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Annandale Pharmacies (NQ) Pty Ltd v The Angliss Estate (Annandale) Pty Ltd

 

[2017] QCAT 429

CITATION:

Annandale Pharmacies (NQ) Pty Ltd trading as Chemmart Annandale v The Angliss Estate (Annandale) Pty Ltd [2017] QCAT 429

PARTIES:

Annadale Pharmacies (NQ) Pty Ltd trading as Chemmart Annandale

(Applicant)

v

The Angliss Estate (Annandale) Pty Ltd

(Respondent)

APPLICATION NUMBER:

RSL030-16

MATTER TYPE:

Retail shop leases matters

HEARING DATE:

On the papers

HEARD AT:

Brisbane

DECISION OF:

Senior Member Brown

Member Judge

Member McBryde

DELIVERED ON:

21 November 2017

DELIVERED AT:

Brisbane

ORDERS MADE:

  1. It is declared that the determination of current market rent by Mr Gregory Clarke dated 20 November 2015 does not comply with the Retail Shop Leases Act 1994 (Qld) and is not a valid determination.
  2. The determination of current market rent is set aside.
  3. A further determination of current market rent is to be undertaken in compliance with the Retail Shop Leases Act 1994 (Qld) by a different specialist retail valuer.
  4. For the purpose of undertaking the further determination the specialist retail valuer is to be provided with a copy of these reasons.

CATCHWORDS:

LANDLORD AND TENANT – LEASES AND TENANCY AGREEMENTS – RETAIL AND COMMERCIAL TENANCIES LEGISLATION – OTHER MATTERS – where applicant exercised option to renew lease – where specialist retail valuer was appointed to determine the current market rent – where applicant challenged the first determination – where the Tribunal set aside the first determination and ordered that a further determination be made – where a further current market rent determination was undertaken – where the Tribunal must determine whether the second determination must be set aside – where the second determination does not comply with the Retail Shop Leases Act 1994 (Qld)

Annandale Pharmacies (NQ) Pty Ltd t/as Terry White Pharmacy v The Angliss Estate (Annandale) Pty Ltd [2014] QCAT 171

Anthony v The Coffee Club (Properties) Pty Ltd [2000] QSC 198

Brisbane Comedy Pty Ltd t/as Albion Comedy Club & Restaurant v Malisano & Ors [2015] QCAT 340

Family and Kids Care Foundation Inc v Bilby Lay Enterprises Pty Ltd [2005] RSLT 007

Kumari v Gao [2008] RSLT 019

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

Acts Interpretation Act 1954 (Qld), s 27B

Retail Shop Leases Act 1994 (Qld) (Reprint No. 3E), s 5, s 28(1), s 28(2), s 29, s 29(a)(i), s 29(a)(iii), s 29(c)(i), s 31(1)

Retail Shop Leases Act 1994, (Qld) s 83(1)

Retail Shop Leases Amendment Act 2006 (Qld), s 38(2)

This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act).

REPRESENTATIVES:

 

APPLICANT:

Boulton Cleary Kern Lawyers

RESPONDENT:

The Angliss Estate (Annandale) Pty Ltd represented itself

REASONS FOR DECISION

  1. [1]
    Annandale leases from Angliss premises at Annandale Central Shopping Centre. Annandale is a suburb of Townsville. Annandale operates a pharmacy from the premises.
  2. [2]
    The background facts surrounding the entering into of the lease are not in dispute. The lease was for an initial 10 year term expiring on 3 December 2010 with an option to renew for a further 10 year period.[1]
  3. [3]
    In 2010 Annandale exercised its option to renew the lease. In accordance with the terms of the lease, a specialist retail valuer was appointed to determine the current market rent. A report was prepared by Mr Geoff Eales (the first determination). The rental determination by Mr Eales was challenged by Annandale and in 2014 the Tribunal set aside the determination and ordered that a further determination be made.
  4. [4]
    Mr Gregory Clarke subsequently undertook a further current market rent determination and prepared a report (the second determination). Mr Clarke determined that the current market rent for the premises was $215,000.00 per annum excluding GST. Annandale has challenged the second determination.
  5. [5]
    The Tribunal must determine:
    1. Does the second determination comply with the requirements of sections 28, 29 and 31 of the Retail Shop Leases Act 1996 (Qld) (“RSLA”)?; and
    2. If not, what is the appropriate order?

