Valuation Tribunal: Chairperson Designate

Apologies have been received from Senator Niall Ó Donnghaile. I ask those present to please switch off all mobile phones as they interfere with the sound recording system.

The purpose of the first session of the meeting is to engage with the chairperson designate of the Valuation Tribunal. Ms Carol O'Farrell, a barrister, has been a member of the tribunal for the past four years and is due to take up her new post at the end of the month. On behalf of the joint committee, I thank her for her attendance. She will be invited to make an opening statement which will be followed by a question and answer session.

Witnesses are protected by absolute privilege in respect of their evidence to the committee. If, however, they are directed by the committee to cease giving evidence on a particular matter and continue to do so, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person or an entity by name or in such a way as to make him, her or it identifiable.

Members should be aware that, under the salient rulings of the Chair, they should not comment on, criticise or make charges against a person outside the Houses or an official, either by name or in such a way as to make him or her identifiable.

I invite Ms O'Farrell to make her opening statement.

Ms Carol O'Farrell

I thank the joint committee for giving me the opportunity to address it.

I was honoured to have been nominated by the Tánaiste and then Minister for Justice and Equality, Deputy Frances Fitzgerald, as chairperson designate of the Valuation Tribunal. I will assume the role of chairperson following the expiration of the term of appointment of the current chairperson, Ms Sasha Gayer, SC, on 30 July.

The chairperson of the tribunal must have a good knowledge of areas of law beyond property valuation. In particular, it is important to be familiar with the principles of statutory interpretation; natural and constitutional justice, including the requirements of fairness, judicial review of administrative decisions and also the usual practice and procedure issues which arise in appeal hearings before the tribunal. In that regard, I have the appropriate legal expertise. I have been practising at the Bar since 1990 and I am a well regarded barrister with a wealth of experience in administrative law. I practise mainly in local government law, with specialist experience in the areas of housing, planning and waste management, as well as property and landlord and tenant law. I regularly act for local authorities in an advisory capacity and have a good track record in successfully resisting challenges by way of judicial review to the decisions of local authorities on the grounds of illegality, irrationality or failure to observe procedural rules or rights guaranteed by the Constitution and the European Convention on Human Rights and Fundamental Freedoms. Throughout my career I have successfully applied sound judgment, offered strategic and practical advice and given valuable guidance to clients to assist them in understanding the law and their legal obligations.

I was appointed as an ordinary member of the tribunal in June 2013 and it has been a great privilege to serve on it for the past four years. During that time I have sat in a variety of hearings of approximately 60 appeals, both quantum and legal. I have sat in hearings related to cost applications and dealt with orders for discovery. I have drafted many of the judgments on these appeals. I have also been involved in the hearing of global appeals. The Valuation Act 2001, as amended, provides for utilities to be valued on a global basis, with the resulting valuations apportioned across rating authorities. I am familiar with the role of chairperson of the tribunal and have worked closely with the current chairperson in recent years. The chairperson recently invited me to participate in a sub-committee tasked with drafting new appeal rules for the tribunal on foot of the Valuation (Amendment) Act 2015.

By way of background, the tribunal is an independent statutory body initially established under the Valuation Act 1988 and continued by the Valuation Act 2001 to hear appeals against decisions of the Commissioner of Valuation on the valuation and revaluation of commercial properties for rating purposes. The tribunal also hears appeals made by owners of derelict sites against the determination by local authorities of the market value of these sites under the Derelict Sites Act 1990. Subject to a right of appeal to the High Court by way of a case stated on a point of law, the decision of the tribunal is final. The tribunal is a separate body independent of the Commissioner of Valuation and the Valuation Office.

The tribunal comprises a chairperson, eight deputy chairpersons and 15 ordinary members, including me. Members are appointed for a term of up to five years by the Minister for Justice and Equality and drawn mainly from the legal and property valuation professions. Members of the tribunal receive administrative support from the registrar and a small team of staff at the tribunal offices in Holbrook House.

The principal challenge for the tribunal in 2017 and beyond is the anticipated large influx of revaluation appeals on foot of the Valuation Office revaluation programme for 2017. That project is a major undertaking by the Valuation Office and proceeding apace. It involves a revaluation of all commercial and industrial properties in ten rating authority areas, including south County Dublin, and will give rise to a greater number of appeals to the tribunal from September 2017 onwards. Since the passing of the Valuation (Amendment) Act 2015 there is no longer a right of appeal to the Commissioner of Valuation and all appeals will, therefore, be made directly to the tribunal.

This influx of revaluation appeals will be in addition to revision and derelict site appeals, which are a constant feature in terms of their continual receipt by the tribunal and which have to be processed and prepared for hearing in the same way as revaluation appeals. Furthermore, the Valuation Office is establishing a dedicated revision unit to support the revision of valuations for certain commercial properties in local authority areas. The commissioner intends to deploy more resources to address the backlog of cases which the Valuation Office has on hand. The establishment of the revision unit will undoubtedly lead to a further increase in the workload of the tribunal.

