Appeal No. VA02/4/011
AN BINSE LUACHÁLA
VALUATION TRIBUNAL
AN tACHT LUACHÁLA, 2001
VALUATION ACT, 2001
Gerrard P. Crosbie APPELLANT
and
Commissioner of Valuation RESPONDENT
RE: Shop at Map Reference: Unit 4, Cows Lane Music Hall,
Ward: Royal Exchange A, Temple Bar, County Borough of Dublin
B E F O R E
Tim Cotter - Valuer Deputy Chairperson
Brian Larkin - Barrister Member
Michael McWey - Valuer Member
JUDGMENT OF THE VALUATION TRIBUNAL
ISSUED ON THE 28TH DAY OF APRIL, 2003
By Notice of Appeal dated 14th November 2002, the appellant
appealed against the determination of the Commissioner of Valuation
in fixing a rateable valuation of €54.00 on the relevant property
above described.
The Grounds of Appeal as set out in the Notice of Appeal
are: " excessive; inequitable, bad in law, not designated, poor
location, quantum allowance."
The oral hearing took place in Dublin on the 10th February,
2003. Mr. Gerrard Crosbie, Managing Director of Whichcraft presented
the case on behalf of Whichcraft Gallery in Cows Lane, Dublin 8. He
was accompanied by Ms. Foley, General Manager of Whichcraft who gave
evidence on behalf of the appellant. Mr. Raymond Sweeney District Valuer
who holds an Economics Degree from the N.U.I. appeared for the Respondent.
The Evidence
The appellant affirmed his précis. The appellant referred to
his précis which included photographs of his property at Unit
4, Music Hall, Cows Lane, Dublin 8. From the outset he was critical
of the comparisons included in the Respondent's précis. He indicated
that Unit 5 Castlegate, Lord Edward Street chosen by him for comparison
purposes was a much fairer basis than the Units in Music Hall and Scarlet
Row proffered in support of the respondent's case. Specifically, he
said, that it was inequitable to value Unit 4, Cows Lane with a floor
area of 55sq metres at the level of €54, while Unit 5 Castlegate,
Lord Edward Street, which has a floor area of 44sq. metres has a rateable
valuation of £54 (€68.57). Lord Edward Street he said was
on a main thoroughfare leading from the N7 into the city and on the
main tourist trail taking in a number of historic cathedrals, the Digital
Hub, The Guinness Hop Store and St. James Gate Brewery. It benefited
from huge footfall all day long whereas Cows Lane had minimal passing
trade. The only reason that he was persisting with Cows Lane he said
was that they had a store in Lord Edward Street where staff alerted
customers to the Gallery in Cows Lane.
Mr. Crosbie outlined to the Tribunal how Whichcraft opened on 1 November,
2000 and the street was launched in March, 2001 with great expectations.
It was a futuristic project but the dream was not being realised. He
referred to declining fortunes on the State and private sides. The State
run Viking Centre had deteriorated leaving only a booking office now
and Cuan Hanley had gone out of business leaving huge debts in its wake.
The problems he said were compounded now by the presence of layabouts
and drug addicts sleeping rough in doorways opposite his premises. This
he said, apart from the security hazard posed for his staff, was totally
off-putting to would-be clients.
The above evidence was advanced by the appellant in support of his grounds
of appeal that the R.V. of the subject was excessive and inequitable
in the light of its poor location. In relation to designation Mr. Crosbie
stated that it was his clear understanding at the outset that the premises
would enjoy an exemption from rates for ten years. This he said was
central to his taking the lease in the subject in preference to anywhere
else in the City. Now, he was advised that the west side of Cows Lane
did not qualify for rates exemption even though he signed up before
the 31st December 1999. This he said exposed him to a significant unbudgeted
expense.
Mr. Crosbie's final point was that the valuation was based on a rental
level of €12,700 which was full commercial rent in a new development
with no trading history and with a very poor identity as evidenced by
the lack of footfall and the failure of a number of businesses to sustain
themselves on the street which could not even be classified as secondary.
This basis of Valuation was bad in law he said. He said that Temple
Bar Properties had reneged on its promise to provide adequate signage
or identity for Cows Lane at the top of the street. This resulted in
people who had 'discovered' the street on the internet wandering about
directionless in the absence of map referencing or signage. Even an
expenditure of €50,000 in marketing had failed to solve the identity
problem.
Mr. Crosbie was cross examined by Mr. Sweeney and he conceded that there
was some improvement in the sense that there was a pedestrian crossing
at the top of the street now but he submitted that there was little
else. He said that in essence the area suffered from under-description
in the sense that it did not feature on any Ordnance Survey map or other
City map and was misdescribed in the box map references in the Temple
Bar Area. Mr. Crosbie added that they, along with other traders, had
invested in signage for the street and indeed had a battle with Dublin
City Council but to no avail. He then proceeded to spell out the business
failures among the Units since he took out a lease there. He cited Insight
Opticians as a classic example. In response to Mr. Sweeney's assertion
that four of the five tenants in Music Hall were still trading, Mr.
Crosbie rejected this out of hand referring in detail to each of the
units. He said appearances were deceptive. The reality he said was that
the traders were either losing money or "hanging in" at close
to breakeven point in the hope that some day the Music Hall Development
would 'take off'. Such a prospect, Mr. Crosbie said was a long way off
the horizon at the moment. Most of the units were 'going under' with
the combination of crippling overheads and insufficient turnover.
