Dun Laoghaire Rathdown County Council v West Wood Club Ltd

JurisdictionIreland
CourtHigh Court
JudgeMs. Justice Iseult O'Malley
Judgment Date17 December 2015
Neutral Citation[2015] IEHC 800
Date17 December 2015
Docket Number[2014 No. 173 CA]

[2015] IEHC 800

THE HIGH COURT

CIRCUIT APPEAL

O'Malley Iseult J.

[2014 No. 173 CA]

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

Local government – Competition law – Imposition of commercial rates – State aids – Treaty on the Functioning of the European Union – Jurisdiction of Circuit Court to hear matters relating to European Competition Law

Facts: The appellant had challenged the decision of the Circuit Court that the Circuit Court had no jurisdiction to entertain issues of the state aid raised by the appellant in its defence in the proceedings initiated by the respondent to recover commercial rates from the appellant. The appellant contended that the receipt of the said rates and the grants from the Exchequer and spending that amount on the leisure centres owned and operated by the plaintiff in competition with the appellant was a form of unlawful state aid. The respondent submitted that the Circuit Court was devoid of jurisdiction to adjudicate matters relating to European or domestic competition law.

Ms. Justice Iseult O'Malley allowed the appeal and remitted the matter to the Circuit Court with liberty to the parties to state the case. The Court held that the Circuit Court had jurisdiction to determine the amount of the state aid but not the compatibility of the aid with the internal market, which vested exclusively on the European Commission. The Court observed that if the issues between the parties related to the payment of tax, the taxpayer was obligated to notify the European Commission under art. 108 (3) of the Treaty on the Functioning of the European Union (TEFU). The Court held that the Circuit Court did not have the jurisdiction to entertain the counterclaim filed by the appellant for damages as it exceeded the prescribed monetary limit.

JUDGMENT of Ms. Justice Iseult O'Malley delivered 17th day of December 2015.
Introduction
1

This is an appeal from a ruling in the Circuit Court (Her Honour Judge Linnane) on a preliminary issue as to the jurisdiction of that court to consider issues relating to State aid in the context of a claim for the payment of commercial rates.

2

The plaintiff/respondent (hereafter 'the plaintiff') has issued three civil bills against the defendant/appellant (hereafter 'the defendant') claiming arrears of commercial rates, for the years 2011 to 2013, in respect of a leisure premises operated by the defendant. In each case, the defendant has pleaded inter alia that the plaintiff is operating leisure facilities in competition with it; that the funding received by the plaintiff from commercial rates and from other State sources constitutes an unlawful form of State aid, contrary to EU law, and that the rates are therefore unenforceable. The defendant has also counterclaimed for damages – this is said to be on the basis that the court considering the claim for rates might feel obliged to give a decree in favour of the plaintiff, but should ameliorate the effect of the unlawful actions of the plaintiff by awarding damages against it in the same amount as the rates claim.

3

The primary arguments of the defendant are summarised as follows:

(a) The receipt of rates by the plaintiff from the defendant, the receipt of State grants from the Exchequer and the subsequent expenditure of that income on leisure centres owned and operated by the plaintiff in competition with the privately owned and non-State subsidised leisure centres operated by the defendant amounts to unlawful state aid, and

(b) The exemption granted by the plaintiff to its own leisure centres for rates for the years in question, when such leisure centres were in competition with the defendant's leisure centres, amounts to a breach of the competition rules of the Treaties taken in conjunction with the obligation on the State and State entities under Article 4(3) of the Treaty on the Functioning of the European Union ('TFEU') not to enact any measure which could jeopardise the achievement of the objectives of the Treaties (which include the non-distortion of competition).

4

The plaintiff contended that the Circuit Court did not have jurisdiction to entertain this argument. Having heard submissions on the issue, the learned Circuit judge ruled in favour of the plaintiff. The order as drawn up recites a finding that she had 'no jurisdiction to consider the points raised regarding State aid in the defendant's defence'.

5

This appeal is, therefore, confined purely to the issue of jurisdiction.

The defence and counterclaim
6

The defence as pleaded raised a variety of issues. The matters relevant to the determination of this appeal can be summarised as follows.

7

The defendant pleads that the plaintiff is involved in the supply of services and the promotion of premises similar to and in competition with its own. It claims that the plaintiff and the companies through which it engages in this activity are 'undertakings' within the meaning of European competition and State aid law, and that they are in a dominant position in the market. It is alleged that the plaintiff has treated the defendant's premises differently to its own.

