Willmott Growers Group Inc v Willmott Forests Limited (Receivers and Managers Appointed) (In Liquidation) [2013] HCA 51

HIGH COURT OF AUSTRALIA

FRENCH CJ, HAYNE, KIEFEL, GAGELER AND KEANE JJ

WILLMOTT GROWERS GROUP INC APPELLANT

AND

WILLMOTT FORESTS LIMITED (RECEIVERS AND MANAGERS APPOINTED (IN LIQUIDATION) IN ITS CAPACITY AS MANAGER OF THE UNREGISTERED MANAGED INVESTMENT SCHEMES LISTED IN SCHEDULE 2 & ORS RESPONDENTS

Willmott Growers Group Inc v Willmott Forests Limited (Receivers and Managers Appointed) (In Liquidation) [2013] HCA 51 4 December 2013 M53/2013

ORDER

Appeal dismissed with costs.

On appeal from the Supreme Court of Victoria

Representation

G T Bigmore QC with M P Kennedy and S G Hopper for the appellant (instructed by Mills Oakley Lawyers)

P D Crutchfield SC with R G Craig and D J Snyder for the first to third respondents (instructed by Arnold Bloch Leibler Lawyers)

No appearance for the fourth respondent

Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS

Willmott Growers Group Inc v Willmott Forests Limited (Receivers and Managers Appointed) (In Liquidation)

Corporations law – Winding up – Insolvency – Liquidators appointed to manager of forestry investment schemes – Liquidators sought to sell assets of manager unencumbered by schemes – Assets included land over which leases granted by manager – Whether liquidators could disclaim leases granted by manager under s 568(1) of Corporations Act 2001 (Cth) – Whether lease "a contract" under s 568(1)(f) – Whether disclaimer of lease terminated tenant's estate or interest in land.

Words and phrases – "effect of disclaimer", "lease of land", "property of the company that consists of ... a contract", "rights, interests, liabilities and property".

Corporations Act 2001 (Cth), ss 568(1), 568(1A), 568D(1).

