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In Derby Teaching Hospitals NHS Foundation Trust and others v Derby City Council and others (2019) EWHC 3436 (Ch), the High Court considered a claim by a number of NHS foundation trusts that the trusts should benefit from charitable rate relief in respect of the properties they occupied. Charitable rate relief applies, at the rate of 80%, to properties occupied by a charity for the charitable purposes of that charity or of that charity and another charity.
There were 17 claimants in the case, all of them being NHS trusts, and 45 defendants, all of them being rating authorities in different parts of England. The Charity Commission also appeared in the case as an “intervenor”. The claimants all asserted that each of them was a charity and that the properties concerned were all occupied for charitable purposes. The defendants denied that the foundation trusts were charities and, also, denied that the properties were occupied for charitable purposes. The hearing of these cases lasted five days and the decision contains a comprehensive review of evidence relating to whether or not the trusts concerned were charities, which the court was to determine as a preliminary issue before considering whether or not the properties concerned were occupied for charitable purposes.
Having reviewed the activities of the trusts concerned, the court concluded that “an institution which is established for charitable purposes and for other purposes is not a charity.” It also found that the trusts are allowed to, and do, carry on activities not related to charitable purposes. From this the court concluded that the lead claimant foundation trust is not established for charitable purposes only and so is not a charity. Because of this, the trust is not entitled to charitable rate relief, and there was, therefore, no requirement for the court to determine whether or not the properties concerned were occupied wholly or mainly for charitable purposes.
The amounts at stake in this case were very substantial, because many of the properties concerned are large ones and an 80% reduction in rate liability would represent very substantial savings. The case gave an example of “government on government” litigation in respect of business rates, with the NHS trusts claiming that they were entitled to charitable relief and the respective local authorities claiming that they were not. It will be interesting to see whether this point is pursued further in litigation, given the very substantial amounts at stake.