Ms. Foley, General Manager of Whichcraft in her evidence endorsed what
Mr. Crosbie said and elaborated in some areas. She placed great emphasis
on the fact that the Development was not finished off to mark entry
despite the commitment given by Temple Bar Properties Ltd. The lack
of identity was a serious hindrance to progress she said. People stood
at the top of the street, spectator fashion, looked into it but did
not venture down it. The feedback she had was that visitors felt the
area was residential rather than a business location. Ms. Foley stated
that in that regard the attitude of Dublin City Council was extremely
unhelpful in refusing to allow street furniture. As a result the place
was in terminal decline due to lack of identity. An initiative undertaken
by the traders themselves she said, with no assistance from Dublin City
Council, by way of introduction of flower sellers was a big success,
Ms. Foley felt that the Cows Lane Development had long term potential
but given the business failure rate among the tenants to date the surviving
traders needed all the incentives they could get, including rates exemption,
in the short term. In general, she felt that Temple Bar Properties Ltd.
did not respond to its tenants needs like any good landlord and questioned
their agenda for the project.
Mr. Sweeney gave evidence in accordance with his précis. He stood
by its contents and was satisfied that the Commissioner's valuation
was fair and reasonable. He was happy to rely on the comparisons quoted.
Cows Lane was, he said, a new 'stand alone' development which would
find its own niche in the market. The relatively new Parliament Hotel
close by was inviting and would attract people to the area. The subject
he said retailed very expensive goods and consequently had a light customer
base. The development was not long in being, but was improving and he
was confident it would 'take off'. The units he said were not valued
on the basis that they would be an immediate success. The fact that
the Ordnance Survey map in 2004 would include the street, he said, would
be a huge plus. The reduced rate of €127 at ground floor level
reflected a discount on the general rate of €163.80 per sq. metre
to allow for the mezzanine level which while increasing the overall
floor area presented an obstruction and reduced ground floor head room.
The rate of €127 per sq. metre he said compared very favourably
with the €265.40 per sq. metre applied to 5 Castlegate, Lord Edward
Street. He concluded that the limited number of appeals by tenants in
Cows Lane indicated satisfaction with the rate charged for what was
in effect a "designer street".
Under cross-examination by Mr. Crosbie he conceded that the photographs
while they did not display significant footfall, may have been selective
in that they did not highlight the presence of drug addicts. It was
put to him that the reason for the limited appeals was due to the traders'
reluctance to expend "good money after bad", quoting in particular
Insight Opticians who accumulated massive debts. In rebuttal of Mr.
Sweeney's contention that those shopping for "speciality items"
such as the goods on sale in the subject would travel anywhere to purchase
them, Mr. Crosbie said that argument fell flat on its face in the light
of the Cuan Hanley experience where there was also a distinct product.
A debate ensued as to the factual incidence of failure. "Insight"
and the "Plant Store" were cited by Mr. Crosbie as the tip
of the iceberg. The continued occupation by other tenants should not
be confused with the stark economic reality which was that the Units
were on a financial "life support" existence. In analogous
terms he suggested that it would not be long before the switch would
be turned off. He challenged the failure rate propounded by Mr. Sweeney
and said it was well in excess of 50% and possibly as much as 80% if
proper consideration is given to part time operations and trading well
below capacity viz. 4 or 5 day week openings. Success as manifested
in the area in general by high demand for 'office space' should not
deflect from the difficulties experienced by the retailers in the development.
It was even possible to speculate, taking the Development overall, that
the failure rate on one side of the street varied hugely from the side
opposite by as much as 60% viz 80% rather than the 20% quoted by the
Respondent. Mr. Crosbie was echoing the views of many of his co-tenants,
he said, by concluding that the prospect of off-loading leases and relocating
elsewhere was so daunting that many of the traders were frozen into
inertia. They adopted the line of least resistance instead of jumping
ship which the economics of the situation dictated.
Findings of Fact
1. The Tribunal accepted that the appellant's case was soundly based.
In terms of comparisons it accepted that the assessment of 5 Castlegate,
Lord Edward Street and No 4 Music Hall at RV €68.57 and €54.00
respectively did not adequately reflect the considerable differences
in trading potential in the two locations. The Tribunal did not accept
the Respondents claim that the rate invoked in Music Hall and Scarlet
Row was a credible benchmark.
2. The Tribunal agreed with the Appellant that the rate applied in Cows
Lane assumed Dublin could support a 'designer street', a proposition
which the experience of the Appellant in the subject suggested it could
not.
3. The Tribunal accepted the unique nature of the Cows Lane Development.
It is not comparable to Temple Bar. It is located on the western side
of the City, not on any street map and does not benefit from significant
footfall or passing trade. It noted furthermore that Cows Lane was not
on any Ordnance Survey map and that suggestions of behalf of the Respondent
that the street would feature on the 2004 City map were ludicrous given
the pressing economic need for an urgent response.
4. The Tribunal agreed that the Development was unique to such an extent
that even the 'rock bottom' rate of €163.8 (£12 per sq. ft.)
as adjusted for mezzanine levels was excessive and required a material
downward adjustment.
5. The Tribunal accepted the Appellants arguments that the trading difficulties
in Cows Lane must be reflected in the net annual value of the premises
seeking to survive on the street.
6. Although the parties debated the relevant failure statistics the
Tribunal accepted that the reality was that the existing net annual
values as established by the Commissioner of Valuation, were not reflected
in the trading realities on the street and that the entire Development
would be history unless action was taken.
7. No significant data in relation to passing rents was canvassed before
the Tribunal.
8. The Tribunal in the circumstances will allow a 50% reduction in the
net annual value per square metre in the subject premises, and determines
the net annual value as follows:
Ground Floor Shop 53sq. m. @ €63.50 = €3365
Mezzanine 28.3sq.m. @ €32.00 = €906
€4,271
4271 x 0.63% = RV €27
The Tribunal therefore determines the rateable valuation
to be €27.