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Appeal No. VA04/3/034
AN BINSE LUACHÁLA Stone Developments Ltd. APPELLANT RE: Quarry/Sandpit at Lot No. 1B.2C.5B.7B.7C, Brackernagh
(Clancarty), Ballinasloe, County Galway. B E F O R E JUDGMENT OF THE VALUATION TRIBUNAL By Notice of Appeal dated the 3rd day of August, 2004, the appellant appealed against the determination of the Commissioner of Valuation in fixing a rateable valuation of €262.00 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, Ormond House, Ormond Quay Upper, Dublin 7 on the 16th of November, 2004. At the hearing the appellant was represented by Mr. Owen Hickey, BL instructed by James Coady & Sons, Solicitors and the respondent by Mr. James Devlin, BL, instructed by the Chief State Solicitor. Expert valuation evidence was given by Ms. Sheelagh O Buachalla, B.A., ASCS, a Director of GVA Donal O Buachalla, Property & Rating Consultants and Mr. David Walsh, B.Agr.Sc., a District Valuer in the Valuation Office, on behalf of the appellant and respondent respectively. Mr. Brendan Costello, the production director of the appellant company, gave evidence of fact in relation to the operation of the property concerned. The Property 2. The property concerned is a limestone quarry located at a hillside location on the outskirts of Ballinasloe about one mile from the town centre. Access to the quarry is off the main Galway-Dublin road. Valuation & History 3. A valuation certificate pursuant to section 28(6) of the Valuation Act, 2001 was issued on the 30th of December 2003 by the Commissioner of Valuation to the effect that the rateable valuation of the property concerned had been assessed at €262 of which €250 was attributed to the quarry output. The balance of €12 was attributed to the canteen and other rateable items. No change was made at first appeal stage and it is against this decision by the Commissioner of Valuation that the appeal to this Tribunal lies. 4. At the hearing it was agreed that the only issue before the Tribunal was the value to be attributed to the quarry, the valuation of the buildings and other rateable items having been agreed. The Appellant's Evidence 5. Mr. Brendan Costello, the production director of the appellant company,
said the property concerned was a dimensional quarry, as distinct from
an aggregate quarry which provides stone principally for road construction
purposes. The subject property, Mr. Costello said, provided limestone
of a high quality for use as a decorative structural material or for ornamental
sculptural purposes. 6. Mr. Costello outlined how the limestone is extracted from the rock
face by the use of diamond-tipped cutting machinery. No blasting occurs.
The stone is produced in block sizes varying in weight from 5 to 20 tonnes.
The stone thus produced is not processed further on-site but is dispatched
to other facilities owned and operated by the appellant. Preparing the
stone for onward sale or use, Mr. Costello said, gives rise to a waste
of about 30%. Mr. Costello said the limestone, which sells for €148
per tonne, has an extraction cost of just over €70 per tonne. Mr.
Costello said just over 4,300 tonnes of stone was extracted from the subject
quarry on an annual basis. 7. Mr. Costello said that limestone was a high value/high cost product
and as such was different from conventional aggregate material which was
of low value and involved a low cost of production. 8. Ms. O Buachalla, having taken the oath, adopted her written précis
and valuation which had previously been received by the Tribunal as being
her evidence-in-chief. In her evidence Ms. O Buachalla valued the quarry
element of the property concerned at a rateable valuation of €16
calculated as set out below: 9. In arriving at her opinion of net annual value, Ms. O Buachalla said
that she was relying upon her comparisons Nos. 2 and 3 (details of which
are set out in Appendix 1 attached to this judgment). Ms. O Buachalla
pointed out that her two comparisons were limestone quarries, each of
which had been valued on an output basis at a royalty rate of 71c per
tonne. 10. Ms. O Buachalla said the valuation of comparison No. 2 had been agreed
at the 2001 Tribunal appeal stage and the basis of the agreement was comparison
No. 3 which itself had been agreed at the 1999 first appeal stage. At
the time comparison No. 2 was agreed she had been advised that the limestone
was being sold at €190 per tonne, as against £3 per tonne for
aggregate used for road construction purpose. 11. Ms. O Buachalla said Mr. Walsh's valuation method in this appeal
was unusual in that it was a departure from the established practice of
the Valuation Office whereby quarries were valued on a royalty basis.
