Peter A Clarke

The High Court will hand down its decision in Willmott Growers Group Inc v. Willmott Forests Ltd (Receivers and Managers Appointed) (In Liquidation) In its capacity as manager of the unregistered managed investment schemes listed in Schedule 2 and Ors this Wednesday 5 December 2013.

For those, like myself, who practice in the corporations and insolvency area it is a long awaited decision with significant ramifications.

The High Court transcript provides:

MR G.T. BIGMORE, QC: May it please the Court, I appear with MR M.P. KENNEDY and MR S.G. HOPPER for the appellant. (instructed by Mills Oakley Lawyers)

MR P.D. CRUTCHFIELD, SC: If the Court pleases, I appear with MR R.G. CRAIG and MR D.J. SNYDER for the first to third respondents. (instructed by Arnold Bloch Leibler Lawyers)

FRENCH CJ: Yes, Mr Bigmore.

MR BIGMORE: Your Honour, might I deal first with the amended notice of appeal? I think the Court might have seen that we have sought, with the consent of our friends, to amend the notice of appeal to remove the issue that arose in relation to costs in the Court of Appeal. We formally seek leave to make that amendment, and by virtue of that – – –

FRENCH CJ: You have that leave.

MR BIGMORE: Thank you, your Honour, and by virtue of that leave and that amendment, we seek the consent order in due course that order 4 of the judgment of the Court of Appeal be set aside.

FRENCH CJ: Yes.

MR BIGMORE: We have distributed our outline of propositions, and the Court will see that we have two propositions. Our learned friends, on a quick glance at their outline of propositions, meet those two propositions. The question first of all is what is the proper disclaimer property? We refer to passages in Bastable, and particularly to the text of the provision.

If the Court has the provision, section 568, our submission is that there is a bright line between paragraphs (a) and (c) of subsection (1) and paragraph (f), so that a liquidator upon being appointed and inquiring as to what the property of the company consists of would immediately observe that the property in cases like this consists of a reversion and the reversion being not really assailable, valueless in itself. What has happened here is the liquidators have determined to rid the land of the leases in order to make the land valuable. This land is otherwise unencumbered, there is no mortgage, and one can readily appreciate the motive of the liquidators to rid the freehold land from the inconvenience of the leases.

FRENCH CJ: Now, just to clear out a couple of preliminary matters. These leases are not registered?

MR BIGMORE: No. In our submission, it makes no difference that they are not registered, but it is the fact that they are not registered – – –

FRENCH CJ: There is no intersection, in other words, with the TLA.

MR BIGMORE: – – – indeed, one or two of them are agreements for a lease, the form of the lease being throughout pretty much the same. Some provided for payment of rent in advance, substantial rent, and some provided for substantial rent in advance and then periodical payments.

HAYNE J: When you say that the first question is what is the proper disclaimer property, what is the connection that you are drawing with what provision of 568?

MR BIGMORE: The connection we draw, your Honour, at – is possibly paragraph (a) or paragraph (c) of subsection (1) because we have land which is burdened with the onerous covenants, the onerous covenants being the covenants of the lease, I suppose, being the covenant for quiet enjoyment and so on.

HAYNE J: Do you say that (f) has no application?

MR BIGMORE: We do, your Honour. We say that whilst it is tempting to look at a lease as a contract fitting within paragraph (f), and that is indeed what the liquidators have striven to do, it does not fit the bill because one has not property consisting of a contract, one has property consisting of a contract and a reversionary interest in land. The property in question here does not completely meet the description of contract. It consists of more than that.

HAYNE J: So when (1A) uses the expression “cannot disclaim a contract (other than . . . a lease of land)”, what work are you giving to those words in the understanding of 568(1)(f)?

MR BIGMORE: The expression “lease of land” in that context as we have explained in paragraph 38 of our submissions is the tenant’s lease of land. The intention of the legislature was clear enough – the word “lease” means the leasehold as held by the tenant.

HAYNE J: Well, the expression “the intention of the legislature” masks the issue, does not illuminate at all. The question is whether a lease of land in (1A) reflects at all on 568(1)(f). If it does, what does it say? Part, perhaps all of your proposition, seems to be that (1A) speaks of some leases of land but not others.

MR BIGMORE: Yes.

HAYNE J: Why should you read it that way in a provision of this kind where you are concerned with court-ordered winding-up?

MR BIGMORE: Yes. Your Honour, can I deconstruct paragraph (1A)? The lease of land that is referred to is plainly enough a subset of the word “contract” in paragraph (f). I think that is the point your Honour raises with me, that when (1A) begins, “A liquidator cannot disclaim a contract” and then in parentheses one draws a distinction between “unprofitable contract” and “lease of land”, one supposes that unprofitable contract and lease of land are subsets of the word “contract” as used in paragraph (f).

On this occasion our learned friends say that we do not have to trouble ourselves with whether this is an unprofitable contract because it is plainly a lease. What we say about it is that, if it is a contract, then it is an unprofitable contract because the expression “lease of land”, as the explanatory memoranda show, means the tenant’s lease of land. So where our learned friends should be focusing – and I think they make mention of that in their responding submissions, written submissions – is that at worst where we fit within the category of unprofitable contract. So if a lease is a contract, as seems to be supposed by the draftsman at paragraph (1A), nonetheless we say that this must be an unprofitable contract which means that the liquidators would need to seek leave to disclaim it.

The liquidators have sought the advice of the court as to whether or not they would be justified in disclaiming it, and they have sought the consent that was contemplated by Justice Dodds-Streeton, as we have explained in the factual background. Your Honour Justice Hayne’s point as I understand it is that in statutes relating to winding-up, one must give the widest effect to expressions which – such as lease of land fitting within the word “contract” and give the liquidator the option to choose paragraph (f) as a means of disposing of burdensome obligations.

In our respectful submission, one needs to go back a step and identify the property of the company that consists of something, whether it be “land burdened with onerous covenants” which seems to fit, or (c) “property that is unsaleable or is not readily saleable”, which is undoubtedly the case here – the reversions are not at least readily saleable; so much is apparent on the liquidator’s own evidence.

Then the task – this is not a question of the option of the liquidators choosing one of the paragraphs that suits them best and then perhaps saying, “well, if it is a contract, it is possibly unprofitable, so we might need the leave of the court”. This is a case where – – –

HAYNE J: Surely, the liquidator does not have to say, “I am acting under this particular paragraph of the section”?

MR BIGMORE: Well, in order to express his disclaimer, one would expect him to identify the property of the company that is being disclaimed. In doing so, he would describe it by reference to one of these paragraphs, one would think – perhaps not; perhaps one would be left to work out which paragraph applied to the liquidator’s description, but the primary task, in our respectful submission, is to focus on the words in the preamble of sub-section (1), “property of the company that consists of” something – – –

KIEFEL J: But do you not have to read that as well with other provisions such as section 568D(1), the effect of the disclaimer which refers to the liabilities of the company?

MR BIGMORE: Yes, your Honour, one certainly does – – –

KIEFEL J: It gives a different perception of property, does it not?

MR BIGMORE: Your Honour, the Court of Appeal started with the latter – well, at least the joint judgement in the Court of Appeal did. In our respectful submission, the primary task is to identify the disclaimer property. Once one identifies the property that is the subject of the disclaimer, one can then look at the operation of section 568D. We say in this case – – –

HAYNE J: Do you therefore abandon the primary judge’s reasoning? It seems to me that you are implicitly abandoning the reasoning of Justice Davies. Is that so, because her Honour founded her conclusion on 568D?

MR BIGMORE: Yes, but her reasoning towards that conclusion did start from the proposition that one looks at 568 first to identify the property. We think she did do that, and certainly that is how the case unfolded. In any event, whilst we do agree with her Honour’s conclusion in relation to 568(d) we stress in our submissions that the starting point must be the identification of the disclaimer property. Now, the disclaimer property is an expression used later and I do not think specifically defined, but we know it means the property that is identified pursuant to task implicit in subsection (1). The property of the company here consists of a reversion. When one opens the door of the company in liquidation and looks at what is on the records, there is a reversion. It is land burdened with a lease and a reversion is unsaleable, the land not so burdened is clearly saleable and quite valuable.

The liquidator not liking that what we would say obvious analysis moves to paragraph (f) and says well, a lease is a contract and so I can disclaim the contract. We have pointed out the textual difficulties with the notion that the property of the company might be a contract and doing the best one can with that, we have suggested that it is the benefit of the contract in the sense that property, one does not have property in a liability under a contract, one has property in the benefit of a contract, chose in action. It might be a chose in action entitling enforcement of a contract. It will depend on a multitude of difference circumstances.

KIEFEL J: Unless you read “property” as property in the contract for all purposes, in a wider conception. This legislation has to be purpose driven, does it not, to see what it is intending to achieve?

MR BIGMORE: It does, your Honour, and in our respectful submission it is plain enough that the usage of the word “contract” freed as it has been of its previous adjective, “unprofitable”, is a word which is wide. It is designed though to encompass contract for the supply of goods, all manner of complicated contracts no doubt, but contracts where there is still a prospective burden upon the company which will inhibit the orderly winding-up or will in fact involve financial expenditure, and prejudice the creditors accordingly.

So a contract is not logically or historically designed to subsume something which fits obviously, we say, under paragraphs (a) or (c), namely reversion. One traditionally looks at land with a lease as comprising the tenant’s leasehold interest and the landlord’s reversion. The legislature, given the history of this provision and its predecessors, had in mind, in our respectful submission, the word “contract” as not capable of subsuming the notion of a lease and a reversion.

KEANE J: The term “land” in subsection (1A) is not defined, is it, in the statute?

