The High Court has upheld a Valuation Tribunal decision that Eurolink Motorway Operation Limited cannot deduct its contractual revenue share payments to Transport Infrastructure Ireland (TII) when calculating the rateable value of the toll franchise for the Kinnegad bypass.
In a judgment delivered on 8 February 2021, Mr Justice Alexander Owens answered a case stated by the Tribunal. He held that the Tribunal did not err in law when it concluded that the estimated annual revenue share was not deductible under the receipts and expenditure method of valuation.
Eurolink argued that the payment obligation was a statutory restriction on the tolls’ income earning capacity because its public private partnership agreement with TII was made under the Roads Act 1993. It also argued that the payments were expenses necessary to maintain the rateable property in its actual state, and should therefore be deducted under the Valuation Act 2001.
The Commissioner of Valuation argued that the property to be valued was the whole toll franchise. On that view, the revenue share arose from the agreement governing Eurolink’s occupation and did not limit the franchise itself.
The judge agreed with the Commissioner. He found that the franchise was created by the toll scheme and bye-laws, and had an existence independent of the PPP agreement. The agreement gave Eurolink the exclusive toll rights for its term, but the revenue share was a contractual payment obligation personal to that arrangement. It was not an inherent disadvantage attaching to the tolls for any hypothetical tenant.
The court also rejected the argument that the payments were expenses necessary to maintain the property. It distinguished the Supreme Court’s earlier decision in Westlink (No 2), which concerned maintenance obligations. The judge said that the revenue share did not keep the toll rights in existence or maintain them in a state capable of supporting rent under the statutory valuation assumption.
The judgment explained that the valuation exercise estimates the annual rent a hypothetical tenant would pay for the property. Deducting a payment owed under the current occupier’s agreement would distort that calculation. The only statutory restriction on the franchise’s earning power identified by the court was the cap on maximum tolls for different vehicle classes.
The High Court therefore affirmed the Tribunal’s conclusion: the annual estimate of the revenue share was not deductible in calculating the net annual value of the tolls. The judgment did not set out a revised valuation amount.