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The Lands Tribunal for Northern Ireland has issued its decision in a case known as Belfast International Airport Limited v The Commissioner of Valuation (2017) VR/9/2016, concerning the rating assessment of Belfast International Airport at Aldergrove in Northern Ireland. in 2014 the ratepayer had lodged an appeal against the then rating assessment of Net Annual Value (NAV) £2,800,000. This figure was increased by the District Valuer in 2015, following alterations to the airport, to NAV £3,315,000. On appeal by the ratepayer to the Commissioner of Valuation, the Commissioner reduced the assessment to NAV £3,000,000 to allow for “disadvantages of terminal layout and location”. The ratepayer appealed against this decision to the Lands Tribunal for Northern Ireland.
The parties agreed the airport should be valued using the Contractor’s Basis of valuation, but differed on some important points of principle. The Commissioner of Valuation supported a value of NAV £3,000,000 and the ratepayer contended for a value of NAV £2,169,000. The first issue to be determined was whether the economic circumstances to be applied in assessing the value were those of 1 April 2001 (the “antecedent valuation date”) or 1 April 2003 (“the valuation list date”). The ratepayer contended for the antecedent valuation date and the Commissioner for the valuation list date. The Tribunal was clear that the antecedent valuation date was the relevant date by which to assess economic matters such as demand for the property – adopting this date gave effect to the intention of the legislature and ensured equality of treatment between ratepayers.
The ratepayer contended that an allowance should be made for “over capacity” because the terminal was larger than was needed to handle the number of passengers using the airport. The Commission submitted that no specific allowance for “over capacity” was needed as this could be accommodated in a single end allowance for all factors. The Tribunal agreed that an allowance for “over capacity” was appropriate and the best way to assess this was by way of comparison with a modern “simple substitute” facility as the ratepayer had done. There was no statutory prohibition on the Tribunal making such an allowance and the evidence clearly supported it. In this respect the Tribunal found that comparisons with Belfast City Airport provided “useful data” in assessing the extent of overcapacity.
The Tribunal also considered the relevance of English cases regarding the Contractor’s Basis of valuation to the jurisdiction in Northern Ireland. The decisions in cases such as Monsanto plc v Farris (VO) (1998) and Eastbourne Borough Council and Wealden Borough Council v Allen (VO) (2001) in England were relevant and provided “best practice in the operation of the Contractor’s Method of valuation”. The ratepayer made an allowance of 15% for age and obsolescence in respect of the terminal building, in addition to an allowance for “over capacity”. The Commissioner contended that to apply two separate allowances was “double counting”. The Tribunal determined that it was correct to make two separate allowances. There was no “double counting” because the allowances each addressed different matters and was each supported by evidence.
The ratepayer made a final end adjustment of 15% for location and for layout and piecemeal development. The Commissioner submitted that these allowances were not appropriate. The Tribunal found that an allowance of 5% for location was appropriate, as was an allowance of 5% for additional operating costs; but that no further allowance should be made for piecemeal development as this issue was reflected in the allowance for over capacity. The overall end allowance of 15% made by the Commissioner for all factors was rejected by the Tribunal because it failed to identify “the specific factors that were included in that allowance and the amount of allowance for each factor”. Following these determinations, the Tribunal ordered that the assessment of the airport be reduced from NAV £3,000,000 to NAV £2,300,000.
The decision is of general importance in clarifying that economic matters should always be considered by reference to the antecedent valuation date, rather than by reference to the valuation list date, irrespective of whether the appeal relates to a revaluation assessment or to a revision between revaluations. Other aspects of the decision will be of interest to valuers involved with valuations on the Contractor’s Basis, particularly the careful consideration by the Tribunal of when the different classes of allowance are appropriate and the types of evidence needed to support them.
