Autumn 2008 Volume 2: Number 4
SCS
REVIEW
Shopping heaven
Taxation: VAT’s life Legislation: The future of arbitration Commercial property: Facing the new reality
President’s news
Using the downturn wisely
SCS President SEAN McCORMACK urges members to upgrade their skills, and to be positive about Ireland’s economic future. Welcome to this edition of the SCS Review. I would like to congratulate our Director General, Ciara Murphy, and the team at Wilton Place for their achievements so far this year in continuing to improve communication to our members. The combination of the Review, Bulletin and ezines is a welcome and positive development. I would also like to thank all those members who have taken the time to contribute to the content of this Review, and also to those who work on the editorial team. We now face a difficult period in the working lives of most of our members. The reality of pay cuts and job losses is difficult to absorb and brings the need to refocus and take stock. The SCS has already received an increased number of enquiries from members looking to upgrade membership or up-skill generally, and this is something that SCS will support and assist members with as much as possible. It is certainly a positive that more of our members at probationer level, particularly those who are quite experienced, may now find the time to complete the APC process. This will ultimately enhance the SCS. It should not be forgotten that Chartered Surveyors in Ireland have made a significant contribution to the growth in our economy in recent years. The application of our knowledge and skill must now be applied again with a renewed vigour to make a contribution to the recovery. We must be energetic, efficient and productive.
I am delighted that we have reactivated our legal update for members in conjunction with Mason Hayes + Curran Solicitors, and in particular with the assistance of our colleague and fellow member, John Minihane. In recent times, the Building Surveyors Division published a promotional house survey leaflet, and this is a welcome development that is likely to trigger other similar initiatives across the divisions. It is also very encouraging to see our Geomatics Division expanding, which further serves to illustrate the reach and diversity of the profession that the SCS represents. Our CPD programme is now well underway and this is a key focus for us in the session ahead. In addition, I look forward to our annual conference on October 17, with the theme: ‘Ireland’s Future in a Global Economy’. I believe that this will provide us with some very interesting food for thought and stimulate debate. In addition, the YCS annual ball takes place on October 10, and I would encourage all firms to support these two events. In closing, I hope you will find this edition of the Review informative and an enjoyable read. Your input is always welcome and should you wish to contact me, please do so at president@scs.ie, or contact Ciara Murphy at cmurphy@scs.ie.
In my opinion, the sustained growth in our industry has not been a once off. As a nation, we have matured along with our economy. We are a relatively young, experienced and skilled professional community. As professionals, we have a common objective to constantly improve and adapt to change, and we are ambitious to achieve. Now, perhaps more than ever, these attributes need to be made to count and I am confident that our members will rise to this challenge. Turning to SCS activities, I am pleased to report that the working group on arbitration and independent expert appointments, chaired by Barry Smyth, will shortly make its final report to Council. Those members on the panel and new applicants can expect to hear from the SCS shortly on our approach. We have convened a working group to make a submission and comment in relation to the Arbitration Bill. This group, chaired by David Gill, had its most recent meeting on September 11.
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Sean McCormack ASCS, MRICS, ACI, Arb. President, Society of Chartered Surveyors
Contents
26 The Society of Chartered Surveyors, 5 Wilton Place, Dublin 2. Tel: Fax: Email: Web:
01-676 5500 01-676 1412 info@scs.ie www.scs.ie
EDITORIAL BOARD Chairman:
John Oliver Costello
Board:
Tom Cullen John Minihane Ciara Murphy Paul O’Grady Gillian Reynolds Derry Scully
The future of arbitration.
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20
There is hope
Climate change – interview with Sean McCormack
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SCS Annual Conference, Tender Price Index and more
Shopping heaven
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24
Joe Bardon and Tom Evans
VAT’s life
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26
Lease release me, let me go
The future of arbitration
15
28
Arbrix comes to Dublin
Facing the new reality
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30
International relations
How does the EU affect property professionals?
Editorial
Interview
PUBLISHERS Published on behalf of SCS by Think Media Ltd Ann-Marie Hardiman Paul O’Grady Design: Tony Byrne Tom Cullen Ruth O’Sullivan Advertising: Paul O’Grady Editorial:
www.scs.ie
News
Obituaries
Legal matters
Views expressed by contributors or correspondents are not necessarily those of the Society of Chartered Surveyors or the publisher and neither the Society of Chartered Surveyors nor the publisher accept any responsibility for them.
Meeting report
Meeting report
Retail
Taxation
Legislation
Commercial property
EU news
SCSREVIEW 3
News
Editorial
There is hope The economy is certainly under serious pressure and some of the gloom and doom-style reports, particularly those emanating from the banking sector, seem very threatening. However, while these are clearly very difficult and challenging times, there are some causes for hope. Evidence of that hope can be found in this edtion of the Review. In his interview, Society President Sean McCormack is blunt about the state of the economy (“it’s been a hard landing”) but also points out that certain fundamentals remain solid in the Irish economy. These include the population forecasts and the State commitment to major infrastructural development. Peter Levins, retail property specialist with Bannon Commercial, outlines in his article why the outlook for that sector is good. He points to the opening of Victoria Square in Belfast this year, the construction of Parkway Valley Shopping Centre in Limerick, and
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five retail developments planned in Waterford alone, as evidence of a healthy retail property sector in Ireland. Perhaps we should leave the final comment on the economy with Marie Hunt from her article: “Ultimately, anyone who understands the property market realises that property is cyclical and that current market conditions (although unpleasant) are temporary. The market is simply following its long-term cyclical pattern, and conditions (and values!) will ultimately improve”. Elsewhere in this edition, we have relevant legal advice on leasing from John Minihane, while Rachel Carney advises us on the latest VAT regulations and how these will affect property issues. I commend this issue to all members – there is excellent information, which will assist you in your business. John Oliver Costello Honorary Editor
CNP Ireland rebrand as The Building Consultancy
The Building Consultancy board of directors (from left): Karl O’Donovan; Ken Mulligan; Hugh Holt; and, Alan Baldwin.
Building and project consultants CNP Ireland have re-branded as The Building Consultancy. The rebrand follows last January’s MBO by the Irish management team. The re-branding process involved consultation with key clients and market researchers over the last six months, and is intended to increase market profile and allow for the streamlining of core services. According to Managing Director Alan Baldwin: “We have been delighted with the success of CNP Ireland and will now add to this as The Building Consultancy. We felt the re-branding of the company was necessary following the MBO. It allows us to transform and develop the company in a way that reflects our knowledge and experience of the industry. As CNP Ireland we demonstrated our dedication to the market and to our clients through the roll out of consistently successful projects. Although we have renamed, we are the same company, with the same people, and we offer the same quality services”.
With over 50 years combined experience in the industry, The Building Consultancy’s board of directors expects the coming year to be a challenging one; however, they also see this as an opportunity to strengthen their position in the market. “Our wide range of services allows us to refocus our sector targets as and when the market changes. This was not just a rebranding process, it allowed us to examine the way we do business and how we service our clients. Along with the new identity, the redesign of key building survey reports was implemented following the research process. We believe constant change and innovation is vital as the industry moves forward,” said Alan Baldwin. The Building Consultancy’s services include project management, building surveys, and design and fitout services. Current projects include the fit-out of new corporate offices for the C&C group and Kavanagh Fennell. Further details about The Building Consultancy can be found at www.thebuildingconsultancy.ie.
News
SCS Annual Conference 2008 comes to UCD
John Bruder
Tom Costello
The 9th SCS Annual Conference, taking place on October 17, 2008, is set to be a major event for the Society. Due to the significant growth in numbers attending in recent years, the Conference will take place in the O’Reilly Hall, Belfield, UCD. The Irish Times has also come on board as media partner with the SCS for the event; the Conference will therefore be advertised widely through The Irish Times in the run-up to the day. Additionally, both MARSH and Travelers have agreed to support the event by becoming Conference Partners, with additional associate sponsorship from Mason Hayes + Curran, and Omega Financial Management. Attendance at this conference will account for 5.75 hours’ CPD activity (SCS members are required to obtain 60 hours’ CPD over three consecutive years). The theme of this year’s conference is ‘Ireland’s Future in a Global Economy’, and presentations will consider the threats and opportunities that this international context presents to the Irish economy and its component parts, particularly the property investment and construction sectors. A highly experienced panel of speakers from diverse backgrounds will address delegates on Ireland’s future in a changing world, and will consider our future from a number of perspectives, including banking,
David Drumm
construction, development and economics. Speakers confirmed to date include: ■ David Drumm, CEO, Anglo Irish Bank; ■ Prof. John Fitzgerald, Research Professor, ESRI; ■ Tom Costello, Managing Director, SISK; ■ Prof. Stig Enemark, President, FIG; ■ John Bruder, Managing Director, Treasury Holdings Ireland; and, ■ David Strahan, Author of The Last Oil Shock – A Survival Guide to the Imminent Extinction of Petroleum Man. David Drumm, Group Chief Executive of Anglo Irish Bank, will give his perspective on the relationship between the Irish banking sector and international capital markets during the last year of global economic uncertainty. Against this backdrop, he will look at opportunities for the financial services industry in Ireland and discuss its role in the property and construction sectors.
Stig Enemark
John FitzGerald
Prof. John Fitzgerald, ESRI, will give an economist’s view on the changing world economies and their influence on Ireland and, in particular, will comment on the ESRI’s medium-term review. A comparison will be made between Ireland’s performance and the performance of other markets. The potential global influences that may affect Ireland will be highlighted. Tom Costello, Managing Director of SISK, will discuss international trends and their influence on the Irish construction sector. He will outline a forecast of performance of the Irish construction sector in the short to medium term. Prof. Stig Enemark, President, FIG, will look at how land tenure, policies and management are placed at the heart of the global agenda. No development will take place without having a spatial dimension, and no development will happen without the footprint of surveyors – the land professionals. FIG will act as a proud icon for the worldwide surveying community in facing this agenda.
David Strahan
John Bruder, Managing Director of Treasury Holdings in Ireland, will look at ‘Ireland in a Global Economy – A Developer’s Perspective’. John will discuss the experience of Treasury Holdings in expanding from an Irish market to becoming a global player and lessons learned from that experience. David Strahan is the author of the The Last Oil Shock: A Survival Guide to the Imminent Extinction of Petroleum Man, the explosive story of peak oil that explains why you may soon be kissing your car keys and boarding pass goodbye. He will look at the impact of the impending oil crisis globally and provide some guidance on the implications for Ireland. David Strahan is an awardwinning investigative journalist and documentary filmmaker who specialises in popularising some of the most difficult and important stories in business and science. We look forward to welcoming you to our conference, and to your participation in the discussions that will follow the series of thoughtprovoking presentations. Mark the date for the SCS Annual Conference in your diary now – October 17, 2008. We are delighted to announce that over 60% of places have now been allocated and we are confident of a fully booked event. Enquiries to: Donna O’Connor at conference @scs.ie or 086 8370577.
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News
HWBC celebrates third anniversary at Taste of Dublin
discussing matters culinary with luminaries such as Anthony Worrall Thompson, Neven Maguire and Rachel Allen. Radio host George Hook and fellow rugby pundit Brent Pope also made a special appearance and entertained everyone immensely, particularly with their singing! In his first public engagement since taking over, new HWBC Managing Director Michael Coyle spoke of the sustained growth the firm has experienced since its inception in
June 2005. He thanked all present for their contribution during that period and the HWBC staff “for the commitment shown in establishing HWBC as one of the leading Irish commercial property firms”. Michael Coyle also took the opportunity to pay particular tribute to the company’s very loyal client base, who have helped HWBC grow substantially in the last three years. He highlighted the fact that HWBC have now transacted upwards of €750m in international investment
deals (the firm are particularly active in Germany and the UK) and also grown their Property Management Division to the extent that it now has over €1b worth of assets under its control (with an annual rent roll of €55m and annual service charge expenditure of €10m). Looking to the future, he stressed that the immediate focus for those in commercial property should be on maximising income growth while awaiting the favourable opportunities that will inevitably present themselves, and pointed out that the correct advice will be paramount in achieving this. He referenced the year 1973, when he first started in the industry, and made the point that certain parallels could be drawn between then and now, and while things looked bleak back then, those who invested in property at that time had been rewarded subsequently. HWBC is one of the few remaining wholly Irish owned commercial property firms. Major instructions include The Blanchardstown Centre, Bray Town Centre, and East Point Business Park, and major clients include Treasury Holdings, Irish Life, BIAM, Green Property, ACC Bank, Earlsfort Centre Developments, Chartered Land, Easons and Boots, among many others.