Jurisdiction

  1. [6]
    Reprint 3E of the RSLA is applicable to the determination of this application. A reference to the RSLA in these reasons is a reference to Reprint 3E.
  2. [7]
    If a lessor and lessee cannot agree on the current market rent within one month after the review date under the lease, the current market rent is to be determined by a specialist retail valuer.[2]
  3. [8]
    Sections 29 and 31 of the RSLA provide:

29 Matters to be considered by specialist retail valuers

In making a determination of the current market rent, the specialist retail valuer—

(a) must determine the rent—

(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

(iii) on an effective rent basis; 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

(c) must have regard to—

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

(ii) the other matters prescribed by regulation.

31 Requirements of determination

(1) The specialist retail valuer’s determination of the current market rent must be in writing, identify the location of the leased shop and specify the matters taken into consideration by the valuer in making it.

(2) The determination must also state—

(a) whether the current market rent includes GST; and

(b) if the rent includes GST, the GST amount.

  1. [9]
    The Tribunal may make the orders considered necessary to be just to resolve a retail tenancy dispute.[3] If the Tribunal finds that, in making a determination of current market rent, a specialist retail valuer did not comply with section 29, the Tribunal may order that the determination be set aside and a further determination in compliance with the section be made.[4]

Does the second determination comply with the requirements of sections 28, 29 and 31 of the Retail Shop Leases Act 1994 (Qld)?

