STOCKLAND’S QUINN PREFAB FUTURE RENT REVIEWS House prices ‘blatantly unfair’ Prefabricated housing comes of age Linking rent to CPI out-dated AUSTRALIA AND NEW ZEALAND JOURNAL

PROPERTYJune 2012 Vol 3/No. 6 $12.95 (incl GST)

THE INTERNET TRANSFORMING PROPERTY Print Post Approved PP246764/00006 Print Post Approved A.R.B.N. 007 505 866 ABN 49007 ISSN 1836-6635 PINZ ISN 100 1330

THE OFFICIAL JOURNAL OF THE AUSTRALIAN PROPERTY INSTITUTE AND THE PROPERTY INSTITUTE OF NEW ZEALAND

OFC.indd 1 6/7/2012 3:06:55 PM 26th Pan

MELBOURNE CONVENTION CENTRERRE 1 – 4 OCTOBER, 2012

Join 500 of your peers at the Pan Pacifi c congress in October and exchange information, gain insight into the culture and Australian real estate market.

Speakers from around the world will present on Global Cities, Global Challenges, Global Thinking with topics including the international economy, property recovery following natural disasters, business valuations, green property development, property management, funds and asset management.

Register by 10 August for limited early bird discount www.2012panpac.api.org.au

ANZPJ_DPS_PanPacificCongress.indd 2 6/7/2012 3:14:11 PM Pacific Congress of Real Estate, Valuers, Appraisers and Councellors

TOP REASONS TO ATTEND: FEATURED KEYNOTES: PARTICIPATE in an engaging STEPHEN JOHNSTON, programme that will provide cutting Korn Ferry International edge industry updates JEFFREY KENNETT AC, EXPOSURE to the smartest and most Premier of Victoria 1992-1999 effective business strategies and ideas to help property professionals drive their businesses DAVID REES, Jones Lang La Salle GAIN insights from industry experts and real-world experience through the varied STEVE SHERMAN, program showcase International Valuation Standards Council

NETWORK with your peers, compare DR GLENN SINGLEMAN, notes, seek advice, make connections BASEClimb

ANZPJ_DPS_PanPacificCongress.indd 3 6/7/2012 3:14:51 PM CONTENTS JUNE 2012 402 COVER STORY The internet economy’s impact on the property industry REGULARS FEATURES

API NATIONAL PRESIDENT’S 390 2011 ANNUAL REPORT

PINZ PRESIDENT’S 392 REPORT

394 API CEO Q&A RESIDENTIAL’S SUPPLY OPINION PREFAB FUTURE CHAIN TRENDS 401 Welcome to the 410 422 new economy Prefabricated housing is The implications for becoming globally accepted industrial property AUCTIONEER PROFILE 409 My Auctioneer’s Kate Lumby

PROPERTY PROFESSIONAL PROFILE 450 Becton Group’s Matthew Chun

LEGAL NOTEBOOK PRIVATE PROPERTY RIGHTS Recent cases, headline 464 The legal aspects of the compulsory issues and new legislation 472 acquisition of land

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386-388_TableOfContents.indd 386 6/6/2012 4:01:03 PM RETAIL QUEENSLAND FPP PROGAM 440RENT REVIEWS 452TORT REFORM 468 The importance Why linking rent reviews to Valuer liability has become of the Future Property CPI increases is now out-dated increasingly complex Professionals (FPP) program

STOCKLAND’S PLANT & MATTHEW QUINN MACHINERY LAW 398Australia’s house prices 430 Towards a legal notion ‘blatantly unfair’ of plant and machinery as personal property

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Australia Property Institute CEO David Haythorn Financial Accountant Zainab Mwamtenda 6 Campion St, Deakin, ACT 2600 CFO Andrew Tregenza Financial Accountant David Lucchetti Property Institute of New Zealand CIO Joel Leslie Administrative Assistant: Barbara Channell Level 5, 181 Willis Street, Wellington, New Zealand Executive Assistant!Jill Lewis Online Content Offi cer: Zoe Wolfendale Editor: Tim Lohman Technology Manager Iain Smith Professional Standards Manager: Tony McNamara Production Manager: Rohan Pearce Education & Training Manager Tracy Kriesel Professional Indemnity & Compliance Manager: Betty Warner-Lehman Sub Editor: Rebecca Merrett API PINZ Creative Director: Fletcher Guinness President and Publisher: Barbara Simon API National President Philip Western PINZ National President Phil Hinton API Senior Vice-President Chris Plant PINZ Immediate Past President Ian Campbell EDITORIAL COMMITTEE API Junior Vice-President Tony Gorman PINZ National Board API Immediate Past President I Campbell, G Barton, G Munroe, Managing Editor: Joel Leslie Nick McDonald Crowley B Hancock, P Hinton, I Mitchell, M Dow, P Merfi eld (Independent) • Professor Richard Reed API National Council Chief Executive Offi cer David Clark • Michelle Glastris N McDonald Crowley (ACT), J Eager (NSW), C Plant (VIC), C Harris (QLD), • Professor Chris Eves J Pledge (SA), P Western (NSW), J Forsyth • Sean Ventris (VIC), A Cubbin (TAS), D Moore (WA) • Ian Flynn National Director David Haythorn

• Amy Guy PRODUCED BY • Gail Sanders IDG Communications Editorial: • Tracy Kriesel for the Australian Property Institute. [email protected] Advertising: MARKETING AND [email protected] COMMUNICATIONS Ph: + 61 2 9902 2706 Level 22, 8-20 Napier Street Joel Leslie, API National Offi ce North Sydney, NSW 2060 Subscriptions Ph: +61 2 9902 2700 [email protected] Ph: +61 2 6282 2411 CONTRIBUTORS

The Australia and New Zealand Property Journal is published slander, unfair competition, trade practices and any violation Rita Avdiev, Andrea Blake, by the Australian Property Institute (API) and the Property of the rights of privacy. Mark Courtney, Lucy Cradduck, Institute of New Zealand (PINZ) for the members. Authors, contributors and advertisers warrant that the Maurice Dunlevy, Chris Eves, The Publishers invite authors to submit articles of material supplied complies with all laws and regulations Phil Hinton, Alan A Hyam, interest that further professional practice in the property and that publication of the supplied material will not give industry. Articles of 500 to 5000 words will be considered. right to claims of liability or are being capable of being Lindsay Joyce, Carlton King, Guidelines for authors are available from the publishers. misleading or deceptive or in breach of respective laws in Tim Lohman, Anthony Mills, The Publishers reserve the right to alter or omit all States and Territories of Australia and New Zealand. James Morse, Richard Reed, any article or advertisement submitted. Authors and At times, the Australia and New Zealand Property advertisers indemnify the Publishers and publishers’ agents Journal publishes technical material to assist professional John Sheehan, Phil Western, against damages and liabilities that may arise from the practice as supplied by authors and 3rd party sources. Xioalin Zhai. published material. The Editor accepts no responsibility for the expressions, Advertisers, advertiser agents and representatives opinions, outcomes or effectiveness of formulas or lodging material with the Publishers indemnify the calculations contained in those articles. Readers Publishers, its servants, staff and agents against all claims of should seek independent, specialist advice on matters liability or proceedings in relation to defamation, trademark concerning business practice, fi nancial outcomes and infringement, breeches of copyright, licences and royalty, legal implications.

388_Publishers_Information.indd 16 6/7/2012 12:42:50 PM iPad & Bluetooth DISTO – Sketching just got easy ValuePRO empowers valuers throughout Australasia.

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Find out how to get more out of every day... Australia: New Zealand: Call 1300 88 60 35 Freecall: 0800 000 686 EMPOWERING YOUR PROPERTY VALUATION BUSINESS www.valuepro.com.au www.valuepro.co.nz t is with pleasure that I was recently able to present, on behalf of National Council, the 2011 Annual Report of the Australian Property Institute (API). If Ianything can be said of 2011, it is that it was a year of challenges and changes. I am pleased to report that the through the ongoing support of the National Council, the National and Divisional Council teams, as well as the dedicated volunteers we have, the API was able to position itself well to meet the challenges of the future. During my seven months as National President, I have visited numerous Divisions and engaged face-to-face with the membership to better understand how the API can improve its services to members and ensure that we continue to remain of value to members. Feedback from our members suggests we need to ensure that our continuing professional development (CPD) programs remain relevant to our diverse membership; that the Property Journal has a more practical orientation; that we make our membership more aware of what services are available through the API and how these services can better assist them. COMMUNICATION AND TECHNOLOGY With regard to these needs, communication and technology PHIL WESTERN FAPI remains core to the API’s interaction NATIONAL PRESIDENT with its membership. During 2011, AUSTRALIAN PROPERTY INSTITUTE communication and technology at the API delivered crucial change: A new API website, a dramatic refresh of the Property Journal and completion of the Institute’s new customer relationship management (CRM) system. The new Find a Property Professional online directory was also finalised for release in 2011 and is based on the new API website foundation. This is

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a great initiative for API members to a number of modules ranging undertaken by the University of showcase and publicise their services. from Inspection, Recording Western Sydney and the University If you have not yet enrolled at the and Measurement to Written of Maastricht, Netherlands. A key Find a Property Professional website, Communication to API Ethics and finding of the research was evidence you should enrol immediately Code of Professional Conduct. Now suggesting that major discounts in at: www.professioanls.api.org.au. in 2012, there are further modules value have been occurring in the lower The new API website, which began in development and these will be energy rated office buildings. development in 2011, will be completed available online soon. Feedback on the shortly and will feature ongoing program to date has been excellent. APIV LIMITED LIABILITY SCHEME improvements, such as the adoption The FPP Program will ensure that The APIV Limited Liability Scheme of the API Events website and an our membership has the prerequisite is now operational in every state and innovative member interaction portal. skills and knowledge to ensure that territory with the exception of Tasmania The API is utterly committed to the profession continues to be at the and membership of the scheme is improving member services, and the forefront of the property industry to growing steadily. During 2011 and early Institute completely recognises that meet the challenges of the future. 2012, a number of important changes technology must be the foundation for were implemented to the APIV Insurance delivery of new forms of communication PROFESSIONAL PRACTICE Standards which form part of the and services to members. The National Professional Board and scheme. These changes allowed members the Australian Valuation and Property greater flexibility in participating in the PROPERTY JOURNAL Standards Board have also had a scheme, and the establishment of the Driven by member feedback in 2011, busy year in 2011, with a number of Corporate Membership class enabled this year’s first Australia and New guidance notes for our members being firms themselves to become members of Zealand Property Journal experienced issued. Importantly, a review of both the scheme and participate in its benefits. a facelift aimed at increasing its the Code of Ethics and the Rules of During 2011, a number of face-to-face readership and shift in editorial Conduct also took place during the roadshows were held on the scheme content to become more relevant year and have now been combined as well as the revised Property-Pro. to API members. Not only did the into one document. In addition, a These roadshows were well received by Journal become more contemporary, major review of the Property PRO members, and it is the intention of the it entered the modern age through residential supporting memorandum API to continue to provide this service becoming available as an iPad version also took place. The International throughout 2012. and downloadable electronic version Valuation Standards Council (IVSC) for the first time. also announced that the existing IVSC INSURANCE MARKET standards would be withdrawn and In the past 18 months, we have seen the FUTURE PROPERTY new standards were released effective withdrawal of about six syndicates PROFESSIONALS (FPP) January 2012. The API is currently from the Australian market. The API The launch of the Future Property determining how these will be is acutely aware that some members are Professionals (FPP) program in the incorporated into professional practice. experiencing difficulties obtaining PI third quarter of 2011 was an exciting insurance. That said, there have been step for the API. The program, which SUSTAINABILITY a number of new insurers which have was rolled out on a voluntary basis Sustainability was also on the agenda entered the valuer PI market in the in September, is designed to further in 2011, and the API continues last seven months. This should offer the knowledge of members, or to be one of the leading property members some much-needed choice and those seeking membership, through organisations in the area. In September relief. We have also successfully worked attaining either the Residential 2011, the API, in partnership with the with a number of insurers to develop Practising Valuer (RPV) or Certified Australian Direct Property Investment a new PI policy specially designed for Practising Valuer (CPV) designation. Association, released the results of the valuers engaged in lower-risk valuations Using the online training tool, Building Better Returns sustainability (non-mortgage/financial security) at members have been able to study research project. The project was very reasonable premium prices. „

391

390-391_APIReport.indd 391 6/6/2012 3:11:10 PM he state of the New Zealand property market has been PINZ continually underpinned by a low interest rate environment. Given Tglobal and local economic conditions, PRESIDENT’S this environment is expected by many commentators to continue for some time yet. On the back of interest rates, the REPORT housing market has responded quickly, particularly in the major metropolitan areas such as Auckland, while residential conditions in Christchurch post earthquake have remained both challenging and skewed, particularly in terms of residential rentals which have ramped up demand and limited stock. In the commercial market, demand still remains for good quality investment properties, particularly those with low tenancy risk underpinned by lessee quality and a long-term lease. Property owners have returned to the fundamental aspects of looking for the lowest investment risk profile possible, and heavily penalising properties where vacancy risk, in particular, remains an overbearing factor. Within this environment, members in practice throughout New Zealand appear in general terms to be facing a solid work load, particularly in Christchurch where the recovery effort and activity levels are now starting to increase. The Institute has a significant role to play in the development of members’ skill sets, and the professional pathways programme now has online modules including professional ethics, property law, professional risk, professional standards and inspections, as well as recording in measurement. A number of other modules are completed and under moderation and review, or else under development. In the past,

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this core information from within the looking to provide quality assurance Further development on the Institute was not easily available in such systems for other communities residential valuer fee guideline project an accessible form and what has now such as Property Management, and is underway, with an aim to have this been created will provide a consistent Facilities Management, as well as in draft form by mid-2012. At the transition process for members Property Advisory. recent round of AGMs held around seeking to improve their knowledge Legislation areas continue to be the country, both David Clark and I and skills within the industry while part of the Institute’s activity that received feedback from valuer members ensuring membership classification and remains strong. At the present time involved in the residential sector that a registration is properly earned. the Real Estate Agents Act and its fee guideline like this could help arrest Provision of external learning administration arm, the Real Estate some of the erosion in fee levels for or information supplied to non Agents Authority, is still an area of residential valuation work. PINZ members has been the main concern to a number of our members, Also at the recent branch AGM visits, reason for the creation of Property particularly those in the property members concerns about how they Education and Training Limited. management and consultancy sectors become more front end in the property This company has been created of the market. We have real concerns market, rather than back end, continues by the Institute as a platform to around the wide ranging nature to surface. As in any business, the need provide external parties e-learning of this legislation and its potential for the practitioner to become top of opportunities, with a number of impact (even though our members mind with his or her client when they strong enquiries now being pursued. are understood not to be on the are considering property matters is the The quality assurance system Authority’s radar) both the property key to success. If this can be achieved, initiated by PINZ during the past managers and property advisory the transition from being “fee takers” 12 months is continuing to gain communities are working together to to “fee makers” becomes more realistic. momentum. Interest in the scheme, navigate a way through the barriers I’m convinced that too many times our particularly from small to medium that transactional type work can bring members’ property skills, experience and sized firms, has been very strong and when not carried out by a licensed ability to add value to clients’ businesses as at the date of writing this report real estate agent. are not fully developed with their client some 140 member firms have expressed In addition, PINZ has been base. I believe that this is one of the interest in joining the scheme. This instrumental in providing feedback major areas of business opportunity that level of response from members has to the Department of Building and exist for current PINZ membership and indicated a common and accepted Housing as well as groups such part of the Property Institute’s role is to need to improve quality assurance as the Building and Construction help members discover ways that they throughout the operational practice Productivity Partnership that seek to can tap into those opportunities. of PINZ member firms. Along with understand the various components As we approach the 2012 AGM in large international and national of the impact on the lifecycle of Auckland during June, we are all facing property practices who already a building within New Zealand. challenges as to how we fit in with the have quality assurance schemes in Recently, we gave part of a key sector slow but steady recovery of the New place, the QAA system will help raise interview in relation to this study. Zealand economy. Many of the papers output standards throughout the total Consultation has also been ongoing at the AGM will help members focus PINZ membership. Joanna Parry, with other land based professionals on leveraging their property skills for Quality Assurance and Accreditation with aligned interests to the Property the benefit of their clients. „ Manager, has been extremely busy Institute such as New Zealand Institute providing workshop sessions to of Primary Industry Management, PINZ branches on how the scheme the New Zealand Institute of PHIL HINTON will work, and although initially Forestry and the New Zealand PRESIDENT | PROPERTY INSTITUTE targeting valuer based firms, Jo is now Institute of Surveyors. OF NEW ZEALAND

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392-393_PINZReport.indd 393 6/6/2012 2:48:42 PM CEOQ&A

API Chief Executive Officer, David Haythorn, sits down with the Australia and New Zealand Property Journal to discuss the impact of the forthcoming Australian Charities and Not-for-Profits Commission (ACNC), the changing role of the CEO, and the API’s recent annual general meeting.

BENCHMARKS FOR CHANGE

HOW WILL THE LAUNCH OF business. We have a federated divisional as accounting and financial planning, THE ACNC IN OCTOBER AFFECT model where each division runs its own that we can measure against in order NOT-FOR-PROFIT ORGANISATIONS race. Now we are running one race. As to achieve operational efficiencies, as SUCH AS THE API? one company we have one ABN, one tax well as raise the professional standing The government is planning to return, one statutory set of reporting. of property professionals outside establish a new regul ator, the I view the focus by government the industry. Australian Charities and Not for Profit on the not-for-profit sector as positive In particular, I look at the Commission (ACNC), and while this as it is a recognition of how much the Certified Practicing Accountant will have useful initiatives for charities, sector contributes and that it is highly (CPA) and the Certified Financial it has the potential to cause confusion, influential. As much as 65% of the Planner (CFP) as being the two particularly for the many associations population is a member of some kind of major Australian benchmarks for that are self sufficient and do not call not-for-profit organisation. The sector what professional certification upon the government for public funds. also contributes 4.7% of Australia’s should be. CPA Australia has a This means that not-for-profits, such as gross domestic product, making it one membership of more than 139,000 the API, will need to become a lot more of Australia’s largest industries. Being finance, accounting and business accountable in how they operate and part of this sector means the API is professionals and owns the CPA what they do. For the API, it becomes also highly influential, so members certification. The Financial Planning essential that we are all rowing in the should think more about how they Association (FPA) has more than same direction. can get involved in the organisation 11,000 members and owns the CFP That’s the basis for my mantra of and influence the industry. certification. I see the Australian ‘one ABN as well as one API’. When Property Institute with the Certified I began as the CEO, the focus was CAN YOU TELL US ABOUT Practising Valuer (CPV) and very much on becoming one API. But YOUR IDEA OF ‘BENCHMARKS Certified Property Professional now the focus is on operating as one FOR CHANGE’ AND HOW (CPP) certifications as growing to be corporate entity. That shift means a THEY RELATE TO THE API? of similar regard as CPAs and FPAs. change in the way people are managed At the moment, I am looking at I’d like to see the API place more and engaged, and the way we do benchmarks in other industries, such emphasis on marketing to graduates

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“IN THE PAST WE HAVE HAD A FEDERATED DIVISIONAL MODEL. NOW WE ARE RUNNING ONE RACE. AS ONE COMPANY WE HAVE ONE ABN, ONE TAX RETURN, ONE STATUTORY SET OF REPORTING” DAVID HAYTHORN

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“AT THE MOMENT I AM LOOKING AT BENCHMARKS IN OTHER INDUSTRIES, SUCH AS ACCOUNTING AND FINANCIAL PLANNING, THAT WE CAN MEASURE AGAINST IN ORDER TO ACHIEVE OPERATIONAL EFFICIENCIES” DAVID HAYTHORN

with about two years’ worth of HOW IS THE CEO ROLE CHANGING industry experience. Research shows TO FOCUS LESS ON STRATEGY that it is at the two-year mark that AND MORE ON BUSINESS? graduates really begin thinking about Harvard University real-life case getting a membership to a professional studies are now being used to convince organisation. In addition, we also CEOs and business executives that need to communicate the value of fielding smart strategies is less the API’s certification to employers important than building a healthy and and recruiters such that they actively effective organisation. That is where seek candidates who have professional we need to be. What I think needs certification and view a certified to happen at the API is the creation candidate as being superior to one who of a change-ready culture, which is not certified. effectively means that people need to

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change their attitudes, their thinking The current president, Philip launched our online e-learning and the way that business is done. We Western, was re-elected for another program, Future Property also need to recruit and retain people term, which I believe is very much Professionals, which has had an with the desired skills. What we have a positive. Having a consistent amazing response. We have already done in the past is that new business figure in Phil along with a newly had more than 254 individual strategies have been imposed over formed National Council, boards learning modules undertaken existing people and not all of them and committees leading the Institute through the program. We were have had the skills sets to apply the means there is an element of stability initially unsure as to whether new strategies. We also need to build in an otherwise changing environment people would adopt our e-learning commercial rigour into everything we and time at the API. Also, there is keen tools but they certainly have and do, and importantly, remain relevant support from amongst the Divisional the feedback on the content has to the industry and more importantly Presidents in a structural review been very good as well. We also our members. All industries will moving forward to meet the changing continue to work with the Property continue to go through change, but needs of the Institute. Institute of New Zealand on joint the not-for-profit sector, with new e-learning programs. I’ve also been accountabilities stemming from the WHAT OTHER UPDATES DO encouraged by my discussions with creation of the ACNC, will require YOU HAVE FOR MEMBERS? other industry organisations which strong skill sets amongst the staff The feedback from members have expressed a desire to work within the API. on our March Journal has been with us in developing programs and fantastic and I’ve been very pleased joint activities. Lastly, we are having WHAT ARE THE MAJOR to hear from people outside the our Young Property Professional ANNOUNCEMENTS TO COME property industry that they are Summit which will kick off in all of OUT OF THE API’S RECENT surprised at just how much ground the Australian states, so keep an eye ANNUAL GENERAL MEETING? the API covers. We have also out for that. „

Wholesale Investment Property

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Australian house prices “blatantly unfair”

Stockland’s managing director and API member, Matthew Quinn, has called for a re-evaluation on property taxes, house sizes and planning in order to make Australian houses affordable for fi rst home buyers, Tim Lohman writes.

ustralia must address According to Mr Quinn, the responsible for this. At one level, the the underlying causes average Australian house is priced federal government — mindful of for high house prices if in the region of $500,000 but the an ageing workforce and shrinking the average Australian average fi rst home buyer — a young tax base — is fuelling increased family is to aff ord the couple — on an average income, population through family tax benefi ts averageA Australian home. Th at’s the borrowing 80 per cent of the value to stimulate higher birth rates, and message Stockland managing director, of a property at current interest through an annual immigration Mathew Quinn, recently delivered to rates, can only muster $329,000. rate of 170,000 to 180,000. property professionals in Sydney. “Th ere is something blatantly Th e problem, Mr Quinn said, is Detailing his outlook for the wrong with the fact that the average that the federal government is not responsible for managing housing supply, and therefore is unable to manage the housing spikes and bubbles that the country has experienced. “Planning is left up to the states, and up until recently there has been no co-ordination to add up each of the states’ plans to make sure you get the same number [of houses] to service the same number of people the federal government is delivering” he said. “Th e states then give their plans to the local governments to make approvals. “Who has dealt with local government for a development approval? Who has found it an easy, seamless process full Australian property market in 2012 family coming into the market cannot of customer service and real at a recent Committee for Economic aff ord the average house,” Mr Quinn engagement? It is a nightmare. Development of Australia (CEDA) said. “It is not even close — 50% off . Th e three levels of government do event in Sydney, Mr Quinn said a Th ere is something blatantly unfair not talk to each other, so there is combination of poor planning, taxes, about that that favours the incumbents fundamentally no co-ordination and levies and consumer demand at the expense of new entrants.” over supply and demand. You get for overly large properties meant Australia’s planning system, uneven markets and we get the the average family could not aff ord which Mr Quinn characterised situation we have now got where the average Australian house. as “broken”, is in large measure housing is unaff ordable.”

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MATTHEW QUINN STOCKLAND MANAGING DIRECTOR can’t buy this house as it has to have a separate parents’ retreat and there is no movie room. People are now saying they do not need all that.” Today in contrast, new home buyers are making conscious decisions to purchase two or three bedroom dwellings and to take on smaller mortgages. “Th e dinner party conversation has gone from ‘how big my house is’ to ‘how small my mortgage is’. It has been a long time coming but it has been forced on them by housing becoming so expensive,” Mr Quinn said. For its part, Stockland is now Mr Quinn also pointed to state to 78sq. m in the US, 50sq. m in off ering house and land packages government housing taxes which Germany, and 32sq. m in the UK. in every Australian state starting are, in his opinion, both too high “Customers have been making a from $350,000. Th e company has and aimed disproportionately at conscious choice to have a lot of space also launched a project in South East new market entrants. According to and to put themselves into a high level Queensland aimed at low income Mr Quinn, the percentage of a new of debt to pay for it,” he said. “Th e households and off ering terrace-type home paid in taxes and levies is 17% good news is that this is changing.” dwellings from $204,500. However, for Perth, 25% for Melbourne, 26% Mr Quinn said fi ve years ago the company encountered some for Brisbane and 30% for Sydney. and prior to the global fi nancial resistance from government over the “Governments have two choices crisis, Stockland began a push to project due to concerns that smaller, when it comes to this: Th ey can either market smaller, more aff ordable higher density properties could lead to spread the load across everyone or houses, but encountered pushback the creation of social issues normally they can tax the new people coming from customers and builders. associated with social housing projects. in. Guess what they choose to do?” he said. “Politically that is a better solution as it upsets less people. “THERE IS SOMETHING BLATANTLY “In Sydney, with an average WRONG WITH THE FACT THE AVERAGE price of $600,000, $200,000 of that is going to the government. FAMILY COMING INTO THE MARKET Is that going directly into services CANNOT AFFORD THE AVERAGE HOUSE” and infrastructure for new people coming in? No it is not. It is going into the general pot.” “Builders wouldn’t engage, “I can’t see too many social Another major driver of and customers were saying they issues caused by creating aff ordable prices is Australian homes’ large couldn’t buy them as they only had housing for people who deserve size relative to other countries. three bedrooms and they would be to be in home ownership,” he According to Mr Quinn, the ashamed to have their friends round said. “I’m not talking about social average new dwelling in Australia for dinner, because they have to have housing. Th ese are dwellings for allows for some 83 square metres four bedrooms as they have been ordinary working Australians who (sq. m) per person. Th is compares conditioned that way,” he said. “I deserve a better way to live.”