12. Under cross-examination Ms. O Buachalla said that, in arriving at her opinion of net annual value in this instance, she considered 71c to be the appropriate royalty figure as this was the same figure used in her comparisons No. 2 and 3, both of which were limestone quarries with higher outputs than the subject. By so doing, she said, she was comparing like with like and maintaining a uniform valuation approach. In her opinion her valuation method was appropriate under section 49(2)(b) of the Valuation Act, 2001. The Respondent's Evidence 13. Mr. David Walsh, having taken the oath, adopted his written précis
and valuation which had previously been received by the Tribunal as being
his evidence-in-chief. In his evidence, Mr. Walsh contended that a rateable
valuation of €250 should be attributed to the quarry element of the
property concerned, calculated as set out below: Mr. Walsh said that before arriving at his opinion of net annual value he had examined other Valuation Office files in relation to the valuation of quarries. As a result of his research he came to the conclusion that it was right and proper to have regard to the price achieved for the stone and this was borne out by his comparisons, details of which are set out in Appendix 2 attached to this judgment. 14. When it was pointed out to Mr. Walsh that the price per tonne derived from the CSO Sand & Gravel Index was based upon his estimated price of €400 per tonne which was considerably higher than the actual price achieved at €148 per tonne, Mr. Walsh agreed that it would be appropriate to amend his valuation as set out below: Price per tonne = €148 15. Under examination Mr. Walsh agreed that there was a distinct difference
between quarries such as the property concerned and what is known as aggregate
quarries. He also agreed that in principle it would be good valuation
practice to value a dimensional quarry by comparison with other dimensional
quarries but pointed out that there were no other such quarries in the
same rating area as the property concerned and that under the provisions
of the Valuation Act, 2001 he was precluded from relying upon comparisons
drawn from other rating areas. He further agreed that all his comparisons
were aggregate quarries and indeed that a number of them were located
in other rating areas. 16. When questioned about section 49(2)(b) of the Valuation Act, 2001
Mr. Walsh opined that it seemed to mean that properties at revision stage
should be valued as if the provisions of the Valuation Act, 1986 were
still in force. He further agreed that on this premise Ms. O Buachalla
was entitled to have regard to how other quarries of a similar nature
were valued. Nonetheless, Mr. Walsh said that he did not necessarily agree
with the valuation methodology used in her two comparisons and was of
the opinion that it was proper to look at the sale price of the end product.
This, he said, was the method of valuation used in all of the comparisons
he had put forward and which had been introduced merely to support his
opinion that this was an acceptable and proper method of valuation. Mr.
Walsh said his valuation methodology was fully in compliance with an internal
Valuation Office document dated April 1998 dealing with the valuation
of quarries and pits. 17. When asked by Mr. Hickey if the effect of section 63 of the 2001 Act meant that he could not impugn a valuation appearing in the valuation list, Mr. Walsh said that this was not necessarily the case and that in his opinion he could in circumstances where he felt it right so to do. Legal Submissions 18. Following receipt of all the valuation evidence it was agreed that a number of issues of some legal importance had arisen during the hearing, which the parties wished to address by way of written submission. The Appellant's Submission 20. In relation to the first matter, Mr. Hickey submitted that 49(2)
provides for where there are no comparable properties in the same rating
area as the property concerned. Section 49(2)(b) provides that in those
circumstances where an existing valuation list is in force- as in the
instance case- then the determination of value should be made as follows: 21. Mr. Hickey further submitted that where there are no comparisons
in the same rating authority area -which is common case in this matter
- section 49(2)(b) becomes operational. Following a detailed examination
of sections 48 and 49, Mr. Hickey contended that the only meaningful interpretation
of the provisions of section 49(2)(b) is that the net annual value of
a property must be taken to mean its net annual value at November 1988
determined by reference to the net annual value of comparable properties
as of the 1st of November 1988. The net annual value so determined is
to be adjusted by the application of an agreed percentage figure in order
to arrive at the property's rateable valuation in compliance with the
repealed enactments-more particularly section 11 of the Valuation (Ireland)
Act, 1852 as amended by section 5 of the Valuation Act, 1986. Under the
repealed enactments it was not a requirement that comparisons cited be
limited to those drawn from same rating area in which the subject property
is located. Accordingly therefore it was open to the appellant's valuer
to introduce and rely upon comparisons drawn from other rating areas.