Tony Smith honoured at SCS reception
servants, turned out to share the evening’s celebrations with Tony and his wife Maureen at the Conrad Hotel. Although Tony has retired from the SCS, he has not retired from the industry. He has recently been appointed Registrar for Quantity Surveyors and Building Surveyors in accordance with the terms of the new Building Control Act 2007 (S56). Both a barrister and an economist by profession, Tony Smith joined the Society in 1983. (It was then the Irish branch of the RICS, later,
in 1993, to be incorporated as the independent body of the Society of Chartered Surveyors.) It had just under 500 members then, but today the SCS represents some 2,200 qualified Chartered Surveyors, as well as more than 1,200 students and probationers countrywide. Under his direction and guidance, the profession of Chartered Surveying not only grew in Ireland on an equal footing with other professions, but also attained its now prominent position in the property and construction industry.
HWBC MD Michael Coyle addresses guests at the function in the Iveagh Gardens.
Commercial property firm HWBC celebrated its third anniversary with a function at ‘Taste of Dublin’ in June. The event was held in the Iveagh Gardens, beside their offices on Harcourt Street, Dublin 2, and was attended by over 250 clients and special guests from the industry. Those present enjoyed lunch by Derry Clarke of Michelin starred restaurant L’ Ecrivain, followed by an afternoon spent exploring the various stands dotted around the picturesque gardens and
One of the construction and property industry’s best known and most respected figures, Tony Smith, was honoured at a reception hosted by the Society of Chartered Surveyors (SCS) in Dublin on Thursday June 26. After 25 years at the helm of the SCS, Tony retired at the end of March 2008 from his position as Chief Executive of the Society, which has become Ireland’s largest property and construction industry
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body during this time. The reception, hosted by SCS President Sean McCormack, was a large affair held to celebrate Tony’s many years of commitment and devotion to the Society. More than 150 representatives and well-known figures from the industry, including many SCS past presidents, as well as representatives of other professional organisations, semistate bodies and senior civil
News
IPFMA Conference examines leadership for a better built environment In the current economic climate, energy management and sustainability are high on everyone’s agenda. The Irish Property & Facility Management Association’s (IPFMA) 6th Annual Conference, entitled ‘Leadership for a Better Built Environment’, promises to be highly interesting, as it examines how to achieve the best possible leadership techniques to ensure survival and long-term success in the built environment in today’s Ireland. Places are already filling up, with over 200 delegates expected to attend the conference, which takes place on Thursday October 9, from 9.00am to 5.00pm, at Croke Park Stadium Conference Centre, Dublin. A panel of distinguished professionals in the architectural, sustainable energy, property development, investment and international trend forecasting fields
will address the conference, presenting their views and recommendations, as well as case studies. An opening address will be made by Michael Finneran TD, Minister of State at the Department of the Environment, Heritage and Local Government – dependent on Budget 2009 preparations! “In difficult times leadership becomes more important to guide people towards achieving the best results possible to ensure survival and long-term success”, said IPFMA Chairman Tom Dunne. “Our speakers will provide the insight and direction necessary to allow professional property and facility managers to make an important contribution to the future of the built environment, even in Ireland today”. Speakers on the environmental
front include Brian Motherway, Head of the Industry Division at Sustainable Energy Ireland, and Dr Colm Cryan, Director of BRE Ireland. Chris Sanderson, Strategy and Insight Director at The Future Laboratory, will provide an insight into the design of buildings of the future and associated implications for work trends. Michele Facer of the Corporate Real Estate (CRE) team in the Investment Banking and Investment Management Division at the Barclays Group, will address the corporate considerations when occupying a landmark building – the Barclays portfolio includes offices in Canary Wharf, Petronas Twin Towers and Park Avenue in New York. A case study on the new eircom headquarters will be presented by Felix McKenna, Director of Property
Services at eircom and managing director of its property development company, Osprey Property, and both a former SCS president and a former IPFMA chairman. Case studies will also be presented by well-known architect Patrick Fletcher of A&D Wejchert & Partners. Environment editor of The Irish Times, Frank McDonald, will chair the conference. Registration is at 8.30am sharp, and the conference will kick off with an opening address by IPFMA Chairman Tom Dunne at 9.00am. Delegate rates are €200 for IPFMA members and €250 for non members, including lunch. Bookings can be made with Jennifer Gahan, General Manager, IPFMA, 5 Wilton Place, Dublin 2, Tel: 01 669 1954, Email: info@ipfma.com. For further information, contact Jennifer Gahan, IPFMA General Manager, Tel: 01 669 1954, or Sandra McDowell, McDowell & Associates PR, Tel: 0402 21576/087 256 4350, Email: mcdpr@indigo.ie.
SCS Tender Price Index confirms continued price fall The latest SCS Tender Price Index, published on August 20, has confirmed that construction tender prices are continuing to fall. The Index for the first half of 2008 shows that the fall, which began in 2007, has continued into this year. On average, there was a 3.1% decrease for the first six months of this year. The Index also shows that tender prices have fallen by an average of 7.4% in the past 12 months. This latest research confirms all reports in the industry, said SCS President Sean McCormack of DTZ Sherry FitzGerald. On average, tender prices reduced further in the first half of 2008, and are now at similar levels to those at the end of 2004. These findings reflect the fact that the well-publicised slowdown in new
residential construction has now spread to all sectors of the industry, including commercial projects and civil engineering infrastructure works, said Mr McCormack. The fall in tender prices comes despite recent increases in the cost of labour and material inputs, so it reflects the very competitive current market conditions where contractors are bidding at or below cost in order to secure a share of the ever-diminishing number of new projects. The SCS Tender Price Index will continue to monitor construction tender pricing levels and trends. The Society will publish the results for the second half of 2008 in the spring of next year. The Society of Chartered Surveyors’ Index is the only
independent assessment of construction tender prices in Ireland. It is compiled by the Society’s quantity surveying members, the largest sector of surveyors within the SCS, which represents some 2,200 qualified members and more than 1,200 students and probationers countrywide. The Index is based on actual tender returns for non-residential projects during the period for which it is undertaken. It is also based on predominately new build projects with values in excess of €0.5m and covers all regions of Ireland. The Index is therefore a measure of average construction tender price change across differing project types and locations. SCS quantity surveying practices
Year
First half
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
100.0 108.6 121.7 132.2 133.9 127.2 135.3 142.6 146.7 152.0 140.7
Second half 103.8 116.1 130.7 136.9 130.1 129.3 139.4 144.7 151.7 145.2
returned figures for the first half of the year 2008, with the data then compiled and published by the Society. The SCS Tender Price Index is available on the Society of Chartered Surveyors website at www.scs.ie.
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News
Claremorris Paul Dixon has set up a quantity surveying practice in conjunction with Sean Dever. Paul was previously employed by Burkeway Construction. Dixon & Dever Project Development Services Ltd 113 Mount Street, Claremorris, Co. Mayo T: 094-937 7897 F: 094-937 3668 M: 086-827 8197 Email: paul@dixondever.ie
Fairgreen The team at Murtagh Surveyors has announced the company’s relocation to newly refurbished and extended offices in the Fairgreen. From Monday March 10, 2008, Murtagh’s correspondence details are: Murtagh Surveyors Chartered Quantity Surveyors Tiernan House, Fairgreen Drogheda, Co. Louth The company’s telephone and fax numbers remain unchanged: Tel: 041-984 6949 Fax: 041-984 6982
Appointment Pat McGovern and Associates recently announced the appointment of Kevin Hollingsworth as Practice Manager in their Dublin office. Kevin has returned to Ireland after five years in professional practice in the UK. Qualified as a Chartered Building Surveyor in 2003, Kevin has provided clients with project management, design and specification, contract administration and site supervision services. These services have been provided on commercial, industrial and office buildings. Kevin also has a wide range of experience in defects analysis, maintenance schedules and condition surveys.
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Korean visit
The Society of Chartered Surveyors recently hosted a delegation from the Korean Real Estate Research Institute (KRERI). KRERI is a non profit corporation, which contributes to the development of property appraisal and the taxation system in Korea, and to the growth of the national economy by means of investing and researching real estate policies, real estate economies, and theories and techniques of appraisal. The Korean government recently
SCS Director General Ciara Murphy, with Paul McNamara and Laura McDonnell of Lisney, welcomed the KRERI delegation.
commissioned KRERI to carry out an assessment of real estate prices,
and so a group of their members, researchers and government officials visited the Society to learn about the Irish system of property appraisal and taxation. Ciara Murphy, Director General, together with Paul McNamara and Laura McDonnell of Lisney, welcomed the delegation and gave an overview of the role of the Society and a detailed presentation on the valuation system used throughout Ireland.
New project director at Chartered Land Chartered Land Limited, one of Ireland’s leading commercial property companies, has announced the appointment of Declan Curtin (right) to the position of Project Director. Declan joins Chartered Land from SIAC Property Developments Ltd, where he held the position of director with responsibility for heading up the company’s property business. He brings with him a wide range of commercial property experience, including development of the 75-acre Baldonnell Business Park in Dublin, and a mixed-use scheme comprising residential and commercial space in Sandyford, Co. Dublin. In his new role, Declan will oversee the continued development of Grand Canal Square in Dublin’s south docklands, in addition to the company’s 100,000sqft mixed-use development, One Clarendon Row, adjacent to Dublin’s Gaiety Theatre. Declan previously served as Chairman of the South Dublin Chamber Transport and Infrastructure Workgroup, where he managed the development of its transport and infrastructure policy. Prior to joining SIAC, he held the role of Chief Quantity Surveyor with
Try Construction Group in the UK, where he led a team of 25 quantity surveyors. He began his career with PJ Hegarty & Sons Ltd. He is a member of the Royal Institution of Chartered Surveyors, the Chartered Institute of Building, and holds associate membership of the Society of Chartered Surveyors. Commenting on his appointment, Dominic Deeny, Chief Executive, Chartered Land, said: “We are delighted to welcome Declan to the team at Chartered Land. He joins our management team at an exciting time in the company’s growth. His experience in commercial property development will add to the extensive skills base at Chartered Land and we look forward to working with him on the further development of Grand Canal Square and One Clarendon Row, among other high profile schemes”.
News
HWBC appoints new managing director HWBC has announced the appointment of Michael Coyle as Managing Director with effect from June 1, 2008. His appointment follows the completion of a highly successful three-year term by Michael Harrington, who has held that position since the firm’s inception in 2005. Michael Coyle qualified as a Chartered Surveyor in 1978 and is one of the founding directors of HWBC. He has headed the firm’s highly successful professional services team, which specialises in the negotiation of rent reviews, mainly those relating to major retail and office premises. He is perhaps best known within the industry in his capacity as a highly respected and sought after arbitrator and independent expert. Michael says: “I am delighted to take on this role from Michael Harrington, who has driven this business forward since our inception in 2005. During this period HWBC turnover has more than doubled, staff numbers have increased by over one-third and we have successfully expanded the range of services on offer to clients. This level of growth and success has been significant and has been achieved across all divisions. The creation in early 2007 of our new marketing department has added an extra dimension to our operations and our expansion into overseas investments is now also paying dividends, accounting for 25% of our turnover in 2007. My key focus will be to continue to drive the existing business forward and also explore opportunities to further grow our range of services and client base”.
