Wynne v Commissioner of Valuation
| Jurisdiction | Ireland |
| Judge | Justice Aindrias Ó Caoimh |
| Judgment Date | 25 November 2002 |
| Neutral Citation | 2002 WJSC-HC 7512 |
| Docket Number | Record No.2490 SS of 2001 |
| Court | High Court |
| Date | 25 November 2002 |
Between:
And
2002 WJSC-HC 7512
THE HIGH COURT
Synopsis:
RATING
Valuation
- Property - Public house - Commercial law - Case stated - Valuation tribunal -Comparative method with other licensed premises - Improvements carried out to premises - Whether revised rateable valuation excessive - Whether valuation based upon value of premises or business of premises - Valuation Acts 1852 to 1988 (2001/249SS - O Caoimh J - 25/11/2002)
Wynne v Commissioner of Valuation
A public house had previously a rateable valuation of £19. The premises were improved, were inspected in 1998 and the valuation was increased to £56. The owner appealed the valuation initially to the Commissioner of Valuation and thereafter to the Valuation Tribunal (the Tribunal). The owner had contended that the improvements that had been carried out to the premises had not increased the area and were essentially cosmetic in nature. In addition the premises had been closed for a number of years before the refurbishment and it was argued that on opening the turnover of the premises was very low. Issue was also taken with comparisons made with other licensed premises. As part of its calculations the Tribunal had compared the premises with another premises and determined that the correct valuation was £48 and a case was stated for the opinion of the High Court.
Held by Ó Caoimh J in finding in favour of the Tribunal. The Tribunal were entitled to have regard to the comparative method in seeking to ascertain the net annual value of the subject premises. There was evidence to support the conclusion of the Tribunal and the Tribunal had not misdirected itself in law. As the determination of the Tribunal related to a particular point in time the occupier would be entitled to have the premises listed for revision at any future date.
Citations:
VALUATION ACT 1988 S5
VALUATION (IRL) ACT 1952 S11
ROSSES POINT HOTEL V CMMSR OF VALUATION 1987 IR 143
ARMSTRONG V CMMSR OF VALUATION 1905 2 IR 448
SHELBOURNE GREYHOUND STADIUM LTD V CMMSR OF VALUATION UNREP MCGUINESS 22.1.1997 1998/30/12153
HARPER STORES LTD V CMMSR OF VALUATION 1968 IR 166
MARA (INSPECTOR OF TAXES) V HUMMINGBIRD LTD 1982 ILRM 421
EDWARDS V BAIRSTOW 1956 AC 14
ROADSTONE LTD V CMMSR OF VALUATION 1961 IR 239
DUNDALK GAS CO V CMMSR OF VALUATION 1929 IR 155
CMMSR OF VALUATION V DUNDALK URBAN DISTRICT COUNCIL 1932 IR 272
MERSEY DOCKS & HARBOUR BOARD V BIRKENHEAD ASSESSMENT COMMITTEE 1901 AC 175
TALAROCH MINING CO V ST ASAPH UNION LR 9 QB 478
MERSEY DOCKS V LIVERPOOL LR 9 QB 84
R V LONDON & NORTH WESTERN RAILWAY CO LR 9 QB 134
delivered the 25th day November 2002.
This is a case stated from the Valuation Tribunal pursuant to s. 5 of the Valuation Act,1988and concerns the valuation of a public house owned by the appellant and situate at Edward Street, Tralee in premises known as "The Osborne" comprising a mid-terrace ground floor licensed premises with a small store. It is stated that the ceiling height is up to the first floor which is effectively used exclusively for toilets though it has also a small area which could not be adequately or objectively described as an office area. The premises at ground floor level consist of a bar lounge (61.3 sq. M -660sq. ft) and store (3.4 sq.m. -37 sq. ft.). The first floor consists of an area of 25.1 sq. M. -270 sq. ft.) The premises internally and externally is in very good condition having recently been refurbished and redecorated. All the main services are connected.
The valuation history of the premises is that there was a rateable valuation of £19 on the premises which stood until 1998 when the property was inspected and revised and on the 9th of November 1998 the valuation was issued on revision in the sum of £56 which remained after initial appeal to the Commissioner of Valuation and from which decision the appeal was taken to the Valuation Tribunal.
