High Court sets aside Valuation Tribunal decision for failure to disclose rationale on valuation method.

APPROVED [2025] IEHC 511

THE HIGH COURT

2024 1613 SS

IN THE MATTER OF SECTION 39 OF THE VALUATION ACT 2001

BETWEEN

VEDANTA RESOURCES LTD

APPELLANT

AND

COMMISSIONER OF VALUATION

RESPONDENT

JUDGMENT of Mr. Justice Garrett Simons delivered on 26 September 2025

INTRODUCTION

1. This matter comes before the High Court by way of a consultative case stated from the Valuation Tribunal. The Valuation Tribunal had been required to value a “tailings management facility”. This structure comprises a base and containment walls within which waste material from mining activities are contained. From a valuation perspective, the striking feature of the structure is that it can no longer be used to facilitate ongoing mining activities. This is because the structure is now full to capacity and has been capped.

NO REDACTION REQUIRED

2. It is crucial to the proper valuation of the structure to determine whether its value should be assessed by reference to its current use as an aftercare facility, or whether, alternatively, its value should be assessed by reference to a longer time span to include its previous use to receive waste material. On this latter analysis, it might be appropriate to have regard to the historical value of the tailings management facility in allowing the occupier to generate revenue from carrying out mining activities in accordance with the relevant development consents.

3. The proper valuation required careful consideration of the logically anterior question of which of the various approaches to valuation should be adopted. In particular, it required consideration of whether it would be appropriate to employ a method of valuation relying on the notional cost of constructing or providing the property, i.e. the so-called “contractor’s method of valuation”.

4. Regrettably, the determination of the Valuation Tribunal does not record its finding on this crucial issue of the appropriate method of valuation. Whereas the determination discusses, at various points, the contractor’s method of valuation, comparable valuations, and the rent which a hypothetical tenant would be willing to pay, it is not possible to tell which method the Valuation Tribunal ultimately settled upon, still less to understand its rationale for doing so. Accordingly, the determination must be set aside and the matter remitted for reconsideration by a differently constituted panel of the Valuation Tribunal.

PROCEDURAL HISTORY

5. The impugned determination of the Valuation Tribunal is dated 19 January 2024. The ratepayer, Vedanta Resources Ltd, had been the appellant before the Valuation Tribunal with the Commissioner of Valuation being the respondent. The case stated has been requested by the Commissioner.

6. The impugned determination of the Valuation Tribunal relates to lands located at Killoran, Moyne, Thurles, Co. Tipperary. The Valuation Tribunal described the overall rateable property as “the Lisheen Mine”.

7. The appeal to the Valuation Tribunal had centred on one specific structure described as a “tailings management facility”. The value of the other structures at the Lisheen Mine had largely been agreed between the parties.

8. The impugned determination records that mining operations at the Lisheen Mine had commenced in the year 1999 and ceased at the end of the year 2015. It also records the following evidence. The mining operations had involved the extraction of lead/zinc ore which resulted in the production of waste material described as “mine tailings”. This waste material is potentially hazardous and its disposal is regulated by an aftercare or rehabilitation plan agreed pursuant to development consent conditions. In order to meet its obligation to dispose of the mine tailings in compliance with the development consents, the mine operator had been required to construct a structure described as a “tailings management facility” or “TMF” for short. The structure consists of a base and containment walls, both of which are lined with composite lining to prevent contaminated liquid (“leachate”) from escaping to the environment.

9. The tailings management facility has now been filled to capacity. The rehabilitation of the tailings management facility required the mine operator to ensure that the facility is “capped”. The mine operator is obliged, under the development consents, to continue monitoring the tailings management facility for a period of 30 years. This monitoring requirement is coupled with an obligation to assure the competent authorities, primarily the Environmental Protection Agency (“EPA”), that the environmental indicators are such that the tailings management facility continues in a “steady state” for the duration of the aftercare period.

10. It is apparent from the recital of evidence, in the impugned determination, that there was a significant dispute between the parties as to the duration of the useful life of the tailings management facility. The mine operator adopted the position that once the facility had reached capacity, i.e. could no longer receive any further deposits of mine tailings, the facility had come to the end of its useful life. The Commissioner, conversely, adopted the position that the facility is still in use for the storage of the waste material, and that this is of benefit to the mine operator in that it enables it to meet its ongoing obligations in terms of aftercare.

11. Having regard to this dispute between the parties, the choice of which method of valuation to apply assumed an especial significance.