MR BIGMORE: No, I do not think so, your Honour. We will check that, but I do not think there is. There is a definition of “property”, of course, in section 9, but I do not think of “land”.

KEANE J: Ordinarily, one would think a reference to “land” would mean something recognised as an interest in land. We do not speak of land allodially. We speak of interests in it.

MR BIGMORE: Yes.

KEANE J: If one were to read it conventionally as meaning an interest in land, and one asks “what is the interest in land?” and the answer is “it is the lease” and then one asks “whose property is the lease?”. As a matter of ordinary language one would say it is lessees.

MR BIGMORE: Yes, indeed, your Honour. We embrace that analysis, but we say even earlier in the chain of reasoning comes the obvious analysis. These provisions designed for convenience in the winding-up that is to assist liquidators do their job. Liquidators must look at things with legal advice, of course, but they will look at this sort of property and say “what have I got? I have got the reversion.” Somebody else, the tenant, has the lease, which is, when one gets to your Honour’s analysis, and it is stretching the purpose of this legislation to move out of paragraphs (a) or (c) into paragraph (f).

HAYNE J: Why?

MR BIGMORE: Because one would not expect the legislature to, with such straightforward words, be interested in striking down the accrued rights of strangers to the liquidation.

HAYNE J: Let us leave aside this freighted term “stranger to the liquidation”. On any view, this deals with contracts, is that right?

MR BIGMORE: Yes.

HAYNE J: Contractors by a lateral arrangement, is that right?

MR BIGMORE: Yes.

HAYNE J: The rights, the benefits, the property of the party other than the company can be dealt with and dealt with adversely. Is that right?

MR BIGMORE: Within limits under 568D, yes.

HAYNE J: Not within limits, Mr Bigmore, at all, except so far as necessary to give effect to the disclaimer means that if you disclaim a contract, the contract comes to an end, does it not, wholly? Is that not so?

MR BIGMORE: With respect, your Honour might be right, but I think the analysis must be this – – –

HAYNE J: Take a simple case. A co makes a contract with B. The liquidator forms the view that the contract with B is disadvantageous to the company. The liquidator disclaims the contract. Upon disclaimer, B’s rights under the contract are wholly brought to an end, are they not, and substituted by a right to prove. Is that not so?

MR BIGMORE: Your Honour, no, because there are two things to say about that. Just as a matter of construction of 568(1), the destruction of an accrued right, an executed right – in this case the executed demise – would not be so obvious. The legislature would need plainer words than those to come to that conclusion, especially when the legislature then recognises in 568D that there is no effect by the disclaimer on other persons’ rights, rights being relevant for present purposes, rights and liabilities. Then the exception – – –

FRENCH CJ: Does that feed back into the construction of 568(1) in the categories, or is it simply a limitation superimposed?

KEANE J: It is the meaning of “terminate”, is it not? It is terminate for the future, not extinguish as if it never existed, at least insofar as it has been construed, and that Spedley Case, for example, that the Court of Appeal referred to and accepted where it was held that terminating is about the future, so that rights that have accrued under the contract remain undisturbed, but that both sides are relieved from liabilities for the future, and that is really about unpacking “terminate”.

MR BIGMORE: Yes, we agree, your Honour.

GAGELER J: So if you take the language of section 568D(1), the concluding words:

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.

Is it your submission that the rights or liabilities that may necessarily be affected do not extend to property rights?

MR BIGMORE: Accrued rights because they are not prospective.

HAYNE J: Take a contract, Mr Bigmore, hire purchase contract. The company, now insolvent, has let on hire a piece of equipment to B, a third party. For whatever reason, the liquidator soundly reaches the conclusion that that contract is one that should be disclaimed. Under the contract the company was bound to give the hirer of the equipment quiet possession of the equipment. What effect does disclaimer of that contract have vis-à-vis the hirer?

MR BIGMORE: The effect is no different from the present case except, of course, in the present case one has a demise, an executed demise. One still has delivery of the equipment to the hirer by the owner. Now, to destroy the rights of the hirer on tendering of the rent is, we would say, not necessary because the rent can be received over the period of the hire. Now, if the period of hire is so long that the liquidator does not like it and thinks that it is onerous from the point of view of an orderly winding-up, then nonetheless the tenant can say this is a unique piece of equipment.

Now, that might be wrong because it is unlikely to be a unique piece of equipment that could not be easily compensated by some other form and that takes us out of the present context where one has an executed demise of unique land, so there are many distinctions between the present case and your Honour’s example. Again, Bastable was a case where – although again it concerned an interest in land – the purchaser’s rights in relation to a contract for the sale of a leasehold, it certainly recognises that if the fact of accrual, or the fact that the part of the contract has been executed and rights accrued, that means that the property stays with the stranger to the liquidation.

KEANE J: In fact, in Bastable, the purchase price had not been paid, had it?

MR BIGMORE: Not the balance, no.

KEANE J: So it was a case where it was really because, in the eye of equity, what should have been done was taken to have been done, so it is a sort of a Walsh v Lonsdale – – –

FRENCH CJ: There is a certain – – –

KEANE J: In the example – sorry. In the example that Justice Hayne gave you, would not the answer be that the disclaimer by the owner would release the hirer from further payments of rent and would destroy the option to purchase at the end of the contract and the right to possession would revert to the owner?

MR BIGMORE: Your Honour, I think there would still be deprivation. In that analysis, there would still be deprivation of something. It may not be something of value because it might be a standard car and readily replaceable. Whatever there is, there is something that has accrued, namely, the right to possession and what needs to be considered is whether or not 568(1) intends that that right to possession be struck down by the exercise of the disclaimer power and whether section 568D, working with section 568(1)(f), preserves anything. It may be that in the context of the hire purchase agreement for a standard car, where there is nothing unique about the asset at all, one can say that it is necessary to strike it down because the remainder of the term is so long and there is no profit in it for the owner.

KEANE J: Might it depend on the terms of the agreement whether the option to purchase at the end of the term was something which was a vested right?

MR BIGMORE: Indeed. I was talking about the right to possession in the meantime, not so much the option in the future because this is a different case – the option in the future from the executed demise.

KEANE J: Because there will be difficulties, will there not, with whether – and Justice Hodgson said this in the case that was referred to – there will always be difficulties in determining whether a right is something which is correlative to an obligation which is debitum in praesenti solvendum in futura? There will always be those questions about the character of the right.

MR BIGMORE: There will, your Honour, and one of the things that is remarkable about this particular case is that when one delves into the leases and looks at Justice Deane’s famous statement at page 53 of Progressive Mailing House v Tabali, one sees on the one side of perhaps a not quite clear line, not a bright line anyway, between on the one side, these modern commercial leases where the landlord lets an area in a shopping centre that is not even built yet, or only partly built. There are so many obligations going forward to the landlord that it is hard to see it as anything other than a modern commercial arrangement. It is hard to see in there any executed demise when the building is not even there.

On the other hand, one has here 25 year leases, not all that dissimilar from the Blackacre example that Justice Deane where a lot of the rent, if not all, has been paid in advance and that there is nothing else for the landlord to do but afford quiet possession – quiet enjoyment, which we say, of course, is a corollary of the executed demise.

KEANE J: You say it is an executed demise, it is not a registered lease – – –

MR BIGMORE: No.

KEANE J: – – – how do you say it is an executed demise?

MR BIGMORE: Because it is enforceable as a lease nonetheless, even though it is a registrable lease; it simply means, in our respectful submission, that the equity would treat it as having – – –

HAYNE J: The assertion it is a registrable lease is a very large assertion, Mr Bigmore.

MR BIGMORE: Yes, that is probably right, your Honour. I do not need to go there.

KEANE J: How is it you say it is an executed demise if we are talking about the same thing? When you say executed demise I infer that you are talking about the grant of a legal interest as opposed to an equitable interest. What are you talking about?

MR BIGMORE: Well, I am talking about the grant of a legal interest in the sense that whilst it is not registered under the Torrens system it nonetheless is expressed as a demise. As I say, one of the exemplar leases is an agreement to lease, the lease which it is appended to is expressed as a demise and so we have the two different examples. The other is expressed as a lease and both refer to the demise of the identified land for the term of years – long term of years, so in the Walsh v Lonsdale sense we say it does not matter whether it is registered or not.

FRENCH CJ: Mr Bigmore, what is the lessee grower left with? What is the property on your submission that the lessee retains after the disclaimer?

MR BIGMORE: The demise, the right to possession of the land for the term, exclusion possession in this case because it is a lease.

FRENCH CJ: All rights, interests, liabilities and properties on the landlord’s side, the owner’s side, have been terminated, including the right, for example, under the provisions of each of these leases to come in and inspect the premises, which I think they incorporated by reference from section 111 of the Landlord and Tenant Act.

MR BIGMORE: Yes. Your Honour, of course, that – – –

FRENCH CJ: It rather has the sound of one hand clapping, does it not?

MR BIGMORE: It does, your Honour, and that is why we go back to first causes, which is to identify the appropriate property of the company and it is not, in our submission, appropriate to say that this is simply a contract within the meaning of paragraph (f). One readily finds in the possession of the liquidator the reversion. Effort has to be gone to to turn the reversion into an unburdened freehold, and by unburdening the company of the lease the effect is to destroy valuable accrued rights of the growers, the lessees.

HAYNE J: What are those accrued rights of the lessees?

