VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL
CIVIL DIVISION
BUILDING AND PROPERTY LIST	
vcat reference No. BP1413/2022	
CATCHWORDS	
RETAIL LEASES–Retail Leases Act 2003 (Vic) (the “Act”) – challenge to determination of current market rent under the Act.
DETAILED REASONS – direct comparison methodology adopted by the valuer for purpose of having regard to the matters in s37(2)(b) of the Act – whether by his reasons the valuer sufficiently justified his conclusion that stated premises were comparable premises.
DETAILED REASONS – whether the valuer complied with s37(6)(b) and (c) of the Act in respect of the rent incentive adopted by the valuer for the purpose of the valuation.
DETAILED REASONS – where a valuation of current market rent for the first year of a subsequent lease term that adopts a technique as materially increases the rent payable for such year above the rent payable if an alternative more logical technique were adopted, a failure to provide an explanation demonstrating that the adopted technique is grounded in established principles of valuation constitutes a failure to provide detailed reasons for a valuation within the meaning of s37(6)(b) of the Act. 
CALCULATION USED IN VALUATION – whether an error or ambiguity in the calculation of the current market rent for the first year of a subsequent lease term that cannot be readily cured by the process of construction is a material mistake of fact sufficient to vitiate the valuation. 	

APPLICANT	Rumaco Pty Ltd (ACN: 095 167 169)	
RESPONDENT	Exhibition & Events Australia Pty Ltd  (ACN: 116 403 126)	
WHERE HELD	Melbourne	
BEFORE	A Kincaid, Member	
HEARING TYPE	Hearing	
DATE OF HEARING	22 August 2023	
DATE OF ORDER	24 January 2025	
CITATION	Rumaco Pty Ltd v Exhibition & Events Australia Pty Ltd (Building and Property) [2025] VCAT 73	

Order

I FIND AND DECLARE that: 
1	The rental determination undertaken by the valuer dated 13 December 2021 for the first year of the respondent’s further 5 year term from 1 June 2020 fails to comply with the requirements of section 37 of the Retail Leases Act 2003 (Vic), is otherwise vitiated by error and is set aside as not binding on the parties.
2	The parties must attempt to agree on an appointment of an alternative specialist retail valuer pursuant to section 37(3)(a) of the Act to provide a rental determination for the first year of the further 5 year term from 1 June 2020, and if no agreement can be reached by 4:00pm on 28 February 2025, the parties must apply to the Small Business Commissioner to appoint one pursuant to section 37(3)(b) of the Retail Leases Act 2003 (Vic).
3	Costs reserved.
4	Any application for costs must be filed and served by 4:00pm on 14 February 2025, and any replies must be filed and served by 4:00pm on 28 February 2025. Member Kincaid will make any costs order on the papers.

A Kincaid
Member			

APPEARANCES:		
For Applicant	Mr L Virgona of Counsel	
For Respondent	Mr A Burnett of Counsel	

REASONS
INTRODUCTION
1	The applicant is the registered proprietor and landlord of premises at Suite 1.02, 801 Glenferrie Road, Hawthorn (the “Premises”). The Premises are one of three separate tenancies on the first floor of the building.
2	The respondent is the tenant of the Premises under a retail lease, which commenced on 1 June 2015 with an initial term of five years (the “Lease”).
3	In accordance with the terms of the Lease, the respondent exercised its option for a further term, which triggered a review of the current market rent from 1 June 2020. 
4	By a valuation report dated 1 June 2020 representatives of Knight Frank Valuation and Advisory Victoria provided to the respondent their suggested valuation of the current market rent of the Premises at 1 June 2020 (the “Knight Frank Report”). 
5	In early 2021, Mr Shane Close of Charter Keck Cramer provided to the applicant his valuation report dated 1 June 2020, containing his suggested valuation of the current market rent for the Premises. 
6	As is usual, the parties respectively provided the valuation reports that they had obtained to the valuer jointly appointed by them to make a determination of the current market rent from 1 June 2020, Mr Courtney of R.L. Courtney Pty Ltd (the “Valuer”). 
