In our September 2012 insolvency update, we reported on Re Willmott Forests Ltd  VSC 29, where the Victorian Court of Appeal found that a leasehold interest in land is extinguished by a liquidator's disclaimer of the lease pursuant to section 568(1) of the Australian Corporations Act 2001 (Cth).
This decision was recently upheld on appeal. The Australian High Court agreed that liquidator's disclaimer of the lease brought the rights and obligations of both parties to an end. However, if the tenant suffers loss as a result of the disclaimer, then they may prove for that loss in the winding up of the lessor company.
Section 568 of the Corporations Act is similar to section 269 of the New Zealand Companies Act 1993. Should the decision be adopted in New Zealand, the practical implications for tenants, financiers and liquidators would be significant. Tenants and their financiers would face uncertainty in the event of the liquidation of a landlord company. Conversely, liquidators would be able to sell or dispose of land undeterred by leasehold interests.
See Court decision here.