MR BIGMORE: The right to occupy for the period of the term, the demise, because all that has been done to put the tenant in the position of having the right to occupy the land and grow the trees and cultivate them and take them off at the end of the 25 years or whatever it is has been done. The reasoning of our learned friends and the Court of Appeal is to start at the end of 568D and work backwards. The first thing is to look at what is necessary if the liquidator is entitled to rid himself of the leases. We would say, your Honour, as I think I mentioned earlier in answer to your Honour Justice Hayne’s question, that if one identifies the relationship between the parties here as a contract and no more then one delves into questions of necessity, but if one identifies the relationship between the parties here as one of landlord and tenant, leasehold and reversion, then other things flow. If we go to section 568D it is – – –

FRENCH CJ: Incidentally, the right of exclusive possession normally conferred by a lease is qualified in this case by a covenants within the lease interest document itself and also the network of agreements that were entered into, was it not?

MR BIGMORE: Not the latter, your Honour, with respect. The Court of Appeal did observe on that. In fact they even thought it was – seemed to think it was a registered managed investment scheme with a constitution. That is just not so. The documents are in the evidence and there was no registered managed investment scheme in this case. One had leases, one had management agreements, one plainly had interrelated agreements but one did not have interdependent agreements. The leases stand alone. The lessees can find their own manager, given that their existing manager is insolvent.

HAYNE J: Has there not been an order for the winding-up of an unregistered managed investment scheme?

MR BIGMORE: In relation to Willmott?

HAYNE J: Yes.

MR BIGMORE: Not in this case, no, not that I am aware of, certainly not ours. When I say unregistered managed investment scheme, there is no suggestion that they ought to have been registered. There is a small number, a dozen or so partners in each of the partnerships and they are very old. So that when the managed investment scheme legislation came along in 1998, there was a transitional provision and eventually most things that had to be registered were registered. Some were not and some have been wound up for remaining unregistered, but in this case these never required registration when the new legislation came in, and regrettably that is simply an error.

What has happened, as your Honours might have noticed in some of the material, in relation to the registered managed investment schemes, liquidators have been permitted to use the unilateral power of amendment of the Constitution to surrender the rights of members for value, plainly pursuant to an arrangement which is approved by the court in due course, but that is a different case altogether and the original application by the liquidators here did involve some of those circumstances but not relevantly. Here we only have leases and interrelated commercial documents for the management over a period of time.

KEANE J: Mr Bigmore, you mentioned that some of the terms of the leases in relation to some of them have been fully paid, some have been partly paid, is there some convenient epitome of those provisions that we can be given, rather than having to dive through several layers of pages to find them?

MR BIGMORE: Now, our learned friends did set out a table, your Honour. No, they did not actually set the details about them, but paragraph 6 and 7 of our learned friends’ written submissions conveniently set out some of the information that your Honour just asked for and it may well be possible for us to supplement that with details of – – –

KEANE J: For my part, I would appreciate a concise statement of the situation in relation to payment by your clients.

MR BIGMORE: We will work with our learned friends to supplement that.

KEANE J: Since it seems to be important to your argument that they have actually paid for these interests.

MR BIGMORE: Yes, and in some cases not completely, because there is further rent to be paid, but obviously not commercially valuable rent against the value of the land because most of the rent was loaded in the early stages. There is no secret about the fact that these were tax-effective investments back in 1994 and following, whenever it was, so the sum of the leases are dated 30 June.

FRENCH CJ: So there is the usual system of internal borrowing for the purpose of the upfront payment, is that – – –

MR BIGMORE: I am not so sure about the borrowing aspect in this case, your Honour, but certainly there was – – –

FRENCH CJ: There is an affirmative nod from the other side.

MR BIGMORE: Yes, there may well have been. I am just not sure about where the money came from in order to pay the initial rent. If they were borrowings, then – I know there was a finance company, and I know some of the growers have loans to the finance company, but I do not know whether it is these ones or other ones, or whether it is a mixture. It might be, as often appears to be the case, a mixture. In any event, these were loaded with large payments of rent in the early stage, and naturally enough, the liquidator says “well, if I have the freehold land, it is better to sell it”, but even if it were to be rented out, it would be rented out at a much higher rental than that provided for in the lease documents.

KEANE J: In relation to desirability of resolving, or realising such assets as the company owns, in the interests of expediting the winding-up, why is not simply assigning or selling the land with the leases or assigning the leases an option for the liquidator?

MR BIGMORE: It is certainly, at least theoretically, an option for the liquidator, and indeed we would say – – –

KEANE J: It might not raise much.

HAYNE J: It is one they pursued, is it not? It is one they pursued with an extensive advertising program and extensive attempts to sell it, and they cannot. Is that the position?

MR BIGMORE: It is, your Honour, yes.

HAYNE J: Yes.

KEANE J: Because it is not worth much.

MR BIGMORE: The reversion on its own, I think, I tried to go between unsaleable to not readily saleable, because – – –

KEANE J: Is that because the leases constitute the major benefit, or the major value of the land, speaking allodially?

MR BIGMORE: Yes. The real value of this unencumbered land in Bombala is in its ability to grow softwood, and it takes a long time to do that, so that is why there are long-term leases. The liquidator can sell the land unburdened by the leases if the disclaimer is allowed – – –

KEANE J: So the problem in selling them, really, comes from the fact that they are not worth very much because the real value of them lies in the lessees who have paid for that land.

MR BIGMORE: Indeed, or substantially. The liquidator does not want to wait for another 10 or 15 years in order to complete the winding-up. One would not expect him ordinarily to think of doing so. There might be cases where that would be desirable. Once the land is free of the burden of the lessees and the trees, then it will be broad acres again available for sale, or reletting, replanting or whatever it is really suitable for.

The liquidator at the moment knows that there is a strong market for the land unencumbered or unburdened by the leases. That says nothing about the value of the trees on the land and we leave that aside. We do not see in our leases any enduring right to the trees after the termination or disclaimer of the leases. But liquidators have raised with the Court a desire to have as a condition of their disclaimer the accounting of some of the proceeds of the timber.

So we are not critical from that point of view, but obviously the preferred option for the liquidator is that the freehold will be sold, so an account will be taken of the value of the wood on the land but the land will be very valuable and a good price obtained for it if the leases are got rid of. We, on the other hand, say that our investment in the tenure was intended to take a long period of time. We intended towards the end of the period to take off the trees and get money for that. That was our profit. We did not make our profit until the end and, dare I say, taxable profit.

KEANE J: Has there been any discussion in the cases as to whether this power of disclaimer is exercisable solely to facilitate the expeditious winding-up of the company or whether, incidentally, the value of the company’s assets can be enhanced as well?

MR BIGMORE: We have found nothing, short of this case, in the latter category. It is not a power which is designed to enhance. It is a power which is designed to facilitate the winding-up and get rid of company’s property, not tenant’s property, that is a nuisance.

KEANE J: What is the best statement in the authorities of the role of these provisions in the Act?

MR BIGMORE: Probably, Lord Justice Collins in Bastable which is one of the cases we said we would read from. We did not actually mention that we would read from it but we did observe in our written submissions that one of the other Bastable cases – Lord Justice Cozens-Hardy’s decision in Peace v Bastable’s Estate – where the liquidator was described as impudent for doing much the same thing as was the subject of this Bastable decision, the one that we rely upon.

But if your Honours look at page 526 of, in Re Bastable, Lord Justice Collins, just over halfway down. I suppose it is actually the second full paragraph. I have highlighted the second-half of that second full paragraph, but to understand it the second full paragraph on that page.

HAYNE J: I go back, Mr Bigmore, to messy matters of commerce. Do we find, conveniently, a description of the liquidator’s attempts at sale in Justice Davies’ judgment which is in Re Willmott Forests No 2, imported at [2012] VSC 125; 88 ACSR 18, particularly at paragraphs 23 and following?

MR BIGMORE: Yes.

HAYNE J: Do I understand that description to reveal that the attempts at sale were on several bases of sale, one of which was to sell whatever assets the company had, subject to whatever existing rights existed, whether under-registered, unregistered, should have been registered, managed investment schemes or prescribed interest schemes, is that so?

MR BIGMORE: Yes, that is so.

HAYNE J: And the liquidator could not?

MR BIGMORE: That is so, that is why I say unsaleable.

HAYNE J: The question now which arises is a question that arises in circumstances where – and this is a question for you – do you accept that on the evidence as it now stands it is apparent that the venture as a going concern is unsaleable?

MR BIGMORE: Your Honour has changed the words a bit in that answer. What I accept is that the reversion is unsaleable.

HAYNE J: If the liquidator attempted to sell the company’s assets subject to the existing schemes and could not?

MR BIGMORE: That is right, and that certainly means in relation to his partnerships he attempted to sell, or they attempted to sell them subject to the leases, and could not. So whether you say it is unsaleable or not readily saleable, it is not going to be sold in that way.

HAYNE J: It is that circumstance which underpins the disputed attempt at disclaimer, is that right?

MR BIGMORE: It is that circumstance and the fact that the liquidators have then moved to try to fit the relevant property into the rubric of contract in paragraph (f). If it were the first circumstance, it falls naturally without more into paragraph (c), probably paragraph (a).

HAYNE J: Your argument is that it is one or the other; it cannot be both?

MR BIGMORE: It cannot be both, it really cannot.

HAYNE J: Well, that is a very odd construction of the statute. Why should we read the statute as saying it must fall wholly within one and not another of the six elements of property?

MR BIGMORE: Because if it is shoehorned into (f) it has the effect of destroying accrued tenure however that might be described, and our submissions, whilst focusing on executed demises, our submissions apply in the same way as they did in Bastable and would preserve accrued rights, rights that would be amenable to specific performance against the company even in liquidation, going back to the hire purchase example that specific performance would not be available in the case of a Holden but might be available in respect of a unique vintage car.

GAGELER J: Do you say Bastable would be decided the same way if the facts there were to arise in a liquidation to which section 568 is applicable?

