Category: Licensing Law

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Woods Whur Gambling Conference is announced as another major operator receives a heavy fine!

In 2016, we held our first Gambling Conference at the iconic Hippodrome Casino, at which we updated delegates on ever-changing legislation and guidance. The event was full and over 120 people attended and contributed both by sharing ideas and questioning those who gave presentations. My opening presentation was called “Changing Times” and referred to 2015 as being a significant year for enforcement action and compliance. I referred to public statements of 13 September 2013, 28 October 2013 and 25 June 2014, as well as further public statements in 2015 and 2016. Those public statements all related to operators not complying with the relevant legislation and guidance, particularly on money laundering and “knowing their customers”. Anna Mathias developed this discussion further with her presentation “Update on Current Developments” and we also heard from Rob Birkett of the Gambling Commission, Kerry Simpkin of Westminster City Council and Sheila Roberts of the London Borough of Newham.

Our second conference will take place at the same venue on 8 May 2018, and our intention is to bring delegates up to date with relevant case studies and analysis of recent guidance. It seems to me to be far more helpful to give a presentation which highlights practical examples and real life scenarios rather than debate any interpretation or wording of recent guidance. We always try, in advising clients in gambling cases, to give pro-active and practical advice, so that the client is put in the best position to make an informed decision on their situation. This applies whether the client is looking to make a new application or requiring advice on a regulatory situation.

It seems clear from the latest William Hill case that compliance with the anti-money laundering regulations, which includes a requirement for the gambling industry to understand their customers and their customers’ financial position, is still the most significant topic for the gambling industry. William Hill were fined a minimum of £6.2million for “systematic social responsibility and money laundering failures”. The recent Gambling Commission Bulletin confirms the seriousness of this matter, saying: “systemic senior management failure to protect customers and prevent money laundering will result in William Hill Group paying a penalty package of at least £6.2 million”.

This is very similar to the case studies we looked at which had been dealt with between 2013 and 2016 and raises significant questions as to the extent to which certain operators have moved on and learned to understand their responsibilities.

Neil McArthur, who is the Executive Director of the Gambling Commission, was quoted in the Gambling Commission Bulletin as confirming: “we will use the full range of our enforcement powers to make gambling fairer and safer…gambling businesses have a responsibility to ensure that they keep crime out of gambling and tackle problem gambling – and as part of that they must be constantly curious about where the money they are taking is coming from”.

The Bulletin gives several examples of William Hill’s failures, including the following:

  • A customer was allowed to deposit £654,000 over nine months without source of funds ever being checked and the customer lived in rented accommodation and was working with a salary of approximately £30,000 per annum;
  • A further customer was allowed to deposit £541,000 over 14 months after the operator made the assumption that a customer’s potential income could be £365,000 per annum based on a verbal conversation.  

We are very much looking forward to welcoming people to our conference on 8 May. We expect to have a wide range of attendees, including those from the industry and local authorities, as well as many operators from the lotteries sector. There will be an opportunity to question those who are giving presentations and to socialise during a coffee and tea break.

I am absolutely delighted to confirm that Erica Young will be attending and speaking on behalf of the Gambling Commission and Philip Kolvin, QC will also be attending to deliver a keynote speech.

If anyone would like further information on the conference or would like to book a place (no charge) then please contact sarah@www.woodswhur.co.uk.

The event did fill up very quickly last time and the number of spaces is restricted given the size of the conference room.

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Gambling Commission issues a raft of guidance to the Lotteries Sector

The Gambling Commission (“GC”) has been busy in the last month or two in the lotteries sector, reminding society lottery operators and External Lottery Managers (“ELM”) of what it expects to see in terms of transparency and reinforcing its message that lotteries must be the preserve of good causes, and not be run for commercial gain. It has also issued some advice on the latest new trend in the lottery market – enabling players to sign up and play via SMS.

The lottery sector is evolving and diversifying all the time and, perhaps as an inevitable consequence of this, the products on offer may stray into realms which the GC considers to be of higher risk than traditional lotteries or raffles, and also less easily distinguishable from other types of gambling activity.

