|
Appeal No. VA04/2/035 AN BINSE LUACHÁLA First Citizen Residential Ltd. APPELLANT RE: Nursing Home at Lot No. 2ABCD, Ballyleague, Cloontuskert,
Roscommon, County Roscommon B E F O R E JUDGMENT OF THE VALUATION TRIBUNAL By Notice of Appeal dated the 16th day of April, 2004, the appellant appealed against the determination of the Commissioner of Valuation in fixing a rateable valuation of €496.00 on the above described relevant property. The grounds of Appeal as set out in the said Notice of Appeal are: "The property is not a Nursing Home. These properties are residential units and therefore should not be rated. The property comprises 56 stand-alone individual residential units fully equipped with their own kitchens, bathrooms, bedroom etc. Residential accommodation is exempt from rates, and therefore we feel it is incorrect that these residential units be rated." The appeal proceeded by way of an oral hearing held in the offices of the Tribunal, Ormond House, Ormond Quay, Dublin, on the 23rd day of September, 2004. At the hearing, the appellant was represented by Mr. Lyndon McCann, Senior Counsel, instructed by Mr. David Fowler, Solicitor, of Shiels, Solicitors, Clanwilliam Terrace, Dublin and Mr. Dan Duggan, M.R.I.C.S., A.S.C.S., M.I.A.V.I., B.Sc., D.B.S., of Spain Courtney Doyle. Mr. James Devlin B.L., instructed by the Chief State Solicitor, appeared on behalf of the respondent and Ms. Ciara Marron, B.Sc. Property Management & Valuation, Dip. in Property Valuation & Management, MIAVI, a Valuer with the Valuation Office was also present. Both parties having taken the oath adopted their respective précis which had previously been received by the Tribunal as their evidence-in-chief. From the evidence so tendered, the following emerged as being the facts relevant and material to the appeal. The Property Each of the rooms has been fitted out and decorated to a high standard
with facilities in each for cooking and washing, and feature the following.
Own:- Each room is carpeted and painted. Power is not metered individually to the units. Tenure Valuation History RATEABILITY Appellant's Legal Submissions and Evidence - Summary • Applicant stated that the First Citizen property was not a nursing
home and that it was a residential property where residents are encouraged
to fend for themselves. It has a pro-active philosophy based on a Finnish
model. • Occupiers of the home are viewed as residents and participants
and it is therefore different from a typical nursing home • Appellant claimed that the subject property was a dwelling. Apart
from the Kerry County Council v Kerins - Supreme Court 1996 3 IR 493 case,
the appellant cited cases on "dwellings" in relation to Acts
not concerned with rating. • Units self-contained. Common room 13% of ground floor area. Administration 10% does not affect dwelling aspect, and does not constitute a "significant extent". Premises are accordingly not a mixed building but are domestic premises, within the meaning of the 2001 Act. Respondent's Legal Submissions and Evidence - Summary • Property is registered as a nursing home. • Capital allowances are allowed on a Nursing home and may be availed
of by appellant. • First Citizen is not using units as private dwellings, but for
the purposes of carrying on a business. • Not accepted by the Commissioner that the premises are used as
a dwelling. • If the Tribunal finds that it is a "dwelling" then it is further submitted that the property falls to be regarded as "mixed premises" within section 3 of the Valuation Act, 2001. Analysis and Conclusions - on Legal Submissions 1. Domestic Premises Accordingly, there is a positive test and 2 negative tests The apart-hotel question is not in issue. The question we have to address is whether the subject matter is a "mixed premises" within the meaning of section 3(1) of the Valuation Act, 2001. 2. Mixed Premises. Valuation Act, 2001 Dwelling Purposes Residential units The subject property has a dwelling use with the 56 self-contained dwellings
units just like the 12 chalets in Kerry County Council V Kerins. Both
properties are similar as regards: • The dwelling purpose: i.e. 56 self-contained units and 12 chalets,
respectively. • Use of dwelling: there is no requirement for an occupier to make private use of the dwelling and it may be used for a commercial purpose subject to planning constraints. However, they differ in important aspects as follows: • The 12 chalets were built as 6 detached building blocks, each
comprising 2 self-contained fully furnished houses capable of being separately
let. This contrasts with the 56 dwelling units which are not separate
buildings in themselves, but an integral part of a single building which
is the subject premises. It is important to bear in mind that as regards
mixed premises the Act uses the word "building". • The 12 chalets were used for one purpose only, namely "dwellings".