MR BIGMORE: We say the outcome should be exactly the same, the characterisation of the purchases lien might be modified, but the right nonetheless exists in relation to enforcement of the contract by specific performance. The deposit has been paid, the purchaser has complied with every obligation and presumably tenders, or is in a position to tender, the balance of the purchase money. The liquidator would be obliged to hand over the title and accept the balance.

The distinguishing feature there might be that that is going to happen soon enough so that there is no real delay to the winding-up but, nonetheless, it is the same situation. Your Honour Justice Hayne, in Old Style Confections v Microbyte, recognised that in that case the company in liquidation did not have very much to do at all in order to complete its obligations under the contract in question there, but there the question was whether it was an unprofitable contract rather than just a contract. So we do not cite that as supportive of our submissions, but it shows the focus is on whether or not one is using the section to strike down rights that would otherwise be enforceable.

GAGELER J: Do you accept that the legislature moved from the concept of disclaiming of onerous property, step one, to onerous property or unprofitable contracts, step two; step three, with which we must grapple, contracts?

MR BIGMORE: Not entirely, your Honour, the moves are explained in our written submissions, and we both address it, but the legislature has moved from a position, very similar to the present, where the liquidator needed leave to disclaim unprofitable contracts but had no power to disclaim ordinary contracts, so as in Microbyte it was necessary for the liquidator to establish the unprofitability. The section has not changed from being a section concerned with onerous property. The starting point still has to be the concept of ridding the liquidator of property which is unsaleable or no earthly use to the creditors, given that the creditors would rather have a dividend sooner than later, and here the easy way to do that is to disclaim the reversions, or the land burdened with onerous covenants. My learned friends make a point, well that would still leave us with obligations under the lease. With respect, no, because disclaimer of the land, the land would accede to the Crown, and the company in liquidation would have no ongoing obligations under the lease at all.

If there is a matter of tendering any remaining rent, as there is in some cases, then that would be tendered to the Crown. If it were a matter of a commercial lease where, perhaps, the landlord was obliged to finish the shopping centre – to take the example I raised earlier – the Crown is not going to do that, so the tenants would be left having to grapple with that problem and would probably see the end of their tenure anyway by that process. We are not in that field, we are in a situation where the shopping centre has been completely finished and long-term leases have been granted and most of the rent paid.

That is why we raised the shopping centre example in the first place, because one can readily imagine a liquidator coming in as liquidator of a shopping centre – company that owned a shopping centre and deciding he liked the rent being paid by some tenants but not others. Would it be the case that the tenants who had the advantage in their cycle of having lower rent than the market rate could be forced out by disclaimer or at least forced to the negotiating table in order to pay a greater amount of rent consistent with market price, having presumably in the early stages paid more than market price? Not only would that be unfair, it would be a totally unnecessary conclusion for this section to work as it is designed to work.

So your Honour Justice Hayne asked whether only one of the paragraphs might apply, but it goes back to the first point I make which is the task is to identify the disclaimer property which is an empirical analysis which should be conducted by the liquidator but the liquidator can get it wrong, as we say in this case. What is the proper characterisation of the property? The property here consists of unsaleable reversions. It is an easy characterisation.

As soon as one moves into a characterisation of the property as a contract – and your Honour Justice Hayne of course extracted from me the obvious admission that a contract is bilateral – at least this sort of contract would be bilateral when there are only two parties. But the simple position is that you cannot fit what happened here into the word “contract” because you have a reversion and a lease.

GAGELER J: Are there any circumstances in which the property of a company within the meaning of section 568(1) can include a contract that is a lease?

MR BIGMORE: That is a – sorry, your Honour?

GAGELER J: Are there any circumstances in which the property of the company within the meaning of section 568(1) can include under paragraph (f) a lease – – –

MR BIGMORE: Absolutely, yes.

GAGELER J: – – – in respect of which the company is the lessor?

MR BIGMORE: No, with respect. As lessee, yes; as lessor, no, because as we have explained in paragraph 38 of our written submissions, the explanatory memorandum makes it clear that the contemplation there is of a tenant’s lease. It is the vernacular perhaps, and Justice Keane made the point earlier that it is commonplace to talk about the lease meaning the tenant’s lease, but it is clear from the explanatory material that the legislation had that in mind because they talked about the requirement of notice to the lessor or subtenant or mortgagee.

They did not speak at all about notice being given by a lessor to a lessee in that context. The focus of the legislatures, or at least the drafters, was the focus of the position of a liquidator of a leasehold which easily fits with the notion of contract, so the liquidator of a lessee can readily disclaim the lease now without having to get leave of the court, which was previously the case.

KEANE J: I suppose the reason that there are differing categories of property of the company described in those various subparagraphs, rather than just some general catchall by contract, is because different kinds of property have different incidents and particularly if you are talking about interests in real property, you are talking about different incidents that have consequences.

MR BIGMORE: Indeed your Honour and there has to be – – –

KEANE J: – – – and not surprising that they might have consequences for the ability to disclaim.

MR BIGMORE: Yes, with respect, indeed, there has to be some level of generality and there is because one talks about property that is unsaleable. One fits into that, the property here consists of the reversions, that is what is unsaleable, land burdened with onerous covenants. Well, it could be easements I suppose or it could be – – –

KEANE J: Or freehold land subject to covenants, building covenants.

MR BIGMORE: Yes, anything that does not have to be a lease. So the legislature has not condescended to a thousand items but it has been careful to distinguish between the types of items that liquidators are generally concerned with, in this case liquidators often come in to leases, they often come in to reversions and it is probably less often that they come into reversions which are totally valueless but where the land is very valuable, freed of the lease, and that is the fact situation here. It certainly will not be rare in the future if the Court of Appeal’s decision stands, because in the shopping centre example one will have the liquidator who picks and chooses the tenants.

FRENCH CJ: Mr Bigmore, the question that was posed by the primary judge and answered differently in the Court of Appeal was are the liquidators able to disclaim the growers’ leases with certain effects. Is there any premise in the use of the term “disclaim the growers’ leases” about which category is relevant, any assumption there? You are putting aside contest of that effect.

MR BIGMORE: If there were in the origins of the formulation of the question it was long forgotten in the argument before Justice Davies and beyond.

FRENCH CJ: Over into other territory. It is certainly not talking about reversions, is it?

MR BIGMORE: No, and the attempt here is to disclaim the leases. The adjective is used, or the possessory “growers’” is inserted into that. Everyone’s focus has been “can the leases be disclaimed”. We say naturally is the description of the lease because they are the growers’ leases – – –

FRENCH CJ: The growers’ leases on the face of it are not the liquidator’s property.

MR BIGMORE: That is right. So how can it fit into 568, but that is not how the argument unfolded. We explored all the things that are covered in these submissions.

FRENCH CJ: But the question is really quite inapposite, was it not?

MR BIGMORE: It might be.

FRENCH CJ: To what the liquidators were trying to do?

MR BIGMORE: One of the problems with formulating questions, I suppose. See this is a case where the liquidators have sought judicial advice first before disclaiming, yet it is a case where, on their case, they do not need approval.

FRENCH CJ: They would have to spell it out on the written disclaimer.

MR BIGMORE: Yes, certainly would, and so presumably what they would spell out on the disclaimer in this case when they get around to it is they are disclaiming the leases without references to growers’ leases but simply the leases between the grower and the company in each case.

FRENCH CJ: Whatever it is that appears on the written document must answer the description, “property of the company”.

MR BIGMORE: Yes, and in this case, our learned friends quite happily say that the lease is a contract, and the contract is property of the company. We say it cannot be, because it is a lease – it is the property of the grower. What the liquidator can disclaim is the reversion. We have been totally consistent from the start, that we have said that is where you have got to go, that is the disclaimer of the reversion, if you want to do that. If they do not want to do that, they might try harder to sell the reversions, who knows?

I think I have covered everything in the first proposition that we have outlined in our written submissions, your Honours. Only in relation to paragraph 5(c) of that outline, I made reference to paragraph 38 of our original written submissions as paragraph 38(b) of those submissions as particularly relevant. Our learned friends submit that, because of the structure of paragraph (f), a disclaimer of the “contract”, the contract being the lease, is total, so that there is total destruction of any proprietary interest.

With respect, we have made submissions about why that is not the appropriate characterisation of the property of the company consisting, or that consists of, here. In the second proposition that the estate survives disclaimer requires close attention to section 568D of the Act, and I wanted to make the point in that context, and I do not think I completed doing so, that one reads section 568 knowing that the legislature would not normally intend, or not without very plain words, intend the destruction of third party rights that had accrued and that might be the subject of specific performance against a company in liquidation.

That being so, it is possible to see section 568D as not so much a distinct and separate step as part of the disclaimer concept itself, so that when one reads it with that in mind, the section provides in subsection (1) that the:

disclaimer is taken to have terminated . . . the company’s rights, interests, liabilities and property in or in respect of the disclaimer property.

Well, one does not see any valuable rights or interests or property in the reversion, which is what the company has. The focus of the argument hitherto has been on the word “liabilities” and equating liabilities in that context with the covenant for quiet enjoyment and the other rather basic covenants that exist in these rather basic leases.

But the history of the section, in our respectful submission, and your Honour Justice Keane referred earlier to the decisions in Spedley and Sims v TXU, a New South Wales Court of Appeal decision, one is focusing on prospective obligations, liabilities being such a widely used expression capable of including accrued liabilities. Here we respectfully submit that the intention behind the word liabilities is liabilities going forward in the context of bringing the liquidation to an expeditious end, and realising property to distribute to creditors and getting rid of possible prospective financial commitments, that is the correct, we say, interpretation of the word liabilities in that context.