7	On 13 December 2021, the Valuer delivered his rental determination (the “Determination”) in which the learned valuer determined the current market rent of the Premises on 1 June 2020 as $174,797 per annum plus GST (the “Current Market Rent”). 
8	The Current Market Rent of $174,797 per annum for the premises comprised $145,757 for rental by the applicant of office space at the Premises, and $29,040 for rental of car park spaces at the Premises.
Relevant provisions of the Act
9	Section 37 of the Retail Leases Act 2003 (Vic) (the “Act”) provides, in part:
37		Rent reviews based on current market rent
(1)	A retail premises lease that provides for a rent review to be made on the basis of the current market rent of the premises is taken to provide as set out in subsections (2) to (6).
(2)	The current market rent is taken to be the rent obtainable at the time of the review in a free and open market between a willing landlord and willing tenant in an arm’s length transaction having regard to these matters:
(a)	the provisions of the lease;
(b)	the rent that would be reasonably expected to be paid for premises if they were unoccupied and offered for lease for the same, or a substantially similar, use to which the premises may be put under the lease;
(c)	…
(d)	…
but the current market rent is not to take into account the value of goodwill created by the tenant’s occupation or the value of the tenant’s fixtures and fittings.
…
(5)	In determining the amount of the rent, the specialist retail valuer must take into account the matters set out in subsection (2).
(6)	The valuation must-
(a)	be in writing; and
(b)		contain detailed reasons for the specialist retail valuer’s determination; and
(c)		specify the matters to which the valuer had regard in making the determination.
Grounds relied on by the applicant
10	On 5 October 2022, the applicant commenced this proceeding seeking to have the Determination declared void and to be of no effect, on the basis that it was not made in accordance with either the terms of the Lease, or the provisions of the Act, in that:
(a)	the Valuer failed to provide detailed reasons within the meaning of s 37(6) of the Act; 
(b)	the Valuer failed to properly have regard to the rent that would reasonably be expected to be paid for the Premises if they were unoccupied and offered for lease for the same, or a substantially similar, use to which the Premises may be put as required by s 37(2)(b) of the Act; and
(c)	the Determination was not made in accordance with the Valuer’s terms of appointment, as it contained material mistakes of fact.
11	The applicant needs only to succeed on one of these grounds for the Determination to be set aside.
12	The applicant filed a short witness statement of Dennis Saccardo, (the “Saccardo Witness Statement”), which deals with a discrete factual point concerning the physical characteristics of the Premises. 
13	The respondent filed an affidavit by its director, Jane Marie Ford, (the “Ford Affidavit”), which in part responds to the Saccardo Witness Statement, but which otherwise raises matters which, the applicant submits, have no bearing on the issues required to be determined by the Tribunal.
Relevant Legal Principles
14	Turning first to the substantive issues in dispute, it is well-established that expert determinations can only be set aside in exceptional circumstances. 
15	In Legal & General Life of Australia Ltd v A Hudson Pty Ltd, McHugh JA stated:
In my opinion the question whether a valuation is binding upon the parties depends in the first instance upon the terms of the contract, express or implied… It is now settled that an action for damages for negligence will lie against a Valuer to whom the parties have referred the question of valuation if one of them suffers loss as the result of his negligent valuation: Sutcliffe v Thackrah; Arenson v Arenson. But as between the parties to the main agreement the valuation can stand even though it was made negligently. While mistake or error on the part of the Valuer is not by itself sufficient to invalidate the decision or the certificate of valuation, nevertheless, the mistake may be of a kind which shows that the valuation is not in accordance with the contract…In each case the critical question must always be: Was the valuation made in accordance with the terms of a contract? If it is, it is nothing to the point that the valuation may have proceeded on the basis of error or that it constitutes a gross over or under value. Nor is it relevant that the Valuer has taken into consideration matters which he should not have taken into account or has failed to take into account matters which he should have taken into account. The question is not whether there is an error in the discretionary judgment of the Valuer. It is whether the valuation complies with the terms of the contract.
5	In Commonwealth of Australia v Wawbe Pty Ltd, Gillard J adopted the above passage, and also stated (at [45]):
In my opinion it follows that the court should consider three questions-
(i)	What did the parties agree to remit to the expert?