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THE FUTURE OF RETAIL “Th e psychology of what happened slow-down in discretionary spend is While high housing prices are of during the GFC — that we dodged quasi-structural and because of the concern, arguably of major concern a bullet — has shown people that threat of online we need to protect to many in the property industry there is more to life than conspicuous ourselves by working below a certain is the question mark hanging consumption and they should be price point and not above. It is a over the future of retail and retail using whatever resources they have conscious decision we have made property. For Mr Quinn, the current for a better quality of life rather than because of these two threats [online downturn in retail — based in a an extra TV on the wall,” he said. and discretionary spend falling].” shift away from discretionary to Pointing to the rapid growth in Mr Quinn said the good news is essential spending — combined online retail, Mr Quinn said that as that Australia was not over-supplied with an increase in online retail, is at 2010, online sales accounted for with shops at just 2 sq. m per head both a structural and cyclical shift . about 5% of total Australian retail of population compared to about 4.8 “People are buying what they spend. Th is fi gure was expected to sq. m per person in the US. While need, not what they used to want,” he grow to 10% by 2015 and to between there is an argument not to build said. “Th ere is an end to conspicuous 15% and 20% by 2020. While this more retail space, Mr Quinn said consumption and people are saying, ‘I can buy what I can aff ord. I don’t need all that anymore’. “ONLINE IS A THREAT, BUT WE HAVE TO KEEP “Online is a threat, but we have to keep it in perspective. Retail is not IT IN PERSPECTIVE. RETAIL IS NOT DEAD” dead. We just have to evolve from shopping centres to community is of concern to retailers of books retail property industry providers hubs. Th ere is a big evolution and CDs, the major area of interest could help arrest the decline in going on which will determine the for retail property companies was retail sales through converting or survival of the fi ttest. Th ose that what will happen with clothing building shopping centres based adapt will perform very well and and shoes — the bread and butter not on the “traditional mall” but those that don’t will die out.” of the shopping centre industry. on “community hub” models. Discussing the decline in “It is what happens to clothes “We are all human, aft er all, and discretionary spending, Mr Quinn and shoes at the margins which will people want human interaction,” he pointed to the GFC as largely being determine the success or failure of said. “Th ere will be a reason to go there responsible; however, he noted that retail space,” Mr Quinn said. “Th e — it isn’t just a wall of shops. Even since 2005 essential spending has proportion of online clothing sales though retail sales and discretionary grown from 67.5% of total spend are heavily skewed toward premium spending is down, spending in certain to 71% of total spend as at 2012. In and high end sales, and that is types of cafes is up, spending on contrast, discretionary spend has deliberately where [Stockland] is not. personal services — beauty, nails, day fallen from 32.5% of total spend “We have skewed the other spas — are up because people want as at 2005 to 29% as at 2012. way as we have determined that the a diff erent sort of experience.” „

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398-400_StocklandAustMarket.indd 400 6/5/2012 10:37:30 AM OPINION OPINION WELCOME TO THE NEW ECONOMY Feelings of uncertainty around employment and salary are on the rise, writes Rita Avdiev

tructural change is hard to instead of reducing mortgage rates. property companies, these senior accept, extremely painful Since the introduction of compulsory roles may just disappear. Uncertainty and cannot be avoided. superannuation, every working has also reached the property The world is undergoing a Australian is a shareholder through community. Attendance at property fundamental shift which is their superfund’s investments. In order seminars is high and growing. The Saffecting authority, capital, information to protect shareholder returns the audience is looking for direction flows and responsibility in governments, banks are shedding staff with the rest and firm forecasts. Speakers are organisations and economies. of the financial services industry. hedging their bets. Australia may well be the envy This is beginning to flow through In another sign of uncertainty, of the world, with a strong currency, to the property industry — especially business bankruptcies have increased prudent banks, low unemployment in Sydney. A lack of advisory work, by 9% nationally in the last year. and inflation under control. However, shrinking floor space requirements, Mid-tier building companies have under the surface, structural change tighter credit and lack of lending for also gone into administration. Senior is driving a multi-speed economy: development and business expansion people are working as self-employed Mining is booming, and so are its is being felt. Redundancies are consultants, hoping to keep a place in suppliers and consultants, but retail increasing with a number of senior their industry. is stagnant and residential property positions — roles below general At Avdiev, we expect that property prices are not improving. managers and directors — that companies will be forced to respond Each state also has its own set of have been quietly eliminated. With to slow work pipelines and changing problems. Queensland is suffering the ongoing structural changes in business conditions through staff from disaster fatigue and is still reductions, recruitment freezes, multi- settling into its new government. skilling staff and expanding their The now not-so-new NSW state services. Mergers and acquisitions government is trying to streamline will also continue. bloated silo bureaucracies and instil Employees are adapting to much needed cultural change. Victoria increased workloads, but their own faces the loss of manufacturing feelings of uncertainty have increased, industry and ongoing industrial unlike their salaries, which have not conflict in the health industry. risen much above the CPI; certainly Western Australia is concerned about not at the senior level. Predictions the effect escalating industrial action for the next reviews are even more will have on its mining industry and is modest. Employers and employees fighting the Federal Government for a should also keep a close eye on bigger GST allocation. government attempts to rein in rising The Reserve Bank reminds us how executive pay and demystify complex well off we are. But it is acknowledging incentive structures. the rising cost of funding and has come out in defence of our major banks Rita Avdiev is Managing Director which have been subject to continual at property industry management bashing from politicians who gripe consultancy The Avdiev Group and about the focus on shareholder returns Fellow of the API (FAPI).

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Life in the internet economy AND THE CHANGING FACE OF PROPERTY USE Dr Lucy Cradduck, Faculty of Law, QUT

ncreased participation in the internet internet. It concludes by suggesting economy is actively encouraged and potential impacts for property and supported by all levels of government. property uses in the future. Research to date clearly shows the positive impacts that increased internet INTRODUCTION access can bring, particularly for rural While the internet can support Australia. Meanwhile, for the most part, businesses by providing greater identifi cation of any negative impacts of fl exibility for expansion; (Waterhouse, increased broadband access on existing 2011) it creates challenges for and potential property uses is avoided. governments (DBCDE, 2011); and for Th e aim of this article is to identify property as access, or lack of, to high- issues for property use arising as a speed broadband (‘HSB’) will impact consequence of increased engagement on property uses (Cradduck, 2011) in the internet economy. Th e article and, potentially, value. Th e various commences by clarifying what is meant levels of government have, or are in the by the term ‘internet economy’ before process of implementing, programs highlighting current impacts of the aimed to assist with access or educating 402 ANZPJ JUNE 2012 I

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consumers about HSB. However, most and consumption of internet goods (ACMA, 2009) knowledge-sharing; projects focus on improved effi ciency and services occurring purely online; (Mintz, 2007) and as a general (DBCDE, 2011) rather than addressing (Mandorf, 2008) online collaboration, communications tool (Slater, 2002). issues arising as work habits, business design and production tracking of However, although many internet operations, community engagement physical goods; and online advertising economic activities will have a real and community confi gurations change. and/or selling of real-world goods. world construction and/or delivery Th e purpose of this article is to bring (Mandorf, 2008) IEA also includes point, arriving at that point takes these issues to the attention of property operations enabled through use of the place in a manner unlike previous industry stakeholders. It commences internet as an information source, and methods of economic activity (Sadeh with an overview of Australia’s internet a method of service delivery. (Choi et al, 2001). A fundamental diff erence economy, before considering the current and Whinston, 2003) Personally and between real world economic impact of increased internet use and professionally, the internet enables activity and IEA lies in the increased concludes by identifying future impacts. communication. It can be used for ability of the internet to enable the radio broadcasts and conferencing; leveraging of knowledge, collaboration THE INTERNET ECONOMY (ACMA, 2009a) video/television between partners, and businesses’ Internet economic activity (‘IEA’) program delivery; (Svantesson, understanding of their customers’ and includes the production, acquisition 2005) creating communities; consumers’ demands and requirements

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(Mandorf, 2008). IEA has an appreciable impact on the physical “THE INTERNET’S IMPACT ON EDUCATION economy (Barua et al, 1999), as well as being a new source of income. PROPERTY USE CANNOT BE UNDERESTIMATED” Importantly for the future of Australia’s economy, unlike economic activities in the real world, which in some areas are in decline, IEA show increased growth of 25-30% (Waterhouse, 2011). Th e direct benefi t of IEA to Australian was recently base, however, means issues of cost (Ewing and Th omas, 2010). In rural assessed at approximately $50 billion are a real concern for commercial areas where your nearest neighbour with the value of the wider, indirect telecommunication suppliers with may be kilometres away, this could economic benefi ts to households, shareholders to answer to. As a further exacerbate issues arising businesses and government estimated consequence, internet service provision from living in physical isolation to be $80 billion (Deloitte, 2011). A in many rural areas is not comparable from others (Miller et al, 2005). negative is that, for some activities, with that available in the cities. Th e internet facilitates this increased benefi t to IEA comes While the increased use of the telecommuting, which, usually, at a cost to real world businesses. internet may have an immediate benefi ts the individual users and their and more publically understandable local community as it enables greater IMPACTS OF THE INTERNET impact for business operations, its use participation in the local community While the internet has, and continues by individuals has equally tangible instead of spending time travelling. It to eff ect positive changes in the way impacts. It facilitates the ability “to also can encourage greater employment in which many Australian businesses connect people to people” (Kollock and opportunities in rural and regional operate (Deloitte, 2011) the impact Smith, 1999, 3); and as an information areas (DBCDE, 2011). A potentially upon rural centres can be less positive, source and a meeting place, it makes negative impact for commercial offi ce as is the resulting impacts upon possible increased involvement in investors is that, with an increase in property ownership. Th e negative local communities (Hampton, 2004). telecommuting, businesses may no impacts appear more dramatic in rural In many ways, work and home have longer need the offi ce space required and more remote regional areas where been greatly changed by modern in previous decades. Th e consequent existing problems appear exacerbated communications technologies, adjustments to the accepted method by either the lack of access, or in which is refl ected in changed social of organisational operations as well as some areas the ease of access, to the goals and law (Farrar, 2010). the changing needs, and expectations, internet. A common complaint of In addition to the internet being of offi ce workers will have a direct the mobility of this technology is, an information source, the services impact upon the property asset as opposed to being benefi cial, it and communications technologies itself and it uses. Th ese impacts will is now intrusive (ACMA, 2008). available via the internet can enable derive both from internal as well as Most Australians (currently 78% communication that is “eff ectively market-led demands and perspectives and increasing) live in cities while and effi ciently [equal to] face-to- regarding offi ce layout and location rural and regional populations shrink face communications” (DBCDE, (Irons and Armitage, 2003). (ABS, 2009). Th eir remoteness makes 2009, 31). Th is expands the ability Th e internet, however, has not rural areas’ need for internet services, to make and maintain community destroyed the desire nor need for real as a means of access to information ties beyond your current physical world communities (Mitchell, 1999). and services, greater than for those in location (Kollock and Smith, 1999) as It is an essential and intuitive human urban areas. Remote communities are communities can be created, exist and trait to want to be part of a community, seriously disadvantaged by the lack of end without members ever meeting. and to engage and interact with others telecommunications services (Molloy A side eff ect is many people spend (Mackay, 1999). Perhaps, therefore, it et al, 2008). Th e lower population less time with family and friends would be more accurate to state the

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COVER STORY

true impact is on the places themselves. In order to capture the possibilities those in remote areas or without the Many existing communities are able to presented by the internet economy, ability or means of otherwise attending continue when previously — because of current industry, and government, classes (Bradley Report, 2008). changed work or living arrangements initiatives are targeted at educating Th e internet enables students of their members — the communities and encouraging retailers and small to pursue their studies without the would have ended because of a lack of businesses as to how to set up websites need to move from where they reside contact between members. Th is ability and operate online (DBCDE, 2011). (Kanuka, 2009) or without needing to impacts upon the use of property (i.e. One eff ect of the growth of IEA for choose between pursuing education as a home or place of work or for play) property is that when existing businesses and family commitments (Legg et by individuals, businesses and groups. seek to expand many no longer look al, 2007). Th is enables students to to establish another physical location remain in their local community; PROPERTY USE IMPACTS (Waterhouse, 2011). While some areas see although how long they remain once Th e increase, for example, in online growth in the demand for offi ce space, qualifi ed would be dependent upon banking transactions (Deloitte, 2011) driven mainly by the resource sector, job prospects and what other services has in many areas resulted in bank this is the exception not the rule (PCA, are available. Th is change in education branches closing. Although other 2011). Th erefore, although positive and delivery has fl ow-on eff ects for factors, such as declining population profi table for businesses, the consequence property. Reduced numbers of students bases, are relevant (Martin, 2009) for commercial property owners is a travelling for study means the need for the increased use of internet banking diminished pool of prospective tenants. low cost student-style accommodation is likely to continue to impact into Property use impacts are not located near the education the future. Bearing in mind the exclusive to commercial operations. provider’s campus is reduced. international bank experience Th e internet, while not originally used Th e internet’s impact on education (Taherabady et al, property use 2010), Australian cannot be bank branches “ONE EFFECT OF THE GROWTH OF [INTERNET underestimated. are likely to move ECONOMIC ACTIVITY] FOR PROPERTY IS While primary from transaction- and secondary venues into THAT WHEN EXISTING BUSINESSES SEEK TO education remains problem-solving EXPAND MANY NO LONGER LOOK TO more commonly venues as the focussed number of in- ESTABLISH ANOTHER PHYSICAL LOCATION” on student bank transactions participation decreases. Th is will impact on the as a teaching medium (Ellram, 1999), at a set venue, tertiary education has space required, where branches are is now is a signifi cant means of course experienced signifi cant changes. Th e located and their use. It also will delivery and interaction and means of ability to undertake university study impact upon population centres as expanding ‘distance education’ services by e-learning any place, any time may the required number of employees (Page, 2006). For those on- and off - reduce costs and provide fl exibility; will correspondingly reduce, and on campus (Groves, 1999) course material however, it also impacts upon the need the need and desire for other property is more easily available and more for infrastructure provision and location related services such as accommodation, commonly available online (DBCDE, of that infrastructure (Deloitte, 2011). and centres for shopping and leisure. 2009). Th e internet facilitates distance Where there is a combination of While such change may be more education by enabling course delivery traditional and internet education easily accommodated in cities, in in a more interactive and up-to-date delivery, the need for large lecture rural areas the impact could be manner (Legg et al, 2007). Th e internet theatres, or even attending lectures more damaging. Th is would be is used to engage students as it enables (Badge et al, 2008) is a thing of the particularly so in low population innovative delivery of course materials past. Lecture theatres are being areas where any loss of residents could in a variety of formats addressing the reshaped resulting in the construction have an appreciable (and negative) needs of all students, particularly those of specially designed interactive fl ow on eff ect to service providers with a disability (Badge et al, 2008). classrooms (RMIT, 2011). Purely online and the community as a whole. It also can be of signifi cant benefi t to courses also are tending to replace more

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“THE INTERNET, HOWEVER, HAS NOT DESTROYED THE DESIRE NOR NEED FOR REAL WORLD COMMUNITIES”

QUEENSLAND UNIVERSITY OF TECHNOLOGY'S DR LUCY CRADDUCK

traditional forms of distance education, to be truly eff ective. (Plumb and Zamfi r, others. Th is impacts upon where many of which have a residential 2009) As more services are provided we live, learn and work and on our component, thus obviating the need online the number, size, location of, property use. However, IEA has not for classrooms, as lecturers prepare, and facilities provided at, government completely replaced the need or desire record and upload lectures from their offi ces (OECD, 2008) will change. for physical proximity with others nor offi ces (Kanuka, 2009), or on-campus Th e use of public spaces also will be does it enable all of our activities to accommodation. Universities of impacted. As IEA increases public spaces be eff ected online. We may browse, the future may bear little physical may be used less, or for less involved choose, compare, select and purchase resemblance to what exists today both purposes. Th is is because internet use a pair of shoes online; however they as regards the ‘class rooms’ used and is intrinsically a sedentary activity. still must be delivered to and worn by the ‘student accommodation’ available. (Mellor, 2005) While Wi-Fi enables us (and seen by others) in the real- Increased IEA also have a fl ow-on internet access from almost anywhere, world. Living in the internet economy eff ect on other aspects of community this use generally is not an engaged means fi nding a way to continue life. Th e function of a local library activity. A lack of physical interaction to appropriately use property now is now equally to house computers within public space leads to health risks and adopting policies that promote and enable internet access as for the (Haggerty and Reid, 2002) and the need appropriate property use into the borrowing of books (ALIA, 2011). Th e to rethink their design to accommodate future. For property investors and space that is required for libraries and changed uses and to maximise returns practitioners it also means being their use will be further impacted by to investors. Finally, the impact on prepared for what is to come. „ the rollout of the National Broadband traditional property roles cannot be Network (ALIA, 2011). Equally, underestimated. Th is is seen in the A previous version of this article was the increased number of people evolution of property-based roles (Gamby presented at the Pacifi c Rim Real now engaging purely online with and Lynn, 2006) and marketing practices. Estate Society Conference 2012 and is government services (Tang, 2009) entitled "Place and Space: Community requires a review of the services CONCLUSION in the Internet Economy and What provided, how they are provided and Th e internet has changed education Th is Will Mean for Property". A where they are provided in order to delivery; how we shop; where we copy of the conference paper is encourage citizens to use them and thus fi nd work; and how we engage with available on the PRRES website.

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REFERENCES

„ ABS, (2009) 3218.0 – Regional Population „ Ewing S and J Thomas, (2010) CCI Digital „ Mintz D, (2007) ‘Government 2.0 – Fact or Growth, Australia, 2007-2008, released 23 Futures 2010: The Internet in Australia, CCI, May Fiction?’ 36(4) Public Manager, 21, 21-24 April, 2009 http://www.abs.gov.au/AUSSTATS/ 2010, 2-4 http://cci.edu.au/sites/default/files/sewing/ „ Mitchell W, (1999) E-topia: Urban Life, Jim – But [email protected]/Lookup/3218.0Main+Features12007- CCi%20Digital%20Futures%202010.pdf (viewed Not As We Know It (Massachusetts University of 08?OpenDocument (viewed 06/11/2009) 08/07/2010) Technology Press, Cambridge, Massachusetts) „ ACMA, (2009) ‘Australia in the Digital Economy „ Farrar J, (2010) Legal Reasoning (Thomson „ Molloy S, B Burgan and S Rao, (2008)‘Creating – Report 2: Online Participation’, May 2009, Reuters, Sydney) new markets: broadband adoption and economic 1 http://www.acma.gov.au/webwr/aba/about/ „ Gamby E and A Lynn, (2006) ‘Pushing benefits on the Yorke Peninsula’, Systems Knowledge recruitment/online_participation_aust_in_digital_ the Boundaries: An exploration of the role Concepts Report prepared for the Information economy.pdf (viewed 07/01/2010) of e-commerce in the evolution of property Economy Directorate, Department of Further „ ACMA, (2009a) ‘Changes in the Australian VoIP management’, Twelfth Annual Pacific-Rim Real Education Employment Science and Technology, market’, December 2009 http://www.acma.gov. 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wellbeing of older rural married Australian „ Ellram L, (1999) ‘Purchasing Education on the and American men. In Proceedings 38th Annual „ Waterhouse J (2011) ‘Booming internet hits $80 Internet’ (1999) 35(1) The Journal of Supply Chain Conference of the Australian Association of billion’, Sydney Morning Herald, 5 August 2011 Management, 11 Gerontology, pp. 89-89, Gold Coast.

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402-408_InternetAndProperty.indd 408 6/6/2012 2:42:34 PM AUCTIONEER PROFILE AUCTIONEER PROFILE: MY AUCTIONEER’S KATE LUMBY

WHAT IS YOUR CURRENT ROLE WHAT ARE THE CHANGES OR class customer service and innovative AND EMPLOYER? MAJOR INDUSTRY TRENDS IN technology. These two ingredients Director and Auctioneer at THE AUCTIONEER FIELD TODAY? will be essential along with the myauctioneer.com.au. We service I believe the role of auctioneer has traditional methods of sale for Sydney’s Northern Beaches, Inner West, evolved. I think it is important agents and auctioneers to embrace Hills District, Eastern Suburbs and that the auctioneer now follows the over the next decade. North Shore. Have gavel, will travel! campaign with the agent helping them throughout. The auctioneer is a third- WHAT DO YOU DO WHEN WHY DID YOU CHOOSE TO WORK party facilitator who can reinforce NOT AT WORK? IN THE PROPERTY INDUSTRY? the agent’s market feedback by giving Be the best mum and wife I can be! „ I grew up in a family of real estate a general overview of the market agents with my learning of the industry so the seller can make an informed beginning over the dinner table, decision. The auctioneer can handle then after school at the office and any questions in relation to what will my first job as weekend receptionist, happen on auction day. Auctioneers, as obtaining my salespersons certificate with buyers and sellers, have more and making my first sale at 16. I never market information at their thought I would join the business and fingertips than ever before. first pursued my passion for voice and Auctioneering has become a performance, something I began from more specialised profession the age of four. I’ve always loved talking among those that do with people and listening to their it very well. With new stories and experiences. Blending a performance benchmarks background in voice and performance and an increasing desire with the background in real estate for continued development made auctioneering a perfect choice. It and enhancement is a live one act performance each time, auctioneering has shifted connecting with the audience to bring to a higher standard. about a quality result. WHERE DO YOU SEE YOURSELF WHY DID YOU MOVE INTO IN THREE YEARS’ TIME? AUCTIONEERING? Auctioneering and real estate training. As a young girl I had attended many Also, seeing our clients rewarded auctions wide eyed watching my father and prospering from giving us the in full flight. I remember this one day opportunity and having faith in our he was auctioning a rural parcel of land ability to trust us with their clients’ standing on a hill with a large crowd of property and business growth. Maltese and Italian market gardeners all keen to buy the land. He began the IN WHAT WAYS DO YOU auction by digging a shovel into the SEE THE AUCTIONEER FIELD, fertile ground, holding up the rich soil AND THE WIDER PROPERTY and asking the buyers, “What am I bid INDUSTRY, EVOLVING DURING for this chunk of dirt?” It was in that THE NEXT DECADE? moment I turned to my mum and said, An increased demand for “I want to do that when I grow up!” exceptionally high levels of world-

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Does the future for residential property include prefabricated housing?

410 ANZPJ JUNE 2012

410-420_Deakin_PrefabHouse.indd 410 6/6/2012 10:13:17 AM PREFABRICATED HOUSING

Industrialised off-site prefabricated residential property development is becoming increasingly widespread and globally accepted, Deakin University’s Xiaolin Zhai, Richard Reed, and Tony Mills argue

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INTRODUCTION means of improving residential land THE INCREASING IMPORTANCE While it is commonly accepted that and is this undertaken in a sustainable OF SUSTAINABILITY IN land is of relatively little use unless it manner? Th is paper discusses a new PROPERTY DEVELOPMENT is improved, residential land use is the approach to residential property in In the property market there largest single land use in urban Australia light of these external factors and remains some confusion about what and New Zealand. However, in recent places the emphasis on industrialised sustainability is. Th e term “sustainable times there has been external pressure prefabricated housing. Th e aim is to development” was originally placed on developing residential due increase the knowledge about potential proposed by the International to factors including sustainability, changes to the residential housing sector Union for Nature and Natural economic value and social value. For which have already occurred in other Resources (IUCN) in the World example, what is the most effi cient sectors e.g. tilt slab industrial buildings. Conservation Strategy (1980). Th e most common defi nition is from the World Commission on Environment and Development (WCED) in the publication Our Common Future (1987), which is also commonly referred to in the Brundtland Report, PROFESSOR ANTHONY MILLS being “development that meets the needs of the present without Professor Anthony Mills (FAIQS) compromising the ability of future is the discipline leader of both generations to meet their own undergraduate and post-graduate needs”. Th e commission argued that Construction Management programs technology and social organisation at Deakin University. He is currently a can be both managed and improved to National Councillor of the Australian make way for a new era of economic Institute of Quantity Surveyors, and growth. Th is statement has direct a founding member of the Australian relevance for the property industry. Construction Forecasting Council. Since the Brundtland Commission Professor Mills has previously worked report, it has been argued that as a quantity surveyor for both “development progress” is no longer Australian and overseas organisations associated with industrialisation and and also published books, journal and simply measured by economic activity conference papers in construction. and wealth increase (UNEP 2007). In contrast to embracing limits- to-growth philosophy, sustainable development placed more emphasis on social and economic goals with stressed interconnection with environmental preservation (Hill and Bowen 1997). Arguably Agenda 21 is the most signifi cant non-binding and comprehensive instrument in the environmental fi eld and regarded as the blueprint for the sustainable development globally (UNEP 2007). In the 2000 update to the Millennium Declaration, world leaders committed to free their people from the “threat of living on a planet irredeemably spoilt by human activates, and whose

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resources would no longer be suffi cient Conference on Human Settlements General knowledge of sustainable for their needs” (United Nations (Habitat II), held in Istanbul in 1996, residential property is fairly 2000). Two years aft er the Millennium recognised the urgent need to improve commonplace, although strategies Declaration, the Johannesburg Plan the quality of human settlements. for resolving the major problems of Implementation (United Nations) It addressed two themes: Adequate of building and their impacts released in 2002 reaffi rmed that Shelter for All, and Sustainable remain elusive. Kibert (2007 p.595) sustainable development was the Human Settlements Development identifi ed four factors aff ecting the central goal of the future development in an Urbanizing World. Th e key of future of sustainable construction: and should “expedite the achievement sustainable human objective is to of the time-bound, socio-economic and environmental targets”. Th e publication stated that changing unsustainable consumption and “UNDERTAKING SUSTAINABLE production (SCP) was indispensable CONSTRUCTION IS SEEN AS ONE VITAL WAY for achieving the global sustainable FOR HOUSING TO RESPOND TO ACHIEVE development with developed countries taking the lead and all countries SUSTAINABLE DEVELOPMENT” to benefi t from this process. More than 20 years have now passed since the Brundtland Report was originally published. Despite facilitate developing “societies that will • Th e sustainable construction will changes in environmental governance make efficient use of resources within extend its physical boundaries to and greater understanding of the the carrying capacity of ecosystems and include construction materials, links between environment and take into account the precautionary the manufacturing of products, development, the real progress principle approach ... by providing all the assembly of products into towards sustainable development people ... with equal opportunities for buildings, the maintenance has been slow (UNEP 2007). a healthy, safe and productive life in and replacement of systems, harmony with nature and their cultural and the ultimate disposition SUSTAINABLE RESIDENTIAL heritage and spiritual and cultural of waste, building systems HOUSING IN THE values, and which ensures economic and and building structure; PROPERTY MARKET social development and environmental • Important considerations Only relatively recently has the protection”(Dekker et al. 2011 p.42). include the impact on the property market fully embraced the manufacturing, construction, term ‘sustainable’, and it is critical In order to be sustainable in operation, and disposal phases to fully understand what it refers to. the property market, undertaking on human and natural system; Th ere are diff erent perceptions of sustainable construction is seen • Physical distribution and sustainability which are confusing as one vital way for housing to relationships of buildings and when seeking to achieve collective respond to achieve sustainable infrastructure and the resulting sustainable outcomes (Zillante development. Kibert (1994) initially energy consumption; and et al. 2010). With reference to a proposed the construction industry • Strengthen the interaction residential dwelling, construction is into “sustainability” context in the between stakeholders in defi ned as a process or mechanism (former) “Conseil International built environment. of delivering human settlements du Bâtiment” (CIB, now full name and creating infrastructure that changed to International Council for AN INDUSTRIALISED supports development (Du Plessis Research and Innovation in Building APPROACH TO RESIDENTIAL 1999, 2002). Th erefore, sustainable and Construction), defi ned the term PROPERTY DEVELOPMENT construction should be based on or ‘sustainable construction’ as “the Th e concept of industrialisation be at least linked to the defi nition of creation and responsible maintenance has become increasing important sustainable human settlements and of a healthy built environment, based in property development but an sustainable society (Hill et al. 1997). on ecological principles, and by means understanding of the concept is Th e second United Nations of an effi cient use of resources”. essential. Warszawski (1999) defi ned

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XIAOLIN ZHAI

Xiaolin Zhai is a full-time PhD candidate at Deakin University. Her research is examining the relationship between sustainability in the built environment and off-site production in the construction industry, particularly in the urban housing sector. Before commencing her research, Xiaolin was a national registered construction manager in China.

an industrialisation process as an effi cient way. Th e machinery and BACKGROUND TO UPTAKE OF investment in equipment, facilities, workers can best be adapted in the AN INDUSTRIALISED APPROACH and technology with the purpose of production process for the particular IN URBAN HOUSING increasing output, saving manual product manufacture, such as building Earlier references to industrialised labour, and improving quality. a prefabricated dwelling manufactured applications in housing can be Th e following features are argued in the factory rather than on-site. traced back at least 100 years. Albert as considered prerequisites to a Farwell Bemis ( 1870-1936) was successful industrialisation process: Labour specialisation regarded as one of the foremost Large volume and standardisation scholars advocating the application Centralised production of production systems raise the of engineering principles and Productions perform at a particular possibility of a high degree of labour standardisation to building, aiming single region with utilisation of expensive specialisation. Workers continuously at lowering the construction costs equipment and facilities. Th e economies perform at the higher productivity of housing, generally through the of scale with respect to capital investment, level of production specialisations continuous, repetitive articles management, and auxiliary services in small homogeneous tasks divided (White 1965). To Le, Corbusier, benefi t in this process. Th e product is from the mass production system. Buckminster Fuller, Walter Gropius, shipped from the central location to Konrad Wachsmann, these earliest the consumer in areas where property Optimal organisation structure proponents of industrialised housing development is being undertaken. Good organisation is the guarantee of contended that urban housings production process and work teams, would be “mass-produced” with Mass production which are required for high-quality advanced building technologies and A large volume of production is the planning, co-ordination and functions mechanisms used in the manufacture only economic justifi cation for the control with respect to products of aircraft , cars and ships. Th eir investment in equipment and facilities manufacture and distribution. concepts of factory-made housing associated with an industrialisation had striking and historical infl uences process. Th erefore, a distribution of Integration on many generations. For example: the fi xed investment charge over a A high degree of co-ordination under large number of product units will a central stakeholder is required “House must go up all of a piece, not infl ate the fi nal cost. Th is is the between design, production, and made by machine, tools in a factory, same mass production approach used marketing of a residential dwelling assembled as Ford assembles cars, for large-scale land subdivisions. to ensure optimal results. Th is is on moving conveyor belts.” another essential ingredient of a - Le Corbusier, 1923 Standardisation successful property development Standardised productions facilitate and is commonly referred to “Human housing is a matter of mass resources utilisation in the most as ‘project management’. demand. Just as it no longer occurs to

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PREFABRICATED HOUSING

90 percent of the population to have shoes made to measure but rather buy ready-made products that satisfy most individual requirements thanks to refi ned manufacturing methods, in the future the individual will be able to order from the warehouse the housing that is right for him.” -Walter Gropius, 1923

Th ere is no confl ict between the advanced industrialisation, PHOTO BY: jingdianjiaju1 manufacture processes and housing industry (Kendall 2010). Industrialisation in housing in-situ construction works. reduce uncertainty, it is important construction identifi ed in the xExtensive  mechanism of to highlight the diff erences Encyclopaedia of Housing (1998 the building materials and between certain concepts. p.315) refers to “the production component handling onsite. of large building elements made xBuilding  design, building elements OFF-SITE CONSTRUCTION (OSC)/ in factories… using sophisticated manufacture and on-site works are OFF-SITE MANUFACTURE (OSM)/ machines and equipment to reduce highly interrelated. Each part must OFF-SITE PRODUCTION (OSP) labour, control waste, and improve be reviewed as indispensable part OSC, OSM and OSP largely quality. Th ese building products of an integrated process which interchangeable terms used widely are generally made by companies has to be co-ordinately planned. in the UK and European countries that specialize in their production xAutomation  should be which refer to parts of the construction and are specifi ed for a particular introduced into the building process that are carried out away site or purchaser. Th e powers realisation process as to from the building site (buildoff site and principles of industrial mass reduce manual operation on 2010). Gibb (1999) used reports from production are essential to success.” site and improve quality. the Construction Industry Institute Deriving from the general (CII) and the Construction Industry attributions of industrialisation REFERENCES TO Research and Information (CIRIA) process as mentioned in the previous INDUSTRIALISATION IN to defi ne ‘off -site’ as follows: section, industrialisation in housing TODAY’S HOUSING INDUSTRY construction has the following main Th ere is a plethora of terms related “A process rather than just a collection features (Warszawski 1999, p11): to industrialised residential of technological solutions, which x Th e potential for the large- building construction with regards incorporates prefabrication and scale building elements being to construction techniques. Th ese preassembly. Th e process involves the off -site manufactured and include worldwide, industrialised design and manufacture on units or prefabricated at a central facility housing, factory-based home, modules, usually remote from the work characterised by specialised prefabricated dwelling, off - site, and their installation to form the equipment and organisation. site manufactured housing and permanent works at the work site. In xTh  e various building modular home which all embody its fullest sense, it requires a project components are incorporated the principle of industrialisation in strategy that will change the orientation into large prefabricated housing construction. To provide a of the project process from construction assemblies with minimum basis for better understanding and to manufacture and installation.”

