Acgrew Pty Ltd v Lartopi Pty Ltd
[2014] NSWCATCD 94
•03 June 2014
NSW Civil and Administrative Tribunal
New South Wales
Medium Neutral Citation: Acgrew Pty Ltd v Lartopi Pty Ltd [2014] NSWCATCD 94 Hearing dates: 27 May 2014 Decision date: 03 June 2014 Before: G Mullane, Senior Member Decision: 1.The application filed by Acgrew Pty Ltd on 31 March 2014 is incompetent and is dismissed (see s 32A of the Act)
Catchwords: Retail Lease - Review of market rental by Specialist Retail Valuer - Party applies for Tribunal to revise valuation - no jurisdiction - proper remedy is Review under s 32A by two Specialist Retail Valuers Legislation Cited: Retail Leases Act 1994 Cases Cited: nil Texts Cited: nil Category: Principal judgment Parties: Acgrew Pty Ltd (applicant)
Lartopi Pty Ltd (respondent)Representation: n/a
n/a
File Number(s): COM14/18216 Publication restriction: Nil
reasons for decision
INTRODUCTION
By order of 29 April 2014 these proceedings were adjourned for a determination on the papers filed of the following issues:
"a) Why the market rental determination of MJ Davis Reality Appraisals dated 31 January 2014 should not be binding on the parties pursuant to s.31 and 32 of the Retail Leases Act, 1994; and
b) Why the application should not therefore be dismissed"
THE EVIDENCE
The evidence comprised:
(1) The Lease
(2) The Application
(3) A letter from Mr Furney of 11 April 2014
(4) Submissions by Leverage Solicitors of 17 April 2014
(5) The Tribunal's letter of 29 April 2014 with orders
(6) H E Beaumont Submissions of 9 May 2014
(7) Further Submissions by Mr Furney dated 13 May 2014.
OTHER FACTS
Mr R Goddard a registered Valuer and Specialists Retail Valuer, of the firm M J Davis Realty Appraisals, provided the parties with a review of the market rental value of the subject retail shop, being Shop 5, 78 Glenhaven Road, Glenhaven, as at 31 January 2014.
This review was pursuant to s 32 of the Retail Leases Act 1994 ("the Act").
On 31 March 2014 the landlord, Acgrew Pty Ltd, being dissatisfied with Mr Goddard's figure, filed this application seeking that the Tribunal appoint another Specialist Retail Valuer to do a Review. The application was made on the basis that Mr Goddard's report contained errors and the Lessor and the Lessee could not agree on a market rental.
Acgrew Pty Ltd relies on the opinions of a Mr Seroban, that the review of Mr Goddard has various alleged defects but also on opinions of Registered Valuer Robert Furney.
There is no evidence that Mr Seroban is a Valuer.
The instruction of Mr Goddard was made by the Lessor and Lessee by agreement.
RELEVANT PROVISIONS OF THE ACT
The relevant provisions are s 31 and 32A which provide:
31 Reviews of current market rent
(1) A retail shop lease that provides an option to renew or extend the lease at current market rent is taken to include provision to the following effect:
(a) The current market rent is the rent that would reasonably be expected to be paid for the shop, as between a willing lessor and a willing lessee in an arm's length transaction (where the parties are each acting knowledgeably, prudently and without compulsion), determined on an effective rent basis, having regard to the following matters:
(i) the provisions of the lease,
(ii) the rent that would reasonably be expected to be paid for the shop if it were unoccupied and offered for renting for the same or a substantially similar use to which the shop may be put under the lease,
(iii) the gross rent, less the lessor's outgoings payable by the lessee,
(iv) rent concessions and other benefits that are frequently or generally offered to prospective lessees of unoccupied retail shops.
The current market rent is not to take into account the value of goodwill created by the lessee's occupation or the value of the lessee's fixtures and fittings on the retail shop premises.
(b) If the lessor and the lessee do not agree as to what the actual amount of that rent is to be, the amount of the rent is to be determined by valuation carried out by a specialist retail valuer appointed by agreement of the parties to the lease, or failing agreement, by the Tribunal.
(c) The matters set out in paragraph (a) are to be taken into account by a specialist retail valuer appointed under paragraph (b) in determining the amount of the rent.
(d) The lessor must, not later than 14 days after being requested to do so by a specialist retail valuer appointed under paragraph (b), supply the valuer with information (where reasonably available to the lessor) requested in a list provided by the valuer to assist the valuer to determine the current market value, including the following information about leases for comparable retail shops in the same building or retail shopping centre:
(i) current rental for each lease,
(ii) rent free periods or any other form of incentive,
(iii) recent or proposed variations of any lease,
(iv) outgoings for each lease,
and including any other information prescribed by the regulations.
(e) A valuation for the purposes of paragraph (b) is to be in writing and to contain detailed reasons for the specialist retail valuer's determination and to specify the matters to which the valuer had regard for the purposes of making his or her determination.
