A Qld Supreme Court has ruled a Valuers Determination invalid for not properly interrupting the requirements of the Lease concerning the meaning of “immediate vicinity”,” suburb or town”. This case highlights the preference for Valuers to seek advice where such ambiguity arises, and for legal advisors to ensure a Lease is drafted with clarity.
The matter involved the ‘Centrelink’ premises located on a major arterial roadway in the northern part of Rockhampton. The lease provided that, if the parties were not able to reach agreement, a rental determination by an appointed valuer would determine the market rent based on a range of factors including, considering comparable premises. A valuer was nominated by the Australian Property Institute in accordance with the terms of the lease. The valuer assessed the market rent at $565,675 plus GST and outgoings per annum which was 30% less than the existing rent.
Although the lease provided that the valuer’s determination was final and binding, the landlord disputed the determination on the basis that it was not done in accordance with the requirements of the lease, and it was therefore invalid.
The Court stated:
A consideration of the terms of the lease supports a conclusion that the task the valuer was contractually required to undertake was to determine the open market rental value of the premises at the commencement of the rent period, taking into account a variety of factors. Those factors included the open market rental value “of comparable premises in the suburb or town within which the building is situated (and where there is insufficient evidence of comparable premises in the relevant suburb or town, then of comparable premises within a comparable suburb or town within the immediate vicinity of that in which the building is situated)”.
The Determination heavily relied on rental evidence from Townsville, some 600km north, consequently the Court decided that approach did not satisfy the requirements of the Lease and ruled the Determination invalid.
DA Staal Property Pty Ltd v Commonwealth of Australia [2021] QSC 216
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