DISCUSSION

12. Section 37(4) of the Valuation Act 2001 provides that the Valuation Tribunal is not required to achieve the determination of the value of a rateable property by reference to any particular method of valuation: the tribunal may arrive at its determination by reference to whatever method of valuation or combination of methods of valuation as the tribunal, in its discretion, may deem appropriate.

13. The Valuation Tribunal enjoys a margin of discretion in choosing the appropriate valuation method or methods. As explained by the Court of Appeal (per Murray J.) in Stanberry Investments Ltd v. Commissioner of Valuation [2020] IECA 33 (at paragraphs 49 to 52), the courts should be slow to interfere with the Valuation Tribunal’s reasoning in those areas touching on the tribunal’s expertise. As further explained, curial deference is properly understood as depending on the tribunal having provided a properly reasoned decision, not as affording a mechanism for compensating where the decision is not so reasoned. The concept of curial deference does not mean that where the tribunal’s reasoning is unclear, so that there are differing possible interpretations of its

decision, the court must simply assume that the tribunal was correct in the

conclusion it reached.

14. The Commissioner had contended before the Valuation Tribunal that the tailings management facility should be valued by the contractor’s method of valuation. In brief, this method involves calculating the notional cost of constructing or providing the rateable property, i.e. the notional replacement cost, and then discounting that cost by a statutorily prescribed decapitalisation rate to produce a figure for the notional annual rent which the property would command. The decapitalisation rate is currently fixed at five per cent. Relevantly, the replacement cost is to be “depreciated” where appropriate. This is to ensure that the valuation is carried out by reference to the property’s actual state. A brand new replacement structure is likely to be more valuable than an existing structure and it is necessary, therefore, to adjust the notional cost of replacement to reflect the lesser value of the existing structure.

15. The contractor’s method of valuation is referred to under section 50 of the Valuation Act 2001 as follows:

“(1). If, in determining the net annual value of property or

any part of it in accordance with section 48, a method

of valuation relying on the notional cost of

constructing or providing the property or part is used,

then, notwithstanding subsection (3) of that section,

the net annual value of the property or part, for the

purposes of that section, shall, subject to

subsection (2), be an amount equal to 5 per cent of

the aggregate of the replacement cost, depreciated

where appropriate, of the property or part and the site

value of the property or, as the case may be, part.

(2). An adjustment shall be made so that the amount

arrived at by such means to be the property’s net

annual value is (insofar as is reasonably practicable

and in accordance with section 19(5) or 49, as

appropriate) determined by reference to the values of

other properties comparable to that property as

appearing on the valuation list.”

16. As appears, the principal purpose of this section is to fix a decapitalisation rate, and to allow for the “tone” of the valuation list to be taken into account. The section does not purport to provide an exhaustive definition of the contractor’s method of valuation.

17. It is not immediately obvious that the contractor’s method is an appropriate method for assessing the value of a property which has the unusual features of the tailings management facility. Whereas the question of the precise point in time at which the facility’s useful life comes to an end is very much in dispute, it is uncontroversial to observe that the use made of the facility falls into two distinct phases. The first phase involves the deposit of additional waste materials, and thus facilitates ongoing mining operations. The second phase involves the containment of waste materials previously deposited. This dual phasing differentiates the tailings management facility from most other types of property in respect of which the contractor’s method is employed. The replacement cost of many structures will require to be adjusted to reflect the reduced value of the existing structure by reference to wear and tear or occupational usefulness compared to its modern counterpart. However, few structures will experience as dramatic a change in use—and in revenue generation—as that which occurs when a tailings management facility reaches capacity and cannot receive any further deposits of waste material.

18. The Valuation Tribunal was obliged to consider whether or not the contractor’s method was appropriate in the circumstances of the case, and, if so, to explain why. The Valuation Tribunal failed to do so. It is not possible to tell from the impugned determination whether or not the Valuation Tribunal settled upon the contractor’s method. The impugned determination is both confused and confusing on this point. Had the Valuation Tribunal adopted the contractor’s method (as had been contended for by the Commissioner), then there would have been no necessity for the tribunal to adopt other methods of valuation, i.e. to consider comparable valuations and the rent which a hypothetical tenant would be willing to pay. Indeed, the Commissioner’s valuer, in a supplemental précis of evidence, had gone so far as to opine that it was “not possible” to value the property under section 48 of the Valuation Act 2001 as there were no comparisons available and a receipts and expenditure approach was not applicable as the mine was no longer operating. The Commissioner’s valuer regarded the contractor’s method under section 50 as the only one applicable.

