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Appeal No. VA02/5/013 AN BINSE LUACHÁLA HEAnet LTD. APPELLANT RE: Offices & Carpark at Lot No. 158C (flr 0),
Sundry Townlands, B E F O R E JUDGMENT OF THE VALUATION TRIBUNAL By Notice of Appeal dated the 26th day of November, 2002 the appellant appealed against the determination of the Commissioner of Valuation in fixing a rateable valuation of €628.00 on the above described relevant property. The Grounds of Appeal as set out in the Notice of Appeal are: 1. This appeal proceeded by way of an oral hearing held in the offices
of the Tribunal at Ormond House, Ormond Quay Upper, Dublin 7 on the 19th
May 2003 and on the 9th June 2003. At the hearing the appellant was represented
by Mr. Seamus O'Tuathail, SC, instructed by solicitors Messrs Edge Manning
& Company. The respondent was represented by Mr. Colm Mac Eochaidh,
BL, instructed by the Chief State Solicitor. 2. The subject property comprises part of the ground floor of Brooklawn
House, a modern five-storey office building at Crampton Avenue off Shelbourne
Road, Dublin 4. The offices occupied by the appellant have an area of
569m2 and four car parking spaces and are sub-leased from the Higher Education
Authority. The premises are occupied under a 25-year full repairing and
insuring lease from December 2001 at a rent of €310,936 per annum
and €2,539.48 per car parking space. 3. The relevant rating history is that the subject property was first
valued at the 2000/2 revision and assessed at a rateable valuation of
€628. At first appeal stage the appellant sought a reduction in the
rateable valuation and to have the property distinguished as exempt in
the Valuation List. The appeal was refused on both counts and it is against
this decision of the Commissioner of Valuation that HEAnet brings this
application before this Tribunal. The quantum is not now in dispute. 4. As the result of a preliminary hearing held on the 7th April 2003
it was agreed that this appeal would proceed under the rating code prior
to the implementation of the Valuation Act 2001. Accordingly therefore
exemption is being sought under the provisos contained in section 3 of
the Poor Relief (Ireland) Act 1838, sections 12 &16 of the Valuation
(Ireland) Act 1852 and section 2 of the Valuation (Ireland) Act 1854.
The basis of the claim for exemption is that the purposes of the appellant
at the subject property are of a public nature and are dedicated to or
used for public purposes or alternatively are charitable in their use
and are used for the advancement of education and learning. 5. At the oral hearing Mr. John Boland, director of HEAnet and Ms. Ann
Hardy, Network Operations Centre Manager, gave evidence in relation to
the establishment, funding and general operations of the appellant company.
Documentary evidence provided included a copy of the company's Memorandum
and Articles of Association and the annual report and financial statements
for the year ending the 30th September 2001. From the evidence so tendered
the following facts emerged. 6. Facts Found by the Tribunal "(a) To support the advancement of education by the Higher Education Authority, Dublin City University, St. Patrick's College Maynooth, Trinity College Dublin, University College Cork, University College Dublin, University College Galway, University of Limerick, Dublin Institute of Technology, The National College of Industrial Relations, Athlone Regional Technical College, Carlow Regional Technical College, Cork Regional Technical College, Dundalk Regional Technical College, Dun Laoghaire Regional Technical College, Galway Regional Technical College, Letterkenny Regional Technical College, Limerick Regional Technical College, Sligo Regional Technical College, Tallaght Regional Technical College, Tralee Regional Technical College, Waterford Institute of Technology, The National College of Art & Design, Tipperary Rural & Business Development Institute, The Royal Irish Academy, their successors and assigns and other educational, academic, cultural and State authorities involved in the advancement of education, by way of the provision of and the continuous enhancement of quality network services to the establishments concerned. (b) Subsidiary and ancillary to the foregoing and for the purposes aforesaid:- The company shall have the following enabling powers: (vi) To purchase, take on lease or in exchange, hire or otherwise acquire
any real or personal estate which may be deemed necessary or convenient
for the objects of the Company. (xiii) To borrow or raise money in such manner as the Company shall think
fit and in particular by the issue of debentures or debenture stocks perpetual
or otherwise and to secure the repayment of any money borrowed raised
or owing by mortgage charge or lien upon the whole or any part of the
company's property or assets whether present or future and also by a similar
mortgage charge or lien to secure and guarantee the performance by the
Company of any obligation or liability it may undertake. Provided that
no mortgagee or other person or company advancing money to the company
shall be concerned to enquire into the necessity or propriety of raising
money or as to the amount required or the application thereof. 7. The members of the appellant company are the Higher Education Authority,
the Universities and other major educational institutions and other academic,
cultural and State authorities involved in the advancement of education,
learning and research. Many if not all of these bodies and institutions
