Dunlop Heywood advise on important RoI business rates’ ruling

The Valuation Tribunal Ireland has handed down an important decision in respect of the Westlink Tolls and the LUAS light rail system in Dublin.

To start the Tribunal determined a procedural issue making clear that “the Valuation Tribunal exercises a de novo appellate jurisdiction. Once that jurisdiction is invoked, an appellant obtains a full hearing on the facts and the law … Everything is up for discussion on the appeal, including the possibility of an increase in the valuation of a property as the Tribunal has a duty … to achieve a determination of value that accords with the requirements of section 19(5) of the Act, namely, correctness of value and equity and uniformity of value between properties on the valuation list”.

The appellant, Transport Infrastructure Ireland (TII), made a public purposes argument that Westlink Tolls were “any building, land or hereditament dedicated to or used for public purposes and no private profit or use is directly derived therefrom” arguing that they were not capable of rateable occupation. TII’s arguments in this regard were based on section 63 of the Poor Relief (Ireland) Act 1838 but the Valuation Tribunal did not accept that argument.

In the alternate TII argued that it is an “Office of State” for the purposes of paragraph 12A of Schedule 4 to the Valuation Act 2001, such that “a building or part of a building, land or waterway or harbour directly occupied by [it]” is exempt from rates. But the Valuation Tribunal found that TII was the State and that in any case, the Westlink Tolls is not a property to which paragraph 12A of Schedule 4 could apply.

Based on the valuation arguments the Westlink Tolls assessment was determined at €10,580,000 as contended for by TII rather than €12,980,000 as proposed by the Commissioner. The assessment of the LUAS was reduced from €1,173,000 to €575,000.

The Tribunal set out the following valuation principles, “Although the tenant is imaginary, the conditions in which his rent is to be determined cannot be imaginary. They are the actual conditions affecting the hereditament at the time when the valuation is made” (see: Poplar Assessment Committee v Roberts [1922] 2 AC 93) and “one must assume a hypothetical letting (which in many cases would never in fact occur) in order to do the best one can to form some estimate of what value should be attributed to a hereditament on the universal standard, namely a letting ‘from year to year’. But one only excludes the human realities to a limited and necessary extent, since it is only the human realities that give any value at all to hereditaments. They are excluded in so far as they are accidental to the letting of a hereditament. They are acknowledged in so far as they are essential to the hereditament itself” (see: Dawkins (VO) v Ash Bros. & Heaton Ltd [1969] 2 AC 336).

Having regard to those principles the Tribunal found that “It is a well-known principle of valuation that you value the property as it stands on the valuation date. The Tribunal is satisfied that what is necessary to maintain the Westlink Toll income in its actual state at the valuation date in order to command the hypothetical rent are maintenance works and operation procedures over the M50 between Junction 3 and Junction 14 to sustain the volume and kind of traffic that uses the M50 to pass through the toll road from both directions. In the Tribunal’s opinion the actual state of the Westlink Toll at the valuation date cannot be preserved without operating and maintaining the M50 roadway between Junction 3 and Junction 14 in good repair”. It determined that the costs of maintaining the M50 between Junction 3 and Junction 14 are deductible for the purpose of calculating the value of the Westlink Toll.

The full decision can be found here

TII was advised by Dunlop Heywood and McCann Fitzgerald, Dublin.