Appeal No. VA89/0/016
AN BINSE LUACHÁLA
Donegal Co-operative Creameries Limited APPELLANT
RE: Shop, Stores, Mill, Offs and yard at Lot No. 4Aa, Newtowncunningham, Co. Donegal
B E F O R E
JUDGMENT OF THE VALUATION TRIBUNAL
By notice of appeal dated the 27th day of July 1989, the appellants appealed
against the determination of the Commissioner of Valuation in fixing a
rateable valuation of £250 on the above described hereditaments.
In a written submission received on the 18th April, 1990 Mr Patrick McCarroll, Chartered Surveyor auctioneer and Estate Agent of Bank Place, Carndonagh, Co Donegal said the property has a neglected air about it. He said that there is little evidence of regular maintenance programme and the general level of upkeep is poor. He said that in his opinion the correct rateable valuation assessment on the property should be in the region of £18.00 and £76.00 as follows:-
(a) Garage premises;
(b) Remaining property;
Total £ 76.34
He said that the above valuations were arrived at taking into consideration the comparisons which he submitted and the profitability of the property and the fact that there is no alternate use.
Mr McCarroll submitted three comparisons as follows:-
2. Nena Models Ltd., Magheradrumman, Milford, Co Donegal.
3. Part of the subject property is let at a monthly rent of £400.00.
The premises let comprises:-
"All that garage premises at Newtowncunningham including any furniture effects and fittings specified in the third Schedule."
The furniture effects and fittings include almost 80 items (not counting each separate socket). All the items that are required to set up and establish a garage from day one. Indeed as this was a fully operational garage premises there must be an element of Goodwill attached to this rental. It is his opinion that 40% of the rental can be allocated to rental for the "furniture effects" and this would give a rental for the building of £240.00 per month or £2,880.00 per annum.
This building has a gross external floor area of c. 3,932 sq. ft.
Mr Christopher Hicks, an appeal valuer in the Valuation Office submitted a written precis of evidence which was received on the 10th April, 1990 in which he outlined the valuation history of the property. He said that the subject property was inspected in July 1984 and the rateable valuation was increased from £135 to £250. In November 1984 this was appealed and inspected by the appeal valuer and a rateable valuation of £250 was agreed unchanged. The property was again listed for revision in 1988 and no change was made to the rateable valuation. An appeal was lodged but following prolonged negotiations between the agent for the appellant and the appeal valuer no agreement was reached.
Mr Hicks says that the rateable valuation here is in line with recently revised comparable properties in Co Donegal. He provides a list of five comparisons which are attached hereto as Appendix "A".
Commenting on other points made by the appellants at various stages during the appeal procedure he said that all the comparisons attached are similarly seasonal. The premises stay open all the year round but very little business is done at some times of the year whereas during the high season the shop and stores are busy for up to 18 hours per day. With regard to the sub-letting of part of the property Mr Hicks said that it is not an "arms length" contract and that no request had been made to have this part of the property rated separately.
Mr Hicks says this type of building in Co Donegal is invariably owner occupied and that there is no suitable rental evidence available. However, he said that good quality industrial space in a good area would normally be available at a maximum of £1.75 per sq. ft. The lowest likely letting value is probably 75p per sq. ft. and he says that this is the rate used in devaluing comparisons where there is a large area of old buildings.
He said that the rate of 80p/sq. ft. used for the subject premises is
only slightly above the minimum and appears reasonable considering that
this is a smaller area of newer buildings and includes a retail shop.
45,000 sq. ft. @ 80p = £36,000
Estimated N.A.V. = £40,250 @ .63% = £253.58
Mr McCarroll said that the Commissioner of Valuation had not taken net annual value into account in reaching a rateable valuation. He said that the Valuation (Ireland) Act, 1852 had prescribed an estimate of the net annual value as the basis of valuation, a concept which is re-stated in the Valuation Act, 1986. He said that the accounts which were prepared specifically for the Newtowncunningham operation of Donegal Co-op shows that margins are very tight. He said that in the Rosses Point Hotel Company Ltd. v The Commissioner of Valuation I.R.  p. 143, Judge Barron expressed the opinion that "Profit earning ability is the basic element in determining the net annual value."
Mr McCarroll handed in a series of photographs (Appendix "B") and a letter dated the 18/4/1990 from Irish Snack Food Company Ltd., which is one of the comparisons offered by the respondent, to the effect that the current rental of their potato store, known as the GT building is £17,395 per annum.
The Tribunal has come to the conclusion that while the appellant's buildings are still functional as grain stores and a complex in which grain may be dried or treated with chemical preservatives they do not match up to the high standard of some of the buildings mentioned by both valuers for the purpose of comparison. However, the Tribunal must have regard to the comparable valuations of other similar grain handling premises in the area of Donegal mentioned in the summary of comparisons of both valuers and the fact that like the subject premises they also have a seasonal trade when arriving at an appropriate valuation of the subject premises. The Tribunal, therefore, cannot hold with the contention of Mr McCarroll that the valuation of the subject premises should be drastically reduced having regard to his rental value calculations. The Tribunal has considered the judgment of Barron J. in the case Rosses Point Hotel Company Ltd v. Commissioner of Valuation I.R.  p. 143 in assessing what weight ought to be given to the appellant's Trading & Profit and Loss Accounts for the years 31st December, 1986, 1987 and 1988. The Tribunal finds that the part of the judgment referred to by Mr McCarroll is applicable but that it has not been quoted in full or appropriately. The quotation which taken in full as appropriately applying to the instant case should read as follows:
"profit earning ability is the basic element in determining the net annual value. It is based not on actual profits but on what the prospective tenant would anticipate would be his profit"
While the accounts referred to for the years 1986, 1987 and 1988 show a net loss in the first two years, the Tribunal is mindful of the fact that in all years a gross profit was made and a substantial, (if declining) turnover was achieved. The Tribunal notes that in the most recent year, 1988, gross profits were actually increased on a reduced turnover and for the first time in three years a small net profit of £11,077 was achieved. The Tribunal finds that a falling level of turnover in monetary terms is probably a more significant factor than any figures for profit however calculated and also that the figures reflect a slower moving economy in relation to home grown barley and grain, a product which the subject premises primarily serves. Having regard to all the circumstances of the case the Tribunal has come to the conclusion that an appropriate rateable valuation of the subject premises would be £190.