Shane McCullagh
Brendan Lupton
Andrew Quinn
McCullagh Lupton Quinn established McCullagh Lupton Quinn was established by Shane McCullagh, Brendan Lupton and Andrew Quinn in December 2007. Although in its infancy, the directors, all of whom are highly qualified and motivated professionals, are well positioned to draw on more than 30 years of experience of providing quantity surveying services to the construction industry. MLQ has quickly established an impressive range of projects and clients, including the 11,000m2 Ormonde Retail Park in Kilkenny, PriceWaterHouse Coopers multistorey office block in Kilkenny, an
entertainment centre, including an eight-screen cinema, restaurant/bar and 12-lane bowling alley, Part V negotiations on behalf of Kilkenny and Carlow County Councils, Bagnelstown VEC Sport Hall, extension and alterations of industrial units, IDA Business Park, Kilkenny. McCullagh Lupton Quinn Chartered Quantity Surveyors, 9 Ormonde Court, Ormonde Road, Kilkenny. Tel: 056 772 3213 Fax: 056 777 2889 Email: blupton@mlq.ie Web: www.mlq.ie
SCS Pre-Budget Submission raises two areas of concern
The SCS has released its 2008 Pre-Budget Submission to Government, in which the Society outlines two main areas of concern: the high level of stamp duty rates; and, delivery of the National Development Plan (NDP). Stamp duty The SCS believes that stamp duty on both commercial and residential property is far too high. The 9% rate on commercial property has forced investors to invest abroad where transaction costs are lower. This outflow needs to be addressed and reducing stamp duty is crucial. A reduction in the 9% rate to 6% at least is essential for sustainable liquidity in the investment and owner-occupier market. A reduction in the top rate of stamp duty would act as a strong catalyst to reactivate the commercial market.
Furthermore, as the cost of stamp duty directly affects the value of property held in pension funds, a 3% reduction in these costs will immediately add the same percentage to the value of all property in pension investment funds, which is seriously required. The action required in the residential market is immediate and will achieve immediate results both in market activity and exchequer receipts. Overall, we suggest: First €125,000 Nil Next €400,000 4% Excess €525,000 6%
The Society urges the Government to give consideration to its call for a reduction in the stamp duty rates currently levied on all property transactions.
National Development Plan The SCS strongly urges the Government to restate its full commitment to the delivery of the National Development Plan (NDP). The recent Tender Price Index compiled by the Society indicates that construction tender prices are continuing to fall. Given the strong likelihood that a further fall is likely during the second half of 2008, the SCS believes that the Government should confirm its commitment and give serious consideration to increasing expenditure, through borrowing if necessary, in capital investment projects as outlined in
the NDP, thereby ensuring value for money on behalf of the State. The fall in tender prices reflects the very competitive current market conditions, where contractors are bidding at or below cost in order to secure a share of the everdiminishing number of new projects and the State should take advantage of the medium- to longterm benefit to the exchequer of this situation. The added benefit of this strategy would also give stability to employment in the construction sector, which would give rise to revenue through income tax and social insurance contributions. The Society believes that the continued and accelerated delivery of the NDP, particularly in relation to the much-needed public transport infrastructure and services, is essential.
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News
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National Building Agency victorious in YCS soccer tournament Congratulations to National Building Agency (NBA), who won the 2008
YCS five-a-side soccer tournament. The event took place on Saturday
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July 19 on the UCD sports grounds. Over 150 competitors turned out,
representing 15 companies. The teams were split into four groups, who played a total of no less than 49 games, leading to the two semi finals – Lisney vs. O’Byrne Jenkins and National Building Agency vs. Healy Kelly Turner Townsend. Lisney and The National Building Agency progressed to the final, with National Building Agency edging ahead with a 7:3 scoreline. A barbecue immediately followed adjacent to the pitches, where players could relax in the sunsoaked afternoon, quench their thirsts and replay the events of the day with colleagues, friends and family. The event is a great opportunity for YCS members to meet one another in a friendly and relaxed environment, and do some of the vital networking that is so often lost in the busy working week. The YCS would like to thank everyone who took part and made the day such a success, and a special thanks to Peter Levins of Bannon Commercial and Shane Caldwell of GVA Donal O’Buachalla, who organised a fantastic event.
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Presentation of the trophy to the winning team from NBA (from left): Shane Dunn; Alice Hanly; Mark Sheridan; Laura Courtney; Lukas Radous; Andrew Ramsey, Chairperson, Young Chartered Surveyors; Brendan Whelan; Ian Rizer; and, Stephen Thompson.
Runners-up Lisney receive their prize from YCS Chairman, Andrew Ramsey. Back row (from left): Adam Pearse; Shane Malone; and, Philip Christie. Middle row (from left): Richard Johnson; Andrew Ramsey; Frank Harrington; and, Michael Horan. Front row (from left): Alex Spzak; and, Helen Daly.
Some of the participants in action on the day.
Present at the FIG Standards Network meeting (from left): Daniel Steudler, Commission 7; Christiaan Lemmen, Commission 7; Ulf Olsson, Commission 4; Hans Heister, ISO/TC 172 SC6; Iain Greenway, Chair, Commission 1; Helen Murray, Commission 3; and, Isaac Boeteng (Commission 8). Source: D. Steudler.
Best female Alice Hanly receives her well-deserved trophy from Andrew Ramsey, Chairperson, Young Chartered Surveyors.
Best male Philip Christie proudly displays his trophy.
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SCS member attends FIG Working Week
Helen Murray, former Chair of the Geomatics Division, represented the Society at the FIG Working Week in Stockholm in June. The theme of the conference was ‘Integrating Generations’. The Working Week was attended by over 1,000 delegates from 90 countries and included over 70 technical sessions, 400 presentations, general assemblies, and commission, task force and network meetings. The President of the Swedish Association of Chartered Surveyors (SLF), Mr Svante Astermo, and his organising committee, must be congratulated both on the successful co-hosting of this Working Week and on SLF’s 100th anniversary, which occurred during the event. FIG was founded in 1878 in Paris and was known as the Fèdèration Internationale des Gèometres, which, over time, became anglicised to the International Federation of Surveyors. It is now a UN recognised non-government organisation (NGO), and is regarded
as a vital, mature and dynamic organisation for land professionals worldwide. FIG recognises the role of surveyors or land professionals as being pivotal in society through the support of social justice, economic growth and environmental sustainability – all key aspects of attaining the Millennium Development Goals (MDGs). To this end, FIG has in recent years partnered UN agencies such as the United Nations Human Settlements Programme (UN-HABITAT), the Food and Agricultural Organisation (FAO), and the World Bank. A key element in the successful work of the commissions is the appointment of national delegates, providing a unique opportunity for a network of global professional development. Helen is the SCS national delegate to Commission 3 – ‘Spatial Information Management’. This Commission’s meeting highlighted the role spatial information plays in good land policy decision-making. Helen is also the Commission’s nominated
representative on the FIG Standards Network. The creation of an updated standards template is part of this Network’s work plan, and Helen has assisted in this with input to the Commission 3 section. (This template provides a very useful reference listing of standards, and is available on the FIG site at www.fig.net/standards_network/in dex.htm.) The technical sessions cover all aspects of surveying activities and Helen was invited to act as Chair for a very interesting session entitled ‘Spatial Planning and Regeneration Issues – Case Studies’. Helen also represented the SCS at a meeting of member association presidents (or their representatives), at which an opportunity was given for the main issues of concern within each of the member associations to be aired. FIG has a full work plan for the coming years and information on this, as well as on FIG publications, is available through its website – www.fig.net. Full report on page 18.
SCSREVIEW 11
Obituaries
Joe Bardon
October 4, 1951 – April 18, 2008
Tom Evans
November 24, 1953 – May 12, 2008
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The surveying profession lost a valued and much admired colleague with the recent demise of Joe Bardon. Timothy Joseph, or Joe as he was known to all, hailed from Abbeyleix. His secondary education was at Cistercian College, Roscrea, where he followed his three older brothers. Joe didn’t follow the family tradition of banking and accounting, but enrolled in Bolton Street College to study environmental economics, eventually leading to his qualifying as a Chartered Surveyor. The root of Joe’s establishment as a pre-eminent rating surveyor arose from his recruitment, along with 24 others over a two-year period (1975-’77), to the Valuation Office following the introduction by the Government of various capital taxes. Having joined in March 1975, he worked over the next four years with many different
colleagues in the market value and rating areas, establishing deep and long-lasting friendships. His move to private practice commenced when he was recruited by Ray Ward to the Lisney valuation department. During this time, he unfortunately contracted lymphoma, but happily returned to Lisney after a lengthy convalescence. Following a period with Spain Courtney Doyle & Hennigan & Company, Joe opened his own practice in Terenure in February 1997 within walking distance of his home. By this time, he had established himself as one of the most knowledgeable rating surveyors, which allowed him to build a successful consultancy practice, which he ran on his own initially and in later years with the help of John Algar and Kevin O’Doherty. As was typical of Joe’s commitment and dedication, he
attended to office matters right until the end, with bedside direction to John and the occasional phone call to clients and colleagues. The abiding memory of Joe among those with whom he worked was his total professionalism, integrity, great attention to detail and enormous capacity for robust argument of his point of view, occasionally coloured with the odd expletive. He always spoke his mind. Nothing gave Joe more pleasure than the discovery of some helpful precedent case or piece of legislation following dedicated research. The knowledge Joe gained was not selfishly guarded but willingly shared with other surveyors. The high standards he set for himself were expected of others. He assisted the SCS by serving on the GP Committee and various working groups for a number of years,
Thomas (Tom) Samuel Evans, elder son of Derek and Eileen, was born in Arusha, Tanzania, where his father was working on an overseas contract. Having enjoyed a somewhat exotic childhood in Tanzania, Tom returned to Ireland with his family at the age of 11 and was enrolled in St Andrews College, Dublin, to commence a distinguished education that would take him through secondary school to pursue a professional qualification in quantity surveying. Tom joined Collen Brothers Limited (now Collen Construction) in Dublin and, following his preliminary training period, moved to Manchester University and completed his studies with distinction, achieving first place in the final examinations. He returned to Collen Brothers from the UK,
where he gained valuable experience on a variety of construction and civil engineering projects before joining Austin Reddy & Company in October 1977 in what was to become a lifelong and dedicated career with the firm. His dedication to the development and promotion of the company was tireless, while an attention to detail and a quest for continued excellence were the hallmarks of his long career. He became a director of the company in 1987, bringing a continued commitment to provide the best possible service for clients and developing this enthusiasm throughout the company. Tom was held in the highest regard by the many clients, architects, engineers, surveyors and contractors with whom he dealt during his career, and was always
willing to listen and provide sound advice when asked. He was involved with various activities in the SCS and in recent years was a respected APC examiner. He was also an Associate member of the Chartered Institute of Arbitrators. Finding time outside of a hectic professional life can be difficult but Tom managed to juggle his work life with an active and social family life. Tom was a dedicated and devoted family man, who together with his wife Joan raised a wonderful family in Jennifer, Gregory, Shane and Simone. Together they encouraged and supported their children to follow their interests and dreams. Tom had many interests and it is difficult to figure out how he found time for them all. He was an avid reader, loved all music and
primarily in relation to rating legislation and liaison with the Valuations Office. Joe was a driving force in the Consultants’ Forum, particularly in their dealing with the VO following the introduction of reforming legislation in 1986, 1988 and 2001. Joe’s achievements were not confined to surveying as he was a very competent golfer, playing off a single handicap for most of his life. He was a member of Abbeyleix and Dunfanaghy as well as various golfing societies. He will be remembered for his great skill on the golf course and for being a regular prize winner in many surveying competitions, both private practice and public service. It was rare to play a round of golf with Joe and not come away with one or two helpful tips on how to improve your game and a timely refresher on the rules of golf. One has to remind oneself that for
much of his working life, Joe suffered from ill health brought on by contracting cancer in 1987. While enjoying intermittent periods of good health, it was very challenging for him and his family. However, it is a common comment among those that knew him that he never complained about his illness, which he bravely bore with resilience, fortitude and ultimately with acceptance. Joe was first and foremost a family man, happily married to Bernadette (neé Duffy), with three charming daughters – Ciara, Fiona and Elaine – of whom he was immensely proud. He will be greatly missed by his three brothers, three sisters and their families, to whom he was very close, and by his professional colleagues and many friends. He now rests in Dunfanaghy, his adopted second home, close to his beloved golf course and Bernadette’s family home.
was an accomplished guitarist. I remember him saying that the lure of notes drifting from Hartley Hall, Royal College of Music in Manchester where he stayed were a constant temptation to avoid QS study, which would have been to the detriment of the profession but not to music. He was also a very keen and competitive sportsman with interests across a broad variety of sports from rugby and athletics to motor sports. In former years he played rugby with Monkstown RFC, bringing the best out of a specialist 400-metre running career. He enjoyed squash, was a very competitive swimmer and in latter years, having retired from contact sports, was a dedicated supporter of Granada Football Club and took to the fairways of the golf course.
