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Appeal No. VA01/1/018
AN BINSE LUACHÁLA Cowper Care Centre Limited APPELLANT RE: Nursing Home at Map Reference: 31a
Cowper Road, Rathmines East C, County Borough of Dublin B E F O R E
By Notice of Appeal dated the 20th day of April 2001, the appellant appealed against the determination of the Commissioner of Valuation in fixing a Rateable Valuation of €799.94 (£630), on the above described hereditament. The Grounds of Appeal as set out in the Notice of Appeal are: "We wish to appeal against the revised valuation on the grounds that the valuation is excessive, inequitable and bad in law when rental levels and other factors are taken into consideration and having regard to the Valaution Acts. This hereditament should be exempt from rates". This appeal proceeded by way of an oral hearing which was held in Dublin on the 26th day of October and 7th day November 2001. The Appellant was represented by Mr Owen Hickey BL., instructed by William Fry Solicitors. Mr. Brian Bagnall, ARICS, ASCS, Principal of Brian Bagnall & Associates, gave valuation evidence of behalf of the appellant. Mr Seamus Shields, General Manager of the subject premises also gave evidence. The Respondent was represented by Mr. Dan Feehan BL., instructed by the Chief State Solicitor. Mr Terry Dineen, District Valuer in the Valuation Office gave valuation evidence on behalf of the respondent. The Property Valuation History Tenure Evidence of Mr Brian Bagnall He gave the Tribunal two comparisons, Talbot Lodge, Nursing
Home, Malahide and Marymount Nursing Home, Lucan details of which are
set out in Appendix 1 to this judgment He said that the comparisons are
of similar construction and size to the subject and that he had adopted
the higher levels in assessing the subject premises. He said that charges
for patients were not location sensitive. Mr Bagnall made the following
comments on the respondent's comparisons, In relation to the contractor's method also used by the respondent, Mr Bagnall said that it was a method of last resort and not appropriate where comparisons are available. Under cross-examination he said that the capital value
was not relevant and the contractor's basis was a method of last resort.
He did not accept that the net annual value should be dependant on location
in the case of nursing homes. He agreed that a site in the city centre
might cost three times that of one in a peripheral location. He estimated
the difference as being in the region of for example £400,000 per
acre in Lucan and £1.2m per acre in Cowper Road. However he did
not accept that this would affect the NAV of a Nursing Home. He said that
his comparison in Lucan had a dementia section with coded access. He said
that the presence of a dementia section should not result in a higher
NAV. He accepted that many nursing homes are commercial in nature, based
on the figures adduced in his submission by the respondent, of 88 nursing
homes valued in Dublin only 23 are exempt. Evidence of Mr Shields to establish, develop and manage one or more care centres… for the relief of persons (in particular members of the Church of Ireland and their families), who have need of accommodation facilities by reason of their age, infirmity, disablement or social or economic circumstances. …." Mr Shields said that at the present time the home has 44 residents, 17 Church of Ireland, 4 other and 23 Roman Catholic. He said that the home provided care to people with the highest physical, mental or social need. He confirmed that no beds were allocated to private patients only. He said that currently there were 12 sufferers from dementia in a closed-door unit and 32 people in a general care environment. He said that the home catered for a small number of people who are relatively independent in care terms to people with terminal cancer. He said that all patients in the nursing home were ill and that most patients were in their mid 70s. In relation to funding of residents he provided the Tribunal
with a breakdown of the funding which detailed the three categories of
residents as follows: In response to a question from Counsel, he confirmed that he would class the home as an infirmary on the lines of county homes run by Health Boards such as St. Mary's Hospital Phoenix Park and St Clares in Ballymun in that they all provide a high level of nursing care but no invasive therapy. In relation to revenue from fees he said that the gross cost per person is £475 per week and less charitable receipts it would be £440 net. He said that their charge was £440 per week for maximum care. In cross examination by counsel for the respondent, Mr
Shields said that the EHB and acute general hospitals had the right to
nominate people for what he described as the "contract beds"
i.e. beds for people of no means. At the moment they had 16 such beds.
