Port of Cork County v Commission of Valuation
| Jurisdiction | Ireland |
| Judge | Mr. Justice Roderick Murphy |
| Judgment Date | 31 July 2007 |
| Neutral Citation | [2007] IEHC 278 |
| Court | High Court |
| Date | 31 July 2007 |
AND
[2007] IEHC 278
THE HIGH COURT
RATING
Valuation
Valuation tribunal - Rateable valuation of port lands, buildings and facilities - Case stated - Whether tribunal correct in law in not taking account of depreciation of assets when calculating rateable valuation - Whether depreciation synonymous with probable annual cost of repair - Whether depreciation necessarily a designated fund for repair or replacement of hereditaments - Trustees Fitzgerald Memorial Park v Commissioner of Valuation VA 95/1/001 - St Albans CC v St Albans Waterworks Company [1954] 47 R&IT 191 - East Link Limited v Commissioner of Valuation VA 96/4/016 and VA 96/4/017 considered; Premier Periclase v Commissioners of Valuation (Unrep, Kelly J, 24/6/1999) - Mara v Hummingbird Ltd [1982] ILRM 421 - O'Keeffe v An Bord Pleanála [1993] 1 IR 39- Orange Communications Ltd v Director of Telecommunications Regulation [2000] 4 IR 159 - State (Keegan) v Stardust Compensation Tribunal [1986] IR 642 followed; Canada (Director of Investigation and Research) v Southern Inc [1997] 1 SCR 748 - Brighton Marine Palace and Pier Co v Rees 9 RRC 75 applied - Poor Relief (Ireland) Act 1838 (1 & 2 Vic, c 56), s 68 - Valuation (Ireland) Act 1852 (15 & 16 Vic, c 63) , s 11 - Cork Harbour Act 1877 (40 & 41 Vic, c 58P), ss 23 and 40 - Cork Harbour Act 1903 (3 Edw 7, c 256P) - Valuation Act 1986 (No 2), s 5 - Harbours Act 1996 (No 11), s 7 - Valuation Act 2001 (No 13), s 15(5) - Decision of valuation tribunal upheld (2005/1691 - Murphy J - 31/7/2007) [2007] IEHC 278
Port of Cork Co v Commission of Valuation
VALUATION ACT 2001 S15(5)
VALUATION (IRL) ACT 1852 S11
VALUATION ACT 1986 S5
RYDE ON RATING: THE LAW & PRACTICE WITHIN & WITHOUT THE METROPOLIS 9ED 1950
ST ALBANS CO COUNCIL v ST ALBANS WATERWORKS CO & CLARE 1954 47 R & IT 191
BRIGHTON MARINE PALACE & PIER CO v REES 1962 9 RRC 77
EAST LINK LTD v COMMISSIONER OF VALUATION VA96/4/016 & VA96/4/017
TRUSTEES OF FITZGERALD MEMORIAL PARK v COMMISSIONER OF RATING VA95/1/001
PREMIER PERICLASE LTD v COMMISSIONER OF VALUATION UNREP KELLY 24.6.1999 2000/15/5860
MARA v HUMMINGBIRD 1982 ILRM 421
O'KEEFFE v BORD PLEANALA 1993 1 IR 39
ORANGE COMMUNICATIONS LTD v DIRECTOR OF TELECOMMUNICATIONS & METEOR MOBILE COMMUNICATIONS LTD 2000 4 IR 136 1999 2 ILRM 81 2004 40 9191
CANADA (DIRECTOR OF INVESTIGATION & RESEARCH) v SOUTHAM INC 1997 1 SCR 748
CELTIC ROADS GROUP v COMMISSIONER OF VALUATION 60 2006 566
Mr. Justice Roderick Murphy dated 31st July, 2007 .
The Port of Cork Company, being dissatisfied with the respondent Valuation Tribunal's determination of 26 th October, 2004, as being erroneous in point of law, asked the Tribunal to state a case for the opinion of the High Court.
The Valuation Tribunal comprising Mr. Fred Devlin F.S.C.S., F.R.I.C.S., Deputy Chairman, Brian Larkin, Barrister, and John Kerr F.I.A.V.I., held a hearing on 24 th March and 12 th May, 2003. The net point before the tribunal was whether and to what extent the depreciation of assets in the accounts of the appellant should be taken into account in calculating the rate of evaluation of its port lands, buildings and facilities.
The Port of Cork Company was incorporated pursuant to s. 7 of the Harbours Act, 1996 on 28 th February, 1997 whereby the Cork Harbour Authority became vested in the appellant. Prior to 1998, the subject hereditaments were occupied by the Cork Harbour Commissioners. They were included in the exempt valuation list in accordance with the established Exemption from Rates of Harbour Authorities under the provisions of s. 68 of the Poor Relief (Ireland) Act, 1838 under the Public Purposes Proviso of that section.
The Harbours Act, 1996 made no express provision for the rateability of port lands occupied by newly incorporated port companies. The Exemption from Rates of Harbour Authorities was abolished by s. 15(5) of the Valuation Act, 2001. A decision of the Supreme Court dated 28 th July, 2003, confirmed that the said exemption subsisted during the period following the incorporation of the appellant and prior to the entry into force of s. 15(5) of the Valuation Act, 2001.
