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Appeal No. VA92/6/063 AN BINSE LUACHÁLA Aer Lingus APPELLANT RE: Offices & Catering Terminal at Lot No. 6A,
Townland of Corballis (Dublin Airport), B E F O R E JUDGMENT OF THE VALUATION TRIBUNAL By Notice of Appeal dated the 30th of October, 1992, the appellants appealed against the determination of the Commissioner of Valuation in fixing a rateable valuation of £1,800 on the above described hereditament. The grounds of appeal as set out in the Notice of Appeal are that:- The Property Tenure Valuation History Written Submissions Prefabricated Offices 5,978 sq.ft. Catering Building 230 Car Spaces Mr. O'Donnell said that there was no formal letting agreements between
Aer Lingus and Aer Rianta prior to 1986. However, in 1986, Aer Rianta
appointed Lisney & Company and Aer Lingus appointed Jones Lang Wootton
to negotiate and agree commercial rents for the various properties. This
agreement was documented in a Memorandum of Understanding which he attached
to his written submission. He said that the schedule of agreed rents fixed
in 1986 applied retrospectively to 1984 with 5-yearly rent reviews. He
said that the Memorandum of Understanding provided for rent reviews on
multi-user accommodation at rents based on the average increase of the
Consumer Price Index and the Building and Construction Wholesale Price
Index. He said it provided, also, that the agreed quantum allowance of
20% should continue to apply to review rents on multi-user accommodation.
He said that both the personnel offices and the catering building were
exclusively occupied by Aer Lingus and the rent was agreed on the basis
of 100% of the full open market rental value. The rent on the office and
catering terminal was reviewed in 1989 at £257,871 effective from
the 1st April, 1989. This figure was agreed between Lisney & Company
and Jones Lang Wootton and was compiled as follows:- Agreed Rent: Add for Temporary Prefabricated Block Rateable Valuation @ 0.63% £1,572.42 A written submission was received on the 29th April, 1993 from Mr. Frank O'Connor, a Valuer with 13 years experience in the Valuation Office on behalf of the Respondent. In the written submission, Mr. O'Connor described the property and the valuation history as set out above. Commenting on the grounds of appeal, Mr. O'Connor stated, that the R.V. here was in line with other recently revised R.V.'s in County Dublin and that it had been assessed at .63% of the estimated N.A.V. as of November, 1988. Mr. O'Connor stated that the property was held on a 35 year lease with 5-year rent reviews as from the 1/4/84. He said that the rent payable as at 1/4/89 was £267,522 comprised as follows:- A. Rent for Personnel and Catering Building £209,789 p.a. Mr. O'Connor stated that this figure was the agreed rent after a 20% reduction had been granted by Aer Rianta as a quantum allowance on account of the large amount of space which Aer Lingus rented in Dublin Airport. Therefore, the rent to any other tenant would be:- " £257,871 X 100 = £322,339 To this has to be added the site rents of £ 651] Aer Lingus is actually paying as of 1/4/89: Rent after 20% quantum allowance: £257,871 Any other tenant would pay as of 1/4/89 Rent before 20% quantum allowance: £322,339 For valuation purposes £331,990 was deemed a fair rent at 1/4/89, and at November, 1988. A quantum allowance of circa 14% was allowed reducing the rent at 1/4/89 from £331,990 to an N.A.V. of £285,500 at November, 1988." Oral Hearing At the outset, the Tribunal dealt with the issue as to whether the letter from Frank O'Donnell and Company, Valuer for the appellants constituted evidence of a concluded written agreement between the parties in relation to the valuation of £1,800 in respect of the subject property. The Tribunal was referred to the letter of the 17th September, 1992 from Frank O'Donnell and Company to the Commissioner of Valuation which set out that the agreement was made in respect of this valuation and the several other valuations set out in the letter of the 15th September, 1992 on the basis that if the Commissioner of Valuation in his decision, on First Appeal, differed on any individual case, the right to re-open and pursue further or other cases should be available to the Appellants. Mr. O'Donnell indicated that the incentive to the appellant to enter into this type of arrangement was to ensure that certain cash flow advantages would be available at an early date to the appellant. The agreement envisaged that the Commissioner of Valuation would continue adjudication in relation to appealed cases. Mr. McKechnie, also indicated that the parties were not ad idem in relation to the basis of the valuation and in particular the appellants proceeded on the basis of an understanding that the rents in respect of the subject apart from the office building were reduced by 20% in respect of a quantum factor and that they could be increased validly up to 100%. Mr. Frank O'Connor, Valuer for the Respondent indicated that a certain number of the valuations referred to in the letter of the 15th September, 1992 were agreed by him only subject to the approval of the Commissioner of Valuation. The Tribunal by the agreement of the parties adjourned to consider the matter as a preliminary issue and decided that the correspondence did not show a concluded agreement. While, the arrangement proposed might have had much to recommend it to the parties, the Tribunal is of the view that an arrangement of such complexity and of such a flexible nature should be set out in more detailed terms if it is to be held to be a binding agreement by the Tribunal. The Tribunal, has in many instances, held that agreements between valuers in such instances are binding where the expressed or ostensible authority of the valuers is to effect such settlement. The hearing proceeded on the basis of the resolution of three issues which were set out by the Tribunal without protest from the parties as follows:- 1) Whether the rent passing ought to be adjusted by 7.5% from April, 1989 back to Novermber, 1988. 2) Whether the passing rent for the office building which was described as a multi-use building ought to be increased to 100% having been pitched at 80% by agreement between Aer Lingus and Aer Rianta. 3) Whether the appellants ought to be bound by the position which they took-up initially by accepting that even the premises with exclusive use had been discounted by 20% down to 80% and whether additional rent ought to be added to establish N.A.V. in respect thereof. In relation to the first issue, Mr. Frank O'Donnell, Valuer for the Appellant opined that, rents had improved between 1988 and 1989, and that by April, 1989 they had improved on average by 7.5% from November, 1988. He added, very fairly, that indicating such increases was not an accurate science. He was cross examined vigorously by Mr. O'Caoimh in relation to this proposition who offered the Jones Lang Wootton index increase of 1% over the same period as being the more objective criterion. The Tribunal is prepared to accept that perhaps the real increase might well have been somewhere between the two figures. In relation to the second issue of the quantum allowance of 20% for the offices, Mr. Frank O'Connor, Valuer giving evidence on behalf of the Respondent suggested that 20% was altogether too excessive in respect of a quantum allowance and suggested that experience in Manchester and Belfast Airports indicated that a 5% allowance was more appropriate. He was challenged on his own use of a quantum allowance of 14% in his precis of evidence. There followed a similar debate in relation to the third issue arising from the apparent mistake of the parties in treating the quantum allowance as being applicable to the exclusive use properties. The Tribunal concludes that the Memorandum of Understanding setting out the rents of the property is a document which fairly assesses market rents and while there was some difficulty in assessing the square footage of the premises involved, on any interpertation the rents per square foot were in the commercial area. The Tribunal therefore decides having regard to the foregoing considerations
and all the evidence offered that the valuation of the subject premises
ought to be established at the rounded up figure of £1,650.
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