096 655)	First Defendant
PHILIP NEWMAN IN HIS CAPACITY AS LIQUIDATOR OF FORDEX PTY LTD (IN LIQUIDATION) (ACN 106 096 655)	Second Defendant

[2025] VSC 180

13 March 2025 (ex tempore; revised 9 April 2025)