However, his greatest sporting love was motorcycle racing. He looked forward each year to the Skerries 100, made many trips to the Northwest 200 and, of course, many pilgrimages to the Isle of Man TTs. Having had motorcycles from an early age it is not surprising that he reverted to them in the last few years, his Suzuki SV650S being his pride and joy. At weekends he would don the leathers and helmet to enjoy a brisk spin on the N11 – but not before he went on a special training course for motorcycle road safety and skills. He is survived by his beloved wife Joan, his children, Jennifer, Gregory, Shane and Simone, his parents and brother Patrick.
Providing services to the commercial and residential sectors Pat McGovern & Associates, established in 1991, provides a wide range of building surveying services including structural surveys, schedules of dilapidations, land surveying, and architectural services. Our valued team, a number of which have been with the firm for many years, has been a key part of the practice’s success. Through their consistent fulfillment of our customer’s requirements, they have enabled the practice to become a leader in its field and provide its services throughout Ireland. As part of our desire to maintain our reputation for providing a high level of service, the firm is committed to working within the framework of a quality management system that meets and sustains the requirements of the international standard ISO 9001:2000. Services are provided to both the commercial and residential sectors as follows:
May he rest in peace.
SCSREVIEW 13
Legal matters
Lease release me, let me go In the first of what will be a regular feature in SCS Review, JOHN MINIHANE presents news of legal issues and cases relevant to surveyors.
■ new grounds for objection to the granting of an off-licence; ■ new conditions attaching to the granting of a special exemption order; and, ■ restriction of theatre licence holders to the normal licensing hours unless additional hours are sanctioned by a special exemption order.
Recent cases Commissioner of Valuation vs. Birchfox Taverns Ltd; McMahon J, [2008] IEHC 110
Recent legislation Major changes to statutory commercial tenant rights The Civil Law (Miscellaneous Provisions) Act 2008 came into effect on July 20, 2008. It is now possible for landlords and tenants to contract out of existing mandatory statutory provisions in respect of the tenant’s right to renew a lease. Prior to July 20, a tenant holding under a tenancy and using a premises for business purposes for at least five years had an automatic right to renew that tenancy by applying to court. This was a mandatory provision, and any attempt to avoid the effects of the statutory entitlement were deemed void. An exception was made to the statutory provisions in 1994, which permitted tenants to contract out of the right to renewal in respect of property occupied for office use only. This has long been a major impediment to parties entering into otherwise straightforward commercial arrangements, which would also give rise to an often unwanted right for the tenant to renew its tenancy. The changes are permissive only and take effect by agreement between a landlord and tenant. There is no requirement (as was contained in the 1994 Act) that rights be renounced prior to entering the lease. It appears that an existing tenant could, with the landlord’s agreement, enter into a new lease arrangement and renounce its existing rights in respect of the new lease. Indeed, it seems possible that tenants can renounce their entitlement to a new tenancy on termination of an existing lease. This would seem in accordance with the purposive interpretation of the section. This development has long been recommended by the Law Reform Commission and generally within the property market. It recognises commercial realities and allows contractual terms to be negotiated freely without statutory interference.
The Intoxicating Liquor Act 2008 The Act came into effect on July 31, 2008, and its provisions include: ■ new hours for off sales of alcohol; ■ tougher public order provisions allowing Gardaí to seize alcohol from minors; ■ a court procedure to secure a new wine-only off-licence;
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This concerned a case stated to the High Court from the determination of the Valuation Tribunal in respect of the entitlement of a person to a revision of the valuation list under the Valuation Act 2001. The judgment closely examined the provisions of sections 27 and 28 of the Valuation Act 2001. The court found that apart from the mechanisms provided for in these sections, there are no other circumstances where the Tribunal can order a revision. It was held that the question for the Court in this case was whether there was a “material change of circumstances” (as defined in the Act), which would enable the revision officer to make a revision of the valuation list under section 28(4). On the facts of the case, the Court held that no revision could be made and the Tribunal had erred in law in reaching a different conclusion.
The Representatives of Terence Chadwick Deceased and Another vs. Fingal County Council, Supreme Court [Record No 407/2007]; Fenelly J and Kearns J (Murray CJ, Macken J and Finnegan J concurring), November 6, 2007 This was an appeal against a decision of the High Court in response to a case stated by the property arbitrator. In dismissing the appeal, the Supreme Court held that the property arbitrator had been correct in restricting the claimants’ right to compensation for injurious affection to land acquired by the respondent council. The respondent had acquired land from the claimants for the purpose of motorway construction. The claimants sought compensation for injurious affection to their remaining lands, arguing that the value of the remaining land would be adversely affected by the construction of and proximity to the motorway. The property arbitrator, in accordance with the established interpretation of s.63 of the Land Clauses Consolidation Act 1845, limited the compensation for injurious affection to works on and use of land actually acquired from the claimants.
John Minihane ASCS MRICS
John is a partner, specialising in real estate, with Mason Hayes+Curran.
Meeting report
Arbrix comes to Dublin DAVID GILL gives an account of the recent Arbrix conference in Dublin.
In late May Dublin’s Shelbourne Hotel was the venue for an important conference on rent review hosted by Arbrix. Arbrix is an association formed in the UK in the mid 1980s to provide a forum for Chartered Surveyor arbitrators (and independent experts) to discuss current issues, experiences and problem solving, in connection with different types of dispute and as a vehicle for the provision of CPD for members. Arbrix has grown in the last 20 years and membership currently stands at about 800, with principal groupings related to general practice (GP) and construction, but with sub-groups covering several other specialties. The GP members of Arbrix deal mainly with commercial rent review and valuation disputes, and almost all are on the RICS panels. Arbrix holds its rent review conferences twice a year. For more information, visit www.arbrix.co.uk. The topics addressed during the Dublin conference were ‘Reaching the Decision’ and ‘Writing the Award’. Although England and Wales have had a new Arbitration Act since 1996, the job done by arbitrators in both jurisdictions (England, Ireland and, likewise, Northern Ireland) is largely the same, with the exception that in the Republic of Ireland reasons are not mandatory at present. The Arbitration Bill 2008, which was introduced recently by the Minister for Justice Equality and Law Reform, and which is proposed to replace the Arbitration Act 1954, looks likely to change this for all new contracts/leases. Some 20 Irish arbitrators attended the conference. Arbrix invited two SCS arbitrators – Barry Smyth and David Gill – to contribute as speakers to the conference and also extended an invitation to the SCS President Sean McCormack to open the afternoon programme.
‘Reaching the Decision’ The morning session was opened by RICS President David Tuffin, and the speakers on ‘Reaching the Decision’ were Barry Smyth and David Gill, who shared the podium with Kirk Reynolds QC (who collaborated with the late Ronald Bernstein QC on the original Rent Review Handbook, which he now co-edits with barrister colleague Guy Featherstonehaugh QC).
Importance of clear directions Kirk Reynolds QC spoke about the importance for the decision-making process of the arbitrator providing clear directions designed to flush out the issues of law, identify points of valuation principle, and allow those and other issues to be developed, either through written submissions and countersubmissions, or at an oral hearing. While the parties may have defined some or all of the issues at different stages in the arbitration process, the arbitrator should draw up a list at the decision stage to ensure that nothing is left out. There may be points that have occurred to the arbitrator. If he feels they are relevant he will hopefully have informed the parties and sought their comments and any relevant evidence that bears upon them. Turning to legal issues, Mr Reynolds explained that for sound reasons such issues have traditionally been afforded special treatment by rent review arbitrators, not because they are in principle more important than any of the other issues, but rather because they tend to fall outside the main body of expertise of the arbitrator (who is a valuer and not a lawyer), and will therefore require a different approach to the other issues that are the staple diet of any valuer. He echoed the (not always popular) view of the late Lord
SCSREVIEW 15
Denning that, at least on issues of interpretation of contracts, the arbitrator is as likely as, if not more likely than, the judge to reach the correct conclusion. He discussed whether legal issues might be dealt with by the arbitrator with the benefit of legal assistance, or by a legal assessor, or simply left to the arbitrator, with the parties making their submissions to him. In the UK, issues of law have been particularly susceptible to the supervision of the court. In Ireland it is mostly “fundamental” errors of law that attract attention. Finally, on the question of deciding costs, Kirk Reynolds emphasised the primary principle that “costs follow the event”, but other matters may influence the arbitrator in the exercise of judicial discretion in making his award on costs.
Evidence Barry Smyth examined the quality and nature of evidence, and the testing of this evidence in submissions, in cross-examination and by questions from the arbitrator. He emphasised the importance of the expert witness supporting his opinion with relevant comparable evidence and linking this with the adjustments that should be made to his conclusions on the subject property. He spoke about headline rents and confidentiality agreements, and stated that where a surveyor is acting in a dual role at arbitration – as expert witness and advocate – that he/she should clearly distinguish between the two roles. Lastly, he examined the issue of the arbitrator’s own knowledge and experience, quoting Ronald Bernstein QC: “It can safely be supposed that no one ever chooses an arbitrator for his inexperience”. Mr Smyth explained that the arbitrator is entitled, indeed obliged, to put questions to the expert witnesses if he feels there are gaps in the evidence, and while he cannot be expected to turn a blind eye to something he is aware of, he must present any such information to the parties for their comments. Against the backdrop that more arbitrations are being conducted through written submissions, Barry Smyth discussed the advantage of an oral hearing, with its opportunity to test both the credibility of the expert witness, and the relevance and weight of the evidence. He advocated that arbitrators should leave their questions until the end of the process in order not to give an advantage to one side or the other.
Equality of representation Among David Gill’s topics were how to deal with unrepresented parties, ex parte cases and cases where there may be an inequality of representation. He reminded the audience that the decision in Fox vs. PG Wellfair Ltd. (1982) 263 E.G. 589 [1981] 2 Lloyds Reports 514 was very instructive to arbitrators as to how to balance arbitral intervention and knowledge, but not to go so
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far as to take up the cudgels for the absent party. He discussed post review date events and the difference between the admissibility and the materiality of post review date evidence (Segama NV vs. Penney Le Roy [1983] 269 EG 322), where it may be appropriate to admit certain comparisons. He contrasted this with the case of Gaze vs. Holden (1982) 266 EG 998, where the judge said that the arbitrator/valuer might take into account the possibilities such as they existed at the relevant date but was not entitled to apply 20/20 vision in hindsight and take into account what happened subsequently, which resolved how those various possibilities and prospects turned out. Moving on to the process of decision-making, he discussed how the arbitrator’s decision should be complete, certain, consistent, cogently reasoned and final, and that whether or not the arbitrator is obliged to give reasons in his award, he/she should weigh and assess all of the issues in a logical fashion, examining and evaluating the evidence, applying the law and then formulating the decision. He discussed the techniques that arbitrators might use to assess and evaluate certain types of evidence, to decide between rival methods of valuation contended for, and for the analysis and ranking of comparisons so as to test the evidence put forward by the expert witnesses.
‘Writing the Award’ The afternoon session on ‘Writing The Award’ was introduced by Sean McCormack, President of SCS, who gave an overview of the role of the SCS and the characteristics of the Irish property market.
Giving reasons Nicholas Dowding QC delivered a short, lucid and most entertaining paper dealing particularly with the giving of reasons, explaining the difference between reasons and reasoning. He advised that: “care must be taken to distinguish between a genuine reason and something which is dressed up to look like a reason but isn’t. Restating the conclusion in a different way does not explain why the conclusion was reached, even where the word ‘because’ or something similar appears somewhere in the sentence”. He gave two examples: 1. “The premises would be unattractive to the market because no tenant would want them”; and, 2. “Mr X, FRICS, took the view that the appropriate rate per square foot for the mezzanine floor was £10.50. I do not accept his view because I do not think that £10.50 is the correct figure”. As Nick pointed out, self-evidently neither of these are reasons.
In Nick’s view, the reason should provide the answer and not prompt a
further question (why or why not?). He stressed that a careful course must be steered between on the one hand being overly brief and sketchy, and on the other going into matters in greater detail than is reasonably necessary. He suggests that the arbitrator must explain why he has decided the issue in the way that he has, and that he must provide enough to ensure that the parties understand how and why he has arrived at his decision. But he need not, indeed he should not, deal expressly with each and every argument put to him by the parties, particularly those that are not really relevant to his decision on value. Nick recommends that reasons should be set out in clear and plain English, which avoids overlong sentences and the use of jargon. He expressed the opinion that where the amount awarded is based on comparables, the award must show how the arbitrator’s analysis of the comparables has informed his final view. He must show the reason for selecting the particular figure out of the range of possible figures, explaining why the he ended up adopting the final figure, and lastly, that the reasons for the decision must be ones that the parties have had a proper opportunity to deal with.
