Queensland Civil and Administrative Tribunal|2013-10-23

This matter was heard and determined on the papers pursuant to s32 of the Queensland Civil and Administrative Tribunal Act 2009 (QCAT Act).

[1] A specialist retail valuer was appointed under the Retail Shop Lease Act 1994 (RSL Act) to determine current market rent of premises at Shop 5, 79 Adelaide Street, Brisbane. The valuer appointed made a determination.

[2] The lessee has applied to the Tribunal for orders declaring that the determination does not comply with the RSL Act; setting the determination aside; and requiring a further determination. The lessor submits that the determination is compliant and seeks orders dismissing the application.

[5] The RSL Act sets out matters which must be considered by a specialist retail valuer in making the determination of current market rent: section 29. These are prescriptive. All of the requirements in s29 must be complied with. It is useful to set them out in full as they provide a checklist for considering whether the determination complies with the RSL Act.[1] The specialist retail valuer--

(i) on the basis of the rent that would be reasonably expected to be paid for the retail shop if it were unoccupied and offered for leasing for the use for which the shop may be used under the lease or a substantially similar use; and

(ii) on the basis of gross rent less lessor's outgoings payable by the lessee under the lease; and

(b) must not have regard to the value of the goodwill of the lessee's business or the lessee's fixtures and fittings in the retail shop; and

(ii) submissions from the lessor and lessee about the market rent of the shop; and

[6] There are no other matters prescribed by regulation.

[7] Effective rent basis is defined.[2] It means the determination of the rent having regard to all associated advantages and disadvantages under the arrangements between the parties to the lease which reflect the net consideration to the lessor from the lessee under the lease and associated arrangements.

[8] Section 31 also requires that the valuer's determination must state whether GST is included;[3] be in writing; identify the location of the shop; state the matters taken into consideration; and state detailed reasons for the determination.[4] The Acts Interpretation Act 1954 relevantly provides that if an Act requires a person to give written reasons for a decision, the instrument setting out the reasons must also set out material findings of fact and refer to the evidence or material on which the findings are based.[5]

[9] We see no issue with compliance with the requirements in s 29, other than those in s 29(a)(ii) and (iii). It is useful to deal with those requirements together.

[10] The valuer makes various references to how he has assessed current market rent. He refers to assessing on an effective basis.[6] He summarises the lessor's submissions, and in doing so refers to gross face rent and gross effective rent, as well as nett effective.[7] We do not know, as we have not seen the lessor's submissions, whether this terminology was adopted in those submissions, or whether it is the valuer's own terminology adopted for the purposes of preparing his summary. In summarising the lessee's submissions, reference is made to effective rents. [8] Again, there is a lack of clarity about whose terminology this represents.

[11] Then under the heading of Determination Considerations,[9] a variety of comments and statements are made. Firstly, he says:

Since the lease provides for a gross rent plus the relevant proportionate share of increases in Outgoings, I have analysed the evidence detailed in the respective parties submission's (sic), as well as obtaining my own evidence, on a gross basis.[10]

[12] He then refers to calculating current market rent to range between certain figures each being gross effective.[11] Further, he sets out his calculation for gross effective annual rent[12]and determines that rent is a specified amount gross effective per annum (GST exclusive).

[13] Section 29(a)(ii), requires gross rent less lessor's expenses payable by the lessee to be used. It is not entirely clear whether the valuer has complied with this requirement. His statement set out in paragraph 11 above does not explain clearly what he has done. However, because of our findings set out later about whether he determined current market rent on an effective rent basis, we do not need to make a finding about this issue to determine that s29 has not been complied with.

[14] Rent must be determined under s29 (a)(iii) on an e_ffective rent basis._ As discussed above, effective rent basis is defined by the RSL Act. As referred to above, throughout the determination, the valuer variously uses terms which are not used or defined in the RSL Act. He does not explain what he means by these terms. He does not use the term effective rent basis without qualifying it in some way, and confusingly, apparently different qualification is used in different places throughout the document. In the end, because of this apparently inconsistent use of terminology and lack of adequate explanation for what was taken into account and how, we are not satisfied that he has complied with the requirements of s 29(a)(iii) of the RSL Act.