FRENCH CJ, HAYNE AND KIEFEL JJ. The issues in the appeal A company leased land to tenants for the tenants to grow and harvest trees. The company became insolvent and is being wound up. Does Div 7A (ss 568‑568F) of Pt 5.6 of the Corporations Act 2001 (Cth) ("the Act") give the company's liquidators power to disclaim the leases which the company granted? If the Act gives that power, does disclaimer terminate the tenants' rights arising under the leases? Two statutory questions and their answers The issues in this appeal present two statutory questions. Section 568(1) of the Act gives the liquidator of a company power to disclaim certain property of the company, including property that consists of a contract. Section 568D(1) provides that a disclaimer is taken to terminate, from the effective date of the disclaimer, the company's rights, interests, liabilities and property in or in respect of the disclaimer property. The relevant questions are: first, does s 568(1) give a liquidator power to disclaim a lease which the company granted to a tenant; and, second, if a liquidator has power to disclaim such a lease, what does s 568D(1) provide to be the effect of that disclaimer? Section 568(1) gives the power to disclaim. It provides: "Subject to this section, a liquidator of a company may at any time, on the company's behalf, by signed writing disclaim property of the company that consists of: (a) land burdened with onerous covenants; or (b) shares; or (c) property that is unsaleable or is not readily saleable; or (d) property that may give rise to a liability to pay money or some other onerous obligation; or (e) property where it is reasonable to expect that the costs, charges and expenses that would be incurred in realising the property would exceed the proceeds of realising the property; or (f) a contract; whether or not: (g) except in the case of a contract—the liquidator has tried to sell the property, has taken possession of it or exercised an act of ownership in relation to it; or (h) in the case of a contract—the company or the liquidator has tried to assign, or has exercised rights in relation to, the contract or any property to which it relates." The central question of construction of s 568(1) is whether a lease granted by the company to a tenant is "a contract" within the meaning of s 568(1)(f). Section 568(1A) of the Act provides that "[a] liquidator cannot disclaim a contract (other than an unprofitable contract or a lease of land) except with the leave of the Court" (emphasis added). Evidently, "a contract" in s 568(1)(f) includes a lease of land. Should the reference to "a lease of land" in s 568(1A) be read as referring to any lease to which the company is a party, or only to leases of land in which the company is the tenant? These reasons will show that s 568(1) should be construed as giving the liquidator of a company power to disclaim a lease granted by the company to a tenant. A lease granted by the company to a tenant is "a contract" within the meaning of s 568(1)(f). This conclusion follows both from the relevant attributes of a lease and from the reference in s 568(1A) to "a lease of land", an expression which cannot be read as confined to leases in which the company is the tenant. Section 568D prescribes the effect of a disclaimer. It provides: "(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." It was not disputed that, if the liquidator has power to disclaim a lease which a company has granted to a tenant, the effect of the disclaimer is that, from the relevant day, the company's rights, interests, liabilities and property in or in respect of the lease are terminated. The appellant, Willmott Growers Group Inc ("WGG"), submitted, however, that termination of the company's rights, interests, liabilities and property in or in respect of the disclaimer property did not bring the tenant's rights to an end. Section 568D(1) requires that a tenant's rights and liabilities are terminated so far as necessary to release the company and its property from liability. These reasons will show that it necessarily follows that, from the effective date of the disclaimer, the company's liability to provide the tenant with quiet enjoyment of the leased property (and not derogate from the grant of a right to exclusive possession) and the tenant's rights to quiet enjoyment of the property (and to non‑derogation from the grant of exclusive possession) are terminated. If the tenant suffers loss because of the disclaimer, the tenant may prove for that loss in the winding up. The essential facts The first respondent, Willmott Forests Limited ("WFL"), was the manager of numerous forestry investment schemes associated with a group of companies which can be referred to as "the Willmott group". WFL, or its predecessor in title, leased to participants in those schemes portions of land which WFL owned or leased. The leases were made at various times. Each lease was for a term of years (generally 25 years) and some leases gave the tenant an option for a further term. Some leases provided for the whole of the rent due to be paid in advance; some provided for rent to be paid annually. The forestry investment schemes took different forms. It is not necessary to examine those differences in great detail. It is enough to notice that all related to forest plantations. Each investor leased an area on which trees were to be