Appeal No. VA02/1/010
AN BINSE LUACHÁLA
VALUATION TRIBUNAL
AN tACHT LUACHÁLA, 2001
VALUATION ACT, 2001
Kayfoam Limited APPELLANT
and
Commissioner of Valuation RESPONDENT
RE: Factory and land at Map Reference 5A Kilcullenbridge
Rd,
Naas 1, ED:Carnalway, County Kildare
B E F O R E
John O'Donnell - Senior Counsel Chairperson
Maurice Ahern - Valuer Member
Patrick Riney - FSCS. MIAVI Member
JUDGMENT OF THE VALUATION TRIBUNAL
ISSUED ON THE 23RD DAY OF OCTOBER, 2002
By Notice of Appeal dated the 7th day of
January, 2002, the appellant appealed against the determination of the
Commissioner of Valuation in fixing a rateable valuation of €507.90
on the relevant property described above. The grounds of appeal as set
out in the Notice of Appeal are: (1) The Valuation is excessive and
inequitable. (2) The Valuation is bad in law.
The said appeal proceeded by way of an
oral hearing that took place on the 26th of July 2002 in the Valuation
Tribunal, Dublin. Ms. Sheelagh O Buachalla BA., ASCS., of GVA Donal
O Buachalla appeared on behalf of the appellant. Mr. Joseph McBride
ASCS., MRICS., MIAVI., District Valuer appeared on behalf of the respondent.
Both valuers prepared written summaries of their evidence which they
exchanged with each other and gave to the Tribunal in advance of the
hearing.
The Property
The main factory building was constructed in 1965 and was formerly the
Irish Rubber Factory. It was purchased in July of 1992 by the present
occupiers from the previous owners who had been put into receivership.
The building is located on a secondary road connecting Naas to Kilcullen
with frontage to the Naas Road. The property in question is extensively
used in the manufacture of mattresses and mattress bases.
It is clear that since the property in question was purchased in July
of 1992 considerable changes have been made. A new warehouse of steel
frame construction with concrete block walls has been added. The offices
at ground floor level have been extended to the front of the building
to provide extra showroom and canteen space. A two-storey works office
has been added internally. A first floor office over the existing offices
was also added. A store was added to the left side of the building and
an open store added to the rear of the building. In addition a large
area of mezzanine floor was added. This is extensively used in the manufacturing
operation.
The premises in question are held freehold and were purchased by the
current owners for €444,408.32 (£350,000). Said premises
includes a site area of 9 acres.
Area
The only issue between the parties in relation to the area of the subject
premises was the mezzanine floor. While the summary provided by GVA
Donal O Buachalla indicated that the mezzanine floor had been completed
in December of 1992 and had been included in the previous valuation,
the submissions on behalf of the Commissioner of Valuation suggested
that this area had been subsequently added.
Valuation History
The premises were valued in 1992 after the purchase by the appellant
and the valuation was revised downward from R.V. €736.45 to R.V.
€285.69. The property has been revised in 1994/3 revision and 1996/4
revision. On both occasions the valuation was unchanged.
The Appellant's Evidence
Mr. Denis Donoghue gave evidence on behalf of the appellant. He had
been an executive director of the appellant company up to 1996 and was
now a part-time director. He indicated that the roof had been recladded
in order to prevent leaking. Leaks had been identified by the time the
property was purchased. Because the company was involved in bed manufacturing
and because staining to a mattress would devalue any such product, it
was essential that the roof in question be repaired and so it was recladded.
He indicated that a mezzanine floor was installed sometime in 1993.
This was a freestanding unit which was "demountable". The
said mezzanine floor was increased in size by adding an extra 50% thereto
in 1997.