  1. [10]
    The points of dispute raised by Annandale can be summarised as:
    1. Failing to determine the rent on the basis that the premises were unoccupied – the valuer, by having regard to comparative rentals of occupied premises, by failing to distinguish between occupied and unoccupied comparative premises, and by failing to make any adjustment to rental amounts in respect of comparative occupied premises, failed to determine the rent in accordance with s 29(a)(i) of the RSLA;
    2. Failing to exclude the value of goodwill – the valuer failed to exclude from his consideration the value of goodwill of Annandale’s business and the fixtures and fittings in the leased premises, and thereby failed to comply with s 29(b) of the RSLA;
    3. Taking into consideration irrelevant considerations – the valuer took into consideration in his determination irrelevant evidence and particularly the 2011 sales data for Annandale’s business;
    4. Failing to consider the submissions by the parties – the valuer failed to have regard to the totality of Annandale’s submissions in contravention of s 29(c)(i) of the RSLA;
    5. Failing to give proper reasons for the determination – the valuer failed to give proper reasons in breach of s 31(1) of the RSLA.[5]
    1. Did the valuer make the determination on the basis the premises were unoccupied?; and
    2. Did the valuer have regard to the value of goodwill of the business or the fixtures and fittings in the shop?
  2. [11]
    Annandale says that the valuer failed to make the second determination on the basis that the premises were unoccupied. In its submissions Annandale acknowledges that evidence of rent of occupied premises is not inadmissible, however to be relied upon by a valuer an appropriate adjustment must be made if the evidence is to be of any utility.[6]
  3. [12]
    Annandale says that the second determination does not make clear which of the comparative leases relied upon by the valuer are of premises where there is an existing tenant and that the determination fails to demonstrate any adjustment for the fact of occupancy in respect of any of the leases.[7]
  4. [13]
    The second determination makes reference to an ‘Analysed Rate’ which Annandale says is not explained by the valuer either as to how the rate is arrived at or how the rate reflects whether the comparative premises were occupied or not.
  5. [14]
    In response, Angliss says that it is clear that the second determination is on the basis that the premises are unoccupied. It says that the valuer assessed the comparable properties at the commencement date, by reference to the relevant lease documentation, when the premises were unoccupied, or at market review date or lease date when they would be valued as unoccupied.[8]
  6. [15]
    The valuer, says Angliss, has assessed only comparable premises that are new lettings between arms length parties; rentals agreed between arms length parties at lease renewal or at exercise of option; and rentals agreed at market rent reviews, and as such the comparable premises are to be considered vacant.[9]
  7. [16]
    Angliss says that the valuer has made use of a ‘Gross Effective Rent (Analysed Rate)’ in considering comparative rentals and that adjustments have been made by the valuer to the initial passing rent to ensure that the Analysed Rate, among other things, reflects vacant possession.[10]
  8. [17]
    Angliss says that Annandale has misunderstood ‘the clear approach’ taken by the valuer in addressing the issue of vacant possession of the comparative premises.[11]
  9. [18]
    Annandale says that by failing to adjust the comparative rentals for the occupancy of the premises, the valuer in contravention of s 29(b) of the RSLA had regard to the value of Annadale’s goodwill and/or fixtures and fittings in making the second determination. Alternatively, says Annandale, if such an adjustment was made by the valuer, the second determination does not make this clear.
  10. [19]
    Angliss says that the valuer states in the second determination that he made adjustments to the initial passing rent to ensure the Analysed Rate excluded goodwill and fixtures and fittings. Angliss says that the approach adopted by the valuer of assessing the rent of the comparative premises at commencement or market review necessarily excludes the value of goodwill and lessee’s fixtures and fittings.
  11. [20]
    In undertaking the second determination, the valuer was required, among other things, to determine the rent on the basis of the rent that would be reasonably expected to be paid for the shop if it were unoccupied and offered for leasing as a pharmacy. The valuer was not permitted to have regard to the value of the goodwill of the lessee’s business or the lessee’s fixtures and fittings in the shop.
  12. [21]
    In arriving at the second determination, the valuer relies upon ‘Leasing Evidence’ attached to the determination. The Leasing Evidence contains details of five comparative premises. The details of the comparative premises may have been extracted from the previous determination although this is not clear from the second determination and, in any event, is not an issue raised by either party in this application.[12]
  13. [22]
    The specific complaints by Annandale regarding the valuer’s treatment of the United Discount Chemist, Amcal Pharmacy, Harrisons Pharmacy and Payless Chemist comparative premises are that:
    1. There is no explanation as to how the valuer arrived at the Analysed Rate;
    2. There is no explanation provided in the second determination as to:
    1. Whether the premises were occupied or unoccupied;
    2. Whether, if the premises were occupied, any adjustment has been made for the fact of occupation;
    3. Whether there has been any adjustment for the difference between the commencement date and the date for assessing the Current Market Rent;
    4. Any treatment of outgoings;
    5. Any treatment of GST;
    6. Any adjustments to arrive at the Analysed Rate.
  14. [23]
    The valuer states in the second determination that he has had regard to the Leasing Evidence of comparative pharmacies with vacant possession.[13] He then goes on to refer to three categories of comparable pharmacies: new lettings; rentals agreed at lease renewal or exercise of an option; and rentals agreed at market rent review. We would observe that the latter two categories necessarily involve occupied premises. We would also observe that the second determination does not make clear whether, in respect of each of the comparative premises, the leases were negotiated when the premises were occupied or unoccupied.  
  15. [24]
    The valuer states that he has not had regard to the goodwill of the ‘lessee’s business’ (referring here, presumably, to the comparative premises noting that the valuer refers to adjustments having been made ‘in all instances’). Again, without the valuer having specified which comparative premises were occupied or unoccupied, it is unclear in respect of which premises he did not have regard to the goodwill of the lessee’s business. The valuer states that the most appropriate method of determining the Current Market Rent is to compare the premises to the best available leasing evidence of comparable pharmacies close to the review date.
  16. [25]
    The term ‘Analysed Rate’ is not defined in the report. The valuer refers to ‘analysing the market’.[14] He goes on to say (referring to the comparative premises) that he has, in all instances, made adjustments to the initial passing rent to ensure the Analysed Rate excludes a number of considerations including fixtures and fittings, goodwill and incentives and reflects vacant possession.[15]
  17. [26]
    There is a further reference to ‘Analysed Rate’ in the ‘Leasing Evidence’ document attached to the report. The term appears in parentheses under the heading ‘Gross Effective Rent’. The second determination contains a definition of the term ‘Gross Effective Rent’:

Rent having regard to any 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 (ie have regard to incentives).[16]

  1. [27]
    The definition of ‘Gross Effective Rent’ in the second determination is essentially the same as the definition of ‘effective rent basis’ in the RSLA. The term ‘effective rent basis’ in the RSLA:

… means the determination of rent taking into account all associated advantages and disadvantages under arrangements made between the lessor and lessee that reflect the net consideration passing to the lessor from the lessee under the lease and associated arrangements.[17]