It is not correct, in our respectful submission, to regard the liability to sit back and afford quiet enjoyment for the remnant of the term as fitting within that category. If there is anything onerous about the reversion, the reversion can be disclaimed, and could have been in this case. If there is anything unsaleable and not worth keeping about it, it can be disclaimed. With respect, it is not appropriate to say that this is an instance where the landlord’s obligation under the tenant’s lease includes onerous obligations into the future.

Again, then one has to make work of the exception, except so far as necessary in order to release the company and its property from liability. One has to bear in mind – and this goes back to a point Justice Hayne made a little while ago – in order to disclaim, there has to be property consisting of something. The effect of the disclaimer is not something which detracts from an absolute striking down of all rights and liabilities. It is a qualification of the extent to which the rights and liabilities are affected. So one has the qualified termination of rights and liabilities, and one then has the exception to the qualification. In this case, the qualification is that the tenant’s rights under the lease will not be affected.

Then it becomes a question of why is it necessary to release the company from these rather insubstantial forward going obligations to see out the term? Why is it necessary to release the company? With respect, a proper focus on “necessary” in that context sees that one has a clear qualification which protects us, whether that be read into 568(1) or found in the beginning of 568D, and an exception which is referable entirely to necessity to release from liability. With respect, in this case, there is no necessity to release from liability, the tenure is preserved.

HAYNE J: That last point is a point, the validity of which depends upon your first question, the answer you give to your first question. If the answer you give to your first question is wrong, how does 568D then operate?

MR BIGMORE: It operates that way, your Honour, because – I should have been more precise – whether we are right or wrong about the first point, if this is a contract, and the property of the company in this case consists of a contract, that contract must be the totality of the lease and the reversion somehow, and what our learned friends say is it is really the lease with the obligations and rights on both sides, but if it is struck down as a contract, it terminates the company’s rights. It does not terminate our rights because those are qualified out by 568D.

HAYNE J: Now, if this is a contract – I recognise that you say it is not – a liability under the contract is to afford quiet possession. Do you accept that?

MR BIGMORE: Not a liability going forward because if the demise is executed, that liability is complete. The liability is the covenant that goes with the land, the demise of the land. It is not an appropriate description.

HAYNE J: Well, you are not saying there is not a continuing obligation to provide quiet enjoyment, are you?

MR BIGMORE: I am saying it is a continuing obligation to provide quiet enjoyment but it is not a liability in the relevant sense. We submitted that the focus here must be in the context of the history of the section. It must be a financial liability, but if it is to be construed as a forward going obligation, then it cannot be perceived as an onerous liability on the company at all, it is simply the corollary of having granted the lease in the first place. So, again, it is easy to say, well, the covenant is a liability, but that begs the question of what the word “liability” is intended to mean in the context.

KEANE J: It is an incident of the property, is it not?

MR BIGMORE: Yes.

KEANE J: I mean, if the thing had been assigned, if the lease had been assigned, the new landlord would not have stood – sorry, if the freehold had been assigned, the new landlord would have not been in privity of contract but would have been in privity of estate and that liability to grant possession would have been an incident, a liability correlative to your client’s property right.

MR BIGMORE: Yes, your Honour, exactly. We endeavour to – – –

HAYNE J: What follows from that Mr Bigmore?

MR BIGMORE: If one has privity of estate between an assignee – – –

HAYNE J: Yes, I understand that, that is Hornbrook law. What follows from it?

MR BIGMORE: The liquidator might seek to disclaim what is left, namely, the contract between the assignor in liquidation – it really does not matter what side of the equation – the assignor and the counterparty. That disclaimer might well be sensible. It might include a whole lot of covenants that have not run with the land and yet the new landlord and the new tenant, if there is one, are happily off with their privity of estate without being affected by the winding-up.

HAYNE J: What does it bear on the construction to be given to the word “liability”?

MR BIGMORE: I am sorry; I was still dwelling in Justice Keane’s question. It does not bear on the construction of the word “liability”. The word “liability” construed, given the history of the cases and the observations in various more recent judgments especially, that it looks prospectively at the liabilities of the company. It is impossible here to discern anything of a burden, anything onerous at all. If the section is about dealing with onerous property – as it still appears to be – then, notwithstanding the removal of the word “unprofitable” from the main part of (f) into the proviso, it is the proviso in (1A).

KEANE J: Or if one is speaking of a purely contractual liability which is correlative to obligations on the other side, the example that I gave you is an example of a situation where contract is taken out of it but the proprietary incidents continue to operate – – –

MR BIGMORE: Yes, even if the situation were reversed – – –

KEANE J: – – – because they have accrued as a matter of property.

MR BIGMORE: That is right, your Honour.

KEANE J: Or perhaps they have accrued in the sense that a court of equity would give proper proprietary consequences to the dealings the parties have had.

MR BIGMORE: Yes, your Honour, and I have mentioned a couple of times that specific performance will lie against a company notwithstanding its liquidation in certain circumstances, and the obvious principle or the primary importance is that there has to be something very special about the accrued right. In this case it is special because it is land, but we do not suggest that our submissions are confined to leases or other interests in land.

Anything which would give rise to a right of specific performance cannot be cut away by disclaimer, notwithstanding that it might be specific performance of a contract as the intention cannot have been in those words to strike down, and it would be necessary to look beyond section 568 and the common principle that we cite of not taking property away from people. Then one finds that legislative intention enshrined in 568D, particularly if one approaches 568D the way we submit, which is to treat it as a situation where disclaimer has not been complete, the contract has not been struck down completely, with a saving provision in 568D. Section 568D conditions the disclaimer, so that its effect cannot be – in the first place its effect cannot be to strike down the lease or other appropriate accrued right, specifically enforceable right.

Then one moves from the qualified disclaimer to the exception where the word “necessary” appears in 568D and we say that on no account in a case such as this can one find a necessity to do that. What one finds is the taking of an opportunity to enhance value rather than a need to avoid liability. There is no evidentiary basis for the need to avoid the covenant for quiet enjoyment. There is a strong evidentiary basis in some of the material that Justice Hayne mentioned, strong evidentiary basis for concluding that the liquidator has endeavoured to use the provision to enhance the value of the property of the company.

HAYNE J: It seems to me, I must say to you, Mr Bigmore, that that argument is no more than a subset or a re-articulation of your fundamental argument which I understand to be – correct me if I am wrong – that because (1)(a) or (1)(c) of 568 could be engaged, (f) cannot be. That is the essential argument you advance, is it not?

MR BIGMORE: I go further, your Honour. I say that on the evidence in this case about the reversion and the unsaleability of it, not could be engaged, but must be engaged. They must be engaged because that is exactly what the liquidator has. It is not an optional thing.

HAYNE J: But because (a) or (c) apply, (f) cannot?

MR BIGMORE: It must be so.

HAYNE J: That is the essential argument you advance?

MR BIGMORE: Yes, it must be so.

HAYNE J: Yes, I understand.

MR BIGMORE: There is a further limb to the argument and that is that it is neither convenient nor sensible to characterise what one has here, lease and reversion, rather than as simply the property consisting of a contract.

You can do that if you want to talk about the tenant’s contract, namely the lease, but you cannot do that when you are talking about the reversion on the lease because some of that is the tenant’s property and the rest is the company’s property. You have to put to one side the existence of the reversion, if our learned friend’s arguments are to be accepted. You have to ignore the existence of the reversion and just focus on the contract which is the lease – interchange words “contract” and “lease” in that respect – and they say that that gives us the right under (f) to strike it down. Pardon me, your Honour. I do not think I have omitted anything from our outline, your Honours, and unless there are further questions and subject to reply, those are our submissions.

FRENCH CJ: Thank you very much. Yes.

MR CRUTCHFIELD: If the Court pleases. The Court, I think, has our outline of oral submissions and can I just make a couple points below preliminary observation. First, it is important to notice, we submit, that this power – this disclaimer power – is only available to a liquidator. It is not available to a voluntary administrator. It is not available to a receiver. It is only available when a company is in the corporate morgue. It is available to further the purposes of the liquidation provisions.

In answer to your Honour Justice Keane’s question about what we would say is the best statement of the underlying purposes, we draw the Court’s attention to the observations of Justice Santow in Global Television Pty Ltd – Justice Santow as he then was, I should say – v Sportsvision Australia Pty Ltd [2000] NSWSC 960; (2000) 35 ACSR 484 at paragraph [65] where his Honour said:

the disclaimer provisions are intended to enable insolvency administrators to relieve themselves of ongoing liabilities which so prolong the administration and delay the dividend –

KEANE J: Sorry, Mr Crutchfield, what paragraph was that?

MR CRUTCHFIELD: It was paragraph [65] of Justice Santow’s decision in Global Television v Sportsvision Australia.

HAYNE J: Page 498.

MR CRUTCHFIELD: Thank you, your Honour Justice Hayne – [2000] NSWSC 960; (2000) 35 ACSR 484. The second point we make by way of introduction is we for better or worse see this as a rather, we say, respectfully simple case where really, we say, if one thinks of these provisions as having two stages as at the first stage. That is, the question of power and that argument – the answer to that question involved looking at the legislation, looking at the words.

It is only if the words can be said to be in any way ambiguous that one goes further or unless they fundamentally jar with the purposes of the part and cause one to look askance at them and, we say, that is not this case. Indeed, we would go so far as to say, respectfully, it would be to use a very blunt instrument to say that in no circumstances, when a third party has some – it was not entirely clear, with respect, what the carve-out was that our friends are putting – but it seems to be that if a third party has at least some sort of proprietary interest in the property of the company in liquidation, then as a matter of the proper construction of the statute, there is no power.

