Post-winding-up rent, dilapidations and vacant possession claims depend on retention for liquidation and the effect of surrender.

Post-winding-up rent is payable in full only where the liquidator retains the lease for the convenience of the winding up; rent attributable to that period ranks as an expense, while earlier rent remains merely provable. A dilapidations claim under repairing covenants was not converted into a liability payable in full by section 323 of the Companies Act, 1948, because a lease was not treated as a "contract" for that purpose, so the claim remained provable. A covenant to give full vacant possession did not survive an informal surrender of the lease where the obligation arose only on termination; the surrender extinguished that liability.

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Issues: (i) Whether rent accruing after the commencement of winding up was payable in full as an expense of the liquidation or only provable; (ii) Whether the claim for dilapidations under the repairing covenants became payable in full by reason of section 323 of the Companies Act, 1948; (iii) Whether the covenant to yield up the premises with full vacant possession survived the informal surrender of the lease.

Issue (i): Whether rent accruing after the commencement of winding up was payable in full as an expense of the liquidation or only provable.

Analysis: The governing principle was that post-winding-up rent is payable in full only where the liquidator retains possession for the convenience of the winding up, or where special equity justifies displacing the ordinary pari passu rule. The test depended on the purpose for which possession was retained. On the facts, the lease was retained after the winding-up order because the official receiver, acting as provisional liquidator and then liquidator, held it in order to realise the company's assets to the best advantage and to facilitate a sale of the plant and machinery as a unit. That retention was not merely passive and was not shown to be for the joint benefit of landlord and company.

Conclusion: The applicants were entitled to payment in full only for the period during which the lease was retained for the convenience of the winding up. Rent accruing before that point remained merely provable, while rent for the later period was payable in full in favour of the applicants.

Issue (ii): Whether the claim for dilapidations under the repairing covenants became payable in full by reason of section 323 of the Companies Act, 1948.

Analysis: The question turned on whether the word "contract" in section 323(4) included a lease so that failure to disclaim after notice would amount to adoption of the lease and convert the dilapidations claim into one payable in full. The relevant provision was construed as referring back to the property described in section 323(1), and a lease was held not to fall within "contract" for that purpose. The notice served under section 323 therefore did not create a liability to pay the dilapidations claim in full.

Conclusion: The dilapidations claim was only provable in the liquidation and was not payable in full.

Issue (iii): Whether the covenant to yield up the premises with full vacant possession survived the informal surrender of the lease.

Analysis: The surrender preserved liability only for antecedent breaches of covenant. The vacant-possession covenant was one that operated at the expiration or sooner determination of the term, and such a covenant does not survive a statutory surrender or equivalent surrender so as to support a claim based on the condition of the premises after surrender. Authority treating disclaimer as equivalent to surrender confirmed that rights arising only on determination of the lease are destroyed by the surrender itself.

Conclusion: The claim based on failure to give full vacant possession failed and was not maintainable against the liquidator.

Final Conclusion: The applicants succeeded only in part: post-winding-up rent was recoverable in full for the period of retention for the liquidation, but the dilapidations claim and the vacant-possession claim failed as claims in full.

Ratio Decidendi: Rent after winding up is payable in full only where possession is retained for the convenience of the winding up, while a surrender extinguishes liabilities arising only on determination of the lease and section 323 does not treat a lease as a contract for converting dilapidations into a liability payable in full.

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