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PREFABRICATION, PREASSEMBLY, Module WHAT DOES AN INDUSTRIALISED MODULARISATION, AND OFF-SITE A major section of a plant resulting APPROACH MEAN FOR FABRICATION (PPMOF) from a series of remote assembly SUSTAINABLE HOUSING? CII (2002) defi nes the term of operations and may include Th e advocates of IOP construction PPMOF in the following manner: portions many of systems. It is have widely acknowledged the usually the largest transportable benefi ts of industrialisation, off -site Prefabrication unit or component of a facility. manufacture and prefabrication A manufacturing process, generally uptake in building construction taking place at a specialised facility Off -Site prefabrication processes, accentuating the in which various materials are joined Th e practice or preassembly or benefi ts of productivity effi ciency, to form a component part of a fi nal fabrication of components both off the construction duration and defect installation e.g. residential dwelling. site and on-site at a location rather than reduction and quality improvement. all at the fi nal installation location. It It appears a better and comprehensive Preassembly is increasingly common to adopt the understanding of the IOP A process by which various materials, generic term ‘IOP’ which refers to construction process, especially in prefabricated components and/ ‘industrialisation, off site manufacture context of the high rise residential or equipment are joined together and prefabrication’. Th is term covers buildings in dense urban locations, at a remote location for subsequent the various ‘fuzzy’ terms above and will help property professionals installation as a sub-unit. It is generally also diff ers to conventional in-situ to work out the implications for focused on a systematic approach. residential building construction. the broader property market. From a global perspective it has been advocated the potential benefi ts of IOP and standardisation are vital factors towards undertaking property development in a sustainable manner. For example this includes the US where CIRIA (1999) published Adopting Foresight in Construction, the Civil Engineering Research Foundation (CERF 2000) launched Th e Future of the Design and Construction Industry. In the UK the Department of Trade and Industry (DTI) launched

PROFESSOR RICHARD REED

Professor Richard Reed (FAPI) is the course leader for the on-campus and off-campus property and real estate programs at Deakin University. He has previously worked as a valuer in both private and public organisations and also published numerous books in the property and construction disciplines on sustainability.

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the report of Constructing the Future (2009) and Foresight Future 2020 (2011). Th e Hong Kong Construction Industry Review Committee (CIRC) launched Constructing for Excellence (2009) and the European Construction Technology Platform (ECTP) published Challenging and Changing Europe’s Built Environment: A Vision for a Sustainable and Competitive Construction Sector by 2030. All the reports commonly acknowledge the

responsibilities for property and Photo by: jakeliefer construction industry in term of sustainable property development. It is important to consider benefi ts of IOP adoption in housing construction as listed below. ECONOMIC BENEFITS Economic performance is probably the most important issue when developers adopt IOP methods when compared with the conventional alternatives (Warszawski 1999).

Shorter construction duration:

A survey conducted in the UK recently Photo by: jakeliefer confi rmed that a shorter construction period is the largest single advantage, especially for property developers. Since and inspection processes than population and higher labour cost the IOP construction method depends those adopted on construction sites. in the developed world, there is an largely on factory-produced building Computer-assistant technology argument there will be a need to components which can be built earlier like 3D/4D models previously rely more on the skilled and high in factories and achieve parallel activities utilised in earlier stages could easily quality workforce from populous with on-site works, the construction time visualise the completed building developing countries in the future. spent on assembling can be considerably prior to construction and predict Almost 30 years ago the US housing reduced than a conventional property most factors which potentially may consultant Nutt-Powell (1985) argued development approach. In addition, aff ect the construction process that property developers can hire external variables including poor in the property development. semi-skilled workers rather than weather will have a minimal eff ect in skilled labour to perform same delaying the property development. Reducing property development well-defi ned tasks with lower cost. labour and upgrading employment: Controlled quality: IOP construction needs fewer skilled Productivity and economies of scale: Quality improvement is the second workers on-site for the assembly Th e factory plant environment enables largest positive benefi t from using operations which facilitate the the effi cient manufacturing processes IOP building construction (Goodier shortages of the on-site workforce in and mass production as determined by and Gibb 2007). Industrialisation locales. In most developed countries general market conditions. Th e factory enables all the prefabricated elements the level of local employment for usually means the relatively stable and modules to be prefabricated in the factory-produced housing and trained workforce and mechanical a factory, while also adopting more buildings is relatively permanent. operation procedures contribute elaborate and better organisation With an increasingly ageing to higher productivity. Increased

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ENVIRONMENTAL BENEFITS Better energy effi ciency: With climate change, natural resources Th e reduction of energy consumption depletion and demographic change, in a pre-fabricated property the environment considerations development is due to less energy use now present increasing challenges in transportation and on-site works. for residential property developers. Increasingly some stakeholders are SOCIAL EFFECTS advocating that IOP construction Reduced accidents and illness: is the alternative solution for IOP transfers much of the construction sustainable property development. process to inside a plant with improved safety and environmental effi ciencies. Reduction of material waste Furthermore a considerable amount and construction waste: of prefabricated components can be IOP manufactured productions are integrated, jointed and assembled performed under monitored quality relying on computer controlled and control and assurance procedures autonomous mechanical operations in a factory environment. For which can reduce hazards to workers. example this includes accurate cutting, aligning, screwing, nailing, Potential to improve job painting and handling which conditions and wage levels: drastically decrease the amount Most of the works in IOP construction of material wastage. Since the IOP processes are conducted away from method contributes to less on- building sites in an arguably stable and site plastering and timber works, safer factory environment. Workers the average of construction waste in IOP construction sites are oft en reduction level in IOP high-rise task specifi c semi-skilled and skilled residential building reduced by 52% workers who have higher earning

Photo by: on1stsite with a reduction of 70% of timber capacity than traditional labourers. formwork achieved (Jaillon 2009). BARRIERS TO USING use of manufactured components Reduction in on-site pollution: INDUSTRIALISED TECHNIQUES also increases the use of fi rms from With less on-site activities and IN RESIDENTIAL DWELLINGS outside the traditional construction all factory-fi nished interior Even though the benefi ts of IOP sector where they participate in the works completed in advance, techniques in property development building construction process and households in high-rise residential have become widely known, there are also increase commercial competition. developments suff er fewer problems some perceived barriers to the uptake of Th e manufacturers and suppliers in such as poor indoor air quality, industrialised property development. the supply chain will signifi cantly noise, dust and litter caused by benefi t from the bulk orders which is traditional construction methods. High cost: in contrast to one-off building orders. Th e decisions of whether to use IOP or Increased use of recycled material: not is oft en based on cost rather than Other economic benefi ts: Th e concept of IOP is also referred value. Even though it has been argued Enable property developers to release to as “cradle to cradle” and based on that IOP construction could reduce whole a new housing development onto a lean construction principle which lifecycle cost, expensive and traditional the market earlier and therefore is analogous to manufacturing. Th is housing construction is still commonly reducing fi nancing costs; reduction approach diff ers from the “cradle seen as the major barrier to the increased in the level of the maintenance and to grave” process for traditional use of IOP in housing construction. repair expenses for on-site versus property developers. Integrated IOP Th e use of just prefabricated dwellings off -site; longer economic service life of construction is considered to be an is argued to be not eff ective enough to components; and household cost of the initiative solution based on reusing substantially improve the effi ciency in interior housing fi nishes are reduced and recycling components and construction industry in higher labour by the mass economies of scale. materials in building construction. cost developed countries. Currently, most

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IOP suppliers are in developed countries co-ordinate. In most cases a large FUTURE OUTLOOK AND but benefi t from suppliers in developing number of interior fi nished modules IMPLICATIONS FOR PROPERTY nations where there are cheaper materials and elements which are delivered to PROFESSIONALS and low-wage labour with less regulation. building sites prior to the preassembly Th is discussion has identifi ed some of Th e high initial cost for a property have to be temporarily stored on- the future changes that are aff ecting developer to invest in production site. Th e on-site storage for fi nished property development and which facilities, equipment and technology components raises critical and property professionals should be is associated with more risk when high demands due to limited space aware of. In a similar manner to new compared with conventional labour construction on sites, especially in technology aff ecting facets of industrial intensive on-site methods. Th is high density urban environments. and commercial building construction, statement is particularly true in prefabricated residential housing appears some developing countries with an Prefabricated elements protection: that it may become commonplace. abundant supply of cheaper labour. A large number of fi nished modules Th is is partly due to factors such as Also the expenses associated with IOP are delivered to the building sites economies of scale and sustainability. housing design, cranes and transport and have to be temporarily stored An analogy can be drawn here with the are other factors which appear to be on-site and exposed to the climate. widespread prefabricated roof trusses prominent in the IOP acceptance Th is presents challenges and places for residential housing, which in turn rate by property developers. high demands on transportation have become the standard. Is a house and the on-site element protection. worth less since it has prefabricated Client resistance: Th e schedules of production housing trusses? Furthermore, is a Based on mass production manufacture in plants and prefabricated house worth less therefore? ideology, the uniform characters of assembling on construction sites are Generally speaking, industrialised standardisation and repetition are at times diffi cult to co-ordinate. off -site prefabricated residential property typical IOP housing images. Housings development is becoming increasingly can be industrialised productions. Construction tolerance: widespread and globally accepted in However, they are diff erent than other Prefabricated elements place a very varying forms. Overall there are two mass manufacturing processes like high emphasis on tolerances which primary drivers for the uptake of this cars, ships and airplanes since clients may create preassembly problems approach. Firstly the prefabrication is a put more emphasis on their individual on the building site. Th e IOP system means to reproduce or reinforce laggard needs. Monotony and dullness are may become vulnerable when productivity of current construction the negative perceptions which partly there are the exact measurements industry. Secondly, there has been a infl uence housing buyers to resist IOP for the prefabricated building radical and incremental awareness of housing, especially in urban areas. components. Low tolerances wide-scale transformation of construction increase problems when fi tting technology into the sustainability agenda Long lead-in time: components on construction sites in the property market (Harty et al. 2007). Since the IOP construction would and are expensive to correct. However it was argued there has been delay the beginning of the project little discussion and understanding in the on-site, the contractors need to be Skills and knowledge shortage: property market about understanding integrated from start of the design Expertise is still limited in the the complexities and uncertainties of process in order to reduce costs and marketplace by developers, designers both present and future implications, or minimise the lead-in time. Suppliers and contractors. On-site assembly to investigate the connection between need to co-operate with the developers, require skilled and semi-skilled international, community, construction designers and contractors at the workers for the installation and specifi c and macro-level factors. earliest stage of a project development erection stages. Th ere is a lack of Nevertheless property professionals to ensure prefabrications are education, training and general need to keep up-to-date with upcoming appropriate to the IOP construction guidance about IOP high-rise changes on a national and international and property development process. housing construction and property level and consider the implications of development in the marketplace. new technology in their daily roles. „ Supply chain synchronisation: Th e time schedules of production Th is paper is related to a current PhD research project at Deakin University. manufacture in plants and assembling If you have any comments or suggestions please email [email protected] on construction sites are diffi cult to (references available from the authors on request).

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SUPPLY CHAIN TRENDS: IMPLICATIONS FOR INDUSTRIAL PROPERTY In order to maintain relevance, businesses that depend on supply chains worldwide are being forced to fi nd responsive distribution centres and warehouses that satisfy both current and future logistics needs, Mark Courtney writes.

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INTRODUCTION Melbourne. It is the intention of this purposes. In other words, the In the past few years, logistics has work to present how the business of growth in the logistics industry been driven to the forefront of supply chain (logistics) management has become the dominant market business strategy worldwide. Th is has adapted to these pressures. Th e driver for the large format industrial has occurred as shipping container paper also reports on the trends building market in Australia. traffi c has surged, particularly in the occurring in the distribution centre Th e result is consistent with Asia-Pacifi c region. Th e never-ending (DC) and warehouse property the well documented decline of the quest for effi ciency will ensure that market (particularly along the domestic manufacturing industry change will be the only constant as eastern seaboard) accompanying which has been challenged by the the future direction of the logistics these industry changes. pace of economic development and industry will be shaped by: manufacturing capability in China INDUSTRIAL PROPERTY TRENDS and India. More recently, the strong x economic, environmental, From a global perspective, the Asia- Australian dollar has worked against social and political pressures; Pacifi c region has been the most robust the most internationally exposed x rising land side costs due industrial market in recent years with Australian manufacturing sectors. to depleting global fossil containerised trade recording strong Th e trend for manufacturing job losses fuel reserves; and growth rates in many countries. Like is likely to continue as international x the never-ending drive elsewhere in the region, growth in competitive pressures continue to be for competitive advantage containerised trade has also driven transmitted to the domestic market. by transport and logistics demand within the Australian It is notable that Deloitte Access fi rms here and abroad. industrial market. And within this Economics’ most recent forecasts market, transaction activity in recent show employment in manufacturing Th e major challenge confronting years has escalated in the larger, “super- is set to fall from 961,000 in 2011- supply chain management is how to sized” warehouse and distribution 12 to 901,000 in 2015-16. make sustainable business profi ts centre segment. Colliers International Meanwhile, the logistics segment research into this has become a dominant driver for the segment, and construction of larger or “super-sized” more specifi cally industrial buildings. Th is has occurred “THE LOGISTICS SEGMENT HAS in the category of as national scale retailing, wholesaling BECOME A DOMINANT DRIVER industrial buildings and transport and storage fi rms have FOR THE CONSTRUCTION OF worth $10 million consolidated the number of sites into and containing fewer, larger premises and/or they LARGER OR ‘SUPER-SIZED’ 10,000sq. m of have secured a number of strategic INDUSTRIAL BUILDINGS” fl oorspace, shows regional sites. Several of Australia’s most that transaction prominent brands have been part of this volumes accelerated growth story and have made signifi cant in times of increased complexity, sharply during 2010. Looking forward, investments. Names such as Coles/Myer, uncertainty and rapid change. It is not Colliers International’s Global Woolworths, Toll and Kimberly Clarke, surprising then that towards this end, Industrial Highlights Second Half 2011 to name a few, have been prominent diff erent thinking and approaches report shows that the International during this time. It is notable that the regarding logistics business models Monetary Fund expects global trade total amount of fl oorspace transacted and technologies have emerged. volume will rise by 3.8% in 2012 and in the eastern seaboard capital city Stakeholders including investors, 5.4% in 2013. Th e implication for the industrial markets in 2011 was more owner occupiers and tenants have domestic industrial market is that as than four times the 2009 fi gure. also been forced to review logistics global trade rises, so too will demand Eastern seaboard major freight business assumptions relating to the for warehouse space. Th e research transport corridors, intermodals and property component of these models. for this paper also found that in industrial precincts where port, road Th is paper is collaboration recent years, in the order of 80% of and rail infrastructure provide access between Colliers International and all transactions in this large format to the local workforce and to state, Logiworx, a supply chain optimisation segment involved purchases of either national and international markets and logistics specialist consulting distribution centres or warehouses tend to represent the key areas where fi rm with offi ces in Sydney and used for non-manufacturing transaction activity has escalated.

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Key Metric 2009 2010 2011 Total Total Investment $334,713,624 $682,028,357 $1,545,767,442 $2,562,509,423 In many cases this is because Capital Values from a location perspective, such $1,124 $1,047 $1,247 $1,171 ($/m2) sites tend to reduce the land side Yields 8.93% 9.45% 8.35% 8.91% cost component in the supply Number of 13 29 52 94 chain equation. Refl ecting this, Transactions Transactions Colliers International research has 297,828 651,240 1,239,560 2,188,627 by Area (m2) focused on the industrial markets Average where most transaction activity Transaction 22,910 22,457 23,838 23,283 in this larger building format Size (m2) has occurred which is within the metropolitan industrial markets GRAPH 1 | EASTERN SEABOARD INDUSTRIAL METRICS 2009 – 2011 along Australia’s eastern seaboard. Graph 1 presents a summary of the change in the market indicators over the 2009-2011 period. YIELDS Th e average yield across the eastern seaboard capitals over the study period is 8.91%. Interestingly, the average yield increased from 8.93% in 2009 to 9.45% in 2010 before compressing notably to 8.35% during 2011. Th is pattern was refl ected in the Sydney and Melbourne industrial markets while Brisbane yields have trended downwards over the complete study period. See Graph 2.

INVESTMENT GRAPH 2 | EASTERN SEABOARD INDUSTRIAL AVERAGE YIELDS Th e signifi cance of the sector within the overall industrial market is highlighted by the fact that $2.56 billion has been invested in this segment during the study period. By far, most of this investment has occurred in Sydney ($1.35 billion), followed by Melbourne ($717 million) and Brisbane ($499 million). Sales volumes of properties worth in excess of $10 million and larger than 10,000 sq. m in fl oorspace have grown rapidly from $335 million in 2009 to $1.5 billion in 2011. During the period, a total of 94 properties transacted with 52 of these sales occurring in 2011. Most transactions occurred in Sydney (42) and Melbourne (33) and Brisbane (21). While some prominent funds including Colonial, Salta Properties, GRAPH 3 | EASTERN SEABOARD INDUSTRIAL TRANSACTION AMP PIF and Cromwell have sold Source for Graph 1, 2 & 3: RP Data, Real Capital Analytics & Colliers International 425

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down or exited from this space in were prevailing in 2009. Melbourne recent years, others have expanded or CAPITAL VALUES and Brisbane capital values in 2011 entered this market segment. Existing Th e average capital value for properties were below the eastern seaboard particpants such as Lend Lease, in this market segment in 2011 was capital city average, whereas Sydney’s Charter Hall, Dexus and Goodman are approximately $1247 per sq. m which average values pushed well above among those that have increased their is approximately $123 above the the benchmark. See Graph 4 & 5. holdings with new entrants including 2009 average. It is apparent that the Growthpoint Properties, as well as higher sales volumes of 2010 and 2011 PURCHASER TYPE other overseas investors. See Graph 3. transacted at lower capital values than Th e research analysed the purchaser type in terms of foreign, institutional, private, public listed, and user/other. A key fi nding is that private purchasers decreased their share from around two thirds of the total in 2009 to less than one third in 2011. Another notable result is shown by the representation by foreign purchasers who increased from a base of nil in 2009 to 25% in 2009 and almost 44% in 2011. Institutions have also increased their share from having no share in 2009 to representing 13.3%. Public companies increased their share from 2009 to 2010 before becoming less active in 2011. Users/other as a group have reduced their purchases from 25% in 2009 to represent 2.2% by 2011. Off shore investment has GRAPH 4 | EASTERN SEABOARD INDUSTRIAL CAPITAL VALUES 2009-11 become a market feature with GIC (Government of Singapore) purchases being prominent. Some notable joint venture activity has also occurred over this period. Th ese include the JV between Australand and GIC which has a target asset value of $450 million. Another signifi cant foreign investment was made in 2009 by both the China Investment Corporation (CIC) and the Canadian Pension Plan Investment Board (CPPIB) into the Goodman Group. Following on from this strategic investment, the ING Industrial Fund was taken over in early 2011 by a Goodman led consortium comprised of CIC, CPPIB and the APG Group. PRE-COMMITMENTS AND SPECULATIVE CONSTRUCTION In recent years, demand has been generated by the need to expand or strategically consolidate distribution centre and warehouse GRAPH 5 | EEASTERN SEABOARD INDUSTRIAL PURCHASER ANALYSIS 2009-11 fl oorspace. Companies including Source for Graphs 4 & 5: RP Data, Real Capital Analytics & Colliers International 426 ANZPJ JUNE 2012

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Coles Myer, Woolworths, Kmart, Best & Less, Target, Pacifi c “FUTURE SUCCESSFUL VENTURES INTO Brands, Symbion Pharmaceuticals, Ascent Pharmaceuticals, National THIS SPACE WILL REQUIRE AN APPRECIATION Foods Logistics, Kimberley OF THE CHANGING PATTERN OF LAND USE” Clarke, DHL and Toll have all been active in securing space. in the industrial marketplace for chip retail and logistics tenants are Analysis of pre-commitments 420,000 sq. m which was almost attracted to state of the art, purpose- provides another indicator of as strong as the recent peak. built warehouses and DCs and demand in this segment. Colliers Speculative development picked up developers and/or investors receive International undertook research since the fi rst half of 2010. Australand, the benefi ts of an investment with into the change in pre-commits Dexus and Goodman have been the most strong covenants incorporating leases from 2005 to mid-2011. With active with new development occurring to quality tenants with long WALEs 430,000 sq. m of pre-commitments, or planned mainly in the Sydney and (weighted average lease expiries). 2007 was found to represent the Melbourne markets. Locations have most recent peak. However, by included Eastern Creek and Erskine DISTRIBUTION CENTRE AND mid-2011 there were requirements Park in Sydney and in Truganina and WAREHOUSE PROPERTY OUTLOOK Laverton North Th roughout the world, fi rms in Melbourne. dependent on supply chains are Some looking at integrating property occupiers who have solutions to reduce the land side insuffi cient time to costs. Th ese costs which are successfully fi nalise primarily fossil fuel costs represent lease negotiations the single largest contributor to are likely to take the total costs confronting logistics up any general operations. In other words, rising industrial fuel costs represent perhaps the space created most signifi cant factor in decisions by speculative made by investors and tenants alike development rather regarding DC and Warehouse options. than become party In addition to the future cost to a purpose built of fuel, the factors infl uencing the pre-commitment outlook of the DC and warehouse project. segment of the Australian industrial Consequently, market are varied. Key among these increased demand giving shape to the risk-return in coming quarters trade-off include global and domestic for space created economic growth, national transport by speculative infrastructure spending, the changing developments regulatory environment (including the may add upward implementation of the National Ports pressure on rents. Strategy), the impact of the carbon In contrast, the pricing mechanism and changing outlook for pre- consumer behaviour including commitment rents households response to online may tend to remain retailing. Naturally, there is debate more stable. about the infl uence and the weight that Th is steadiness can be attributed to each of these. would refl ect the What is certain, however, is that MARK COURTNEY nature of these since 2009, the eastern seaboard COLLIER INTERNATIONAL DIRECTOR, RESEARCH deals where blue industrial market has progressed

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through a period of investment In order to maintain relevance, 15% withholding tax rate remains uncertainty. Th e risks referred to businesses that depend on supply competitive on an international basis above have for some funds led to a chains worldwide are being forced to and is well down from the 30% rate downsizing or a complete retreat fi nd responsive distribution centres and which was in place fi ve or so years ago. from this segment. Th roughout warehouses that satisfy both current Th e recent history of this segment the eastern seaboard market where and future logistics needs. Land side has been marked by rationalisation, most of the transaction activity has costs have risen to become the single as all property businesses have been occurred, capital values eased in largest contributor to the overall cost forced to review their holdings in the 2010. Institutions like Charter Hall, confronting logistics businesses and can post-GFC world. However, future Dexus, and Goodman seized on the be regarded as a key driver of change. successful ventures into this space opportunities presented. In 2011, Th e appropriate response to this change will require an appreciation of the values rose as yields compressed. It is expected that the outlook over 2012 is for the level of transaction activity “THROUGHOUT THE WORLD, FIRMS to stabilise. Th is means that there may be a levelling off period for both DEPENDENT ON SUPPLY CHAINS ARE LOOKING the number and value of transactions AT INTEGRATING PROPERTY SOLUTIONS as investors consider the future of logistics and owner occupiers review TO REDUCE THE LAND SIDE COSTS” the vast array of factors impacting their supply chain management strategies. is an agile and adaptable domestic supply changing pattern of this land use which Overall, demand for quality chain which can cope with new emerging is moving towards fewer, larger central stock with strong covenants is likely markets and frequent network redesign storage facilities, increasing demand for to remain fi rm. Yields are expected which minimises the risks associated with multiple, relatively small cross-docking to tighten slightly for this type of integration into complex, multi-national centres regionally and the increased product which will place upward supply chains. Evidence of this response potential for distribution centres and pressure on capital values. With is given by the trend towards fewer, larger warehouses to be outsourced more the majority of new supply being centralised distribution centres with more frequently and for shorter periods. „ in the form of pre-commitments, fl exible downstream supply chains. overall market rental growth may In recent years, Australian and Mark Courtney is Director, Research, at be constrained. Th ere is some foreign fi rms have invested funds in Colliers International and can be reached potential for speculative warehouse distribution centres and warehouses at [email protected] rents to rise given the relatively low seeking investment returns and/or level of new supply available in the to respond to heightened customer market – particularly in Brisbane. expectations. Notably, during this time, BIBLIOGRAPHY However, the contribution to overall as a number of investment funds and „ The National Intermodal Challenge, Colliers International Summer 2010 White Paper rental growth from speculative private investors have exited from this „ Maritime Statistical Report – Australian construction is likely to be modest. industrial market segment, others have Maritime Activity to 2029-30, Bureau of identifi ed the opportunity to enter or Infrastructure, Transport and Regional Economics CONCLUSION expand their holdings. Ownership is „ National Ports Strategy Background Paper Many of us never pause to consider now more concentrated and foreign October 2010, Infrastructure Australia and the National Transport Commission the processes managing the fl ow investment is at record levels. Looking „ National Ports Strategy Infrastructure for an of raw materials, component parts, forward, the relatively high Australian Economically, Socially, and Environmentally fi nished goods and information that dollar may lead to a steadying Sustainable Future December 2010 represent the business of logistics. in the rate of foreign investment „ Business Outlook March Quarter 2012, Deloitte Yet the contemporary consumer through joint ventures. Changes to Access Economics lifestyle is inextricably intertwined withholding tax measures for foreign „ Supply Chain Magazine, Martijn Lofvers, The Netherlands, 2010 with it. And while the term ‘supply investors announced in the 2012-13 „ “Living Supply Chains” (FT Prentice Hall, chain’ may evoke images of fi xed Commonwealth Government Budget London 2006), Gattorna, John linkages, the fact is that the logistics may also have a sightly dampening „ “Dynamic Supply Chain Alignment” (Gower industry is highly dynamic. impact on investment, although the Publishing, London, June 2009), Gattorna, John

