ATTACHMENT 4.3
VALUATION METHODOLOGY(Clause 4.3.1)
1 OBJECT
This Attachment sets out the process to be followed, the factors to be considered and the methodology to be adopted in determining the Transfer Value of the Properties. The procedures outlined in this Attachment shall apply in all cases unless this Deed provides otherwise or the parties agree otherwise in any particular case.
2 DEFINITIONS AND INTERPRETATION
2.1 In this Attachment, unless the context otherwise requires:
Adjustment Property means any Property specified in a notice given under paragraph 8.1;
Arbitrated Property means any Property to which paragraph 6 applies;
Arbitration Commencement Date means, in respect of each Arbitrated Property, the date specified by OTS under paragraph 6.1 or, as the case may be, determined in accordance with paragraph 6.3;
Arbitrator means a member of the panel constituted under paragraph 7;
Disputed Property means any Property to which paragraph 5 applies;
Market Value is the estimated amount for which an asset should exchange, on the Valuation Date, between a willing buyer and a willing seller, in an arms length transaction, after proper marketing, wherein the parties had each acted knowledgeably, prudently and without compulsion.
In applying this definition to any Property, the following matters shall be taken into account:
(a) the Terms of Transfer (Attachment 4.5) other than the effect of the delayed possession date;
(b) any encumbrances or interests or other matters affecting or benefiting the Property appearing on the title to the Property as at Valuation Date or to appear on such title on Completion Date or as disclosed in writing by the Crown or the Vendor Agency in accordance with clause 4.3.2; and
(c) the value is to be on a plus GST (if any) basis;
Te Runanga's Response Date means the next Business Day after the expiration of the period of 41 Business Days commencing on the date of this Deed;
Te Runanga's Valuation Report means the valuation report prepared by Te Runanga's Valuer in accordance with this Attachment;
Te Runanga's Valuer means any Registered Valuer appointed by Te Runanga to take part in the process set out in this Attachment;
Valuation Presentation Date means the next Business Day after the expiration of the period of 21 Business Days commencing on the date of this Deed;
Valuation Date means the date of this Deed;
Vendor Agency's Valuation Report means the valuation report prepared by each Vendor Agency's Valuer in accordance with this Attachment;
Vendor Agency's Valuer means any Registered Valuer appointed by a Vendor Agency to take part in the process set out in this Attachment;
3 APPOINTMENT OF VALUERS
3.1 No later than the next Business Day after the expiration of the period of 5 Business Days commencing on the date of this Deed, each Vendor Agency and Te Runanga shall each:
(a) appoint Registered Valuers and instruct them to assess the Market Value of each Property in accordance with this Attachment; and
(b) give notice to the other and to OTS of the identity of each Valuer appointed and specify each Property in respect of which he or she has been appointed.
3.2 Each Vendor Agency and Te Runanga shall ensure that the terms of appointment of their respective Valuers require them to participate in the process set out in this Attachment in accordance with the terms of this Attachment.
4 PRESENTATION OF CROWN'S VALUATION REPORTS AND TE RÜNANGA'S RESPONSE
4.1 Each Vendor Agency's Valuer shall carry out an inspection of each Property owned by the relevant Vendor Agency in sufficient time to enable it to comply with paragraph 4.2 by the Valuation Presentation Date. Each Vendor Agency's Valuer shall give at least 5 Business Days' notice of the date, time and location of each inspection to the relevant Te Runanga's Valuer and give that valuer an opportunity to attend the inspection.
4.2 Each Vendor Agency's Valuer shall, in respect of each Property, prepare a valuation report which includes the assessment of Market Value of the Property and deliver a copy of the report to OTS and Te Runanga by no later than the Valuation Presentation Date.
4.3 Each Vendor Agency's Valuation Report shall:
4.3.1 meet the minimum requirements set out in Section 5 of the New Zealand Institute of Valuers Valuation Standard 1 ("Market Value basis of Valuation") and other relevant standards insofar as those requirements are consistent with the express provisions of the Deed and this Attachment;
4.3.2 include an executive summary containing:
(a) a summary of valuation along with key valuation parameters;
(b) a summary of key issues affecting value, if any;
(c) the name of the valuer and his or her firm; and
(d) the signature of the valuer and lead valuer if applicable;
4.3.3 include a property report based on the standard referred to in paragraph 4.3.1; and
4.3.4 attach appendices setting out:
(a) a statement of valuation policies; and
(b) relevant market and sales information.
4.4 No later than Te Runanga's Response Date, Te Runanga shall give notice in writing to each relevant Vendor Agency and OTS that it either accepts or rejects the assessment of Market Value contained in the Vendor Agency's Valuation Report for each Property owned by that Vendor Agency.
4.5 If, in respect of any Property, Te Runanga gives notice that it accepts the assessment of the Market Value contained in the Vendor Agency's Valuation Report, that assessment shall (subject to Adjustment and the Terms of Transfer) be the Transfer Value for that Property for the purposes of this Deed.