Reasons for awards Graham Chase, 2007/8 RICS President, gave a paper on the award and linking each decision to the issues. While the format of his paper was largely based on the requirements under the 1996 Arbitration Act (UK & NI), his paper was of considerable interest in view of the ongoing debate on the desirability of providing reasons for arbitrator’s awards and explained that a ‘good’ award is one where: (i) the reasons are clear and the award follows as a direct consequence of the reasons and the answer is therefore the right one; or, (ii) where the parties (one or both) disagree with the answer but understand and accept the reasons behind the award. He suggests that a ‘bad’ award is where: (i) the parties disagree with the answer and do not understand the reasons; or, (ii) where one of the parties is happy but the other party does not understand the reasons. A ‘really bad’ award is where no party is happy with the answer and nobody can understand the reasoning. Graham reminded the audience that in arbitration the parties are the clients and arbitrators should not forget this, that arbitrators are service providers, and that the parties expect a service. He suggested that an arbitral award should flow rather like a story that moves from one chapter to another (including some flashbacks to jog the memory). He gave guidance to arbitrators as follows:
1. The reasons and the award are inseparable. 2. There must be no gap between the issues and the reasons, and between the reasons and the award. 3. The reader must not have to make any leap between the reasoning on the issues and the award, or resort to any guesswork, or consider any assumptions in order to understand the award against the reasons. 4. He recommended that when making a précis of each side’s case, arbitrators should not lose the essence or the subtlety of their argument. 5. Arbitrators should use plain English, short sentences, and numbered paragraphs and headings, with a summary of issues and findings on each individual item. 6. Finally, he referred to the case of Moore vs. Inntrepeneur Estates GL Ltd. (Court of Appeal 31/7/97 – unreported), which shows how judges can get it wrong.
Arbitrators and expert witnesses The last speaker of the day was Simon Curtis of Cushman & Wakefield, who dealt with the question of whether arbitrators should, in their award, criticise expert witnesses either for bias or for some other failure in relation to their evidence, which might be part of the reason for the arbitrator having adopted alternative evidence and conclusions. Simon referred to the draft RICS Practice Statements and Guidance Notes, which have been issued as discussion documents and which are likely to be adopted for application in England, Wales and Northern Ireland in the relatively near future. There were syndicate discussions during both the morning and afternoon sessions, and the conference concluded with a plenary session in which many of the points discussed in syndicates were referred to the panel members for comment and observation. The day rounded off with a well-attended dinner in the Shelbourne ballroom, which provided well needed R&R, as well as an opportunity for delegates and partners to mix with colleagues from all over the UK. The highlight of the evening was provided by singer Liz Ryan, who entertained everyone with her wide repertoire of classical and popular numbers, and sent us all home happy and even thinking that conferences have a silver lining.
David Gill FSCS FRICS FCIArb Dip Arb Law David is a GP surveyor and arbitrator practising as David Gill Associates, Property Consultants & Valuers.
SCSREVIEW 17
Meeting report
International relations HELEN MURRAY (former Chair of the Geomatics Division) reports from the FIG Working Week in Stockholm in June, where she represented the SCS. The FIG Working Week had as its theme ‘Integrating Generations’, and incorporated a collaborative FIG and UN-HABITAT seminar on ‘Improving Slum Conditions through Innovative Financing’. The Working Week was attended by over 1,000 delegates from 90 countries and included over 70 technical sessions, 400 presentations, general assemblies, commission, task force and network meetings. The President of the Swedish Association of Chartered Surveyors (SLF), Mr Svante Astermo, and his organising committee, must be congratulated both on the successful co-hosting of this Working Week and on SLF’s 100th anniversary, which occurred during this event. The importance of active participation by the Society in FIG should not be underestimated. FIG has a long history. Founded in 1878 in Paris, it was known as the Fèdèration Internationale des Gèometres, and over time, this became anglicised to the International Federation of Surveyors. It is now a UN-recognised non-government organisation (NGO), and is regarded as a very vital, mature and dynamic organisation for land professionals worldwide. FIG recognises the role of surveyors or land professionals as being pivotal in society through the supporting of social justice, economic growth and environmental sustainability – all key aspects of attaining the Millennium Development Goals (MDGs). To this end, FIG has in recent years partnered UN agencies such as the United Nations Human Settlements Programme (UN-HABITAT), the Food and Agricultural Organisation (FAO), the United Nations Environment Programme (UNEP), the United Nations Office for Outer Space Affairs (UN OOSA), and the World Bank. The Working Week was officially opened by the Swedish Environment Minister, Andreas Carlgren, who stated that land and property underpinned the Swedish economy. He noted that Sweden is currently launching a national satellite imagery database, ‘Saccess’, which can be used for measurement and is available for download free of charge from the web. A keynote presentation was delivered by UN Under Secretary General, Executive Director Anna Tibaijuka. In this speech, Dr Tibaijuka asked how surveyors and land professionals can contribute to sustainable urbanisation, and went on to suggest that this could be better achieved through improved provision of planning information and greater recognition of the role of land professionals in society.
information plays in good land policy decision-making. Helen is also this Commission’s nominated representative on the FIG Standards Network, which also met during this week. The interest in standards, especially as they relate to spatial information is growing, perhaps due to the EU INSPIRE Directive. Many public sector data providers are beginning to grapple with compliance with this Directive at present. Standards act as an enabler to interoperability and, as such, key issues identified at this meeting were the need for progress to be made on the Land Administration Domain Model (LADM), TC172 SC6 work on survey instrument standards, and linkages with other sister organisations involved in standards work (in particular, the International Valuation Standards Council [IVSC]). The creation of an updated standards template is part of this Network’s work plan, and Helen has assisted in this with input to the Commission 3 (Spatial Information Management) section. This template provides a very useful reference listing of standards, both those published and under development, which are relevant to land professionals; it is available on the FIG site at http://www.fig.net/standards_network/index.htm. The SCS has invited Iain Greenway, Chair of this FIG Standards Network, to deliver a presentation on standards (as they relate to property and land professionals) and he has kindly agreed. This presentation will be included as part of the coming CPD programme. It must be noted that Iain (who is CEO of the Ordnance Survey of Northern Ireland) was elected as incoming Vice-President of FIG during this Stockholm event. The Society congratulates him on this great achievement.
Peer review FIG has introduced a new optional process for peer review of technical papers. This is an option for those authors who feel that this would benefit them in their jobs and/or in their professional standing. The technical sessions cover all aspects of surveying activities and Helen was invited to act as chair for one of the technical sessions, a very interesting joint Commission 8, 3 and 7 session entitled ‘Spatial Planning and Regeneration Issues – Case Studies’. This session vividly highlighted the rights, restrictions and responsibilities that should ideally encapsulate good land management policy-making.
Commissions and standards Through the work of its 10 commissions (see Table 1), FIG continues to contribute to the global (MDG) agenda, but while FIG’s President, Stig Enemark, wishes the organisation would “fly high” in this regard, he is also cognisant of the role the surveying profession plays in underpinning sustainable development at national and local level – “keeping feet on the ground”. A key element in the successful work of the commissions is the appointment of national delegates, providing a unique opportunity for a network of global professional development. Helen is the SCS National Delegate to Commission 3 – ‘Spatial Information Management’, and attended this Commission’s meeting during the Conference. This meeting highlighted the role that spatial
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Plans for the future FIG has a very full work plan for the coming years, and information on this is available through its website, its annual review and through free subscription to its e-Newsletter (www.fig.net). The FIG publication series is extensive and highly regarded globally. It includes formal policy statements and ethical, educational and technical guidelines and reports (all freely available online on www.fig.net/pub) while proceedings of FIG congresses and selected technical seminars sponsored or co-sponsored by FIG’s commissions and member associations are available on www.fig.net/news/newsindex.htm. The most current publications that may be of interest are FIG Publication No. 41 (‘Guidelines on Capacity Assessment in Land Administration’), and FIG No. 42
Meeting report
Table 1: Commission activities Commission 1 – Professional Practice Perception of surveying profession; professional practice, legal aspects and organisational structures; standards and certification; code of ethics and applications; under-represented groups in surveying; students and young surveyors; information technology management and professional practice; and, project management, quality and best practice.
Commission 2 – Professional Education Curriculum development; learning and teaching methods and technologies; educational management and marketing; continuing professional development; and, networking in education and training.
Commission 3 – Spatial Information Management Management of spatial information about land, property and marine data; spatial data infrastructure – data collection, analysis, visualisation, standardisation, dissemination, and support of good governance; knowledge management for SIM; and, business models, public-private partnerships, professional practice and administration.
Commission 4 – Hydrography Hydrographic surveying; hydrographic education, training and CPD; marine environment and coastal zone management; data processing and management; and, nautical charting and bathymetric maps – analogue and digital, including electronic navigational charts.
Commission 5 – Positioning and Measurement The science of measurement, including instrumentation, methodology and guidelines; and, the acquisition of accurate and reliable survey data related to the position, size and shape of natural and artificial features of the earth and its environment and including variation with time.
Commission 6 – Engineering Surveys Acquisition, processing and management of topometric data; quality (‘Informal Settlements: The Road towards More Sustainable Places’), while the most recent publication (No. 43) examines ‘Integrated Coastal Zone Management’. The FIG President, Stig Enemark, invited the presidents (or their representative) of all member associations attending this Working Week to a meeting on the final morning of the event. Helen represented the SCS at this meeting, at which an opportunity was given for the main issues of concern within each of the member associations to be aired. A report of this meeting will also be available on the FIG website. The Geomatics Division has formally invited Stig Enemark to visit and address the SCS. He has kindly accepted this invitation and we are truly honoured that he has done so. He will address the SCS Annual Conference in UCD on October 17 with a presentation entitled: ‘Property development: where do we go form here?’ FIG is keen to encourage interaction with and participation of each of its member associations, and indeed of individual surveyors. It is striving to enhance the global standing of the profession through both education and
control and validation for civil engineering constructions and manufacturing of large objects; modern concepts for setting-out and machine guidance; deformation monitoring systems; automatic measuring systems, multi-sensor measuring systems; and, terrestrial laser systems.
Commission 7 – Cadastre and Land Management Cadastre, land administration and land management; development of pro poor land management and land administration; development of sustainable land administration as an infrastructure for sustainable development to underpin economic growth; applications of innovative and advanced technology in cadastre and land administration; and, promoting the role of surveyors in land administration matters to the public and stakeholders.
Commission 8 – Spatial Planning and Development Regional and local structure planning; urban and rural land use planning and implementation; planning policies and environmental management for sustainable development; re-engineering of mega cities; public–private partnerships; and, informal settlement issues in spatial development, planning and governance.
Commission 9 – Valuation and the Management of Real Estate Valuation; investment in real estate and investment planning; real estate investment vehicles; real estate, development finance and land use feasibility planning; real estate economics and markets and market analyses; management of property and property systems; and, management of public sector property.
Commission 10 –Construction Economics and Management Construction economics, including quantity surveying, building surveying, cost engineering and management; estimating and tendering; commercial management including procurement, risk management and contracts; and, project and programme management including planning and scheduling. practice, and increased political relations both at national and international levels, to assist in poverty eradication and in the promotion of democracy while facilitating economic, social and environmental sustainability. Helen would like to thank the Society for inviting her to attend and participate in this Working Week on its behalf. She would also like to urge all divisional chairs to identify or to appoint (if not already in place) a national delegate and/or correspondent to the FIG commission that is most relevant to its particular interests.
Helen Murray
Helen is a lecturer in DIT Bolton Street.