428 ANZPJ JUNE 2012

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TOWARDS A LEGAL NOTION OF PLANT AND MACHINERY AS PERSONAL PROPERTY

INTRODUCTION results in the conferral of three natural resources and in emerging Th e legal notion of property rights in qualities or capacities, namely: A forms of personalty has highlighted Australia has undergone fundamental management power; an ability to the need to understand how markets change since 1992, providing receive income or benefi ts; and an for such rights develop. Th is paper clearer, albeit still-developing ability to sell or alienate the interest. looks at the history of the market for defi nitions of real property (realty) However, the relatively recent personalty, traditionally known as and personal property (personalty). transition from open access to chattels (or plant and machinery), Th e holding of realty or personalty property rights in a broad range of and draws attention to how we

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By John Sheehan, LFAPI Deputy Director, Asia- Pacifi c Centre for Complex Real Property Rights, Adjunct Professor Faculty of Design Architecture and Building, University of Technology, Sydney, Chair, Property Rights Committee, Past President NSW Division, Australian Property Institute.

test whether “particular rights” THE DIVISION OF PROPERTY as permanent and immoveable as are in fact property rights. Th e common law divides “property” being the hallmark of real property. Th is paper points out that as into two separate legal notions: Real However, the well-known decision knowledge is gained as to the nature property and personal property of the High Court in Mabo v of these less familiar property rights, or, in legal taxonomy, into realty Queensland (Mabo No 2) (1992) 175 accepted truths about the notion of and personalty. Personalty was CLR 1 heralded a recasting of the property are being shown to be only traditionally described property notion of Anglo-Australian property partial and an incomplete vision. which could not be characterised rights. Subsequent judgements have

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“THE TRANSITION FROM OPEN ACCESS TO PROPERTY RIGHTS... HAS HIGHLIGHTED THE NEED TO UNDERSTAND HOW MARKETS FOR SUCH RIGHTS DEVELOP”

confi rmed the view that the legal while the discipline most closely England. Indeed, the concept of notion of property rights in Australia associated with globalisation is economic value with its inherent polity has undergone fundamental change economics, other disciplines related implications is the underlying thrust since 1992, providing a clearer to social, ethical and cultural act in many property rights discourses understanding albeit still-developing as reminders that regional cultures especially in North America, and in defi nitions of realty and personalty. (and their market societies) remain that context James Ely observes: From a property theory surprisingly robust, pointing out that: standpoint, however, the relatively English common law provided recent transition from open access to Globalisation will not make local the legal foundation for property property rights in a broad range of cultures disappear; in a framework ownership in the colonies. Common natural resources, and in emerging of worldwide openness, all that is law was customary law, deriving forms of personalty such as electronic valuable and worthy of survival its authority from long-established intellectual property rights, has in local cultures will fi nd fertile usage. Royal courts in England highlighted the need to understand ground in which to bloom. (1) fashioned the common law into how markets for such rights develop. a body of rules that defi ned and Th e following section of this paper Th is is a poignant reminder that protected property rights… (3) looks at the history of the market for the customs and laws of many societies personalty, traditionally known as have only undergone incremental Conceptually, property chattels, and the role of early English change throughout history, rights and the concept of ‘value’ market society. In a subsequent notwithstanding the sometimes necessarily emerged as the twin section, a discussion of the more violent precursors of such change. leitmotifs of English common law, recent history of the chattels market Anglo-Australian law is one such and its colonial American progeny. is provided, again focussing on the complex amalgam, and studies of its Anglo-Australian law was also a English experience given that the roots in English custom and law reveal, legal sibling of this tradition. roots of Anglo-Australian law are such according to linguist Sophie Masson: The concept of value, that any description and analysis of especially when given monetary market history necessitates recognition …a curious and most marvellous gift expression, involves the of the colonial heritage. Finally, the for mutability and metamorphosis, allocation of worth to a particular developing notion of transportable rooted in a rich, complex and strange property right, usually as an property will be discussed, showing multi-layered, multicultural history. (2) estimate of its capitalised future that as knowledge is gained as to potentiality based on its current the nature of these less familiar Inescapably, property rights were utility. The concept of ascribing property rights accepted truths of pivotal concern to those involved in monetary value to such rights in regarding the notion of property conquest and dispossession, and hence property has its roots, according rights are being shown to be only once acquired the value of realty and to Perry Anderson, in the: partial and incomplete visions. personalty crystallised in the hands of the conquerors, notably the Normans …perdurable inheritance of classical A PROPERTY RIGHTS HISTORY in England. Similar to other areas of antiquity. Th e Roman Empire, its fi nal OF CHATTELS Western Europe, the value of rights to historical form, was not only itself In 2001, the Peruvian novelist realty and personalty was central to naturally incapable of a transition Mario Vargas Llosa observed that the maintenance of civilised Norman to capitalism. Th e very advance of

1 Mario Vargas Llosa (2001) “Locally speaking, global is good” The Sydney 3 James W Ely Jnr. (1998) The Guardian of Every Other Right: A Morning Herald (10 February) 3S Constitutional History of Property Rights 2nd ed Bicentennial Essays on 2 Sophie Masson (2001) “Here today, gone yesterday” The Sydney Morning the Bill of Rights (New York: Oxford University Press) 10 Herald (14 October) 8S 4 Perry Anderson (1979) Lineages of the Absolutist State (London: Verso) 420.

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diff erent sense: the transformation of one form of private property — conditional — into another form of private property — absolute — within the landowning nobility was the indispensable preparation for the advent of capitalism and signifi ed the moment at which Europe left behind all other agrarian systems... (6)

Importantly, private rights in property arose with the emergence of “absolutist public authority”, wherein according to Anderson:

Th e increase in the political sway of the royal state was accompanied, not by a decrease in the economic security of noble landownership but by a corresponding increase in the general rights of private property. Th e age in which ‘Absolutist’ public authority was imposed was also simultaneously the age in which ‘absolute’ private property was progressively consolidated. (7)

By the 18th century, the property rights revolution emerging from medieval times had, according to Adam Smith, resulted in private property rights being regarded the classical universe doomed it to a …European feudalism also as a tenet of English society and catastrophic regression, of an order for underwent an evolution that had enforceable at law, stating that: which there is no real other example in no parallel elsewhere. Th e extreme the annals of civilisation. Th e far more rarity of the fi ef system as a type Property and civil government very primitive social world of early feudalism of…property…was never known in much depend on one another. Th e was the result of its collapse, internally the great Islamic states, or under preservation of property and the prepared and externally completed. (4) successive Chinese dynasties… (5) inequality of possession fi rst formed it, and the state of property must always Marxist writers such as Conditional private property vary with the form of government. (8) Anderson see medieval Western rights were transformed to Europe as a slow although inexorable absolute private property With the emergence of private transition to the “capitalist with the result, according to property rights came the need for mode of production”, yet this Anderson, being as follows: concomitant valuation of the worth phenomenon appears to have of such rights, whether realty or been unique to Europe because: Th e formula, however, contains a personalty. However, the activity of profound truth if applied in a somewhat ascribing the worth of property rights

5 Anderson 424 8 Adam Smith (republished 1978) Lectures on Jurisprudence. Oxford: Oxford 6 Anderson 425 University Press.. 410 7 Anderson 429

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can be traced back to at least biblical of the open market in the various Spirituality pervaded medieval times where Ephron in selling his villages and towns include not society, and it is not surprising that fi eld to Abraham is quoted as saying: only services such as toll-gatherers, feudal property rights encompassed cleaners and others, but importantly: holistic notions such as conservation My Lord, hearken unto me: the land is strategies, and village communism. worth 400 shekels of silver; what is that …appraisers were appointed to settle the Some of these rights, described in betwixt me and thee? (Genesis xxiii.) value of goods in event of dispute. (11) modern valuation terminology as ‘profi ts-a-prendre’ (13) did not involve Th e next section of this paper In a similar vein to Lie, John ownership of land and yet were viewed describes the emergence of the chattels Moore in his classic 1945 description as valuable property rights. Such market in early English market of traditional English village life rights could be exclusive, or enjoyed society — arguably the historic root of fi ctitious ‘Elmbury’ described in common with others, granted of the Australian market for chattels. the realty and personalty beyond in perpetuity or for a fi xed term. THE EMERGENCE OF A MARKET FOR CHATTELS “THE CONCEPT OF VALUE ... INVOLVES Th e emergence between the 16th and the 18th centuries of the early modern THE ALLOCATION OF WORTH TO A market for private property rights, PARTICULAR PROPERTY RIGHT” whether realty or personalty, was a response to the arrival of absolute private property. Th ese property rights the medieval village which were Moore also describes the exercise were not necessarily ill-defi ned, and held as communal rights, as: of other classes of use, such as the as John Lie points out in his important right to fi sh, in the following terms: work on the social origins of English …something of a legal curiosity, and market society in the period between mixed up in its title-deeds were some of From the banks of the river jutted out 1550 and 1750, the commodifi cation the principles of feudalism, capitalism, numberless fi shing-rods; little boys with of many previously communal natural distributism, and communism. Th e hay willow wands conjured up minnows… resources required the ascribing of crop belonged to a number of private [fi sherman] perched sedately on wicker value and valuers, observing that: owners, including the squire and the creels ledgering for bream, while the Abbey; their boundaries were marked more energetic ones, swift of eye and Th ere was nothing automatic mysteriously by means of little posts… wrist, fi shed for roach, and the more or laissez-faire about the growth adventurous wandered here and there, of market society. (9) But while the hay crop was private carrying a jar of minnows, live-baiting property, the meadow itself, the soil for perch….and the very old, and the In addition, Lie points out that: that grew the hay, belonged to “the very stupid, content with the mere dregs burgesses”…[who] possessed no cows of angling, heaved enormous lobworms Th e variety of commodities also or sheep to graze upon it, so they too impaled upon enormous hooks into the expanded to include mechanical each season sold the aft ermath by deepest and stillest backwaters and then contrivances and luxury goods for auction and distributed the proceeds, went to sleep until Fate, in the guise the populace, leading…[writers] according to an ancient law…Nobody of a shiny yellow eel, accepted… (14) to characterise the period as “the got more than a few shillings for his birth of a consumer society”. (10) share; but at least every man, woman Clearly many of these rights may and child… had the right to walk and be problematic as profi ts-a-prendre; Importantly, the “market society” play in the fi eld, which gave them a however it does show the enormous entrusted with the smooth conduct good possessive feeling about it.” (12) breadth of uses to which communal

9 John Lie (1993) “Visualizing the Invisible Hand: 11 Lie 282 13 Alan Hyam (1995)The Law Affecting Valuation The Social Origins of ‘Market Society’ in England, 12 John Moore (1945) Portrait of Elmbury of Land in Australia 2nd ed (Sydney: The Law 1550-1750”, Politics and Society, 21(3), 277. Modern Authors Series reprint of 1945 edition Book Company Limited) 29 10 Lie 280. (London: Collins 1964) 17. 14 Moore, 18.

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and the purpose of the valuation. Th e likely reasons for attributing a value to such a property right has to do with maximising the economic benefi t of the resource, balancing any social aspects, compensation for loss of rights, access and the voluntary sale or purchase of property rights by private parties. Th e ability of holders of rights in personalty to sell, or lease their rights is more limited than holders of more widely encountered property rights such as freehold land or leasehold land. In certain circumstances, rights JOHN SHEEHAN in personalty may be inalienable, capable only of surrender to the Crown, such as sea wrecks. It is generally accepted in the literature that recognised grants of property defi ne the range of privileges and responsibilities of holders to specifi ed rights. It is generally believed property rights until very recently pattern of self-regulation which that such rights are either legal rights were put in non-urban England. according to Kenneth Arrow (15) has or economic rights, or both (16). Th e following fi nal section of resulted in the emergence of social In attempting to construct a test to this paper canvasses the developing institutions to meet this need, namely: determine whether a right is indeed a notion of transportable property property right, it is important that the rights, which has special importance …private property rights, frequently diff erent but necessarily interrelated to plant and machinery as chattels. hard to defi ne, on the one hand, notions of legal and economic and the supervision of the state, rights are clearly understood. TESTING CHATTELS AS on the other, [which] only begin to When such rights are viewed as PROPERTY RIGHTS exhaust the list of social devices to legal rights they involve an assignation All property rights result in the balance individual initiative with by the State through legislation, conferral of three qualities or prevention of injury to others. common law or other means (for capacities; namely a management example, custom) to an individual, power, an ability to receive income In attempting to develop a test for group of individuals or organisation, or benefi ts and an ability to sell or property rights which accommodates of specifi ed property rights that the alienate the interest. In particular, new forms of ‘property’ such as State wishes to assign. Even when the transition from open access to chattels, it is important the paradigm assigned, there is the question of property rights for natural resources within which this test is to operate is regulation which can be critical to has drawn attention to just how we interrogated and understood. Hence, the value of the legal rights, which defi ne whether particular “rights” any methodology used to value new as Donald Denman asserts lies in: are in fact property rights. forms of property rights, especially Confounding this issue of personalty, will depend on the use …the extent to which restraints can transition is the long established to which the resource is to be put, and should be imposed by the State on

15 Kenneth J Arrow (1996) “Foreword” in Rights to Nature: 16 Yoram Barzel (1997) Economic Analysis of Property Rights, (New York: Ecological, Economic, Cultural, and Political Principles of Cambridge University Press) 3 Institutions for the Environment, eds S Hanna, C Folke and K Maler (Washington: Island Press) xiv

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the use of the private property rights… the notion of ‘property’. Starke J in in the conferral of three qualities Restraint may be severe and curtail the Th e Minister of State for the Army v (or capacities): A management absolute rights of property to the near Dalziel (1944) 68 CLR at 290 (Dalziel) power; an ability to receive income practical abolition of them; or the touch indicated that such a defi nition: or benefi ts; and an ability to of the State power may be exceedingly sell or alienate the interest. light and leave near absolute power with …extends to every species of Th e degree to which these the holders of the private property right. valuable right and interest including three qualities are evident in a real and personal property, particular property right depends Political debate in these circumstances incorporeal hereditaments such as on the mix of fundamental centres round the extent and nature rents and services, rights of way, characteristics that the particular of the restraint to be imposed rights of profi t or use in land of property right contains. As stated by the State over the exercise another, and chooses in action. earlier in this paper, an understanding of property rights… (17) of these fundamental characteristics Starke J. (at 290) also comments that: is crucial to ascertaining whether a However, regulation restraining particular right is a ‘property right’. the use of specifi ed property rights …to acquire any such right is rightly Th e transition from open access is accepted as a necessary feature described as an acquisition of property. to property rights is refl ected in of their continued existence in increasing attention by Australian society, as explained in Mason Th is approach to constructing courts to less familiar forms of v Tritton (1994) 34 NSWLR 572 a defi nition of ‘property’ has been ‘property’. A notable example of where Kirby P (at 592-593) stated: further strengthened in the important these judicial considerations is decision Yanner v Eaton (1999) HCA 53 found in Minister for Primary …In the ordinary case, control and (Yanner), where the High Court took the Industry and Energy and Australian regulation of the rights and privileges opportunity to contrast property in the Fisheries Management Authority v associated with property ownership conventional sense with the ‘property’ Davey and Fitti (1993) 119 ALR 108, is consistent with continued property or ‘ownership’ that the Crown asserts where the Court was asked inter ownership. Indeed civilized societies over natural resources stating that: alia whether the fi shing capacity demand that proprietary rights and permitted for the Northern Prawn interests be highly regulated. Th e word ‘property’ is oft en used to Fishery expressed in “units of fi shing refer to something that belongs to capacity” was in fact ‘property’ It may seem prosaic in the another…‘property’ does not refer to within the meaning of Section 51 extreme, but any discourse on ‘new a thing; it is a description of a legal paragraph (xxxi) of the Australian property rights’ ought to be embarked relationship with a thing. It refers to Constitution which states that: upon from the standpoint that such a degree of power that is recognised rights must meet a defensible test in law as power permissibly exercised Th e Parliament shall, subject to this of what a property right is. If these over the thing. Th e concept of Constitution, have power to make property rights are to be meaningful ‘property’ may be elusive. Usually it laws for the peace, order, and good to users, purchasers, and especially is treated as a ‘bundle of rights’. government of the Commonwealth the banks and fi nancial organisations But even this may have its limits as an with respect to… (xxxi) the acquisition that will use these rights as collateral analytical tool or accurate description, of property on just terms from any for mortgage-based loans, then and it may be… that “the ultimate State or person for any purpose in the test of whether they are indeed fact about property is that it does not respect of which the Parliament property rights is crucial. really exist; it is mere illusion”. (18) has power to make laws… In constructing such a test, it is essential to gain an appreciation of As previously stated, in varying In deciding whether the “units existing judicial considerations of degrees all ‘property rights’ result of fi shing capacity” were property,

17 Donald Denman (1981) “Recognising the property right”, 19 Bob Beale (1998) “Depths of Despair”. The Sydney Morning Herald The Planner 67:6, 161. (6 June) 10s. 18 Yanner-v-Eaton (1999) HCA 53, at 8 per Gleeson CJ, 20 A.D. Hargreaves & B.A. Helmore (1963) , An Introduction to the Gaudron Kirby & Hayne JJ. Principles of Land Law (New South Wales) (Sydney: The Law Book Co) 4.

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it was noted by the Court that the problems emerging from the actual partially negated by the concurrent limits of operation of Section 51 requirements of society. Nowhere restrictions. Th is led Kevin Gray and paragraph (xxxi) have not been more apparent is this seen than in the Susan Francis Gray to point out that: determined precisely. However, the recent commodifi cation of increasingly Court drew upon the defi nition of valuable natural resources, which …there may well be graduations of property as discussed in the Dalziel in the conferring of a property “property” in a resource. Th e amount case which was referred to earlier rights regime is hoped, in line with of “property” which a specifi ed person in this paper, and noted that the other resources such as fi sheries to may claim in any resource is capable approach in Dalziel was approved become more sustainably used. (19) of calibration – along some sort of in Australian Tape Manufacturers Th ere is a signifi cant history in sliding scale – from a maximum value Association Ltd v Commonwealth of the literature of attempts to identify to a minimum value…Far from being a Australia (1993) 112 ALR 53 at 65. the fundamental characteristics monolithic notion of standard content Th e Court decided that the “units present in any property right. A.D. and invariable intensity, “property” of fi shing capacity” were property Hargreaves and B.A. Helmore (20) thus turns out to have an almost rights which were generated by statute, point out that the foundations of infi nitely gradable quality. (22) WHAT ARE PROPERTY RIGHTS? “THERE IS A SIGNIFICANT HISTORY IN Given the above, a review of select THE LITERATURE OF ATTEMPTS TO IDENTIFY literature for this paper suggests that a more comprehensive tabulation of THE FUNDAMENTAL CHARACTERISTICS fundamental characteristics ought to PRESENT IN ANY PROPERTY RIGHT” provide a level of certainty such that a meaningful discourse for property rights can be constructed. In this regard, the writer is attracted to a form of comprehensive specifi cation of fundamental characteristics which and were ‘property’ for the purposes modern Western property rights appears to have been fi rst described by of Section 51 paragraph (xxxi). lie in the legal “world of the Middle Anthony Scott, (23) of the Department It will be seen that existing Ages”; however, like other branches of Economics, University of British judicial considerations of the notion of law, their present form is more Columbia in 1986. Scott describes a of ‘property’ fall short of providing a dependent on the historical forces of test for property rights which relies defensible test of what a property right the intervening centuries. Despite the upon the identifi cation of a minimum is. As stated previously, all property radical demise of the social obligations of six fundamental characteristics rights have the three qualities or of medieval feudalism in the 16th which he asserts to be present capacities of management, income/ century, the holder of property rights in any property right: Duration; benefi t, and alienation — each in have never totally escaped a certain fl exibility; exclusivity; quality of title; varying combinations. At a more remnant of duties to the community: transferability; and divisibility. fundamental level, there are also Scott shows how, when just four characteristics which are present Th ere has always been a thin trickle of of these characteristics are varied, in any property right, and which, public law which imposed duties... (21) the worth of a particular property depending on the blend and quality right can change, given that the of the characteristics, determines Th e value of a property right may amount of any of the characteristics the relative infl uence of the three be considered as the net private benefi t can be observable, measurable qualities or capacities outlined earlier. of the particular positive institution and continuously variable. Th ere Th e concept of property rights as it exists within a particular society. is considerable attraction in this arises from a need to address Th e benefi t of the absolute right is tabulation of characteristics which

21 Hargreaves & Helmore, 155. 23 Anthony Scott, Evolution of Individual Transferable Quotas as a Distinct 22 Kevin Gray & Susan Francis Gray (1998), “The Idea of Property in Land”, Class of Property Right edited version of a paper presented at the NATO in Land Law: Themes and perspective eds Susan Bright and John Dewar Conference on rights-based fi shing, Reykjavik, June 1988 and the APPAM (Oxford: Oxford University Press) 16. Conference, Seattle, January 1989.

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REFERENCES „ Anderson, Perry (1979).Lineages of the absolutist state, (London: Verso) „ Arrow, Kenneth J. (1996) “Foreword” in Rights to Nature: Ecological, Economic, Cultural, and Political Principles of Institutions for the Environment, eds S Hanna, C Folke and K Maler (Washington: Island Press) „ Barzel, Yoram, (1997) Economic Analysis of Property Rights 2nd ed, Political Economy of Institutions and Decisions series, (New York: Cambridge University Press) „ Beale, Bob. (1998) “Depths of Despair”. The Sydney Morning Herald (6 June) 10s. „ Denman, Donald. (1981) “Recognising the property right” The Planner 67(6)161 „ Ely, James W Jnr. (1998) The Guardian of Every Other Right: A Constitutional History of Property Rights 2nd ed Bicentennial Essays on the Bill of Rights (New York: Oxford University Press) „ Gray, Kevin & Gray, Susan F. (1998) “The Idea of Property in Land” in Land Law: Themes and perspectives eds Susan Bright and John Dewar Scott suggests to be a minimum charge based loan from a bank or (Oxford: Oxford University Press) when attempting to describe property other fi nancial institution. From „ Hargreaves A.D. & B.A. Helmore, B.A. (1963) An Introduction to the Principles of Land Law (New rights or interests which have been this line of reasoning, it can be South Wales) (Sydney: The Law Book Co) formed either by statute or even concluded that the tenure must „ Hyam, Alan (1995) The Law Affecting Valuation totally outside the common law. evidence qualities which lenders are of Land in Australia 2nd ed (Sydney: The Law Book It must be stressed that the notion comfortable and familiar with. Company Limited) of a ‘property right’ is not a legal Finally, as the Anglo-Australian „ Lie, John. (1993) “Visualizing the Invisible Hand: The Social Origins of ‘Market Society’ in England, term, and the foregoing discussion is legal system moves ever closer to an 1550-1750”, Politics and Society, 21(3) 275-305. not an attempt (nor should it be) to omnibus defi nition of property rights, „ Masson Sophie. (2001) “Here today, gone provide legal advice. Indeed, as this this process has already brought forth yesterday” The Sydney Morning Herald (14 October) paper has shown, there has been a long calls for a uniform titling system for 8S „ Moore, John (1945) Portrait of Elmbury, Modern history of reluctance by the courts to the two major classes of property Authors Series reprint (London: Collins 1964) articulate what is ‘property’ and a what rights, namely realty and personalty. „ Scott, Anthony (1989). Evolution of Individual is a ‘property right’. It is clear that the Th e importance of this prospect Transferable Quotas as a Distinct Class of Property form of tenure for a specifi c property for the valuation of plant and Right edited version of a paper presented at the NATO Conference on rights-based fishing, right should be driven by a synergy machinery cannot be overstressed, Reykjavik, June 1988 and the APPAM Conference of security and tradeability. Many given that in North Sydney Municipal 1989, (Seattle) January. permutations of tenure could doubtless Council v Boyts Radio and Electrical „ Smith, Adam (1978) Lectures on Jurisprudence. be constructed which, drawing upon (1989) 67 LGERA 344 at 345, Kirby Oxford: Oxford University Press. the six fundamental characteristics of J stated that property cannot be „ Vargas Llosa, Mario (2001) “Locally speaking, global is good” The Sydney Morning Herald (10 property rights identifi ed by Scott (24), arbitrarily expropriated, drawing February) 3Sw would result in a tenure which could be upon previous decisions (25) and utilised in a system of property rights. stating that this principle is: However, it is recognised that both security and tradeability …an essential idea which is both require that the form of tenure is basic and virtually uniform in capable of acting as collateral for a civilised legal systems. „

24 Scott 25 Dorrestijn-v-South Australian Planning Commission (1984) 59 AJLR 104

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430-438_Law_P&M.indd 438 6/6/2012 4:24:23 PM 2012 RMM RISK MANAGEMENT MODULE Launching July 2012

The Risk Management Module 2012 has been designed as a core Risk Management Module that must be undertaken by all new Members of the Institute and those who have not undertaken a Risk Management Module previously.

In addition, there will be a number of specialised Risk Management Modules available to Members who have already completed a Risk Management Module with the API. The specialised module chosen should align closely with the Valuation work being undertaken. The modules include: • Volume Residential for Mortgage Purposes • Commercial and Premium Residential for Mortgage Purposes • Government Acquisitions and Rating Valuations • Plant and Machinery Valuations • Private Clients, Financial Reporting, Rental Determinations and Expert Valuation Work • Valuers and Financial Institutions – an advanced workshop designed specifically for CEO’s and Senior Management within Financial Institutions

For further information refer to www.api.org.au under the Risk Management Module heading.

Untitled-1 1 6/5/2012 11:05:22 AM RETAIL RENT REVIEWS

RETAIL RENT REVIEWS TO CPI, A PRACTICE NOW OUT-DATED?

Retail leases commonly base rent reviews on movements in the Consumer Price Index (CPI), rather than actual movements in market rents. This article, by Carlton King, a director at Carlton Property Advisors, discusses the reasoning behind the use of CPI over market rent and the inherent advantages and disadvantages of the practice. Alternative indices and economic measures are analysed to determine if any are more refl ective of changes in market rents than CPI. It is found that a number of alternative indices exhibit a stronger relationship with market retail rents, with GDP by Industry, Manufacturing – Seasonally Adjusted, being the most comparable.

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for an arbitrator/third-party expert as “DESPITE THE ATTRACTIONS OF CPI AS A utilised in certain diffi cult negotiations. Th e CPI is perceived as a reliable basis SUBSTITUTE FOR MARKET RENT REVIEWS, for market rent reviews because the SEVERE CRITICISM REGARDING ITS ACCURACY data set is consistent among all parties. AND APPROPRIATENESS EXIST” However, this is not the case with market rent calculations due to the diffi culty of identifying and determining which properties to use as comparables INTRODUCTION and the eff ective rental rates of these comparables. Within the retail leasing sector it is common industry Th e perceived reliability of CPI derives from its practice to base rent reviews on increases in the Consumer objectivity, since it is based not on opinion but on a long Price Index – All Groups Category (CPI) over the more standing national index constructed and authored by conventional review to market. Th e reasoning behind this a government department (Department of Statistics). practice is discussed with its inherent theoretical advantages Moreover, the fact that the Reserve Bank of New Zealand and disadvantages identifi ed. Statistical analysis is then (RBNZ) has a mandate to contain annual infl ation within undertaken on CPI and selected alternative economic a band stretching from 1% to 3% gives both landlords measures in order to determine the appropriateness and tenants reasonable certainty as to the level of future of CPI to refl ect market rents. It is concluded that a rental growth. Th is in-built constraint within the CPI has number of alternative variables are more representative the eff ect of limiting the impact of market fl uctuations on of retail market rents, over CPI. Th e most comparable contract rent upon review, to the benefi t of tenants (when alternative to retail market rent is found to be GDP by demand for a particular location increases, pushing up Industry, Manufacturing – Seasonally Adjusted. market rental levels at a greater rate than increases in the CPI) or to landlords (when the opposite trend occurs). CONSUMER PRICE INDEX It is common practice in commercial lease agreements, ARGUMENTS AGAINST USING CPI predominantly in the retail sector, to incorporate a rent Despite the attractions of CPI as a substitute for market review clause that bases the increase in rental paid under rent reviews, severe criticism regarding its accuracy the lease on the increase in the CPI over the corresponding and appropriateness exist. Such criticisms stem from period. Th e CPI is an index formulated from specifi cally the fact that rent reviews, based on changes in CPI, are weighted price levels of a predetermined selection of unlikely to accurately refl ect the actual movement in household expenditures that are consistently measured market rental levels. Th e argument for this inaccurate every quarter. Th e change in this index is used to determine portrayal is based on the fact that the basket of goods the rate of infl ation over the period in question. used to determine changes in CPI does not include retail rents. Th e most comparable item within this basket, WHY CPI IS USED in terms of item similarity, is residential rent levels. Th e rate of infl ation is used as a basis to adjust the level of However, arguably residential rent bears little rental upon review as an alternative to market rent reviews correlation to changes in retail rent levels because it for a number of reasons, including simplicity, timeliness, is driven by unique market forces. Price changes in reduced disagreement, cost savings and reliability. Simplicity other constituents of this basket, such as footwear derives from the fact that the calculation is relatively straight- and alcoholic beverages, have no apparent direct link forward and can be easily calculated by parties to the lease. to retail rental levels. Micro factors are not included Timeliness is achieved because external advisors, such as within CPI in the sense that those aff ecting a certain valuers, are not required. Room for disagreement is reduced locality are not incorporated into CPI rent reviews in because the calculation formula is stipulated within the any way as CPI is a uniform fi gure over the entire, or Deed of Lease document – generally with the provision of macro, economy. Th e rise in New Zealand GST from a worked example. Cost savings are obtained as there is no 12.5% to 15% in October 2010 was incorporated within requirement for a valuer to determine market rental, nor the CPI index as it is based on GST inclusive fi gures.

