Blennerhasset BT & Anor R (on the application of) v the Royal Borough of Kensington And Chelsea

Factual and Procedural Background

The applicants are trustees of the National Hospital Trust (NHT), a registered charity promoting public relief of sickness by purchasing equipment for the National Health Service. The applicants sought judicial review challenging the decision of the Director of Legal Services of the respondent Royal Borough of Kensington and Chelsea, communicated in letters dated March 1996, which purported to revoke or treat as revoked the registration of 100 National Hospital Trust Societies under the Lotteries and Amusements Act 1976 (the 1976 Act).

The applicants initially sought certiorari, prohibition, an interim injunction, and a declaration. An interim injunction was granted by Macpherson J restraining the respondent from revoking the registrations until trial or further order. The respondent later clarified it did not claim a power to revoke but argued no decision to revoke had been made and that the scale of the lottery meant the respondent was not the appropriate registration body.

The dispute concerns 100 separate unincorporated associations constituting branches of the NHT, each purportedly running separate lotteries under a common scheme launched in 1995. The lotteries share a common entry form and weekly draw, with a top prize of £10,000 per branch lottery and an additional free prize draw with a £1 million top prize.

All 100 branches had been registered annually with the respondent since 1988. The legal framework involves the 1976 Act and its amendments, which distinguish between smaller lotteries registered with local authorities under Schedule 1 and larger lotteries registered with the Gaming Board under Schedule 1A. The respondent contended that the overall scale of the lottery meant registration should be with the Gaming Board, not the local authority.

The respondent’s Director of Legal Services, in a letter dated 6 March 1996, expressed the view that the 100 branches were not separate societies but parts of one society (the NHT) and that the proper registration authority was the Gaming Board due to the size of the lottery. The respondent proposed to return registration fees and cease local registration.

The applicants argued that the 100 branches were legitimate separate societies reflecting the local nature of the NHS and that the lotteries were properly registered with the respondent. They relied on the broad statutory definition of “society” and the administrative arrangements, including separate committees and constitutions for each branch, supported by examples and affidavits.

The respondent, supported by the Gaming Board, challenged the separateness of the branches, pointing to common addresses, trustees, administration, marketing, and a single lottery draw. The Gaming Board expressed concerns about the operation and supervision of the lotteries, emphasizing its greater regulatory powers over larger lotteries.

Legal Issues Presented

1. Whether the 100 branches of the National Hospital Trust constitute separate societies for the purposes of the Lotteries and Amusements Act 1976 and are thus properly registered with the respondent local authority under Schedule 1.
2. Whether the scale and operation of the lotteries require registration with the Gaming Board under Schedule 1A, rendering the respondent not the appropriate registration authority.
3. The validity of the respondent’s purported revocation or treatment of registration as revoked.

Arguments of the Parties

Applicants' Arguments

• The 100 branches are separate unincorporated associations or societies, each administering its own lottery, reflecting the local NHS structure and reducing administrative costs.
• The statutory definition of “society” in section 23 of the 1976 Act expressly includes “any separate branch or section,” supporting the applicants’ position.
• Each branch has its own constitution, committee, and operates a distinct lottery with separate prize funds derived from local entries.
• The arrangements are supported by precedent from other charities with branch structures recognized by the Charity Commissioners and Inland Revenue.
• The amendments to the 1976 Act do not prohibit registration of such branches with the local authority if the lotteries fall below financial thresholds.
• The common entry form and free prize draw do not negate the separate identity of the 100 lotteries.
• Any ambiguity in statutory provisions should be construed strictly in favor of the applicants, referencing the principle from Inland Revenue Commissioners v Duke of Westminster.

Respondent's Arguments

• There is only one society and one lottery in reality, not 100 separate lotteries.
• The 100 branches share the same address, trustees, bank account, constitution (save for one), administration, promoter, and marketing under a single NHS Lotto brand.
• There is only one draw, one set of winning numbers, and one entry form for all purported lotteries.
• The definition of “separate branch” requires more than a paper exercise; the branches must be genuinely separate entities.
• The scale of the lottery exceeds thresholds requiring registration with the Gaming Board under Schedule 1A, not the local authority under Schedule 1.
• The Gaming Board has greater supervisory powers appropriate for larger lotteries which the local authority lacks.
• The free prize draw further evidences a single lottery structure rather than multiple independent lotteries.

Gaming Board's Arguments

• The societies ought to be registered with the Gaming Board rather than the local authority.
• Concerns exist about the operation of the lotteries, including the free prize draw and frequent exceeding of the 50% prize limit.
• The Gaming Board is better equipped with statutory powers under Schedule 1A to supervise and regulate larger lotteries effectively.

Table of Precedents Cited

Court's Reasoning and Analysis

The court undertook a detailed examination of the statutory framework under the Lotteries and Amusements Act 1976, including the definitions of “society” and the registration schemes under Schedules 1 and 1A. It analyzed the factual matrix of the lottery scheme operated by the NHT and its 100 branches.

The court found that despite the applicants’ submissions and documentary evidence suggesting separate branches, the reality was that there was only one lottery operated centrally by the NHT. Key factors included the single common entry form, one weekly draw with one set of winning numbers, centralized administration, identical trustees and officers for each branch, one bank account, and uniform marketing under the NHS Lotto brand.

The court rejected the applicants’ contention that the branches were separate societies within the meaning of the Act, concluding the branches were a “paperwork façade” without genuine autonomy or separate existence. The court distinguished the example of other charities with genuinely separate branches, such as the Red Cross, which had independent trustees, premises, and activities.

Given the scale of the lottery and the statutory thresholds, the court agreed with the respondent and the Gaming Board that registration should be with the Gaming Board under Schedule 1A, not with the local authority under Schedule 1. The court emphasized the greater regulatory powers of the Gaming Board appropriate for larger lotteries.

Accordingly, the court held that the applicants’ societies were not validly registered with the respondent local authority and dismissed the application for a declaration to the contrary.

Holding and Implications

The court dismissed the application and held that the National Hospital Trust lotteries, as presently constituted, are not validly registered with the respondent local authority.

The direct consequence is that the respondent is not the appropriate registration authority for the lotteries in their current form, and registration must be sought with the Gaming Board. The court did not make a broader ruling beyond the facts of this case, and no new precedent was set. The applicants retain the option to regularize their position either by registering with the Gaming Board or by restructuring the scheme to comply with the statutory requirements for local authority registration.

The court ordered the applicants to pay the respondent’s costs of the application, excluding the costs of the earlier injunction hearing before Macpherson J. The court granted a limited extension of the interim injunction until 1 August on the applicants’ undertaking to apply for leave to appeal by that date.