(ii)	Did the valuer make a mistake and what was the nature of the mistake?
(iii)	Is the mistake of such a kind that demonstrates that the valuation was not made in accordance with the terms of the contract and accordingly does not bind the parties?
6	The Tribunal’s task, when faced with a challenge to an expert determination, was also described by Croft J in Epping Hotels Pty Ltd v Serene Hotels Pty Ltd as follows:
As the authorities make clear, the Tribunal’s task was to consider whether the Rental Determination answered the contractual description of what the valuer was required to do. For present purposes, it is sufficient to note that, by virtue of s 37(1) of the Act, sub-s (2) is taken to be a term of the lease, that is, a term of the contract between the parties. Therefore, the valuer was required to make a determination that accorded with the requirements of that sub-section.
7	In Higgins Nine Group Pty Ltd v Ladro Greville St Pty Ltd, after reviewing the authorities, Croft J discussed what is asked of a Valuer when providing reasons which comply with s 37(6) of the Act. His Honour relevantly noted:
It is clear that it is not sufficient for a valuer to “leap to a judgment”: the valuation must disclose the steps of reasoning. This position is, in my view, reinforced by the provisions of s 37(6) of the Retail Leases Act. Not only does para (b) of this sub-section require “detailed reasons” for the valuer’s determination, but in para (c), adds the requirement that the valuer “specify the matters to which the valuer had regard”. These provisions are relevantly the same as the New South Wales equivalent provisions considered in Adwell. Clearly, both the Victorian and New South Wales provisions eschew and do not entertain any “blinding flash of light” as satisfying their “requirements”.
First ground of challenge-an alleged failure to provide detailed reasons
8	The primary basis on which the applicant challenges the Determination is that the Valuer did not provide detailed reasons for the Determination within the meaning of s 37(6)(b) of the Act. 
9	The applicant submits that this is demonstrated by the manner in which the Valuer dealt with both comparable rental evidence, incentives provided to tenants as a result of the COVID-19 pandemic and the way in which the Valuer has calculated the Current Market Rent. 
Alleged failure to provide details of comparable rental evidence
10	The applicant makes the following criticisms of the manner in which the Valuer dealt with comparable rental evidence: 
(a)	he did not provide sufficient detail of the physical features upon which he relied when carrying out his evaluation of comparable premises; and
(b)	he did not provide sufficient details regarding the comparable premises on which he states to have relied.
11	In respect of the first criticism, the Valuer commences his discussion on comparable premises by explaining the methodology which he has used, stating:
The current rental value of the subject is primarily reflected in an analysis of rental evidence for comparable premises. Where such evidence is obtainable, the Direct Comparison Methodology is the most appropriate approach to be used.
The primary basis of my current market assessment has been in comparison with other premises within the general location having regard, inter alia, for use, size, state of repair, age, amenity, location, outgoings, etc (emphasis added).
12	The applicant submits that by his use of the abbreviation “etc”, it is entirely unclear as to what other features or matters the learned Valuer was apparently considering beyond those matters he expressly describes. The reader, it submits, cannot be expected to have any idea whatsoever of what the additional matters which are said to be “[t]he primary basis of [the Valuer’s] current market assessment” may be. 
13	I agree with the submission of the applicant that it is inappropriate for a specialist retail valuer to list a number of matters which are said to form the basis of the matters on which the valuer relies in reaching a determination, before providing an express indication that there are a number of unspecified additional considerations concerning which neither party has information as their content or relevance.
14	In my view, the form of this recitation of the supposed matters which are said to form the basis of the Valuer’s considerations with respect to comparable rental premises is open-ended, and does not sufficiently “specify the matters to which the [Valuer] had regard in making the [Determination]”, contrary to s37(6)(c) of the Act. 
15	In respect of the second criticism, the applicant relies on the following extract in the Determination: 
The evidence [I consider] to be of greater comparability contains some or all of the following elements:
•	Location
Commercial office tenancies within the neighbourhood or nearby locations
•	Size of Premises
Tenancies generally in the range of 200-500 square metres 
•	Use 
Substantially similar office premises, 
•	Date/timing
New Lettings or freely negotiated rent reviews preferably within 3 to 9 months prior to the relevant date
I been able to [analyse] rental evidence that satisfies the above requirements and believe I have identified enough evidence of comparability (emphasis added).