In 1998 revised valuations of all hereditaments occupied by the Port of Cork Company were entered into the rateable valuation lists. Among these, four assessments as at the relevant valuation date of 10 th November, 1998 were the subject of the appeal before the Valuation Tribunal.
The judgment of the Valuation Tribunal, as can be seen in the following table, reduced the rateable valuation in respect of the first and fourth, being the two most valuable hereditaments and left the lesser two unaltered as follows:
| Appeal No. | Rateable Valuation | Revised Valuation |
| VAO1/1/001 | £4,800 (€6,094.74) | £3,983 (€5,057.37) |
| VAO1/l/012 | £39 (€49.53) | £39 (€49.53) |
| VAO1/1/013 | £550 (€698.38) | £550 (€698.38) |
| VAO1/1/014 | £3,000 (€3,809.21) | 32,475 (€3,142.60) |
The judgment of the Tribunal, which forms part of the case stated, sets out the facts as proved or admitted or agreed and as found by the Tribunal. It also contains the Tribunal's summary of the evidence, including expert evidence offered on behalf of the parties in relation to the inclusion of depreciation charges in respect of tangible fixed assets of the accounts of the appellant.
For the purpose of the appeal before the Tribunal and of the case stated the parties had agreed that the receipts and expenditure method of valuation was the most appropriate in arriving at the net annual value. It was also agreed that that the 1998 accounts of the appellant would form the basis of the valuation.
The legal submissions made for counsel for the parties at the hearing of the appeal before the Valuation Tribunal were also included in the case stated.
In its judgment of 26 th October, 2004 the Tribunal dismissed the appeal on the grounds set out in the findings section of the judgment and confirmed the valuation as contended for by the valuer appearing for the respondent as set out above.
On 4 th November, 2005 the appeal by way of case stated seeking the opinion of the High Court was sought on the following question:
2 "1. Whether the Tribunal was correct in law in determining that the depreciation of assets in the accounts of the appellant should not be taken into account in calculating the rateable valuation of its port lands, buildings and facilities."
The basis of valuation is the net annual value as determined by s. 11 of the Valuation (Ireland) Act, 1852 as amended by s. 5 of the Valuation Act, 1986 (which amendment is not relevant to the case stated).
That section provides:
"The rent for which, one year with another, the same might in its actual state be reasonably expected to be let from year to year, the probable average annual cost of repairs, insurance and other expenses (if any) necessary to maintain the hereditament in its actual state, and all rates and public charges if any (except tithe rent charge) being paid by the tenant."
2 3.1 The comprehensive 33-page judgment sets forth the appellant's evidence of its Secretary and Finance and Administration Manager, Mr. Donal Crowley B. Com., F.C.A., of Dr. Edward Cahill F.C.A., of University College Cork and of Mr. Desmond Killen F.S.C.S. F.R.I.C.S. I.I.R.V.
The evidence on behalf of the respondent was given by Mr. Shay Aylward B. Com., F.C.A., Staff Valuer, in the Valuation Office and Mr. Terence O'Rourke B.A. F.C.A. of KPMG.
2 3.2 The appellant's submissions were made by Mr. Dermot Gleeson S.C. and those of the respondent by Mr. Donal O'Donnell S.C.
In summary, the evidence of Mr. Donal Crowley was that depreciation in relation to fixed assets with finite lives was relevant to the determination of the annual value. Depreciation is defined in FRS 15 (Financial Reporting Standard 15: "Tangible Fixed Assets" issued by the Accounting Standards Board). He agreed that the depreciation fund in the company's accounts was not earmarked for any specific purpose and could be applied for the purposes as the company considered proper, necessary or appropriate.
Dr. Cahill said that in his opinion there was no conceptual difference between depreciation and a sinking fund in relation to fixed assets. As a non-cash expense "depreciation augments cash flow and helps in the provision of funds to invest in new fixed assets for replacement of or other purposes". From extensive research he had come to the conclusion that sinking funds were no longer accepted accountancy practice and that companies now used depreciation as a method of setting aside funds which remain in the company and augment cash flows. It is these internal resources through depreciation as a major constituent element, that contribute to the purchase of assets. He believed that the obligation to repair was onerous and represented more than normal repair and maintenance and that the only effective method of providing for it when using the receipts and expenditure method of valuation was to allow the annual depreciation charge in full.
Mr. Desmond Killlen stated that the depreciation charge provided for in the 1998 accounts, apportioned as between buildings, quays and piers, dredging and site development was £1,154,593. It was his opinion that a hypothetical tenant would make provision for a sinking fund to meet the anticipated cost of future repairs and/or replacement of major items. He...
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Iarnród Éireann v Commissioner of Valuation
...valuations or comparative rentals. This difficulty was alluded to by Murphy J. in Port of Cork Company v Commissioner of Valuation [2007] IEHC 278 where he observed that: “ There would be no difficulty at all if there were an actual letting in the open market by a willing lessor and a willi......