  1. [28]
    The definition of ‘effective rent basis’ in the RSLA does not include any reference to whether premises are occupied or unoccupied.
  2. [29]
    In our view, the second determination appears to make clear that the ‘Gross Effective Rent’ is the ‘Analysed Rate’. If this is not what the valuer meant when referring to these terms in the Leasing Evidence document then any difference in meaning is not apparent from the second determination.
  3. [30]
    As we have observed, the valuer was required to make the second determination on an effective rent basis.[18] The valuer was also required to make the determination, inter alia, on the basis that the premises were unoccupied.[19]
  4. [31]
    We accept that the valuer says that he made appropriate adjustments to ensure that the Analysed Rate reflected vacant possession of the comparable premises. As the Tribunal has previously held however, we must be satisfied that, in fact, the valuer undertook the stated adjustment and that more than mere lip service has been paid to the requirements of the RSLA.[20]
  5. [32]
    The definition of ‘Gross Effective Rent’ in the second determination makes no reference to premises being occupied or unoccupied. As the definition reflects the definition of ‘effective rent basis’ in the RSLA this is perhaps unsurprising given that the determination of rent on an effective rent basis in accordance with s 29(a)(iii) of the Act is separate and distinct to the requirement contained in s 29(a)(i) that the determination be on the basis that the premises are unoccupied.
  6. [33]
    We find it difficult to reconcile, on the one hand, the reference in the determination to the ‘Gross Effective Rent’ as being the same as the ‘Analysed Rate’ (which the valuer says has been arrived at after undertaking those adjustments referred to in the determination) and on the other, the definition of ‘Gross Effective Rent’ which makes no reference to any adjustments to exclude goodwill or reflect vacant possession and which, as we have noted, accords with the definition of ‘effective rent basis’ in the RSLA.
  7. [34]
    As we have observed, the second determination does not make clear whether the comparative premises set out in the Leasing Evidence were occupied or unoccupied. The distinction is an important one, as the tribunal has previously held:

Whilst the determination refers to the comparable premises as new leases, it is unclear from the comparisons whether the leases referred to were in respect of premises already occupied and from which established businesses were operating and new leases negotiated, or whether the comparable premises were previously unoccupied. The distinction is an important one. The former may involve factors irrelevant to a determination under the RSL Act. If the comparable premises referred to were in fact new leases of premises previously unoccupied by the identified lessees then this is not made clear in the determination.[21]