16	The applicant submits that the nature of the rental evidence the Valuer refers to is not entirely clear, and that the reader cannot be expected to understand what weight was given to any of the “elements” which are said to be of “greater comparability”.
17	Critically, the applicant submits, the Valuer subsequently makes the following statement:
In accordance with the lease and relevant legislative provisions I have had primary regard to open market lettings and rental evidence from premises in the neighbourhood. 
…In accordance with Clause 38 of the Retail Leases Act 2003, a significant portion of the rental evidence provided by the parties or obtained by me during this determination process is subject to confidentiality. Included within this information is a schedule of rentals within the subject building (requested by me) that has been provided on a confidential basis. 
The rental evidence considered was of premises which ranged in size from approx. 300 to 520 square metres and have annual net face rentals that range from $300 to $450 p.s.m.p.a., depending on factors such as size and frontage, location and age and quality of accommodation.
The rental evidence provides a rental range per car space per calendar month for covered and secure spaces of between $200 and $225 per car space per month plus GST.
Due to the confidentiality requirements discussed above I am unable to provide full specific details of each transaction (emphasis added).
18	I agree with the applicant’s submission that the dimensions of the comparable rental evidence have changed from the previously stated “element” of “200-500 square metres”. Why the Valuer has made this has not been made clear, as no explanation is provided.
19	This lack of explanation is even more problematic in respect of the failure to provide any detail or explanation whatsoever of how the further matters identified in the statement – being size and frontage, location and age and quality of accommodation - have been considered in the process of determining the current market rent. 
20	I find that a reasonable reader in the position of one or both parties to the Determination is therefore left to speculate on the elements taken into account by the Valuer when assessing comparable premises for the purpose of his arriving at a valuation of the Current Market Rent.
21	Further, the factors which the Valuer has apparently relied upon – being size and frontage, location and age and quality of accommodation – can readily be included in a valuation report (and almost always are), together with rental amounts, as a means to explain to a reader how each of those elements affect the current market rent of the premises the subject of the valuation. 
22	Here, I find, the Valuer has not undertaken a sufficient exposition of these considerations, and his not doing so is not in accordance with the requirement under s 37(6) of the Act to provide detailed reasons in a rental determination.
23	I should add that a common basis expressed by valuers for failing to provide detailed reasons as comply with s 37(6) of the Act, which is also apparent from the last paragraph of the above quoted extract from the Determination, is a reliance on the confidentiality provisions of s 38 of the Act. Despite the Valuer’s insistence that these provisions prevent him from disclosing any more information relating to the comparable premises, the Act does not allow:
…a Valuer to rely on confidential information provided to him for the purposes of reaching a market rental determination without disclosing that information to the parties to the lease in question or to use the cover of confidentiality to fail to provide detailed reasons for his determination (emphasis added).
Alleged failure to provide a basis for a 20% reduction as a COVID-19 incentive
24	The second aspect of the Determination which, the applicant submits, fails to comply with s 37(6) of the Act is the manner in which the Valuer has dealt with leasing incentives apparently provided by landlords in response to the COVID-19 pandemic. 
25	The applicant relies on an extract from a decision of the then Queensland Retail Shop Lease Tribunal in Kumari v Goa, concerning a similar case, in which were made the following observations: 
Nothing in these reasons for decision is meant to encourage a hypercritical approach to the decisions of specialist retail valuers. But due weight must be given to the legislature’s demand for “detailed reasons”, when not inconsiderable fees are charged for reports of this nature. It seems to us that this requirement is not satisfied by a decision padded with preliminary, non-contentious material, purportedly based on “a full consideration” of relevant facts, followed by a leap to judgement. We recall the advice of Sir Frank Kitto, former Justice of the High Court, to those called upon to give “detailed reasons”. Such a task, involves more than-
…[recitation of] the facts in a degree of pedestrian detail that scorns to [indicate] those that really bear on the problem … and then, without carefully worked out steps of reasoning but with a “blinding flash of light” … produces the answer with all the assurance of the divine revelation.