have the benefit of exempt status under the rating code. 8. HEAnet which was established in 1997 is Ireland's national educational
and research network and primarily provides high quality internet services
to the staff and the students in Ireland's Universities, Institutes of
Technology and other educational and research organisations. Some but
not all of HEAnet's services are also available to the public. As Ireland's
only national research network HEAnet is represented on a number of likeminded
international bodies. 9. The affairs of HEAnet are managed by a board comprising of members
drawn from third level education institutions, the Higher Educational
Authority and the Department of Enterprise Trade and Employment. The company
is a non-profit making organisation and has been afforded charitable status
by the Revenue Commissioners. HEAnet has 21 employees paid directly from
the company's funds. Board members are not remunerated for their services
to the company. 10. HEAnet's operating costs are met from charges to the company's members
according to their level of usage, grants for specific projects and grants
from the Higher Education Authority and funding under the National Development
Plan. Client charges do not reflect the full costs of providing the services
tendered and are in fact heavily subsidised. 11. HEAnet exclusively services the education and research community
within Ireland and operates a national network dedicated solely to supporting
education, learning and research so as to ensure that Irish educational
organisations can fulfil their role as educators. It also facilitates
connection to and collaboration with other international networks of a
similar nature for educational and research purposes. 12. HEAnet acts as a dedicated internet portal for higher education information
in Ireland and provides an excellent electronic library service to its
members and the general public which operates on a 24 x 7 basis. The library
services provided include: 13. HEAnet currently has a client list of approximately 40 institutions all of which are publicly funded either in whole or in part. Clients pay an annual sum based on usage. Services are not provided to private Universities as they are engaged in profit-making activities and are not publicly funded. 14. The Appellant's Submission 15. HEAnet, Mr. O'Tuathail said, was established and mainly funded by
the Higher Education Authority and its primary object was to support the
advancement of all the major educational establishments in the State by
providing quality network services. HEAnet derived no profit from the
provision of the services the cost of which was heavily subsidised by
grants from the Higher Education Authority and other projects. Many but
not all of the services were provided to members of the public at large
free of charge. 16. In support of his submission for exemption Mr. O'Tuathail relied
upon the findings of this Tribunal in the case of University of Limerick
v Commissioner of Valuation (VA95/5/010- 014). In particular Mr. O'Tuathail
drew the Tribunal's attention to paragraph 13 of the judgment where after
an examination of the various cases relating to exemption the Tribunal
set down criteria for use in measuring whether or not exemption should
be granted. 17. Mr. O'Tuathail submitted that the relationship between the Higher
Education Authority and HEAnet was analogous to that which existed in
the case between Aer Rianta CPT and Tedcastle's Aviation Fuels Limited
and another party v The Commissioner of Valuation (Supreme Court Decision
333/92). In that case he said that the Supreme Court had concluded that
the facilities (a tank farm for aviation fuel) were in the occupation
of the Minister for Transport and accordingly exempt from rates. The appellant
in this case is a sub-tenant of the Higher Education Authority and moreover
the Memorandum and Articles of Association were specifically drafted to
further the specific objectives of the policy and interests of the Higher
Education Authority in combination with the Universities and other educational
institutions in promoting the advancement of learning in the electronic
age. 18. Mr. O'Tuathail also referred to the comments of Keane. J. in the
matter of the Trust of Worth Library (1995) 2 IR.301. These comments he
said indicated a more relaxed approach to the definition of what types
of academic research and advancement of learning can constitute a good,
laudable object sufficient to gain exemption. 19. Having regard to all the references above cited Mr. O'Tuathail submitted that HEAnet should be accorded exempt status by virtue of the fact that the company was providing a great public benefit and advancing learning and scholarship to the benefit of the entire community. 20. The Respondent's Submission 21. In regard to the claim that the premises were dedicated to or used
for public purposes Mr. Mac Eochaidh referred the Tribunal to "The
Law of Local Government in Ireland" by Ronan Keane wherein Mr. Justice
Keane analysed the judicial authorities interpreting the exemption of
valuation on the basis of public purposes. Mr. Keane summarised the authorities
in the following terms 22. Mr. Mac Eochaidh submitted that since the subject property was not
owned by the Government but was leased by a company limited by guarantee
of which the State is not a guarantor the first portion of the test is
not met. Equally since the services and assistance HEAnet supplies are
not available to the public at large the second portion is not met. In
support of his submission Mr. Mac Eochaidh relied upon the words of Kenny.