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Retail tenants are GST registered and by virtue of the neutrality of the GST tax, are not subject to this increase. CARLTON KING Th e fi nal theoretical argument as to why movements DIRECTOR AT CARLTON PROPERTY ADVISORS in CPI do not accurately refl ect movements in retail market rental levels is that the level of infl ation, since September 2002, has been targeted by the RBNZ using monetary policy to remain within the range of 1% to 3% per annum. Commercial rents are not subject to any central Government regulation or interference in any way except through Government’s standard leasing, purchasing and divesting activity, therefore inconsistencies arise. Aside from arguments arising from the makeup of CPI, the fundamental argument against basing rent reviews upon changes in the CPI index is that when the rate of infl ation exceeds the rate of market rental growth, tenants pay a higher rental than market. Conversely, when rental growth outstrips infl ation tenants pay a lower rental than market. If no market review is incorporated within the Deed of Lease’s rental clause to periodically occur in a long-term lease the rent payable under the lease will not be realigned with the market rent level. Consequently, the contract rental amount can diff er greatly from the market rental level, to the detriment of either the landlord or tenant. It is therefore imperative to base rent reviews, when not adjusted by a market review, on an index or economic measure most comparable to actual market rents. Th e correlation between CPI and market rental is slightly biased, however, therefore it makes sense to investigate the possibility of a more accurate measure. RELATIONSHIP BETWEEN CPI AND MARKET RENTS An anomaly exists between CPI and retail market rents. Th e use of the CPI as a determinant of a large proportion of retail rental reviews, by its utilisation as a multiplier, results in an increased correlation between CPI and market rents. Th is anomaly artifi cially strengthens the relationship between the above two variables and gives unjust advantage to CPI when compared with other variables as a substitute to market rental adjustments upon review. CPI rental adjustments may therefore play a part in the widely held belief that, in the long term, property is one of the most infl ation-proof asset classes. MANIPULATION OF RENT BY DEED OF LEASE Prior to statistical analysis being undertaken it must be noted that the diff erence in rental,

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TABLE 1: CORRELATION BETWEEN IPD RETAIL RENTAL INDEX AND SELECTED INDICES AND ECONOMIC MEASURES

INDEX/MEASURE SUB-CATEGORY BASE CORRELATION WITH IPD

All Groups -0.13 CPI Tradables* Base: June 2006 =1000 -0.22 Non-tradables* -0.17 TWI Base June 1979 = 100 0.00 Actual -0.09 SALES PER HEAD OF POP. Seasonally adjusted Current -0.12 Trend -0.11 Actual -0.05 SALES PER HEAD OF POP. Seasonally adjusted Defl ated, at Sep. 2010 quarter prices -0.10 Trend -0.10 Price Index by Group of Capital Goods CAPITAL GOODS PRICE INDEX Non-residential Buildings -0.12 (Base: Sep. Quarter 1999 = 1000) Price Index by Item of Capital Goods; CAPITAL GOODS PRICE INDEX Shops and Offi ces (Base:Sep. Quarter 1999 = 1000) (Qrtly- -0.12 Mar/Jun/Sep/Dec) CPI Level 2 Subgroups for New Zealand (Qrtly-Mar/ CPI Actual rentals for housing -0.10 Jun/Sep/Dec)* Wholesale Trade - Total Market and Non-Market -0.18 Seas. Adj. Const. Price (Qrtly-Mar/Jun/ PRODN A/C, GDP (PRODN MEASURE) BY AGGREGATED IND Retail Trade - Total Market and Non-Market -0.08 Sep/Dec) Finance and Insurance - Total Market and Non-Market -0.11 PRODN A/C, GDP & GDE, MARKET PRICE, SEAS. ADJ. QUARTERLY Gross Domestic Product - product measure Constant Prices -0.03 (QRTLY-MAR/JUN/SEP/DEC) Gross Domestic Product - expenditure measure -0.05 Primary industries -0.12 Chain-volume series expressed in GROSS DOMESTIC PRODUCT BY BROAD INDUSTRY GROUP Goods-producing industries 0.18 1995/96 prices Gross domestic product -0.03 Agriculture -0.06 Fishing, forestry and mining -0.20 Manufacturing 0.23 Electricity, gas and water 0.12 Construction 0.08 Wholesale trade Seasonally adjusted chain-volume series -0.18 GROSS DOMESTIC PRODUCT BY INDUSTRY Retail, accomm. and restaurants expressed in 1995/96 prices -0.07 Transport and communication -0.05 Finance, insurance and business services -0.09 Govt. admin and defence -0.12 Personal and community services 0.01 Gross domestic product -0.03 Primary industries Seasonally adjusted chain-volume series -0.12 expressed in 1995/96 prices GROSS DOMESTIC PRODUCT BY BROAD INDUSTRY GROUP Goods-producing industries 0.18 Values and percentage change from same Gross domestic product -0.03 quarter of previous year Agriculture 0.05 Fishing, forestry and mining -0.22 Manufacturing 0.24 Electricity, gas and water 0.11 Construction 0.08 Wholesale trade Actual chain-volume series expressed in -0.15 GROSS DOMESTIC PRODUCT BY INDUSTRY Retail, accomm. and restaurants 1995/96 prices -0.04 Transport and communication -0.03 Finance, insurance and business services -0.09 Govt. admin and defence -0.13 Personal and community services 0.01 Gross domestic product -0.02 Final consumption expenditure - Private -0.07 Final consumption expenditure - General government -0.12 Gross capital formation - Change in inventories 0.08 Gross capital formation - Residential buildings 0.25 Seasonally adjusted chain-volume series EXPENDITURE ON GROSS DOMESTIC PRODUCT Gross capital formation - Other fi xed assets -0.10 expressed in 1995/96 prices Gross national expenditure -0.06 Exports of goods and services 0.00 Less imports of goods and services -0.07 Expenditure on gross domestic product -0.05 Finance 0.14 Real Estate Outputs - (ANZSIC96) - ANZIND96 level -0.13 PPI INDEX Ownership of Owner-Occupied Dwellings2, Base: Dec 1997 Quarter (=1000) (Qrtly- -0.08 Other Property Services Mar/Jun/Sep/Dec) -0.13 Business Services -0.09

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TABLE 2: COMPARATIVE VARIABLE AND CPI-ALL GROUPS

between market rent and the rent as adjusted by a variable, may be restricted by the Auckland District Law Society (ADLS) lease as it includes a soft ratchet clause. Th e ADLS lease is the most prevalent lease in the New Zealand retail property sector. Th e result of the soft ratchet clause is that rents may fall, but not to a fi gure below that of the rental level as at the commencement date of the then current lease term. Th e rental at commencement is predominantly the market rent at that time. Reviews of this rent will therefore not always mirror the market rent, even if the lease adjusts rent to the market rent, as the ratchet clause will hold the rent payable at an artifi cial level if market rents fall to below the commencement rent level. Frequently found in longer term leases, in which rental is adjusted by CPI, is a periodic rental review to the market rent as at that time. Th is reduces the inequality that may be placed on either the Tenant or Landlord due to a deviation of the rental amount, if adjusted by CPI, from the true market rental fi gure. REFER TO TABLE 1: PAGE 444 ALTERNATIVES TO CPI Given the fundamental fl aws of using CPI as a substitute for market rent reviews, which arguably reduce its degree of accuracy in predicting retail rent levels, CPI may not be the most appropriate index on which to base retail rent reviews. A number of possible suitable alternative indices and economic measures exist, as listed in Table 1. In order to select possible alternatives to the CPI index a number of criteria must fi rst be satisfi ed, with the most important being the continuity and public availability of the index, accessibility at no charge, and a methodology that infrequently changes. An alternative index or economic measure must also be robust, contain periodic index updating at set intervals (minimal quarterly updating), have low likelihood of a large variation due to a single infrequent event unique to a specifi c locality (such as an earthquake), and be published by a reputable organisation. Th e alternative indices and economic measures that have satisfi ed the above criteria are now analysed in relation to market rents as measured by IPD’s Retail Rental Index, which is fi rstly defi ned. Market rental level data is collected from an index measuring rent per square metre for retail premises from the December quarter 1997 to the June quarter 2011, as published by IPD. Th e IPD New Zealand Property database currently includes 96 retail properties valued at NZ$2744.9 million, which are owned/managed by 14 diff erent funds/ managers, as at June 2011. Th e constituents used in the formation of IPD’s Retail Rental Index (IPD Index) include listed property vehicles, unlisted wholesale property funds and unlisted retail property funds. Th e rent per square metre

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FIGURE 1: RENT PER m2 ADJUSTED BY VARIABLES

RENT MOVEMENTS BASE DECEMBER QUATER 1997 = $281.56

IPD RENT PER m2 EXP. ON GDP – RES. BLDGS CPI – ALL GROUPS GDP – MANUFACTURING – SA – CV GDP – MANUFACTURING – ACTUAL – CV

(sq. m) listed by IPD is the actual rent received over the CORRELATION OF CPI AND SELECTED VARIABLES annual period to the end of the respective quarter, essentially TO MARKET RENTS being the portfolio rent. It is unadjusted and presented in Th e coeffi cient of correlation (ρ) is employed to determine nominal terms. Conversely to the argument mentioned which variable has the greatest correlation with market earlier, the IPD index is largely unaff ected by changes in rents. Th e coeffi cient of correlation is a measure of the CPI. Th is is due to the practice of retail rents in larger relative strength of a linear relationship between two regional shopping centres, of which a large majority of the variables; i.e. how the movement in two variables is properties contained within IPD’s index consist, being based related. Th e coeffi cient of correlation is expressed as a on percentage rentals with a ‘to market’ adjusted base rent. fi gure ranging from -1 (perfect negative correlation) to +1 (perfect positive correlation) with a fi gure of 0 indicating that there is exactly no correlation between the variables. Table 1 lists the correlation between movements in the listed variable and movements in the IPD Index. Th e six most positive and six most negative correlations have been highlighted. Th e CPI – All Groups Index, the current index utilised as a base for rent reviews in substitution for TABLE 3: MEAN AND STANDARD DEVIATION OF market rent reviews, has a correlation with the IPD Index COMPARATIVE VARIABLES AND CPI-ALL GROUPS of -0.13 over the period December 1997 – June 2011. Th is negative correlation indicates that there is a weak negative VARIANCE TO IPD RENT PER M2 linear relationship between the two variables; when CPI GDP – GDP – EXP. ON GDP – CPI – ALL increases to a higher value there is a weak tendency for MANUFACTURING MANUFACTURING RES. BLDGS. GROUPS – ACTUAL – CV – SA – CV market rent to decrease to a lower value. Th e strongest positive correlations found between the IPD Index and MEAN 35.86 31.45 48.26 44.90 analysed variables, although only exhibiting weak positive STDEVP 22.66 18.59 29.99 27.79 correlations, are, in descending order, Expenditure on GDP,

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Gross Capital Formation – Residential Buildings, Seasonally Industry, Manufacturing – Actual owing to a smoothing Adjusted 0.25, GDP by Industry, Manufacturing, Actual of the yearly cycle by higher December quarter fi gures. Chain-volume 0.24, GDP by Industry, Manufacturing, Seasonally Adjusted 0.23, GDP by Broad Industry Group, REFER TO TABLE 3: PAGE 446 Goods Producing Industries, Chain-volume 0.18, GDP by Broad Industry Group, Goods Producing Industries, Diff ering correlations with the IPD Index, among the Seasonally Adjusted 0.18, PPI Index, Finance, Outputs 0.14. three most highly correlated variables and CPI, results in varying rental levels if rent is adjusted by these variables. REFER TO TABLE 2: PAGE 445 A lease commencing December 1997 at the market rate of $281.56 per sq. m would have a market rent of $256.91 REFER TO FIGURE 1: PAGE 446 per sq. m in June 2011, yet the rent would have increased to $392.64 per sq. m if adjusted by CPI –All Groups. Th is Figure 1 visually depicts the movement in the IPD Index, equates to a 52.83% premium over the market rental level. including the most highly correlated variables and CPI, Th e average diff erences from the market rent (IPD rental with the base being the IPD Index’s rental level in the fi gures) are smallest for GDP by Industry, Manufacturing December 1997 quarter. Table 2 lists the values of these – Seasonally Adjusted at $31.45 and for GDP by Industry, variables; permission to list IPD rental fi gures has not been Manufacturing – Actual at $35.86, Expenditure on GDP, obtained. Movements in the IPD Index are characterised Gross Capital Formation – Residential Buildings at $48.26 by a weak repetitive cyclical pattern, which is a typical and for CPI – All Groups an average of $44.90. Th e standard phenomenon in the property market. Expenditure on deviation (STDEVP in Table 3) of variances between the GDP, Gross Capital Formation – Residential Buildings market rent and selected variables, which is a measure of shows a close correlation with the IPD Index between the dispersion of a set of data from its mean, is the smallest mid-2001 to 2005 but outside of this time frame the for GDP by Industry, Manufacturing – Seasonally Adjusted correlation weakens. Th e CPI – All Groups Index exhibits at $18.59, followed by GDP by Industry, Manufacturing a relatively linear upward trend across the entire time – Actual at $22.66. Expenditure on GDP, Gross Capital period and appears uninfl uenced by the same factors as Formation – Residential Buildings and CPI – All Groups retail rent. GDP by Industry, Manufacturing – Seasonally have standard deviations of $29.99 and $27.79 respectively. Adjusted exhibits a smoother trajectory than does GDP by GDP by Industry, Manufacturing – Seasonally Adjusted

TABLE 4: MULTIPLE REGRESSION: IPD RENTAL INDEX TO LISTED VARIABLES

INDEX/MEASURE SUB-CATEGORY BASE R2 F SCORE T-TEST FOR SLOPE SIGNIFICANCE F P VALUE CPI - All Groups 0.0158 0.8505 0.9222 0.3606 0.3606 CPI Tradables Base: June 2006 =1000 0.0468 2.3083 1.6134 0.1354 0.1354 Non-tradables 0.0288 1.3935 1.2536 0.2437 0.2437 PRODN A/C, GDP (PRODN Wholesale Trade - Total Seas. Adj. Const. Price 0.0310 1.6960 1.3023 0.1984 0.1984 MEASURE) BY AGGREGATED IND Market and Non-Market (Qrtly-Mar/Jun/Sep/Dec) GROSS DOMESTIC PRODUCT BY Chain-volume series Goods-producing industries 0.0327 1.7921 1.3387 0.1864 0.1864 BROAD INDUSTRY GROUP expressed in 1995/96 prices Fishing, forestry and mining 0.0395 2.1801 1.4765 0.1457 0.1457 GROSS DOMESTIC PRODUCT BY Seasonally adjusted chain- Manufacturing volume series expressed in 0.0537 3.0073 1.7341 0.0887 0.0887 INDUSTRY Wholesale trade 1995/96 prices 0.0311 1.6994 1.3036 0.1980 0.1980 Seasonally adjusted chain- GROSS DOMESTIC PRODUCT BY volume series expressed in Goods-producing industries 1995/96 prices. Values and 0.0327 1.7921 1.3387 0.1864 0.1864 BROAD INDUSTRY GROUP percentage change from same quarter of previous year Fishing, forestry and mining 0.0471 2.6222 1.6193 0.1113 0.1113 GROSS DOMESTIC PRODUCT BY Actual chain-volume series Manufacturing 0.0584 3.2847 1.8124 0.0756 0.0756 INDUSTRY expressed in 1995/96 prices Wholesale trade 0.0229 1.2405 1.1138 0.2704 0.2704 Seasonally adjusted chain- EXPENDITURE ON GROSS Gross capital formation - volume series expressed in 0.0637 3.6062 1.8990 0.0630 0.0630 Residential buildings DOMESTIC PRODUCT 1995/96 prices

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was the most comparable index on which to base retail IPD Index of > 0.15 or < -0.15, with CPI also included rent reviews over the analysed period as it had the lowest as it is the current index used when rents are adjusted average deviation, or dispersion, from the IPD Index by a variable. Th erefore, apart from CPI, only the most and the lowest standard deviation of this average. comparable indices and economic measures are analysed. Th e R Square determined from the regression analysis REGRESSION ANALYSIS denotes the predictive power of the model, or the coeffi cient Th e purpose of regression analysis is the development of a model of determination (R2). A model’s R2 is a measure of the from which predictions are generated for a dependent variable, proportion of change in ‘retail rent levels’ (dependent based on the values of one or more independent variables. Th e variable y) explained by changes in the independent output of this model, which is a prediction line, is graphed with variable over the period in which the data was collected. the dependant variable on the y axis and the independent variable For example, it can be seen that changes in the CPI Index on the x axis. Th e regression output also includes information explains 0.0158 or 1.58 % of the movement in retail rent concerning the level of statistical signifi cance of the model. A levels. Th e F Test for the slope tests if the slope given by single factor regression analysis is employed to test the strength the regression model, generated from using the coeffi cients of the relationship between the IPD Index and selected variables. of determination above, is statistically signifi cant or not. Th is regression model for the prediction Using 53 degrees of freedom the critical value of F of line is depicted as: Yi = β0 + β1Xi 2.8027 is determined. Th is implies that any variable with an F statistic over 2.8027 has a prediction line slope that Where: Yi = Dependent variable is statistically signifi cant at the 90% confi dence level. A β0 = Y intercept (intercept coeffi cient) statistically signifi cant slope indicates that for a change β1 = Slope of the linear regression in the independent variable there will be a corresponding line (X variable coeffi cient) change in the dependant variable with 90% confi dence. Xi = Independent variable Th e t Test for the slope is used to determine if a statistically signifi cant linear relationship exists between the dependent ‘Retail rental levels’ is the dependant variable that this model variable and independent variable. At the 90% confi dence is constructed to predict. Th e Y intercept is the point on the level, the critical value of t, with 53 degrees of freedom, is Y (vertical) axis where the regression line crosses the axis; it is the 1.6741. Th is implies that any variable with a t stat over 1.6741 mean value of Y when X is zero. Th e slope of the linear regression has a statistically signifi cant linear relationship with market line is denoted by β1 which represents the expected change rent at the 90% confi dence level. With the signifi cance level in Yi for a one unit change in Xi. Th e independent variables set at 0.10, the Signifi cance F and P-value must be 0.10 or are the indices and economic measures as listed in Table 4. lower in order to be 90% confi dent that a linear relationship exists between retail rent levels and market rent levels. REFER TO TABLE 4: PAGE 447 Th e results of the regression analysis undertaken, as depicted in Table 4, show that three variables Regression analysis has only been conducted on those exhibit statistically signifi cant linear relationships indices and economic measures that correlate with the with the IPD Index at the 90% confi dence level. Th ese

TABLE 5: SUMMARY OF STATISTICS

CORRELATION WITH MEAN DIFFERENCE STANDARD DEVIATION R2 MARKET RENT FROM MARKET RENT OF DIFFERENCE

CPI CPI - ALL GROUPS 0.0158 -0.1257 44.90 27.79 GROSS DOMESTIC SEASONALLY MANUFACTURING 0.0537 0.2317 31.45 18.59 PRODUCT BY INDUSTRY ADJUSTED GROSS DOMESTIC ACTUAL CHAIN MANUFACTURING 0.0584 0.2416 35.86 22.66 PRODUCT BY INDUSTRY VOLUME GROSS CAPITAL EXPENDITURE ON GROSS FORMATION - SEASONALLY 0.0637 0.2524 48.26 29.99 DOMESTIC PRODUCT RESIDENTIAL ADJUSTED BUILDINGS

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ineff ective. Expenditure on GDP, Gross Capital Formation “CPI MAY NOT BE THE MOST – Residential Buildings possesses the greatest R2 but also APPROPRIATE INDEX ON WHICH a signifi cantly higher mean diff erence of rental fi gures, and standard deviation of these diff erences, from actual TO BASE RETAIL RENT REVIEWS” market rents and is therefore not recommended either. Both tenants and landlords are argued to prefer a variable to base movements in retail rental levels upon review that is closely aligned with movements in actual variables are Expenditure on GDP, Gross Capital market rent. Since the use of CPI as a determinant of Formation – Residential Buildings, GDP by Industry, retail rent movements is fundamentally fl awed and Manufacturing – Seasonally Adjusted, and GDP by is not statistically signifi cantly related to market rent Industry, Manufacturing – Actual. However, the CPI movements (see Table 5), a more comparable index is index has a P Value of 0.3606. Th is implies that we can recommended, which is GDP by Industry, Manufacturing be only 63.94% confi dent that a linear relationship exists - Seasonally Adjusted. Both Tenants and Landlords between retail rent levels and CPI, as opposed to over are now privy to information which will aid them in 90% confi dent for the three above listed variables. lease negotiations relating to rent review clauses. CONCLUSION GDP BY INDUSTRY, MANUFACTURING – SEASONALLY ADJUSTED REFER TO TABLE 5: PAGE 448 Th e measure of GDP by Industry, Manufacturing - Seasonally Adjusted, is located on Statistics New Zealand’s Th e aim of this article is to discuss the reasoning website (http://www.stats.govt.nz) under “Stats in Demand” behind the use of CPI over market rent as a “GDP” “Downloads” “Gross Domestic Product”, table 2.2 determinant of movements in contracted retail rent of this spreadsheet includes the above-mentioned measure. upon review, and to identify the inherent advantages and disadvantages of the practice. Alternative indices ARTICLE LIMITATIONS and economic measures have been analysed to Th e fi ndings in this article are limited by the fact that the determine if any are more refl ective of changes in market IPD Index, although the most complete index of retail rents than CPI. Th eoretical analysis concludes that a rental levels in New Zealand, has its limitations. Th ese number of fundamental arguments exist to support limitations arise from the fact that the sample used to derive using movements in CPI as a basis to adjust retail the index in 1997 is much smaller than the sample size rents upon review over the more conventional review today. Th is index also had a greater skew towards larger to market. It is argued to be more simple, timely, less Shopping Centres, therefore a stronger average rent was expensive, reliable, relatively predictable and consensual. expected than the current make-up of sample properties. Arguments against utilising CPI include the fact that Access to the IPD Index is via subscription, therefore a lack retail rents are not incorporated within the calculation of accessibility and transparency exists. Th e IPD Index’s of CPI. CPI is tied to the macro economy, is not location applicability to the average retail tenancy is questionable specifi c and is mandated to fall between 1% to 3% per as the sample of retail tenancies used in this index are annum. In addition to the above theoretical arguments, unique in that they are predominantly located within empirical analysis provides irrefutable evidence that more regional and suburban shopping centres. Shopping centre comparable indices than CPI to market rents exist and popularity appears to be increasing due to changing societal could be fruitfully utilised. Th e Consumer Price Index trends, which aff ects rents in these centres diff erently – All Groups possess a correlation of -0.1257 and a R2 than rents in non-shopping centre retail tenancies. of 0.0158 to market rent while these fi gures for the most It would be extrapolation to suggest that the comparable index are 0.2317 and 0.0537 respectively (See relationship between market rents and GDP by Industry, Table 5). Th is most comparable index is found to be GDP Manufacturing – Seasonally Adjusted will continue into by Industry, Manufacturing – Seasonally Adjusted. Th is the future with the same level of statistical signifi cance, measure when not seasonally adjusted is statistically more although it appears likely given the relationship between comparable based on R2 but seasonal spikes render it these two variables over the previous 13-year period. „

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Profile: Matthew Chun, Chief Executive Officer, Becton Property Group By Maurice Dunlevy

decade has passed “The award was certainly one the landmark Breakfast Point housing since Matthew of my career highlights,” says project in Sydney, separate apartment Chun became API Matthew who, as a 31-year-old and office projects in the Adelaide CBD, Victoria’s inaugural winner, was one of the pioneers of the a Hobart hotel and Darwin’s Mitchell Young Achiever of superannuation industry’s move into Centre mixed-use shopping complex. Athe Year, but the passage of time property development. “Cbus wanted to put money back hasn’t changed his adherence to the Hired by Cbus to effectively fill into the industry, but also wanted award ideals of exceptional skills, the gap left by David Marriner after higher returns than those on offer dedication and commitment to the the maverick developer’s acrimonious from the trusts,’’ he says. property industry. fallout with the superannuation giant, it Former Cbus marketing boss Maria Today, Matthew is a 40-something was Matthew’s job to find development Butera, now one of the fund’s most chief executive of Melbourne’s Becton opportunities around Australia. senior executives, persuaded Matthew Property Group, but when he took Chasing higher returns than to throw his hat in the ring for an out the prestigious API award in 2002 traditional property investments, Cbus inaugural API Young Achievers of the he was a rising star at construction had invested almost $200 million in Year Award, now one of the property industry super fund Cbus. development projects that included industry’s most sought-after prizes. “After 12 to 18 months in the job we had a couple of projects going pretty well, so we thought it was a good story,’’ says Matthew. “I was short- listed, interviewed by a panel and won the award.’’ It was a fitting result for Matthew who, after graduating from La Trobe University in 1991 with an Economics Degree and major in accounting, found himself without a job at the height of the ‘recession we had to have’. “My dream was to get a job with a big accounting firm, but they weren’t taking graduates,” he says. Matthew’s big break came instead during a surf patrol at Fairhaven Beach when commercial and industrial real estate veteran John Lawson, also a Fairhaven Surf Club member, offered him a six-month job at Hamilton Lawson, filling in for an accountant who was on maternity leave.

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Matthew, a life member of the surf life saving club, became its Treasurer at the age of 22 and has clocked up 23 years of continuous beach patrols. As well as running the club’s Nippers program, he’s also the chair of a building committee that is attempting to raise $900,000 to construct one of Australia’s most modern surf life saving complexes. “By the time the accounting job was over John thought that I would be really good at real estate, so I somewhat reluctantly became an agent,” he says. MATTHEW CHUN, CEO, BECTON PROPERTY GROUP With the depths of the recession making it virtually impossible to store, and the amount of research was Becton, the publicly listed group sell commercial and industrial unbelievable,’’ he says. Matthew has headed since 2008, ended property, Matthew was thrown into With more than 10 years’ up being a big part of the consultancy, the deep end of a leasing market accumulative experience in each of the eventually acquiring the business in 2004. where doorknocking was the norm to main property markets under his belt, He took over the running of win listings, and where tenants were Matthew then turned his attention to Becton’s then burgeoning funds frequently close to going under. the superannuation industry through a management business in 2006 before To his surprise, he loved the job, new job at Cbus. moving to the role of chief operating frequently using his accounting skills “They took a punt on somebody officer in the middle of 2007. to analyse prospective tenant cash who didn’t have any funds That was in preparation to take flows to demonstrate to them that management experience, but I threw charge of the company, replacing lease deals stacked up. everything I had into the job,” he says. long-time CEO Hamish Macdonald He also became a fully qualified agent, “Luckily, I was single at the who had decided to exit the business at as well as completing a Graduate Diploma time and able to launch myself the end of 2008. in Property from RMIT, ahead of a into another course — a Graduate But as with the best laid schemes of deliberate career decision to understand Diploma in Applied Investment mice and men, Matthew found himself each and every element of property. and Finance — that gave me funds in the top job in August 2008, after the That resulted in a move firstly to management-type skills.” GFC hit Becton hard by the middle of inner-Melbourne apartment specialist He left Cbus in 2003 to start his that year. Central Equity, where Matthew spent own business: A consultancy targeting “We had to adjust to a very different two and half years learning about funds managers with a development landscape, and since then it’s been a residential property. angle to their business. very challenging journey,” he says. Next stop was Coles Myer where, That meant working at the Matthew remains upbeat about as well as being part of Australia’s coalface with some of Australia’s Becton’s future as a company focussed largest retail property operation, he best developers, giving him a unique on social housing, medium density also gained insider knowledge about insight into their businesses. residential and retirement markets, the systems and processes used for the “I would sit around a table with but he warns of a restrained capital- group’s then 1800 stores. developers and make sure they had the induced structural shift that will “They had to put in a lot of right processes and balances, while make it challenging for publicly listed processes before they opened a new always ensuring that projects stacked up.” property companies. „

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WILL Lead author: Andrea QUEENSLAND Blake, Senior Lecturer in Property Economics, TORT REFORM Queensland University of Technology; co-author: CHANGE Chris Eves, Professor VALUATION in Property Economics, Queensland University PRACTICE of Technology AND VALUERS’ LIABILITY?