SCSREVIEW 19
Interview
Climate change This year’s President of the Society, Sean McCormack, has strong views on the state of the economy and the development of the SCS. PAUL O’GRADY interviewed him for the Review. It’s raining in Poland when Sean McCormack, who’s attending an RICS Poland function on behalf of the SCS, telephones to do our interview. It’s raining in Ireland too, actually, and metaphorically on our economy. However, Sean is adamant that there is hope for the medium-term outlook; and that there is plenty that the Government could and should do to help. “While the headline news in construction has been bad, the good news is that the Government’s major capital projects are still going ahead. Foreign direct investment has been maintained and the population forecast is still good. So while we have a problem at the minute, the medium-term outlook is good.” And he is quick to point out that in Poland where they have a growing economy, the Government is pleased that unemployment has reduced to a level of 10%. This compares very favourably with unemployment in the Republic of Ireland which is currently at 6% despite the recent rise. Sean says that the downturn in the global economy, well beyond our control, was a contributing factor to Ireland’s economic difficulties. “As it was, we were dealing with some over-heating in Ireland and a rise in inflation. We had all hoped that when the reduction in property values came, it would be a soft landing, perhaps in the region of 3-10%. However, Irish difficulties were compounded by an international downturn, and the reality is that values have dropped by 15-25% over the last 12 months. That’s a hard landing in anyone’s language.”
20 SCSREVIEW
He sees the current situation as a real challenge for leadership in every sector, but especially in Government. “The Government should act to remove some of the red tape that is strangling small business in Ireland, specifically employer PRSI, and corporate governance requirements should be eased for those with small turnover. The entrepreneurial spirit should be encouraged in order to stimulate new employment. Additionally, the Stamp Duty top rate of 9% should be reduced to 7% for commercial property and land.” The SCS President is confident that there would be some transactions that would take place at 7% Stamp Duty that will not take place at 9%, and an interesting side-effect of such a move is that pension funds would be revalued upwards. These measures are to be included as part of the Society of Chartered Surveyors’ Pre-Budget Submission, which also calls on the Government to stimulate the construction sector by: ■ restating its full commitment to the delivery of the National Development Plan (NDP); and, ■ implementing further and far-reaching energy efficient policies to upgrade existing and future building stock.
Developing the Society Assessing the current state of the Society, Sean says: “There’s no doubt the spirit of volunteering is alive and well in the Society, but I would like to see additional
Interview
tangible benefits for members over and above the education and networking opportunity that we provide.” He believes that there has been tremendous work done on the education side, and would like to see a similar success on Continuing Professional Development (CPD). Complementing the President’s desire to increase the services to members, he identifies the fact that the new Director General has further developed and improved internal communications which helps membership awareness of the benefits available to them.
do need to speak out and let our voice, and the voice of our membership, be heard more frequently.” An internal issue that Sean wishes to address is getting more 30-45-year-olds actively involved in the Society. “There’s a gap in active members in that age bracket which is related to the years of the boom in Ireland. It would be a good time now to get those members more involved. The Society would benefit from their input, and they would benefit from getting their colleagues’ views of the problems which all of us are facing.”
Lifting external awareness Sean’s greatest ambition as President is to lift the awareness of Chartered Surveyors beyond the construction industry and the financial services business. “We’re not sufficiently in the public eye, and I think the members would appreciate seeing a little more of the Society offering opinions and contributions on matters of concern to us. That’s a challenge too. One of the benefits of keeping our own counsel has been that people tend to listen when we do choose to speak. I wouldn’t like to lose that credibility, yet we
Leadership The President has called on the Government to show leadership by taking actions that will help the commercial property sector in general, and small businesses specifically. The Society is showing leadership in a challenging time by actively seeking out the changes necessary to assist a return to good business volumes. Sean McCormack may not have an easy backdrop to his term-of-office, but his year will be busy – hail, rain or shine.
Presidential profile Sean McCormack is a Chartered Valuation Surveyor who graduated in Environmental Economics from Bolton Street in 1988. After college, he went into the commercial property sector, and over time specialised in valuation and landlord/tenant issues, developing a particular expertise in these areas. During that time, he was active in the Society of Chartered Surveyors through the Young Chartered Surveyors (YCS), then known as the Junior Organisation. After some years, Sean became involved with the General Practice Divisional Committee and served as its Chairman. Officership beckoned and this year, he was elected President of the Society.
His day job is as Director of Professional Services at DTZ Sherry FitzGerald, the commercial property arm of the Sherry FitzGerald Group. The company has 90 staff and offices in Dublin, Cork, Limerick, Galway and Belfast. A native of Dun Laoghaire, Sean now lives in Wicklow with his wife Nessa and four children – a boy and three girls. His son is now a student of Property Economics at Bolton Street, while the girls are all still at school. He aspires to be a recreational golfer at Blainroe Golf Club, but finds little time beyond work and family to achieve his ambition.
SCSREVIEW 21
Retail
Shopping heaven PETER LEVINS explains why the retail sector in Ireland is definitely on the up.
2008 will be perceived by many to be a relatively quiet year on the retail front in comparison to 2007, when we saw an unprecedented number of shopping centre openings. This year has, however, been full of exciting new developments.
Dublin and North Wicklow Dublin’s city centre will see dramatic changes occur. On Henry Street, Arnotts recently received full planning permission for its Northern Quarter development, and the planning application has also been lodged by Joe O’Reilly’s Chartered Land for redevelopment of the Carlton Cinema site, duly named Dublin Central. These new opportunities will significantly enhance the city centre’s shopping environment, and no doubt shift the powerhouse of retailing to the north side of the city. Both schemes are unlikely to see completion until 2012/2013; however, the depth of demand for quality modern retail space and large retail boxes, together with the current lack of available space in one of Europe’s capital cities, has already produced significant interest from national and international retailers. Grafton Street may not develop at a similar pace, due in most part to the physical constraints of the existing streetscape. However, the South King Street development adjacent to the Gaiety Theatre has proven that demand for large retail boxes in the area is very strong. This is the redevelopment of the former Eircom office building, with approximately 3,250 square metres of retail space now fully let to H&M, Zara and Warehouse, and retailers due to open for trade in November to make the most of the pre-Christmas trade. The eyecatching structure will also incorporate approximately 2,700 square metres of office accommodation branded One Clarendon Row, and a number of residential units on the upper floors. The retail element was pre-sold to Anglo Irish Assurance Company (AIAC). New opportunities must exist for surveyors and their clients in other high footfall locations in the city. Redevelopment options are already visible in adjoining streets. Paddy McKillen’s development on South Anne Street has attracted new retailers such as Guess, Hackett and Links to the Irish market. Furthermore, the redevelopment of the former Graham O’Sullivan restaurant on Dawson Street, now trading as Carluccio’s, has proven that maximising the floor area and rental return of existing retail stock can produce dynamic results.
22 SCSREVIEW
Recent additions such as Farrell & Brown (formerly Eason’s) and Baulmer (formerly Colliers) have re-positioned Dawson Street within the city’s retail hierarchy. The question to ask ourselves is: from what street/building will the next opportunity spring up? Suburban Dublin will see major extensions to shopping centres, with planning applications lodged for the Pavillions Shopping Centre in Swords, Blanchardstown Town Centre (Yellow Mall extension) and Liffey Valley. In Wicklow, Bray Town Centre is being developed by a consortium called Pizarro (Paddy Kelly and Kelly family, Alanis Ltd, Durkan New Homes, Newlyn, Pierce Construction and Equity Properties). This is a 57,000 square metre shopping development on the former Bray Golf Club site, and is currently with An Bord Pleanála. This planning decision may have a bearing on other retail developments earmarked for southeast Dublin and north Wicklow.
Nationwide The opening of Victoria Square in Belfast earlier this year will no doubt be the largest centre opening in Ireland in 2008. Energies are now focused on the next tranche of shopping centres currently being promoted. Parkway Valley Shopping Centre in Limerick is well under construction, with over 37,000 square metres of retail space. Developed by Liam Carroll, it is due to open in 2010. Expect to see anchor tenants announced very shortly. Ireland’s fifth largest city, Waterford, has not seen new retail development since the opening of City Square Shopping Centre in 1997. No less than five retail developments are now being promoted. The most advanced is the Newgate Centre in the heart of the city. The local authority wants to see this project developed first in order to rejuvenate the existing city centre.
Retail demand Retail demand has remained strong in 2008. A large percentage of this demand has come from UK and international retailers seeking to open new stores in Ireland. New lettings recently announced in Dundrum Town Centre include fashion retailers Gant and Gerry Weber, jewellers P.inc and the famous Hamley’s Toy Store. Demand has also spread to nationwide locations; the Academy Street development in Cork is reported to have secured H&M, Zara and Top Shop. This year has also seen continued demand from the UK-based restaurant multiples for additional space. Milano’s, Yo Sushi, GBK (Gourmet Burger Kitchen), Nando’s, and Carluccio’s, among others, have continued strong expansion plans in Ireland, with particular emphasis on the major cities. Tesco continues to acquire new stores across the country. They have a strong property team, based in
Retail
Hamley’s Toy Store in Dundrum Town Centre will open in October 2008.
South King Street, currently under construction and due to open for trade in November 2008.
their Dun Laoghaire headquarters, who are actively seeking a multiplicity of store sizes right across the country. These range in size from their smallest format Tesco Express branded store (Approximately 400 square metres) to their largest Tesco Extra store format (no less than 5,000 square metres net retail floor area).
Building the role of property management
International comparisons There has been a large influx of international retail brands into the Irish economy in recent years. Retailers have seen the pace of growth in the economy, and the level of expenditure per capita, as a clear financial opportunity. This, coinciding with the supply of new quality retail space, has seen Irish retailing punch at a heavier weight in the ring of European retailing during 2007/2008. A recent statistic suggested that 35% of international retail brands trade in Ireland, compared with 55% in the UK. The UK retail market is the most advanced in Europe but has experienced marginal growth in the past year. It could also be assumed that UK retailers have been reluctant to pass on the financial gains made from recent weakening of sterling against the Euro in order to offset recent poor trading results in the UK. One thing is for sure, however: irrespective of current reported market conditions, UK retailers continue to take advantage of the Irish market and seek new store opportunities throughout the country. Examples include Tesco, Marks & Spencer, Debenhams, Links of London, Hackett, Yo Sushi, Ted Baker, Savoy Taylors Guild, Hamley’s, etc. It would be unwise to underestimate other European and American retail brands that currently trade within the Euro zone. These include Tom Tailor, Lanidor, Gerry Weber, Gant, Tommy Hilfiger, Bally, Esprit, Premaman, Golfino, and Wolford.
Retail barriers The constriction of available finance has had an impact on retail demand. This is particularly prevalent in provincial locations, where small indigenous retailers seek to expand their brands and develop business on the high street, in neighbourhood centres and shopping centres. There is a widely reported constriction of available investment finance for retail expansion and new shop fit outs. Obviously, this is a factor prevailing across the business community. However, landlords must be cognisant of this barrier and strive to assist tenants in this matter through the course of their negotiations.
Retail Excellence Ireland is a not-for-profit, part government-funded organisation that seeks to raise standards in the retail industry through research, training, a nationwide awards programme, and the dissemination of best international practice among a membership of retailers. Their most recent piece of research, entitled ‘Retail Excellence Ireland Shopping Centre Productivity Review 2008’, has recorded the productivity of a shopping centre from a tenant’s perspective. It judged 50 shopping centres, using information compiled from 157 retail brands trading in 517 shop units, and has judged these centres year on year from 2006. This research highlights the fact that retail property management is no longer just about collecting rent and ensuring that the latest security or cleaning contract is in place. The marriage between landlords and tenants needs to be nurtured. Support using adequate marketing tools, detailed knowledge of the customer catchment, and investment in long-term sustainability of the property is vital in order to get the best out of the relationship. Proactive asset management also needs to look at and advise on the long-term sustainability of particular investments. This is a service that surveyors must be able to supply to their passive existing and potential new clients.
Irish retailers – safe hands One of the key drivers in the successful supply of new retail product to the Irish market has been the exponential growth of franchising. Historically, this started with retailers like Musgrave’s and the development of their Supervalu and Centra brands, and success stories like O’Brien’s Sandwich Bars and Zumo Juice Bars. Irrespective of currency trends and the dynamics of different economies, Irish retailers are the individuals who are pushing new retail brands in Ireland. They have the expertise, see the opportunities on the ground, and can avail of efficiencies in marketing and branding. Examples include fashion brands such as Tommy Hilfiger, Esprit, Premaman, San Tropez and Salsa Jeans.
Peter Levins Peter is an Associate Director in Bannon Commercial and specialises in the sale and leasing of retail property, particularly shopping centre developments.