[15] The lessee also submitted that his submissions were not taken into account as required by s29(c)(ii). We do not accept that argument. It is clear that the valuer had regard to them. He sets out a summary of their substance in 8.2 and 8.3 of the Determination. He also explains in Item 9 why he discounts various issues raised in them.

[16] In his determination, the valuer says, among other things, that he contacted other landlords and managing agents regarding nearby properties.[13] With the exception of the information he received from the owner of one property in Adelaide Street, he does not disclose what information he received from these sources.

[17] He later goes on to opine that the most appropriate method of valuation is the Direct Comparison Approach, but that neither the parties submissions or the information he sourced reveal a directly comparable premises.[14] Then, he says that having regard to the parties submissions as adjusted in some unspecified manner for permitted use, access, frontage, location and size and his own comparable leasing evidence he calculates (although there are no calculations given) the current market rent within a range which he specifies and adopts a mid-point calculation.[15]

[18] As this analysis reveals, he does not with any degree of particularity set out the matters taken into account. He has considered comparable evidence sourced by him from other landlords and managing agents upon which he relies, without setting out what it was. If he only relies upon the information he did obtain which is disclosed, his determination suggests otherwise. He has not weighed the evidence to arrive at a conclusion about how it is to be taken into account. The other matters said to be taken into account (that is, the parties submissions as adjusted for various factors) are referred to only in a cursory manner and not in a manner which reveals how he has taken into account any particular matter referred to in forming his conclusions. Nor is it discernible how the range is arrived at. As noted above, despite his assertion that he has calculated the rent as being within a particular range, the basis for arriving at the range is not disclosed and nor are the calculations he refers to.

[19] Accordingly, we are satisfied that the valuer has not complied with the requirements of section 31 as he has not stated the matters taken into consideration and set out detailed reasons.

[20] Accordingly, we make orders declaring that the determination does not comply with the RSL Act and setting it aside. We make orders requiring a further determination of current market rent in compliance with the RSL Act.

[1] See discussion in Kumari v Gao [2008] QRSLT 19 and Family and Kids Care Foundation Inc v Bilby Lay Enterprises Pty Ltd [2005] QRSLT 7.

[2] RSL Act, schedule, effective rent basis.

[4] RSL Act s 31(1). See also discussion in Anthony v Coffee Club [2000] QSC 198; Kumari v Gao [2008] QRSLT 19 and Family and Kids Care Foundation Inc v Bilby Lay Enterprises Pty Ltd [2005] QRSLT 7.

[6] Determination, page 4, 1.1 Brief, second paragraph.

[7] Determination, page 11, 8.1, table and last dot point.

[8] Determination, page 12, 8.2, fifth dot point and page 13, final dot point.

[10] Determination, page 14, second paragraph.

[13] Determination, page 14, 3rd paragraph and page 15, 2nd paragraph.

[14] Determination, page 15, final 2 paragraphs.

Silver Jewellery Shop & Piercing Planet v Telado Pty Ltd & G&J Drivas Pty Ltd [2013] QCAT 561 (23 October 2013)

Anthony v Coffee Club [2000] QSC 198

Kumari v Gao [2008] QRSLT 19

Family and Kids Care Foundation Inc v Bilby Lay Enterprises Pty Ltd [2005] QRSLT 7

Silver Jewellery Shop & Piercing Planet v Telado Pty Ltd & G&J Drivas Pty Ltd [2013] QCAT 561

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Judgment (22 paragraphs)

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Cases Cited (4)

Silver Jewellery Shop & Piercing Planet v Telado Pty Ltd & G&J Drivas Pty Ltd [2013] QCAT 561 (23 October 2013)