B & R Holdings Pty Limited v Nine Dogs Pty Limited

[2008] NSWADT 341

CITATION:	B & R Holdings Pty Limited v Nine Dogs Pty Limited [2008] NSWADT 341
DIVISION:	Retail Leases Division
PARTIES:	APPLICANT B & R Holdings Pty Limited RESPONDENT Nine Dogs Pty Limited
FILE NUMBER:	085129
HEARING DATES:	On the papers
SUBMISSIONS CLOSED:	4 December 2008
DATE OF DECISION:	24 December 2008
BEFORE:	Molloy G - Judicial Member
CATCHWORDS:	Objection to appointment
LEGISLATION CITED:	Retail Leases Act 1994
CASES CITED:	B & R Holdings Pty Limited v. Nine Dogs Pty Limited [2008] NSWADT 276 Great Tastes of Australia Pty Limited v Shorty Holdings Pty Limited [2006] NSWADT 253
REPRESENTATION:	APPLICANT C Dalton RESPONDENT No appearance
ORDERS:	1.The Objection to Appointment is upheld 2.I rescind/vacate the interim order made 14 August 2008 and the Interim Notice of Appointment dated 15 August 2008 3.I appoint Robert (Bob) Dupont of Duponts, Valuers and Property Research, P O Box 1740 Newcastle 2330 as the Specialist Retail Valuer by way of interim appointment. The Registry is to issue the appropriate Interim Notice of Appointment and the Application is listed on Thursday 29 January 2009 at 10am.

1 In my Decision 13 October 2008 (B & R Holdings Pty Limited v. Nine Dogs Pty Limited [2008] NSWADT 276) I declared that there was no decision made by me 28 August 2008 appointing Randolph Rossi as specialist retail valuer.

2 There is no need for me to set out yet again the basic facts, nor the terms of the Applicant’s Application. Suffice it to say that it is now necessary to determine the Objection filed by the Applicant 25 August 2008, dated 22 August 2008.

3 There is no need to set out again the terms of the Objection to Appointment – these terms are set out in paragraph [9] of my Judgment 13 October 2008.

4 Subsequent thereto, and consistent with the leave granted in paragraph [44], the Applicant filed an Affidavit sworn 29 October 2008 supported by formal Written Submissions dated 29 October 2008. No material has been received from the Respondent notwithstanding direction 3 in paragraph [44] and the solicitor for the Applicant/Objector has informed the Tribunal that the said Affidavit and Written Submissions were all served upon the Respondent 29 October 2008.

5 It now falls to me to determine the Objection on the papers in Chambers. The Affidavit and the Written Submissions take the matter a little further that the formal Objection and it is convenient (in my view) to refer firstly to the Affidavit and then to the Written Submissions.

6 The Affidavit is of Mr B T Malone, a director of the Applicant Lessor. He deposes to the fact that the lease itself was the subject of proceedings when a dispute arose with the previous lessee and the Applicant company. In the course of those proceedings the previous lessee relied upon a letter of advice received from Mr Rossi dated 27 February 2007, to which I shall refer later in this Decision.

7 In those circumstances it was submitted that Mr Rossi had “therefore provided advice on the subject lease for the benefit of the (previous) lessee only and (thereby) placed himself in a position of conflict with (the Applicant) as his correspondence was relied upon by the former lessee in a litigated matter”.

8 The balance of the affidavit refers to expressions of concern by the deponent. However, in the circumstances, I think it appropriate to set out these expressions in full:

“5. I am aware that Mr Rossi operates a general real estate agency practice which involves residential, retail, commercial and industrial real estate sales, marketing and managing. Mr Rossi also undertakes valuations of various types of property.

6. I seek the appointment of a Specialist Retail Valuer who does not undertake the sale, marketing or management of real estate to ensure there is no direct or indirect benefit flowing to the valuer from the outcome of the assessment.

7. In my view a Specialist Retail Valuer who undertakes valuations only would be able to conduct a valuation unfettered by any current involvement in the sale, management and marketing of real estate within the same area of the subject premises”.

9 This theme was taken up in the Applicant’s Written Submissions. It was there submitted that valuation should only be conducted by valuers who do “not receive any benefit from the assessment or value of rental returns or real estate values in the course of his occupation”. It was submitted that “the value of market rent determined by Mr Rossi will be of a direct benefit to his real estate practice when negotiating rentals and prices for properties he manages or offers for sale in or around the same area as the subject premises.”

