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Appeal No. VA06/1/011 AN BINSE LUACHÁLA Joseph Conneely APPELLANT RE: Licensed Shop, Restaurant/Cafe, Night Club at Lot
No. 7, Market Street, Clifden, County Galway B E F O R E JUDGMENT OF THE VALUATION TRIBUNAL By Notice of Appeal dated the 16th day of January, 2006 and received in the Tribunal on the 27th day of February, 2006, the appellant appealed against the determination of the Commissioner of Valuation in fixing a rateable valuation of €450.00 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 oral hearings held on the 23rd May, 1st June and 29th June, 2006 at the offices of the Valuation Tribunal, Ormond House, Ormond Quay Upper, Dublin 7. At the hearing Mr. Marcus Daly, SC, instructed by Messrs. Kennedy Fitzgerald Solicitors appeared on behalf of the appellant. Mr. James Devlin, BL, instructed by the Chief State Solicitors Office, appeared on behalf of the respondent, the Commissioner of Valuation. 2. At the hearing on the 23rd May, 2006 Mr. Daly, on behalf of the appellant, sought an adjournment. Mr. Daly in seeking the adjournment said that he had only been retained within recent days and from a brief examination of the papers in the case he had reluctantly come to the conclusion that he would require some time in order to better prepare his submissions. In particular, he said, the appellant's valuer lacked some basic information in relation to the valuation of properties upon which he had based his opinion of the appropriate rateable valuation of the property concerned. Mr. Daly said that the only matter at issue in this appeal was in relation to Quantum. 3. Mr. Damien Curran, Staff Valuer in the Valuation Office, said on behalf of the respondent, that he had only heard on the previous Friday that the appellant had retained counsel and this, he said, left the Commissioner of Valuation insufficient time to engage counsel in time for the hearing. Nonetheless Mr. Curran said he was prepared to proceed without the assistance of counsel. He also made the point that the appellant had ample prior notice of the hearing in order to prepare for the hearing and that there was no good reason for an adjournment at this late stage. Mr. Curran said that in the event of an adjournment being granted the Commissioner of Valuation would be seeking his costs for the hearing of the 23rd May. 4. Having considered the matter the Tribunal came to the conclusion that in this instance justice would be better served if the adjournment sought was granted. In relation to Mr. Curran's application for costs the Tribunal said it would deal with this matter after it had made its determination in relation to Quantum. 5. At the hearings on 1st June and 29th June, 2006, evidence in relation to the valuation of the property concerned and its accounts and financial statements was given by Mr. Owen F. Kennedy, principal of Joyce Mackie & Lougheed, Auctioneers & Valuers and Mr. Austin Sammon, FCA, a member of the firm of auditors DHKN, respectively. Mr. Damien Curran, ARICS, ASCS, a Staff Valuer in the Valuation Office, gave valuation evidence on behalf of the Commissioner of Valuation. The Property Concerned 7. The subject of this appeal, which is under the occupation and management of the appellant, comprises a public bar known as "Humpties", a restaurant and night club. Each of these elements of the property is essentially self-contained from a customer point of view, but for management purposes it is possible to access one sector from another. Accommodation 9. The restaurant is at pavement level and lower ground floor level 1. The kitchen and food preparation area and stores are also at the lower level, as are the male and female toilet accommodation dedicated to restaurant patrons use only. 10. The night club/function suite area which is at lower ground floor level 2 has a separate entrance and lobby at pavement level. The night club/function suite area has a bar serving area and male and female toilet accommodation. 11. No agreed schedule of areas was provided to the Tribunal prior to the hearing and from the evidence tendered it would appear that areas and measurements were not discussed at any of the earlier stages of the appeal process. Rating History The Oral Hearing The Appellant's Evidence 15. The subject property, Mr. Kennedy said, faced strong competition within the town and the surrounding area for what was in effect a declining customer base. 16. In his written précis Mr. Kennedy gave a detailed description of the property but without measurements or areas. He also listed a number of properties which he considered to be comparable to the subject property together with a statement of their rateable valuations. At the hearing Mr. Kennedy said he had re-inspected the property and had perused the architect's drawings of the premises and from these prepared a schedule of areas as set out below. Ground Floor: Lower Ground Floor Level 1 Lower Ground Floor Level 2 17. Mr. Kennedy said that the subject property was the only such premises in Clifden which operated below pavement level, so that strictly speaking there was nothing comparable to it. Mr. Kennedy went on to describe in some detail his comparisons, as set out in Appendix 1 attached to this judgment. Whilst he was familiar with these properties, Mr. Kennedy said he was unable to provide areas or throw any light as to when or how their rateable valuations had been determined. 