They had no other use and accordingly could not be referred to as mixed
premises. This as we shall see contrasts with the subject premises. • The chalets came within the definition of "domestic hereditaments"
under the Local Government (Financial Provisions) Act, 1978. Accordingly
they were exempt from rates. • The subject premises is a building which is used for dwelling and non dwelling purposes and is a "mixed premises". The facts will show if it is a mixed premises within the Valuation Act, 2001. Non Dwelling Purposes. The ground floor plan provided in evidence indicates: Services for the residents, as noted in the extract from the website;
include the provision of: It is clear from the above facts that the subject property has both dwelling
and non dwelling uses and that it is a mixed premises. However, the next
step is to show that the premises is mixed to a "significant extent"
within the meaning of the Valuation Act, 2001. In view of the facts of
this case the Tribunal concludes that on the balance of probabilities
that the subject property is a mixed premises to a "significant extent"
with regard to both dwelling and non dwelling purposes within the meaning
the Act. Accordingly, the subject premises is not a "domestic premises"
under the Valuation Act, 2001. In these circumstances there is no provision
for relief and the subject premises is liable for rates. Appellant's Case Mr. Duggan drew the attention of the Tribunal to his views that the subject units are the largest residential type properties within current use in this country, which he described as own door, self-contained, residential units. He acknowledged that the own door was located internally, providing ingress and egress to each unit from internal corridors within the structure. He confirmed that each unit was fitted with a fridge, washing machine/dryer, microwave oven, sink, kitchen, shelving, bathroom, own letterbox, direct line telephone service and own television with licence fee paid directly by the occupier. Mr. Duggan also advised that the complex provides a communal dining facility and seating area. He stated that the administrative area occupies about 12% of the gross building area and the communal area about 13%, again of the gross building area. He emphasised that the residents within the subject property do not require full time medical care or assessment, there are no restrictions on visitors and each occupier has a dedicated letterbox. While confirming that the complex was built with the benefit of planning permission to a nursing home and that the complex has since been registered as a nursing home in accordance with relevant legislation, Mr. Duggan suggested that, in the absence of any other legislative label or identity available for a complex such as the subject and to qualify for certain capital allowances as well as weekly operating allowances, the owners of the complex had no choice but to register and accordingly adopt in name only, the term of nursing home. Mr. Duggan indicated that, in his view, the Valuation Office had increased the number of comparisons introduced in their appeal document to the Tribunal over and above those employed by them during revision and appeal. He stated that the Commissioner had overlooked the issue of quantum and potential profitability. He contended that the current occupancy level is approximately 30% and urged the Tribunal to consider an approach to valuation based on the financial contribution made per patient. This turnover method, in Mr. Duggan's view, was more appropriate than the use of the comparison method, the latter which he considered to be unfair, particularly when compared to other properties which are 90 - 100% occupied. Whilst he accepted the initial 2 comparisons introduced by the Valuation Office at First Appeal, namely the Curley and O'Connor properties, as noted in the Appendix attached, Mr. Duggan rejected the analysis conducted by the Valuation Office, stressing that the subject comparisons are, respectively, from 4.4 to 6.8 times smaller than the subject, and that the Valuation Office had erred by not, apparently, applying a quantum allowance to the rateable valuation of the subject to reflect such differences in areas. He stressed that the dramatically different functionality of the subject, taken together with its operational dynamics, meant that it should not be valued exclusively on the comparison method, as there are, in his opinion, no comparable properties to relate to. In analysing the Valuation Office's Valuation Reports provided on the
Curley and O'Connor properties, being nursing homes at Ballymonagh and
Boyle, Co. Roscommon, respectively, Mr. Duggan concluded an applied rent
per sq. metre of €33.01 and €38.04 on each of the 2, again respectively;
deduced an apparent quantum discount of 13% on the former; and suggested
that the Valuation Office had not been consistent in applying such a quantum
allowance on the First Citizen property. Noting the difference in floor
areas of 57% between the Curley and O'Connor properties and the 13% quantum
discount referred to earlier, Mr. Duggan affirmed that his client's property
is approximately 680% larger in floor area than O'Connor's, and yet apparently
does not qualify for any quantum discount by comparing the €33.01
assumed rent on the larger of the Valuation Office's comparisons, property
No. 1, to the €33.90 assumed rent applied on the First Citizen property.