grown. Generally, each investor made a forestry management agreement with a company in the Willmott group, by which that company agreed to plant, maintain and harvest the trees. Most forestry management agreements provided for the investor to pay the relevant company an initial fee, but for the investor to pay no further sum until the trees were harvested. Some of the schemes were registered managed investment schemes under Ch 5C of the Act; others were not. No question arises in the appeal about the application of Ch 5C to any of the unregistered investment schemes. The unregistered schemes were of three types, described as "contractual schemes", "partnership schemes" and "professional investor schemes". WFL acted as the responsible entity and manager of eight registered managed investment schemes and, so far as relevant to this appeal, as manager of 22 unregistered schemes. These registered and unregistered schemes (together referred to as "the Willmott schemes") related to plantation projects in six areas, described as "Bombala Victoria", "Bombala New South Wales", "Murray Valley Victoria", "Murray Valley New South Wales", "North Coast New South Wales" and "North Coast Queensland". The land used in a particular investment scheme (registered or unregistered) was not always a single contiguous block. So, for example, one of the schemes was conducted on 105 different plantations. Although trees were planted as a single plantation, and not in individual lots, one investor's lot might be adjacent to one or more lots leased to investors in other schemes. In September 2010, WFL (and other companies in the Willmott group) went into voluntary administration. Receivers and managers were also appointed to property which companies in the Willmott group had charged and the receivers and managers took possession of the charged assets. Freehold land owned by WFL in and around the town of Bombala in New South Wales, comprising 27,861 hectares, was not charged. At September 2010, about 70 per cent of that land had been planted with pine trees. In March 2011, the creditors of WFL resolved that the company be wound up and appointed the second and third respondents in this Court as liquidators of WFL ("the liquidators"). The liquidators concluded that the Willmott schemes could not continue to operate. The liquidators considered that it was "very unlikely" that "a party would be willing to take over as responsible entity and manager of the Willmott Schemes in circumstances where that party would be required to assume the liabilities of WFL and fund the continued operation of the Willmott Schemes without any income or contributions from [individual investors] until harvest". The liquidators further concluded that it would not be practicable to maintain separately, or harvest separately, the trees on any individual lot leased to a particular investor and that the individual investors' "right to maintain and harvest their own trees is a theoretical right which cannot be exercised". In conjunction with the receivers and managers, the liquidators sought to sell the assets of WFL, including its freehold land and its interests as lessee of certain land on which plantations had been established. The sale campaign was said to have been run on the basis that parties could either purchase the relevant assets "unencumbered by the Willmott Schemes" or purchase those assets "encumbered by the Willmott Schemes with the ability to take over as responsible entity and manager of the schemes". Expressions of interest were received from 229 parties, of whom 92 submitted "indicative non-binding offers". No person who responded to the request for expressions of interest in purchasing assets from the liquidators or receivers and managers expressed interest in purchasing any of the assets encumbered by the Willmott schemes, or in becoming responsible entity or manager of any of the Willmott schemes. After those who had provided indicative offers were given an opportunity to examine information and documents about the assets, 54 binding offers were made to acquire assets. Separate conditional contracts of sale were then concluded with the one purchaser with respect to each of the six areas in which the Willmott schemes were conducted. Each contract provided that title to the assets the subject of the contract was to pass to the purchaser free from the encumbrances arising out of the Willmott schemes and, more particularly, that title to the trees on the land was to pass to the purchaser at settlement. Proceedings about the proposed sales Pursuant to s 511 of the Act, the liquidators applied to the Supreme Court of Victoria for directions and orders about the sales that had been negotiated. WGG and another body associated with investors who sought to continue the schemes in which they had invested, Willmott Action Group Inc ("WAG") (the fourth respondent), sought and were granted leave to intervene in the proceedings. The receivers and managers of WFL were not named as parties to the proceedings but were represented and supported the application by the liquidators. WGG and WAG acted as contradictors of the arguments advanced by the liquidators. Because of the time constraints presented by the contracts of sale that had been made, the primary judge (Davies J) ordered separate determination of the question: "Are the liquidators able to disclaim the Growers' leases