Council fails in Supreme Court appeal over business rates and gym operated by charity

Merton argued that Nuffield Health was not entitled to the 80% relief because its £80 a month gym fee excluded people of modest means from using the facilities.

Nuffield had won the case in the High Court and Court of Appeal but Merton then took it to the Supreme Court.

It is registered as a charity established “to advance, promote and maintain health and healthcare of all descriptions and to prevent, relieve and cure sickness and ill health of any kind, all for the public benefit.”

Justices Lord Briggs, Lord Kitchin, Lord Sales, Lord Hamblen and Lord Leggatt said they had first to decide whether Nuffield Health was a charity - which they held it was - and then whether the Merton Abbey building which houses the gym was used for charitable purposes.

They unanimously dismissed Merton’s appeal and held that Nuffield Health was entitled to the mandatory 80% relief from business rates.

The justices said: “Even though the services provided at the Merton Abbey gym do not, taken by themselves, satisfy the public benefit test in section 4 of the 2011 [Charities] Act, Nuffield Health’s purposes are exclusively charitable in all the places where they are carried on and, viewed as a whole, satisfy the public benefit test in that section.”

Merton Abbey gym was used for the direct fulfilment of its charitable purpose of promoting health through exercise and “both the rich and the poor form part of the section of the public served by this purpose.

“Accordingly, Merton Abbey is used for charitable purposes, because the provision of gym facilities to those who can afford to pay the membership fees is itself carried out as part of the public benefit requirement.”

In London Borough of Merton Council v Nuffield Health [2023] UKSC 18 they added: “Nuffield Health plainly uses the Merton Abbey gym for the direct fulfilment of those charitable purposes.”

It added: "On the findings of the Court of Appeal, it does so at Merton Abbey only for those who are not of limited means, in short, and putting it broadly, for the rich but not the poor.

“But the rich are as much a part of the section of the public benefited by Nuffield Health’s charitable activities as are the poor, and it must be assumed from its registration as a charity and from the fact that it is common ground that the trustees are not in breach of their fiduciary obligations that the poor are not excluded from benefit, on a view of Nuffield Health’s activities in the round, even if they are at the Merton Abbey gym.”

Merton has been approached for comment.

Mark Smulian