He said that the decision on who would get one of these contract beds
is agreed with the nominating bodies within agreed criteria and if necessary
the decision would be based on a clinical assessment. He agreed that patients
in any nursing home would be entitled to apply for a subvention from the
Health Board. He said that the dementia unit was there to provide confused
patients with an area in which they could wander unimpeded, in contrast
to the situation in ordinary nursing homes where such patients are totally
sedated or confined to what he described as a Buxton chair. He said dementia
was a condition found in about 10% of older people. Such people were previously
cared for in psychiatric hospitals. He said that at the present time five
of the twelve persons in the dementia unit were nominated by the Eastern
Health Board. In reply to the Tribunal he said that the subject premises was the only charity operated by the Church of Ireland in Dublin and that the McGeough home was an independent trust. He confirmed that a Trustee of the McGeough home was also a Director of the Cowper Care Centre Limited and added that it was appropriate that there should be a liaison between the two homes. He said that the Cowper Care Centre Limited would give a priority to the McGeough home if they needed a place and also to persons from the local area. Only five persons to date have come from the McGeough home or been nominated by a Church of Ireland or Protestant Charity. In addition he said that the home takes only adults in need. He confirmed that there was no one in the building who was not on medication of one kind or another. He confirmed that the site on which the subject premises
was built was compulsorily purchased by Dublin Corporation under the Derelict
Sites Act. It was deemed to be landlocked but the appellants got a right
of way from the McGeough home in addition to a metre of the garden at
the back of the houses for a footpath. One access only exists from Cowper
Road through the main gates of the McGeough home. Valuation Office Estimate of Rent/NAV £100,000.00 (€126,973.80) Gross Area 1,857sq.m. @ £53.80/sq.m (€68.31) = £99,906 (€126,854.45) RV @ 0.63% = £630.00 (€799.94) Convert to 1988 levels using SCS construction cost index (index 122 to index 179) £1,942,458.00 (€2,466,412.88) [The SCS tender cost index only commenced in 1998.] NAV @ 6% = £116,547.00 (€147,984.16) Valuation Office Valuation £630.00 (€799.94) He said that his calculation of the rateable valuation on the subject premises in his second method did not include a site value. He said that if he was to add for the site and if you estimated the site rent at £100,000 (€126,973.80), which if the land value was £2m (€2.5) would represent 5% of that as a site rent, that would give £100,000 (€126,973.80) per acre as an assessment of the commercial site rent. Reduced to 1988 figures by 50% would give a site rent of £50,000 (€63,486.9) and an RV of £320 (€406.31) alone. Applying the figures to the valuation of the subject on his method 2, if you took £300 from the valuation for the site value, then the RV on the buildings only came to RV £330 (€419.01). He said that the fact that Cowper Care Centre Limited paid a reduced rent to Dublin Corporation, should be disregarded, as it was peculiar to the occupier and did not affect the calculation of net annual value. In the subject property the charges per patient are lower than normal as the site is subsidised and the capital expenditure was not borrowed but came from charitable sources. Funds for construction of the premises came from: Sale of Gascoigne House a nursing home in Camden Row In relation to the charge per week as a basis for assessing net annual value, he said the question was not what is being charged but what could be charged. He considered that the rate charged in a nursing home was very relevant but not the actual rate. As a consequence of the funding of the construction of the home the centre could afford to charge lower rates. He further added that the fact that the subject had charitable status from the Revenue Commissioners had no implications for the assessing of the net annual value. In relation to the size of the facility he said that the larger the premises the more efficient it was and therefore should attract a higher net annual value. He said that it was necessary to have at least 28 beds to provide for the recommended level of care In response to Counsel for the appellant, Mr Dineen said
that he valued many nursing homes every year and that he was aware of
the market for nursing homes from conversations with nursing home operators.
He did not accept that there was a general quantum principle that the
larger the premises the less the rate per sq.m. In relation to quantum
for nursing homes he said that he did not agree that quantum would necessarily
apply and said that there was an optimum size for a nursing home in that
a larger home was more efficient. He said that he had used two methods
of valuation, both the comparative method of valuation and the contractor's
basis and that the contractor's basis was a proper method for arriving
at net annual value and that the method took the site value into account.
He said that he accepted that two of his comparisons, at page 4 of his
written submission, were assessed on a value per bedroom basis but he
said that he did not agree with that basis. In relation to the contractor's
method he said that it was a check on the other method and he did not
accept that is was an unreliable method in the subject case. He did not
accept that the comparisons in Cork were not relevant but said that his
comparisons presented a range of values and that it was for the Tribunal
to determine the relevance. He said that his comparison number 5 was the least relevant. In relation to the question about the lack of access and its impact on net annual value, Mr Dineen said that there would be no business without access. He said that the rating hypothesis would assume that the current access continues and is permanent and unrestricted. He said that the appellant had not made a case to him on the impact of access on the net annual value of the subject premises The Tribunal hearing resumed on 7 November 2001. The Tribunal addressed itself to the title and right of way issues at this resumed hearing. Title documents were presented to the Tribunal in relation
to the subject site and the Way Leave agreement. The Way Leave agreement
indicated a grant from four sets of Trustees two of whom were Bank of
Ireland and AIB respectively and two of whom were individuals connected
with the Church of Ireland. The Grantee was the Cowper Care Centre Limited.