We submit that there is no warrant for reading such a limitation into the language. It would be utterly inconsistent with the purposes, and your Honours Justice Kiefel and Justice Keane – I will bore your Honours with the example I gave at the special leave application.

One can envisage a circumstance where a trustee in bankruptcy, and it is actually starker with a trustee in bankruptcy who is personally liable in respect of the ongoing obligations as landlord, owns a very valuable property in the main street of an Australian capital city and has leased that property for 50 years and the rent is less than market or the trustee in bankruptcy wants to seek to disclaim the lease even though the rent is at market.

But take the first situation where the rent is not at market, the trustee on our friend’s case has to sit around for 50 years until the lease runs out; the trustee will have passed away, of course, in that time, the new trustee in bankruptcy waiting and waiting, and eventually the land can be sold. Now, we submit it is almost absurd to say that in no circumstances would a court say that the trustee in bankruptcy in that situation should not be able to disclaim the property. It might be a situation for a court says no, they should not. Can I give your Honours another example?

HAYNE J: Before you do, the assumptions upon which that example are founded are assumptions which perhaps drive the conclusion and they are assumptions which I would have thought the validity of which would bear directly on whether leave should go.

MR CRUTCHFIELD: Yes, exactly. With respect, that is precisely right.

HAYNE J: If the property is saleable, for whatever value it may bring, sell it.

MR CRUTCHFIELD: Exactly.

HAYNE J: If it is not saleable, then maybe disclaim.

MR CRUTCHFIELD: Yes.

HAYNE J: But disclaim with leave? Do you accept that leave is needed in this case, or not?

MR CRUTCHFIELD: On the facts of this case?

HAYNE J: Yes.

MR CRUTCHFIELD: No, we do not accept that, because – – –

HAYNE J: But whether leave is needed or not, the party can approach the court?

MR CRUTCHFIELD: Yes, indeed, your Honour. If I could just clarify – – –

HAYNE J: So it is who is moving party the – – –

MR CRUTCHFIELD: Exactly, we say it does not matter to this case whether or not we need leave, it does not matter what the words in parentheses mean in (1A), because whether or not we need leave, on the facts of this case we are actually, in effect, getting leave. We are really at the stage too when we go back, assuming the Court says there is power, we say on the facts of this case, it does not matter whether or not you need leave, because in either case, as with relief against forfeiture, the tenant has the right these provisions allow even if leave is not required the tenant to come along and say, “well, I want to be heard on this application to disclaim my property”.

It also does not say – we say it is relevant – some of the old provisions used to refer to a leasehold; it does not say that either, it just says “lease of land”. I am perhaps distracting the Court, because we say it does not matter whether you need leave or not. The second aspect of that, can I – – –

KIEFEL J: Just before you go to that, could you remind me, when do these leases come to an end?

MR CRUTCHFIELD: They are 20 years – – –

FRENCH CJ: Twenty-five years, are they not?

MR CRUTCHFIELD: Twenty-five years, yes, I am sorry.

KIEFEL J: It is not 2014, is it?

FRENCH CJ: They were signed in 1994, were they not, the ones we have on – – –

MR CRUTCHFIELD: At paragraph 6, we have got a little table, and the leases expire any time between – the first date is 2015, by the looks, and the last date is 2028.

KIEFEL J: Yes, thank you.

HAYNE J: Does that take account of some options? Some of them, one of them at least, had a five year option, see AB 198.

MR CRUTCHFIELD: Yes. We say it would be an absurdity if in that situation my original example, the trustee in bankruptcy, has to give up the land, a cheap valuable city property, to the Crown. That would strike one as passing strange. If that has to happen as a matter of statutory construction, you never get to stage two.

KEANE J: Are you not begging the question about whether it is valuable? If the owner of the property has entered into a transaction, the effect of which is to create property rights in someone else, then ex hypothesi there has been an effect on the value of the freehold.

MR CRUTCHFIELD: Your Honour, that might mean I might need to do a lot of work to persuade your Honour that leave ought be granted to disclaim, if it is required, or that the disclaimer should not take effect, but we say, with respect, it has got nothing to say about whether or not the power exists. This is a contract. Tabali was decided in 1985, and Tabali says plainly a lease is a contract. Tabali says more than that. Tabali, as Justice Deane makes clear, summarises the law and says a lease was a contract before it was an interest in property. A lease is a chattel real, and this is a contract.

KEANE J: Both Justice Deane and Chief Justice Mason both say that that does not make the proprietary aspects irrelevant, even in the case of termination for repudiation, and both of them make the point that where you have got a long lease for a rent that has been substantially paid, an accepted repudiation in accordance with contractual principles will not necessarily bring the proprietary interest to an end. They both say that, and that is perfectly consistent with McDonald v Dennys Lascelles.

MR CRUTCHFIELD: Sure, we say a few things about that. We say the facts of this case are, of course, a mile away from that 1999 year lease of the church at a peppercorn rent. Justice Hayne has already referred to Willmott No 2. Could I just draw the Court’s attention to paragraph 123 of those reasons?

KEANE J: This is Willmott No 2?

MR CRUTCHFIELD: Yes, where her Honour – there is no dispute about this, but I will just draw it to the Court’s attention. Her Honour has said that we are justified in disclaiming all of the project documents. They are all gone. They are all going to go, the forestry management agreements, everything else. The only thing that remains in this case is the grower leases. Under these leases, there are obligations – we say it does not matter on the facts of this case because some of the leases have provisions for periodical payment.

Again, we also say that our friend’s logic just cannot sit with Tabali because if a lease is repudiated, it is accepted. The lease is gone. If the contract is repudiated and that repudiation is accepted, the lease is gone, and that we say is what is happening in this case as well; the lease is gone. It is a mistake, we respectfully submit, to drop into these parts, to this part, an exception for proprietary interests. One will not find that in the words. If one goes to 568D what is carved out is what the case has referred to as accrued rights. That is a gloss on the language. It does not say proprietary rights. What is carved out is the fact that a disclaimer is taken to have terminated as from the day on which it is taken because of subsection 568C(3) to take effect, so all the interest that remain to be performed are gone.

KEANE J: All the obligations that remain are to be performed.

MR CRUTCHFIELD: Yes, I am sorry, your Honour, yes. Your Honour, just while I am dealing with it, the other matter I think your Honour Justice Keane raised was – – –

KEANE J: Does that mean, for example, if you had a contract of sale where the purchaser had actually paid the purchase price, but the contract had not yet been completed by a transfer of the legal title, for example – – –

MR CRUTCHFIELD: Yes, the Bastable situation?

KEANE J: Yes. Well, no, this is even a fortiori Bastable because in Bastable the price had not actually fully been paid. If you had a contract where the purchase price had actually been paid but the transfer had not occurred, the liquidator of the vendor could disclaim the contract, so avoiding the obligation of transfer, and would thus be in a position where he has the money and the box.

MR CRUTCHFIELD: The answer to your Honour’s question is that as a matter of power, that contract can be disclaimed with leave, so the Bastable contract can be disclaimed with leave.

KEANE J: Why would leave be necessary?

MR CRUTCHFIELD: Because, if we go back to 568(1A), because it is a contract which is not “an unprofitable contract or a lease of land” so leave is required and one comes along to the court and says, I want leave to disclaim this contract, it is a contract, I have got power to disclaim it, and the debate, we submit, would go as follows. The court would refer the parties to section 568D and say, in the example that Justice Keane just gave me, there must be a very good argument that, in the example that has just been given, the disclaimer is of no effect because it is only taken to have terminated as from the day on which it is taken to take effect, the company’s rights, interests, liabilities and properties in or respect of the disclaimer property, and as from the day on which it is taken is too late, might be thought in your Honour’s example. Even if that is wrong – – –

KEANE J: But going back to my example, assume that the purchase price is market value, so on no view is it an unprofitable contract.

MR CRUTCHFIELD: The Bastable situation, yes, leave is required. What would happen there is the court would say, “Well, what do you think you are doing, Mr or Mrs Liquidator? Why do you think you can disclaim this contract?”, and leave would not be granted in that situation.

GAGELER J: It seems to me that that situation falls pretty squarely within the scope of section 568B(3) – – –

MR CRUTCHFIELD: Yes, exactly.

GAGELER J: – – – setting out a precondition for the setting aside of a disclaimer. One would think if that precondition existed in circumstances where leave were sought to be granted, leave would be refused.

MR CRUTCHFIELD: Exactly.

KIEFEL J: In addition to the continuing obligation to grant quiet enjoyment, if the lease has remained on foot, would there be an obligation to maintain the property the subject of the lease?

MR CRUTCHFIELD: On the landlord, your Honour means?

KIEFEL J: Yes.

MR CRUTCHFIELD: Yes, that is right. So again – and again the problem is starker with a trustee in bankruptcy – there are these continuing obligations. Yes, so the answer to your Honour’s question is yes. Your Honour Justice Kiefel asked me at the special leave application, and your Honour Justice Keane raised the same point again today I think, about this lease of land language and how 568(1A) sits with (f). Can I just draw the Court’s attention – it is referred to in paragraph 65 of our primary submissions.

The same conundrum or at least issue confronted Justice Chesterman in Re Real Investments at page 559 from lines 20 to 30. I draw the Court’s attention to that. Of course, your Honour Justice Keane, in the hands of the liquidator of the landlord, the lease is not land. It is not within (1A). It is only the tenant that sits within (1A), and that is common ground. So they say we have to just get rid of the entirety of the land, which is why we – (1A) is in apposite and we are in (1)(f).

KIEFEL J: His Honour in Re Real [1999] QSC 89; [2000] 2 Qd R 555 said that the draftsmen regarded a lease as a species of contract rather than – – –

MR CRUTCHFIELD: Yes, exactly, and again we would respectfully say that is unsurprising in the face of Tabali.