Mr. Allan McMillan ASCS., ARICS., MIAVI
of GVA Donal O Buachalla also gave evidence. He indicated that he had
dealt with the appeal against the original valuation in 1992. He indicated
that he had agreed a valuation with the Valuation Office which was then
represented by Mr. Denis Maher in or about June of 1993. In his view
the property had been purchased on the open market although the company
was in receivership. He says that he and Mr. Maher agreed to include
some of the work which was ongoing at the time including the mezzanine
floor. It was his evidence that work in relation to the mezzanine floor
could be deemed to be reflected in the agreed valuation in June of 1993.
He indicated that the property had been revalued in 1994 and 1996 but
that the valuation had remained unchanged. In his view he would not
calculate the value of the new warehouse added to the premises on a
"stand alone" basis. He said that this warehouse should be
treated as being an integral part of the old building and that therefore
the basic valuation utilised for the old building should be used also.
He referred to the decision VA98/3/009 Gaynor and McVeagh -v- The
Commissioner of Valuation.
He suggested that the determination of the division of the Tribunal
in that appeal indicated that where a part of a premises appears to
have been in existence at the time of a previous valuation and had not
been materially altered, there was no basis to add an additional value
over and above that assessed on that previous valuation date. In his
view, the determination appeared to suggest that because the relevant
part of the premises appeared to exist at the time of the earlier valuation,
it must be deemed to be included in that earlier valuation and therefore
could not be treated as an addition in any later valuation. In his view
the fact that the mezzanine was a movable structure, plus the fact that
it was an insertion to the premises (rather than an addition) meant
in any event that it should not be regarded as having additional value.
In cross-examination he agreed that in
the Gaynor and McVeagh case the yard, the subject matter of the dispute,
was present on the property in 1991 when the property had been valued
in that case whereas it was clear that the mezzanine floor was not present
on the property in 1992 when the revised valuation was carried out.
He agreed that the property had originally been sold while the previous
owner had been in receivership and not in liquidation, though he made
no real formal distinction between either form of insolvency so far
as the effect on the price of the property was concerned. He agreed
that the floor size had been increased as far as the mezzanine was concerned
in 1997 which obviously could not have been included in the 1992 valuation.
Ms. Sheelagh O Buachalla also gave evidence. She believed that the mezzanine
floor had been taken account of in the valuation in 1996 which had remained
unchanged from the previous valuations. In her view the addition of
the extra third of the mezzanine floor was negligible. The main additions
were the warehouse and the extended offices. In her view the value of
the warehouse and new offices did not operate to double the rateable
valuation per square metre. She took the view that the value of those
new additions should increase the value of the warehouse and offices
by 25%.
Ms. O Buachalla did not rely on any comparisons,
taking the view that the best comparison was the subject. The valuation
fixed on it originally related to the purchase price, which she said
was the best evidence of its value.
She acknowledged that monies equivalent to almost twice the original
purchase price had been spent on the improvements in question.
The Respondent's Case
Mr. Joseph McBride gave evidence on behalf of the respondent. He indicated
that there had been no mention of the mezzanine floor at the time of
the valuation in 1992. It had clearly not been in place at that time.
He speculated as to why the mezzanine had not been referred to in 1994
and 1996, and commented that a valuer might regard the change in question
as being insufficient to warrant an increase at those times. He was
of the view that the extensions carried out in question were extensive
and costly. In his view the R.V. in question was moderate in all the
circumstances and especially having regard to other similar industrial
buildings in the Naas area.
He was cross-examined by Ms. O Buachalla.
He indicated that there was no mention of the mezzanine floor in 1992
though it was accepted that there was a mezzanine floor present by the
time the valuation of June of 1993 was agreed. He expressed the view
that the cost of investment was a factor to be taken into account when
assessing the rateable valuation. He agreed that he had not relied on
the 1992 valuation in coming to his conclusions. He referred to a letter
in relation to the earlier valuation in 1992. It had been written in
June of 1993. While this letter was headed " without prejudice",
by agreement between the parties it was made available to the Tribunal
and to all parties. It referred to works being undertaken within the
interior of the premises but did not refer to the mezzanine floor. Ms.