4.6 If, in respect of any Property, Te Runanga gives notice by the date referred to in paragraph 4.4 that it rejects the assessment of the Market Value contained in the Vendor Agency's Valuation Report, paragraph 5 shall apply to the determination of the Transfer Value for that Property.
5 NEGOTIATIONS TO AGREE DISPUTED MARKET VALUES
5.1 Each notice rejecting the assessment of Market Value for a Property under paragraph 4.4 shall be accompanied by a copy of a valuation report which contains Te Runanga's Valuer's assessment of the Market Value for every Property referred to in the notice. Paragraph 4.3 applies to each Te Runanga's Valuation Report.
5.2 If, in respect of any Property, Te Runanga:
5.2.1 fails to give notice by Te Runanga's Response Date; or
5.2.2 gives such a notice by that date rejecting the assessment of the Market Value contained in the relevant Vendor Agency's Valuation Report but fails to give Te Runanga's Valuation Report in accordance with paragraph 5.1,
then Te Runanga may give Te Runanga's Valuation Report no later than the next Business Day after the expiration of the period of 5 Business Days commencing on the Business Day immediately following the date referred to in paragraph 4.4. If Te Runanga gives Te Runanga's Valuation Report by that date paragraph 4.6 will apply. If Te Runanga fails to give Te Runanga's Valuation Report by that date, paragraph 4.5 will apply.
5.3 No later than Te Runanga's Response Date, the relevant Vendor Agencies and Te Runanga shall each appoint and notify the other and OTS of the appointment of a person or persons who shall have authority to act as their respective representatives to negotiate an agreed value for each Disputed Property in respect of which Te Runanga has rejected the assessment of Market Value.
5.4 Each relevant Vendor Agency and Te Runanga, through their respective representatives appointed under paragraph 5.3, shall negotiate to attempt to agree the Transfer Value in respect of each Disputed Property. Where agreement is reached in respect of a Disputed Property both representatives shall sign a statement identifying the Disputed Property and the amount which the parties have agreed is the Transfer Value for that Disputed Property and shall give a copy of that statement to OTS. All such statements shall be received by OTS no later than the earlier of:
5.4.1 the next Business Day after the expiration of the period of 30 Business Days commencing on Te Runanga's Response Date or (if applicable) on such later date that Te Runanga gives all its reports under paragraph 5.2; and
5.4.2 the next Business Day after the expiration of the period of that number of Business Days which equals the number of Disputed Properties commencing on Te Runanga's Response Date or (if applicable) on such later date that Te Runanga gives all its reports under paragraph 5.2.
5.5 The amount agreed as the Transfer Value for each Disputed Property in respect of which OTS receives a statement under paragraph 5.4 shall be, subject to Adjustment and the Terms of Transfer, the Transfer Value for that Disputed Property for the purposes of this Deed.
5.6 Where, in respect of any Disputed Property, OTS does not receive a statement under paragraph 5.4, the determination of the Transfer Value of that Disputed Property shall be referred to an Arbitrator in accordance with paragraph 6.
5.7 Each relevant Vendor Agency's Valuer and Te Runanga's Valuer may, as part of the negotiations, disclose to the other and OTS relevant comparable sales by no later than the earlier of:
5.7.1 the next Business Day after the expiration of the period of 5 Business Days commencing on Te Runanga's Response Date or (if applicable) on such later date that Te Runanga gives all its reports under paragraph 5.2; and
5.7.2 the date referred to in paragraph 5.4.2.
6 DETERMINATION OF DISPUTED VALUES
6.1 No later than the date of expiration of the period of 5 Business Days commencing on the relevant date referred to in paragraph 5.4, OTS shall give a notice to each relevant Vendor Agency and Te Runanga allocating, respectively, all the Arbitrated Properties to one or more specified Arbitrators and, in respect of each allocation, specifying a date on which the process set out in this paragraph 6 shall commence (which, subject to paragraph 6.3, will be the Arbitration Commencement Date). In allocating Arbitrated Properties to the Arbitrator or Arbitrators and specifying the Arbitration Commencement Date in respect of each allocation, OTS shall first consult with each relevant Vendor Agency and Te Runanga and have regard to the following principles:
6.1.1 Arbitrated Properties in respect of which the dispute or market conditions are similar or which have similar characteristics or which are in reasonably close proximity to each other or which are owned by one Vendor Agency should be allocated to one Arbitrator;
6.1.2 as few Arbitrators as possible should be used; and
6.1.3 the Market Value for all Arbitrated Properties shall be determined by no later than the date of the expiration of the period of 100 Business Days commencing on the date of this Deed.
6.2 If Te Runanga does not object to the notice given by OTS under paragraph 6.1 within 2 Business Days of receipt, OTS shall immediately give written notice to each Arbitrator concerned that he or she is to determine the Market Value for each Arbitrated Property allocated to him or her under paragraph 6.1 in accordance with this paragraph 6.
