Willmott Growers Group Inc v Willmott Forests Ltd (Receivers and Managers appointed) (in liq)

The High Court of Australia considered an appeal concerning the ability of liquidators to disclaim leases granted by a company, Willmott Forests Limited ("WFL"), which managed forestry investment schemes. WFL, now in liquidation, had leased portions of land to participants in these schemes. The liquidators sought to sell WFL's assets, including the leased land, free from these leases. The appellant, Willmott Growers Group Inc ("WGG"), argued that the liquidators could not disclaim the leases, as they represented vested interests in land that could not be terminated by disclaiming the underlying contract.

The central legal issue before the High Court was whether the leases granted by WFL constituted "property of the company that consists of ... a contract" within the meaning of s 568(1)(f) of the *Corporations Act 2001* (Cth), thereby allowing the liquidators to disclaim them. A related question was the effect of such a disclaimer on the tenant's estate or interest in the land. WGG contended that *Bastable* supported the proposition that a vested interest in land, once created by a contract, could not be extinguished by disclaiming that contract.

The High Court reasoned that each lease was indeed a contract and therefore fell within the scope of s 568(1)(f) of the *Corporations Act*. The Court distinguished *Bastable*, noting that it concerned a different statutory provision and a contract for the sale of a lease, not a lease itself. The Court held that the leases were property of WFL that could be disclaimed. Furthermore, the Court clarified that s 568D(1) of the *Corporations Act* requires that a tenant's rights and liabilities are terminated to the extent necessary to release the company and its property from liability. This necessarily includes the company's obligation to provide quiet enjoyment and the tenant's corresponding right to it, meaning that from the effective date of disclaimer, these rights and liabilities are terminated. If a tenant suffers loss due to the disclaimer, they may prove for that loss in the winding up.

The appeal was dismissed with costs.