SCSREVIEW 23
Taxation
VAT’s life RACHEL CARNEY outlines recent changes to VAT regulations, and how these will affect the property sector. The new VAT regime for property transactions was implemented on July 1, 2008. When Revenue announced that there was going to be an overhaul of the rules regarding VAT on property, there was a sigh of relief throughout the property industry. It was anticipated that the new VAT rules would simplify the then existing legislation governing VAT on property transactions. It is arguable as to whether or not the new VAT rules have simplified matters; however, it is imperative for all parties dealing with property transactions to be aware of and to consider the implications of these changes.
Changes The main changes relate to the sale of land and buildings, leasing of property, and the introduction of a Capital Goods Scheme (CGS). Before looking at the effect of these changes, it is important to note that a property is considered to be developed for VAT purposes if it has undergone construction, demolition, extension, alteration or reconstruction of any building on land or engineering, or other operations, to effect a material change of use. Refurbishment, being a development to a previously existing building, may also be development for these purposes.
Land and buildings The sale of property will be taxable at 13.5% only where the building is considered to be “new”. A property is considered “new” if it is sold within five years of its completion. The first sale within five years of completion is always subject to VAT. If the property is sold within this fiveyear period, it will also be subject to VAT, except where the building has been occupied for two years or more at the date of the sale. Where the property has not been occupied for two years or more it will not be subject to VAT. A property may also be considered “new” where it has been substantially refurbished or adapted for a materially altered use. The sale of “old” property will be exempt from VAT; however, there will be an option to apply VAT to the sale, to be exercised jointly by the parties to the transaction. The Law Society of
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Taxation
Ireland introduced a new special condition 3(e) in Contracts for Sale, which automatically exercises the joint election to tax. Purchasers should be aware of this new special condition before signing Contracts for Sale, particularly where the purchaser does not have full VAT recovery. If the joint option is exercised, VAT at a rate of 13.5% of the consideration paid on the sale must be accounted for by the purchaser by way of self supply under the reverse charge mechanism. A purchaser may be required to register for VAT to comply with these regulations where the purchaser has not previously been registered. If the option to tax is not exercised the vendor may suffer a clawback of the VAT previously recovered on the acquisition or development of the property. The treatment of the sale of a site remains unchanged, i.e., it is exempt from VAT.
Leasing of property The new regime abolishes the distinction between short-term and long-term lettings and, with effect from July 1, 2008, the old Section 4A/4B system no longer exists. An occupational letting of developed commercial property, no matter what the term, will be a VAT-exempt supply. However, the landlord has an option to tax the rents, which, if exercised, will be taxed as a service at a rate of 21%. If the landlord does not exercise this option to tax, they will not be entitled to full VAT recovery and will suffer a clawback of the VAT previously recovered on any acquisitions or development of the property under the CGS. If the landlord opts to tax the lease, then VAT is applied at a rate of 21% on rents for the duration of the lease. Where the landlord opts to tax the rents, a provision should be incorporated into the lease specifying that VAT is chargeable on the rents, or the landlord should issue the tenant with a document notifying the tenant that VAT is chargeable on the rents. There are restrictions on the landlord’s option to tax the lease where the landlord and the tenant are connected parties. A “connected party” is widely defined but includes connected group companies, spouses and an individual that someone is in partnership with. A landlord will want a right to refuse consent to an assignment or sub-letting to a connected party. Additional VAT provisions providing for these changes should be incorporated into commercial leases. When acting for a landlord, in the event that the existing tenant applies to assign its interest in the lease to a third party, there should be a provision prohibiting such alienation where it would result in an irrecoverable VAT cost to the landlord.
property that has been refurbished is 10 years. This is to ensure that the user gets VAT recovery in direct proportion to the use to which the property is put. For example, if a company recovers VAT on property when the use to which the building is put is fully taxable, but then subsequently uses the building for exempt purposes during the adjustment period, it will have to repay part of the VAT that relates to that exempt use under the CGS. It is imperative that property owners comply with the obligations under the new CGS and this means keeping accurate VAT records on the properties, and on any alterations to the properties.
New VAT rules for construction services With effect from September 1, 2008, new VAT rules were introduced, which will affect principal contractors and sub-contractors involved in construction services to which Relevant Contracts Tax (RCT) applies. A reverse charge mechanism is to be introduced for supplies from sub-contractors to principal contractors. Currently, a VAT-registered sub-contractor invoices the principal contractor for construction services, showing the consideration plus VAT. The principal contractor pays the consideration plus VAT to the sub-contractor, who then passes on the VAT to the Revenue Commissioners. From September 1, 2008, the sub-contractor will no longer include VAT on the invoice issued to the principal contractor. Instead, the principal contractor will be obliged to calculate the VAT on the amount charged by the sub contractor and account for the VAT to the Revenue Commissioners through its tax return. Where the principal contractor is entitled to an input credit, it may claim an input credit for this VAT charged in the same return for the same period. The sub-contractor is still obliged to issue an invoice that shows all the same information as appears on the VAT invoice, except the VAT rate and amount. Government departments, local authorities and public bodies who are principal contractors for the purpose of RCT, and who receive construction services, will be required to register for VAT for the purpose of this new legislation. These entities will be required to account for the VAT on services received from sub-contractors directly to Revenue through their VAT returns. The new VAT rules will place a greater responsibility on principal contractors, and all contractors affected by these new rules should make provisions to implement these changes.
Introduction of the Capital Good Scheme A significant change in the new VAT regime is the introduction of a CGS for property. Pre July 1, 2008, the amount of VAT recoverable on the acquisition or development of property was calculated by reference to the use to which the property was put during the year of the acquisition. The CGS permits a property owner to recover VAT that they would have paid on the acquisition or development directly in proportion to the use of the property during its VAT life. The VAT life of a property is generally 20 years but the VAT life of a
Rachel Carney
Rachel is a solicitor specialising in real estate, with Mason Hayes+Curran.
SCSREVIEW 25
Legislation
The future of arbitration JOHN MINIHANE explains the significance of the new Arbitration Bill 2008.
The Arbitration Bill 2008 is intended to promote Ireland as a neutral third party country venue for international arbitration by incorporating international best practice into Irish law.
A short history of arbitration law Irish arbitration law is governed by three Acts: the Arbitration Act 1954; the Arbitration Act 1980; and, the Arbitration (International Commercial) Act 1998. Regard must also be had to provisions for commencement and time limits contained in the Statute of Limitations, 1957.1 Domestic arbitration in Ireland is governed by the provisions of the 1954 Act. The 1980 Act adopted the New York and Washington Conventions into Irish law.2 These conventions principally concern foreign arbitrations and international investment arbitrations. The Arbitration (International Commercial) Act 1998 does as its title says: it substantially adopts the United Nations Commission on International Trade Law (UNCITRAL) Model Law on international commercial arbitration into Irish law. The Arbitration Bill published on the June 9, 2008, if passed into law, will repeal the existing Arbitration Acts, consolidate the law of arbitration – basing it on the UNCITRAL Model Law – and govern all arbitrations, both domestic and international.3 Ireland’s obligations under existing international
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conventions will be preserved under the Bill. The UNCITRAL Model Law was drafted in 19854 to provide procedures so that international arbitrations could be conducted without intervention from national courts. The international enforcement of arbitral agreements and awards is provided for by the New York Convention.5 This article discusses the provisions that will affect domestic arbitration. It should be noted that much of our arbitration law arises from decisions of our courts. These decisions have set out guidance on matters such as the arbitrator’s immunity from suit, power to proceed ex parte, arbitrators’ duties and powers, and detailing grounds for setting aside or remitting an award. The Bill, as well as consolidating arbitration law, will also codify areas of arbitration practice currently lacking statutory provision.
The Arbitration Bill 2008 Except as amended by the terms of the Bill, the Model Law6 will apply to all arbitrations that take place in Ireland.7 The main provisions of the Bill include: ■ the Bill will not apply to existing contracts; therefore, for example, it will not apply to leases granted prior to its enactment. The parties to an existing contract can, however, agree to have the Bill apply to the contract;8
Legislation
■ where the parties agree that disputes arising from an agreement are to be submitted to arbitration, this will include disputes as to the existence of the agreement;9 ■ an arbitrator may order any party to provide security for the costs of the arbitration10 and other interim measures of protection.11 This contrasts with the need to apply to court under the 1954 Act;12 ■ the High Court will assist in and supervise certain functions of arbitration13 relating to matters such as the procedure for challenging an arbitrator and for setting aside an award; ■ recourse to a court against an arbitral award may be made only if it is proved that:14 (i) a party to the arbitration agreement was under some incapacity; or, the arbitration agreement is not valid; or, (ii) the party making the application was not given proper notice of the appointment of an arbitrator, or of the arbitral proceedings, or was otherwise unable to present his case; or, (iii) the award deals with a dispute not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration; or, (iv) the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of the Model Law from which the parties cannot derogate; or, (v) the subject matter of the dispute is not capable of settlement by arbitration; or, (vi) the award is in conflict with the public policy of Ireland, or (vii) there is an error of law on the face of the arbitral award that is so fundamental that it would be unjust not to set aside or remit the award; or, (viii) the conduct of the arbitrator was so procedurally unfair that it would be unjust not to set aside, or remit;15 ■ an application for setting aside may not be made after three months have elapsed from the date on which the party making that application received the award. There will be no right of appeal of the decision of the High Court in deciding an application to set aside an award; ■ an arbitrator is not liable for anything done or omitted in the discharge or purported discharge of his functions.16 Unless otherwise agreed, there will only be single arbitrators who will be authorised to administer oaths for the purpose of witness examination; ■ a witness giving evidence before the arbitrator will have the same privileges and immunities as witnesses before the High Court;17 ■ an arbitrator’s powers to award interest can be agreed by the parties. In default of agreement, the arbitrator can award interest that he or she considers fair and reasonable;18 ■ the party by whom or the body by which the arbitrator is appointed will not be liable for anything done or omitted by the arbitrator in his role as arbitrator;19 ■ the parties to arbitration can make such provision for costs as they see fit. In default of agreement, the arbitrator can award costs as he or she sees fit; ■ statutory arbitration under the Ground Rent Act 196720 is excluded from the application of the Bill; ■ an award will be enforceable either by action or by leave of the High Court in the same manner as a judgement of that court;21 ■ the parties are free to agree the procedure of arbitration. In default of
agreement, the arbitrator, subject to the Model Law, may conduct the arbitration as he or she considers appropriate;22 ■ the proposed provisions will apply to an arbitration under any other enactment, insofar as application of the Bill is not incompatible with the provisions of the relevant enactment;23 ■ an award will state the reasons on which it is based, unless the parties have agreed otherwise;24 and, ■ an arbitrator may proceed ex parte.25
1954 Act Principal provisions of the 1954 Act not replicated in the Bill include the following: ■ the general authority granted26 to the court to remit an award back to an arbitrator. Four grounds have been “established” by the courts through decided cases, although it appears that the courts are not limited in this regard: an error on the face of the award; mistake; new material evidence; or, misconduct;27 ■ the power of the court to set aside an award for misconduct by the arbitrator or of the proceedings;28 ■ the power of the High Court to remove an arbitrator for misconduct;29 ■ the power of an arbitrator to state a case on any question of law, in respect of the reference itself or the award, for determination by the High Court;30 and, ■ although not a provision of the 1954 Act, but common in practice, “sealed offers” are not addressed in the Bill. The Society has formed a working group to review the Bill and the group is actively seeking input from our members. Please forward comments to jminihane@mhc.ie.
References 1. Part (iv), Sections 73-80. 2. Section 5 of 1980 – it also gave authority to the court to stay
proceedings where an arbitration
agreement is proved.
3. Some minor exclusions – Section 29; arbitrations relating to
employment and small claims. 4. Last amended 2006. 5. 1958. 6. The Model Law is set out in the First Schedule to the Bill.
7. S ection B. 8. Section 3 (1). 9. Section 8 (3). 10. Section 19. 11. Article 9 and Article 17. 12. Section 22 (a) of the 1954 Act. 13. Section 9.
14. 15. 16. 17. 18. 19. 20.
Article 34. Section 32.
Section 21 of the Bill.
Section 21 (6).
Section 18. Section 21 (4).
Section 17 of the Ground Rent Acts 1967. 21. Section 22. 22. Article 19. 23. Section 29.
24. Article 31. 25. Article 25. 26. Section 22. 27. McCarrick vs. The Gaiety (Sligo) Ltd; HC Zool. 28. Section 24. 29. Section 37 of the 1954 Act. 30. Section 28.
