Our September 2012 insolvency update featured the article "Disclaiming Landlord's Interest in a Lease - an Australian Perspective". This article discussed the Victorian Court of Appeal's ruling that section 568(1) of the Corporations Act 2001 (Cth) (similar to our own section 269 of the Companies Act 1993 (NZ)) allows a liquidator to exercise his power of disclaimer to extinguish the leasehold estate of a tenant.
Last month, the Australian High Court granted leave for that decision to be appealed. The main issue will be whether a liquidator has the power to disclaim a lease, enabling him to deal with a company's land free from the interests of tenants. The outcome may have significance for liquidators, tenants and financiers. Tenants with long term leases may be more alert to the likelihood of the landlord company being liquidated when investing in premises and when seeking funding. Furthermore, there may be changes to the willingness of financiers to fund business heavily dependent on long term leasing.
It will be interesting to see whether this decision impacts New Zealand insolvency law, given that the High Court ruled against the liquidator's ability to disclaim in 2008 (see Capital + Merchant Investments Ltd (In Rec) v Russell Management Limited here). We will be following this decision closely and reporting on the outcome later this year.
See court decision here.