26	The applicant submits that the Valuer has not provided carefully laid out steps of reasoning as would have provided an explanation of why an incentive of 20% was deemed by him to be appropriate in the present circumstances.
27	It will be recalled that the Valuer was in possession of the Knight Frank Report which, the Valuer notes, contained “information in respect of incentives provided…”
28	The incentives reported on in the Knight Frank Report ranged from 1% to 26%. The Knight Frank Report also observed that the latter incentive may possibly be considered by the Valuer as an outlier, and that the range of incentives for comparable premises in the inner eastern suburb areas of Melbourne was in the order of 5%-10%. 
29	The Valuer mentions expressly only one incentive to which he has had regard, being 18% in respect of level 2 of premises at 313 Burwood Road, Hawthorn (the “Burwood Road Property”).
30	After reciting introductory facts about the COVID-19 pandemic and the Victorian government’s response to it, the Valuer states:
Between January and March [2020], the leasing market was at an almost standstill and landlords wishing to lease premises started offering incentives by way of rent-free periods and/or free fit outs etc.
At the relevant date, 20 June 2020 (sic), the leasing market was profoundly affected, with incentives being given. The higher rates applied to larger or longer-term leasing in new buildings. 
In my opinion in the event that the lease is for vacant space for a single fixed term without an option for a further term the incentive will be at the higher level.
I have applied an incentive of 20% in determining the subject’s current market rental (emphases added).
31	The applicant submits that a number of matters are readily apparent from the Valuer’s consideration of incentives relating to COVID-19.
32	First, it submits that it is again unclear, from his use of the abbreviation “etc”, as to the nature of the further matters that were considered by the Valuer. The criticisms made by the applicant in relation to the abbreviation “etc” when used in relation to comparable rental evidence are relied on with equal force in relation to the same abbreviation when used here. I find that this submission is sustained. 
33	Secondly, it submits that there is no sufficient explanation of the nature of the supposed incentives which the Valuer considers to have been offered in the leasing market at the time or, in particular, what the particular range of those incentives was (if not the range of incentives reported on in the Knight Frank Report), and on which the Valuer supposedly relied. I agree with this submission. I consider that it is necessary for a valuer to provide a reasonable description of the incentives which the valuer has taken into account, if only by referring in generic terms to the incentives reported on by valuers engaged by the parties. If the valuer chooses not to rely on these incentives, but other incentives, the valuer should state what those incentives are.
34	Third, while the Valuer notes that the ‘higher [incentive] rates applied to larger or longer-term leasing in new buildings’ it is unclear, the applicant submits, within which leasing category the Valuer considers the Premises to fall.
35	Falling within a longer term category would seem unlikely, given that the Valuer has correctly noted that there is only one five-year term remaining on the Lease. However, despite a reported relevant factor when determining the size of an incentive being whether relevant premises are offered on a long term lease (a higher incentive rate) or a short term lease (presumably a lower incentive rate), when assessing the rate for the Premises (a single fixed term lease, without an option for a further term) the Valuer decided, without explanation, to apply an incentive “at the higher level” to the Current Market Rent.
36	That is, of course, assuming that an incentive of 20% is indeed an incentive at a higher level. Once again, the reader is not afforded a description of what is considered by the Valuer to be a higher incentive, because the range of incentives relied on by the Valuer has not been particularised in the Determination. I also agree with this submission.
37	Finally, the applicant submits, the Valuer has noted that the relevant date upon which he has applied the incentive is the 20 June 2020 despite the valuation being conducted as of 1 June 2020, the first day of the further term. Given the rapidly changing retail leasing environment which existed during the COVID-19 pandemic, it is not entirely clear what effect this difference in dates may have had on the Valuer’s ultimate finding - an investigation which is again made impossible by the failure to provide any detailed reasoning, or indeed any reasoning at all, in respect of incentives associated with the COVID-19 pandemic. I find that this criticism is justified in the circumstances. 
38	I find from these three submissions that the Valuer did not provide a satisfactory basis for a 20% reduction as a COVID-19 incentive, contravening the requirement in s 37(6) of the Act to provide detailed reasons in a rental determination.
