Dún Laoghaire Rathdown County Council -v- West Wood Club Ltd

JurisdictionIreland
CourtCourt of Appeal (Ireland)
JudgeMr. Justice Gerard Hogan
Judgment Date25 July 2017
Neutral Citation[2017] IECA 213
Date25 July 2017
Docket NumberNeutral Citation Number: [2017] IECA 213 Record No. 2016 No. 157

[2017] IECA 213

THE COURT OF APPEAL

Hogan J.

Peart J.

Hogan J.

Hanna J.

Neutral Citation Number: [2017] IECA 213

Record No. 2016 No. 157

BETWEEN/
DUN LAOGHAIRE RATHDOWN COUNTY COUNCIL
PLAINTIFF
- AND -
WEST WOOD CLUB LIMITED
DEFENDANT

Unpaid rates – Case stated – Jurisdiction – Parties seeking to state a case for the opinion of the Court of Appeal – Whether the Circuit Court has jurisdiction, in proceedings issued for the purpose of the recovery of rates, to determine whether the collection of rates and expenditure of the proceed thereof amounts to State aid which should have been notified to the European Commission pursuant to Articles 107 - 109 TFEU

Facts: The plaintiff, Dun Laoghaire Rathdown County Council, is the rating authority for the Dun Laoghaire Rathdown administrative area. The defendant, West Wood Club Ltd, was the occupier of premises at the West Wood Club, Leopardstown, Co. Dublin, within the Council’s administrative area. It was accordingly liable to pay rates to the rating authority. The Council brought three sets of proceedings in the Circuit Court for unpaid rates pursuant to the provisions of the Poor Relief Ireland Act 1838 in respect of the years 2011, 2012 and 2013. The Council claimed the sums of €176,800 for both 2011 and 2012 and the slightly lesser sum of €173,264 in respect of 2013. No direct challenge was brought by West Wood to the setting of the rate by the Council in respect of the years in question. Accordingly, the question for consideration was whether the Circuit Court has jurisdiction to determine by way of a defence to a claim for unpaid local authority rates that the enforcement and recovery of the rate in question amounts to a form of State aid contrary to the provisions of Article 107(1) TFEU. When the matter came before the Circuit Court on the 24th July 2017 on the jurisdictional issue Linnane J rejected the contention that the Circuit Court could entertain the State aid defence, saying that this was a matter for the High Court or the European Commission to determine. This jurisdictional ruling was appealed to the High Court and O’Malley J, on the 17th December 2005, held that the Circuit Court had jurisdiction to determine whether the rates amount to State aid.

O’Malley J indicated that while her disposition was to allow the appeal and to remit the matter to the Circuit Court, she was also prepared to state a case for the opinion of the Court of Appeal if the parties so requested. The parties subsequently did request such a case stated and the judge accordingly stated the following questions for the opinion of the Court: 1. Does the Circuit Court have jurisdiction, in proceedings issued for the purpose of the recovery of rates, to determine whether the collection of rates and expenditure of the proceed thereof amounts to State aid which should have been notified to the European Commission pursuant to Articles 107 - 109 TFEU?; 2. Is the issue raised by the defendant, as a matter of law, a challenge to the validity of the rate itself and thus a matter to be dealt with by way of judicial review only?; 3. If the Circuit Court has jurisdiction in such proceedings, and were to hold that the plaintiff is entitled to judgment for the amount of the rates unpaid but also that the collection of the rates in the circumstances amounts to a State aid which has not been notified to the European Commission, would it have jurisdiction to award to the defendant damages in an amount equal to the amount of the judgment granted to the plaintiff or in any amount in order to ameliorate the effect of the (ex hypothesi) unlawful actions of the plaintiff?

Held by Hogan J that he would answer the questions posed by O’Malley J as follows: Question 1: Yes, but only where the defence raises an issue which involves a clear error on the face of the proceedings or there is no doubt as to the illegality of the decision in the sense explained and described by the Supreme Court in Dublin City Council v Williams [2010] IESC 7; Question 2: No, the Circuit Court enjoys no jurisdiction to pronounce upon the general validity of the rate struck by a rating authority; Question 3: In view of the answers just given to Question 1 and Question 2, it would be premature and unnecessary to answer this question.

Case Stated 2 out of 3 questions answered.

JUDGMENT of Mr. Justice Gerard Hogan delivered on the 25th day of July 2017
1

Does the Circuit Court have jurisdiction to determine by way of a defence to a claim for unpaid local authority rates that the enforcement and recovery of the rate in question amounts to a form of State aid contrary to the provisions of Article 107(1)TFEU? This is essentially the principal question posed by the High Court in this consultative case stated to this Court by O'Malley J. in her order to that effect dated the 16th March 2016. The matter arises in the following way.

Background to the proceedings
2

The plaintiff, Dun Laoghaire Rathdown County Council (‘the Council’), is the rating authority for the Dun Laoghaire Rathdown administrative area. The defendant, West Wood Club Ltd. (‘West Wood’) is the occupier of premises at the West Wood Club, Leopardstown, Co. Dublin, which premises are within the Council's administrative area. It is accordingly liable to pay rates to the rating authority. West Wood operates a number of leisure and sports and fitness clubs, including the premises at Leopardstown.