with the effect of extinguishing the Growers' leasehold estate or interest in the subject land?" Her Honour answered that question "No". There were two principal elements in her Honour's reasoning. First, the negative answer was said to be supported by cases on "analogous" legislation, in particular, In re Bastable; Ex parte The Trustee (concerning the application of s 55 of the Bankruptcy Act 1883 (UK)). Second, her Honour reasoned that termination of the leases granted by WFL to investors was not necessary to release WFL or its property from a liability. So much followed, in her Honour's opinion, from the fact that WFL's grant of proprietary rights to the tenants created rights in the tenants that were different from WFL's reversionary interest in the leased land. Davies J said that it was "unnecessary to interfere with the Growers' property rights in order to release WFL from its liability to lease because the leases have been effected" and that, accordingly, "the proviso in s 568D has no application". The liquidators appealed to the Court of Appeal. That Court (Warren CJ, Redlich JA and Sifris AJA) allowed the appeal, set aside the order answering the separate question "No", and ordered that the question be answered "Yes". The plurality in the Court of Appeal (Warren CJ and Sifris AJA) identified the critical question as "how far it is necessary to go (in relation to the lease of the lessee grower) in order to release WFL from liability". Their Honours noted that the liquidators identified that liability as (among other things) WFL's continuing obligation to provide the tenant with quiet enjoyment of the land. By contrast, WGG submitted that the rights of the investors as lessees had accrued or become vested before the time of any disclaimer and would therefore be preserved. Yet, as Redlich JA noted, WGG resiled in argument from the contention that the covenant to provide quiet enjoyment was not a liability of WFL, and accepted that the primary judge had been wrong to conclude otherwise. All members of the Court of Appeal rejected WGG's submissions. By special leave, WGG appealed to this Court. WGG's arguments WGG advanced two principal arguments in this Court. Those arguments were: first, that the "proper" disclaimer property was WFL's unsaleable reversion, and second, that the tenants' leasehold estates would survive disclaimer of the lease contracts. It is convenient to deal with them in turn. The "proper" subject of disclaimer The liquidators seek to disclaim the leases to investors of which WFL is landlord. They do not seek to disclaim WFL's reversionary interest in the land which is subject to those leases. It will be recalled that s 568(1) gives the liquidator of a company power to disclaim "property of the company that consists of" any of six enumerated categories of property. Paragraphs (a) and (b) of s 568(1) refer to "land" and "shares"; pars (c), (d) and (e) refer to "property" of various kinds; and par (f) refers simply to "a contract". WGG submitted that the only "proper" subject of disclaimer in this case was WFL's reversionary interest in the land that had been leased to investors. That is, WGG submitted that only pars (a) and (c) of s 568(1) could be engaged in this case and only in respect of WFL's reversionary interest. Section 568(1), therefore, did not authorise disclaimer of the leases. It may be accepted that WFL's land subject to the leases is "land burdened with onerous covenants" (within par (a)) and is also "property that is ... not readily saleable" (within par (c)). But, as WGG's argument necessarily acknowledged, property which may be disclaimed under s 568(1) may engage more than one of the specific descriptions given in pars (a) to (e) of that sub‑section. There is no foundation for reading the several forms of property enumerated in pars (a) to (f) of s 568(1) as mutually exclusive. Property which consists of "land burdened with onerous covenants" within the meaning of par (a) may also be not only "property that is unsaleable or is not readily saleable" within par (c) but also "property that may give rise to a liability to pay money or some other onerous obligation" within par (d). WGG's argument at least flirted with, perhaps even embraced, the proposition that satisfaction of a paragraph appearing earlier in s 568(1) entails that other, later, paragraphs of the sub‑section are to be ignored as irrelevant or inapplicable. That cannot be right. A company may have several different kinds of property which are the subject of s 568(1). Demonstrating that one kind of property of the company (in this case its reversionary interest in land) falls within one or more of the paragraphs of s 568(1) does not entail that another kind of property of the company (here the leases to investors) cannot be disclaimed. WGG's submission might be understood as asserting that, because pars (a) and (c) of s 568(1) identify some of the rights and obligations which arise under the leases, the disclaimer of any of the rights and obligations arising under those leases must be made using the power provided by those paragraphs. If that was the argument, and it was right, it would follow that the power provided by par (f) of s 568(1) in relation to "a contract" could not be exercised. But how or why s 568(1)(f) would be read down to achieve such a result was never explained satisfactorily. WGG's argument