39	It follows that I prefer the submissions of the applicant concerning this ground to those of the respondent.
Second ground of challenge-alleged failure to comply with s 37(2)(b) of the Act
40	The second basis on which the applicant challenges the determination is a failure to comply with s 37(2)(b) of the Act, in that the Valuer has failed to properly have regard to the rent that would reasonably be expected to be paid for the Premises if they were unoccupied and offered for lease for the same, or a substantially similar, use to which the Premises may be put.
41	This contravention is submitted to have arisen in respect of the only premises which has been identified by the Valuer as being a comparable site, being the Burwood Road Property. 
42	While the Valuer correctly notes that the Burwood Road Property does not have the profile enjoyed by the Premises, the applicant contends that the Valuer attempts to make up for these shortcomings by referring to “compensating facilities in the form of balconies, toilets and kitchens on each level [of the Burwood Road Property]”.
43	It is this particular statement which, the applicant submits, has necessitated the Witness Statement. It cannot be said, the applicant contends, that the Burwood Road Property has the stated “compensating facilities” because, save for the balconies, the amenities identified by the Valuer are in fact also present on each floor of the building in which the Premises are located. 
44	Moreover, while the building in which the Premises is located does not have the balconies which are present at the Burwood Road Property, the Witness Statement makes clear, the applicant submits, that the building has a substantial outdoor courtyard which, arguably, more than makes up for a lack of balconies. The Determination offers no suggestion that the outdoor courtyard has been taken into consideration. 
45	The applicant submits that the Determination is opaque as to the Valuer’s reasons for considering the existence of the listed further amenities at the Burwood Road Property as compensating for its inferior profile. Upon these submissions, I find that the rationale adopted by the Valuer for favourably comparing the Burwood Road Property, a building with an inferior profile to the Premises, is not self-evident. A more detailed exposition was therefore required to be given by the Valuer in order to be satisfied that the Burwood Road Property are comparable premises to the Premises upon application of the Direct Comparison Methodology.
46	Given that the Valuer has chosen to expressly identify only one allegedly comparable premises, I consider that is a contravention of s 37(2)(b) sufficient to have the Determination set aside.
47	It follows that I prefer the submissions of the applicant on this ground to those of the respondent. 
Third ground of challenge-material mistake of fact
48	The final basis on which the applicant seeks to impugn the Determination is that it contains material mistakes of fact, such that the Determination is vitiated by error and ought to be set aside. 
49	The material mistakes of fact upon which the applicant relies are allegedly incorrect calculations upon which the Valuer has based his ultimate determination of Current Market Rent.
The Valuer’s Calculations
50	The applicant alleges that the Valuer has made various errors of calculation upon which he has based his conclusions.
51	First, with regard to the section in the Determination titled ‘Assessed Market Rental (Office Area)’, the Valuer states:
I am of the opinion that the current market face rental rate of [the Premises] is $400 per sq. metre per annum (net), and that an incentive equal to 20% of the “total office rental is applicable. 
52	The Valuer partly bases his valuation of $400 p.s.m.p.a. for the first year of the second term of Lease of the Premises (prior to increasing this figure to $429 p.s.m.p.a) on a calculation of $397.00 rent per square metre for the Burwood Road property. The applicant submits that the Valuer’s calculation of the $397.00 is incorrect: 
…the Valuer notes that the property has an area of 300 [square metres]. The Valuer then goes on the state that the office was leased for $126,649 per annum, which included four car park spaces at $9,600 per annum. Based on this, the Valuer then calculated the rental figure to be $397 per square metre per annum. This calculation is incorrect. Deducting the amount of $9,600 from $126,649 leaves an amount of $117,049. [Dividing $117,049 by 300 square metres leads] to a net per square metre amount [of] $390.16.
53	The respondent agrees that this error has occurred, but submits that the error is immaterial. I agree. Whether a rental of $390.16 p.s.m.p.a. or $397 p.s.m.p.a is arrived at in respect of an allegedly comparable property, both figures might equally form a basis for the reasonable conclusion that a rounded up figure of $400 is applicable.