In light of these developments the tribunal has recently secured the appointment of one new deputy chairperson and three new members to ensure that it can deal efficiently and effectively with the increased number of appeals. The tribunal is also making improvements to its website and working towards implementing an online appeals process and the electronic payment of appeal fees, which will improve our procedures and increase efficiencies.

As the committee is undoubtedly aware, as part of a programme of rationalisation of State bodies, the Government is proceeding with a merger of Ordnance Survey Ireland, the Property Registration Authority and the Valuation Office. It is proposed that the new organisation arising from the merger, Tailte Éireann, will be responsible for ensuring that the tribunal carries out its functions. To that end, the tribunal will ensure it keeps itself informed of all developments arising from the merger.

I look forward to the opportunities and challenges that will arise for the tribunal in ensuring that we deliver a high-quality and impartial service to all parties in the tribunal appeals process. I thank the members for their attention. If they have any questions I will be happy to endeavour to answer them.

Thank you, Ms O'Farrell. I will open up the discussion. Do members have questions they would like to pose or even good wishes to offer, which I hope to extend in a few moments?

I thank Ms Carol O'Farrell for coming before the committee. She stated in her opening remarks that she believes she is a well regarded barrister. I want to confirm that I know she is. I wish her well in the office.

Ms O'Farrell mentioned there being a potential increase in derelict site appeals. What is the nature of the derelict site appeals that come before the Valuation Tribunal? Is there anything we as legislators could learn for the purpose of trying to solve the housing crisis? I know that is outside her remit but is there anything she sees within her work in the Valuation Tribunal that would give rise to comments that she considers might be useful to us?

Ms Carol O'Farrell

No. As I said, the tribunal is essentially established for the purpose of hearing appeals from determinations of local authorities in regard to the market value of derelict sites. Beyond that, we are an appellate body established by statute and, therefore, we are bound by the provisions of the Act and we cannot enlarge or add to our jurisdiction.

Ms Carol O'Farrell

I know that local authorities are examining derelict site options with a view to seeing if they can potentially acquire some derelict sites through the compulsory purchase procedure in order that they might be able to make more properties available to deal with the housing crisis. However, in terms of appeals to the tribunal, we are limited to ensuring that whatever determination the local authority has made in respect of the market value of a particular property, that it is a correct valuation in law.

From Ms O'Farrell's experience, has there been an increase in appeals in respect of derelict sites during the past four years?

Ms Carol O'Farrell

No, not at all. I am not sure there is an increase in the number of appeals. They come in occasionally. I do not believe there has been a significant increase in the past 12 months.

Ms Carol O'Farrell

I thank the Deputy very much for his kind good wishes.

Does any other member have a comment?

I wish Ms O'Farrell well in her new role. I was interested in Deputy O'Callaghan's question about the number of derelict site appeals. I know from Fingal County Council that there was no site on the derelict sites register. It is an under-utilised legislative option. Many of the Dublin local authorities do not utilise that option. Have there been many appeals outside Dublin or could Ms O'Farrell give us an indication of the number of appeals that have gone through because as far as I know it is a completely under-utilised option?

Ms Carol O'Farrell

I thank the Deputy for his kind wishes. I am not in a position to give the Deputy a precise number with respect to the number of appeals in regard to derelict site matters that are currently with the tribunal. I can ascertain that information this week and make it available to the committee. We can also break the numbers down for Dublin and for the rest of the country.

It would be welcome to see a huge number of appeals go through the tribunal because it would show that the local authorities are using the legislative power that they have-----

Ms Carol O'Farrell

Yes, indeed.

-----because currently we are not seeing any progress there. I thank Ms O'Farrell and extend best wishes to her in this role.

Ms Carol O'Farrell

Thank you.

Is any other member offering? I understand there is a sequential address of revaluation taking place. I am sure that I could be confident in assuring the good electors in Cavan-Monaghan that they have no need for trepidation and that there is no reason for fear with the Valuation Office descending in 2018 when it is scheduled to carry out its work? I am not asking Ms O'Farrell to give them that assurance, but at what stage is the programatising of revaluation? Are there a number of years already designated for different parts of the country?

Ms Carol O'Farrell

The revaluation programme was undertaken by the Commissioner of Valuation initially in 2005. To date revaluations have only been completed in the four Dublin authority areas, the Waterford areas and Limerick. A mammoth task was set for the Commissioner of Valuation this year, in that his main strategy was to achieve the revaluation of ten rating authority areas this year. That process is now almost complete. The proposed certificates have issued, the representation stage is complete and I understand the valuation lists for those ten rating authority areas will be published in September. It will be from the publication of the valuation lists that the 28-day period will run for the appeals to the tribunal.