J. at page 519 in the case Trinity College Dublin v Commissioner of Valuation
(1919) IR "in all the Irish authorities where the question of the
meaning and application of the words " used for public purposes,"
or "altogether of a public nature," or "used exclusively
for public purposes," has arisen, it has been uniformly determined
that the " user," essential in order to establish exemption,
must be available for all the subjects of the realm; the " purposes"
must be purposes in which every member of the community has an interest;
and the premises must be used for the public benefit of the whole community,
and not for the private or exclusive use of any members, or any particular
class or section, of it." 23. Mr. Mac Eochaidh further submitted that the public at large did not
benefit from the HEAnet occupation of the subject property. The only class
of persons benefiting from the occupation were the Higher Education Authority,
the Universities and other educational and academic, cultural and State
authorities involved in the advancement of education and learning. Accordingly
he contended HEAnet were not entitled to exempt status. 24. Mr. Mac Eochaidh further submitted that while educational establishments
may be entitled to exemption under the provisions of section 63 the property
in question must be used exclusively for the education of the poor or
exclusively used for charitable purposes or dedicated to or used for public
purposes. It was clear from the facts in this case that the appellant's
use of the subject property is for none of the above stated purposes. 25. Mr. Mac Eochaidh in his submission made reference to the criteria
set down at paragraph 13 in the judgment of this Tribunal in the case
University of Limerick v Commissioner of Valuation previously referred
to. Mr. Mac Eochaidh submitted that HEAnet cannot be likened to a university
or educational establishment and hence the criteria set down at paragraph
13 do not operate. 26. Mr. Mac Eochaidh submitted that a claim for exemption in accordance with the provisions of section 63 on the basis that the subject property was used exclusively for the education of the poor could not succeed as it was clear from the facts that it was not so used. 27. Determination 28. HEAnet Ltd. is a creature of the Higher Education Authority, the
universities and several other third level institutions engaged in the
pursuit of education, learning and research. The fact that these bodies
enjoy exemption from rates does not of itself entitle HEAnet to exemption
from rates. Exemption can only be granted if it can be proved conclusively
that the activities of HEAnet in the subject property are such as to bring
it within the scope of statutory provisions i.e. section 63 of the 1838
Act, section 16 of the 1852 Act and section 2 of the 1854 Act 29. HEAnet is not an educational establishment in the accepted sense
of that expression. As stated elsewhere HEAnet's primary purpose is to
support the advancement of education "by way of the provision of
and continual enhancement of quality network services" to the establishments
concerned. It is, in short, a provider of internet services to its members
which pay for the services provided allbeit at a heavily subsidised level
of charges. In the circumstances therefore the tests set down in the University
of Limerick case do not apply. 30. The test that property is of a public nature and dedicated to or
used for public purposes is set out by Mr. Justice Keane in the book entitled
"The Law of Local Government in the Republic of Ireland" at
page 297. In regard to the first test the Tribunal holds for the respondent
in that the subject property does not belong to the government but is
leased by a company limited by guarantee in respect of which the State
is not a guarantor. 31. In regard to the second test the main objects of HEAnet are as set
out in the Memorandum and Articles of Association as previously referred
to. In furtherance of these objectives the appellant provides a quality
internet service to its members and by extension to the staff and students
in the universities and other third level educational establishments and
research bodies throughout the State. HEAnet also provides to its members
a high-speed national network with direct connectivity to other networks
in Ireland, Europe and the rest of the world. It is therefore one of the
largest internet service providers in the country notwithstanding the
fact that it is geared to meet the needs of the academic and research
communities. Some but not all of the services are available to the public
at large free of charge. The Tribunal considers the decisive test in this
appeal as to whether or not occupation of the subject property by HEAnet
is for public purposes is as set down by Kenny J. in the case Trinity
College Dublin v Commissioner of Valuation (1919) 2 IR 519 as referred
to by the respondent. 32. Having regard to the facts as found in this appeal the Tribunal concludes
that the occupation of the subject property is primarily if not indeed
exclusively for the benefit of a section of the community only i.e. the
members of HEAnet and the staff and students of the universities and other
third level educational establishments and research bodies in the State.
Accordingly the Tribunal determines that the subject of this appeal should
not be distinguished as being exempt under the provisions of section 63
of the Poor Relief (Ireland) Act 1838. 33. Under section 63 educational establishments may be entitled to exemption
if the subject property is a building used exclusively for the education
of the poor. From the evidence tendered in this case it is clear that
the property which is the subject of this appeal is not so used and hence
any claim under this heading cannot be sustained. 34. The appellant did not canvass for exemption on the grounds that the
subject property was used for charitable purposes although it was alluded
to by the respondent. In the Pemsel case charitable purposes were classified
into four principal divisions 35. The absence of a precise definition of "charitable purposes"
means that each application must be decided on the facts of each appeal
or precedent. In Ireland the courts, at least since 1957, have taken a
more restrictive view of what "charitable purposes" means and
the Supreme Court in the Barrington's case decided that the categories
enunciated in the Pemsel case did not necessarily apply for the purposes
of the Valuation Code. Accordingly, the Tribunal cannot give "charitable
purposes" the same liberal and broad meaning as found in English
authorities. 36. It is accepted by the Tribunal that whilst HEAnet is not an educational
establishment in the strict understanding of that term, it does nonetheless
have a role in the education process. However, the Tribunal is of the
view that this role is not sufficient to satisfy the requirements of section
63 which, from well-established precedent, must be narrowly interpreted.
The true role of HEAnet is more akin to that of a support function or
support activity than one which could be properly categorised as charitable. 37. Having regard to the foregoing the Tribunal finds that the use of
the subject property by HEAnet is not of a nature sufficient to meet the
requirements necessary to gain exemption in accordance with the statutory
provisions. Accordingly the appeal is dismissed. |