8

The defendant pleads that the plaintiff is:

a) in breach of and/or acting contrary to ss. 4 and 5 of the Competition Act 2002;

b) in breach of and/or acting contrary to Article 102 TFEU;

c) in breach of and/or acting contrary to Article 106 TFEU;

d) in breach of and/or acting contrary to Articles 107 – 109 TFEU; and

e) in breach of and/or acting contrary to Article 4 TFEU.

9

It is pleaded that receipt by the plaintiff of commercial rates, Government grants and money from the Local Government Fund distorts or threatens to distort the market, affecting trade between member states and thereby amounting to unlawful State aid. It is specifically pleaded that the monies collected in respect of rates are disbursed by the plaintiff in support of its own leisure facilities, which are in direct competition with those of the defendant. The defendant also alleges that the plaintiff's facilities enjoy relief from tax.

10

Complaint is made that the alleged State aid has not been notified to the European Commission, as required by Article 108 TFEU.

11

The defendant pleads that the prohibition on State aid has direct effect, and that national courts are thereby obliged to provide whatever remedies are appropriate in the circumstances. The Circuit Court is also a 'Competition Authority' within the meaning of the Modernisation Regulation, and has obligations in that role. In this case, the appropriate remedy would be relief from the rates liability and/or damages at least equal to the rates to be collected.

The Treaty provisions
12

Article 4 imposes a general obligation on Member States to take any appropriate measures to ensure fulfilment of their Treaty obligations for the achievement of the Union's objectives.

13

Chapter 1 of Title VII deals with the rules on competition. Section 1 sets out rules applying to undertakings.

14

Article 102 requires Member States to prohibit abuse of a dominant position.

15

Article 106(1) reads as follows:

'In the case of public undertakings and undertakings to which Member States grant special or exclusive rights, Member States shall neither enact nor maintain in force any measure contrary to the rules contained in the Treaties, in particular to those rules provided for in Article 18 and Articles 101 to 109.'

16

Section 2 of the Chapter relates to aids granted by States. Article 107(1) sets out the general principle.

'Save as otherwise provided in the Treaties, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, insofar as it affects trade between Member States, be incompatible with the internal market.'

17

Sub-articles (2) and (3) of Article 107 provide that certain forms of State aid are, or may be, deemed to be compatible with the internal market.

18

Article 108 requires the Commission to keep under review all systems of aid existing in Member States. If it decides that a particular form of aid is not compatible with the internal market, it is to determine whether the aid should be abolished or altered. Article 108(3) requires that the Commission be informed of any plans to grant or alter aid.

The plaintiff's objection
19

The plaintiff raised a preliminary objection as to the jurisdiction of the Circuit Court to consider the issues pleaded in the defence and counterclaim. In a written submission to that court, the objection was framed in the following terms:

'The Plaintiff submits that this Honourable Court does not have the Jurisdiction to hear, determine or adjudicate on matters of European or Domestic Competition law, whether the plaintiff is an undertaking for the purpose of European competition and/or State Aid law, whether commercial rates payable to the Plaintiff are State Aid or Unlawful State Aid, whether the Plaintiff is in a Dominant position in the market, issues which affect trade between member states; and whether the Plaintiff is in breach of or acting contrary to Article(s) 4, 102, 106, 107 – 109 of the Treaty on the Functioning of the European Union (TFEU) as alleged by the defence and counterclaim...'

20

The case made by the plaintiff in the Circuit Court was that the issues raised by the defendant were in reality issues of competition law. It was contended that Irish law had designated the High Court as the Court with jurisdiction to determine disputes about such matters. Reference was made to s.3(1) of the Competition Act, 1991, which defined the word 'court' as meaning the High Court or, in the case of an appeal, the Supreme Court, and to rule 4(1) of O. 63B of the Rules of the Superior...

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3 cases
  • Dun Laoghaire Rathdown County Council v Westwood Club Ltd
    • Ireland
    • Supreme Court
    • 22 May 2019
    ...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 Club Limited Defendant/Appellant Judicial review – Jurisdicti......
  • Dún Laoghaire Rathdown County Council -v- West Wood Club Ltd
    • Ireland
    • Court of Appeal (Ireland)
    • 25 July 2017
    ...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 Ci......
  • Dún Laoghaire Rathdown County Council v West Wood Club Ltd
    • Ireland
    • Supreme Court
    • 30 April 2018
    ...issue with the summary as set out and accepts 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 l......

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