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ABSTRACT that the end of an extended period through Valuers Registration Acts in It has been common practice over of economic prosperity such as some states. Of further interest is the past property boom and bust has been experienced in Australia, initiative of the Australian Property cycles in Australia for fi nancial will once again be marked by an Institute to introduce a capped liability institutions and property owners increase in litigation against valuers scheme by virtue of the Professional who have suff ered a loss in the for professional negligence. Standards Acts in each state property downturn to sue valuers Th e valuer acts as an independent (Professional Standards Act 2004 (Qld)). for negligence. Damages claimed are professional whose responsibility is Th e aims of this paper are to based on the price diff erential between not only to their client in contract and identify the key drivers for negligence the valuation at or nearing the peak in tort but this duty extends to third litigation against valuers and to of the market and the subsequent sale in the market downturn. However, the context of valuers’ “LITIGATION AGAINST VALUERS SEEMS TO liability has become increasingly complex as a result of statutory reforms FALL INTO TWO MAIN THEMES: HUMAN introduced in response to the Review ERROR AND VALUATION ACCURACY” of the Law of Negligence Final Report (2002), in particular the introduction of Civil Liability Acts introducing parties to act with reasonable care and identify the impact of proportionate liability provisions. skill as widely accepted by peer opinion statutory reforms on Legislative reforms have had some (Section 22(1) of the Civil Liabilities property valuers. Th e positive outcomes for valuers; however Act 2003 (Qld)). Th e context of valuers paper is structured as they need to continue to maintain high liability has become increasingly follows: Th is section ethical standards, independence and complex as a result of statutory reforms is immediately professionalism in valuation practice. introduced in response to the Review followed by a review of the Law of Negligence Final Report of relevant literature INTRODUCTION 2002 (“the IPP Report”), in particular pertaining to Historically, there has been a the introduction of Civil Liability Acts valuation litigation, correlation between the economic in each state and proportionate liability followed by a cycles and litigation in the area of provisions. Th e landscape of torts in discussion of how the area of professional negligence relating to Australia, formerly within the gambit professional negligence is likely to be valuers. Negligence actions have of the common law, is now largely impacted by reforms to torts law and a principally been instigated by regulated by each state’s Civil Liability discussion of the most recent valuation fi nanciers for valuations prepared Act. Although outside the scope of this negligence case law to get a snapshot during more buoyant economic times, paper, the application of the Australian of what, if anything, has changed. where there has been a subsequent loss consumer protection law also extends Finally, conclusions are drawn and due to a reduction in property value. to the valuer, in particular section 18 areas for future research are identifi ed. More specifi cally, during periods of of the Competition and Consumer Act economic downturn such as 1982 2010 (Cth) (formerly s 52 of the Trade LITERATURE REVIEW to 1983 and 1990 to 1998 there has Practices Act 1974 (Cth)) and section Litigation against valuers seems to been an increased focus by academic 38 of the Fair Trading Act 1989 (Qld) fall into two main themes: Human writers on professional negligence as which deals with misleading and error and valuation accuracy. it relates to property valuers. Based deceptive conduct. Valuers may also Human error includes issues such on historical trends it is anticipated be subject to disciplinary proceedings as reliance on inappropriate sales

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evidence, poor analysis of sales buoyancy followed by a period of sharp the legal profession, the reality is that evidence, failure to adequately and possibly extended decline there for valuers there is not only a sense of inspect the property, use of incorrect will be a wave of similar claims. Lavers professional responsibility towards the methodology or improperly applied notes that this proposition is supported client to resolve the dispute but also methodology. Valuation accuracy may by Connell (1990), Evans (1993) and the reputation of the fi rm to protect. be impacted by the economic cycles. Crosby et al (1998b). Secondly, there Interestingly, unless specifi cally Th e predominant themes which are the more routine claims which are instructed by the client the valuer is are evident in the academic literature unrelated to market cycles and occur engaged to undertake the valuation pertaining to valuation negligence are as a result of human error. Th is may on the basis of the fair market value as the establishment of a link between be due to a variety of poor practices defi ned by the International Valuation valuation litigation and the economic including pressure from the client Standards as at the date of valuation. cycles with a noticeable spike in to reach a certain valuation fi gure. It was determined in Banque Bruxelles valuation negligence actions arising Murdoch (2001) further comments Lambert SA v Eagle Star Insurance1 at the end of a period of economic that it is rare for the lender to seek to that the valuer is under no obligation prosperity; and valuation accuracy claim against the valuer for failure to inform the client on any further and an acceptable ‘margin of error’ to recognise the changing market movements in property values or any to be applied in valuation litigation. conditions. It is more common that obligation to provide commentary on litigation is initiated against valuers what may be the ‘worst case scenario’ NEGLIGENCE LITIGATION AND for some other negligent action. Joyce (Christensen and Duncan, 2004). A ECONOMIC CYCLES and Sharpe (1997) made comment valuation is also prepared as at a point Th ere appears to be a correlation that during the buoyant periods of in time. Reliance on that valuation between the economic cycles and the 1980s valuers who ‘cut corners’ aft er a signifi cant lapse of time is litigation against valuers for negligently found themselves being pursued by considered unreasonable. In the case performed valuations with an increase fi nanciers and developers. Further, of Ta Ho Ma Pty Ltd v Allen2 reliance in the number of disputes occurring even those valuers who had not cut on a valuation prepared nine months immediately following a downturn in corners “found themselves on the ago was considered to be unreasonable the market. Th is may well be due to receiving end of litigation as lenders without making further enquiry. fi nanciers not being able to liquidate and developers looked for a scapegoat” Th e extent to which the valuer the asset for the fi gure specifi ed in the (Joyce and Sharpe, 1997 at page 559). should be accountable for the overall risks valuation following a mortgagee in Th e reality of valuation work is that of the clients was also explored by Lee possession action. Th is proposition clients rely on valuations to support (1996) and Murdoch (2001). Murdoch is supported by Murdoch (2001) who their entry into property transactions. (2001) provided a commentary and has drawn the correlation between According to Lavers (2001) when clients reconciliation of the United Kingdom the economic cycle and litigation seek to recoup or at least partly off set as against the Australian position against property valuers based on their losses sustained in transactions, on this matter. Th e United Kingdom both UK and Australian valuation property valuers represent a target has taken a fundamentally diff erent and case data. More specifi cally due to their professional indemnity approach from that of Australian courts. Murdoch refers to litigation which insurance, irrespective of whether In the UK decision of South results from loan transactions based they bear any responsibility morally Australia Asset Management on property valuations undertaken for that loss. Although the topic of Corporation v York Montague Ltd3 the during more buoyant times. professional ethics in this era of rapid House of Lords sought to limit the Lavers (2001) draws the distinction social change has also come under liability of the valuer by fi nding that between the two types of negligence some scrutiny by writers such as the valuer was not responsible for the claims. Firstly, in periods of economic Kirby (1997) in relation to ethics in lender’s additional losses as a result of

1 Banque Bruxelles Lambert SA v Eagle Star Insurance Co Ltd [1995] QB 375 3 South Australia Asset Management Corporation v York Montague Ltd 2 Ta Ho Ma Pty Ltd v Allen (1999) NSWLR 1:348 [1997] AC 191

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the fall in the property market. Th e Liability Act 2003 (Qld). Th e fact that a judicial recognition of the link valuer was only responsible for the there may be variance of opinion as to between the outcome of the valuation loss suff ered as a result of the valuation the value of a property does not mean and negligence. More specifi cally being wrong but not for the entire loss that the valuer has been in breach of anything that is outside the tolerable suff ered by the fi nancier as a result of a this duty. Th is was confi rmed in Baxter limits of the valuation fi gure will downturn in the property market. Th e v FW Gapp & Co Ltd4 when Goddard be seen as negligent. Th e size of the justifi cation for this outcome is that LJ made the following observations: bracket of tolerance has also been the loss suff ered as a result of a downturn We are all liable to make mistakes, subject of much judicial discussion. in the property market is a risk that and a valuer is certainly not to be In Singer & Friedlander Ltd v John the fi nancier would bear as part of found guilty of negligence merely D wood & Co9 the tolerable margin his or her normal business of lending because his valuation turns out to of error was considered to be 10% money for property transactions. be wrong. He may have taken too with the possibility that this may be Th e Australian courts have taken a optimistic or too pessimistic a view extended in exceptional circumstances fundamentally diff erent approach as can of a particular property. One has to 15%. Th ere is signifi cant judicial be seen in the case of Kenny & Good Pty to bear in mind that, in matters of precedent to support a fi gure of around Ltd v MGICA. On appeal to the High valuation, matters of opinion must 10% with a higher variation being Court it was considered that the valuer come very largely into account. acceptable depending on the context was liable for the full extent of loss of Similarly, it is noted in Greaves of the valuation. Th e Australian the fi nancier and mortgage insurer & Co (Contractors) Ltd v Baynham case of Trade Credits Limited v including the loss that resulted from Meilkle & Partners5 (in Crosby et Ballieu Knight Frank (NSW) Pty the downturn in the property market. al) that a level of variation in value Ltd10 supported the margin of error Th is is because it is considered that the is tolerable. Lord Denning MR goes principle when it was found that an fi nancer would not have entered into the on to further make comment: error of 22% fell outside of what would transaction but for the valuer’s negligent Apply this to the employment of be considered a permissible margin advice. Th e outcome of this case has a professional man. Th e law does of error even when considering the been criticised by some writers such as not usually imply a warranty that unique nature of the subject property. Murdoch (2001) on the basis that the he will achieve the desired result, Th e level of potential variation lender is likely to have suff ered a loss as but only a term that he will use in the market value of a property a result of the downturn in the property reasonable care and skill. Th e surgeon has resulted in considerable market even if the property had been does not warrant that he will cure attention by academic writers on worth as much as the valuation stated. the patient. Nor does the solicitor the topic of variation in value and warrant that he will win the case. valuation accuracy. Parker (1998) VALUATION ACCURACY Th ere is substantial UK case has defi ned valuation accuracy to Property valuers are widely regarded law to support the view that the be the “proximity of a valuation (or as professionals as opposed to agents method as opposed to the result prediction of the most likely selling acting on behalf of their clients. is most highly scrutinised such as price, oft en being an expectational Consistent with the ethical standards UCB Home Loans Corporation Ltd assessment) to market price (or the required of any professional, valuers v Roger North & Associates6, Singer recorded consideration paid for a are required to use reasonable care & Friedlander Ltd v John D Wood & property, being a current time or and skill in arriving at the market Co7, and Zubaida v Hargreaves8. actual assessment)”. Boyd and Irons value of the subject property. Th e It is noted by Crosby et al (1998) (2002) have further considered the standard required by valuers has that despite these judicial comments concepts of valuation accuracy and been determined to be that which is relating to the method the valuer negligence. Specifi cally, the study acceptable according to peer opinion employs and the context of the undertaken by Boyd and Irons by virtue of Section 22 of the Civil valuation there is still seemingly scrutinised the case of Interchase

4 Baxter v FW Gapp & Co Ltd [1938] 4 All ERR at 457 7 Singer & Friedlander Ltd v John D Wood & Co [1977] 2 EGLR 84 5 Greaves & Co (Contractors) Ltd v Baynham Meilkle & Partners 8 Zubaida v Hargreaves [1995] 1 EGLR 127 [1975] 3 All ER 99 9 Singer & Friedlander Ltd v John D Wood & Co [1977] 2 EGLR 84 6 UCB Home Loans Corporation Ltd v Roger North & Associates 10 Trade Credits Limited v Ballieu Knight Frank (NSW) Pty Ltd (1985) 12 [1995] EGCS 149 NSWLR 670

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Corporation Ltd v ACN 010087573 Pty study was that there was a considerable of an acceptable margin of error by Ltd11 which was appealed from the range of accuracy from 8.8% above courts in the United Kingdom is Queensland Supreme Court to the market value to 14.3% below. Only lacking in an empirical basis and Queensland Court of Appeal which 15% of the valuations reviewed were runs counter to available evidence. upheld the decision of the Supreme accurate to within 5% of the transacted Th e signifi cance of the margin Court involving the valuation of the market value of the property. of error bracket is noted by Crosby et Myer Centre in Brisbane. At the time While valuation inaccuracy may al (1998) in that it is most commonly of the valuation of the Myer Centre not be acceptable to the end user of the relied upon in valuation negligence the property was considered to be valuation report, Parker (1998) notes litigation and may in fact be valued quite unique with a lack of comparable that the literature supports the fact that above the method and context of market evidence. Th e case involved valuation inaccuracy is a fundamental the valuation in determining the the valuation of the Myer Centre and feature of valuation practice with a negligence of the valuer. It is noted the degree of variation by valuers 5% to 15% variation in value generally in Mount Banking Corporation Ltd v engaged to value the property. Despite accepted by the courts according to Brian Cooper & Co13 with the following the signifi cant variation between the court precedent. comments by the Deputy Judge: If the valuation has been reached cannot be impeached as a total, then “THE REALITY OF VALUATION WORK IS however erroneous the method or its application by which the valuation has THAT CLIENTS RELY ON VALUATIONS been reached, no loss has been sustained TO SUPPORT THEIR ENTRY INTO because…. It was a proper valuation. Bretten and Wyatt (2000) PROPERTY TRANSACTIONS” undertook an empirical study in the United Kingdom into variance in commercial property valuations for valuers’ end value for the Myer Centre Similarly lending purposes and found that the property the courts in this case looked Crosby et main cause of variation in valuation not to the range of fi gures to determine al (1998) was attributable to individual valuer negligence but rather to the valuers’ identifi ed a ‘behavioural infl uences’. Th e study also performances based on their reports bracket of 10- concluded that parties to a valuation and evidence presented to the court. 15% of value instruction widely accepted the Similarly Parker (1998) has variation principle of a tolerable margin of error undertaken a case study into the which is as a test of negligence. Interestingly, accuracy of the valuations of a generally it is also noted by Bretten and Wyatt portfolio of investment properties considered (2000) that valuers do not operate held by an Australian Institutional acceptable to from a platform of perfect market investor which were for sale by the courts in the knowledge. Th ey rely on external tender closing November 1995. Th is United Kingdom. infl uences such as client instructions was a case involving simultaneous Th e concept of an acceptable level of and various pressures which infl uence valuation and transaction for seven value variation was initially introduced the end valuation fi gure. Th e results of the properties in the portfolio. In by valuers acting as expert witnesses of the survey undertaken by Bretten addition, the valuations did not inform and most notably was introduced in and Wyatt (2000) showed that 60% the transacted sale amount which the case of Singer & Friedlander Ltd of the valuers surveyed agreed that was determined through open market v John D Wood & Co12. It is noted by they would increase their valuation competition. Th e outcome of the case Crosby et al (1998) that the notion fi gure if external parties exerted

11 Interchase Corporation Ltd v ACN 010087573 Pty Ltd [2000] QSC 13 12 Singer & Friedlander Ltd v John Wood & Co [1977] 2 EGLR 84 13 Mount Banking Corporation Ltd v Brian Cooper & Co [1992] 2 EGLR 142

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pressure on them to do so. Similarly and the potential for unlimited of damages awarded in any given Gallimore and Wolverton (2000) also liability for large claims” (Wellford, negligence litigation. Th e introduction considered the infl uence of client 2003). Th e Australian Property of proportionate liability is expected feedback on valuation accuracy. Institute has further introduced a to remedy many of the injustices that capped liability scheme under the valuers would have experienced in REFORMS TO TORTS LAW respective Professional Standards the past when they were held to be Th e valuer is an independent Act for the various states of Australia completely accountable for the loss professional who potentially has (Professional Standards Act 2004 Qld). of the plaintiff despite other parties liability in tort, contract and under Th e proportionate liability sharing responsibility for that loss. the Competition and Consumer provision of the Civil Liabilities Th e Civil Liabilities Act 2003 (Qld) Act 2010 (Cth) (formerly the Trade Act 2003 (Qld) will in fact seek to also outlines the standard of care Practices Act 1974 (Cth)). However, apportion liability among contributing required of a practicing professional this paper is limited to an analysis of parties to an event. Concurrent which is essentially an embodiment the reforms to the area of torts law, in wrongdoers will only be liable to the of the common law. Th e standard is particular recent statutory reforms. extent that they contributed to the essentially determined by what would Torts law was once fi rmly in the overall damage. Th ese provisions seek be deemed to be widely accepted domain of the common law. However, to correct the former situation where according to peer the landscape of torts has changed the tortfeasor would be entirely liable professional opinion in Australia with (Section 22(1)). the introduction However, of civil liabilities “THE VALUER IS AN INDEPENDENT where the legislation (Civil court considers it Liabilities Act 2003 PROFESSIONAL WHO POTENTIALLY to be inappropriate Qld) in response to HAS LIABILITY IN TORT, CONTRACT to rely on peer the Review of the AND UNDER THE COMPETITION AND professional Law of Negligence opinion because Final Report 2002 CONSUMER ACT 2010 (CTH)” it is ‘irrational or (“the IPP Report”). contrary to written In addition to law’ then the court documenting the need not rely on standard of care peer professional required by a professional the most for the damage suff ered as a result of opinion (Section notable impact of the Queensland Civil negligence even if they were not wholly 22(2)). Liabilities Act 2003 is the introduction responsible for the loss of the plaintiff . Th e of proportionate liability provisions In eff ect where there are two are more situation may (part 2 of the Act). Valuers would be concurrent wrongdoers the plaintiff arise that classifi ed as a ‘professional’ under is now barred from recovering although the Section 20 of the Civil Liability 100% of their loss from any one valuer is Act 2003 (Qld) in that they are a wrongdoer. Section 7(3) of the act found to be ‘person practicing in profession’. prevents parties from ‘contracting negligent, According to the then Queensland out’ of the proportionate liability losses that Attorney-General, the proportionate provisions. Th is is a signifi cant have been sustained liability provisions were introduced change to valuation litigation and through the property “in response to the concerns raised by may have a signifi cant infl uence on transaction are largely due to the professional bodies about excessive the quantity of negligence actions conduct of the client. Where this professional indemnity premiums against valuers and the quantum has been established the valuer can

14 Genworth Financial Mortgage Insurance v Hodder Rook & Associates [2010] NSWSC 1043

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invoke the contributory negligence of that duty to a party who was not contemplated MGICA as a party which sections of the Civil Liabilities Act a party to the contract for valuation was entitled to rely on the valuation. (Sections 23 and 24). It may be services; i.e. the mortgage insurance Th ere is little doubt that the that the claim against the valuer provider. Th is case followed the introduction of proportionate is defeated entirely and the client precedent established in Kestrel liability laws should reduce is found to be 100% responsible Holdings Pty Ltd v APF Properties16 excessive compensation payments for their own losses despite any where it was established that a duty for valuers who are found negligent negligence on the part of the valuer. may exist outside a contractual due to the correction of some of relationship to a third party who has the inequities surrounding joint RECENT CASE LAW relied upon the valuation. In this case and several liability. Th e impact of Since the introduction of torts Gray, Mansfi eld and Tracey JJ stated: proportionate liability is clear with reforms in Australia there have A duty of care is recognized to exist successful apportionment of liability been a substantial number of cases where the valuer actually knows or for damage suff ered in Genworth of litigation against valuers for ought to have known that the person Financial Mortgage Insurance v negligence. Not surprisingly much in question would rely upon the Hodder Rook & Associates18 In the of the litigation follows similar valuation so prepared. In respect of case of Solak v Bank of Western historical themes as seen prior to the objective limb of that formulation, Australia Ltd & Ors19 the issue the statutory reform. Th e issue of it is noted that subjective knowledge of apportionment of liability an acceptable margin of error in of the particular recipient or purpose was considered by the Victorian valuation fi gures when considering to which the valuation would be Supreme Court in view of the fact whether there was a failure by a valuer put is not relevant. In addition, that one of the wrongdoers had to exercise reasonable skill and care there is the further requirement acted fraudulently. In this case the was addressed in the case of Genworth that a fi nding of a duty of care be fraudulent party was held responsible Financial Mortgage Insurance v Hodder reasonable in all the circumstances. for 50% of the loss. Th is was despite Rook & Associates14. Th e decision in Accordingly, the subjective the fraudulent party’s overwhelming this case provides further support knowledge, actual or potential, of moral blameworthiness for the overall for the notion of an acceptable range the valuer is a relevant consideration loss. It was noted by the court that: or ‘bracket’ in terms of valuation in determining reasonableness. Th e fraudster’s portion of liability accuracy. Th ere was an obvious Th e position regarding mortgage would swamp that of the others if moral connection in the decision by Einstein insurance and valuers was addressed blameworthiness were the overriding J between the value being outside of in Kenny & Good Pty Ltd v MGICA17. criteria to determine apportionment. the acceptable ‘bracket’ and negligence It was held that despite the contract However, it seems to me that the by the valuer as opposed to a critical being specifi cally between the primary focus of the apportionment analysis of the valuation methodology valuer and the fi nancier, the insurer, provisions is not to give expression and method adopted by the valuer. MGICA, was also entitled to rely to moral sanction but to apportion Einstein J made the comment: on the valuation report despite as between operative causes. On the evidence, the Hodder Rook not being a party to that contract. In the cases of Ginelle Finance valuation exceeded the upper end of However, MuHugh J stated: Pty Ltd v Diakakis20 and Chandra v the acceptable range of opinion by a Th e scope of the duty of care which Perpetual Trustees Victoria Ltd21 a little more than 10% and the lower by the appellant owed to MGICA is signifi cantly higher proportion of more than 26%. I accept that this is identical with the contractual duty responsibility was allocated to the suffi cient to allow the Court to conclude which the appellant owed to the Bank fraudster. It is noted that the higher that the valuation was negligent15. and which is to be deduced from the the proportionate responsibility to Th e Genworth Financial Mortgage terms of the contractual arrangement the fraudster the more diffi culty Insurance case also addressed the entered into by those parties. Th at the plaintiff may have in receiving issue of duty of care and the extension is because the contract specifi cally compensation for their loss.

15 Genworth Financial Mortgage Insurance v Hodder Rook & Associates 18 Genworth Financial Mortgage Insurance v Hodder Rook & Associates [2010]NSW 1043 [2010] NSWSC 1043 16 Kestrel Holdings v APF Properties [2009] FCAFV 144 19 Solak vBank of Western Australia Ltd & Ors [2009] VSC 82 17 Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413 20 Ginelle Finance Pty Ltd v Diakakis [2007] NSWSC 60 21 Chandra v Perpetual Trustees Victoria Ltd [2007] NSWSC 694

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Th ere appears to be an CONCLUSIONS relatively recent and it may take some inconsistency with how Th e law of torts, once solely within time to see trends in the application proportionate liability has been the realm of the common law, has of these laws to valuation disputes. applied by the courts in Australia. been reformed by the introduction Some decisions have been favourable An attempt to rely on proportionate of Civil Liabilities Acts in each state to the lender and against the valuer liability laws by a valuer to reduce of Australia. Th e Civil Liabilities Act such as is seen in St George Bank Ltd their contribution to compensation 2003 (Qld) sets out the standard of care v Quinerts23. Other decisions such was rejected by the Victorian Supreme required of professionals as being that as Solak v Bank of Western Australia Court of Appeal in St George Bank which would be deemed acceptable Ltd & Ors24, Ginelle Finance Pty Ltd v Diakakis25 and Chandra v Perpetual Trustees Victoria Ltd26 are more “THERE APPEARS TO BE A CORRELATION favourable to the valuer but may result BETWEEN THE ECONOMIC CYCLES AND in the plaintiff (lender) experiencing diffi culty in attaining compensation. LITIGATION AGAINST VALUERS FOR While the introduction of NEGLIGENTLY PERFORMED VALUATIONS” proportionate liability provisions is signifi cant in limiting the liability of professionals, the Australian Limited v Quinerts Pty Ltd22. In this according to peer professional Property Institute has also introduced case Quinerts (the valuer) was held opinion. Th e notion of an acceptable a capped liability scheme through to be wholly liable for the loss of the ‘bracket’ for a valuation fi gure in the Professional Standards Act 2004 lender. Th e valuer has sought to have determining whether a valuer has (Qld). However these measures liability apportioned to the borrower met the requisite standard of care limit the professional liability for and the guarantor on the basis that seems to be fi rmly entrenched in valuers, there is a strong argument they were concurrent wrongdoers. the Australian case law and seems for increased professionalism However, the court held that they to be held in greater consideration and ethical standards for valuers. were not concurrent wrongdoers than the methodology adopted Th is is particularly concerning and consequently no liability was by the valuer or the application rigour in the valuation process apportioned to them. Further, the of that chosen methodology. and maintaining objectivity when court clarifi ed that apportionment Contributory negligence is also confronted with client expectations is available where two or more outlined in the act and can completely as to the valuation outcome. Th e wrongdoers have contributed to defeat a claim against a valuer for status of the valuer as an objective the same damage. In this instance compensation for negligence. Whilst professional free from confl ict of the valuers and borrowers and these provisions are important the interest sets them apart from other guarantors did not contribute to most signifi cant change with the parties to a property transaction. the same damage being that of the Civil Liabilities Acts has been the Th e writing of this paper has negligently prepared valuation which introduction of proportionate liability identifi ed several areas that are worthy lead the lenders to make the loan or at laws. Th is has sought to correct some of further academic investigation and least lend more than they otherwise of the inequity associated with joint research. Firstly there is considerable would have. Th e borrowers and and several liability for professionals academic commentary on the link the guarantors did not participate to limit liability for large claims where between economic cycles and valuation in this action. Th e failure by the the wrongdoer may not be solely litigation with a spike in valuation borrower and guarantor to repay responsible for the loss of the plaintiff . litigation immediately following the loan amount was not connected Th e introduction of proportionate an extended period of economic up with the granting of the loan. liability laws in Australia is still turn. While this statement appears to

22 St George Bank Ltd v Quinerts [2009] VSCA 245 25 Ginelle Finance Pty Ltd v Diakakis [2007] NSWSC 60 23 St George Bank Ltd v Quinerts [2009] VSCA 245 26 Chandra v Perpetual Trustees Victoria Ltd [2007] NSWSC 694 24 Solak vBank of Western Australia Ltd & Ors [2009] VSC 82

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Th is paper has been double „ Gallimore, P., and Wolverton, M., (2000), The intuitively be accurate there is little objective in valuation: a study of the influence of academic empirical research to support blind peer reviewed. client feedback, Journal of Property Research, 2000, this proposition. Further analysis 17(1) 47-57 of the link between academic cycles REFERENCES „ Joyce, L., Sharpe, A., (1997), Anatomy of a Negligence Claim, The Valuer and Land Economist, and valuation litigation is required. „ Boyd, T., Irons, J., (2002), Valuation Variance and Negligence: The Importance of Reasonable Care, May 1997, page 559. When considering the valuation Pacific Rim Property Research Journal, Vol. 8, No. 2. „ Kirby, Justice M., Legal Professional Ethics in times litigation case law the conduct of the „ Bretten, J., Wyatt, P., (2000), Variance in of change, (1997), The Judicial Review, (1997) 3 TJR valuer in undertaking the valuation is Commercial property valuations for lending „ Lavers, A., (2001), Optimum Resolution of closely scrutinised to determine whether purposes: an empirical study, Journal of Property Negligent Valuation Disputes, Paper presented at Investment and Finance, Vol 19 No, 3, 201, MCB the Seventh Annual Pacific Rim Property Research the valuer has breached the requisite University Press. Conference, 21 – 24 January 2001, Adelaide standard of care owed to the client in „ Christensen, S.& Duncan, W., (2004), „ Lee, R., (1996), Should the Valuer be the insurer undertaking the valuation. While it is Professional Liability and Property Transactions, of all the client’s risks, Property Management necessary to determine the conduct the Federation Press, Sydney, New South Wales. „ Journal, Emerald http://www.emeraldinsight. of the valuer to an objective standard, „ Commonwealth of Australia, Review of the Law com/Insight/ViewContentServlet?contentType=Arti of Negligence Final Report 2002 (“the IPP Report”). cle&Fi.. (Accessed 10/6/2009) the notion of the infl uence of the client „ Crosby, (2000), Valuation accuracy, variation „ Lee, R., (1997), Valuers do not need a crystal ball, in the valuation process is worthy of and bias in the context of standards and Property Management Journal, Emerald, http:// further academic consideration. In expectations, Journal of Property Investment and www.emeraldinsight.com/Insight/ViewContentServ particular the client expectation of the Finance, Bradford 2000. Vol. 18, Iss. 2; pg 130 let;jsessionid=3258B0953... (accessed 10/6/2009) valuation outcome and the infl uence „ Crosby, N., Lavers, A., Murdoch, J., (1998), „ Murdoch, J., (2001), Negligent Valuers’ Liability Property valuation variation and the ‘margin of for Market Losses in the UK and Australia, paper that this has on valuer behaviour is error’ in the UK, Journal of Property Research, 1998, presented at the 7th Annual Pacific Rim Real Estate a topic worthy of further study. „ 15(4) 3-5-330 Society Conference, Adelaide 21-24 January 2001.

