Public benefit for the rich?: Merton LBC v Nuffield Health


Nuffield Health is a registered charity. Its purposes are “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.” It pursues its purposes primarily through the provision of gym facilities, including the gym at Merton Abbey. It also operates private hospitals and clinics. The facilities at Merton Abbey are mainly restricted to fee-paying members. In April 2019, the standard membership fee was £80 per month. Nuffield also offers certain limited services to non-members of the gym.

S.43(5) and (6)(a) Local Government Finance Act 1988 mandates an 80 per cent relief from business rates where “the ratepayer is a charity or trustees for a charity” and the premises are “wholly or mainly used for charitable purposes (whether of that charity or of that and other charities)”.

Nuffield Health claimed the mandatory relief under s.43(5) and (6)(a) from 1 August 2016, when it acquired the Merton Abbey gym. Merton Council refused the relief because, in its view, the membership fees were set at a level that excluded persons “of modest means” from enjoying the gym facilities and, therefore, the gym was not used for charitable purposes because the requirement for public benefit was not satisfied.

Nuffield Health challenged this decision and succeeded, both in the High Court and, by a majority, in the Court of Appeal. Merton appealed to the Supreme Court.

The judgment

In London Borough of Merton Council v Nuffield Health [2023] UKSC 18, the Supreme Court dismissed the appeal unanimously, holding that Nuffield used the gym for its charitable purposes and was therefore entitled to the mandatory relief.

The Court said that there were two conditions that applied [49].

The first condition was that the ratepayer had to be a charity or the trustees of a charity. The rating authority should first consider whether the ratepayer was a registered charity – and if it was registered, the first condition would be satisfied because, under s.37(1) Charities Act 2011 the ratepayer was conclusively presumed to be a charity [49], [52].

If, however, the ratepayer was not registered (which would be the case for very small charities or those excepted from registration, such as certain church congregations), the rating authority should consider whether it met the test for charitable status. That was a question of charity law [52]: that the ratepayer was established for exclusively charitable purposes under s.3(1) Charities Act 2011 and that its activities were for the public benefit as defined in section 4]. The ratepayer’s purposes should ordinarily be identified by reference to its written constitution, but if it did not have one, or if it was inconclusive, its purposes could be determined by reviewing its activities and the purposes that it served – and in considering whether the requirements of s.4 were satisfied, one had to look at the ratepayer’s activities as a whole, not merely at those carried on at any one particular site [49], [56].

The second condition was that the premises in question were used wholly or mainly for the charitable purposes of the ratepayer, or of the ratepayer and other particular charities. That was a question of fact, not a question of charity law. If the premises were being used for the (necessarily charitable) purposes of the charity or for incidental activities that were sufficiently closely connected with those purposes, then the second condition would be satisfied. In contrast, if the premises were used for activities that were not sufficiently closely connected with the charity’s purposes, such as fundraising or investment, then the second condition would not be met. The same considerations would apply if the activities were conducted in breach of the trustees’ fiduciary duties and not in pursuit of the charity’s purposes [50]-[52].

In the present case, the Court was satisfied that both of those conditions were satisfied, while it was common ground between the parties that Nuffield’s trustees were not in breach of their fiduciary duties.

As to condition 1, therefore, Nuffield Health was a registered charity, and even though the services provided at the Merton Abbey gym did not, taken by themselves, satisfy the public benefit test, Nuffield’s purposes were “irrebuttably presumed all to be charitable, in all the places where they are carried on and, viewed overall, to satisfy the public benefit requirement” [63].

As to condition 2, Nuffield used the gym for the direct fulfilment of its charitable purpose of promoting health through exercise. Crucially:

“Nuffield Health plainly uses the Merton Abbey gym for the direct fulfilment of those charitable purposes. This is not a case of incidental activities … 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” [64]: emphasis added.


So what, you may be wondering, does this have to do with “religion”?

The answer is that we suspect that the Supreme Court’s judgment may possibly have opened the door to widening the scope of “public benefit”, at least to a limited extent. For example, when the Charity Commission decided in 1999 that the Church of Scientology was not eligible to be registered as a charity, one of its reasons for doing so was its finding that “the central practices of Scientology (auditing and training) were conducted in private rather than in public, and were in their nature private rather than public activities. In addition, there was the practice of requesting donations in advance of receipt of those services” [emphasis added].

The private vs public point probably still stands – though see also The Church of Scientology Religious Education College Inc v Ricketts (VO) [2023] UKUT 1 (LC) on the Church’s application for the 80 per cent business rates relief on its chapel in Central London, which we noted here. But would the Commission’s objection to charging for services survive this latest Supreme Court ruling?

Nicola Evans of BDP Pitmans, who acted for Nuffield Health, has a much longer analysis here

Cite this article as: Frank Cranmer, "Public benefit for the rich?: Merton LBC v Nuffield Health" in Law & Religion UK, 8 June 2023,

Leave a Reply

Your email address will not be published. Required fields are marked *