Exchequer-Funded Disability Care Facilities Exempt from Commercial Rates

Introduction

In NUA Healthcare Services Ltd v Commissioner for Valuation; Redwood Extended Care Facility v Commissioner for Valuation [2025] IEHC 197, the High Court of Ireland addressed the scope of the rating exemption under Schedule 4, paragraph 14(b) of the Valuation Act 2001 (“the 2001 Act”). Two appeal-by-case-stated proceedings challenged “nil” valuations awarded by the Valuation Tribunal to care homes for disabled persons, operated by (i) NUA Healthcare Services Ltd (“NUA”) in County Tipperary and (ii) Redwood Extended Care Facility Unlimited Company (“Redwood”) in County Meath. Both bodies are for-profit operators but receive virtually all of their income via service arrangements with the Health Service Executive (“HSE”), funded by Exchequer moneys. The only question of law was whether those service arrangements meet the test of expenses “defrayed wholly or mainly out of moneys provided by the Exchequer,” thus rendering the properties non-rateable.

Summary of the Judgment

Mr. Justice Bradley dismissed the Commissioner’s challenges. He held that, on the plain wording of Schedule 4(14)(b), a body whose expenses in caring for elderly, handicapped or disabled persons are defrayed wholly or mainly “out of moneys provided by the Exchequer” qualifies for exemption. In both NUA and Redwood, 97–100% of operational costs come from HSE service-level agreements, and the facilities incur their entire expense out of those funds. The decision distinguished the Fair Deal (Nursing Homes Support) regime considered in Glendale Nursing Home v Commissioner of Valuation [2012] IEHC 254, where the focus was on State support for individual patients rather than direct funding of providers’ expenses. Accordingly, the nil valuations stand and the appeals fail.

Analysis

Precedents Cited

• Glendale Nursing Home v Commissioner of Valuation [2012] IEHC 254 The High Court (Birmingham J.) in Glendale held that State subvention under the Nursing Homes Support Scheme Act 2009 (“Fair Deal”) focused on support to the individual patient, not direct defrayal of the care‐provider’s expenses, so a private home did not meet Schedule 4(14)(b). Mr. Justice Bradley distinguished this case by reference to the different statutory regimes and contractual framework in NUA/Redwood, where the HSE contracts directly with providers to fund operational costs.
• Nangles Nurseries v Commissioner of Valuation [2008] IEHC 73 MacMenamin J. reaffirmed that reliefs and exemptions under the 2001 Act must be strictly construed in favour of the ratepayer and that Schedule 4 recasts historic exemptions. Bradley J. applied the same literal, contextual and purposive approach to statutory interpretation.
• Eurolink Motorway Operation Ltd v Commissioner of Valuation [2023] IECA 54 The Court of Appeal confirmed that appeals from the Tribunal by way of case-stated under section 39 proceed on questions of law only; fact-finding remains with the Tribunal. Bradley J. adhered to that boundary.
• Supreme Court authorities on statutory interpretation (e.g. Heather Hill Management Co. [2022] IESC 43; Cork County Council v Whillock [1993] 1 IR 231). Bradley J. recited the three-part approach—language, context and purpose—with primacy on the statutory text.

Legal Reasoning

Bradley J.’s analysis progressed in stages:

1. Text and Context
   He began with the literal meaning of Schedule 4(14)(b): “Any land, building or part of a building occupied for the purpose of caring for elderly, handicapped or disabled persons by a body the expenses incurred by which…are defrayed wholly or mainly out of moneys provided by the Exchequer.” Each word must carry effect (the presumption against tautology).
2. Legislative Framework
   The Court examined the 2001 Act as a whole—its Long Title, purpose to recast previous rating exemptions, Part 4 (Sections 15–16) and Schedule 4’s enumeration of non-rateable property classes. Schedule 4(14) sits alongside analogous provisions for hospitals (8), schools (10) and HSE-occupied premises (20), all using “defrayed out of moneys provided by the Exchequer.”
3. Comparison with Fair Deal
   In Glendale the “defrayal” test failed because the HSE’s statutory Fair Deal contribution was payable to patients, not Edinburgh home operators. Here, by contrast, service-level agreements between the HSE and NUA/Redwood are direct contracts under Health Acts 2004 & 2007, funding all duties, taxes, staff costs, utilities, rent, insurance and ancillary services. Facilities incur their entire expense out of those invoices.
4. Evidence and Findings
   The Tribunal’s fact-findings (uncontested on appeal) demonstrated 97–100% reliance on HSE/TUSLA funding, absence of private charging, and service-level agreements obliging NUA/Redwood to exhaust HSE funds on operational costs. Bradley J. held no error of law in concluding those arrangements equate to “defrayal…out of moneys provided by the Exchequer.”

Impact

The ruling clarifies that any care facility—profit-making or not—whose care costs are financed almost entirely by the Exchequer, under HSE service arrangements rather than patient contributions, will enjoy a rating exemption under Schedule 4(14)(b). This decision:

• Offers certainty to operators of designated centres for disabled persons about rate exposure.
• Distinguishes between Fair Deal subventions to patients and service agreements funding providers.
• May prompt local authorities to revisit other care facilities’ rate status.
• Reinforces the strict-construction rule for rating exemptions and the primacy of statutory text.

Complex Concepts Simplified

“Defrayed out of moneys provided by the Exchequer” simply means the care home pays all of its running costs—staff wages, utilities, rent, insurance, meals and therapies—using money that comes entirely from State funding via the HSE.

“Service Level Agreement” is a formal contract between the HSE and a care provider setting out rates and duties for resident care. The provider invoices the HSE monthly for each resident’s full cost of care.

“Fair Deal” vs. “Service Arrangement”
– Fair Deal (Nursing Homes Support Scheme): the State subsidises individual residents, who remain legally responsible for fees and can choose any approved home. – Service Arrangement: the HSE places residents and pays providers directly for all care costs; the resident never signs with the provider.

Appeal by Case-Stated (Valuation Act 2001 §39): the High Court reviews only points of law raised by the Valuation Tribunal, not re-open factual findings.

Conclusion

The High Court has affirmed that Schedule 4(14)(b) of the 2001 Act exempts care facilities whose expenses are paid wholly or mainly from Exchequer funds under HSE service agreements. By contrast with Fair Deal subsidies to patients, these direct provider contracts satisfy the literal and contextual test of “defrayal…out of moneys provided by the Exchequer.” The judgment brings certainty to the rating treatment of HSE-funded disability and elderly care centres and underscores the importance of precise statutory wording in shaping public revenue exemptions.