about the "proper" subject of disclaimer must, then, be understood as in effect asserting that the leases are not property of the company for the purposes of s 568(1). That is, WGG's argument was that the sub‑section provides no power to disclaim property of that kind. What is "property of the company"? Care must always be exercised in understanding how the word "property" is used in legal discourse. The word may be used in different senses and the very concept of "property" may be elusive. The Act's conferral of a power to "disclaim property" can be given legally sensible operation only by reading the reference in the chapeau to s 568(1) to "property of the company" as not confined to the object in respect of which the property rights exist. Rather, the reference to "property of the company" must be read as directing attention to the legal relationship which exists between the company and the object (whether that object is land, shares, a contract or some other object of property). That reading of the chapeau is consistent with the Act's definition of "property" as "any legal or equitable estate or interest (whether present or future and whether vested or contingent) in real or personal property of any description and includ[ing] a thing in action". The breadth of the kinds of "property" with which s 568(1) deals both demonstrates and requires that no narrow meaning can be given to the legal relationships which are embraced by the word "property" whenever it is used in the provision. The word "property" should be understood as referring to the company's possession of any of a wide variety of legal rights against others in respect of some tangible or intangible object of property. If land was the only object of property with which s 568(1) dealt, the nature and extent of the property rights which may be disclaimed might usefully have been elucidated by reference only to general land law and, in particular, doctrines of estates. But s 568(1) does not deal only with property in land. It deals with a company's "property" in, among other things, bilateral contracts. In that context, as well as in other contexts in which s 568(1) must operate, doctrines of estates cannot inform, let alone limit, the scope of the word "property". Once it is understood, as it must be, that "property" in the chapeau to s 568(1) is a compendious description of legal relationships amounting to "ownership" of objects of property (both tangible and intangible), the reference in par (f) to "a contract" must be understood as identifying, as the disclaimer property, the rights and duties which arise under the contract. The contract is the source of those rights and duties. It is then important to recognise that it is now firmly established that a lease is a species of contract. As Deane J said in Progressive Mailing House Pty Ltd v Tabali Pty Ltd, "[a] lease for a term of years ordinarily possesses a duality of character which can give rise to conceptual difficulties. It is both an executory contract and an executed demise" (emphasis added). Hence, as Mason J said, "the ordinary principles of contract law, including that of termination for repudiation or fundamental breach, apply to leases". The rights and duties which a landlord and tenant have under a lease are bundles of rights and duties which together can be identified as species of property. The origins of those rights and duties lie in the contract which the landlord and tenant or their predecessors in title made. In every case, the rights and duties of the landlord and tenant, whether as an original party to the lease or as a successor in title, stem from the contract of lease and any later contract made in relation to that lease. When a company is the landlord, the rights and duties which that company has in respect of the lease are properly described as "property of the company that consists of ... a contract". The landlord's rights and duties are a form of property; those rights and duties "consist of", in the sense of derive from, the contract of lease. This conclusion, which follows from identifying the nature and source of the rights and duties which a landlord has in respect of leased land, is put beyond any doubt by the reference in s 568(1A) to "a contract ... other than a lease of land". The reference in that provision to "a lease of land" cannot be read as referring only to leases in which the company is a tenant. As WGG pointed out, the Harmer Report on Insolvency identified leases granted to a company as tenant as an example of onerous property which a liquidator should have power to disclaim. References to the recommendations of that report can be found in extrinsic material relevant to the introduction, by the Corporate Law Reform Act 1992 (Cth), of provisions substantially like those now found in Div 7A of Pt 5.6 of the Act. Nothing in the extrinsic material suggests, however, that the otherwise general words of what is now s 568(1) of the Act, or the reference in s 568(1A) to "a lease of land", should be confined to leases to the relevant company. There is no textual foundation for limiting the words in that way. WGG's submission that the words should be so confined must be rejected. The leases to investors of which WFL is landlord are property of the company which may be disclaimed. Each lease is "a contract" within s 568(1)(f). To the extent to which WGG's "proper" subject