18. When asked to comment on the comparisons introduced by the Commissioner of Valuation Mr. Kennedy said he knew all of them quite well. The Kings premises (Valuation Office Comparison No. 1) was in his opinion better than the subject, in that it occupied a prime corner location and also had the added advantage of a designated pavement area for customers. This, he said, was particularly beneficial in the light of the "no smoking" regulations. The ground floor of Kings, Mr. Kennedy said, was given over to a large bar area (circa 200 sq. metres) with a restaurant at first floor level and kitchens and stores etc. at second floor level. Having regard to the location of Kings and its layout etc., Mr. Kennedy said he was of the opinion that the rateable valuation of the subject property should be lower than Kings, which was valued at €304.74. 19. Mr. Kennedy said that the Barry licensed premises (Valuation Office Comparison No. 2) was not as good as Kings nor did it occupy as good a location. Comparison No. 4 (Mitchell's Restaurant) was, he said, a well established licensed restaurant trading on ground and first floor levels. In many respects this property was similar to the restaurant element of the subject property in that it traded on two levels. However, in his opinion, customers would prefer to go upstairs rather than down to basement level and hence this should be recognised when valuing the property concerned. 20. As far as the rest of the Valuation Office comparisons were concerned, Mr. Kennedy was of the opinion that they were not particularly relevant, insofar as Comparison No. 5 was now demolished and Comparison No. 6 was a lock up shop. 21. Having regard to his comparisons and taking into account those introduced by the Commissioner of Valuation, Mr. Kennedy said that in his opinion the rateable valuation of the property concerned was in the order of €105.00 as stated in his précis. 22. After the luncheon adjournment Mr. Kennedy sought leave to amend his opinion of rateable valuation and put forward the following valuation calculated on a comparative basis: Bar 85.21 sq. metres @ €200.00 per sq. metre €17,420.00 23. At this point the hearing was adjourned. 24. On the 15th June, 2006 the Tribunal was furnished with audited accounts prepared by Messrs. DHKN Chartered Accountants in respect of the subject property for the years ending 31st March, 2004 and 31st March, 2005. Non audited details of the turnover for the year ending 31st March, 2006 were also provided. 25. At the resumed hearing on the 29th June, Mr. Kennedy said that he had had an opportunity of examining the accounts and as a result put forward a second valuation prepared on what is known as the "accounts basis" as set out below: Total Turnover for 30 month period €1,953,299.00 26. Under cross-examination Mr. Kennedy said that on balance he considered his valuation prepared on the accounts basis to be the most appropriate, as turnover gave a true picture of the property's trading position. Mr. Kennedy said he did not consider the Valuation Office approach, whereby each element of the business was separately assessed to be correct. In his opinion the property was a single business unit and hence it should be valued on a global turnover basis. When it came valuing licensed premises Mr. Kennedy said that [for whatever purpose] the most important factor to be borne in mind was the business turnover. Mr. Kennedy agreed that the 2006 trading figures were not audited but nevertheless felt that they should be used for valuation purposes as they showed what was really happening in the business. He further agreed that the 2005 accounts were prepared some months after the relevant valuation date of 16th June, 2005. 27. When questioned about his comparisons Mr. Kennedy agreed that all of the valuations referred to had been carried out before the introduction of the Valuation Act, 1986. However, since these valuations were in the valuation list, Mr. Kennedy said, they were valid comparisons. 28. Mr. Austin Sammon confirmed that he had been involved in the preparation
of the accounts of the property concerned as provided to the Tribunal.