19. In the event, however, the determination addresses alternative methods of valuation in granular detail. For example, the determination contains a lengthy discussion of the rent, if any, which a hypothetical tenant might be prepared to pay for a letting. It is unclear, however, how this discussion relates to the earlier discussion of the contractor’s method of valuation. The Valuation Tribunal also stated that the “proper construction and application of” section 48 of the Valuation Act 2001 had been “central” to the appeal. The tribunal criticised the approach of the Commissioner’s valuer, saying that it is not permissible to ignore the actual state of the relevant property when considering the net annual value under section 48(3).

20. None of these statements can be reconciled with a reading of the determination to the effect that the tribunal had elected for the contractor’s method of valuation.

21. The Valuation Tribunal’s determination thus fails to disclose the reasoning of the tribunal in relation to one of the principal issues on the appeal before it. This, in turn, frustrates the High Court in the exercise of its statutory jurisdiction under section 39 of the Valuation Act 2001. It is a condition precedent to the High Court exercising its case stated jurisdiction that it understands the reasons and rationale for the determination. As explained by the Supreme Court in Connelly v. An Bord Pleanála [2018] IESC 31, [2021] 2 IR 752, [2018] 2 ILRM 453, one function of the obligation to give reasons is to allow the courts to exercise their supervisory jurisdiction. See paragraph 46 of the reported judgment as follows:

“Therefore, it seems to me that it is possible to identify two

separate but closely related requirements regarding the

adequacy of any reasons given by a decision maker. First,

any person affected by a decision is at least entitled to know

in general terms why the decision was made. This

requirement derives from the obligation to be fair to

individuals affected by binding decisions and also

contributes to transparency. Second, a person is entitled to

have enough information to consider whether they can or

should seek to avail of any appeal or to bring judicial review

of a decision. Closely related to this latter requirement, it

also appears from the case law that the reasons provided must

be such as to allow a court hearing an appeal from or

reviewing a decision to actually engage properly in such an

appeal or review.”

22. These principles have been applied, in the specific context of a determination of the Valuation Tribunal, in Breanagh Catering Ltd v. Commissioner of Valuation [2024] IECA 53. The Court of Appeal emphasised that a determination must stand on its own two feet: the reasons must communicate sufficient information to enable the parties to understand the reasons for the decision, and to consider whether they have a reasonable chance of succeeding in an appeal by way of case stated.

23. It is essential to the effective exercise by the High Court of its case stated jurisdiction that the rationale of the Valuation Tribunal be disclosed. Were it otherwise, substantive errors of law would go uncorrected. The Valuation Tribunal, by delivering an inscrutable decision, would be able to shield its

decision from appeal by way of case stated. It follows that the failure on the part of the Valuation Tribunal to provide adequate reasons for its determination must itself be regarded as an error of law which is amenable to the case stated procedure.

24. Here, it is not apparent whether or not the Valuation Tribunal settled upon the contractor’s method as the appropriate method of valuation, still less is there any explanation of its rationale for doing so (if, indeed, it did do so). It is not possible, therefore, for the High Court to engage in a meaningful manner with the questions posed in the case stated. It must be recalled that an appeal by way of a case stated does not allow for a rehearing on the merits, with the High Court acting as a surrogate for the Valuation Tribunal. It is essential to the effectiveness of the case stated procedure that the determination under review disclose the findings and rationale of the Valuation Tribunal on the principal issues. The determination in the present case fails to do so. Accordingly, the matter must be remitted for reconsideration by a differently constituted panel of the Valuation Tribunal.

PROPOSED ORDER

25. The determination of the Valuation Tribunal dated 19 January 2024 will be set aside, pursuant to section 39 of the Valuation Act 2001, and the underlying appeal will be remitted for reconsideration by a differently constituted panel of the Valuation Tribunal.

26. As to costs, this court’s provisional view is that the allocation of the costs should await the final outcome of the appeal before the Valuation Tribunal. This is proposed because the case stated proceedings have been resolved on a narrow ground and there has been no adjudication by the High Court upon the substantive merits. Neither party can be said to have been entirely successful in the case stated proceedings. It is proposed, therefore, that no costs order will be made at this stage, but the parties will have liberty to re-enter the matter before me for the purpose of the making of a costs order once the underlying appeal has been finally determined.

27. If either party wishes to contend for a different form of order than that provisionally proposed, they should contact the High Court Registrar, within twenty-one days, and arrange to have the matter relisted.

Appearances

Patrick Leonard SC and Michael Vallely for the Commissioner of Valuation instructed by the Office of the Chief State Solicitor Owen Hickey SC and Proinsias Ó Maolchalain for the Ratepayer instructed by James J. Kelly & Sons