John Minihane ASCS MRICS John is a partner, specialising in real estate, with Mason Hayes+Curran.
SCSREVIEW 27
Commercial property
Facing the new reality MARIE HUNT looks at how changes in the commercial property sector will impact on surveyors now and in the near future. While surveyors across Ireland realised in early 2008 that conditions in the commercial property market were likely to be more challenging this year, nobody anticipated the speed at which global and domestic economic conditions would deteriorate or the extent to which liquidity would evaporate. Therefore, while we understood the significance of the subprime lending debacle, expected conditions to be difficult, and accepted the fact that the Irish commercial property market looked certain to follow its long-term cyclical pattern, nobody anticipated the speed or the depth of the deterioration in performance and activity levels. According to the SCS/Investment Property Databank, total returns in the Irish market went into negative territory in Q1 2008 for the first time since 1992, and in the first six months of the year have contracted by an average of 8.5%. Economic growth in Ireland is likely to contract in 2008 compared to 6% achieved in 2007, and it now appears that commercial property returns are likely to remain negative until 2010 at least.
The open market
The banks
Other factors
Every sector of the property industry has been affected, with the single biggest issue dampening transactional activity in sectors of the market being a lack of liquidity in the banking system. Developers and investors had long been used to a scenario where loan-to-value rates of more than 80% were on offer from the main lending institutions. This, coupled with cheap debt, fuelled property market activity and performance in the last number of years. In 2008, there was a noticeable deterioration in typical loan-to-value rates, and an increase in interest rates but, more significantly, there was also a marked increase in the lending margins applied by banks as they reacted to global financial difficulties in the aftermath of the credit crunch. The total volume of available debt has diminished considerably and Irish banks, like banks worldwide, are now much more cautious about who they will lend to, the types of property they will lend against and the terms on which they will lend.
The situation in Ireland has been compounded by the fact that 100% of investment activity in Ireland is domestic and almost entirely led by leveraged debt-funded purchasers. Capital values have declined even more dramatically in the UK market than in Ireland during 2008. However, there has been some transactional activity in the UK with private investors from the Middle East and Far East, and sovereign wealth funds, chasing investment opportunities. These investors won’t consider investing in Ireland, despite the re-pricing that has occurred in recent months, on the basis that our 9% stamp duty rate on commercial property is prohibitively expensive relative to other European economies. This is undoubtedly an issue that the Irish Government could and should address in the forthcoming Budget. Other sectors of the market have suffered a significant decline in transactional activity as a result of a lack of liquidity. These include the development land, hotels and pubs sectors. Thankfully, the key occupier
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Difficulties in securing funding were further compounded in recent months by a very sudden and unexpected decline in economic prospects and a significant deterioration in consumer sentiment. The result was that transactional activity in key areas of the market (particularly investment and development) has essentially dried up. Sellers are as yet not under pressure to sell assets on the basis that most of these properties are still generating decent cashflows. Meanwhile, buyers are unable to secure finance at rates that they deem acceptable. Coupled with this, while there is little transactional evidence, notional yields have softened by at least 100 basis points across the board since the beginning of the year and many potential buyers have been holding out in the anticipation that, like house prices, the value of these assets have further to fall before a correction is likely. The result has been the emergence of a market where transactional activity has been extremely thin on the ground and conditions are essentially illiquid.
Commercial property
markets (offices, retail and industrial) have held up reasonably well in the first half of 2008 at least, although weakening economic prospects will undoubtedly reduce the quantum of transactional activity that will occur in the latter half of 2008 and 2009. Some transactions will be negotiated but, with conditions challenging, negotiations will undoubtedly become more protracted.
Effects on surveyors – how to survive What are the implications for surveyors? There are many. The reality is that transactional activity in the investment area will remain subdued until such time as liquidity improves and prices adjust to what buyers deem to be ‘fair value’. Development projects will be extremely difficult to finance for the foreseeable future unless there is an immediate income-generating angle. Occupier markets will continue to see some activity, particularly from tenants who see this market as an excellent time to expand or relocate, considering the relative value on offer. However, getting these transactions across the line will prove challenging, even for seasoned negotiators. Most agree that 2009 will be a very difficult year for the industry and that it is likely to be 2010 before there is a notable recovery in economic activity and property market performance. Many surveying practices will have no option but to become even more mindful of costs, particularly staff costs. Marketing, advertising and entertainment budgets will have to be cut and there will be increased reliance on other income-generating areas of business such as valuations, property management and consultancy. The key to surviving this downturn is to accept it as a new reality, focus on the positives, and not panic!
invest in the delivery of key infrastructure. All indicators are that population growth is set to continue at pace in Ireland over the coming decade, despite an expected slowdown in the pace of net immigration. While it might be two years before the Irish economy recovers to a stronger pace of growth, this enables companies to prepare their businesses now for growth opportunities in the future. Many occupiers are in a good bargaining position in the current climate and are able to secure more favourable incentives or lease terms than were available over the last few years when the market was performing at pace. This could give rise to opportunities. Equally, many opportunistic developers and investors will see good purchasing opportunities over the coming months, particularly where properties become available at a significant discount, as some people come under pressure to restructure their borrowing commitments and sell some assets. The fact that many development schemes are now being phased or put on hold is actually a positive, as it diminishes the threat of oversupply in the medium term. Ultimately, anyone who understands the property market realises that property is cyclical and that current market conditions (although unpleasant) are temporary. The market is simply following its long-term cyclical pattern, and conditions (and values!) will ultimately improve. We have been here before and, as sure as night follows day, we will be here again. The difference this time around is that the credit crunch has exacerbated the speed and depth of decline and transactional activity cannot improve until such time as liquidity improves – something that is out of our hands.
Looking ahead
Marie Hunt
Economic forecasts for almost every country have been downgraded significantly in the last few months, so we are not alone. In addition, according to the ESRI, even though the short-term outlook is gloomy, the Irish economy is likely to return to growth of approximately 3.75% per annum from 2010 onwards, if the Government makes prudent decisions, such as continuing to
Marie is Director of Research at CB Richard Ellis.
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EU news
How does the EU affect
property professionals?
This article, taken from www.cepi.eu, outlines some of the principal ways in which European legislation impacts on property professionals operating within the EU.
All professionals in the European Union (EU) are affected, directly and indirectly, by European law, in particular by the rules of the internal market. However, property law remains within the competence of individual member states. Also, while the EU has introduced sectoral directives harmonising training to facilitate professional mobility concerning, for example, the medical profession, there is no equivalent for property professionals such as estate agents and property managers as regards their professional status. This does not mean to say that the EU is not important for property professionals; in fact, it affects their daily professional lives in many different ways.
The fundamental freedoms The internal market is based on the fundamental freedoms of movement of the EU: the free movement of people, goods, services and capital. The free movement of goods has little application for property professionals; however, the free movement of people, services and capital all affect property professionals.
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Free movement of people The creation of a single European market evidently contributes to mobility in Europe; when people move from one country to another they have to rent or buy a property to live in. These people must be treated as nationals in applying the principle of equality of treatment, which is at the heart of European texts on the fundamental freedoms.
Free movement of services Professionals who are EU citizens benefit from the free movement of services and associated freedom of establishment because these freedoms make it easier for them to work in different countries. The 2006 Services Directive and the 2005 Directive on Recognition of Professional Qualifications codify and expand on the essential existing rules and the rulings of the Court of Justice, allowing property professionals from other member states to establish themselves in different countries within this framework. Thus professionals can, for example, open a branch office in another member state. These directives contain certain safeguards and must be read carefully. The
EU news
Services Directive is aimed at eliminating obstacles to trade in services, thus allowing the development of cross-border operations. It also contains a section on quality care and encourages the elaboration of codes of conduct at a European level, in particular by professional bodies or associations. The Services Directive also imposes transparency of information for consumers, concerning identification of the enterprise and its services. This could pose problems for professionals from member states where there is no professional status or organised professions, who want to work in other member states. On the other hand, for those who have a relatively detailed status, it will not be difficult. Article 15 of the Directive on Recognition of Professional Qualifications envisages the establishment of common platforms to facilitate professional mobility. This applies to professions for which the minimum training requirements are not subject to co-ordination at EU level, and aims to simplify the assessment of individual applications by the competent national authorities and give greater security to the professional as to the outcome of their application. The EU also encourages professional mobility by providing funding for cross-border training, and the European Qualifications Framework, adopted in 2008, will help to compare qualifications across education and training systems.
Free movement of capital The free movement of capital is a fundamental freedom, but one that has taken much longer than the others to be realised. It is important to emphasise that buying a property in another member state falls within the framework of the free movement of capital. With regard to financial services, in 2007 the European Commission published a White Paper on the integration of EU mortgage credit markets, which announced that a Recommendation to member states on property valuation standards, foreclosure procedures and land registration will be presented in 2008. It also announced that the European Commission will publish regularly updated “scoreboards” on the cost and duration of land registration and foreclosure procedures in all member states.
Other European legislation affecting property professionals European law applies to the creation of companies, including property companies. If a European national wishes to create a property company in a particular member state, they must be subject to the same rules as nationals of that member state, based on the principle of equality of treatment. There are also important existing texts in the matter of civil–judicial co operation, for example dealing with judicial co-operation and recognition of decisions of justice in the EU. The area of contract law is one that is likely to continue to develop in the near future, in the form of the Common Frame of Reference, which is intended to provide a handbook to be used for the revision of existing and preparation of new legislation in the area of contract law. The 1993 Unfair Contract Terms Directive, which introduces a notion of “good faith” in order to prevent significant imbalances in the rights and obligations of consumers, sellers and suppliers, is one of eight directives currently being analysed in the Review of the Consumer Acquis. Other European legislation that affects daily professional life includes the 2006 Directives on the Common System of Value Added Tax and With Regard to Reduced Rates of Value Added Tax. Specific sectors of activity can also be affected, for example timeshare in the 1994 Directive on Timeshare. Property
professionals must also be aware of the provisions of the 2005 Directive on Prevention of the Use of the Financial System for the purpose of Money Laundering and Terrorist Financing.
Free and fair competition in the single market Like all professionals, property professionals are also concerned by the rules ensuring free competition among service providers. These rules are based on Article 81 (concerning agreements, decisions of undertakings and concerted practices, which may restrict competition) and Article 82 (abuses of a dominant position) of the EC Treaty. While there are no specific rules relating only to the property sector, the European Commission has adopted two reports on the subject of regulation of professional services, the ‘Report on Competition in Professional Services’ and the ‘Report on Professional Services – Scope for More Reform’. While these reports do not focus on property professionals, their contents merit attention. The conclusion of these reports is that the Commission is not opposed to all regulation, but it considers that restrictive regulations should only exist where they provide an effective and proportionate means of protecting consumers. Regulatory authorities in the member states and professional bodies are invited to voluntarily review existing rules, taking into consideration whether those rules are necessary for the public interest, whether they are proportionate and justified, and necessary for the good practice of the professions. It should be noted in connection with the Services Directive that Article 37 of the Directive provides that professional codes of conduct must comply with Community law, which includes competition law. Any attempt to establish fixed prices will be deemed to be contrary to Articles 81 and 82 of the EC treaty as decided in the Belgian architect’s case in 2004.
Property professionals and sustainability Property professionals operate in the built and natural environment. Accordingly, it is increasingly important for them to be aware of European legislation on environmental issues. In particular, what is the importance to property professionals of the sustainability agenda? Energy supply, land contamination, waste management and transport are all issues of sustainability that can be relevant to property professionals, as can habitat/biodiversity loss, social exclusion (in terms of social housing), and water supply issues. The European Parliament resolution of May 10, 2007, on housing and regional policy expresses support for the Commission’s campaign for sustainable energy. This means that property professionals operating in different areas must know about a building’s environmental sustainability, about environmental impact assessments, and about European legislation on waste and water management. Other environmental directives have an effect on the environment within which property professionals operate. Examples include the 2004 Directive on Environmental Liability with Regard to the Prevention and Remedying of Environmental Damage and the 2006 Directive on the Management of Waste from Extractive Industries. All of these examples illustrate the importance of the EU to property professionals. With the expansion of the EU and extension of the single European market, this importance will increase, and property professionals cannot afford to be unaware of the significance of this. They must also recognise the importance of being organised at a European level in order to take full advantage of the opportunities offered in the European market.
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