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Appeal No. VA04/3/013 AN BINSE LUACHÁLA Ard Services Ltd. APPELLANT RE: Shop and Garage/Filling Station at Lot No. 1F.3B,
Brideswell Commons, B E F O R E JUDGMENT OF THE VALUATION TRIBUNAL By Notice of Appeal dated the 14th day of July, 2004 the appellant appealed against the determination of the Commissioner of Valuation in fixing a rateable valuation of €900.00 on the above described relevant property. The grounds of Appeal as set out in the Notice of Appeal are: The appeal proceeded by way of an oral hearing, which took place at the Valuation Tribunal Offices, Ormond House, Ormond Quay Upper, Dublin 7 on 2nd November, 2004. Mr. John C. Elliott, FSCS, FRICS, FIAVI, MCI.Arb of Elliott & Fitzgerald appeared on behalf of the appellant. Mr Frank Shine, Accountant and Business Controller, Ard Services Ltd, gave evidence on behalf of the appellant. Mr Kevin Heery, B.Comm., ASCS, MRICS, MIAVI, a Staff Valuer with the Valuation Office appeared on behalf of the respondent. In accordance with the Rules of the Tribunal, prior to the commencement of the hearing the parties had exchanged their précis of evidence and submitted them to the Tribunal. Précis of Evidence Matters Agreed The Property Valuation History Tenure Services Material change of circumstances At Issue: Submissions: Appellant The methodology used by the Valuation Office is flawed. It uses an arbitrary figure of 5.07 cent per gallon on throughput. It lacks any method or science. The applicant proposed a fairer method based on profit margin at the pumps. Because of the state of the industry, with oil prices rising, the volume output at the forecourt should be adjusted downwards by 20% to reflect the nature of the business: 24-hour opening giving rise to extra costs; the construction of the ATM with right-of-way which reduced the trading area; the age and condition of the property; competition from Tesco at Finglas and Malahide. He arrived at the NAV by taking 15% of the adjusted throughput at 3 cent a litre - the gross profit margin at the valuation date. A copy of the appellant's valuation, so calculated, is contained in Appendix 1 to this judgment. The tone of the list cannot be relied upon as it was arrived at by unfair means, by compromise and not by agreement. The hypothetical tenant The proper method that should be used is that which is accepted by the oil industry, namely 15% of the gross retail profit at the pumps on the adjusted average throughput which would give a fairer result and would be in line with what the hypothetical tenant would be prepared to pay from one year to another. This price is based on a book entitled "The Valuation and Development of Petrol Filling Stations" by JRE Sedgwick (Estate Gazette Ltd., London 1960). The appellant stated that 3 cent per litre was the profit margin at the
date of valuation in December 2003. The current profit margin is 1.2 cent
per litre. This was confirmed at the hearing by Mr Frank Shine, Accountant
and Business Controller, Ard Services Ltd. It must be further borne in
mind that out of this gross margin staff, insurance, light and heating
costs have to be met. The petrol industry is going through a very difficult
period at the moment. The forecourt margins are just not there and this
has not been taken into account by the Valuation Office. Comparisons The appellant also stated that the Valuation Office was 'cherry picking' in looking for properties with the highest values rather than drawing on a mixed basket. The respondent had been selective in his comparisons. Submissions: Respondent Once it was established that a material change of circumstances had taken place within the meaning of section 3(1) of the Valuation Act, 2001 the Valuation Office had a duty to revise the valuation by the method referred to in section 49 (1) namely by reference to the values appearing on the valuation list, the tone of the list for filling stations in the South County Dublin area. The methodology he used is that set down in section 49(1). However, he pointed out that the appellant did not give any comparison where the 15% of gross profit method was used to determine the NAV although that was the method he was contending for in the subject. He referred to VA01/2/002 - Texaco Ireland Ltd (the Texaco case) where Mr. Freeman also used arguments for the 15% of gross profit approach which were not accepted by the Tribunal in reaching its decision. The respondent referred to page 13 of the Tribunal determination in the Texaco case which states that the volume of throughput in pence per gallon method is the "general practice" for filling stations. The RV of €900 is reasonable having regard to the values of filling stations in the South County Dublin area. 5.07 cent per gallon for throughput supports the tone of the list for the South County Dublin area. In the Texaco case there is a lower rate in line with the tone of that area where the retail volume is lower. The respondent stressed that he acted under section 49 of the Act. If he set a lower value than €900, it would be unfair to other filling stations in the same rating authority area. Actual state The method put forward by the appellant to obtain rental evidence was not used in South County Dublin. The method used by the Valuation Office is the same as that used in South County Dublin. In fact the method used by the appellant is similar to that put forward in the Texaco case, which was not accepted by the Tribunal. Findings in law and fact Mr Elliott's method of valuation, gross profit margin on the forecourt pumps, does not comply with section 49 (1) because he did not use any comparisons from the valuation list based on his own method of valuation. By contrast, the Tribunal has found that the respondent by his throughput method on the forecourt pumps has complied with section 49 by giving comparisons based on this method appearing on the valuation list and also comparisons within the same rating authority area. The Tribunal also found the respondent's comparisons to be fair and reasonable. Both methods of calculating NAV on the forecourt pumps were submitted in the Texaco case and the Tribunal found in favour of the throughput method. Moreover, the appellant did not cite one case where his method was used successfully. It was confirmed at the hearing by the appellant's witness, Mr Shine, that the subject property is wholly owned by Statoil Ireland Limited and that a price support mechanism is in operation. The Tribunal notes this fact and agrees with the finding in the Texaco case that "In relation to filling stations whilst gross retail margin may be under the control of the occupier there is no doubt that the petrol companies also have a major influence on the level of margin attained by the control they exercise in relation to the pump prices …" . This fact also influenced the Tribunal to favour the throughput method. It was submitted by the appellant that the construction of the ATM facility in 1999 reduced the amount of usable space at the subject property site. The amount of space reduced is minimal and it could well be argued that an ATM machine could well enhance the business of the service station. In the Tribunal's view this has very little effect on the overall valuation. The subject property is 7 years old. While it may be in need of refurbishment it could not be classified as an old building. It is a relatively modern building in line with comparisons in the rating authority area. These matters the Tribunal has taken into account. Determination As regards the rate per square metre in the shop, carwash, passageway and toilets the Tribunal acknowledges that there are inconsistencies with some of the comparisons given by the respondent and accordingly makes allowances taking into consideration the age of the service station and determines the NAV and RV of the subject property as follows: Shop - 105.50 m2 @ €150.34 per m2 = €15,860.87 Outside |