Commissioners of Valuation v Dundalk Urban District Council

• Jurisdiction: Ireland
• Judgment Date: 03 December 1932
• Date: 03 December 1932
• Court: Supreme Court (Irish Free State)

Commissioner of Valuation v. Urban District Council of Dundalk.

THE COMMISSIONER OF VALUATION

Appellant

and

THE URBAN DISTRICT COUNCIL OF DUNDALK, Respondents (1)

High Court.

Supreme Court.

Valuation - Waterworks - Principle of Assessment - "Contractor's method"or "profits method" - Appeal from Circuit Court - Extent of appeal - Valuation (Ireland) Act. 1852 (15 & 16 Vict. c. 63), sects. 11, 22, 23 -Annual Revision of Rateable Property (Ireland) Amendment Act, 1860 (23 Vict. c. 4), sect. 10 - Courts of Justice Act, 1924 (No. 10 of 1924),sects. 51, 61.

An appeal to the High Court under sect. 61 of the Courts of Justice Act, 1924, from the decision of a Circuit Court Judge on a valuation appeal is not limited to a question of law.

So held by the Supreme Court reversing the High Court.

The "contractor's method" of valuation is inapplicable in the case of a waterworks erected and maintained by a local authority under powers conferred by the Public Health (Ireland) Act, 1878.

So held by the Supreme Court.

Appeal from the Circuit Court.

The Urban District Council of Dundalk had appealed to the Circuit Court Judge for Louth from the valuation of their waterworks which had been made by the Commissioner of Valuation, and the appeal had been heard on the 21st and 26th January, 1929, and judgment had been delivered on the 22nd April, 1929.

The valuation appealed from was as follows:—

1. £110 assessed on their rights and easements of laying and using water mains within the Electoral Division of Dundalk.

2. £270 assessed on their rights and easements of laying and using water mains within the Electoral Division of Ballymascanlon.

3. £90 assessed on their rights and easements of laying and using water mains within the Ravensdale Electoral Division.

4. £5 assessed on their caretaker's house.

5. £220 assessed on their reservoir in the Townland of Drumnasillagh.

6. £30 assessed on their reservoir in the Townland of Faughart Lower, making a total valuation of £725.

The Circuit Court Judge (Judge St. L. Devitt) in giving judgment said:—

The Supreme Court in the Dundalk Gas Company Case(2),has decided that the task the Valuation Authority has to do is to decide a question of fact, viz.: What is the rent

for which the premises to be valued might be reasonably expected to let? The Valuation Authority is not bound to adopt any one method more than another to help it to a decision. It can gather data from any sources, but the data cannot force a decision: they can only act as a help to arriving at the decision. The judgment of the Supreme Court relieves me from the necessity of dealing with the numerous authorities that were cited to me by counsel, and which it would have been my duty to have dealt with if I had not had the authority of the Supreme Court, which has settled the law.

The Commissioner of Valuation, in fixing the valuation, proceeded on the contractor's method. He found the cost of construction, and assessed the valuation at 5 per cent. divided by two, arriving thus at a figure of £900 in round numbers. The late Judge Doyle disagreed with this method, and I am in entire agreement with that learned Judge. I am satisfied on the evidence I have heard that a valuation of £900 would not be in any sense a measure of the rent the premises could bear.

