Steinhardt v Trenfield and Park as liquidators of Wealth Base South Coolum Pty Ltd (in liq)

Steinhardt brought an application against Trenfield and Park, who were the liquidators of Wealth Base South Coolum Pty Ltd, to set aside a disclaimer of a lease of land held by Steinhardt from the company. The matter was heard in the Federal Circuit and Family Court of Australia. The primary issue before the court was whether the disclaimer would cause Steinhardt a prejudice that was grossly out of proportion to the prejudice that setting aside the disclaimer would cause to the company’s creditors. The court was required to determine whether the proposed undertaking by Steinhardt to surrender the lease upon the sale of the subject lot would mitigate any prejudice to the company’s creditors.

The court considered Steinhardt’s evidence of substantial financial prejudice from the disclaimer of the lease, alongside the liquidators’ claim that setting aside the disclaimer would prevent the company’s land assets from being sold until the lease expired. Steinhardt proposed to provide an undertaking to the court to surrender the lease if and when the liquidators sold the subject lot. The court found that there was no discernible prejudice to the company’s creditors for the purposes of section 568E of the Corporations Act 2001 (Cth) by setting aside the disclaimer and allowing Steinhardt to remain in possession.

The court granted Steinhardt leave to apply under section 568E of the Corporations Act 2001 (Cth) and ordered that the disclaimer of the lease be set aside upon Steinhardt providing the specified undertaking to the court.