(f) The parties to the lease are to pay the costs of a valuation by a specialist retail valuer appointed under paragraph (b) in equal shares.
Note : The procedure provided by this section can be avoided if the parties can come to an agreement as to what the rent is to be.
(1A) A party to a lease may apply to the Tribunal for the appointment of a specialist retail valuer for the purposes of subsection (1) (b).
(1B) A party to a lease may make written submissions to a specialist retail valuer to assist in the valuer's consideration of the valuation, and the valuer must consider any such written submissions.
(2) A specialist retail valuer must make a valuation of a current market rent for the purposes referred to in this section not later than 1 month after receiving the information referred to in subsection (1) (d).
(3) A specialist retail valuer may apply to the Tribunal under Part 8 for an order that a lessor comply with a request referred to in subsection (1) (d) to supply relevant information about leases for retail shops situated in the same building or retail shopping centre to assist the valuer to determine the rent.
(4) The reasons and matters included in a valuation as referred to in subsection (1) (e) must not be set out in a way that discloses information identifying other leases or parties to other leases or relating to the business of parties to other leases. This subsection does not apply to leases between the parties to the lease for which the valuation is made or to leases whose parties consent to the disclosure of the information.
32A Review of current market rent determinations
(1) Application for review A party to a lease may apply to the Tribunal for the appointment of two specialist retail valuers to conduct a review of a determination of the current market rent made by a specialist retail valuer made under section 19 or 31.
(2) The application for a review must be made within 21 days after the party first received a copy of the determination.
Note: Subsection (13) provides another opportunity to make an application for a review if the decision on the review is set aside.
(3) Review by and decision of valuers The specialist retail valuers may conduct the review and may jointly:
(a) affirm the reviewed determination, or
(b) vary the reviewed determination.
(4) Subject to this section, the provisions of sections 19 and 19A or sections 31 and 31A, as the case requires, apply (with any necessary adaptations) to and in respect of the specialist retail valuers in the same way as those provisions apply to and in respect of the original specialist retail valuer.
(5) Without limiting subsection (4), the specialist retail valuers jointly and severally have the powers and obligations of the original specialist retail valuer in connection with obtaining information under the provisions referred to in that subsection.
(6) The specialist retail valuers are to conduct the review and reach their decision not later than one month after they are notified of their appointment.
(7) If the specialist retail valuers are unable to agree by the end of the month referred to in subsection (6), the valuers are taken to have decided to affirm the determination.
(8) Access to original determination and information It is the duty of the specialist retail valuer (the "original valuer") who made the original determination, and of each party to the lease, to ensure that the specialist retail valuers reviewing the determination are given access to:
(a) the original determination, and
(b) information relating to the matters, specified in the original determination, to which the original valuer had regard to in making the original determination, to the extent that the information is available to the original valuer or party,
unless the specialist retail valuers indicate that they do not require access to the determination or information to be given to them under this subsection.
(9) Costs of review The following provisions apply to the costs of the review by the specialist retail valuers:
(a) the parties to the lease are to pay the costs of the review in equal shares, unless paragraph (b) applies,
(b) the party who applies for the appointment of the specialist retail valuers is to pay the costs of the review, if the current market value is jointly determined by the specialist retail valuers to be the same as or within 10 per cent of the amount specified in the original determination.
(10) Effect, finality and setting aside of decision A varied determination has effect as if it were the original determination.
(11) Subject to subsection (12), the joint decision of the specialist retail valuers is final and binding on the parties to the lease.
(12) The Tribunal:
(a)may, on application made by a party to the lease within 21 days after the decision of the specialist retail valuers is given, order that the decision be set aside, if satisfied that the valuers have manifestly made a fundamental error warranting such an order, and
(b)may also order that the costs of the review are not payable by the parties or, if paid, are to be refunded.
The decision is not otherwise reviewable by or appellable to the Tribunal.
(13) If the decision is set aside, a party to the lease may make a fresh application to the Tribunal under subsection (1) in relation to the original determination within the period of 21 days after the date of the order setting it aside, and this section applies accordingly.
There is no provision in the Act that gives the Tribunal the role of itself determining market rental value. The remedy of a Lessor or Lessor who is dissatisfied with the Review under s 31 is to apply under s 32A for appointment of two Specialist Valuers to review the determination of the single Specialist Valuer.
Neither party has made an application under s 32A.
CONCLUSION
The application of Acgrew Pty Ltd is therefore incompetent and should be dismissed. In the absence of any Review under s 32A of the Act, the Review by Mr Goddard is binding on the parties.
ORDER
Accordingly, the order of the Tribunal is:
The application filed by Acgrew Pty Ltd on 31 March 2014 is incompetent and is dismissed (see s 32A of the Act).
(signed)
G Mullane
Senior Member
Civil and Administrative Tribunal of New South Wales
3 June 2014
I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.
Registrar
Decision last updated: 21 August 2014
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