Appeal No. VA96/4/036
AN BINSE LUACHÁLA
Power Supermarkets Limited APPELLANT
RE: Supermarket at Map Ref: 43, Douglas Shopping Centre,
B E F O R E
JUDGMENT OF THE VALUATION TRIBUNAL
1. By Notice of Appeal dated the 28th August, 1996 the Appellant appealed against the determination of the Commissioner of Valuation in fixing a rateable valuation of £330 on the above described hereditament.
The grounds of appeal as set out in the Notice of Appeal are that "the valuation is excessive".
2. This appeal was heard by way of an oral hearing which took place in
Cork on the 11th day of June, 1997. Mr. Edward Hanafin, from Messrs. Lisney,
Having taken the oath both valuers adopted, as their evidence in chief, their respective "précis of evidence". As can be seen from the Notice of Appeal there is no issue on the question of rateability in this case and accordingly the sole question for our determination is one of quantum.
3. In the early 1970's a Centre, known as Douglas Village Shopping Centre was constructed and opened. This included as its anchor tenant Quinnsworth as well as 29 shop units, a library and a bank. The centre was located north east of Douglas village which in turn is about 2½ miles south east of Cork city. In 1991 the ownership of the centre changed. Following acquisition the new owner embarked upon a major programme of redevelopment, refurbishment, alteration and reorganisation of the space within the centre. These works resulted in the creation of a larger supermarket, the establishment of at least 6 further retail units, the making of two new entrances and the covering of the main mall. Extended car parking facilities were also made available.
4. In the 1970's and indeed also in the 1980's this centre dominated retail activity in the southern suburbs. This domination however has, in the past number of years, been challenged by the opening of Douglas Court Shopping Centre, Wilton and Bishopscourt Shopping Centre. As against that however the recent opening of a new road network, and in particular the South Link Road, has created considerable opportunity for further development and the further enhancement of the centre.
5. The subject property with which this appeal is concerned is a shop unit on the west side of the centre. It is well fitted internally with a tiled floor and suspended acoustic tiled ceiling incorporating stripe lighting. All main services are connected. The agreed area is, 5,000 sq.ft. in respect of retail space and 399 sq.ft. in respect of stores/stockroom. The activities therein carried out relate to hardware equipment as well as children's clothing. The occupier, at the material time, was the appellant herein under its trade name "Quinnsworth". This said occupation was and so remains under and pursuant to an Indenture of Lease for the term of 25 years commencing on the 1st day of July, 1992 at a yearly rent of £57,500 subject to 5 year reviews and to the other terms and conditions therein contained. These include a covenant obliging the tenant to accept responsibility for the rates, insurance and service charges on the aforesaid premises.
6. On behalf of the Appellant Mr. Hanafin gave evidence to the effect that in his opinion the most appropriate way of establishing the NAV was by reference to the reserved rent as contained in the aforesaid mentioned Indentured Lease. He indicated that in his view the rent reserved for the said lease was representative of open market conditions and was not in any way affected or reduced by collateral considerations. In such circumstances it was urged upon us that this rent should be taken as being the equivalent of the NAV which of course this Tribunal is obliged to determine under Section 11 of the 1852 Act as amended. Depreciating the figure of £57,500 by 14% Mr. Hanafin arrived at an NAV for November, 1988 of £50,000. Applying the agreed fraction of 0.5% he submitted that the correct rateable valuation of the subject unit should be £250.
7. On behalf of the Commissioner of Valuation Mr. Conroy, when dealing
with the valuation history of the unit and also with the manner in which
he approached the
The valuation history of the shopping centre as a whole dates from 1972
when it was first built. In 1991 the centre was purchased by O'Callaghan
Properties and a
In 1992, 32 units were the subject of appeals to the Commissioner. Most
owners were professionally represented and a general agreement was reached,
8. He then produced in written form a document headed "Comparisons"
wherein 11 units within the centre were identified and various details
in respect thereof given. This document is reproduced in full as an appendix
to this judgement. In his opinion Mr. Conroy was of the view that the
details contained in this document were of such a comprehensive, precise
and compelling nature that the same afforded an unassailable basis to
support and sustain the generality of his evidence as recited above. Indeed
his approach was crystallised by a submission to the effect that the rents
passing in respect of these units were not as such relevant or, in any
event, highly relevant to the issue of determining the correct NAV. His
view was that one should concentrate on the rateable valuations as outlined
and that if this approach was followed the unit, the subject matter of
this appeal, could not attract a rateable valuation of less than £12psf.