of disclaimer argument depended upon denying that proposition, it should be rejected. WGG's reliance on an earlier decision WGG sought to support its proposition that the only "proper" subject of disclaimer is the company's reversionary interest in the land by reference to statements made in Bastable. (It will be recalled that the primary judge treated Bastable as supporting the conclusion that the liquidators could not disclaim the leases which had been granted to investors.) WGG submitted that Bastable established that a vested interest in land cannot be brought to an end by disclaimer of the contract which created that interest. It followed in this case, so the argument continued, that because each investor has a vested interest in the land which the investor leased from WFL, the only property of the company which the liquidators can disclaim is the company's reversionary interest in the land. Bastable concerned a disclaimer by a trustee in bankruptcy, under s 55 of the Bankruptcy Act 1883 (UK), of a contract for the sale of a lease of land. The contract had been made before the vendor became bankrupt. The purchaser of the lease had paid a deposit of £50. The unpaid balance of the purchase price was £40. The trustee alleged that carrying out the contract of sale would be "unprofitable" to the bankrupt's estate in the sense that the bankrupt's estate would be better off with the lease than it would be if the lease were transferred to the purchaser in return for payment of the balance of the purchase money that had been agreed. The Court of Appeal dismissed the trustee's appeal against the decision of a divisional court declaring the disclaimer void. The premise for the Court of Appeal's decision was that the statute did not authorise the disclaimer of the contract for sale of the lease because it was not in any relevant sense onerous property (as s 55 of the Bankruptcy Act required.) Completion of the contract according to its terms placed no burden on the estate or the trustee. No doubt, as WGG submitted, both Collins LJ and Romer LJ described the effect of the contract of sale as being to vest an interest in the purchaser which disclaimer would not affect. Indeed Romer LJ identified the fallacy in the trustee's argument as lying in ignoring the nature of the interest of a purchaser of real estate after a contract for its sale had been made. And in the course of argument, the Court had identified the purchaser's interest in the land as being ownership in equity of the property (being the lease which the bankrupt had agreed to sell). It was this interest which Romer LJ described as being an "interest in the land [which] would remain whatever might be the effect of a disclaimer by the trustee in the vendor's bankruptcy of the contract for sale". Hence, the actual orders made in Bastable required the trustee either to disclaim the lease which was the subject of sale or to convey the leasehold estate to the purchaser. Three points may be made about what was said in Bastable. First, the statutory provision for disclaimer considered in the case differed from the provisions which must be considered in this matter. Only "unprofitable" contracts, and other onerous property, could be disclaimed by a trustee in bankruptcy. Second, great care must be exercised in treating unqualified statements made in the course of ex tempore reasons for decision given for deciding a particular case as establishing some absolute or universally applicable gloss upon the relevant statutory provision. Especially is that so when differently worded statutory provisions are to be applied in the instant case. Third, the proposition in Bastable, that the purchaser's interest in the lease "would remain", was necessarily directed only to the consequences of disclaimer, not the ambit of the power to disclaim. It is, therefore, a proposition which does not speak directly to WGG's submission that the only "proper" subject for disclaimer is WFL's reversionary interest in the land. The proposition emphasised that terminating the vendor's liability to convey the legal title to the leasehold interest upon tender of the balance of the purchase price would leave unaffected the purchaser's equitable interest as purchaser of the leasehold. But, as these reasons will later demonstrate, when consideration is given to the effect of disclaimer, the analysis of the relationship between the parties in Bastable cannot be applied directly to the present case, if only because the relevant rights and liabilities with respect to quiet enjoyment of the leased land (and non‑derogation from the grant of exclusive possession) are continuing rights and liabilities. And because those rights and liabilities are continuing, the Act can, and in this case does, bring them to an end with the consequence that from the effective date of the disclaimer there are neither the continuing rights to quiet enjoyment of the leased land (and non‑derogation from the grant of exclusive possession) nor the corresponding liabilities. Termination of those rights and liabilities entails termination of the tenants' estates or interests in the land. The decision in Bastable does not support WGG's submission that the "proper" subject for disclaimer in this case was WFL's reversionary interest in the land. It is, therefore, not necessary to examine whether, as WGG submitted, on disclaimer of