From 4 April 2018 all lotteries will have to make it clear to all players, before they buy a ticket, in exactly whose lottery they will be participating in, that is to say, exactly which society or charity the “good causes element” of their ticket money will be going to. This new Social Responsibility Provision is aimed at lotteries that are promoted under one “umbrella” brand. Perhaps more importantly, another new Social Responsibility Provision that will come into force on the same day will require societies to publish the percentage of lottery ticket monies applied directly to the good cause in the previous year. This needs to be done either through the society’s lottery page on its website, in its Annual Report or via any other means that are reasonable and proportionate, depending on the size and scale of the organisation.

This requirement to disclose percentage of actual charitable spend has given rise to concern for some. There are fears that it might lead to certain elements of the press, for example, drawing unfair and misleading comparisons between charities. My advice throughout has been that the requirement to publish the percentage does not preclude publishing accompanying information, such as the total amounts raised and applied to the good cause since the lottery scheme’s inception and how long the lottery has been operated for, for instance.

These changes result from a consultation on fairness and openness in lotteries conducted by the GC between 20 July and 30 September last year, and the GC has continued its drive for transparency, issuing a warning in December to all lottery operators following an adverse ruling by the Advertising Standards Authority (“ASA”) on 22 November, which arose from complaints about how The Health Lottery advertised some of its prizes.

The offending advertisement appeared on Facebook. It read:

“You know what they say: five chances to win is better than one, that’s why we run five weekly draws! What’s more, each draw has a jackpot of up to £100k – that means that there is a potential half a million pounds up for grabs week in week out… Up to £500k can be won every week. That’s 5 draws per week each with up to £100k jackpot Tuesday, Wednesday, Thursday, Friday and Saturday… Still only £1! That’s half the price of Lotto! Play now #EverybodyWins.”

The complainants, aware that the jackpot won was usually significantly less than £100,000, questioned whether the statements about a jackpot of up to £100,000 and total prize pot of £500,000 per week were misleading. The Health Lottery argued that the purpose of the advertisement was to highlight the fact that they operate five draws per week, each with a top prize of £100,000, making it possible for members of the public to win up to £500,000 in total. They insisted that, based on the normal volume of ticket sales, top prizes of £100,000 were a realistic expectation. However, the ASA noted the prize limits in the Gambling Act (“GA2005”), which currently restrict the top prize in a Large Society Lottery to £25,000 or, if more, to 10% of ticket monies. Given that ticket monies in any particular Large Society Lottery draw are limited to £4m, this means that the absolute maximum theoretical prize that may be won in any Large Society Lottery is £400,000.

The Health Lottery stressed that it had discussed the wording of its advertising with the GC, with a view to striking the appropriate balance between the highest top prize of £400,000 if there was a large number of ticket sales, and stating the minimum top prize of £25,000. It said that there had been 264 jackpot winners since The Health Lottery’s inception in 2011, of which 61% (181) had won a jackpot of £100,000 and 71%, £50,000 or more. It also pointed out that its method for calculating prizes is set out in its terms and conditions which, in turn, had been approved by the GC.

All of this notwithstanding, the ASA found that the advertisement was, indeed, misleading. Although there had been winners of £100,000 jackpots in the past, the possibility of winning £500,000 in a week by winning the jackpot in five consecutive daily draws had only existed since February 2015, when the scheme involving five weekly draws was introduced. Since then, no player had won a £100,000 jackpot. Accordingly, although the figures given in the advertisement were qualified by the words “up to”, the ASA held that they no longer represented a realistic amount that was likely to be won as a jackpot in any particular draw, given the 10% rule in GA2005.