54	Second, the applicant submits that:
…with regard to the incentives said to have been taken into account in reaching the ultimate valuation as to Current Market Rent, the Valuer notes that the [assessed] current market rental prior to any deduction for incentives is $185,560 for the first year of the Lease, being a rate of $400 p.s.m.p.a [applied to the 463.9 square metre area of the Premises]. The Valuer then notes that this is subject to an annual increase of 3.5%, and then applies those increases to find [that] “for the term of the lease will result in a total [rental payments] of $995,060, an average of $429 p.s.m.p.a.”
55	The applicant challenges the means by which the Valuer then adopts the “average rate” of $429 p.s.m.p.a. for the Premises over the balance of the term of the Lease as the rent for the first year of the further term from 1 June 2020, prior to a deduction to take account of incentives.
56	The applicant submits, in effect, that the Valuer has not made clear in his reasons why he did not simply apply a 20% incentive deduction to the gross rental amount of $185,560 as assessed for the first year of the further five year term, in which case the benefit to the respondent of the 20% incentive would still apply over the term of the Lease. Instead, the Valuer chose to assess the rent for the first year by calculating the 3.5% increases from the $185,560 rental for the first year (to which the applicant was entitled over the subsequent four years) so as to achieve an “average rate of $429 p.s.m.p.a. for the 1st year” and against which rate, it appears, the Valuer intended to apply a 20% incentive deduction. 
57	In summary, therefore, the Valuer has calculated the average of the expectant rates per square metre over the remaining term of the Lease, and used the figure so arrived at ($429 p.s.m.p.a) as the starting point for the rent to be paid for the first year of the second term of the Lease. The applicant contends that this has resulted in a windfall to the applicant, as the average rental figure to be paid by the respondent will necessarily be higher than the rent that would otherwise be paid by the respondent for the first year of the further term of the Lease as otherwise assessed by the Valuer ($400 p.s.m.p.a.).
58	I consider that readers in the position of one or both of the parties would be left wondering why the Valuer chose not to calculate the rental for the first year of the second term at $400 p.s.m.p.a.(subject to a reduction for the relevant incentive), rather than adopting the process whereby he found the rental for the first year of the second term to be $429 p.s.m.p.a.(subject to a reduction for the relevant incentive). 
59	I am unable to find, however, that the Valuer has made a vitiating error of calculation here, because there is no evidence of the established valuation techniques open to be taken by a valuer (if indeed there is more than one) when determining current market rent. 
60	Rather, I find that where a reader might reasonably consider that a technique adopted by a valuer for determining the current market rent for the first year of a second or subsequent term of a lease is at odds with an alternative more logical technique, the Valuer is obliged to provide an explanation as supports the proposition that the adopted technique is grounded in established principles of valuation. I find that the failure to do so in this case results in a conclusion that the Valuer has not provided detailed reasons within the meaning of s37(6)(b) of the Act. 
61	Third, the applicant challenges the calculation by which the Valuer has applied the incentive deduction of 20%.
62	In the words of the Valuer:
After an incentive of 20% is applied, the effective rental rate is $314.20 p.s.m.p.a. for the 1st year. 
63	How the figure of $314.20 is arrived at is one of contention between the parties on the pleadings but, in any event, the applicant submits that the figure is infected by error.
64	The alleged error is that, if one subtracts 20% off the average rental rate of $429 p.s.m.p.a., as the Valuer appears to have stated he has done, the amount arrived at is $343.20 p.s.m.p.a, not $314.20 p.s.m.p.a.
65	In its attempt to explain this apparent error, in the particulars to paragraph 9 of its Points of Defence the respondent sets out the following series of different calculations by which the Valuer used should have arrived at a figure of $312.00:
The calculation of a rental rate of $400 multiplied by the size of the Premises in square metres (463.9) is $185,560. The Valuer has removed an amount of 20% as the incentive to leave a yearly rental amount of $148,448. The total can be multiplied by the annual increase in rental of 3.5% over a five-year period to reflect a total rent over the five years as $796,047.33. That total can be divided by the respective size of the premises (463.9) over each of the five years. The average amount for each year is $343.20. The Valuer has then removed GST by dividing $343.20 by 1.1 to leave a net rent per square metre exclusive of GST as $312.00 the Valuer has incorrectly calculated this as $314.20. The immaterial difference between $314.20 and $312.00 is $2.20.