30. When shown a letter dated 18th April, 2005 on Conneely's Bar & Restaurant notepaper sent to the Valuation Office stating that the "annual on-licence turnover figure year ending 30/09/04 as submitted to the Revenue Commissioners for the above; €673,956.00", Mr. Sammon said he could make no comment on it, as it had nothing to do with his function as auditor to the company. Mr. Sammon went on to say that up to the March 2005 period, when audited accounts were last prepared, the business was a loss-making venture and in his opinion this underlying situation was likely to continue into the 2006 accounts. 31. Mr. Sammon confirmed that the outgoings in the accounts showed a rent of €104,000 per annum being paid for the property and said that to the best of his knowledge this was not an arms length transaction as it was an arrangement between connected parties. 32. Mr. Joseph Conneely said that he had prepared the letter dated the 18th April, 2005 addressed to the Commissioner of Valuation. Mr. Conneely said that the figure referred to was a rough estimate of the total turnover of the business at that time. It was not the actual turnover but his best estimate and it included all sales of food, drink and other income raised from the business in its entirety. Respondent's Evidence 34. In his evidence Mr. Curran contended for a rateable valuation of €450.00 calculated as set out below: Bar Restaurant Rateable Valuation = Total NAV @ 0.5% = €449.12 Say €450.00 35. Mr. Curran said that in arriving at his opinion of net annual value he had come to the conclusion that the appropriate method of valuation to adopt was to value the bar ("Humpties") having regard to its turnover and in line with the assessments of other licensed premises in Clifden. The rest of the property he valued on a comparative tone of the list basis. In support of his valuation Mr. Curran introduced six comparisons, details of which are set out in Appendix 2 attached to this judgment. 36. Mr. Curran said that in arriving at his estimated turnover of €800,000 for the bar he had relied upon the information contained in the letter sent to him on 18th April, 2005 by Mr. Conneely to the effect that the turnover for the year ending 30th September, 2004 was €673,956. Armed with this figure, Mr. Curran said, he considered a turnover of €800,000 to be a reasonable estimate for valuation purposes at the relevant date. 37. When asked about his comparisons Mr. Curran said that in his opinion Kings (Comparison No. 1) was the most relevant. When valued at the 2000/4 first appeal stage this property, he said, had a turnover of just over €812,000. The 7.5% yield applied to the adjusted turnover figure of €675,597 was arrived at having regard to a number of adverse factors including the age of the property, inadequate storage at basement level which was liable to flooding, the layout of the building with the kitchen and food preparation area at second floor level and the fact that the restaurant was not operated on a full time basis. 38. Mr. Curran said that none of the comparisons introduced by the appellant were relevant in that they were all determined prior to the introduction of the 1986 Act. 39. At the end of his direct evidence Mr. Curran sought leave to amend
his valuation in the light of the audited accounts which had been made
available to him and the Tribunal within recent days. Mr. Curran's amended
valuation is as set out below: 40. Under cross-examination Mr. Curran said that he had no knowledge of the subject property before it was redeveloped. He agreed that there were two levels below pavement level but said that this was a feature of the design in order to take account of the sloping nature of the site at the rear which afforded excellent views of Clifden Bay from the restaurant at ground and lower ground floor levels. 41. When questioned about Kings, Mr. Curran said he had no firsthand
knowledge of the property or its turnover, but was solely relying upon
information contained in the Valuation Office records prepared at the
time of the 2000 revision. The information contained in these records,
he said, reflected the state and circumstances of the property at that
time and hence were reflected in the valuation so determined. It was possible,
Mr. Curran said, that further changes had taken place which could affect
the valuation currently in the valuation list. 43. When asked by the Tribunal if he had physically measured the subject property, Mr. Curran said he had carried out a number of spot measurements onsite in order to confirm and satisfy himself that the architect's drawings could be relied upon for valuation purposes. Having so satisfied himself, Mr. Curran said he had calculated the areas from the drawings. 44. Mr. Curran agreed with the Tribunal that the cellar area at lower ground floor level 1 should be included in the valuation of the bar and accordingly he further amended his opinion of rateable valuation to the sum of €378.00. 45. At the request of the Tribunal Mr. Curran was asked to forward to the Tribunal a schedule of areas in respect to the accommodation at lower ground floor level 1 and lower ground floor level 2. This information was provided to the Tribunal in writing on 30th June, 2006. Findings Determination 1. Bar 75% of turnover attributed to "Humpties Bar" €344,435 2. Restaurant 3. Nightclub/function suite area Total NAV = €54,208 And the Tribunal so determines. |