The ASA therefore ordered The Health Lottery to withdraw the advertisement in its current form and instructed them not to exaggerate the likely winnings available. The GC has now passed on that warning to other lottery operators, saying that any information published about prizes must be presented in a clear, transparent and unambiguous way so that consumers are entirely clear about the prizes on offer and that, in particular, advertisements must not mislead by exaggeration. The GC advice, with a link to the ASA findings, may be viewed here: http://www.gamblingcommission.gov.uk/news-action-and-statistics/news/2018/Is-the-advertising-for-your-lottery-misleading.aspx

The GC has also taken the opportunity to remind the lottery industry about lotteries being confined to good causes, rather than being a commercial opportunity. Last week, it issued guidance, both on societies running lotteries on behalf of good causes, and on the limited ways in which commercial private sector businesses may be involved in fundraising, either by promoting their own lotteries or by supporting lotteries promoted by charities and other good causes.

Societies can run lotteries to raise funds for other good causes, provided that their aims and objectives allow them to do so. I have advised in a number of cases where the currently prevailing aims and objectives did not permit this, but we were able to achieve the societies’ ambitions by widening their aims and objectives to include raising funds for additional good causes.

The GC (or Local Authority, if the society is running a Small Society Lottery registered with them) should be notified of the amendment to the aims and objectives as a Key Event, as soon as reasonably practicable and, in any event, no later than 5 working days after the amendment takes place. The society would also need to check that their new aims and objectives are compliant with charity law.

Societies promoting lotteries on behalf of other good causes must also be careful to ensure that all players clearly understand that they, and not the beneficiary or beneficiaries of the lottery, are the promoter, and that there is full transparency as to the cause that the lottery is actually benefitting, that is to say, where the “good causes element” of their ticket monies is actually going.

The GC has also reminded commercial private sector businesses that lotteries may not be run for private or commercial gain, and last week issued a Guidance Note on the limited circumstances in which such a business may become involved in fundraising through this means. Briefly put, the company must set up a separate non-commercial society, which must get itself licensed as a society (or registered as such with the Local Authority in which their Head Office is situated, depending on projected turnover) or licensed as an External Lottery Manager (“ELM”), depending on whether it is the promoter of the lottery, or merely managing all or an aspect of, it as an ELM on behalf of a society.

Commercial entities can also run incidental lotteries at an event such as fundraising dinner or fete, or set up a workplace lottery for its staff, if it wishes to raise funds for charity. However, very specific rules apply to all such schemes and advice should be sought before launching one to ensure that the particular scheme satisfies all of the legal requirements in order legitimately to be considered exempt from regulation and the need to obtain a licence or registration.

Another subject which the GC has its eye on at the moment is lotteries via SMS. I think that it’s fair to say that this is one of the “hot topics” of the moment for the sector and I am dealing almost daily with queries from operators who are seeking to capitalise on this undeniably massive opportunity whilst, at the same time, striving to be compliant.

Last week, the GC issued a Guidance Note on the subject, which may be found here: http://www.gamblingcommission.gov.uk/for-gambling-businesses/Compliance/Sector-specific-compliance/Lotteries/Using-SMS-short-codes-for-lottery-promotion.aspx

This Note broadly reflects the discussions I have been having with the GC over the last few months on this subject, and I think that we all have the same broad areas of concern. These surround, firstly, social responsibility, including how to implement self-exclusion checks, assess the risk of problem gambling, impose limits on numbers of tickets sold and carry out age-verification checks. Secondly, the concerns surrounding money laundering (albeit, these are acknowledged by the GC to be low in the case of subscription lotteries) persist.

Thirdly, Licence Condition 11.1.7 (and 11.2.7 for ELMs) requires all players in a lottery to be provided with a “ticket” containing certain prescribed information (whether as a paper document, or as an electronic document that is capable of being downloaded and/or printed) . The question therefore arises as to who will be issuing the ticket and, if it is to be the SMS provider, whether the software required to do so needs to be licensed under a gambling software licence.

Fourthly, Licence Condition 11.1.1.9(c) requires all ticket monies to be paid to the relevant society before the draw takes place. I have advised on a number of cases involving this issue, and am confident that, as long as funds are ring-fenced, that the agreement between the SMS provider and the society provides for the lottery proceeds to be held on trust for the society, and to be transferred to, or collected by, the society within a reasonable period of, say, 14 days, this should be compliant.