3

The Council has brought three sets of proceedings in the Circuit Court for unpaid rates pursuant to the provisions of the Poor Relief Ireland Act 1838 in respect of the years 2011, 212 and 2013. By virtue of the provisions of the Third Schedule to the Courts (Supplemental Provisions) Act 1961 the Circuit Court enjoys an unlimited jurisdiction in rates recovery cases. The Council claims the sums of €176,800 for both 2011 and 2012 and the slightly lesser sum of €173,264 in respect of 2013. It is accepted that no direct challenge – such as by way of judicial review proceedings - has ever been brought by West Wood to the setting of the rate by the Council in respect of the years in question. Accordingly, as I have already indicated, the real question for consideration by this Court is whether the State aid issue can properly be raised by way of defence to the claim for unpaid rates.

4

It is also accepted – and was so found by O'Malley J. in her case stated - that the Council is involved and engaged for reward in the supply of services and the promotion of leisure centres such as fitness centres, tennis courts and swimming pools similar to those operated by and in competition with those of West Wood. The Council does this either directly or indirectly through the mechanism of a limited liability company or companies which are under the control of the Council.

5

At one stage West Wood indicated that it wished to defend these proceedings by adducing evidence and making arguments in relation to the following contentions:

(a) That the receipt of rates by the Council from West Wood, the receipt of State grants from the Exchequer and the subsequent expenditure of that income on leisure centres owned and operated by the Council in competition with privately owned and non -State subsidised leisure centres operated by West Wood amounts to a form of unlawful State aid.

and

(b) The Council granted an exemption to its own leisure centres from rates for the years in question, when such leisure centres were in competition with West Wood's leisure centres, and that this amounted to a breach of the competition rules contained in Article 101 and Article 102 TFEU, taken in conjunction with the obligation on the State and State entities under Article 4(3) TFEU not to enact any measure which could jeopardise the achievement of the objectives of the treaties (which include the non-distortion of competition).’

6

At the hearing before this Court, counsel for West Wood, Mr. Michael Collins S.C., stated that he was not pressing the Article 101 and Article 102 point. The sole question, therefore, relates to whether West Wood can properly raise the State aid point by way of defence in the Circuit Court. This judgment addresses this jurisdictional question only and I express no view at all on the underlying merits of the State aid argument.

The judgments of the Circuit Court and the High Court
7

When the matter came before the Circuit Court on the 24th July 2017 on the jurisdictional issue only Her Honour Judge Linnane rejected the contention that the Circuit Court could entertain the State aid defence, saying that this was a matter for the High Court or the European Commission to determine. This jurisdictional ruling was appealed to the High Court and in a comprehensive judgment delivered by O'Malley J. on the 17th December 2005 she held that the Circuit Court had jurisdiction to determine whether the rates amount to State aid: see Dun Laoghaire-Rathdown County Council v. West Wood Club Ltd. [2015] IEHC 800.

8

In her judgment O'Malley J. stated:

‘(a) The Circuit Court has jurisdiction to determine whether the rates amount to State aid.

(b) The Circuit Court does not, however, have jurisdiction to determine the compatibility of the aid (if it is found to be such) with the internal market.

(c) As a matter of fact, it seems to be common case that if it is State aid, it has not been notified to the Commission and to that extent a finding of a breach of Article 108(3) of the Treaty would follow.

(d) However, the court must bear in mind that where the issue relates to the payment of a tax, the obligation to notify the Commission can only be relied upon by the taxpayer if their own tax payment forms an integral part of the unlawful aid.

(e) If the exemption of the plaintiff's own enterprises is established, and was unlawful, it is not a remedy for that particular illegality to grant exemption to the...

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3 cases
  • Dun Laoghaire Rathdown County Council v Westwood Club Ltd
    • Ireland
    • Supreme Court
    • 22 May 2019
    ...J. Finlay Geoghegan J. Supreme Court appeal number: S:AP:IE: 2017: 000144 [2019] IESC 043 Court of Appeal record number: 2016 no 157 [2017] IECA 213 High Court record number: 2014 no 478 JR [2015] IEHC 800 Between Dún Laoghaire Rathdown County Council Plaintiff/Respondent - and - West Wood ......
  • Kenny Lee v The Revenue Commissioners
    • Ireland
    • Court of Appeal (Ireland)
    • 28 January 2021
    ...This distinction was explained by Hogan J. in an analogous context in Dun Laoghaire Rathdown County Council v. West Wood Club Ltd. [2017] IECA 213 at para. 11 et seq. in terms which were not, I think, affected by the different outcome on appeal of that decision ( [2019] IESC 53 . Second, wh......
  • Dún Laoghaire Rathdown County Council v West Wood Club Ltd
    • Ireland
    • Supreme Court
    • 30 April 2018
    ...that it is correct. Further detail can be found in the judgments of the High Court ( [2015] I.E.H.C. 800) and the Court of Appeal ( [2017] I.E.C.A. 213) in the within proceedings. Accordingly, it is not necessary to repeat such matters at any length in this determination, and what is prese......

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