Breanagh Catering Ltd v Commissioner of Valuation

• Jurisdiction: Ireland
• Judge: Mr. Justice Heslin
• Judgment Date: 01 October 2021
• Neutral Citation: [2021] IEHC 663
• Court: High Court
• Docket Number: 2020/1959SS

In the Matter of the Valuation Act 2001

Between

Breanagh Catering Limited

Respondent (Appellant Before the Valuation Tribunal)

and

Commissioner of Valuation

Appellant (Respondent Before the Valuation Tribunal)

[2021] IEHC 663

2020/1959SS

THE HIGH COURT

Case stated – Valuation – Questions of law – Valuation Tribunal appealing to the High Court by way of case stated at the request of the appellant – Whether the Valuation Tribunal was correct in law in applying an overall 11% to the door and cloakroom receipts

Facts: The Valuation Tribunal appealed to the High Court by way of case stated pursuant to s. 39 of the Valuation Act 2001 at the request of the appellant, the Commissioner of Valuation. The Commissioner was the respondent before the Tribunal when it made a decision on 18 January 2016 which gave rise to the case stated. The issue which was before the Tribunal concerned the rateable valuation determined by the Commissioner in respect of the Jackson Court Hotel on Harcourt Street in Dublin (the Property). A nightclub known as “Copper Face Jack’s” was in the basement of the Property and was accessible from the ground floor bar and from the street. The respondent in respect of the case stated, Breanagh Catering Ltd, was the occupier and ratepayer of the Property (and was the appellant before the Tribunal). As per s. 8 of the case stated, the following were the questions of law arising: “Was the Valuation Tribunal correct in law (a) In applying an overall 11% to the door and cloakroom receipts on the grounds that no evidence was adduced to support the respondent’s methodology or as to how the 40% was arrived at, having regard to the onus of proof and the appeal scheme established under Part 7 of the Valuation Act 2001, and the provisions of s. 63 of the said Act? (b) In focusing on the percentages to be applied to door and cloakroom receipts instead of considering of the estimate of [the net annual value (NAV)] was excessive? (c) In failing to consider if the NAV was excessive in light of the [Receipts and Expenditure (R&E)] evidence? (d) In the reasons provided to the parties, in particular as regards the conclusion that 11% should be applied to all door and cloakroom receipts? (e) In finding that 11% should be applied to door and cloakroom receipts in excess of €1m where the respondent now contends that there was an absence of evidence to support that percentage? (f) In failing to have regard to the R&E evidence, when inferring or concluding that 11% should be applied to the door and cloakroom receipts? (g) In concluding that 11% should be applied to the entirety of the door and cloakroom receipts, when the costs of operating the nightclub were discharged by the first €600,000 of revenue? (h) In reducing the applicable percent to 11% on the grounds that no evidence was adduced to support the methodology or as to how the 40% was arrived at, in circumstances where the R&E evidence indicated that the NAV was not excessive and that the application of 70% to the door and cloakroom receipts would be justified?”

Held by Heslin J that each of the questions stated should be answered in the negative and the matter should be remitted back to the Tribunal for hearing.

Heslin J held that the parties should correspond with each other with regard to the appropriate form of the final order, including as to costs, within 7 days. Heslin J held that, in default of agreement between the parties on any issue, short written submissions should be filed in the Central Office within a further 7 days.

Case stated.

JUDGMENT of Mr. Justice Heslin delivered on the 1st day of October, 2021

Introduction

1 This is an appeal by way of case stated by the Valuation Tribunal (hereinafter “the Tribunal”) pursuant to s. 39 of the Valuation Act, 2001 (hereinafter “the Act”) at the request of the Commissioner of Valuation (hereinafter “the Commissioner”). The Commissioner was the Respondent before the Tribunal when it made a decision on 18 January 2016 (hereinafter “the Decision”) which has given rise to the case stated. The issue which was before the Tribunal concerned the rateable valuation determined by the Commissioner in respect of the Jackson Court Hotel on Harcourt Street in Dublin (hereinafter “the Property”). A nightclub known as “Copper Face Jack's” is in the basement of the Property and is accessible from the ground floor bar and from the street. The Respondent in respect of the case stated is the occupier and ratepayer of the property (and was the Appellant before the Tribunal).