Fifthly, operators will have to be very careful to check addresses of players – with only a mobile phone number to go on, additional verification will be required, to ensure both that lottery tickets are not being sold in a jurisdiction where it is unlawful to do so, or unlawful to do so without the appropriate licence, and also that players are not committing an offence in their own country of residence by purchasing lottery tickets remotely.

My residual concern relates to the requirements surrounding gambling software. I cannot see how any SMS provider can link in with gambling operators (for example, issuing a compliant ticket) without adapting their software specifically for gambling (the GC’s test as to what does, and does not, constitute gambling software). In my view, the jury is still out on this issue.

There is still a great deal of work to be done before the industry plunges into SMS. SMS is indisputably a great opportunity, but it is a real challenge from a compliance point of view. We will continue to monitor developments in this area and report back in further editions of this Newsletter.

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Where are we with the House Of Lords’ scrutiny of the Licensing Act 2003 and the Government response?

Sometimes you have to pinch yourself when you see how slowly the wheels of the legislature and legislative scrutiny grind around. It is agony, thinking back to when we went through the run-up to the Licensing Act and its transitional period. I am hoping we don’t have to go through anything like that again. The specialist lawyers made huge recommendations against the introduction of the Licensing Act and the DCMS said we were only saying what we were saying because of self-interest and that we were concerned that our mid- to long-term future was threatened. Well, we can see where that went! It would be fantastic to be able to assess the cost to the industry of the 2003 Act, as compared to what the DCMS proudly predicted. We have one Licensing Authority we deal with regularly who will not accept minor variation applications in identical terms to those readily accepted as minor variation applications by other Licensing Authorities. The cost to the operator is therefore significantly more….just one example of the strange workings of the legislation.

So, it was always going to be interesting to see what was going to happen with the House of Lords’ Select Committee’s report on the Licensing Act. After hours of evidence and a very detailed report…the Government dismissed 90% of its findings out of sight. Admittedly, the Government has huge issues to deal with and the Licensing Act will be nowhere near the top of the pile, but the tone of its response to the House of Lords’ report was particularly dismissive.

It was always worth the wait to see how the Lords would respond, and just before Christmas Baroness McIntosh of Pickering, Chair of the House of Lords’ Select Committee on the Licensing Act 2003, tabled a motion. She highlighted the principal recommendations of the Select Committee’s April 2017 report and the Government’s negative response to the vast majority of those recommendations.

She said: “Applicants, businesses, residents or the lawyers representing them were all critical of the decision-making generally and, in some cases, the denial of basic justice. The Government say in their response that, “we do not intend to take the approach recommended by the Committee at this time”. They believe that it is enough to improve training and provide stronger guidance — which we did recommend — on how licensing committees should be conducted. While better training and guidance may help, they cannot mend the basic flaws of the system. If the Government do not intend to follow our recommendations “at this time”, I ask the Minister to tell us at what time she thinks this would be appropriate.”

Baroness Williams of Trafford responded on behalf of the Government. It was a response which must have frustrated those who had invested so much time and effort in gathering evidence for, and giving evidence to, the Select Committee. She said:

“We accept the important points raised by the Committee on the effectiveness and consistency of implementation of licensing processes and decision-making across local areas. We agree that improvements in practice could be made. Instead of transferring the functions of licensing committees to planning committees, we are focusing on improving training and providing stronger guidance on how licensing hearings should be conducted. There is good practice in many local areas that we will build on and we will work closely with partners—the Institute of Licensing and the Local Government Association (“LGA”), in particular—to assess the training needs for councillors and the police and, where appropriate, to develop specialist training programmes with them”.

I have to say that I don’t recognise many of the significant criticisms raised in the call to evidence before the Select Committee and that, having undertaken recent planning applications, couldn’t see that that, either, is a stronger system.

Having been involved in a number of consultations over the years as a licensing lawyer, I come out of this one with the same feeling: If the Government of the day wants something to happen, it will do whatever it wishes, whatever the result of the consultation.

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A lot happening in the Lotteries Sector…

This week has been a busy one for society lotteries, with the publication by the Gambling Commission (“GC”) of its finalised proposals for new Licence Conditions and Codes of Practice (“LCCP”) and a major debate in the House of Lords surrounding proceeds and prizes limits.