Mr. Duggan then explained a valuation technique titled by him as the "patient method", which concluded with a proposed rateable valuation of €108. He concluded his review of his submission by highlighting the ethos and unique philosophy of his client's operation at Lanesborough, stressing the unique differences between it and all other residential facilities in the country more particularly described as nursing homes. He emphasised the residential nature of the property, the self-dependent ethos espoused by the owners of First Citizen Residential, the nobility of their approach in terms of self care, dignity and personal esteem and urged the Tribunal to support either one of 2 proposed rateable valuation calculations made by him, calculated initially by the turnover method at €162.21, or if necessary, a combination of his comparison, turnover and patient methods, which would produce a proposed rateable valuation figure of €128. Mr. Devlin commenced cross-examination of Mr. Duggan by having the latter
confirm that capital allowances could be claimed by the developers of
a registered nursing home. Mr. Devlin outlined the primary function of
a nursing home as one providing care and maintenance to dependent persons.
Mr. Duggan, in reply to questions, confirmed that when a Health Board
is involved, the weekly patient charges are €400, and when not involved,
the sum increases to €500 per week. He also stated that he was unaware
of any other residential units within the state charging similar levels
of weekly fees. In reply to observations made by Mr. Devlin in relation
to the support and care of residents who are aged and following accidents,
Mr. Duggan contended that the people are cared for at First Citizen Residential
well beyond the limits of accidents or the provision of food and shelter.
He confirmed that if needed, the residents are provided with medication
and may get specific nursing attention. Mr. Devlin challenged the use of the turnover method or approach to valuation adopted by Mr. Duggan. He referred to Section 49 of the 2001 Act. Mr. Duggan stated that there are only 2 other similar type properties in existence and not the 5 which appear to be scheduled on the first page of the website. He then accepted that the Valuation Office use of the comparison method was in his view the best approach, but retained his view that the turnover method employed by him should be considered relevant in this particular case. Mr. Devlin stated that Section 48 of the 2001 Act is used to assess the rates payable on a new property, not yet on the List, which calls for the application of net annual value. He explained that, as comparisons were available, the Valuation Office was not required to consider any other provisions or method of valuation within the context of the 2001 Act. Discussion ensued on matters relating to the application of quantum allowances and the tone of the list, and Mr. Duggan, in reply to Mr. Devlin, stated that, in his view, the rigours of the valuation process should apply at all levels up to and including Tribunal Hearing. Mr. Duggan questioned whether or not the Valuation Office had considered, and if so, applied, a quantum allowance. Mr. Devlin drew attention again to the apparent all en-suite layout and finishes of each of the rooms and assured Mr. Duggan that the Valuation Office had made some allowance for quantum at First Appeal stage, which was evident when looking at the Valuation Office's comparisons, which measure 694 sq. metres and 443 sq. metres respectively. Mr. Duggan acknowledged that the turnover method may not be the actual method to be used in this circumstance but contended that it remains useful for reference purposes. In challenging the proposed rate of €10 per sq. metre, which Mr. Duggan might apply, Mr. Devlin stated that such a rate would in fact be less than an average rate applicable to an industrial unit. Respondent's Case She indicated that there are 14 nursing homes in Roscommon and her comparisons were those most recently revised. With reference to comparison No. 1, she affirmed that the applied rate of €30.75 per sq. metre resulted from an analysis following an appeal of this Ballyleague Nursing Home and drew attention to the fact that this smaller property of circa 630 sq. metres comprises of 7 single and 18 double rooms, none of which are served with en-suite bathrooms, and noting it to be in the same