Valuation for rental purposes
22 According to the appellant's argument, the words "for rental purposes" meant "for the purpose of fixing the rent under the lease having regard to the use of the land permitted by cl 20". As I understand the argument, from the reference to rental it was necessary to assume that the land was leased, and further to assume that the hypothetical lease contained the restriction on use found in cl 20 of the lease. If the argument be otherwise sound, I can not see why the assumptions would go only to the restriction on use found in cl 20 of the lease. It would have to be assumed that the hypothetical lease contained all the provisions of the lease except as to the amount of the rent.
23 Apart from the practical difficulties this would present in making the valuation, I do not think the argument should be accepted. It re-writes the rent review provisions, and finds in the words "for rental purposes" more than they properly contain. Confining attention to cl 20 of the lease, while it provided that the land should be used by the lessee only for certain purposes (albeit open ended purposes in that any business purposes were potentially available), the words "for rental purposes" did not require the Valuer General to assume for his valuation that the land was the subject of a lease which included such a provision. At most, the reference to rental could require the Valuer General to assume for his valuation that the land would be turned to account by its owner by leasing it to a lessee, with only such limitation on the duration, nature and terms of the lease, and in particular the use to which the lessee could put the land, as the Valuer General in his valuation judgment thought appropriate. This is unlikely to have been intended, and the appellant did not submit that it should be found. In Plinth Property Investments Pty Ltd v Mott Hay & Anderson (1979) 38 P & C R 361, on which the appellant relied, the relevant clause specifically required the valuer to have regard, amongst other things, to the provisions of the lease, and it was quite a different case.
24 Reference to a valuation for rental purposes immediately invites the question, from what valuations with other purposes is the valuation for rental purposes distinguished? Land may be valued for other purposes, for example, for sale purposes in order to arrive at a price to be received or paid, or for mortgage purposes in order to arrive at an amount to be lent or borrowed. It is common in instructions for a valuation or in a valuation to state the reason why the valuation is to be or is made, because the valuation process properly involves attention to the purpose to be served by the valuation: see for example Corisand Investments Ltd v Druce & Co (1980) 26 The Valuer 58 at 62-3; Rothwell, "The Credibility Gap", in Whipple (ed), Real Estate Valuation Reports and Appraisals, 18; Ellis, "Demonstration Report: Security Assessment Muddy Waters Estate" in ibid, 103; Whipple, Property Valuation and Analysis, 51-5. In the present case the Valuer General was a statutory officer with the functions conferred or imposed by or under the Valuation of Land Act 1916 or other legislation, and valued land for a variety of purposes found in the legislation. It is therefore understandable that the lease should have stated the purpose of the valuation, making express what may well have been implicit and in particular distinguishing the valuation from a valuation made by the Valuer General for a purpose found in the legislation.
25 Contrary to the appellant's submission, the presence of the words "for rental purposes" is explicable, and the words play a part, without giving to them the effect for which the appellant contended. They meant that the valuation was in order to arrive at the rent to be received and paid. The Valuer General had to value "the demised premises", that is, the land at Homebush Bay - in lawyers' language, the fee simple. The rent was effectively an agreed percentage of the value of the land, and so the valuation was used to arrive at the rent to be received and paid.
26 The appellant submitted that the land was part of a specialised industrial area developed by the Board for industrial use, including use such as that to which MLB put the land. Assuming regard can be had to this, I do not think it assists the appellant. The lease was a long-term lease, and so had rent review provisions, the normal commercial purpose of which is to keep the rent in line with current property values. Changes in the locality, in the planning instruments relevant to the land, and in the economically advantageous use of the land could be expected. No doubt the lessee would want to be protected from paying a greatly increased rent while still restricted in the use of the land. But the lessor would not want to be left with an inadequate return from land of greatly increased value. Their bargain must be found in the words they used.
27 The appellant also submitted that it gained assistance from correspondence between the Board and MLM at the time of the lease. I do not agree.
28 MLM's current lease of the land was about to expire. On 28 February 1983 the Board wrote to MLM saying that it was prepared to grant a fresh lease and would "advise details of rental etc as soon as possible".
29 On 30 March 1984 the Board wrote to MLM regretting that it had not "detailed" the terms and conditions of the fresh lease and saying that it would -
" … generally contain terms and conditions similar to those embodied in the current lease agreement including -
(i) initial rental would be calculated on 8% of a site valuation for rental purposes to be obtained from the Valuer General and provision would be made for re-appraisal of rental at three yearly intervals and increased by not more than 10% of any increase in the site valuation to be obtained from the Valuer General at the appropriate time;