The Waterworks Committee put forward evidence showing the receipts and expenditure, and, basing their view on the profits method, contended that the valuation should be about £130. The Valuation Authority, on the same figures, assessed the valuation at over £1,100. I have considered very carefully the evidence of Mr. Allen [a Fellow of the Surveyor's Institution examined on behalf of the Urban District Council] and Mr. Linsey [a District Valuer from the Dublin Valuation Office], and the calculations by which they arrived at their respective figures. The discrepancy is due to the following fact. The capital to equip the waterworks was raised by loans. These loans have not yet been paid off. Every year it is necessary to provide for the payment of a proportion of the loans, and interest on the unpaid portions. The income of the waterworks is derived from water rents, and up to date such income has not been sufficient to pay the running expenses, and also to pay off the proportion of loans and interest which must be paid off each year. So the Urban Council in striking their rate estimate the amount necessary to raise to enable the waterworks to discharge all liabilities for the year, including this proportion of loan and interest payable each year. In the year of assessment it was estimated that the water rents would bring in £1,600, and the Urban Council raised out of the rates a sum of £1,100 for the Waterworks Committee. In fact the water rents realised £1,806 in that year, and only £800 was required out of the rates to assist the waterworks to balance their budget. That budget included in its expenditure a sum of £1,100 proportion of loan paid off, and £400 interest. Mr. Allen in his calculation took the view that a tenant would not be liable for his landlord's liability for loans and interest, and he therefore deleted the receipts from the rates on one side—the receipts side—and the expenditure on payment off of loans and interest on the other—the expenditure side. In other words, that the tenant could only rely on the difference between the cash receipts for water rents and the running expenses for his profits. Mr. Lisney took the view that as the waterworks in fact received this grant from the rates, he would include it in the receipts, but would not include the payment of loans or interest on the expenditure side. I am myself unable to see why the Urban Council should, even if they could, go on paying a sum out of the rates each year to a tenant who would refuse to devote such monies to the purpose for which it was raised. I think Mr. Allen's view is the sounder, and I accept it. The other differences between the two experts are only such as are natural. They differ as to the percentage to be allowed on tenant's capital, and I think 10 per cent. is the fair amount to allow.

I have carefully considered also their figures as to the value of meters, mains, tools, etc., and have been able to arrive at figures I think fairly represent their value. The result is, taking the receipts for 1926 as £1,806, expenditure, including wages, at £1,222, tenant's capital at £2,260, and allowing 10 per cent. on it, viz.: £226, and allowing for rates at 10s., I find that the net figure would be £205. However, as I think I must find a rent that, taking one year with another, would represent a fair rent, I fix the valuation at a sum of £170, of which £132 will be on the Rural area and £38 on the Urban area.

I understand that the Urban Council desire only to have the total valuation, and that they can then assess the amount falling on the various districts in the rural area. I have been told that, otherwise I would have gone on and broken it up. But if any difficulty should arise the case can be re-entered.

From this decision the Commissioner of Valuation appealed to the High Court. The appeal was stated to be taken both on law and fact. The following were the grounds of the appeal:—

"The grounds of this appeal, so far as it is an appeal on law, are that the Circuit Court Judge misdirected himself and was wrong in law:—

(1) In excluding from the considerations on which he based his valuation the fact that the Council, which was a hypothetical tenant for the purposes of the valuation, had considered the provision of a good water supply for the township of Dundalk worth the expenditure of approximately £40,000, and had, in fact, borrowed and expended that sum in acquiring and constructing the hereditaments constituting the said waterworks for the purpose of securing that supply.

(2) In adopting the profits method as the means of arriving at the valuation of hereditaments so circumstanced as the said waterworks, and notwithstanding that under the relevant statutory enactments applicable thereto the said hereditaments were incapable of yielding a pecuniary profit to the said Council.

(3) In adopting the profits method as the sole means of arriving at the valuation of hereditaments so circumstanced as in the last paragraph mentioned.

(4) In excluding from the valuation made by him upon the profits method the sum of £1,149, being the amount of rates raised in the year ending 31st day of March, 1926, for the purpose of defraying the expenses of repairs and maintenance of the said waterworks.

(5) In deducting from the figure of £205 arrived at by him upon the profits method a sum of £35.

(6) In holding that the Council had discharged the onus of showing that the valuation contained in the said Lists signed by the said Commissioner of Valuation [pursuant to sect. 21 of the Valuation (Ireland) Act, 1852] was incorrect.

This appeal, so far as it is on fact, is taken upon the grounds that if, and so far as, the matters hereinafter referred to are matters of fact, the learned Judge was wrong upon the evidence:—

(a) In finding that the costs of the acquisition and construction of the said waterworks was not a matter which should be taken into consideration in arriving at the valuation.

(b) In finding that the 'profits method' was the proper method of valuing the said waterworks.

(c) In finding that the 'contractor's method' was an incorrect method of valuing the said waterworks.

(d) In adopting the 'profits method' as the sole method of valuing the said hereditaments.

(e) In excluding from the figures of his valuation the said sum of £1,149, raised out of rates.

(f) In finding that the sum of £1,149, so raised by rates, was raised to enable the Urban Council to discharge all the liabilities for the year ending 31st day of March, 1926, including the proportion of loan and interest payable under same, and in the finding that the said sum of £1,149, so raised by...