22. In his submission Mr. Hickey made reference to section 63(1) of the
Valuation Act, 2001 and contended that the operation of this Act precluded
the Commissioner of Valuation from attempting to impugn an existing valuation
appearing in the valuation list. 23. In support of his submissions Mr. Hickey cited the following cases:
The Respondent's Submission 24. Mr. James Devlin dealt with: 25. Mr. Devlin in his submission said that section 49 must in the first
instance be looked at as a whole. Where the valuation of a relevant property
falls to be determined for the purpose of section 28(4), Mr. Devlin said,
then that determination "shall be made by reference to the values,
as appearing on the valuation list relating to the same rating authority
area as that property is situate in, of other properties comparable to
that property." Section 49(2) only comes into play when there are
no comparable properties in the rating authority area. 26. Mr. Devlin said the respondent did not challenge the findings of
the Valuation Tribunal in the Shoezone case referred to by Mr. Hickey.
However, Mr. Devlin said Mr. Hickey's contention that regard must be had
to comparisons was somewhat at odds with the findings in the Shoezone
case as borne out by the following extract, 27. The valuation of limestone quarries in Carlow and Kilkenny were agreed
at first appeal stage and therefore do not carry the same weight as a
Tribunal judgment. Mr. Devlin said that the findings of the Tribunal in
Kilsaran Concrete v Commissioner of Valuation (VA98/3/039) dated the 26th
of July 1999 was relevant to this appeal and in particular the following
extract, 28. Mr. Devlin said that the fact that the Carlow and Kilkenny valuations
were post the Kilsaran Concrete case did not detract from his contention
that the application of a fixed rate per tonne was inappropriate in itself
and more so where the rate per tonne bears no resemblance to the value
of the relevant material as reflected in its ex-pit price. To exclude
consideration of the ex-pit price would represent a departure from the
Shoezone stipulation that regard must be had to "all available relevant
evidence". 29. Mr. Devlin submitted that a valuation officer could not depart from
established Valuation Office practice and policy as outlined in official
instructions issued to valuers. In the circumstances of this appeal Mr.
Walsh was acting within the Valuation Office practice as per the document
entitled 'Instruction to Valuers April 1998 on the Valuation of Pits and
Quarries'. This instruction, Mr. Devlin said, allowed for the use of the
royalty method as well as the price per tonne method. Mr. Walsh in fact
applied the same methodology as was adopted by the Tribunal in the Kilsaran
case. 30. In his submission Mr. Devlin cited the following cases: Findings The Law 2. The Valuation Act, 2001 which came into effect on the 2nd of May,
2002 is a codifying Act and under its provisions all the then existing
statutory enactments (with some minor exceptions) dealing with the valuation
of property for rating purposes were repealed. The Act makes provision
for the revaluation of all relevant properties in the local rating authority
areas on a regular periodic basis and also sets down new revision procedures.
3. Under section 43 of the Act the now existing valuation lists shall
remain in force until such times as valuation lists prepared in accordance
with the relevant valuation orders made by the Commissioner of Valuation
pursuant to section 19(1) of the Act come into effect. Section 44 enables
the revision of valuations appearing in an existing valuation list to
be carried out in accordance with the new revision and appeal procedures
as set down in parts 6 and 7 of the Act. 4. Part 11 of the Valuation Act comprising of sections 48-55 sets down
the basis of valuation of relevant property for rating purposes. In regard
to this appeal, section 49 is particularly relevant. Subsection 1 of this
section states that the valuation of a relevant property at revision stage
"shall be made by reference to the values, as appearing on the valuation
list relating to the same rating authority area as the property is situate
in, of other properties comparable to that property." Subsection
2(a) of section 49 states that "if there are no properties comparable…
situated in the same rating area" then the value of the property
concerned "shall be made by the means specified in section 48(1)"
(i.e. an estimate of its net annual value) and that the amount so estimated
shall "be adjusted so that amount determined to be the property's
value is the amount that would have been determined to be its value if
the determination had been made by reference to the date specified in
the relevant valuation order for the purposes of section 20". The
effect of this section is that valuations made at revision shall be determined
by reference to what is known in rating parlance as "the tone-of-the-list".