HAYNE J: Can I understand one aspect of the facts better than I presently do? These leases are of portions of land determined by GPS coordinates, are they not?

MR CRUTCHFIELD: Yes, that is correct.

HAYNE J: Which form a part of larger areas of land which would constitute a single title to land, is that right?

MR CRUTCHFIELD: That is my understanding, your Honour, yes.

HAYNE J: They are subject to leasehold interests of differing terms?

MR CRUTCHFIELD: Yes.

HAYNE J: Unless this is unwound, the consequence will be that whoever is owner of Blackacre at Bombala will have freehold in possession of bits of the land as time goes by, is that right?

MR CRUTCHFIELD: Yes, that is precisely right, your Honour.

HAYNE J: Subject to what obligations to maintain, for example, as to fire?

MR CRUTCHFIELD: Statutory obligations in that regard as landlord, yes.

HAYNE J: Yes.

MR CRUTCHFIELD: Paragraph 5 of our submissions, your Honour Justice Hayne referred to Willmott No 2 and the summary of Justice Davies in relation to the sale process. We have endeavoured to also summarise that at paragraph 5 of our submissions. As we said there, the liquidators by reference to the evidence:

The Liquidators ran an extensive campaign to sell the Bombala land and other assets, offering the assets either ‘encumbered’ by the ‘schemes’ (whether registered or unregistered) or unencumbered. All 179 parties who formally expressed interest in the sale process . . . indicated interest in buying some or all of the assets on an unencumbered basis. No parties (except under one proposal in respect of schemes which are irrelevant for present purposes) expressed interest in buying the assets on an encumbered basis.

Your Honours, we respectfully adopt what fell from Justice Hayne in relation to the legislative history and the expansion of the disclaimer provisions which we have referred to in paragraph 1 of our outline. We elaborate on that in our written submissions at paragraph 15 which are in footnote 1 and we summarise the way in which the powers have been expanded and now sit in the 1993 amendments.

That is, a lease of land is treated as a contract. There is power to set aside the disclaimer and I interpolate that that was not a power that existed in the Re Bastable environment. Those powers to set aside disclaimer provisions were not in the United Kingdom legislation, and there is the expansion of unprofitable contracts to all contracts. Our learned friends, both in their written submissions and in their oral submissions, allied this concept of onerous property and say that is what the sections say. The section does not say onerous property. It says “contracts”.

HAYNE J: When did contracts first appear as a discreet element, and as distinct from unprofitable contracts?

MR CRUTCHFIELD: Nineteen ninety three. The answer to your Honour’s latter question is 1993. It was the first time contracts appeared.

HAYNE J: What was the Act that brought it in?

MR CRUTCHFIELD: The Corporate Law Reform Act 1992 which is the same Act, I am sure your Honours know, that brought in the corporate voluntary administration provisions.

So we then in our outline say a lease of land constitutes a contract. We set out in our submissions why that accords with the plain meaning of the text. We do draw attention to a matter that our friends did not raise which we do say is important for the proper construction of these provisions, even if one is in doubt about the topic after having read the plain words of subsection (1)(f) which, we submit, one should not be. But if one were, we for our part cannot see our friends’ argument sits with 568(9). That section provides that:

The Court may, on the application of a person who is, as against the company, entitled to the benefit or subject to the burden of a contract made with the company, make an order –et cetera. Now, it is not entirely clear and your Honours will notice it is only talking about a contract so that must, on our friend’s argument – well, it must be just a reference back to (1)(f), and on our friend’s case, although we do say that their case seems to have moved a bit because originally her Honour Justice Davies said that we could disclaim the contract but it would not affect the estate. But in any event, on our friend’s case, how does subsection (9) work?

We cannot disclaim because we are within (1A), we can only get rid of the reversion. Do our friends say that they can disclaim under 568(9) because they are entitled to the benefit or subject to the burden of a contract? That would be an odd outcome as well, we respectfully submit. If a lease involving an insolvent lessor is not a contract, then the lessee is deprived of its rights under this section.

Your Honours, the other – just this point about “proprietary interests” as well. It would be, we submit, wrong to draw a line between proprietary and non-proprietary interests in this context. There is nothing in the language to suggest that that is so, and there are many other examples in the Corporations Act where the insolvency provisions may interfere with proprietary interests. We could give your Honour a couple. Section 588FJ dealing with setting aside floating charges, section 468(1) dealing with avoidance of dispositions after the winding-up.

So at the power stage there is no magic about proprietary interests. Indeed, even our friends, as we apprehend it, do not seem really to say that because in answer to your Honour Justice Hayne’s question about the machine, they seemed to be saying in that situation, one could not disclaim either as a matter of power and we say that if that is the submission, that just shows how our friend’s arguments, with respect, emasculate these provisions.

KEANE J: Mr Crutchfield, in (1A) do you accept that land is to be understood as an interest in land?

MR CRUTCHFIELD: Yes, we do, and – – –

KEANE J: Any interest in land?

MR CRUTCHFIELD: Yes, and I think the Property Law Acts of the relevant States, I might be wrong about this, but the Property Law Act or the Acts Interpretation Act defines land.

HAYNE J: But how would they be picked up with the Federal Act?

MR CRUTCHFIELD: That might be a good question about that, yes, probably not. But we do accept it means an interest in land, yes.

KEANE J: It is not limited to freehold interests?

MR CRUTCHFIELD: No, it is not but if the lessor is in liquidation (1A) does not pick up the lease in the hands of the lessor, because in the hands of the lessor, that is not an interest in land in the hands of the lessor. What the lessor has is the reversion, which is what our friends say. We have to give up the land. Their complaint is not that we have not proceeded under (1A) and not (1)(f) in respect of the lease. We just do not understand this argument – – –

HAYNE J: Going back to this land point. You would need to take account, I think, of section (2)(b) of the Federal Acts Interpretation Act which “land”:

includes [messuages], tenements and hereditaments, corporeal and incorporeal, of any tenure or description, whatever may be the estate or interest in them.

MR CRUTCHFIELD: We are grateful to your Honour, yes.

HAYNE J: In the Corps Act, I do not think there is a definition that takes it away, but the purchaser should make his own inquiries about that one.

MR CRUTCHFIELD: We frankly do not see why it is that as a matter of construction we just cannot see as a matter of construction why it falls out of this text, the liquidator has to in some way in advance of disclaiming, one, identify what it is that is being disclaimed in terms of which subsection, and perhaps, two, even more oddly, sit back and form a view about which part is going to cause least damage to the third party before exercising the disclaimer power, that certainly might be relevant.

FRENCH CJ: Complying with a requirement to give written notice of what is disclaimed would he have to identify the property with greater precision than the term “the growers’ leases” used in – – – ?

MR CRUTCHFIELD: Yes, we accept that.

FRENCH CJ: How will have to be done?

MR CRUTCHFIELD: He would refer to the agreement, the lease, between X and Y, dated whatever date it was made.

FRENCH CJ: That really would be on the basis in the same way you would disclaim a contract.

MR CRUTCHFIELD: That is right.

FRENCH CJ: You just say, this agreement, I am disclaiming it.

MR CRUTCHFIELD: Yes, exactly, yes. Now, I cannot think of an example, but if the liquidator capriciously chose a limb or sought to justify the disclaimer at stage two by reference to a matter where the Court could see less damage could be done to the third party by effecting the disclaimer in another way, then that is plainly relevant to a stage two question.

FRENCH CJ: Just coming back to that question I put to you, suppose the liquidator were not relying upon the contract provision but one of the other, (a) or (c), would he have to describe the property of the company being disclaimed in a different way in his notice?

MR CRUTCHFIELD: I do not know that that – – –

FRENCH CJ: His or her notice.

MR CRUTCHFIELD: I do not know that that follows.

HAYNE J: Would not he have to describe it as being any interest of the company in that part of Blackacre designed as, here insert coordinates or metes and bounds or however it is described?

MR CRUTCHFIELD: Yes. Section 568A(1), I am informed on my right that there is a prescribed disclaimer form.

HAYNE J: Where do we find it? In the regs?

MR CRUTCHFIELD: In the regs. If it would assist the Court we can certainly provide that.

FRENCH CJ: I am just concerned about the instruction of the Act and how the Act works here at the moment.

MR CRUTCHFIELD: Yes. Your Honour the Chief Justice, while I think of it, in answer to your Honour’s question about the preliminary question, what the question was, we agree with Mr Bigmore. I was not at the trial, but we agree with Mr Bigmore that what was in issue was clear between the parties and we say that really falls out and one can see that from page 172 of the appeal book, which is paragraph 16 of her Honour Justice Davies’ reasons where her Honour says in the third last sentence, starting at about line 11:

Moreover, it is to be borne in mind that the property proposed to be disclaimed is the contract for lease –

Your Honours, if our friends are right, can we just point to another, what we would regard as an oddity that follows? As we have put in our submissions at paragraph 61 to 64, a lease can contain obligations that do not touch and concern the land, personal obligations. On our friend’s argument, we are forced to – the landlord who is in liquidation is forced to escheat the land to the Crown, but that will have no effect on the contract, the contract continues in existence, and there are many contracts where the landlord may have marketing obligations or other obligations that have got nothing to do with the land.

So in that, we ask rhetorically, what happens to the personal rights and obligations of the landlord there, an insolvent landlord, which, in that outcome again, jars with the purpose of these provisions which is to wind-up an insolvent company in the interests of its creditors as expeditiously as possible? In the document we have handed up we then deal with this Bastable issue; we have said what we want to say about that in the outline, unless the Court has any questions on that topic.

