Appeal No. VA92/6/043
AN BINSE LUACHÁLA Margaret Foley APPELLANT RE: Licensed Guesthouse and Restaurant at Lot No: 28.29,
Henry Street, B E F O R E JUDGMENT OF THE VALUATION TRIBUNAL By Notice of Appeal dated the 29th day of October, 1992 the appellant appealed against the determination of the Commissioner of Valuation in fixing a rateable valuation of £110 on the above described hereditament. The grounds of appeal were set out in a memorandum attached to the Notice of Appeal and this memorandum is attached to the judgment. The grounds of appeal are summarised below:- 1) The premises have no yard or open space to the rear for parking. 2) Comparable premises have lower valuations, i.e. The Property Tenure Valuation History In 1990 the property was listed by Kerry County Council to "value guesthouse and other improvements to these lots". On 1991 Revision both lots were amalgamated and the R.V. assessed at £110. There was no change at First Appeal. Written Submissions Mr. Brooks submitted that the R.V. should be reduced because inter alia the nature of the business was seasonal and there was no room for further development or expansion on the site. There was little on-street parking and no off-street parking. He said that there was no major industry in Kenmare with a total dependency on tourism, that there was a small population with poor agricultural hinterland. He said that the business was a family run business and was operated by the eldest son whose remuneration was shown in the accounts as £7,000 per annum. He said that there was a downturn in tourism in this area according to the Cork/Kerry Tourism Report in 1992. Mr. Brook submitted an estimate of N.A.V. as follows:- Ground Floor N.A.V. Say £10,000 Or Alternatively In conclusion, Mr. Brooks said that in his opinion nobody would be prepared to pay in excess of £320 per week for this type of business in Kenmare when all the adverse factors were taken into account. Mr. Brooks offered three comparisons:- (2) The Coachmans Hotel. (3) Lansdowne Arms Hotel. A written submission was received on the 7th April, 1993 from Mr. Frank O'Connor, a Valuer with 13 years experience in the Valuation Office, on behalf of the respondent. In the written submission Mr. O'Connor set out details of the property and the valuation history as set out above. Commenting on the appellants grounds of appeal Mr. O'Connor stated that the R.V. here was in line with other recently revised R.V.'s since 1988 in the town and throughout County Kerry. He stated that since last revision in 1967 for Lot 29 and 1981 for Lot 28 the property had been extensively modernised and extended at a cost of £107,000 and was probably, in his opinion, the best licensed premises and guesthouse in town. An analysis of the six comparisons quoted by the appellant indicated that few of them had been revised in recent years. For example: 1) The Coachmans Hotel with an R.V. of £37 was last revised in
1959 Mr. O'Connor set out his calculation of the rateable valuation on the
subject premises on the following basis:- Reduce to 1988 base by consumer price index for alcoholic drink. 30/4/89 - £132,615 x 135 = £127,000 The turnover in 1988 terms after improvements = £224,000pa (2) Estimated capital value 11/88 In relation to comparative evidence Mr. O'Connor stated that there were
no properties of this type and size rented in Kenmare. He said that any
rental evidence related to small shops and office units in the town. He
gave examples of some recently revised comparables:- (2) Lot 29/35 William Street, Description: Licensed shop and restaurant.
In conclusion Mr. O'Connor stated that the large sum spent on improvements and the substantial turnover gave a good indication as to capital and therefore rental value of the property. Appended to the written submission were statements of accounts for the year ended 30th April, 1989, 1990 and 1991. Oral Hearing Evidence was given by all the parties in accordance with the precis of
evidence submitted and the debate centred around the accounts which were
submitted by Mr. Walker, Accountant. It transpired that the wages allowed
for Patrick Foley who is in a strong management position at £7,000
under estimated by £10,000 at least the value of his work to the
business. In addition, from time to time, there was an input from other
young adult members of family and no wages at all were allowed in respect
of Margaret Foley. It was pointed out by Mr. Walker that in a corporate
situation Margaret Foley would have a wage in place for her contribution
and this would depreciate profits even further. On page 12 of Mr. O'Connors
precis the treatment of the accounts at a notional level of percentages
for gross profit and net profit were discussed in detail. The deduction
of approximately £54,000 made notionally by Mr. O'Connor compared
with a deduction in actual terms in respect of the 1991 accounts by Mr.
Walker of approximately £59,000 after adjustment of bank interest..
Mr. Jeremiah Foley Jnr. expressed the view that the accounts produced
by Mr. Walker did not reflect a 45% net profit figure and suggested a
30% figure as being more realistic. Mr. Walker also agreed with this view.
The Tribunal is of the view that some adjustment would have to be made
in respect of the under estimation of Patrick Foley's input into the business
in terms of wage cost at the very least and would in view of the fact
that the other businesses in a provincial location are probably run by
sole traders in the same position as Mrs. Margaret Foley, hesitate to
go as far as suggesting a deduction in respect of her wage input into
the business. The Tribunal is of the view that if Patrick Foley's true
cost to the business is taken into account, then the N.A.V. resulting
points towards the base figure suggested by Mr. Brooks. However, Mr. O'Connor
argued on behalf of the Respondent that a significant investment has been
put into this business in the recent past and that this indicates that
his figures should be accepted anyway regardless of how the accounts would
be analysed and that an N.A.V. of £22,500 ought to be accepted on
that basis.
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