2 It is not in dispute that there was a revaluation of all commercial properties within the Rating Authority area of Dublin City Council, pursuant to s. 19 of the Act. A proposed Valuation Certificate was issued by the Commissioner pursuant to s. 24 of the Act, indicating a valuation of €1,750,000.00. That valuation remained unchanged following a consideration of representations made on behalf of the Respondent in the present proceedings. The final Valuation Certificate issued on 16 December 2013 and the Respondent appealed to the Commissioner pursuant to s. 30 of the Act. This appeal was disallowed by the Commissioner's appeal manager. In September 2014, the Respondent appealed the Commissioner's determination, on the grounds that the valuation applied was excessive and an oral hearing was held in the offices of the Tribunal on 09 November 2015. The Respondent was represented by Mr. Desmond Byrne FRICS FSCSI Dip Arb. Law. of Bannon Chartered Surveyors (hereinafter “the Respondent's Valuer”). The Commissioner was represented by Mr. Alan Sweeney, B.Sc (Property & Mgmt) NSCSI MRICS (hereinafter “the Commissioner's Valuer”). Neither party was legally represented.

3 In advance of the hearing of the said appeal, each Valuer prepared a précis of evidence. These were exchanged between the parties and submitted to the Tribunal prior to the commencement of the oral hearing. It is the Decision of the Tribunal which gave rise to the case stated, dated 15 December 2020. Before looking at either, it is necessary to understand the methods employed to determine valuation having regard to the provisions of the Act, section 48 being of fundamental significance.

S. 48 of the Valuation Act, 2001

4 Given its relevance, it is useful to set out s. 48 of the Act in full:

• “48.—(1) The value of a relevant property shall be determined under this Act by estimating the net annual value of the property and the amount so estimated to be the net annual value of the property shall, accordingly, be its value.

• (2) Subsection (1) is without prejudice to section 49.

• (3) Subject to section 50, for the purposes of this Act, “net annual value” means, in relation to a property, the rent for which, one year with another, the property might, in its actual state, be reasonably expected to let from year to year, on the assumption that the probable average annual cost of repairs, insurance and other expenses (if any) that would be necessary to maintain the property in that state, and all rates and other taxes in respect of the property, are borne by the tenant.”

Estimate

5 It is clear from s. 48 that the net annual value (hereinafter “NAV”) is an estimate. The section makes clear that the relevant exercise is based on a hypothetical tenancy to a hypothetical tenant. Plainly the estimate must be within a reasonable range, but the Commissioner's statutory function is to identify a NAV which the property might reasonably be expected to let for.

Appeals scheme under the Valuation Act 2001—Sections 34 and 35

6 The appeal in question is governed by s. 34 of the Act (as it existed prior to amendment in 2015) and permits a person to appeal to the Tribunal against a decision of the Commissioner to allow or disallow an appeal in relation to a property. There is no dispute in relation to the foregoing, nor is there any dispute that s. 35 of the Act provides that the appeal must specify the grounds on which the appellant considers that the NAV determined by the Commissioner is incorrect and the value the Appellant considers the Commissioner should have determined as the NAV. The foregoing is clear from s. 35(a)(i) and (ii) of the Act. For present purposes, Sections 34 and 35 of the Act state the following as follows in respect of appeals to the Tribunal and the grounds of an appeal:

“34.– (1) a person referred to in subsection (1) of section 30 (whether or not he or she was the appellant or an appellant in the appeal concerned) may appeal in writing to the Tribunal against a decision of the Commissioner to allow or disallow an appeal under that section in relation to a property (whether or not the property falls within the same paragraph of that subsection (1) as the property falls within).

(2) Such an appeal shall be made within 28 days from the date on which the Commissioner issued the valuation certificate concerned or made the notification concerned under s. 33(2).

35 – an appeal made under s. 34 shall, as appropriate –

(a) Specify–

(i) the grounds on which the appellant considers that the value of the property, the subject of the appeal (in this section referred to as ‘the property concerned’, being the value as determined or confirmed by the Commissioner under s. 33, is incorrect….”

7 It was pursuant to the foregoing sections that the relevant appeal came before the Tribunal. It is not in dispute that when a Tribunal hears such an appeal, as in the present case, it involves a hearing de novo (see Commissioner of Valuation v Carlton Hotel Dublin Airport [2016] 2 I.R. 385). The parties also agree that, in the appeal before the Tribunal, the onus rested on the ratepayer (who is the Respondent in the present case) to establish that the NAV determined by the Commissioner was ‘incorrect’ (s. 35(a)(i) of the Act).

Valuation Act 2001 (Appeals) Rules 2008

8 It is not in dispute the provisions of s. 35 of the Act are...