FRENCH CJ: Anything further, Mr Crutchfield?

MR CRUTCHFIELD: Not on our outline. Can I just see if I have answered any other questions that the Court had? We respectfully adopt what Justice Kiefel said that one cannot look at the chapeau to subsection (1) of 568 and say, it is only talking about in some way the property of the company is just the company’s rights because there are so many other indications in the text of Division 7A that it is not just the rights, it is the contract in total, it is the obligations as well, and that is 568D.

These sections are also replete with references to persons who have interests in the property. There is no suggestion in the statutory language that those with proprietary interests are treated as so special that they are outside the park. Unless there is anything else, that is our submissions. If the Court pleases.

FRENCH CJ: Yes, thank you very much. Yes, Mr Bigmore.

MR BIGMORE: Thank you, your Honour. Could I just take that first point first about the chapeau to the provision? This is not a provision or a set of provisions dealing with refusing proofs of debt, this is a provision about property of the company. Section 568(1) makes it quite clear that that is the focus and then subsets of that property because it is not all the property, it is property which consists of certain categories, the contract being obviously potentially very wide.

Could I go back to one question that Justice Hayne asked my learned friend in relation to the nature of the land the subject of these leases? I do not know whether your Honour was contemplating that they might be very small areas. Some of them are quite large, 39 hectares and so on. This is not what you might expect in the way of a managed investment scheme with one-third of a hectare in wood lots, or whatever type of lots they might be called.

I think I might have been remiss earlier in – I should have said in relation to Justice Davies’ second decision in relation to the – that we were not so directly involved in – about the course of conduct by the liquidators in putting the property up for sale on alternative bases. The choice was offered to – as we understand the advertising campaign, people were given the choice of offering to buy the land subject to the leases, or offering to buy the land without the leases. It is not quite the same as offering the land subject to the leases full stop then seeing if there was a market, so we do not agree that the testing process that the liquidators undertook leads necessarily to the conclusion that the land is unsaleable.

It seems likely that it is not readily saleable, there is no doubt about that, so we do not try to take it outside of category C, but I need to make those observations. Justice Gageler raised section 568B(3) as a basis for, as it were, refusing to countenance a transaction whereby, as Justice Keane posed, contract of sale might be completed but for the transfer of title, all the money paid and so on.

One such contract might be a normal contract where it was sold at market value and one could not necessarily describe that as unprofitable, but another such contract might be one where the price has gone up since the contract of sale was entered into three to six months earlier, and I am talking about a totally arm’s length contract, not one which is amenable to clawback under the voiding provisions.

We would respectfully disagree that section 586B(3) would assist somebody in the purchaser’s position having paid the full amount of the purchase money, because what that second requires, or what that section mandates, is that a disclaimer cannot be set aside unless the Court is satisfied that there would be disproportionate prejudice, not just unfairness, as our learned friend said in one written submission, but disproportionate prejudice grossly out of proportion to the prejudice that setting aside the disclaimer would cause the company’s creditors.

Well, at the moment the creditors have the money and the box by virtue of the disclaimer, so setting aside disclaimer would take one or the other away. It is not a section which is, on it is face, helpful to people in our position. There is no jurisprudence, I think, on what “grossly out of proportion” means in this context. One might think one would go back to the start and say, well, before this contract of sale was entered into was it a market price and, well, the company has got the market price, it should part with the land, that is what you would think common sense would dictate. But whether common sense is expressed in that provision is another question.

Our learned friend raised the analogy between disclaimer and repudiation again in referring to Tabali. With respect, disclaimer, if it is analogous with repudiation and the dictionary definition of “disclaimer” tends to suggest that it might be, then it is not – it is disclaimer by the liquidator or the company in liquidation. It is not – repudiation by the company or the liquidator is quite different from the situation that was considered in Tabali. That was repudiation by the tenant.

So, the applicability of an analogy with or drawing comfort from Tabali to make good the argument that repudiation by a tenant being construed as a contractualisation of lease law, let us say, it does not apply here because what you have is the repudiation by the liquidator, a permitted statutory repudiation, of course, and one which is not amenable to refusal on the part of the tenant. But the fact of the matter is the repudiating conduct is that of the liquidator not the tenant. In Tabali the repudiating conduct was that of the tenant.

Finally, our learned friends raised and indicated correctly that it was a new point, the reference to section 568(9). I think the assumption that was inherent in the proposition was that we would be – people in our situation would be driven to make an application under that subsection or alternatively, in some circumstances, if we are right in our arguments, unable to make an application under that section.

Well, we are the last people who want to make an application discharging or rescinding the lease, whether it be – and accepting even for present purposes that the expression “contract made with the company” is intended to equate exactly with (f), which it probably is.

HAYNE J: And, in particular, a lessee is not entitled to engage subsection (8), putting the liquidator to the term and within 28 days whether to disclaim or no.

MR BIGMORE: Yes.

HAYNE J: But do not those provisions together tend to suggest, when read with the requirements for leave, or the capacity put the matter into court to dispute it, that these are things which are, in the first instance, to be left to the liquidator and in case of dispute, in particular, in case where it is alleged that disclaimer would work unfairness, it goes to court to determine that issue. Not a question of power, but a question of whether the power, in the particular facts of the case, was properly exercised – exercisable.

MR BIGMORE: There is no general discretion afforded to the court in that regard, unless it is an unprofitable contract, in which case leave is required, and then the criteria in relation to that have been reasonably well-established and, indeed, one wonders parenthetically, what the leave is for. Because, if the court said, well it is not an unprofitable contract, it is a normal contract, it is profitable, then (f) would still be available to do work and leave would not be required. A tenant’s lease, it seems that leave is not required. So people in that situation with contracts or leases – tenants – are left with only the opportunity to prove gross disproportion.

HAYNE J: In construing these provisions what, if any, account are we to take of their application at least to windings-up by the court where the liquidator has the relationship with the court that follows? In particular, is this to be approached in the fashion of Shin Kobe Maru without reading these provisions down?

MR BIGMORE: At first I thought your Honour meant that a prudent liquidator, as here, would approach the court first.

HAYNE J: No, no. In effect, this is winding-up by the court, by the court’s officer subject to control of the court. These powers – liquidator’s powers here – are amenable to court control. In those circumstances, what, if any, effect do principles of the kind discussed in Shin Kobe Maru have on construction of 568?

MR BIGMORE: It is a long time since I looked at that, your Honour.

HAYNE J: Shin Kobe Maru is saying in effect that do not read down powers of a court. This is powers of a liquidator, but a liquidator standing in a relationship with the court.

MR BIGMORE: And subject to the direction of the court.

HAYNE J: Yes.

MR BIGMORE: Again, we fall back to our first argument, of course, in this context, and we do not resile from the fact that we are driven there and that is where we started.

HAYNE J: Your opponent says it is clear the other way, and that is the competition, but I just wondered whether if it were to be decided not to be clear, whether Shin Kobe Maru may be marching across the stage.

MR BIGMORE: With respect, probably not, because these provisions apply equally to liquidations that result from administrations as they do to court ordered windings-up. One might take some comfort from the fact that the court is supervising a liquidation in the notional sense at least, not the day-to-day sense, but it does not help in the construction of the section which has to work for all purposes.

FRENCH CJ: Coming back to the question I put to Mr Crutchfield earlier, what descriptions of property in a liquidators notice under section 568A would be open in relation to the growers’ leases? Mr Crutchfield said, I think, simply described the agreement.

MR BIGMORE: Sorry, your Honour, I did not follow that.

FRENCH CJ: I asked your opponent what would be the description of the property that the liquidators would have to put into their notices to affect the disclaimer of the growers’ leases. He just put it in terms of the contract, the agreement.

MR BIGMORE: Of course, your Honour. I think our learned friend suggested a schedule but, in reality, we know that they are leases. Dropping the descriptive growers probably highlights the question adequately because our learned friends talk about the leases as contracts. It highlights the area of dispute between us because we say that the property of the company consists of reversions and leases. The property is the reversion, the tenant’s lease is the tenant’s – – –

FRENCH CJ: That would not be a proper description, in your submission?

MR BIGMORE: It probably is. It certainly worked to agitate the debate thoroughly on both sides, but one always has great wisdom with hindsight, and I appreciate the inelegance of the question.

FRENCH CJ: It is not the question. It is really how the notice would be formulated, on your submission.

MR BIGMORE: The notice would be formulated by reference to the document, as my learned friend said, in each case, but generically basically identifying the lease between the company and the particular tenant whom we speak for.

FRENCH CJ: And it would be enough for the liquidator to say, “I disclaim this”, but you say it would have the limited effect for which you contend.

MR BIGMORE: Yes, and if the liquidator needs to give reasons at any time, and that would obviously happen at some stage in the process, whether in court or earlier, then the reason the liquidator would clearly give is because the lease is a contract and paragraph (f) applies. We would say what the notice should say is, this is a disclaimer of the reversion under the lease, same description of lease, and if asked the liquidator would say that either paragraph (a) or (c) or both applied. In the case of (c), no leave is required, but the liquidator needs to give careful thought to whether it is readily saleable or not. I think we are all agreed that “readily” is a standard that would be very difficult to meet.

FRENCH CJ: Now, I think there is an outstanding request from Justice Keane for an extract for terms and payments and so forth.

MR BIGMORE: There is. I was just going to ask if we could do that. I think we are not from doing it so we can do it during the course of the day, I think.

FRENCH CJ: All right. Thank you for that.

MR BIGMORE: We can do that.

FRENCH CJ: Yes, the Court will reserve its decision. The Court adjourns to 10.15 on Tuesday, 13 August in Canberra.