6.3 If Te Runanga gives notice within that 2 Business Day period objecting to the notice given by OTS under paragraph 6.1, OTS shall immediately request the President for the time being of the Institute of Valuers (or its successor) or his or her nominee to allocate the Arbitrated Properties to the Arbitrators and, in respect of each allocation, to specify a date on which the process set out in this paragraph 6 shall commence having regard to the matters set out in paragraph 6.1 and the date so specified will become the Arbitration Commencement Date in place of the date specified under paragraph 6.1. OTS shall request the President to comply with the request within 5 Business Days of OTS's request.
6.4 OTS shall serve a copy of the President's (or his or her nominee's) determination on each relevant Vendor Agency and Te Runanga immediately on receipt by OTS of it and shall also immediately give written notice to each Arbitrator concerned that he or she is to determine the Market Value for each Arbitrated Property allocated to him or her under that determination in accordance with this paragraph 6.
6.5 Not earlier than the date of expiration of the period of 5 Business Days commencing on the Arbitration Commencement Date, the Arbitrator shall give notice of a meeting to be attended by the relevant Vendor Agency, OTS and Te Runanga and their respective Registered Valuers, at a venue to be decided by the Arbitrator.
6.6 The Arbitrator's notice of the meeting shall include a request by the Arbitrator to OTS, the relevant Vendor Agency and Te Runanga that they forward to the Arbitrator all information relating to the assessment of the Market Value of the Arbitrated Properties allocated to him or her which is in their possession. The relevant Vendor Agency, OTS and Te Runanga shall ensure that this information is provided to the Arbitrator (and any submissions or expert evidence based on information already disclosed shall be copied to the other parties) no later than 5.00 pm on the day which is 2 Business Days prior to the date of the meeting.
6.7 The information sent to the Arbitrator by the Vendor Agency, OTS and Te Runanga (and to each other) shall constitute, in respect of each Arbitrated Property allocated to him or her, the Vendor Agency's Valuation Report, Te Runanga's Valuation Report, sales evidence disclosed under paragraph 5.7 and any submission or expert evidence based on that information which the Vendor Agency or Te Runanga intend to present at the meeting.
6.8 At the meeting, the Arbitrator shall establish a procedure and give each party to the arbitration the right to examine, cross examine and re-examine the Registered Valuers and other experts appointed by the other parties in relation to the information provided to the Arbitrator and, subject to paragraph 6.7, otherwise have regard to the requirements of natural justice in the conduct of the meeting.
6.9 The Arbitrator shall hold the meeting and give his or her determination of the Market Value of each Arbitrated Property allocated to him or her no later than the next Business Day after the expiration of the period of 35 Business Days commencing on the Arbitration Commencement Date.
6.10 Once the Arbitrator has determined the Market Value he or she shall serve notice on the Vendor Agency, OTS and Te Runanga of his or her decision.
6.11 The Transfer Value of each Arbitrated Property for the purposes of this Deed (subject to Adjustment and the Terms of Transfer) shall be the Arbitrator's determination of the Market Value. That determination shall be:
6.11.1 no higher than the higher of the assessment of Market Value contained in Te Runanga's Valuation Report and in the Vendor Agency's Valuation Report; and
6.11.2 no lower than the lower of the assessment of Market Value contained in those reports.
6.12 The determination of the Arbitrator shall be final and binding on each Vendor Agency, OTS and Te Runanga and the persons claiming under them. No person shall have any right of appeal against, or review of the decision of the Arbitrator in relation to any matter of fact or law or procedural irregularity or any other grounds other than misconduct by the Arbitrator. If, however, the determination is appealed, Section 4, and its Attachments shall continue to apply as if the determination were final and binding but an adjusting payment will be made if necessary once the appeal is concluded.
6.13 The Arbitrator shall not make an interim decision.
7 ESTABLISHMENT OF ARBITRATORS PANEL
7.1 OTS and Te Runanga shall, in accordance with this paragraph, establish a panel of 10 persons who are independent, sufficiently qualified and experienced to be considered experts in the area of determination of values of the types of properties comprising the Properties and who are ready, willing and able to act as Arbitrators.
7.2 OTS may appoint five such persons in consultation with Te Runanga and Te Runanga may appoint five such persons in consultation with OTS. OTS and Te Runanga shall both have discharged their obligation to consult and appoint such persons by the expiration of the period of 41 Business Days commencing on the date of this Deed. If either of them fails to do so, the panel shall consist only of the persons appointed by the other party until the party which has failed to consult and appoint does so.
7.3 An appointment under this paragraph shall not be properly made until the Arbitrator has confirmed in writing to OTS and Te Runanga that he or she has read and understood Section 4 and its Attachments and that he or she shall conduct an arbitration in accordance with this Attachment on receipt of and in accordance with a notice received under paragraph 6.2 or paragraph 6.4.