The submissions made to the Valuation Tribunal are summarised as follows:
i i. that having regard to the turnover of the premises, the letting value of the premises was such that there was little or no increase in the letting value that existed prior to the improvements being carried out on the premises;
ii ii. The premises were purchased at auction on the 23rdOctober, 1997, for a sum of £250,000.
iii iii. The premises had been closed for approximately 10 years prior to that and accordingly the turnover on the opening was very low;
iv iv. The recent refurbishments which have been carried out at a cost of £107,000 to the retail bar area had not increased the area and the alterations if they could be so described, were essentially of a cosmetic nature;
v v. The alterations carried out to the premises were principally in response to the Fire Officer's requirements and not otherwise;
vi vi. The premises, having been closed for a long period, had no track record and the only audited accounts were those for the year ending the 31,st December, 1999, which showed an annual turnover for the year in question of £104,000 approximately with a gross profit of approximately £46,479 which when other deductions were made, resulted in an operating loss of £21,055 for the year in question.
The case stated recites that the tribunal summarised that the essence of the appellant's argument was that, having regard to the level of turnover and to the resulting loss that the premises could not in any circumstances have a net annual value of £11,200 which was used by the respondent as the basis of determining a rateable valuation of £56. The Tribunal also observed that the appellant took issue with all of the comparisons produced on behalf of the respondent and in particular the licensed premises known as "Val's Pub" on 29 Bridge Street and "Jack's Pub", the Square, Tralee.
It is recorded that on behalf of the Commissioner, Mr. Moloney gave a breakdown of the suggested net annual value of the premises of £11,200 as follows:
| Bar/Lounge | £16 per sq.ft. or £172.30 per sq. m. |
| Store | £3 per sq.ft. |
| First floor (offices) | 25.1 sq. m. at £10.76 per sq. m. = £270. |
The case stated records that in support of this breakdown the witness referred the Tribunal to three comparisons which are set forth in the Tribunal's judgment. In addition to relying on these three comparisons the witness suggested an alternative approach to valuing the subject premises by proceeding upon the basis that a leasehold exists of 2 years 11 months from September 1996 at a rent of £16,000 per annum and deducting 30% from that rent to reflect the situation as of November 1998 leaving an estimate of £11,200 which, when converted gives a rateable valuation of £56.
The Tribunal considered that "Jack's Pub" was in a better location and had a significantly greater floor area and a significantly greater retail area. The Tribunal was of the view that while this property was of some assistance it was not a prime comparison available to support the Commissioner's case.
With regard to "Val's Pub" the Tribunal observed that the premises were significantly greater than and in its opinion in a better location than the subject premises.
The Tribunal noted its obligation that in making a valuation of the subject reference had to be made to s. 11 of the Valuation (Ireland) Act, 1852 (“the Act of 1852”) and s. 5 of the Valuation Act,1986(“the Act of 1986“) and the valuation had to be estimated on the basis of what a hypothetical tenant would pay for the premises in question on a letting from year to year. The Tribunal indicated that the rates, taxes, repairs, insurance and other expenses must be taken into account when calculating the rent which the hypothetical tenant would pay.
The Tribunal stressed that it was the premises in their actual state and not the business which had to be valued. It indicated, however, that while the actual and potential business capacity of the premises are relevant considerations they are only an indication of the value of the property. It noted that it is the net annual value (N.A.V.) of the premises and not the business which must be determined.
The Tribunal noted that the hypothetical tenant will not be bound by the actual rent and will not under any circumstances feel obligated to accounts produced. Nevertheless, the Tribunal concluded that the hypothetical tenant will consider and be mindful of such accounts but does not have to treat them as conclusive. The hypothetical tenant will look at the history of the trading pattern and will look at the market and his competitors and may see opportunities not evident to the existing user. He may feel that the premises are being under utilised or that the management efficiency of the property could be increased. He could change the entire focus of the business carried on in the premises to achieve a great deal higher turnover than is reflected in the accounts and thus in that way he would be in a position to offer more to the landlord for rent. The Tribunal concluded that it was crucial to understand that whilst the actual trading position is of relevance, and whilst the accounts will of course be considered, nonetheless, the hypothetical tenant will also take into account all perceived advantages which he might believe the property has in order to calculate what rent he will be prepared to pay for the premises in question.
The Tribunal concluded that the best comparison offered was comparison 1 offered by Mr. Moloney, namely the premises at Lot 14a Edward Street, Tralee which is also a licensed premises and has a rateable valuation of £50.00 having been valued at the fourth quarterly revision in 1997. In so holding the Tribunal held that...
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