In the Tribunal's opinion it is clear that 49(2)(a) does not apply to
the revision of a property appearing in an existing valuation list. In
those instances, as is in the present appeal, where an existing valuation
list is in force and where there are no comparable properties in the same
rating area section 49(2)(b) comes into play. Subsection 49(2) states
as follows: 5. Section 5(2) of the 1986 Act differs in one significant point to section
49(1) of the 2001 Act. Section 5(2) refers to the Valuation of "rateable
hereditaments are comparable and of similar function and valuations have
been made or revised within a recent period" whereas section 49(1)
stipulates that comparisons must be in the same rating authority area
as the property concerned. However, in the circumstances of this appeal
it is a moot point insofar as it is common case that section 49(2)(b)
applies in this instance. 6. In appeals to this Tribunal under the repealed enactments comparables
drawn from without the rating area were not considered inadmissible but
obviously the weight attached to such evidence depended upon the availability
and quality of comparables from the same rating area. If there were no
comparables in the same rating authority area then in fairness such evidence
would have been considered relevant and taken into account when arriving
at the appropriate valuation of the property concerned. That being the
case the Tribunal in the circumstances of this appeal has no difficulty
in admitting the evidence of other properties of "similar function"
drawn from other rating authority areas. The Tribunal notes in passing
that both expert witnesses introduced comparisons from outside the rating
authority area in which the property concerned in this appeal is situated. 7. Section 63(1) states: 8. During the course of the hearing Mr. Walsh referred to an internal
document issued by the Valuation Office in April 1998 dealing with the
valuation of pits and quarries. A copy of this document has been made
available to the Tribunal and in principle the Tribunal accepts it for
what it is: a statement of good practice which aims to ensure a uniform
approach to the valuation of properties of a particular mode or class
be adopted by valuers in the Valuation Office. However, no matter how
laudable such a document as this is it does not have any statutory force
or effect. 9. In summary, having regard to the foregoing and in accordance with Section 49(2)(b), the Tribunal finds that in circumstances where there are no properties comparable to the property being valued situated in the same rating authority area, comparables from other rating authority areas are admissible in evidence and it is then up to the Tribunal to attach such weight to this evidence as is considered appropriate in the light of all the circumstances surrounding the comparable(s) in question. Obviously this may not be the case when the now existing valuation lists cease to be operative. The Valuation 10. It is common case that the property concerned is a limestone quarry
with an annual output for valuation purposes of 4,310 tonnes. 11. The valuation of other rateable items at the quarry has been agreed
so that the only issue to be determined is the valuation to be attributed
to the annual output of stone. 12. The Tribunal accepts Mr. Costello's evidence that the method of extraction
used at the subject quarry is significantly different and considerably
more expensive than that used in aggregate quarries. The Tribunal also
accepts that the cost of the limestone is a multiple of the cost of stone
from aggregate quarries or sandpits. 13. In applying section 49(2)(b) the Tribunal must have regard to the
net annual values as determined under the repealed enactments. In this
regard the Tribunal has found that in the circumstances of this appeal,
comparables drawn from rating authority areas other than that in which
the property concerned is situated are admissible. 14. Ms. O Buachalla in her evidence introduced two comparisons, both
of which are limestone quarries located in other rating authority areas.
Both of these quarries have considerably higher outputs than the subject
and evidence was given that the ex-quarry price of the limestone at the
Stone Development Facility at Carlow was €190 per tonne at the time
the valuation of this quarry was agreed at the 2001 appeal stage. In each
instance Ms. O Buachalla's comparisons were valued at a consistent royalty
rate of 71c per tonne. 15. Mr. Walsh in his evidence introduced five comparisons all of which
were aggregate quarries producing low value stone used mainly for road
construction purposes. Only one of Mr. Walsh's comparisons is situated
in the same rating authority area as the subject. In all of Mr. Walsh's
comparisons the quarry output is valued at a royalty rate calculated as
a percentage of the ex-quarry price of the produce. The royalty figures
so determined range from 10c to 46c per tonne. In principle the Tribunal
has no great difficulty with Mr. Walsh's valuation approach in this case
but the end result i.e. a royalty rate of €4.35 per tonne is so out
of line with that applied to other limestone quarries as to render it
unhelpful from the point of view of maintaining equity between ratepayers. 16. Having regard to the Tribunal findings in relation to section 49(2)(b) the Tribunal prefers Ms. O Buachalla's evidence in as much as her comparisons are limestone quarries identical in operation to the subject property and whose valuations were determined having regard to the provisions of Section 11 of the Valuation (Ireland) Act 1852 as amended by Section 5 of the Valuation Act, 1986 i.e. the repealed enactments as referred to in Section 49(2)(b). The said valuation was also determined post the decision of this Tribunal in VA98/3/039 - Kilsaran Concrete. Determination And the Tribunal so determines.
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