that reversionary interest, the land would escheat to the Crown but still be subject to whatever may be the leasehold interests of investors. Rather, it is necessary to examine the second limb of WGG's argument, which was that the investors' leasehold interests in the land would survive disclaimer. The effect of disclaimer WGG's second submission necessarily accepted that the liquidators could disclaim the leases of which WFL was landlord. It must, therefore, be taken to have proceeded from an acceptance that s 568(1) treats a company's lease of land to a tenant as "a contract" within s 568(1)(f). The effect of disclaimer is provided for, and governed, by s 568D(1), the text of which is set out earlier in these reasons. Section 568D(1) provides that, from the day on which the disclaimer takes effect, the disclaimer "is taken to have terminated ... the company's rights, interests, liabilities and property in or in respect of the disclaimer property". WGG submitted that, despite this effect on the rights, interests and liabilities of the company, the disclaimer of a lease could not operate "to destroy a third person's interest in property which existed before the disclaimer". WGG gave little prominence in argument in support of this submission to the proposition (advanced before the primary judge) that WFL's obligation to provide continuing quiet enjoyment of the leased property was not a liability of the company. Rather, the argument was advanced primarily, perhaps exclusively, by reference to three related ideas. First, emphasis was given to each lease having created an estate or interest in land. Second, by describing the tenants as "third persons" or "third parties", it was suggested that the tenants stood apart from the rights, interests and liabilities of the company which were terminated by disclaimer. And third, it was asserted that termination of the tenants' estates or interests in the land would not follow from, or be compelled by the "release [of] the company and its property from liability". WGG's argument must be rejected. The first of the three points made by WGG is undoubtedly correct. Each lease created an estate or interest in land. But the relevant question is whether the effect of the operation of the statute is that the estate or interest is brought to an end. In that respect, it is critically important to recognise that the tenants do not stand as third parties divorced from the rights, interests and liabilities of the company which are to be brought to an end. 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 company. And contrary to the submissions of WGG, the company's rights, interests and liabilities in respect of the leases cannot be brought to an end without bringing to an end the correlative liabilities, interests and rights of the tenants. That is, to adopt the closing words of s 568D(1), "in order to release the company ... from liability", it is necessary to terminate the tenants' rights under the leases. This operates to terminate the tenants' estates or interests in the land. As the liquidators correctly submitted, the liabilities of WFL that would be terminated by disclaimer of the leases include its obligations to provide quiet enjoyment and not derogate from the grant of exclusive possession of the land. And as the liquidators further submitted, again correctly, it necessarily follows that the tenants' rights to quiet enjoyment and, non‑derogation are terminated by the disclaimer of the leases with consequent termination of the company's correlative liabilities or duties. It follows that the tenants' estates or interests are also brought to an end. The tenants are then left with the right to prove in the winding up as creditors for whatever damage is thereby inflicted. Questions not considered Obviously, a tenant whose lease has been disclaimed by the liquidator of a landlord may consider that being left to proof as an unsecured creditor in the winding up gives little effective compensation for what has been taken away. Whether that is so in this case was not examined in argument and is not considered. Nor has there been any occasion to consider in this case whether the liquidators require the leave of the "Court" before disclaiming the investors' leases or, if they do require leave, what considerations would inform the decision to grant or refuse leave. It may be noted that the Act does provide expressly, in s 568B(3), that the "Court", on application, may set aside a disclaimer "only if satisfied that the disclaimer would cause, to persons who have, or claim to have, interests in the property, prejudice that is grossly out of proportion to the prejudice that setting aside the disclaimer would cause to the company's creditors" (emphasis added). Again, however, whether or how that provision would apply in this case was not explored in argument. Conclusion and orders For these reasons, the liquidators have the power to disclaim the leases to investors. Each lease is "a contract" for the purposes of s 568(1)(f) of the Act. The liabilities of WFL (including its obligations to provide quiet enjoyment and not derogate from the grant of exclusive possession) would be terminated from the day on which the disclaimer takes effect, as would the correlative rights of the tenant. Each tenant's estate or interest in the land would be terminated. The appeal should be dismissed with costs.