The GC consulted between 20 July and 30 September this year on introducing three amendments to the LCCP applying to society lotteries, centring around improving fairness and transparency for players. This is in line with its current stated priority of putting the consumer at the heart of everything operators, and the GC itself, do. This is also strongly reflected in its 3 year Strategy published in the autumn.

The proposed amendments were designed new requirements for so-called “umbrella”, or branded, lottery schemes to make plain to consumers precisely which society lottery they are signing up for, for the percentage of lottery proceeds applied directly to the good cause to be disclosed, and clearly to define for the first time each of “instant win”, “high frequency” and “low frequency” lotteries.

The GC received 27 responses to its Consultation, including 11 from charities and 11 from industry bodies. As a result of those responses it will introduce a new Social Responsibility Code provision (equivalent to a licence condition) requiring societies to disclose the percentage of lottery proceeds in the previous calendar year applied directly to the good cause – this will need to be done on the lottery page of their website, in their Annual Report or via “any other means appropriate to the size and scale of the organisation”. In addition it will introduce a new Social Responsibility Code provision to translate what has hitherto merely been contained in Guidance requiring operators promoting lotteries under a brand or “umbrella” to make it abundantly clear to players which particular society lottery they are being asked to sign up to.

The one proposed amendment that is not be pursued in full is the definition of the three categories of lottery. As a result of the Consultation the GC has reached the conclusion that defining “high frequency” and “instant win” lotteries will not achieve any additional clarity and hence the only amendment that it proposes to introduce to current social Responsibility Code provision (which currently defines “low frequency” lotteries as those where consecutive draws are at least two days apart) to make it clear that these include lotteries promoted by Local Authorities. The relevance of all of this, of course, is that “low frequency” lotteries are subject to less onerous requirements surrounding age verification and the GC’s Remote Technical Standards.

The other important event this week from society lotteries’ perspective was a major debate in the House of Lords on Tuesday surrounding an increase to proceeds and prizes limits, something which has been before Ministers for 5 years, which, as the Lords expressed, is far too long. This delay is the cause of considerable frustration and has led a significant number of my society lottery clients to seek my advice about obtaining multiple operating licences.

The problem is that, currently, society lotteries may only raise £10m in proceeds (aggregate ticket sales) per calendar year and £4m per single draw. Because the top prize is limited to £25,000 or, if greater, 10% of proceeds, this means that players of society lotteries can only stand to win £400,000 as an absolute maximum.

Those lobbying on behalf of the sector, particularly on behalf of the Lotteries Council and its members, would like to see the top prize increased to £1m, the annual proceeds limit raised to £100m and the single draw proceeds limit to £10m.

It was extremely heartening to read the Hansard transcript of the Lords debate where there was (almost) unanimous support for these reforms, together with a real appreciation of the work society lotteries do to fund good causes. They have raised over £38b for charity, the figure for 2011 of £100m rising to over £250m in the latest year for which records exist. The percentage of total proceeds applied directly to good causes rose from 43% to 43.6% last year. This is impressive when set against the statutory minimum of 20%.

As the Lords observed during the course of this debate, the total ticket sales last year in society lotteries last year of £586.66m amounts to less than 10% of the National Lottery ticket sales over the same period of £6.92b. There is no evidence to suggest that society lotteries pose any threat to the National Lottery – indeed, all the evidence points the other way – the two complement each other and there is certainly room for both of them.

As someone heavily involved in advising the society lottery sector and a passionate advocate of the good that they do in our communities, I am encouraged by the debate this week and fervently hope that this signals a possibility that these long-awaited reforms will be implemented, sooner rather than later.

I will of course keep you updated in further editions.

 

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How do Local Authorities deal with premises causing a nuisance?

