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Circuit Court had jurisdiction to determine EU state aid issue in counterclaim to claim for unpaid rates

By: Mark Tottenham BL

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Supreme Court allows appeal from the Court of Appeal, and remits to the Circuit Court a counterclaim to a claim for unpaid rates which raised the issue of State Aid, on the grounds that: (a) the Circuit Court had jurisdiction to entertain the claim where the relevant EU State Aid rules had direct effect, and it was not solely a matter for judicial review; (b) the counterclaim was not a challenge to the rates themselves but the fact that the ratepayer (a sports facility) was paying rates that would subsidise sports facilities provided by the local authority; and (c) any claim for damages on the counterclaim was limited by the monetary jurisdiction of the Circuit Court.

Relief sought in proceedings: Appeal of Court of Appeal decision upholding decision of Circuit Court

Application before the court: whether 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

Outcome: Appeal allowed and matter remitted to Circuit Court

Grounds: Circuit Court does have jurisdiction to entertain a claim that State Aid may constitute a defence in the context of proceedings issued for the purpose of recovery of rates; he State Aid point raised by the Appellant is not a general challenge to the validity of the rate itself; thus the issue of whether it is to be dealt with by way of judicial review only does not arise; and any counterclaim for damages is limited to the general monetary jurisdiction of the Circuit Court.

McKechnie J: Whether Circuit Court had jurisdiction to determine that enforcement of rates amounted to a form of State Aid, by way of a defence to a claim for unpaid rates - liability to pay rates - provider of sports facilities - competition with facilites provided by local authority - Articles 107 – 109 of the Treaty on the Functioning of the European Union - whether Circuit Court would have jurisdiction to award defendant damages - unpaid rates for 2011-2013 - provision to appeal rates - jurisdiction of Circuit Court to determine issues concerning State Aid - primacy of EU law - use of rates from private sports facilities to subsidise local authority sports facilities - direct effect.

"In my view, therefore, the Circuit Court does have jurisdiction, at least in principle, to consider the State Aid argument. The right to raise this point derives directly from Union law. The principles of supremacy and direct effect compel me to this conclusion. This finding, however, is far from saying that the State Aid point has been established. In fact, I am not even suggesting that a prima facie case has been made out in that regard. Two further points need to be noted in this context: first, even if the underlying assumption as to subsidy is proven, a question still arises as to whether that amounts to State Aid; second, even if it does the follow on issue is, whether that is a defence to the within proceedings."

"In my view, therefore, the Circuit Court does not have jurisdiction to award West Wood damages in excess of its general monetary jurisdiction, and could not award damages equal to an amount of the judgment granted to the Council beyond that threshold. It should be remembered, however, that there may be remedies available other than damages."

Charleton J (dissenting): Whether state aid issue was matter for judicial review - unpaid rates - public law - characteristics of public law - validity of chosen forum - deviation - discrimination.

"There is nothing special about raising either the claim as to State aid, which is a European law point raised in West Wood’s Circuit Court defence, or the claim as to bias, which is a domestic legal point canvassed in the same document. Both of these are in the defence to these proceedings and both of these are subject to the requirement that an issue seeking to overturn a public law measure should take place within the appropriate format. Thus, there is no discrimination as between the domestic measures and any measures derived from Treaty obligations within the European Union. "

Note: This is intended to be a fair and accurate report of a decision made public by a court of law. Any errors should be notified to the editor and will be dealt with accordingly.

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