Both documents were unsigned but the Tribunal was informed that the documents
presented to it were the title documents and the substantive Way Leave
agreement. Mr Feehan for the respondent objected to the introduction of the above described documents into evidence before the Tribunal as the documents were not signed. The Tribunal allowed the matter to be introduced into evidence as the Tribunal had asked for the information to be produced to it and accepted that in the short time available, the appellant was unable to obtain the signed documents and undertook to provide same to the Tribunal when they were to hand. The Tribunal considered that it had been presented with prima facie evidence that the documents were signed. Mr Bagnall, in further evidence to the Tribunal, amended his valuation taking into account the fact that the way leave agreement was particular to Cowper Care Centre Limited and that its grant could be withdrawn. Mr Bagnall submitted that a tenant would look for a reduction in the net annual value of 50% taking into account the restrictions on the grant of the Way Leave. He therefore proposed an RV of £172.50 (€219). He said that he would not take into account the close relationship that existed between the parties in this instance and that in these circumstances a hypothetical tenant would only pay 50% of the rent and that a charitable tenant would have the same view. He accepted that he was not aware of the restrictive nature of the access until now. He also confirmed that there were no other access points that could be used for the subject premises. Mr Dineen in further evidence in relation to quantum on the subject and the discount now being applied by Mr Bagnall, said that the essential point was that the problem with access was only a potential problem and had not arisen to date. The discount should be considered when the net annual value had been established and not at this stage. He said the right of way in itself in certain circumstances could be a rateable hereditament. In relation to the level of discount to be applied, Mr Dineen said that if access was denied the discount would be 100% but that in the context of rebus sic stantibus, no discount should be given in the present circumstances. He maintained that where there was a discretionary right of way, it should not affect net annual value in accordance with the rating hypothesis and that in such a situation it was likely that a rent would be re-negotiated subject to the access being available and that a bid might also be made for the right of way. He accepted that in a general sense the net annual value of a property, where there was an issue about the right of way, for example being held by a third party, would be less than that of a property without such constraints. However Mr Dineen submitted that in the rating hypothesis, the actual occupier and actual tenant are irrelevant as are any legal arrangements between them. In relation to the grant of the right of way, Mr Feehan on behalf of the respondent, submitted that the McGeough home would be estopped from enforcing the covenant and that Cowper Care Centre Limited would never have been developed without the Way Leave. He submitted that as the Way Leave had been granted, a court would enforce a similar right on any successor to Cowper Care Centre Limited regardless of how they conducted their business. He submitted that there was no basis for an alteration in the appellant's net annual value. Submissions on behalf of the Appellant in relation
to exemption In the Barrington's Hospital case it was held that the terms "used exclusively for charitable purposes" included a hospital even if not used for the poor. He submitted that the subject premises although not a hospital was a nursing home and provided some degree of medical care for all residents. He submitted that a trust for the care of the sick is a charity. He submitted that even patients paying the most in the subject premises were in receipt of some subvention. In accordance with Barrington's judgment he argued that people receiving care in the subject are properly an object of the charitable purpose of the statute and the case law. Submissions for the Respondent in relation to exemption
Findings and Determination Notwithstanding the fact that the parties chose to argue the issue of quantum first at the commencement of the hearing and left their arguments as regards exemption to its end, the Tribunal feels that this determination may be set out in more concise terms when dealing with the issue of exemption at first instance. Applications for exemption upon grounds similar to those in this present appeal have been made to the Tribunal on many occasions. It is common case when dealing with appeals seeking exemption on the grounds of user for "charitable purposes" that one must go back to the benchmark case of Barrington's Hospital and City of Limerick Infirmary -v- the Commissioner of Valuation and to the decision of Mr. Justice Kingsmill Moore delivered in the Supreme Court in 1953. Mr. Hickey has relied upon the decision as laid down in that case upon the basis that it deals with a similar property to that in the present case. He further submitted that the points dealt with by Mr. Justice Kingsmill Moore affectively cover the circumstances grounding his present application. Mr. Hickey has cited extracts from Mr. Kingsmill Moore's judgement deemed relevant to the present case. He has argued that, though not a hospital, the subject premises is one where members of the public are receiving medical care and attention. Mr. Hickey has gone on to quote from the judgement of Mr. Justice Kingsmill Moore when seeking to establish that the subject premises need not satisfy the Tribunal as to its use "exclusively for charitable purposes". Mr. Feehan has suggested to the Tribunal that the provision of beds under contract to nominees of the Health Board takes the subject out of the ambit of "charitable works" as defined. Having considered the arguments on this point and having noted the particulars of the learned Judge's decision in the Barrington case, the Tribunal is minded to agree with the contentions of Mr. Hickey in this respect. The Tribunal has noted the existence of a Lease between Dublin Corporation and the Trustees of the Cowper Care Centre Limited, and a Way-Leave agreement had between Cowper Care Centre Limited and the Trustees for the McGeough Home. The composition of these documents and the constraints placed upon Cowper Care Centre Limited by virtue of the terms and conditions, covenants and restrictions contained within the lease and the Way-Leave agreement, deprive the subject property of an open market rental value and are consistent with a determination on the part of all the parties concerned to ensure that the subject premises continue for the foreseeable future to be operated as a charity and for the provision of charitable works as in the various statutes so defined. This evidence in the view of the Tribunal serves to corroborate the arguments of Mr. Hickey even though no direct connection is adduced. In the present case the Appellant has submitted that the Memorandum and Articles of Association are essentially charitable in nature and this has not been disputed by the Respondent. Taking the foregoing points together the Tribunal is of the view that the Appellant's activities and aims as outlined in this case are "charitable purposes" as defined. Accordingly, the Tribunal determines the subject premises to be exempt from rateable assessment. By virtue of the foregoing the Tribunal makes no findings
as regards the quantum on the premises. |