66	It is clear, I consider, as a matter of construction of the Determination, that the starting point of the Valuer’s calculations, being “$400 per sq. metre per annum (net)”, is a reference to a GST exclusive figure. In other words, GST has not been included in any of the figures used to arrive at the figure of $429.00 p.s.m.p.a., or indeed the figure of $314.20 which is stated to apply after the incentive of 20% has been take into account. Therefore, on the respondent’s own case, the only way in which the figure of $312.00 is to subtract GST from an amount which is expressed not to include GST. 
67	While, of course, it is accepted that not all mistakes of fact will be sufficiently serious to vitiate an expert determination, in circumstances where the only task which the Valuer is asked to undertake is to determine the Current Market Rent of the subject property, I consider that that the calculation error which distorts that final figure assessment of the current market value is sufficient to have a determination set aside.
68	So much is suggested by Nettle JA (as his Honour was then) in AGL Victoria Pty Ltd v SPI Networks (Gas) Pty Ltd, where his Honour said:
Therein lies the distinction drawn in some of the authorities, and observed by the judge in this case, between an error in the exercise of a judgment, opinion or discretion entrusted to an expert, and an error which involves objective facts or a mere mechanical or arithmetical exercise. Subject to the contract in question, it is easier to suppose that parties to a contract contemplate than an error of the former kind be beyond the realm of review than it is to think that they intend to be fixed with errors of objective fact or in processes of mechanical calculation.
69	I do not accept the submission of the respondent to the effect that the error in calculation of the effective rental rate in the amount of $314.20 p.s.m.p.a. is immaterial.
70	The Valuer has failed to provide an adequate explanation of his calculations as may have provide a rationale for the figure of $314.20 arrived at by him. Where a figure in a rental determination, such as the rent per square metre, leaves room for reasonable debate between the parties as to how the figure was arrived at, I find that the determination has failed to comply with the requirements of s 37(6) of the Act by providing detailed reasons for the determination.
71	I have concluded that the error in calculation cannot therefore readily be cured by the process of reasonably construing the document. Such an error is therefore vitiating in nature, and leads to a conclusion that the Determination be set aside.
Objections to Evidence
72	Finally, the applicant objects to a number of paragraphs of the Respondent’s Affidavit, primarily on the basis that those paragraphs have no relevance to the issues for determination by the Tribunal in this proceeding. The paragraphs are: 
6-7, 21-28, 30, 31. 
73	The basis for the objections may be summarised as follows.
74	In respect of paragraphs 6 and 7, any effect on the respondent’s business by reason of the COVID-19 pandemic, and whether or not the respondent qualified for any government mandated assistance due to COVID-19, has no relevance or bearing on the question of whether the Valuer has complied with his obligations under s 37 of the Act. 
75	In respect of the balance of the paragraphs referred to above and which are objected to on the basis of relevance, I have concluded that those paragraphs appear to be evidence which would perhaps be more appropriately adduced in a proceeding where a tenant has alleged a landlord has failed to properly maintain premises under a retail lease. 
76	Whether or not the property “is tired and needs work”, whether there are problems with the elevator, or whether there are ongoing issues with the air conditioning unit, are not matters which the Valuer has referred to in the reaching his conclusions in the Determination, and cannot now be used in aid of a submission concerning the status of the Determination. 
77	If indeed there are physical problems with the Premises which the respondent appears to suggest should affect the Current Market Rent at the Premises, one might expect a valuer, cognisant of their obligations under s 37(6) of the Act, to include those matters in a determination.
78	I have not had regard to paragraphs 6-7, 21-28, 30 and 31 of the Ford affidavit filed on behalf of the respondent, for the reasons relied on by the applicant. 
Conclusion
79	For the reasons set out above, the Valuer has failed to comply with his obligations under both the terms of his appointment, and under the Act.
80	There will be orders that the Determination be set aside.

A Kincaid
Member