As I write, I have just finished at Court dealing with some problem premises, acting for the London Borough of Newham, and the process has been quite tortuous. The premises licence was reviewed by Newham’s Environmental Protection Team in February 2017, after a series of complaints from local residents. In addition, a noise abatement notice had been served under section 80 of the Environmental Protection Act. The abatement notice had been breached and, by the time the review was launched by the Local Authority, there had been in excess of 30 complaints of public nuisance at the premises. 47 residents made representations in support of the review, together with the Ward Councillor, and many attended the review hearing.

The premises licence holder was unable to give any good account of himself during the review hearing and the premises licence was revoked. The licensing sub-committee gave detailed reasons as to why they had come to the conclusion they had in revoking the licence.

The premises licence holder appealed that decision, which obviously “stayed” the revocation of the licence and allowed him to continue trading. Due to issues with listing and Court admin, the Appeal did not proceed to a re-hearing until 12 December 2017.

By the time we got to the Appeal there had been a further 60 complaints of public nuisance and 2 instances of statutory nuisance attributable to the premises. This led the Local Authority to seek my advice prior to the Appeal taking place on all of the powers given to the Local Authority under the Anti-Social Behaviour, Crime and Policing Act 2014. After having a detailed discussion and review of the evidence, the Authority determined to issue a closure notice under section 79 of that legislation.

As a result of the closure notice being served on the premises, an application for a closure order fell to be considered by a District Judge at Stratford Magistrates’ Court on the 20 November. I appeared on behalf of the London Borough of Newham and a closure order was issued for 3 months under section 80 of the legislation. The District Judge felt we had made our case that there had been:

  • a regular and continuing nuisance
  • 2 breaches of the abatement order
  • a warrant for seizure of music amplification equipment executed at the premises

This allowed for the premises to be secured and the operator prohibited from entering the premises, let alone operating from them.

At this stage, the land owner of the building evicted the tenant premises licence holder and further secured the property. We attended in front of District Judge McIvor at Stratford Magistrates’ Court on 12 December when the premises licence holder, notwithstanding being the subject of a closure order and banned from entering the premises until late February 2018, and also evicted from the premises by the land owner, sought to persuade the District Judge that the decision given by the Licensing Authority was wrong in that it was disproportionate and not appropriate to promote the licensing objectives.

After a day of evidence and submissions, which included local residents saying that they had been scared and had their lives blighted by the style of operation, the District Judge agreed with my submissions and dismissed the Appeal. She could find no fault in the decision-making process of the Licensing Sub-Committee at the original review hearing in February and said she understood why the Licensing Authority could have no faith in the operator of the premises. She thought that the situation had got worse since the revocation and the premises licence holder had shown total disregard for the licensing objectives and the neighbourhood.

This is a good example of the amount of work which had to be undertaken by the Licensing Authority and, in particular, by the Environmental Protection team. They had 94 complaints from 10 addresses, of which 19 complaints of nuisance arose from the premises operating outside the permission of the premises licence. The amount of resource used was significant but necessary to support the local residents and Ward Councillor who complained and who gave evidence at the review and the Appeal. The Local Authority were awarded costs in full for the Licensing Act Appeal, however the difficulty in circumstances like this is whether the company which holds the premises licence, and had the award of costs against it, will exist long enough to enable enforcement of that costs order.

It can be seen from this example that, whilst there are tools available for dealing with truly problem premises, it took nearly a year and significant resource to go down the review, appeal, noise abatement notice and closure order route in order for the premises to be finally closed and prevented from causing a nuisance to a wide section of the local community.

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Paddy Whur is successful in the return of two premises licences in Braintree, Essex

Since the introduction of the Immigration Act 2016 into the Licensing Act 2003, and the additional changes to the section 182 guidance document, the use of illegal workers in licensed premises has become a thorny issue.

We have now had considerable success in defending premises who have been caught with illegal workers. The first of these was the Red Lion Truck Stop on the M1 some 18 months ago.

More recently I was instructed earlier this year to look after the operator of two convenience stores near Braintree, both of which had the benefit of premises licences to sell alcohol. The premises licences had been reviewed in March 2017 and a different legal team represented the operator. Unfortunately they were revoked as a result of the review proceedings and the reasons for the revocation centred around the premises licence holder admitting that he had made mistakes in employing illegal workers at the premises.

