Copper Face Jacks commercial rates must be recalculated, court rules

The Commissioner of Valuation has won a High Court order directing a reconsideration of how commercial rates were calculated for the company operating well known nightclub Copper Face Jacks and a hotel on Dublin’s Harcourt Street.

The commissioner says the rates should be calculated based on a €1.75 million estimated net annual rental valuation (NAV) of the premises and he asked the High Court to determine legal issues arising from a decision of the Valuation Tribunal reducing the NAV to €1.155 million.

The case arose after the valuation office completed a revaluation of business premises in the Dublin City Council area in 2013, applicable to rates charged from 2014.

Brenagh Catering Ltd, which operates the Jackson Court Hotel on Harcourt Street, and Copper Face Jacks, which operates from the basement of the hotel premises, had appealed to the tribunal that the €1.75 million NAV was excessive. It proposed a NAV of €840,000.

The tribunal’s 2016 decision on a €1.155 million NAV arose after it provided for 11 per cent to be applied the nightclub’s door and cloakroom revenue of €3.2 million and an allowance of some €200,000 to reflect the agreed “exceptional” expertise of the occupier.

Judgment

In a judgment published on Friday, Mr Justice Mark Heslin found the tribunal erred in law in several respects, including in not giving adequate reasons for various findings by it.

The sole issue in dispute in the appeal before the tribunal was the percentage to be applied to door and cloakroom receipts associated with the nightclub, in respect of revenue exceeding €1 million, he said.

For the purposes of the tribunal appeal, the total agreed door/cloakroom revenue was some €3.2 million, he said.

The tribunal was incorrect, inter alia, in focusing on the percentages to be applied to those receipts instead of considering if the €1.75 million NAV was excessive, he held.

It also incorrectly applied an overall 11 per cent to the receipts on grounds of its finding no evidence was adduced to support the commissioner’s methodology in reaching a 40 per cent figure for the receipts, he said. The commissioner considered an application of 70 per cent to the door and was also justified, he noted.

It is “not at all clear why” the tribunal concluded 11 per cent was appropriate, the judge said.

While not doubting the skill, expertise or bona fides of the tribunal members, and while accepting there may well be clear and compelling reasons for the conclusion reached, he was satisfied those reasons were “not set out with sufficiency”.

The tribunal must now reconsider the matter in line with all of the judge’s findings.

The judge stressed, in its appeal to the tribunal, the onus of proof was on Brenagh to prove the €1.75 million NAV was “actually incorrect” and it must do so on specified grounds.

However, certain statements in the tribunal’s decision were suggestive of a shifting of the onus of proof onto the commissioner as if he faced the burden of proving the €1.75 million NAV.

Basis

Although the basis upon which the tribunal rejected evidence from the company’s valuer concerning the appropriate percentage to be applied to the receipts was unclear, “it is clear that it was rejected”, he said. The company’s valuer had argued a zero percentage should be applied to the first €600,000 of receipts, (€600,000 being the annual cost of operating the nightclub); 10 per cent on the next €400,000; and 5 per cent on the balance of €2.2 million.

The tribunal’s decision on the receipts suggested Brenagh did not discharge the burden of proof of demonstrating the pre-appeal NAV was incorrect, he said.