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Appeal No. VA98/3/091 AN BINSE LUACHÁLA Inishowen Co-Op Livestock Mart APPELLANT RE: Livestock Mart at Map Reference On 22 Pound Street, B E F O R E
By Notice of Appeal dated the 5th August 1998 the appellant appealed against the determination of the Commissioner of Valuation in fixing a rateable valuation of £100 on the above described hereditament. The grounds of appeal as set out in a note attached to the Notice of Appeal were reduced at hearing to one ground i.e. "the valuation is excessive". The Property The mart is located on the northern side of the town of Carndonagh within the town boundary with good vehicular access and adequate parking facilities. Carndonagh and its environs have a population of approx. 1,600, with a reasonably prosperous agricultural hinterland located in the northern half of the Inishowen Peninsula. The agreed areas are as follows : Covered pens 17,789 sq.ft. Written Submissions The written submission prepared by Mr. Patrick McMorrow, District Valuer in the Valuation Office was received by the Tribunal on 19th day of July 1999. Hearing and Evidence Appellant's Case Mr. McCarroll then gave evidence based on his precis and was questioned by Mr. Hickey with regard to same. He explained there were basically two trades being carried on - the sale of sheep and the sale of cattle. A weekly mart is run in the subject property alternating between sheep and cattle sales. While the sale of sheep is more seasonal, cattle sales take place throughout the year. The major portion of the income is generated by commission charges. In the case of sheep sales, the Mart charges both the buyer and the seller 2% on the sales price while in the case of cattle, there is a charge of £4 per head between buyer and seller while £2 per head is applied to lower priced animals. Mr. McCarroll explained that the number of animals being sold through the Mart has declined over the past number of years with quite a dramatic fall in connection with sheep numbers. There are several reasons for this decline including increasing regulatory trading arrangements from the Department of Agriculture and the European Union. There are also various local/national factors attributable including the relative decline in importance of buyers from Northern Ireland and what are termed "dealers", together with an increase in part-time farming, the gradual erosion of profitability in farming enterprises and the affects of live shipments. Mr. McCarroll gave details in his precis of the declining sheep and cattle numbers over recent years. Investment income has been an important element in maintaining profitability
in the subject and Mr. McCarroll pointed out that with fairly dramatic
falls in interest rates in recent times, this source of income is being
further eroded. He said that historically the "mart cheque"
was as good as money in the bank for the local population. It had the
financial strength of the In cross-examination of Mr. McCarroll, Mr. Dignam suggested that the profits basis for determining R.V. was incorrect and was not applied in other livestock marts but rather they were valued by way of the comparative method. He also suggested that in a co-operative Mart such as the subject, the profit motive would not necessarily be the overriding objective as the views and concerns of a broad range of members needed to be taken into account. He further suggested that commission payments may vary from one mart to another and in the case of the subject, they were relatively low. Mr. Dignam pointed out that if commission charges were higher, profits could increase fairly significantly notwithstanding that the number and value of the animals being processed may be decreasing. Mr. Colbert from the Irish Co-operative Organisation Society (I.C.O.S.)
