Legal Briefing

Licensing appeals in the spotlight

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Public Sector | 01 October 2011

Licensing decisions by local authorities and regulatory bodies can have a very significant commercial impact for those entities and individuals that they affect. It is not surprising therefore that, depending upon the sector and context, appeals are common. This in turn gives rise to possible financial, and potentially reputational, risk for the decision-making bodies themselves. For those advising either party – licensor or licensee – it is essential to have a clear understanding of the basis upon which the decision is to be taken and, once it has been taken, the grounds on which it may be challenged.

The position is, of course, made more complicated by the fact that licensing decisions are very often made in the context of the exercise of discretionary power. Moreover, the legislation by which that power is conferred may be framed in terms that are deliberately vague and may offer relatively little guidance as to how the discretion should be exercised. From a legal perspective, the consequence is likely to be an intertwining of common law with statute, the courts resorting to the former to fill in the gaps left by the latter – in relation, for example, to the way in which decisions may be taken and, applying established common law principles of natural justice, the rights of the (prospective) licensee in the decision-making process. To the extent that the European Convention on Human Rights is engaged, the Human Rights Act 1998 may add a third tier of complexity, as well as fertile ground for argument as to the rights and obligations of licensee and licensor respectively.

It is fundamentally important for those advising licensor and licensee alike to have a clear understanding of both the basis on and procedure by which licensing decisions can be challenged. Recent case law suggests that neither may be as straightforward as they appear. What has been described so far – the careful meshing by the courts of statutory powers, common law principles and, if applicable, human rights – is of course the classic territory of judicial review, whose scope and limitations may at least be described as relatively settled, through substantial and developed case law. More difficult is the question of the approach to be adopted where the legislation prescribes a specific statutory appeal mechanism in preference to judicial review. Subtle but important questions may arise as to the extent and scope of the right of appeal, matters on which the legislation itself may often offer little by way of direct steer. This was the territory in which the Court of Appeal found itself earlier this year, when called upon to hear an appeal against a decision under the Licensing Act 2003 (the 2003 Act), in R (Hope and Glory Public House Ltd) v City of Westminster Magistrates’ Court [2011].

R (HOPE AND GLORY PUBLIC HOUSE LTD) V CITY OF WESTMINSTER MAGISTRATES’ COURT [2011]

The Court in Hope and Glory had to grapple with the tricky question of the extent to which the appeal court is entitled to hear evidence (including potentially new evidence) and decide the matter afresh. Important principles emerge that will be relevant to those involved in advising licensors and licensees alike, under the 2003 Act, but with wider relevance and application to other licensed sectors.

In Hope and Glory, the appellant (Hope and Glory) took issue with a number of conditions imposed upon its licence by the licensing sub-committee of Westminster City Council. Hope and Glory owned a licensed public house in Soho, London. Its licence was reviewed following complaints by local residents about the level of noise caused by customers taking their drinks out of the premises and congregating on the street in the evening. The conditions imposed by the sub-committee included a provision that no customer should be permitted to take drink from the premises in an open container after 6pm.

Under s181 of the 2003 Act, a right of appeal is available to the Magistrates’ Court, a right that was exercised by Hope and Glory in appealing, initially, to the City of Westminster Magistrates’ Court. Rejecting the appeal, District Judge Snow stated that he was satisfied that the ‘conditions imposed by the licensing sub-committee are necessary and proportionate to ensure the promotion of the licensing objectives’ (paragraph 8). Hope and Glory appealed again, this time to the Court of Appeal, arguing that the legal approach adopted by the district judge had been unduly narrow.

The district judge had described his role as follows:

‘I will therefore

  1. Note the decision of the licensing sub-committee.
  2. Not lightly reverse their decision.
  3. Only reverse the decision if I am satisfied it is wrong.
  4. I will hear evidence…’

NOT ALL APPEALS ARE EQUAL

It is appropriate to recognise that not all appeals are equal in scope. Classically, the courts draw a distinction between a ‘review’ on the one hand and an ‘appeal proper’ on the other. The former involves the appeal court restricting its enquiry to the question as to whether the original decision maker was entitled to reach its decision. Typically, the appeal court’s enquiry might be restricted to the question of whether the original decision maker conducted itself properly, according to its own procedures, and exercised its discretion to arrive at a decision that was within the range of outcomes reasonably available to it.

That is a quite different question from the wider consideration of whether the decision reached was, in fact, the right one. An ‘appeal proper’, on the other hand, is more extensive than a review, allowing evidence (and potentially new evidence) to be (re)heard in assessing the merits (as opposed merely to the legality) of the original decision and determining the matter afresh. As will be obvious, the point is an important one, because it defines the extent of the right of parties to challenge the underlying decision. The nature of the appeal available may be defined, as here, in legislation, or may be dictated by considerations of fairness and, in certain contexts, by the Human Rights Act.1

It was accepted in Hope and Glory that the appropriate appeal mechanism was a rehearing, at which evidence could be led. The appellants, however, contended that the district judge had nonetheless misdirected himself because he had ‘wrongly placed the burden on the appellant to disprove that the noise caused by customers… was such as to amount to a public nuisance and that the conditions imposed by the Licensing Authority were necessary and proportionate’ (paragraph 26). In effect, according to Hope and Glory, the district judge had placed too great a weight on the original decision of the licensing sub-committee, incorrectly placing the burden of disproving the basis for that decision upon the appellant, which was thereby denied a fair hearing.