village as the subject relevant property. She reported that upon inspection of her comparison No. 2, being the Oakwood Nursing Home in Roscommon, only 12 rooms had been completed and the valuation, which was not appealed, was carried out on circa 917 sq. metres, but the complex has been designed to approximately 1, 940 sq. metres in total area. She stated that the rate of €41 per sq. metre was considered fair, highlighting that property's location in Roscommon and noting a correction in her text to reflect its distance of 0.9 miles from Roscommon County Hospital and 20 miles from the subject property. Ms. Marron stated that the finish in the Oakwood Nursing Home was broadly similar to the subject, but in a superior location, and therefore commanding €8 higher per sq. metre of applied rental value, reasoned by her on location and not quantum. On the issue of quantum Ms. Marron said that, if the subject was smaller in area, she would have valued it higher. She also reviewed the details in her submission in relation to comparison No. 3, noting its transition from a former convent to a guest house and more recently to a nursing home and confirmed that the rate of €33.76 resulted following an appeal to the Commissioner. She also referred to her comparison No. 4, which was also appealed to the Commissioner, and in common with Mr. Duggan's comparison No. 1, which was assessed at a rate of €33.01 per sq. metre, which is at the same level as the subject, but this property is smaller in area, with en-suites fitted to the single rooms only, and she expressed the view that the subject property is better finished and fitted to a higher standard than this particular comparison. Ms. Marron also declared that, in her view, none of the 4 comparisons offered should be considered as primary. She addressed the appellant's comparison property No. 2, i.e. O'Connor's Nursing Home in Boyle, and focused on the assessed rent level of €38.04 per sq. metre, and informed the Tribunal that it is a mixed, 2 storey building, comprising nursing home, store, laundry and private residence located on the outskirts of Boyle town, and in her view, inferior to the subject. Mr. McCann commenced cross-examination of Ms. Marron focusing on the 2 nursing home properties outlined in Mr. Duggan's précis of evidence, and stated from the outset that they were not the sole comparisons used to reflect and analyse the rateable valuation of the subject. In reply, Ms. Marron stated that the comparisons chosen by the Valuation Office were in accordance with Section 49 of the Valuation Act, 2001 and attributed a fair level or rate to the subject. In reference to her comparison No. 1, she stated it was not the only relevant property and having reviewed the characteristics unique to all of the buildings she reviewed, she concluded that the comparisons offered by her were selected on the basis that they are each nursing homes and comparable to the subject. Ms. Marron acknowledged the issue of self-dependency addressed by the appellant relative to the management ethos of the subject for its occupiers, but declared that she would not consider herself a health care specialist. She expressed the view that few nursing homes offer own kitchen facilities, but many offer own door and private television viewing. She acknowledged that the cooking facilities were limited to a microwave oven in each of the subject rooms and that many of the occupants possibly have food cooked for them on a daily basis. She acknowledged that, in her experience, most nursing homes do not provide private telephone lines in the occupier's name to each of the rooms, or indeed private letterboxes. She stated that, in her opinion, there would typically be a larger area of the building dedicated to common, nursing, administration use and so on, whereas the subject apparently has a greater overall residential component or area. In response to a question Ms. Marron stated that she does not accept the principle of application of a quantum allowance in this case. Mr. McCann again raised the matter of €10 per sq. metre as referred to and proposed by Mr. Duggan earlier, and in reply to a question, Ms. Marron stated she had valued some industrial units previously at a rental rate equivalent to €20 per sq. metre. Findings & Conclusion 1. The relevant property is registered, and trades, as a nursing home. Determination And the Tribunal so determines. |