then gave evidence. He explained his organisation had carried out a review
of the co-operative mart sector in 1999 and this highlighted a decline
in the mart share of livestock sales. He explained that despite an increase
in the cattle population of one million from 1990 to 1998, the mart share
had fallen by approx. 25% since 1990. While marts had an increase in turnover
during the period from 1990 to 1993 of about 19%, there was a fall of
about 9% covering the overall period from 1990 to 1997. On the other hand,
the survey highlighted the increasing costs of running a mart where the
average increase between 1990 and 1997 was 22%. With regard to the future,
Mr. Colbert suggested that cattle numbers will decline further. The CAP
Reform of 1992 introduced the concept of support price reductions and
higher direct payments. This will reduce the end value of stock in the
marts. In conclusion, he suggested there will be a continuing trend of
decreasing numbers of livestock being sold through the marts. As a result, he completed a separate extract from the audited accounts with reference to the Marts Division and these details were appended to the precis from Mr. McCarroll. This showed the income and expenditure of that Division for the years from 1994 to 1998. In questioning from Mr. Dignam, Mr. Gorman acknowledged that the income and expenditure shown for the Marts Division were effectively extracted from the management accounts and were not audited in their own right but as part of the overall "group". Accordingly it was not practicable to segregate separate numbers for the marts division and have them subject to audit. Mr. Gorman said that while the subject generates significant investment income from interest arising on reserves and uncashed cheques, in his opinion, another livestock mart that may operate an equivalent business would not necessarily have the same confidence with the members and the public in general and as a result, this type of income would not be as significant. Mr. Gorman indicated that approx. two thirds of the interest income was generated from uncashed cheques and the other one third from reserves. In cross-examination by Mr. Dignam, Mr. Gorman explained that the raising of commissions was not a practical option as, in his view, this would mean a reduction in livestock numbers being processed. He also stated that the overall objective is to maximise profits notwithstanding the fact that the business is run on a co-operative basis. Respondent's Case The comparison at Burnfoot has an area of just over 28,000 sq.ft. with the covered pens valued at 65p p.sq.ft. and the administration area at £1.70 p.sq.ft. However its entire Eastern hinterland was lost due to its proximity to the Border (c. 1 mile). The comparison at Dowra has an area quite similar to the subject (just over 24,000 sq.ft.) and the covered pens were valued at 61p p.sq.ft. and the administration area at £1.80 p.sq.ft. However this was a very remote location on the Leitrim/Cavan Border with particularly poor road access and severely disadvantaged farming hinterland. The comparison at Grange had an area of just over 14,000 sq.ft. but most of the property consisted of open pens and in any event, trading had ceased at that location some time ago. Accordingly, this comparison was not considered further. Mr. McMorrow referred to the precis submitted by the appellant and in
particular to the basis of the R.V. calculated by Mr. McCarroll. He explained
that investment income had been excluded from the calculation, and this
was incorrect. In addition, he felt the management charge should be added
back as this would be the view taken by a hypothetical tenant and the
wages included some costs in connection with the general manager, which
should likewise be added back. In his view, an allocation of 50% for the
rates adjustment was too high and he suggested the "rate in the pound
divider" should be 1.162, as distinct from the figure used of 1.38.
He also mentioned that the average profit and loss figures used by Mr.
McCarroll in his calculations referred to the years from 1994 to 1998.
However as the valuation date was November '96, reference to 1997 and
1998 was inappropriate. Even if one were to use the profits method and
take account of the foregoing adjustments suggested, one would end up
with an R.V. in the region of £70/£75. In any event, Mr. McMorrow
once again contended that reliable comparative evidence was available
for livestock marts. He has used these comparisons in arriving at the
R.V. and this was the most appropriate basis. The Tribunal has considered the written submissions and the oral evidence adduced at the oral hearing by both the appellant and respondent. While the appellant has relied on the accounts/profits method as the basis of arriving at a valuation, the respondent has relied on comparative evidence. The Tribunal has had regard to these methods. Given that reliable comparative evidence is available for other livestock marts in the surrounding areas, the Tribunal is of the view that reliance on the accounts/profits method is not appropriate in this case. The respondent put forward a schedule of four comparisons. Trading has ceased at Grange (comparison D) and the overall area at Raphoe (comparison A) is approx. 1.5 times that of the subject. In the Tribunal's opinion however comparisons B and C are particularly relevant. The comparisons used by the Respondent have been valued as marts on an existing use basis. However some weight should attach to the fact that a restrictive covenant is included in the lease agreement under which the subject property is held whereby any alternative occupant will be obliged to continue operating a livestock mart at this location. Having considered the evidence of both parties, the Tribunal determines
the rateable valuation of the subject hereditament at £80 calculated
as follows :
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