Fairdale Pty Ltd v Commonwealth Bank Officers Superannuation Corp Pty Ltd [2002] RSLT 21

[2002] RSLT 21 THE RETAIL SHOP LEASES ACT In the matter of Dispute 91/2001 FAIRDALE PTY LIMITED (T/A THE SHOE SHOP) - Claimant and COMMONWEALTH BANK OFFICERS SUPERANNUATION CORP PTY LTD AND ADVAL J DODDS & ASSOCIATED VALUERS & PROPERTY CONSULTANTS - Respondents DECISION Given in Brisbane on 20 August, 2002. -- 1 of 5 -- -- 2 of 5 -- 91/01- Decision 3 Pursuant to the orders made on 1 July 2002 the Applicant has filed amended particulars of its claim that a valuer appointed under s.29 of the Act did not follow the guidelines set out therein. Unfortunately the new matter is discursive, argumentative, and contains numerous assertions that are not really particulars. However, distilling the mixture as best I can the essential allegations appear to be: 1. That the valuer failed to observe a duty of care owed to the Applicant; 2. That the valuer made his determination by calculating 13.86% of the Applicant’s projected sales, where 13.86% is an arbitrary figure drawn from “a wide range of centres” and businesses. 3. That the determination was not made on a vacant possession basis; 4. That the amount fixed for rent is unreasonable in that it exceeds a current market rent and, if paid, would lead to the Applicant’s insolvency; 5. That the valuer “ignored material facts in the [Applicant’s] submission to him.” That the valuer filed to observe a duty of care owed to the Applicant If any such duty exists, which is doubtful when the valuer is appointed under s.29, a breach of it is not a matter that this Tribunal can entertain. This claim is simply not a dispute under or about a retail shop lease. That the valuer made his determination by calculating 13.86% of the Applicant’s projected sales, where 13.86% is an arbitrary figure drawn from “a wide range of centres” and businesses The valuer acknowledged that: “It is obvious that the best comparisons will be drawn from within the same centre, but we note that there are only two shoe shops in Mt Pleasant including the subject [one] and a Mathers outlet…” He affirms that he took those two businesses into account. But he adds that with so few comparable enterprises “close to home” it was necessary to examine circumstantial evidence further afield, namely statistics drawn from -- 3 of 5 -- 91/01- Decision 4 “a range of similar non-affiliated shoe outlets in regional and sub-regional shopping centres in Australia, with an average moving annual turnover of $407,710, and average gross occupancy cost of 13.86%. In my view the relevance and weight of that comparative material is a matter of professional judgment and experience, with which the Tribunal may not interfere. These are not matters for “second guessing” by a court or tribunal on appeal: Liangis Investments Pty Ltd –v- National Australia Bank Ltd [2002] ACTSC 17. See also Brewarrana Pty Ltd –v- Commissioner of Highways (1973) 6 SASR 541 at 551 per Wells J, where his Honour observed: “[T]here is no hard and fast line by the application of which a valuer may …. Draw the line that clearly separates the sales that are comparable from the sales that are not. It is, in my view, all a matter of degree …. Just where the line is to be drawn is, it seems to me, the very short of question that is fit for the expert valuer to determine….” That the determination was not made on a vacant possession basis Again no specific basis for the allegation is described. On page 12 of his report the valuer expressly notes that under the Act “the rental must be determined on the basis of the rent that would be reasonably expected to be paid …...if it were unoccupied”. I see no reason to infer that this statement lacked bona fides, or that the valuer subsequently departed from it. In Liangis Investments, above, Gray J, dealing with a similar provision, observed: “I see no warrant to restrict the market evidence relating to comparable premises to only market evidence of unoccupied comparable premises. Rent is paid in respect of occupied or to be occupied premises, and that will provide market evidence in respect of comparable premises. It matters not whether the premises were or were not occupied in fact. The tribunal did not err in law in its conclusion on this aspect.” That the amount fixed for rent is unreasonable in that it exceeds a current market rent and, if paid, would lead to the Applicant’s insolvency These are questions of professional judgment and commercial viability quite beyond the jurisdiction of this Tribunal. There is no jurisdiction to hear a dispute “about the actual amount of the rent”: s 109(3)(a) That the valuer “ignored material facts in the [Applicant’s] submission to him” No particulars of the facts “ignored” are given. -- 4 of 5 -- 91/01- Decision 5 According to the valuer he took into account an “extensive submission from Mr Don Gilbert (for the applicant]” Indeed that submission is summarized on page 13 of the valuer’s report. In my view there is no evidence that the valuer abdicated his role by “rel[ying] entirely on the expression of opinion by the Lessor”, and on the fact of the report there is evidence to the contrary. The Applicant refers to Batson Holdings Pty Ltd –v- Rose [2002] NSWADT 110, a decision of the NSE Administrative Decisions Tribunal under the Retail Leases Act1004 (NSW). However, Batson is radically different from the present case, in that it dealt with valuations obtained and tendered by the parties. It was held on the fact of that case that the proper method of calculating a current market rent under the NSW Act had not been followed. The decision turned on defects properly particularized, some of them apparent on the fact of the valuer’s reports. In particular, one valuer did not use “his own expertise” but “seems to have relied entirely upon the expression of opinion by the lessor’s solicitors”. (Batson, paragraph 48.) Batson is a decision on quite different facts, under different legislation. I have heard further oral submissions from both parties, which, in my view, take the matter no further. In the absence of particulars sufficient to support the allegation that the present valuer failed to “act properly” under s.29 the claim must be dismissed. A.Forbes Chairman -- 5 of 5 --