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„ Parker, D., (1998), Valuation Accuracy – An „ Kestrel Holdings v APF Properties [2009] Australian Perspective, paper presented at the 4th FCAFV 144 LEGISLATION Pacific Rim Real Estate Society Conference, Perth, „ Mount Banking Corporation Ltd v Brian Cooper Civil Liabilities Act 2003 (Qld) 19-21 January 1998. & Co [1992] 2 EGLR 142 Competition and Consumer „ Queensland Parliamentary Debates, 11 March „ Singer & Friedlander Ltd v John D Wood & Co Act 2010 (Cth) 2003, 366-369 (Rod Wellford) [1977] 2 EGLR 84 Professional Standards Act 2004 (Qld). „ Solak vBank of Western Australia Ltd & Ors Trade Practices Act 1974 (Cth) CASES [2009] VSC 82 „ Banque Bruxelles Lambert SA v Eagle Star „ South Australia Asset Management Corporation Insurance Co Ltd [1995] QB 375 v York Montague Ltd [1997] AC 191 „ Baxter v FW Gapp & Co Ltd [1938] 4 All ERR „ St George Bank Ltd v Quinerts [2009] VSCA 245 at 457 „ Ta Ho Ma Pty Ltd v Allen (1999) NSWLR 1:348 „ Chandra v Perpetual Trustees Victoria Ltd [2007] „ Trade Credits Limited v Ballieu Knight Frank NSWSC 694 (NSW) Pty Ltd (1985) 12 NSWLR 670 „ Genworth Financial Mortgage Insurance v „ UCB Home Loans Corporation Ltd v Roger North Hodder Rock & Associates [2010] NSWSC 1043 & Associates [1995] EGCS 149 „ Ginelle Finance Pty Ltd v Diakakis [2007] „ Zubaida v Hargreaves [1995] 1 EGLR 127 NSWSC 60 „ Greaves & Co (Contractors) Ltd v Baynham Meilkle & Partners [1975] 3 All ER 99 „ Interchase Corporation Ltd v ACN 010087573 Pty Ltd [2000] QSC 13 „ Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413

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Recent cases, headline issues and new legislation

VALCORP AUSTRALIA PTY LTD V ANGAS SECURITIES LIMITED AUTHORS (NO 2) [2012] FCAFC 22 Snapshot A lender has had its level of contributory negligence increased on appeal, from 25% to 50%. Facts As previously reported on pages 188 and 189 of the September 2011 edition of this journal, this case arose from a loan transaction whereby the lender lent $2.8 million to borrowers secured by a mortgage. This loan LINDSAY JOYCE JAMES MORSE was in reliance upon a valuation by [email protected] [email protected] a valuer, who valued the property at $3.6 million. The borrowers defaulted Lindsay is a Partner at DLA James is a Senior Associate at DLA and were unable to repay the loan, so Piper Australia who practises Piper Australia who also practises the lenders sued the valuer. extensively in the area of in the area of professional At first instance (Angas Securities professional negligence as it negligence, including with Ltd & Ors v Valcorp Australia Pty affects property professionals, respect to claims for and against Ltd [2011] FCA 190), the court found including valuers. Before valuers. James regularly advises that the valuation was negligent and commencing practice in 1979, on valuation liability issues and is the valuer had misled and deceived Lindsay practised as a valuer for a guest lecturer at the University the lender. This was because the 10 years, being admitted as an of Western Sydney, addressing valuer had placed greater reliance Associate of what has become students from the School of on sales that were not ‘comparable’. the Australian Property Institute Economics and Finance on legal However, the lender was also found in 1973. He advanced to Fellow in issues and professional liability guilty of contributory negligence, 1989 and Life Fellow in 2005. arising from property valuations. assessed at 25%. The finding of contributory negligence was based upon the lender’s failure to undertake

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certain serviceability enquiries of the was just and equitable that each of serviceability became a secondary borrowers, prior to granting the loan. the parties should be found equally consideration), there was still an On appeal, the valuer submitted responsible for the loss suffered. obligation on the lender to make a that it could not be said that its On that basis, the lender was found proper assessment of serviceability. negligence reflected a substantially guilty of contributory negligence to This appeal further demonstrates greater degree of departure from the extent of 50%. the need for lenders (even those who the conduct of a reasonably profess to be security lenders) to competent valuer than did the Impact properly conduct their enquiries about negligence of the lender reflect This case is a stark reminder that a borrower’s ability to service the a departure from the conduct of a valuer will not be ‘automatically’ loan. It is not sufficient for a lender a reasonably prudent lender. liable for the entirety of any loss that who does not solely rely on security to Although the valuer initially is suffered by a lender who lends in claim that it was focusing on security submitted that the court should reliance upon a valuation. as opposed to serviceability. find that the lender was liable for Especially in respect of any failure by In a case, unlike this, where a 100% of its loss (on the basis that the a lender to carry out proper due diligence lender alleges a total security loan primary judge found that “had the or adequate assessment/consideration (that is, a loan where little or no [serviceability] enquiries been made of the means and ability of the borrower regard was had for the borrower to the loan would not have been made”), to repay the principal loan, interest demonstrate an ability to repay the this was not accepted. and other charges (as was the issue in principal and interest repayments on In the end, the court found this case), it is likely that a significant the loan), that lender’s loan to value that, having regard to the relative reduction for contributory negligence ratio would need to be at a lower than culpability of each party and because will be made against the lender. usual level. Valuers should be very the reasons of the primary judge did Although, in this case, the lender wary of accepting instructions for a not disclose a basis to “distinguish submitted that it viewed the security as valuation for mortgage purposes where between the causal potency of the the principal consideration of whether the lending is security lending. Know impugned conduct of each party”, it the loan would be made (meaning that your client’s basis of doing business.

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PROPELL NATIONAL VALUERS (WA) This loan was in reliance upon a ‘hindsight’ information/evidence. PTY LTD V AUSTRALIAN EXECUTOR valuation by the valuer, who valued As a result, the court was unable TRUSTEES LIMITED [2012] FCAFC 31 the property at $1.6 million. The to rely upon the valuer’s expert. borrower defaulted and was unable to The court therefore found that the Snapshot repay the mortgage debt, so the lenders subject valuation was negligent and The Full Court of the Federal Court sued the valuer. One of the issues that misleading and deceptive. of Australia has confirmed that (at fell for determination was how to On appeal, the valuer argued that least with respect to determining the resolve divergent expert retrospective it was permissible, when determining liability of a valuer who undertakes valuation opinions. the value of a property at a specific a valuation as at a certain date) The lender’s expert had earlier time, to have regard to sales of it is inappropriate for an expert considered and analysed evidence of properties comparable to the subject retrospective valuer to take account comparable sales that had occurred property that were sold subsequent to of sales (and one can assume any before the date of the valuation. the relevant valuation date. other data) subsequent to the However, the valuer’s expert had Ultimately, this argument was relevant valuation date. considered and analysed these sales not successful. both before and after the date of the The court accepted that, in Facts subject valuation. some circumstances, particularly As outlined on page 189 of the At first instance (Australian where the relevant issue for September 2011 edition of this Executor Trustees Limited v determination is the actual value journal, this case arose from a loan Propell National Valuers (WA) of the land at a particular date, it transaction whereby a lender lent Pty Ltd [2011] FCA 522), the court may be prudent to take into account slightly more than $1.22 million to held that it was inappropriate for hindsight information/evidence. a borrower secured by a mortgage. an expert to take into account Circumstances where this might

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“WHERE A CLAIM RELATES TO THE CONDUCT OF A VALUER AT A PARTICULAR TIME, INCLUDING CONDUCT WHICH IS RELEVANT TO A CLAIM FOR NEGLIGENCE OR IN RESPECT OF MISLEADING OR DECEPTIVE CONDUCT, LATER EVENTS ARE OF NO RELEVANCE”

be appropriate could include the value (or thereabouts) to a specific sales both before and after the valuation of property at a relevant property. Expert evidence in such valuation date ought to have been time for land tax purposes or for the proceedings must only be relevant to admissible as they were relevant assessment of estate duty, a valuation the determination of that question, to to proving market value as at the for the purpose of rental, or a which hindsight can play no part. valuation date. determination of the value of the land Accordingly, the appeal was at the time of compulsory resumption dismissed by the majority judges Impact for the purposes of assessing (Stone and Collier JJ). Although there was a 2:1 split compensation payable. However, Gilmour J dissented, between the judges, this case However, where a claim relates to finding that subsequent comparable reinforces the general rule that, when the conduct of a valuer at a particular sales might be relevant to establish conducting an expert retrospective time (including where a focus is on loss or damage in a case, as well as valuation in respect of proceedings the task undertaken by the valuer and determining whether allegations of that have alleged negligence and/or the valuation produced in light of misleading and deceptive conduct, or misleading and deceptive conduct the exercise of the valuer’s judgment negligence, are made out. Gilmour J against a valuer who has provided a at that particular time), including arrived at this conclusion by placing valuation as at a specific date, regard conduct which is relevant to a claim for significant importance on the way in must not be had to comparable sales negligence or in respect of misleading which the case was run. that have occurred after the date of or deceptive conduct, later events are In this case, the lender had the subject valuation. This decision of no relevance. argued that the market value of therefore remains consistent with The relevant question is whether, the property was not $1.6 million other decisions, such as HTW Valuers as at the valuation date, a competent as at the valuation date. That (Central Qld) Pty Ltd v Astonland Pty valuer could have described a specific being so, evidence of comparable Ltd (2004) 217 CLR 640. ƒ

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With the Future to achieve professional excellence as a All applicants for Provisional valued member of the API. Membership: PMAP (RPV), Property Professionals Designed by property professionals, Associate (AAPI) or Associate (FPP) program educators and technical experts the with Certification, will be required FPP Program focuses on the skills to complete six core modules. A becoming mandatory required to prosper in a dynamic further three prescribed modules for all API members professional environment. are required for Provisional from 1 July 2012, the API has mandated this program to Members (RPV). For Associate with ensure that graduates of today will be Certification, applicants are required ANZPJ presents an our property leaders of tomorrow. to complete the six compulsory overview of the program described above, three modules prescribed for certification and three and discusses why now FPP AS A COMPONENT OF property electives. is the time to enrol. MEMBERSHIP The modules are expected to The FPP program is an integral take participants two to three hours component of the membership and to complete. There are additional certification pathway of the Australian readings and resources included he Future Property Property Institute. in some modules. In order to fully Professionals program Graduates of property complete the module and the (FPP) is developed and qualifications (API Provisional additional reading, extra time may implemented by the Members) have a number of need to be allocated. They are made up Australian Property requirements to achieve Provisional of course content, reference material, TInstitute (API) to provide graduates with Membership with Residential Property further reading, an assessment and a quality education, and a training pathway Valuer (RPV), Associate Membership workplace assessment (where relevant). from academic excellence to property and Associate Membership with Each applicant sitting the module professional competency. Certification. These include: will accrue two CPD points per API, as the leading organisation • Successful completion module. These points can only be in the property industry, has of the Future Property accrued for the calendar year the implemented a professional program Professional program modules are completed and cannot be to support academic excellence of our • Approved professional experience rolled over. Only three modules can be accredited education providers and • Professional work diary enrolled in at any one time. enhance the practical and professional • Membership application process competencies of property graduates. • Professional interview. This specialised FPP program ASSESSMENT will assist graduates in achieving There will be an online quiz form of competencies to apply for Institute WHAT IS THE FPP? assessment for each FPP module. The Membership including certification FPP is a series of specialised online quiz must be undertaken in order to and property specialisation within an modules that cover property related complete a module. You will be given evolving property profession. areas from ethics to professional risk two attempts to complete the quiz The program will lift the capabilities and written communication through within an allotted time and there is a and practical skills of the graduates to GST and other relevant modules. pre-set pass mark of 80%.

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THE FPP PROGRAM IS AN INTEGRAL COMPONENT OF THE MEMBERSHIP AND CERTIFICATION PATHWAY OF THE API

WHO WILL UNDERTAKE FPP? assessment criteria. If unsuccessful, To be eligible to sit the professional All applicants seeking Membership of the participant will be required to interview for AAPI (Certification), the API will be required to complete enrol in the module and complete applicants are required to have the FPP program as a pathway to all components of the prescribed completed a minimum of two years of membership. module accordingly. approved professional experience in Applicants with less than three Graduates who have completed their area of specialisation. years of approved professional an API approved qualification are As of 1 July 2012, all applicants experience will be required to complete eligible to undertake the program. will be required to ensure six the FPP program in its entirety. Students who are currently completing months of the approved professional Applicants with between three their API approved university degree experience is undertaken years and six years of approved or TAFE qualification are eligible to post-graduation of the approved professional experience will be commence the FPP program in their qualification. Post-graduation is required to complete the assessment- final year of study only, provided they defined as the date the student only sections of the FPP program. have a minimum of 12 months of receives the qualification’s academic Applicants with more than approved professional experience. transcript stating that they six years of approved professional have successfully completed all experience will be required to WHAT ARE THE REQUIREMENTS requirements of the qualification (this complete the assessment only OF APPROVED PROFESSIONAL is not the date the graduate receives section of six designated modules EXPERIENCE? their graduation certificate). As a of the FPP program. To be eligible to sit the professional result, as of 1 July 2012, applicants Participants completing the FPP interview for PMAPI (RPV) for professional interview will not program in its entirety will have two designation, applicants are required be eligible to meet all the approved attempts to pass the online assessment to have completed a minimum of professional experience requirements criteria. Applicants with three years 12 months of approved professional as a student. Six months of the or more experience as described above experience in residential and approved professional experience will only have one attempt to pass the associated valuation. requirements will be post-graduation.

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WHAT ARE THE TRANSITIONAL FPP PROGRAM STUDENT TESTIMONIAL ARRANGEMENTS FOR THE INTRODUCTION OF TELL US ABOUT YOUR CURRENT EMPLOYMENT THE FPP PROGRAM? Since graduating from my Bachelor’s degree at Bond University, majoring The Future Property Professionals in Property Valuation, I have commenced my career in valuation at Egan program will be implemented from National Valuers (ACT). Throughout the course of my employment I have 1 July 2012. To cater for a smooth gained invaluable knowledge and professional experience in the areas transition for compulsory completion of residential, rural, industrial and commercial valuations. Meanwhile, I of this professional initiative of the API, achieved my API status as a Provisional Member of the API, Residential graduates of API approved qualifications Property Valuer (PMAPI, RPV). with a minimum of 12 months of approved professional experience, as WHEN ARE YOU DUE TO SIT YOUR PROFESSIONAL INTERVIEW? of 30 June 2012, will be exempt from My upcoming goal is to sit for the professional Associate Member with Certified completing the FPP program from 1 Practising Valuer (AAPI, CPV) interview during August this year. July 2012. WHERE DO SEE YOUR CAREER HEADING? WHAT ARE THE ENHANCEMENTS In the future I see myself as a Certified Practicing Valuer gaining further TO MY PROFESSIONAL EXPERIENCE professional experience and knowledge within the field, and perhaps in time THROUGH THE FPP PROGRAM? becoming a Life Fellow of the API. Participants in the FPP program will be required to complete a professional HOW HAVE THE FPP PROGRAM MODULES REFRESHED YOUR work diary that will journal the depth KNOWLEDGE, BROUGHT NEW INFORMATION TO LIGHT OR and breadth of experiences gained FURTHER DEVELOPED YOUR SKILLS? in the lead-up to the professional After completing half of the FPP program, I have found that most of the interview. The experiences to be gained modules provide knowledge that had already been gained during my will be defined by the practitioners in professional experience; the only difference is theory and practice. However, the field, as required for professional the modules have given me confidence in knowing that I am applying most competency and coverage. of the theory into my own practice and have also refreshed my knowledge in areas that I could improve on. INVESTMENT The investment for each module of WHICH MODULES IN PARTICULAR DID YOU ENJOY? the FPP program is $49 plus GST In particular I enjoyed Written Communication as I also find concise, accurate ($53.90 GST inclusive). This is a and easily read reports, among ootherther tthings,hings, to bebe importantimportant inin providingproviding thethe heavily subsidised rate by the API. client with a professional final product.oduct. The investment for the FPP program will be reviewed when the program HOW HAS THE FPP ASSISTEDD YYOUROUR becomes compulsory on 1 July 2012. PROFESSIONAL DEVELOPMENTNTA ASS AVALA VALUERUER The Institute is happy to advise AND BETTER PREPARED YOUU FOR YOUR that the module to assist applicants NEXT PROFESSIONAL INTERVIEW?VIEW? prepare for the professional interview, The FPP program has provided meme with a little more ‘Preparation for Professional Interview’ confidence and ease to sit for thee professional (whether for RPV or AAPI with or interview. After completing the “PreparingPreparing For Your without Certification), will be provided Professional Interview” module I havehave foundfound somesome to FPP participants free of charge. This beneficial information that has helpedelped me to prepare is a compulsory module and important for the application and interview processprocess for participants to complete prior to as well as what to look out for andd sitting the professional interview. what to look forward to. WANT MORE INFORMATION? The Future Property Professionals program can be found at at the API’s EGAN VALUERS' website: www.api.org.au. For program OLIVIA WYSTEPEK support and enrolment, email: fpp@ api.org.au. „

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RIGHTS

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In the first of a two-part paper, Alan A Hyam OAM, Barrister-at-Law and LFAPI, details the law as it pertains to the compulsory acquisition of land, as well as actions taken under environmental and town planning legislation.

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INTRODUCTION property from any state or person, Governments have interfered with in respect of those matters which citizens’ private property rights for many the Parliament has powers to make years through legislation passed by the laws, and mandates that such Parliaments of the Commonwealth, acquisitions must be on “just terms”. States and Territories. This has never Unfortunately, the Constitutions been more evident than at the present of the Australian States do not contain time with the enactment of legislation similar provisions. Th is situation was by the Commonwealth Parliament aptly explained by the High Court in concerning the taxation of carbon Chang v Laidley Shire Council (2007) dioxide emissions, installation of the 234 CLR 1, where Kirby J said, at [21]: National Broadband Network, and the entry onto private property for “State constitutions in Australia do the purpose of mining operations not contain guarantees according and exploration. land owners entitlements to ‘just Such interference can be very terms’ compensation in the event wide ranging. However, this paper of compulsory acquisition of their is limited to consideration of property interests by or under State matters concerning the compulsory law (Durham Holdings Pty Ltd v New acquisition of land, and actions South Wales (2001) 205 CLR 399). taken under environmental and Still less do they contain guarantees town planning legislation. of compensation in the event of Th e purpose of the paper is supervening injurious aff ection to assist property professionals in occasioned by successive changes advising their clients as to their to planning law. Nevertheless, a rights when their valuable property provision for compensation, in rights are interfered with by the specifi ed circumstances, has appeared actions of governments and their in Queensland law at least since the instrumentalities, or pursuant to Local Government Act 1936 (Qld) …” powers vested by legislation. In the same case and context, COMMON LAW PRINCIPLES Callinan J said, at [123]-[125]: Common law principles, which Australia inherited from England, “Although the States are and which have been expounded and unfortunately not constitutionally extended by the courts, are: Firstly, bound to provide just terms on the that property cannot be taken by compulsory acquisition of property, the state without just compensation; by long practice and convention, but to exonerate the public from and, secondly, the presumption sensitivity to the disparity between paying the deprived landowner is that Parliament did not intend to State and subject, and historical entirely another, and unaccep table interfere with private property rights, respect for property and like rights, thing. What the public acquires or unless clear words to this eff ect rarely do they fail so to provide... It enjoys the public should pay for. is contained in the legislation. is on the basis of such rights, and the expectation of compensation for “It seems to me that to take away JUST COMPENSATION their destruction or impairment, completely, by a few strokes of the Th e requirement of just compensation that transactions take place, plans legislative pen, the appellants’ right is enshrined in the Australian are made, money expended, and to seek to have, and undoubtedly Constitution in which s 51(xxxi), people order their lives. To destroy in substance to have, their land confers upon the Commonwealth legislatively such a valuable right, subdivided, is to do much the same Parliament the express power to here to subdivide, in some appre- as was done by the Commonwealth make laws for the acquisition of hended public interest is one thing, Parliament by the Seafarers

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“GOVERNMENTS HAVE INTERFERED WITH CITIZENS’ PRIVATE PROPERTY RIGHTS FOR MANY YEARS THROUGH LEGISLATION PASSED BY THE PARLIAMENTS OF THE COMMONWEALTH, STATES AND TERRITORIES. THIS HAS NEVER BEEN MORE EVIDENT THAN AT THE PRESENT TIME…”

Rehabilitation and Compensation Act contemporary conditions could ‘properly made application’ and the 1992 (Cth) considered by this Court in possibly insist upon, should not, as I fi ction of an application which is Smith v ANL Ltd (2000) 204 CLR 493. fear they oppressively are, be used as a not to be treated as an application Mr Smith, however, had the right to cloak to reduce, or extinguish valuable in fact and in law. If it were at all just terms as mandated by s 51(xxxi) rights of, or attaching to, property. possible sensibly and properly to of the Constitution. Th e appellants read the legislation as conferring here unhappily do not. Increasingly “‘Cloak’ is an especially apt term a right to compensation upon the prescriptive, restrictive, intrusive and here because, instead plainly and appellants I would be glad to do so. even wrong-headed planning and openly, of legislatively declaring that I cannot do that, but I can surely at heritage legislation and instruments, the various changes to zoning and least commend to the legislature the which go far beyond what a modern uses within the designated area or restoration to the appellants, and law of nuisance, taking account of region, will not attract compensation, others similarly aff ected, of the right denser populations, closer settlements, that result is achieved by the device, to compensation to which historically burgeoning industries, and other clumsy and obscurantist, of a and morally they are entitled.”

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An example of State legislation contrast between the market value denying a dispossessed owner just of the land found under s 124 of the terms compensation following the Public Works Act and the artifi cial compulsory acquisition of that value of the land under s 125 owner’s land is found in Haig v ($1,950,000 as against $1,596) speaks Minister Administering the National vividly of the apparent injustice which Parks and Wildlife Act 1974 (1994) has arguably occurred in this case. 85 LGERA 143. Th at case concerned Furthermore, I do not consider the the determination of compensation fact that Mr Haig has made a profi t under the former s 125 of the Public on his original investment as having Works Act 1912 (NSW), which removed the force of his complaint. provided that in respect of land But this Court has held that it is s resumed within fi ve years from the 125… which governs his right to time when it was granted in fee by compensation. Th at decision has the Crown, the compensation shall been upheld by the High Court of be a sum of money equal to the Australia. Th is Court, and the High amount of the purchase money paid Court, would be fully aware of the by the grantee or to the amount of presumption for the construction the deposit paid by the conditional and application of resumption and purchaser, together with a sum not compensation legislation. In the end, exceeding 100 per cent on the amount however, the conclusion was reached of such purchase money or deposit that s 125 governed the case. Until that plus the value of any improvements holding is set aside by legislation, it is then being upon the land. part of the law of this State. It requires In dismissing the application, the valuation to be had according Kirby P, as he then was, made the to the “intractable” language of the following lamenting remarks at 156-157: section which limits the amount that may be recovered. Th ere is no “I am not unsympathetic to the constitutional means available to the complaint which Mr Haig still voices Court to strike down s 125 as invalid. concerning the application to this A proposal to alter the Australian case of s 125 of the Public Works Act. Constitution in 1988 in eff ect to limit I am certainly sympathetic to the State acquisitions in the way those by principles which he invokes which the Commonwealth are limited failed state that basic rights (including the to pass. Th e proposed [amendment] of right to just terms for the compulsory the Constitution would, if it had been “THUS ART 17 OF acquisition of property) should be adopted, have read: ‘… A law of a State THE UNIVERSAL accorded to a person such as him. may not provide for the acquisition DECLARATION ON Th at principle is not only found in of property from any person except the Australian Constitution. It is also on just terms’. Th e alteration was HUMAN RIGHTS found in international human rights rejected in the referendum… No RECOGNISES THE law. Th us, art. 17 of the Universal constitutional principle to aff ord relief RIGHT TO OWN Declaration on Human Rights could be, or was, invoked by Mr Haig.” PROPERTY AND recognises the right to own property and declares: ‘17.2 No-one shall be Section 125 of the Public Works DECLARES: ‘17.2 arbitrarily deprived of his property’. Act had been rescinded and replaced NO ONE SHALL with the Land Acquisition (Just Terms BE ARBITRARILY “It is an arbitrary deprivation of Compensation) Act 1991 (NSW) [“the DEPRIVED OF property to acquire it compulsorily Just Terms Act”], the objects of which, under authority of law without contained in s 3(1)(a), guaranteed HIS PROPERTY’” providing just compensation. Th e that compensation will not be less

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than the market value of the land. and McHugh JJ observed in Plenty Also, which pursuant to s 54(1), v Dillon (1991) 171 CLR 635 at 654: provides that compensation to which a dispossessed owner is entitled must ‘… inconvenience in carrying out justly compensate that person for the an object authorised by legislation acquisition. Of course, the Just Terms is not a ground for eroding Act does not apply to the determination fundamental common law rights.’ of compensation for the compulsory taking of other items of property. “In England, Lord Browne- Wilkinson has expressed the PRESUMPTION AGAINST view that the presence of general INTERFERENCE WITH words in a statute is insuffi cient to FUNDAMENTAL RIGHTS authorise interference with the basic Th e presumption was well immunities which are the foundation explained in the joint judgment of of our freedom; to constitute such Mason CJ, Brennan, Guadron and authorisation, express words are McHugh JJ in Coco v Th e Queen required: [Wheeler v Leicester City (1994) 179 CLR 427 at 435-436: Council [1985] AC 1054 at 1065].”