O Buachalla and Mr. McBride both then made submissions.
Determination
The principal issues between the parties appear to be:
(i) Whether or not the mezzanine floor should be included in the most
recent valuation as an addition which now falls to be valued as such.
(ii) The appropriate additional value to be attributed to the premises
by virtue of the addition of the warehouse and extended offices.
(i) Mezzanine Floor
The evidence of Mr. McMillan indicated that works being carried out
were deemed to be included in the agreed valuation arrived at in or
about June 1993. However there is no evidence as to the extent of the
mezzanine floor at that stage. It is unclear whether it had been completed
by then. Under normal circumstances the Valuation Office would be reluctant
to include in its valuation, works which were under construction but
which had not yet been completed.
It is also clear that there is no express reference to the inclusion
of the mezzanine floor in any valuation or revision. It is true that
the revisions in 1994 and 1996 did not expressly refer to the mezzanine
either. However the mezzanine floor was substantially expanded in 1997.
Having considered the determination of the Tribunal in VA98/3/009
Gaynor and McVeagh -v- Commissioner of Valuation, it is the Tribunal's
view that this decision can be distinguished. In that case there was
clear evidence that the yard, the subject matter of the dispute, was
present in 1991 at the time of the revision of the relevant premises.
However in this case there is no such clear evidence. While it may well
be that the mezzanine was under construction, it is impossible to know
what if any value was then attributed to it. It is also clear that unlike
the yard in the Gaynor and McVeagh case, the mezzanine in question was
substantially increased in 1997, which is clearly an addition. The Tribunal
takes the view that the Commissioner of Valuation is obliged to value
the property as he finds it, including the mezzanine floor in question.
The fact that it is not expressly referred to at the time of the 1992
valuation is not clear evidence that it was taken into account. Indeed
the evidence is somewhat ambiguous in this regard. What is clear, however,
is that it has in any event been materially altered since. For these
reasons the Tribunal believes that the area of the mezzanine floor should
be included in the valuation.
(ii) Value of the additional premises
The Tribunal takes the view that these premises have been significantly
improved by virtue of the additional offices and warehouse. The appellant
relied on the original valuation which was fixed by relation to the
purchase price of the property which was at that stage suggested to
be the best evidence of its value. It is noted that the property in
question was sold in the course of a receivership, which while not exactly
the same as a sale in the course of a liquidation, cannot be said to
be the same as a full and free open market sale. It is also notable
that almost twice the amount of the purchase price has been spent on
the property in 1999. While it is clear that building costs have increased
between the original purchase date in 1992 and the time these additional
works were carried out, it is in the view of the Tribunal an extremely
significant sum.
The Tribunal is also in a position to look at the valuations provided
in respect of comparative properties in the area. The appellant was
concerned that additional value in relation to the warehouse and extended
offices was deemed an increase from €12.03 per square metre to
€23.92 per square metre i.e. an increase of 100%. In her view an
increase in value of 25% was more appropriate.
However it is of interest to examine the comparisons provided by the
Valuation Office. Comparison 1, is a very similar floor space of a "new"
factory at €27.34 per square metre. Other comparisons provided
valuations for warehouses between €27 and €41 per square metre.
While some of the comparative properties vary in size it does seem that
valuation of the warehouse premises at €23.92 per square metre
does not appear unreasonable.
The Tribunal is also of the view that the
additional office space appears, having regard to the comparisons, to
be fairly valued at €34.17 per square metre.
In the circumstances, the Tribunal values
the premises as follows:
1992/3 First Appeal : €57,101
(R.V. @ 0.5% on NAV) = €285.7 or £225.
Value of Extensions since 1992: €45,116
(R.V. @ 0.5% of NAV) = €222.20 (£175).
Therefore the total rateable valuation
is €507.90 (£400).
Accordingly the Tribunal determines the
R.V. of the property in question to be €507.90 and affirms the
determination of Respondent.