  1. [35]
    For these same reasons, we cannot be satisfied that the valuer has made the second determination in accordance with s 29(a)(i) of the RSLA.
  2. [36]
    Contrary to Annandale’s submission, it does not necessarily follow from a finding that a determination has not been made on the basis that a retail shop was unoccupied, that the valuer has had regard to the goodwill of the lessee’s business. Other than a general submission that the failure by the valuer to adjust for the occupancy of the comparative premises leads to the conclusion that he took into consideration Annandale’s goodwill and fixtures and fittings, Annandale does not point to anything in the second determination to support its submission.
  3. [37]
    We are not satisfied that the valuer had regard to the lessee’s goodwill or fixtures and fittings. It follows that we are satisfied the valuer did not contravene the requirements of s 29(b) of the RSLA.
  4. [38]
    Annandale raises specific issues relating to the treatment by the valuer of another comparative premises, Star Discount Chemist which was subject to both a head lease and sub lease. In light of our conclusions it is not necessary for us to deal separately with this issue.
    1. Did the valuer take into consideration irrelevant matters in making the determination?
  5. [39]
    Annandale says that the valuer had regard to irrelevant matters in the form of its 2011 sales data and that the second determination does not make clear what use the valuer made of the data.
  6. [40]
    Angliss says that the only reference to the 2011 sales data appears in one passage in the report and then only to note the average monthly sales figures and annual sales for 2010 and 2011.
  7. [41]
    Angliss says that the reference in the report to the 2011 year relates to the average monthly sales in the 2010 and 2011 years of $307,000.00 ‘equalling to approximately $3,684,000’. Angliss says that it is clear from reading the determination ‘as a whole’ that it was based on evidence applicable at the Market Review Date.
  8. [42]
    The valuer refers in the second determination to having had regard to the ‘relevant parts’ of Angliss’s submissions. Those submissions attached a number of appendices including a spreadsheet described as ‘Annandale Central Monthly sales for 2010 and 2011’. The spreadsheet contains a breakdown of sales, month by month, for the 2010 and 2011 calendar years. The valuer refers to the average monthly sales achieved by the lessee in the 2010 and 2011 years.
  9. [43]
    That the valuer considered the sales figures to be of significance can be inferred from his specific reference to the figures as a ‘relevant part’ of the lessor’s submissions to which he ‘had regard’. We note that one of the principal arguments in Annandale’s submissions to the valuer was that it was a relevant consideration Annandale Central Shopping Centre was ‘in decline’.[22]
  10. [44]
    The matters set out for consideration by a specialist retail valuer at s 29 of the RSLA are not exhaustive[23] although it has also been observed that the RSLA prescribes a virtual code for current market rent determinations.[24]
  11. [45]
    The date of determination in respect of the second determination was 4 December 2010. In the absence of any explanation by the valuer it is difficult to apprehend how the sales figures for the lessee’s business for the 2011 calendar year could be relevant to the determination. The valuer was certainly entitled to take into consideration relevant turnover figures for shops in the centre to the date of the second determination but beyond this date, the relevance of any sales data is entirely unclear from the determination. Indeed, the determination is unclear as to the relevance of any of the sales data, pre or post the date of determination, referred to by the valuer.
  12. [46]
    We will deal further with this issue when considering the adequacy of the reasons given by the valuer.
    1. Did the valuer take into consideration the submissions by the parties?
  13. [47]
    Annandale says that the valuer failed to have regard to its submissions regarding the Herron Todd White report; the lease of the Nathan Street Chemmart Pharmacy; the impact of competition by Coles and Woolworths and online sales on Annandale’s business; the 2011 Pharmacy Guild of Australia Rentals Report; the regulatory change in the pharmacy industry impacting government payments to pharmacies under the Pharmaceutical Benefits Scheme. Annadale says that the RSLA does not permit the valuer a discretion to have regard only to those submissions the valuer subjectively considers to be relevant.
  14. [48]
    Angliss says that the RSLA does not require the valuer to consider as relevant all submissions that the applicant considers may be relevant. Angliss says that the valuer states in the determination that he had regard to the submissions and responses by both parties and that it is for the valuer to give such weight as he considers appropriate to those submissions.
  15. [49]
    The valuer was required to have regard to the submissions by the parties.[25] In our view the second determination make clear that the valuer had regard to the submissions by Annandale and Angliss.[26] The valuer was required to specify the matters he took into consideration in making the determination.[27] The valuer was not, in our view, required to refer in a mechanical fashion to all of the parties submissions and his reasons for accepting or rejecting each submission.
  16. [50]
    We are satisfied that the valuer had regard to the submissions by the parties in arriving at the second determination. 
    1. Did the valuer provide adequate reasons?
  17. [51]
    Annandale says that the valuer failed to specify the matters taken into consideration in making the determination in contravention of s 31(1) of the RSLA. Annandale says that the valuer fails to explain how the comparative rental evidence was taken into consideration and applied in reaching the second determination. Annandale refers to an ‘unexplained quantum leap’ by the valuer in arriving at the current market rent.[28]
  18. [52]
    Angliss says that the valuer did specify the matters he took into consideration in arriving at the second determination. The valuer, says Angliss, did set out the comparable leasing evidence relied upon and sets out in detail how the market rent was determined.
  19. [53]
    As a person required by the RSLA to give written reasons for a determination, the SRV must also set out his or her findings on material questions of fact and refer to the evidence or other material on which those findings were based.[29] The valuer was required to weigh the evidence to arrive at a conclusion about how the evidence is to be taken into account.[30]
  20. [54]
    In the determination, the valuer specifically refers to the relevant parts of the submissions by the parties to which he had regard. This observation raises two issues. Firstly, why were the parts of the submissions referred to considered relevant and, secondly, why were the balance of the submissions not relevant. The reasons are silent on these two issues. As we have observed, the valuer was not required to recite, chapter and verse, the submissions by the parties and whether the submissions were accepted or rejected. In circumstances however, as here, where the parties have provided very detailed submissions and where the valuer specifically states that he has had regard to only ‘relevant parts’ of the submissions, the determination should make it tolerably clear why regard had not been had to specific and detailed submissions, in this case, Annadale’s submissions regarding the Herron Todd White report; the lease of the Nathan Street Chemmart Pharmacy; the impact of competition by Coles and Woolworths and online sales on Annandale’s business; the 2011 Pharmacy Guild of Australia Rentals Report; and the regulatory change in the pharmacy industry impacting government payments to pharmacies under the Pharmaceutical Benefits Scheme.
  21. [55]
    The valuer refers to his ‘own independent research’.[31] The independent research relied upon is not particularised by the valuer. The valuation does not reveal what the research was nor the relevance of the research to the conclusions reached by the valuer. That it was considered relevant by the valuer is made clear. He specifically refers in the determination to the evidence as being one of the bases upon which he concluded that the Annual Passing Rent was above the acceptable market range. In our view the valuer, by failing to refer to the specific evidence or other material constituting the ‘independent research’, thereby failed to give adequate reasons in relation to the relevance of the ‘independent research’ to the conclusions he reached.
  22. [56]
    Annandale is critical of the failure by the valuer to explain how the lessee’s sales data for the 2010 and 2011 years was considered relevant to the determination. As we have observed, the reference to the sales data appears only once in the second determination but importantly it is referred to by the valuer as a relevant part of the submissions by Angliss to which he had regard.[32] The reference to, and use of, trading figures was the subject of consideration in Family and Kids Care Foundation Inc v Bilby Lay Enterprises Pty Ltd.[33] There, it was held:

