The High Court has upheld a Valuation Tribunal decision allowing depreciation of some Irish Rail assets to be considered in calculating the network’s rateable value, while ruling that a temporary payroll saving should not reduce the valuation costs.
The case was an appeal by way of case stated under the Valuation Act 2001. The Commissioner of Valuation challenged the Tribunal’s decision concerning the global valuation of Iarnród Éireann’s national railway network, based on a valuation date of 31 March 2014.
The Commissioner had set the network’s net annual value at €8.93 million in a certificate issued in November 2015. The parties agreed to use the receipts and expenditure method and the company’s 2014 accounts, but disputed how to treat depreciation of tenant assets and savings under a pay reduction agreement.
The Tribunal had found that depreciation could be allowed for assets funded by Iarnród Éireann, including a stated 25% share of rolling stock and freight vehicles. But it rejected the depreciation figure in the accounts as a basis for the allowance and said expert evidence was needed on the assets’ market value, age, condition and likely useful life. The Commissioner argued that depreciation was not an actual annual expense and should not be deducted absent renewal expenditure.
The High Court found no error of law in the Tribunal’s approach. It said the Tribunal could allow depreciation in principle for tenant assets paid for by the company, while requiring evidence to determine the appropriate amount. The judgment does not set a depreciation figure or conclude the valuation calculation: the Tribunal had yet to determine the amount after hearing expert evidence.
The separate payroll dispute concerned a €4.08 million saving arising from a pay reduction agreement concluded in September 2014, after the valuation date. The Commissioner argued that the saving should be reflected because the valuation used the 2014 accounts. The High Court agreed with the Tribunal that a hypothetical tenant deciding on rent as at 31 March 2014 could not have contemplated the later agreement. It also upheld the finding that the temporary saving, negotiated in exceptional economic circumstances, was not a reliable basis for assuming continuing savings over the tenancy.
The court answered “No” to all three questions of law stated and affirmed the Tribunal’s decision. It did not itself determine the final net annual value.