It is important for this revaluation programme to continue apace because that is the only way that we will be able to achieve equity, uniformity and correctness of value, namely, if we base the valuations on modern rental property values. The Chairman will be aware that South Dublin County Council area has been revalued. It was revalued in 2007 and it has been revalued again. The Act envisages that there will be a sequential revaluation of all local authority areas and that once a revaluation is complete that the next one will take place in not fewer than five years and not more than ten years. It is important because the revaluations of the other Dublin local authorities will be due again. It is important for the Commissioner of Valuation to finish revaluing the remaining parts of the country in order to get all rating authority areas on this sequential five to ten-year cycle of revaluation.

I thank Ms O'Farrell for that. I call a final contributor, Deputy Wallace.

I had better wish the lady well.

Ms Carol O'Farrell

Thank you, Deputy.

I hope we never have reason to fall out over valuations. If there is a dispute when the revaluation process is going on and a figure is set, can one appeal that decision to the commissioner in the first instance?

Ms Carol O'Farrell

No. That has now changed. Prior to the passing of the Valuation (Amendment) Act of 2015, persons essentially had three opportunities to contest a valuation. First, they could make representations to the Commissioner of Valuation once a proposed valuation certificate issued. If they were unhappy with the outcome of their representation, there was a right of appeal. It was called the first appeal to the Commissioner of Valuation and if the person was still aggrieved following that right of appeal, then they could appeal it to the Valuation Tribunal. Given that the pace of the revaluation programme had slowed down so much, the 2015 Act was passed and one of the key objectives was to accelerate that programme. New measures were introduced in the new legislation and one of those was to streamline the appeal process. Essentially, the right of appeal to the Commissioner of Valuation has been abolished. The time period for making representations has been extended to a period of 40 days. That is a much more robust process now with the Commissioner of Valuation.

If someone is still aggrieved, having made representations, the only right of appeal is directly to the Valuation Tribunal.

I spent about two hours in the Valuation Office a couple of years ago arguing over the rateable valuation of my properties. I found the system to be very strong and was very impressed by the workings of the office, although it lacked flexibility. While I found that properties were being valued fairly in good commercial areas, I felt we were treated harshly in others in which most business people would not dream of locating a wine bar. The staff gave me a breakdown of how they had arrived at a valuation. The footprint of a property is designated in terms of being in category A, B, C or D. The street frontage has the highest rateable value, whereas the area at the back has a lower rating. Traditionally, kitchens were hidden away at the back, but nowadays businesses should be encouraged to have open kitchens at the front in order that people would be able to see how food was being prepared. In the layout of my wine bars and restaurants we have the kitchen at the front in order that customers can see it in operation, but we are penalised for doing so. The Valuation Office has not moved on from the traditional way in which the different aspects of the building were rated and does not take into account the new location of kitchens at the front of a building. We were slaughtered by the rates payable on some of our businesses. If I were to appeal the rateable valuation of a business to the Valuation Tribunal, how much flexibility would it have in terms of the fixed rules that apply in arriving at the valuation of a property?

Ms Carol O'Farrell

In hearing an appeal before the Valuation Tribunal the key objective is to ensure that whatever valuation was determined is correct and achieves equity and uniformity with the valuations of other similar properties in the particular rating authority area. Essentially, the basis for a determination of value is set out in section 48 of the Act. That section requires that the value be determined by estimating the net annual value. The net annual value is the rent a tenant would be willing to pay on the property, with the tenant bearing all of the expenses such as insurance and maintenance costs. The test is set out in statute and the function of the tribunal is to apply it. In the context of the valuation list for a particular rating authority area, the test is to ensure the value determined for a property is relative to that of comparable properties at that location.

My experience is that it is not easy to run a small business in Ireland. People are struggling to pay rates. I do not know how the levels of rates payable here compare with those in other European countries, but I get the impression that we are being hit harder than the average small business elsewhere in Europe. Perhaps I am wrong, but that is my feeling. Let me give an example. In Inchicore and the streets around Croke Park we had restaurants and wine bars. One sees shops in these areas being closed all the time and it is very hard to stay in business and to attract shop owners into them. One of the reasons for this is that it is difficult for those in business to pay the rates charged. Is there a concept in the Valuation Office that in certain areas there is a need for leniency to allow existing business to survive and attract further businesses?

We will have a final reply from Ms O'Farrell because we have to proceed.

Ms Carol O'Farrell

At the end of the day, the valuation is determined by reference to the rental values of properties in the relevant area. That is the principle by which we are guided.

Therefore, large parts of the city will remain on the edge of dereliction. I thank Ms O'Farrell.

Not necessarily. I thank Ms O'Farrell for her engagement with the joint committee. On behalf of members, I wish her every success in her new role.

Ms Carol O'Farrell

I thank the Chairman and members.

Sitting suspended at 9.26 a.m. and resumed at 9.27 a.m.