There is a quantum leap from paragraph 2 of subparagraph 5.1 in identifying a unique situation to the next paragraph where the valuer simply states that he will use trading figures. Even if this approach were acceptable, the determination should have gone through the steps in the reasoning that lead to the conclusion of using the trading figures and then give details as to how the trading figures were applied. After concluding that the trading figures should be used in paragraph 3 of subparagraph 5.1, the determination then says “The rent has been calculated as,”. It then gives the ultimate figures for rent etc. without any explanation how they were arrive at. The Tribunal accepts the applicants’ submission in that respect. The determination is silent on this.

  1. [57]
    The use to which the sales data for 2010 and 2011 was put, which the valuer considered relevant and to which he had regard, is not explained or otherwise expanded upon in the second determination. The steps in the valuer’s reasoning explaining the relevance of the sales data are missing. In this regard, the second determination fails to adequately specify how the sales data was taken into consideration or identify relevant findings or conclusions about sales data the valuer considered relevant and to which he had regard.
  2. [58]
    A further criticism by Annandale of the second determination is the ‘unexplained quantum leap’ by the valuer in arriving at the current market rent. In Brisbane Comedy Pty Ltd t/as Albion Comedy Club & Restaurant v Malisano & Ors[34] the Tribunal was critical of a current market rent determination on the basis that:

There is no detailed reasoning contained in the determination as to how the rent figure is arrived at. Indeed, apart from referring to the comparable premises identified by reference to the broad descriptions as outlined above, there is no way of discerning how the SRV arrived at his final determination. There is no adequate weighing of the evidence nor any adequate process of reasoning identified leading to the determination.[35]

  1. [59]
    The leasing evidence contained in the determination refers to five comparative premises classified as ‘inferior’, ‘slightly inferior’ and ‘far superior’. The valuer’s calculation of the gross effective rent for each of the premises is identified. The gross effective rents range from $531m2 to $1065m2. The valuer refers to this range of figures in the body of his report identifying that several willing pharmacists were prepared to pay within this range for premises in the Townsville area.[36] The valuer refers to the annual passing rent for the subject premises of $841m2 as being above the acceptable market range. He opines that the gross effective rent assessed by Angliss of $1000m2 is too high and the gross effective rent assessed by Annandale of $300m2 is too low. The valuer then concludes, without any further explanation, that the current market rent is greater than $750m2 gross effective but less than the passing annual rent of $841m2. How the valuer arrives at the figure of $750m2 is unexplained. It might be observed that the figure is the mid point between the two gross effective rent figures identified by the valuer as the rent ‘several willing pharmacists’ were prepared to pay in the Townsville area. The valuer then proceeds to identify the range of what he opines to be the current market rent as being from $775m2 to $825m2 and then proceeds to adopt the mid point between these two figures, $800m2, as the gross effective rent.
  2. [60]
    The valuer does reveal, to some extent, his process of reasoning in arriving at the figure for the current market rent. However there is a significant lacuna in the reasoning process as we have identified.  The valuer does not identify how he arrived at what was the lower of the two figures he initially adopted in the process of finally arriving at the current market rent. In the absence of any process of reasoning in the second valuation as to how the figure was arrived at, we conclude that the valuer has failed to give adequate reasons in the second determination.