9. To fully understand this submission it is important to point out that
the same was predicated on a belief that the rents negotiated in 1991/1992
were "soft rents". This came about by reason of the fact that
the new landlord was anxious to secure the agreement of the tenants to
reduce the rent review period from 7 years to 5 years. In return therefore
the landlord was prepared to offer a refurbished, modern and upgraded
shopping centre at unit rents which did not reflect that investment and
which in turn were less than that which surely could be obtained, if open
market conditions applied. Hence, the rejection of the passing rents as
establishing the appropriate or correct NAV for the purposes of determining
the resulting rateable valuation.
11. Dealing with the units contained in Mr. Conroy's "Comparison"
document could we comment as follows:-
Unit 5B:- This unit, occupied by Padraig Byrne, had approximately £1,000
added to the rent of £18,000pa (fixed in July, 1992) in order to
arrive at the NAV used for the purposes of calculating its rateable valuation
at £96. With an area of 1273 sq.ft. the price psf, utilising the
rent, was £14.14.
Unit 17:- The occupier in this instance was Mr. Corrigan. The passing rent as of December, 1992 was £23,600. Yet that figure was reduced by 27% to arrive at the working NAV.
Unit 34:- This unit occupied by Teasers Restaurant had its passing rent increased by almost £2,000 to establish the NAV.
Unit 29:- The occupier of this unit is either Cork Corporation or Cork
County Council. The area is 4,000 sq.ft. with the rent as of the 1st August,
1978 given as
12. As can be seen from the foregoing, significant increases in the rents, in respect of a number of units, were made in order to arrive at the NAV. These increases varied from 50% or more down to single figures. In other instances the NAV required to sustain the resulting RV was upwards of 60% or more in excess of the passing rents and this percentage figure, in the case of Mr. Bresnan, fell to about 10%. Why this should be so was a matter of considerable enquiry by the Tribunal. And yet, as the evidence concluded, there was in fact no explanation given for the anomalies and inconsistancies above identified which it should be said are but examples only of the difficulties faced by us.
13. As can be further seen from Mr. Conroy's "Comparison" document
he refers to four further units namely, Units 31, 41, 42 and 42A which
had been revised in 1994. Three of the leases involved in these units
were created between December, 1993 and March, 1994. Hence the reasons
given for adjusting the passing rents in order to establish the NAV's
could not have applied at this period in time. And yet, each rent was
lowered in order to arrive at the NAV. In the case of Unit 41, that is
Crafts Shoes, the rent was reduced by about 25%. Yet in the case of Unit
42, it was reduced by about 8.8%. Whereas in the case of Unit 31 the reduction
was about 12 or 13%.
15. That being the situation the only evidence before us, of a reliable nature and upon which we could act was that adduced on behalf of the Appellant. We are satisfied that whilst the suggestion was made that the rent paid by the Bank of Ireland for the subject property was not a "market rent" as of July, 1992 nevertheless we do not believe that such a suggestion is underpinned by any evidence. Accordingly we propose to accept the passing rent as the basis for establishing the correct NAV. Depreciating that sum by 14%, the percentage reduction agreed to by Mr. Conroy, we determine that as of November, 1988 the correct NAV for the subject unit is £50,000. Applying the agreed fraction of 0.5% that gives a rateable valuation of £250 and we so determine.
16. Finally, we readily appreciate that this RV of £250 may appear
to be out of line when placed against the rateable valuations existing
on the other units above identified, nevertheless if one accepted the
passing rent in the Bank of Ireland unit and if one applied the fraction
of 0.5% to Unit 29 the same has some relationship to these other units.
Even however if it does not it remains our view and our decision that
on the evidence the suggested rateable valuation of £250 is appropriate
and we so determine.