“Every authorised entry upon private Th eir Honours went on to say, at 437: property is a trespass, the right of a person in possession or entitled to “Th e insistence on express possession of premises to exclude authorisation of an abrogation others from those premises being or curtailment of a fundamental a fundamental common law right. right, freedom or immunity must In accordance with that principle, a be understood as a requirement for police offi cer who enters or remains some manifestation or indication that on private property without the leave the legislature has not only directed or licence of the person in possession its attention to the question of the or entitled to possession commits a abrogation or curtailment of such trespass unless the entry or presence basic rights, freedoms or immunities on the premises is authorised or but has also determined upon excused by law. Statutory authority abrogation or curtailment of them. to engage in what otherwise would Th e courts should not impute to the be tortious conduct must be clearly legislature an intention to interfere expressed in unmistakable and with fundamental rights. Such an unambiguous language. Indeed, it has intention must be clearly manifested been said that the presumption is that, by unmistakable and unambiguous in the absence of express provision language. General words will rarely to the contrary, the legislature did be suffi cient for that purpose if they not intend to authorise what would do not specifi cally deal with the otherwise have been tortious conduct. question because, in the context in But the presumption is rebuttable and which they appear, they will oft en will be displaced if there is a clear be ambiguous on the aspect of implication that authority to enter interference with fundamental rights. or remain upon private property was intended. Such an implication may “So long as the requirement for be made, in some circumstances, if it express statutory authorisation is is necessary to prevent the statutory understood in the sense explained provisions from becoming inoperative above, we would accept the or meaningless. However, as Gaudron requirement as a correct statement

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“THE COUNCIL HAD THE POWER, PURSUANT TO S 186(1) OF THE LOCAL GOVERNMENT ACT 1993 (NSW) TO COMPULSORILY ACQUIRE LAND WITHOUT THE OWNER’S APPROVAL”

of principle. At the same time, in Kingdom, though acknowledging privately owned land and the parts of our view, the principle was expressed the sovereignty of Parliament, apply the two public roads. Th e agreement more simply by Brennan J in Re principles of constitutionality little also required the Council to transfer Bolton; Ex parte Beane (1987) 162 diff erent from those which exist the lands to be compulsorily acquired, CLR 514 at 523 in these terms: in countries where the power of the parts of the public roads, and the the legislature is expressly limited land already held in its ownership, “‘Unless the Parliament makes by a constitutional document.” to the private partner. Th e fi rst step unmistakably clear its intention to was to transfer the land to a trust, abrogate or suspend a fundamental APPLICATION OF THE and the second step was to transfer freedom, the courts will not construe PRESUMPTION TO COMPULSORY the legal title. In consideration a statute as having that operation.’” ACQUISITIONS for the transfer, the Council was An excellent recent example of the to receive monetary payment and Th e presumption was well application of the presumption is other valuable considerations. summarised in oft cited passage the decision of the High Court in R Th e Council had the power, from judgment of Lord Hoff man & R Fazzolari Pty Ltd v Parramatta pursuant to s 186(1) of the Local in R v Secretary of State for the City Council (2009) 83 ALJR 557. Government Act 1993 (NSW), to Home Department; Ex parte In that case, the Council sought compulsorily acquire land without the Simms [2000] 2 AC 115 at 131: to compulsorily acquire privately owner’s approval. However, under s owned land and parts of two public 188(1), a compulsory acquisition must “… the principle of legality means roads as a part of redevelopment have the owner’s approval if the land that Parliament must squarely scheme. While the ownership of the is required for the purpose of resale. confront what it is doing and accept public roads was already vested in Th e principle behind s 188(1) is that if the political cost. Fundamental the Council, the agreement with the a government authority compulsorily rights cannot be overridden by developers required their compulsory acquires privately owned land and then general or ambiguous words. Th is acquisition as they were designated sells that land to another private party, is because there is too great a risk as public roads under the Roads Act the public purpose which justifi ed the that the full implications of their 1993 (NSW). Th e majority of the land compulsory acquisition may be absent. meaning may have passed unnoticed required for the redevelopment scheme Th e landowners appealed to the in the democratic process. In the was already in the ownership of the Land and Environment Court of absence of express language or Council. However, due to the scale NSW on the ground that s 188(1) of necessary implication to the contrary, of the scheme, the Council entered the Local Government Act precluded the courts therefore presume into a public-private partnership the Council from acquiring the land that even the most general words agreement with two development without the approval of the owners. were intended to be subject to the companies. Th e agreement required, Th e landowners succeeded. Biscoe basic rights of the individual. In as a condition precedent, that the J held that the acquisitions were this way the courts of the United Council compulsorily acquire the for the purpose of re-sale, thus the

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Untitled-1 1 6/8/2012 9:21:23 AM PRIVATE PROPERTY

Council could not acquire the land that compulsory acquisition and In allowing the appeal, the High without the landowners’ consent. Th e compensation for such acquisition Court held that the proposed acquisitions Council appealed to the NSW Court of is entirely the creation of statute. were unlawful for the reasons that: Appeal which held by a majority that the function which the Council was “Th e attribute by Blackstone, of “(1) Th ey were for the purpose of performing in making the acquisition caution to the legislature in exercising re-sale of the land because, upon was for the “sole or dominant purpose” its power over private property, is acquisition, the council was to of furthering the development scheme, refl ected in what has been called a declare itself trustee of the land and not the purpose of re-sale. presumption, in the interpretation for the benefi t of the developer On appeal to the High Court, of statutes, against an intention to in exchange for the developer’s two issues were raised on behalf of interfere with the vested property providing agreed consideration; and the landowners. Firstly, whether the rights. It was expressed by Griffi ths acquisitions were for the purpose of re- CJ in Clissold v Perry (1904) 1 CLR “(2) s 188(2)(a) of the Local sale, and, secondly, if the acquisition 363, a land resumption case, thus: Government Act did not apply so as of the land was for the purpose of to remove the need for the owner’s re-sale, did the acquisition of the “‘In considering this matter it is approval because the council’s power abutting roads validate the acquisition? necessary to bear in mind that it to acquire the land comprising Th ese issues arose out of is a general rule to be followed in the roads was conferred by s 7B ambiguities in the relevant legislation. the construction of Statutes such of the Just Terms Act and not by Th e approach to the interpretation as that which we are now dealing, the Local Government Act.” of the statutory provisions were that they are not to be construed explained by French CJ, at [40]-[43]: as interfering with vested interests Shortly aft er the judgment was unless that intention is manifest.’ handed down the NSW Parliament “Private property rights, although amended the Just Terms Act subject to compulsory acquisition “Th e presumption has been by amending s 7, as follows: by statute, have long been hedged restated on more than one occasion about by the common law with in this Court. Th at does not, of “(1) Th is Act does not empower an protections. Th ese protections are course, authorise the court to authority of the State to acquire land not absolute but take the form of put to one side ‘the unambiguous if it does not have the power (apart interpretive approaches where eff ect of words which the from this Act) to acquire the land. statutes are said to aff ect such rights. Parliament has seen fi t to use’. “(2) Th e power of an authority of the “Blackstone said that the “Th e terminology of ‘presumption’ State to acquire land under another common law would not authorise is linked to that of ‘legislative Act is aff ected by section 7A and 7B of the ‘least violation’ of private intention’. As a practical matter it this Act. Any such acquisition to which property notwithstanding the means that, where a statute is capable section 7A or 7B applies remains, for public benefi t that might follow. of more than one construction, all purposes, an acquisition of land He accepted however that the that construction will be chosen under the subject to that other Act.” legislature could compel acquisition which interferes least with private and in so doing wrote: property rights. Th at approach Th e amendment does not override resembles and may even be seen as the presumption against interference “‘All that the legislature does is to an aspect of the general principle with private property rights, but oblige the owner to alienate his that statutes are construed, where provides clear words negativing the possessions for a reasonable price; constructional choices are open, presumption as applied to the facts and and even is an exertion of power, so that they do not encroach upon circumstances of the Fazzolari case. „ which the legislature indulges fundamental rights and freedoms with caution, and which nothing at common law. It operates in the Part two of this paper, to be run in but the legislature can perform.’ United Kingdom as a manifestation the September 2012 edition of the of a ‘principle of legality’ and has ANZPJ, will detail the application “It was and has remained the been described in Australia as of presumption to environmental case in England and Australia an aspect of the rule of law.” and town planning legislation.

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QUEENSLAND SOUTH AUSTRALIA

Adelaide 67 Grey Street ‡ South Brisbane QLD 4101 GPO Box 1776 ‡ Brisbane QLD 4001 (08) 8277 0500 www.taylorbyrne.com.au Rob Simmons, AAPI, Director 'LUHFWRUV VALUERS & PROPERTY CONSULTANTS T Bartholomew • Valuation • Advisory • Research D Burley RESIDENTIAL ‡ COMMERCIAL ‡ RURAL ‡ INDUSTRIAL • Corporate Real Estate Solutions C Caleo RETAIL ‡ LITIGATION ‡ FAMILY LAW ‡ ACQUISITION • Property & Asset Management T Cavanagh www.prp.com.au J Clune 2IÀFHVLQ ''XIÀHOG QUEENSLAND *'XIÀHOG B Guest Brisbane ‡ Bundaberg ‡ Cairns ‡ Emerald ‡ Gladstone L Hamilton Knight Frank Valuations (SA) S Herbert Gold Coast ‡ Hervey Bay ‡ Kingaroy ‡ Mackay R Hewitt Rockhampton ‡ Roma ‡ Sunshine Coast ‡ Toowoomba James Pledge FAPI A Hoolihan Townsville Alex Smithson FAPI A Innes Nick Bell AAPI C Lando NEW SOUTH WALES Level 25 Westpac House J Lyons Jason Oster AAPI P Lyons Ballina ‡ Coffs Harbour ‡ Grafton ‡ Inverell Zac Vartuli AAPI 91 King William Street T Rabbitt Craig Barlow AAPI Lismore ‡ Port Macquarie ADELAIDE SA 5000 P Turner Rob Mitchell AAPI Lucy Graham AAPI T: +61 08 8223 5222 Paul Scrivener AAPI F: +61 08 8231 0122 Carol Simons AAPI Lyle Montgomerie RPV Brisbane Sam Tucker AAPI Nicki Quinn RPV ͗ĂĚŵŝŶΛƐĂ͘ŬŶŝŐŚƞƌĂŶŬǀĂů͘ĐŽŵ͘ĂƵ Ben Badenoch APPI Andrew Skilbeck RPV (07) 3846 2822 Chris Hill AAPI Peter Hansen RPV Troy Chaplin, AAPI, Director David Coventry AAPI Mark Whitcher RPV ǁǁǁ͘ŬŶŝŐŚƞƌĂŶŬ͘ĐŽŵ͘ĂƵ Matthew Harris, AAPI, Senior Valuer Tom Walker AAPI Kim Wallace RPV We have Specialist Valuers in the areas of: WůĂŶƚΘƋƵŝƉŵĞŶƚͻ,ĞĂůƚŚ͕ZĞƟƌĞŵĞŶƚΘŐĞĚĂƌĞͻŚŝůĚĂƌĞͻŐƌŝďƵƐŝŶĞƐƐͻZĞŶƚĂůĞƚĞƌŵŝŶĂƟŽŶ Cairns ,ŽƚĞůƐ͕DŽƚĞůƐΘĂƌĂǀĂŶWĂƌŬƐͻZĞƐŝĚĞŶƟĂů͕^ƵďĚŝǀŝƐŝŽŶΘĞǀĞůŽƉŵĞŶƚƐͻŽŵŵĞƌĐŝĂůͻ/ŶĚƵƐƚƌŝĂůͻZĞƚĂŝů (07) 4031 9552 • Valuation • Advisory Robert Cowell, AAPI, Director COLLIERS INTERNATIONAL CONSULTANCY AND VALUATION Brian Walsh, AAPI, Director • Corporate Real Estate Solutions Level 10, Statewide House 99 Gawler Place, Adelaide SA 5000 • Property & Asset Tel: 08 8305 8888 Fax: 08 8231 7712 Management Tony West FAPI Director www.prp.com.au Jennifer Robertson AAPI Director – Healthcare and Retirement Living • Research Alex Thamm AAPI National Director – Rural and Agribusiness Angus Barrington-Case AAPI Director – Rural and Agribusiness Certified Practising Valuers www.colliers.com.au

COLLIERS INTERNATIONAL CONSULTANCY AND VALUATION

Level 20, Central Plaza One 345 Queen Street, Brisbane QLD 4000 Tel: 07 3229 1233 Fax: 07 3229 1100 Marcus JohnsonPartners FAPI: in Directoryour success. Troy Linnane AAPI National Director /DZ\HUDQGTXDOL¿HG9DOXHU Craig Clayworth AAPI Director Property law, commercial litigation, Warren Galea AAPI Director compulsory acquisitions, site value objections Scott McKeiver AAPI Associate Director DQGSODQQLQJDSSHDOV Tim Kent AAPI Associate Director Cleveland | Capalaba | Brisbane CBD

Certified Practising Valuers www.colliers.com.au 07 3370 5100 WPFFDUWK\GXULHFRPDX

Brett McCracken AAPI TASMANIA Graeme Smith AAPI John Burke AAPI Tom Lister AAPI Damien Taplin AAPI CPV C.P.M. Tas Peter Bouwmeester AAPI CBRE Valuations Pty Limited Managing Director Chris Kennedy AAPI, MRICS Hotels: Management Rights Level 3, Oracle East Tower Jamie Brown AAPI Hotels: Manufactured Home Estates 6 Charles Avenue, Broadbeach Mobile 0418 513 003 Claudine Reinecke AAPI Hotels: Management Rights Qld 4218 Our Certified Practising Valuers 5 Audley Street Paige Sherwood AAPI Hotels: Child Care, Rent Rolls T: 61 7 5581 2000 F: 61 7 5581 2099 provide professional specialist North Hobart TAS 7000 service to the Mortgage Industry. Phone 03 6231 6688 Fax 03 62316788 www.tpcvaluers.com.au Email [email protected]

register your details www.professionals.api.org.au The Property Practitioner Directory is now live. Register your details NOW, and be found online!

484 ANZPJ JUNE 2012

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TASMANIA VICTORIA

Hobart COLLIERS INTERNATIONAL CONSULTANCY AND VALUATION (03) 9602 0555 Damian Kininmonth, FAPI, Director Level 32, Optus Centre 367 Collins Street, Melbourne VIC 3000 • Valuation • Advisory • Research Tel: 03 9629 8888 Fax: 03 9629 8549 • Corporate Real Estate Solutions Jim Macey AAPI National Director • Property & Asset Management www.prp.com.au Stephen Andrew FAPI National Director - Retail John Conrick AAPI Director - Healthcare & Retirement Living Ben McCallum AAPI Director Paul Wheate AAPI Director Knight Frank Valuations (TAS) Peter Volakos AAPI Associate Director Matthew Page, AAPI Level 3, Building 3 195 Wellington Road, Clayton North VIC 3168 Scott Newton, FAPI Tel: 03 8562 1111 Fax: 03 8562 1122 Ian Wells, FAPI Chris Dupen AAPI Director Stuart Wigston, AAPI www.knightfrank.com.au Certified Practising Valuers www.colliers.com.au 5 Victoria Street, Hobart TAS 7000 T: 03 6220 6999 F:03 6224 3218, [email protected]

BARTROP REAL ESTATE BALLARAT SAUNDERS & PITT REAL ESTATE AUCTIONEERS & VALUERS David Saunders B.Ec. Dip.Val. FAPI Andrew Pitt Dip.Val. AAPI, AREI Russell Cripps B.Bus Dip.Val. FAPI, AREI -RH6WDQV¿HOG B.Prop. AAPI BRUCE E. BARTROP, FAPI, FREI, ACIS &HUWL¿HG3UDFWLVLQJ9DOXHUV Certified Practising Valuer 50–54 LYDIARD ST STH, BALLARAT 3350 14-16 Victoria Street, Hobart TAS 7000 Incorporating “A Real Estate Office Since 1876” D. Saunders & Co. 3KRQH  )D[   Established 1905 Phone: (03) 5331 1011 Fax: (03) 5333 3098 (PDLOVDXQGHUVSLWW#ELJSRQGFRP Email: [email protected]

VICTORIA Knight Frank Valuations

Melbourne | Mornington (03) 9602 0555|(03) 5975 0480 Damian Kininmonth, FAPI, Director Joseph Perillo FAPI Level 31 Neal Ellis, AAPI, Director David Way MRICS AAPI 360 Collins Street Michael Schuh MRICS AAPI Melbourne VIC 3000 Ballarat Samuel Murphy MRICS AAPI F Fin T: 03 9604 4600 (03) 5334 4441 Property Services Samantha Freeman FAPI David Keenan AAPI F: 03 9604 4773 Darren Evans, AAPI, Director • Valuation Chris Safstrom AAPI E: [email protected] Yong-Fu Lim AAPI Gippsland • Advisory Natasha Altson AAPI www.knightfrank.com.au (03) 5672 4422 • Corporate Real Matthew Crowther AAPI Tim Barlow, AAPI, Director Estate Solutions Alex Ellis, AAPI, Director • Property & Asset Management Geelong | Warrnambool • Research Charter Keck Cramer - Independent Strategic Property Consultants (03) 5221 9511|(03) 5562 5851 Strategic Research; Urban Economics & Policy Gareth Kent, AAPI, Director www.prp.com.au Stuart Mcdonald, AAPI, Director Mitchell Rowe, FAPI, Assoc. Director Development & Project Management; Land Surveying; Civil Engineering; Quantity Surveying

Corporate Real Estate; Private Equity; Strategic Asset Management; Accommodation Solutions; The Valuation Expert for Commercial Valuations; Residential Valuations; Hospitality, Tourism and Leisure Specialist Valuations Telephone 61 3 9884 7336 Peter Hutchins AAPI Managing Director Bob Butterworth FAPI L1, 620 Church St, Richmond, VIC 03 9425 5555 www.butterworth.com.au www.charterkc.com.au

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VICTORIA AUCKLAND

Nicholas Bond AAPI Trevor Crittle AAPI Andrew Kollmorgen AAPI Level 1/501 Church Street Richmond VIC 3121 Nicholas Tassell AAPI T 03 9428 7676 www.avaproperty.com.au Chris Pulvirenti AAPI

John K Dowling FAPI FREI K L Dowling & Co Specialist Valuers Estate Agents & Property Managers Valuations and Expert Evidence prepared for: ‡ /LWLJDWLRQ ‡ &RPSHQVDWLRQ City – ‡ 5HQWDO'HWHUPLQDWLRQ Level 8, 52 Swanson Street, Auckland 1010 ‡ 0HGLDWLRQ $UELWUDWLRQ ‡ 6DOHSXUFKDVH ORDQVHFXULW\ Phone: (09) 309 2116 Facsimile: (09) 309 2471 ‡ ,QVXUDQFH JHQHUDOSXUSRVHV Email: First name and surname initial (one word) @ seagars.co.nz 6HFRQG)ORRU%RXUNH6WUHHW0HOERXUQH Manukau – Level 1, Cnr Te Irirangi Dr & Ormiston Rd, Botany Junction, Auckland 7HO )D[ (PDLOMRKQGRZOLQJ#NOGRZOLQJQHWDX PO Box 258 032, Greenmount, Manukau 2141 Phone: (09) 271 3820 Facsimile: (09) 271 3821 Email: First name and surname initial (one word) @ seagarmanukau.co.nz

WESTERN AUSTRALIA City Manukau Chris Seagar, DIP URB VAL, FPINZ, FNZIV Mike Clark, DIP VAL, FPINZ, FNZIV Ian McGowan, B COM (VPM), FPINZ, FNZIV Joseph Gillard, DIP URB VAL, FPINZ, FNZIV Knight Frank Valuations Ian Colcord, B PROP ADMIN, SPINZ, ANZIV Richard Peters, BBS, DIP BUS STUD, SPINZ, ANZIV Reid Quinlan, B PROP ADMIN, DIP BUS (FIN), SPINZ, ANZIV Warren Priest, B AGR COM, SPINZ, ANZIV Stephen MacKisack, B AGR, SPINZ, ANZIV Ken Stevenson, QSM DIP VFM, VAL PROF URB, FPINZ, FNZIV Marc Crowe AAPI DIRECTOR Andrew Buckley, B PROP ADMIN, SPINZ, ANZIV Malcolm Hardie, FPINZ, FNZIV Sean Ray AAPI MRICS DIRECTOR Level 10, Exchange Plaza, David Bolton AAPI Scott Keenan, BA, B PROP, MPINZ, ANZIV Mark Brebner, B PROP ADMIN, SPINZ, ANZIV 2 The Esplanade Perth WA 6000 Andrew Buchanan AAPI MRICS Jane Wright, BBS (VPM), MPINZ Charlene Smith, B PROP, MPINZ, ANZIV David Lang AAPI T: 08 9325 2533 Kelly Beckett, B PROP, B COM, MPINZ Carina Cheung, B PROP, DIP COM (FIN), MPINZ Jonathan Vaughan AAPI www.knightfrank.com.au Glenn Paul, B SC, B PROP Pamela Smith, B PROP Damon Buckley, B COM, B PROP Julia Flett, B PROP Jamie Ellis, B COM, B PROP Brad Featherstone, B COM, B PROP Perth (02) 9292 7400 Greg Rowe, FAPI, Director HAWKES BAY • Valuation • Advisory • Research • Corporate Real Estate Solutions LOGAN STONE LTD • Property & Asset Management www.prp.com.au REGISTERED VALUERS & PROPERTY SPECIALISTS 205 Hastings Street South, Hastings. PO Box 914, Hastings. Phone (06) 870 9850 Email [email protected] Facsimile (06) 876 3543 www.loganstone.co.nz Frank Spencer, BBS (VAL PM), FPINZ, FNZIV, AREINZ Boyd Gross, B AGR (VAL), DIP BUS STD, FNZIV, FPINZ John Reid, M PROPERTY STUDIES, B COM, FNZIV, FPINZ Philippa Pearse, BBS (VPM), MPINZ Grant Barron, B COM (AG) VFM, MBA, ANZIV, MPINZ, AREINZ Advertising Enquiries Jay Sorensen, B APPL SC (RURAL VAL, AGBUS), MPINZ Louise Thompson, BBS (VPM), MPINZ

[email protected] TAURANGA

PROPERTY SOLUTIONS (BOP) LIMITED +61 (0)2 9902 2706 REGISTERED VALUERS, MANAGERS, PROPERTY ADVISORS TAURANGA MOUNT MAUNGANUI ROTORUA Phone (07) 578 3749 Phone (07) 572 3950 Phone (07) 343 9261 +61 (0)407 201 386 Email: [email protected] www.4propertysolutions Simon Harris, B AG COM, ANZIV, FPINZ Garth Laing, BCOM (VPM), ANZIV, SPINZ Harley Balsom, BBS (VPM), ANZIV, SPINZ Mark Grinlinton, BCOM (VFM) SPINZ Steve Newton, BBS (VPM), SPINZ Todd Davidson, BBS (VPM), SPINZ

486 ANZPJ JUNE 2012

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AUCKLAND AUCKLAND

COLLIERS INTERNATIONAL NEW ZEALAND LIMITED

REGISTERED VALUERS CONSULTANTS PROPERTY ADVISORY

Auckland Wellington Level 27, 151 Queen Street, Auckland 1010 Level 10, 36 Customhouse Quay, Wellington 6011 REGISTERED VALUERS, PROPERTY CONSULTANTS, PO Box 1631, Shortland Street, Auckland 1140 PO Box 2747, Wellington 6140 RESEARCH, PROPERTY MANAGEMENT, LICENSED REAL ESTATE AGENTS Phone +64 9 3581888 Phone +64 4 473 4413 Facsimile +64 9 3581999 Facsimile +64 4 4703902 Web: www.cbre.co.nz Email [email protected] Email [email protected] Email: [email protected] National Director: Directors: Auckland CBD Office Kane Sweetman BA BPROP MPINZ AAPI FRICS Gwendoline Callaghan FPINZ FNZIV Mike Horsley FPINZ FNZIV Level 14, 21 Queen Street, Auckland Directors: Andrew Washington BCom (VPM) SPINZ ANZIV PO Box 2723, Auckland S Nigel Dean DipUrbVal FNZIV FPINZ AREINZ Milton Bevin BPA FPINZ FNZIV Phone: +64 (09) 355 3333 John W Charters Val Prof (Urb/Rural) FNZIV FPINZ AREINZ Valuation & Advisory Services Mark Parlane BBS ANZIV SPINZ Associates, Registered Valuers & Valuers National Director Russell Clark BCom (VPM) MPINZ Jeremy Simpson BBS (VPM) MPINZ Campbell Stewart, B.Prop, SPINZ, ANZIV Michael Granberg BCom BPROP ANZIV Kellie Slade BBS (VPM) MPINZ Directors Reuben Blackwell BSc BCo m GRAD DIP VAL MPINZ Associates, Registered Valuers & Valuers Genevieve Grant BCom (VPM) GRAD CERT BUS SUST MPINZ Steven Dunlop, B.Prop, SPINZ, ANZIV Hamilton Office Lianne Harrison BBS (VPM), ANZIV, MPINZ Jacqueline Forshaw BBS (VPM) MPINZ Patrick Ryan, BBS, SPINZ, ANZIV Ground Floor, 155 Te Rapa Road Anthony Long BPA ANZIV SPINZ Louise Hammond BBS (VPM) MPINZ Tim Arnott, B.Com, (VPM), MPINZ PO Box 1330, Hamilton Melaney Kuper B.ApplSc (RVM) DipUrbVal William Franks BCom (Mktg) GRAD DIP VAL Michael Gunn, B.Com, (VPM) SPINZ, ANZIV Phone: (07) 850 3333 Chris Bennett BPROP Hotels & Leisure Valuation Valuation & Advisory Services Melody Spaull BPROP ANZIV MPINZ Christchurch & Advisory Services Director Darren Park BPROP Unit A, 15 Sir Gil Simpson Drive, Director Matt Snelgrove, SPINZ, ANZIV Nick Hooper BPROP Burnside, Christchurch 8053 Dhilan Balia BCom BPROP PO Box 13478, Christchurch 8141 Stephen Doyle, B.Prop, MPINZ, ANZIV Wellington Office Gemma Peterson BCom BPROP (Hons) Phone +64 3 379 6280 North Auckland Office Level 12, ASB Tower, Facsimile +64 3 366 1240 Queenstown Unit 8, 35 Apollo Drive 2 Hunter Street, Wellington Email [email protected] Level 1, Cnr Camp & Shotover Sts, Mairangi Bay, North Shore City, PO Box 5053, Wellington Queenstown 9300 Directors: PO Box 33-1080 Phone: (04) 499 8899 PO Box 416, Queenstown 9348 Gary Sellars FNZIV FPINZ Phone: +64 (09) 984 3333 Valuation & Advisory Services Phone +64 3 441 0790 Warren Glassey Val Prof (Urban) FNZIV AREINZ FPINZ Director Facsimile +64 3 441 0791 David Harris FNZIV FPINZ Directors Jamahl Williams, BBS,(VPM), SPINZ, ANZIV Email [email protected] Martin Cummings DipUrbVal FNZIV Peter Schellekens, SPINZ, ANZIV South Auckland Office William Bunt, FPINZ, FNZIV Directors: Registered Valuers & Valuers Level 1, 7a Pacific Rise John Scobie BCom BBS (VPM) Samantha Stark BBus Prop (Val) AAPI MPINZ Mt Wellington, Auckland Christchurch Office Carl Graham BCom (VPM) MPINZ PO Box 11-2241, Penrose, Auckland Level 3 CBRE House, 112 Tuam Street Registered Valuers & Valuers Ryan Teear BCom (VPM) MPINZ Phone: +64 (09) 573 3333 PO Box 13-643, Christchurch Doug Reid BCom (VPM) ANZIV SPINZ AREINZ Paul Koster BCom (VPM) MPINZ Andrew Hyndman BCom (VPM) Valuation & Advisory Services Phone: +64 (03) 374 9889 Geoff McElrea BBS (VPM) Director Valuation & Advisory Services John Fletcher FNZIV FPINZ AREINZ Wouter Robberts, NDPV, MPINZ, ANZIV Directors Tim Thomas BCom GRAD DIP VAL Plant & Machinery Valuation Chris Barraclough, B.Com, FPINZ, FNZIV

Mike Morales, SPINZ Marius Ogg, SPINZ, ANZIV Accelerating success. www.colliers.co.nz NELSON / MARLBOROUGH

42 Halifax Street, Nelson P (03) 548 9104 F (03) 546 8668 WELLINGTON E [email protected] Motueka: P (03) 528 6123 Dick Bennison, DIP.AGR, B.AG.COM, MNZIPIM (REG) ANZIV, SPINZ Rhonda Muir, B.B.S (VPM), ANZIV, SPINZ Murray Lauchlan, FNZIV, FPINZ, AREINZ Trudy Barnett, B.COM AG (AG MGMT & RURAL VAL) Barry Rowe, B.COM (VPM), ANZIV, SPINZ Ian Wallace, B SC (HONS), DIP BUS STUD, DIP AG SCI, MPINZ

propertyelearning.co.nz NATIONWIDE CORPORATE PROPERTY ADVISORS & NEGOTIATORS SPECIALISING Turning Professionals into Leaders IN PUBLIC LAND & INFRASTRUCTURAL ASSETS 12 OFFICES NATIONWIDE Level 10, Technology One House, 86-96 Victoria Street, PO Box 2874, Wellington. Chief Executive: Wayne Crowley Phone (04) 470 6105 Facsimile (04) 470 6101 property.org.nz Email [email protected] Website www.propertygroup.co.nz

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Webroot vs. Symantec is like David vs. Goliath. Only this David has a much faster, lighter, easier-to-manage slingshot.

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© 2012 Webroot Inc. All rights reserved. Webroot, SecureAnywhere, Webroot SecureAnywhere, and the globe design are trademarks or registered trademarks of Webroot Inc. in the United States and/or other countries. Reprinted from www.pcmag.com, with permission. © 2011 Ziff Davis, Inc. All Rights Reserved. API.ORG.AU

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