The Court of Appeal has ruled that the Circuit Court may hear a State aid defence in proceedings to recover local authority rates, but only in limited circumstances. The defence must involve a clear error on the face of the proceedings or an illegality about which there is no doubt, as explained by the Supreme Court in Dublin City Council v Williams.
The ruling arose from three claims by Dún Laoghaire-Rathdown County Council against West Wood Club Ltd for unpaid rates for 2011, 2012 and 2013. The Council sought €176,800 for each of the first two years and €173,264 for 2013. West Wood occupies premises at Leopardstown and operates leisure and fitness clubs, including one there.
West Wood proposed arguing that rates it paid, alongside State grants received by the Council, funded Council-run leisure facilities competing with its clubs, amounting to unlawful State aid. It also alleged that the Council had exempted its own leisure centres from rates. At the Court of Appeal hearing, however, West Wood did not pursue its separate argument under EU competition rules.
The case before the Court of Appeal was a consultative case stated by the High Court. The Court addressed the Circuit Court’s jurisdiction, not whether the rates in fact constituted unlawful State aid. It expressly gave no view on the merits of that allegation.
The Court said a defendant cannot generally use debt recovery proceedings to bypass the time limits that apply by analogy to judicial review. A defence may be available where the illegality is established on agreed or otherwise undisputed facts after legal argument; it need not have been conceded or be obvious without argument. But a defence relying on complex expert evidence or a proportionality assessment would likely go beyond the limited jurisdiction described in the ruling.
Any ruling for West Wood on such a defence would apply personally to it and would not invalidate the rate generally. The Court said the Circuit Court had no jurisdiction to pronounce on the rate’s general validity. It did not answer whether the Circuit Court could award damages, describing that question as premature and unnecessary.
The judgment, delivered by Mr Justice Gerard Hogan on 25 July 2017, answered the first question in the case stated “Yes”, subject to those limits. The Court answered the second question “No” and did not answer the third.