10 Quite frankly, I reject those submissions and that type of submission. For the reasons that I set out in Great Tastes of Australia Pty Limited v. Shorty Holdings Pty Limited [2006] NSWADT 253, in particular at [21], in my view it is unrealistic and often impossible of attainment to expect to find a specialist retail valuer, particularly in country locations, who does not have some interest in real estate sales, marketing and management. Indeed, to the contrary – one would think that a person with those interests would be able to exercise his/her professionalism having regard to their undoubted experience.

11 The next primary submission was to the following effect: it related to what was said to be a personal lease dispute between the solicitor for the Applicant and Mr Rossi. In my opinion it is quite inappropriate and improper for me to refer to the details as alleged/asserted in the Written Submissions. There was no evidence filed in support of that submission and, in any event, it seems to me totally irrelevant to the dispute between the Applicant and the Respondent. The personal details of the solicitor for the Applicant ought to be kept personal and should not be put before this Tribunal in a matter between the solicitor’s client and the Respondent. Such a submission is offensive and objectionable; I do not propose to make any reference to the details; and I reject that submission.

12 Thirdly, and finally, the most important submission made was that there is either a conflict of interest, alternatively a perceived conflict of interest, because Mr Rossi assisted and advised the previous lessee in relation to previous proceedings in which the Applicant was a party. This submission, in my view, has force, particularly having regard to the letter written by Mr Rossi to the previous lessees and dated 27 February 2007. There is no need to set that letter out in detail. Suffice it to say that most of it is fairly unremarkable. In it Mr Rossi expressed a number of opinions relating to the lease (which is the lease now before the Tribunal), believed his expressions of opinion were correct, but did not guarantee them and suggested that the previous lessees “seek legal and accounting advice in regards to these issues”. The matters in the letter that I regard as important on the issue now before me are those set out in the following numbered paragraphs:

“5. Land Tax is payable as a single holding. Annexure B(1) has no effect (cannot contract out of law). See lease clause 5.3.2.c.

6. Lease not in proper form and manner you cannot have either or clause in increases. Law states to stipulate one method per annum. Item 12 is invalid and I believe the lessee may not be liable for any increases except for market reviews maybe. If the whole clause is valid then there may be no increases at all including the option.

7. Clause 3.5. First right of refusal. I believe that the lessor has to, in each case, go back to the lessee for each offer he receives from any other party. Eg. A frustrating clause to the lessor condition being that if the property is put to auction then the highest bid only wins the property if the lessee refuses to pay the price.

8. With reference to the start of Dec for the option take up. I believe that the lessor has not complied with the act in that he needs to notify the lessee in writing 3 months prior to minimum notice, no evidence of such. No evidence of confirmation to tenant from Malone that option not taken up.

9. Undated recept of disclosure statement, repercussions? Was correct period for signing observed as per statute as there is no evidence of solicitors certificate.

10. Management cost in budget illegal as it is not detailed in 14b of the lease.

11. Reimbursement claim for overpaid land tax 95-2005 (previous lease). There may be refund available subject to statute of limitations.”

13 In my opinion those quoted paragraphs, either taken individually or collectively or variously jointly, amount to advice to the previous lessee which may be adverse to the Applicant lessor in relation to the lease now before this Tribunal. In those circumstances there is at the very least a perception of conflict of interest in a real sense and at the most a real conflict of interest simply because Mr Rossi appears to have tendered expressions of opinion on the terms of the lease which maybe adverse to those of the Applicant lessor.

14 In these circumstances it is my opinion that the Objection is made out and Mr Rossi should not be appointed. In those circumstances I rescind the interim appointment of Randolph Rossi as Specialist Retail Valuer.

15 I appoint Robert (Bob) Dupont of Duponts, Valuers and Property Research, P O Box 1740 Newcastle 2330 as the Specialist Retail Valuer.

Orders:

1. The Objection to Appointment is upheld

2. I rescind/vacate the interim order made 14 August 2008 and the Interim Notice of Appointment dated 15 August 2008

3. I appoint Robert (Bob) Dupont of Duponts, Valuers and Property Research, P O Box 1740 Newcastle 2330 as the Specialist Retail Valuer by way of interim appointment. The Registry is to issue the appropriate Interim Notice of Appointment and the Application is listed on Thursday