Conclusion

  1. [61]
    We conclude for the reasons set out that the second determination does not comply with the requirements of the RSLA.
  2. [62]
    It is unfortunate that, for a second time, the determination by the specialist retail valuer has been found not to comply with the requirements of the RSLA. The further determination which we order should be conducted strictly in accordance with the requirements of the RSLA, in accordance with these reasons and with the following words of Atkinson J in Anthony v The Coffee Club (Properties) Pty Ltd firmly in mind:

It seems to me that, in order to avoid litigation of this type and in order to follow the statutory requirements, specialist retail valuers must be careful to ensure that their determination of the current market rent carefully specifies the matters taken into consideration and that those matters are the matters specified in the Act and each and every one of them.[37]

  1. [63]
    We order as follows:
    1. It is declared that the determination of current market rent by Mr Gregory Clarke dated 20 November 2015 does not comply with the Retail Shop Leases Act 1994 (Qld) and is not a valid determination.
    2. The determination of current market rent is set aside.
    3. A further determination of current market rent is to be undertaken in compliance with the Retail Shop Leases Act 1994 (Qld) by a different specialist retail valuer.
    4. For the purpose of undertaking the further determination the specialist retail valuer is to be provided with a copy of these reasons.

Footnotes

[1] Lease dated 18 September 2000.

[2] RSLA, s 28(1) and (2).

[3] RSLA, s 83(1).

[4] By s 38(2) of the Retail Shop Leases Amendment Act 2006 (Qld), s 83(2)(j) was inserted into the RSLA. By s 129(2) of the RSLAA 2006, s 83(2)(j) applies to the subject lease, the lease having been entered into before the commencement and any extension or renewal of the lease.

[5] Notice of Dispute – Attachment ‘B’, filed 19 January 2016.

[6] Applicant submissions at [39].

[7] Ibid at [40].

[8] Respondent submissions at [26] and [27].

[9] Respondent submissions at [53(f)].

[10] Ibid at [56(b)].

[11] Ibid at [56(e)].

[12] Rental assessment, G W Eales, 4 December 2010.

[13] Second Determination at page 15.

[14] Ibid.

[15] Ibid.

[16] Second Determination at page 16.

[17] RSLA, s 5.

[18] Ibid, s 29(a)(iii).

[19] Ibid, s 29(a)(i).

[20] Annandale Pharmacies (NQ) Pty Ltd t/as Terry White Pharmacy v The Angliss Estate (Annandale) Pty Ltd [2014] QCAT 171.

[21] Brisbane Comedy Pty Ltd t/as Albion Comedy Club & Restaurant v Malisano & Ors [2015] QCAT 340, 7 [36].

[22] Lessee submissions to valuer, 30 October 2015.

[23] Family and Kids Care Foundation Inc v Bilby Lay Enterprises Pty Ltd [2005] RSLT 007.

[24] Kumari v Gao [2008] RSLT 019.

[25] RSLA, s 29(c)(i).

[26] Second Determination at [7.1] and [7.2].

[27] RSLA, s 31(1).

[28] Applicant submissions at [66].

[29] Acts Interpretation Act 1954 (Qld), s 27B.

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

[31] Second Determination at [8.0].

[32] Ibid at [7.1].

[33] [2005] RSLT 007. 

[34] [2015] QCAT 340.

[35] Ibid at 8 [41].

[36] Second Determination at [8.0].

[37] [2000] QSC 198.

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Editorial Notes

  • Published Case Name:

    Annandale Pharmacies (NQ) Pty Ltd trading as Chemmart Annandale v The Angliss Estate (Annandale) Pty Ltd

  • Shortened Case Name:

    Annandale Pharmacies (NQ) Pty Ltd v The Angliss Estate (Annandale) Pty Ltd

  • MNC:

    [2017] QCAT 429

  • Court:

    QCAT

  • Judge(s):

    Senior Member Brown, Member Judge, Member McBryde

  • Date:

    21 Nov 2017

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.
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