A ‘THIRD WAY’?

The challenge for the Court of Appeal in Hope and Glory lay in reconciling apparently contradictory authorities which, on the one hand, required that the appeal was an ‘appeal proper’, allowing evidence to be called and (re)heard, and a fresh decision reached; and, on the other, attaching weight to the original decision of the licensing sub-committee, to the extent of placing the onus on the appellant to disprove the basis for that decision.2 The Court held that these two conceptual approaches could in fact be reconciled and that the district judge had been correct in his approach. Dismissing the appeal, the Court endorsed the approach of Lord Goddard CJ in Stepney Borough Council v Joffe [1949], also quoted with approval by Edmund LJ in Sagnata Investments Ltd v Norwich Corporation [1971]. Having recognised that there was in that case an unrestricted appeal, involving the (re)hearing of evidence, Lord Goddard stated as follows (at pp602-603):

‘That does not mean to say that the court of appeal… ought not to pay great attention to the fact that the duly constituted and elected local authority have come to an opinion on the matter, and ought not lightly, of course, to reverse their opinion. It is constantly said (although I am not sure that it is always sufficiently remembered) that the function of a court of appeal is to exercise its powers when it is satisfied that the judgment below is wrong, not merely because it is not satisfied that the judgment was right.’

Following this analysis, the district judge had been right in his approach and there was no inconsistency in, on the one hand, allowing a full (re)hearing of evidence, while, on the other, placing weight upon the decision of the licensing authority such that the onus lay with the appellant to disprove its decision.

LAST WORD (FOR THE TIME BEING)

Asked recently to interpret Hope and Glory in the context of judicial review proceedings in R (on the application of Townlink Ltd) v Thames Magistrates Court [2011], the Administrative Court made clear that the appeal court is required to consider ‘the rightness of the decision itself’ and not merely its legality (paragraph 37). Having regard to the passage from Lord Goddard, quoted above, Lindblom J stated that the appeal court had nonetheless ‘to come to [its] own conclusion on the merits of the appeal’ (paragraphs 35-36), and accordingly ‘to consider on the merits whether the decision of the licensing sub-committee ought to be upheld’ (paragraph 37).

In thus interpreting the Hope and Glory decision, the court in Townlink appears to have placed greater emphasis on the requirement for a full rehearing (an ‘appeal proper’), as compared to the weight to be attached, at appeal, to the licensing authority decision. If that is correct, however, the question does seem to arise as to what importance is actually to be attributed to the judicial direction, approved in Hope and Glory, to the effect that the appeal court should ‘not lightly reverse’ the licensing authority decision, only doing so if ‘satisfied it is wrong’. If in fact, followingTownlink, the rightness or wrongness of the original decision is to be decided following a fresh consideration in light of a full rehearing, one might be forgiven for wondering whether in fact we have moved very far from an ‘appeal proper’, as traditionally understood. Apparently taking a similar approach to Townlink, in another recent case, R (on the application of Developing Retail Ltd) v East Hampshire Magistrates Court [2011], the Administrative Court described the role of the appeal court as being to ‘consider whether, having taken the decision of the licensing authority into account, it is wrong on the basis of the evidence put before the [appeal court]’.

KEY POINTS

As matters stand, the following points are clear and will be relevant to those involved in, or contemplating, appeals under the 2003 Act:

  1. Evidence may be led before the appeal court.
  2. Parties should expect the appeal court to undertake a full reconsideration of the evidence and circumstances relevant to the licensing decision.
  3. The ‘onus’ will normally be on the party challenging the licensing authority decision, with the procedural consequence that they may be required to present their evidence first.

CONCLUSION

On 1 August 2011 the Supreme Court refused an application from Hope and Glory for leave to appeal against the Court of Appeal’s decision. More widely, however, it may well be that we have not yet heard the last judicial word on the subject, whether under the 2003 Act or in relation to other licensed sectors. The Hope and Glory decision will in the meantime be important for anybody advising those involved – whether licensor or licensee – in licensing decisions. Experience shows that powers and rights of appeal that seem on their face to be clearly defined can appear differently when exposed to the full glare of the judicial spotlight. In particular, the scope of any right of appeal, and even the way in which it may be conducted from a procedural perspective, can have a significant bearing on the prospects of a decision being overturned. As always, good preparation pays dividends and anybody advising in this context will no doubt wish to consider and test carefully the validity of any assumed position. Hope and Glory provides a useful touchstone for this purpose; the key point will be to be consider carefully the extent and scope of any appeal mechanism, and the approach that may therefore be taken by the court.

Notes

1) See s181 of the 2003 Act, which, it was accepted in Hope and Glory, gives rise to a right of appeal by rehearing (paragraph 28).

2) Following, for example, Sagnata Investments Limited v Norwich Corporation [1971] 2 QB 614.