The Sub-Committee, both prior to the hearing and during the hearing, had not received any documents to evidence that he had put new processes in place to prevent this from happening in the future. The licences were therefore revoked as they were not persuaded that robust procedures/systems had been or were about to be introduced to ensure that immigration and right to work checks would be carried out appropriately. They formed the view that the premises licence holder’s approach to compliance with legal requirements was at best limited, which in turn raised concerns about actions the premises licence holder may take in future to ensure promotion of the licensing objectives in respect of the prevention of crime and disorder.

I was instructed to take over representation of the premises licence holder’s interests shortly after the review proceedings had revoked the two premises licences.

We lodged a notice of appeal to the Magistrates’ Court, which of course stayed the decision to revoke and allowed the premises licence holder to continue trading.

During this period, we reached out to the Licensing Authority and asked if we could have a meeting to discuss where we were in regards to potential settlement of any appeal. Braintree District Council were amenable to meet me as I had not been instructed in the review proceedings. At this meeting I highlighted the deficiencies that I had seen in the preparation and delivery of the defence of the review proceedings and how I would be looking to change this for any appeal. Rather than going down the root of a full contested appeal hearing, I asked them whether in the light of the new evidence that I could produce they would be amenable to settling the appeal by way of the addition of conditions to the premises licence. Having considered their position, they felt that the members should make a decision rather than the officers and therefore the appeal at the Magistrates’ Court was settled with the appeals being remitted back to the Licensing Authority for a fresh determination.

We disclosed additional evidence on the Authority and Essex Police, having instructed People Force International to conduct an audit of the procedures in place for right to work checks for all of their staff at the two premises. We offered the Authority the following conditions to be attached to the premises licence:-

  1. The premises licence holder will operate a full HR management system where all relevant documents are stored for each individual member of staff.
  2. All copies of relevant documents for members of staff will be retained for a period of 24 months post termination of employment and will be made available to Police, Immigration or Licensing Officers on request.
  3. The premises licence holder will work with People Force International (or any other similar agency) to carry out checks on the Home Office website and verify identification documents such as right to work documents to ensure that all new members of staff can be legally employed.
  4. No new member of staff will be able to work at the premises unless they have provided satisfactory proof of identification and right to work.

Essex Police determined not to accept these conditions and attempted to rely on the case of East Lindsey District Council v Abu Hanif (t/a Zara’s Restaurant and Takeaway) [2016] EWHC 1265 (Admin).

We attended the remitted review hearings for the two premises licences before Braintree District Council Licensing Sub-Committee on the 28 November 2017. The Police were represented by Counsel and also brought a senior immigration officer in their request to maintain the revocation of the two licences.

I was delighted that I was able to persuade the Licensing Sub-Committee to allow for the reinstatement of the licences by way of the additional conditions being attached to the premises licences and by way of one further condition which was offered during the hearing in that an unannounced periodical audit would take place whereby a consultant would come in to check that all of the relevant documents were being maintained.

A critical point of difference between the two sets of review proceedings was the introduction of People Force International, who I have worked with successfully on a number of occasions. They provided an HR package after an audit and ensured that all of the correct right to work documents were retained for each members of staff. Some of these documents run out of time and therefore it is clearly critical that a forward diary entry is put in place to ensure that the continued right to work documents are available.

One of my arguments in the case, which the Licensing Sub-Committee accepted, was that the facts of the East Lindsey District Council case were significantly different to mine. In my case we had a member of staff who had proved to us his ability to be legally employed through right to work documents. These had lapsed but his wife was applying for full residency status in the UK and he had produced letters to my client from his then solicitors explaining that this gave him a right to continue his employment. It was a moot point whether this was the case but on a belt and braces approach we should have had up to date verification of his ability to work rather than relying on a letter from a firm of solicitors. Interestingly, my client did not receive a civil penalty for the employment of this person and by the time we got to this week’s hearing, his wife had won his appeal and he was legally in the UK. My client, believing that he was legally employable, had paid for him to go on the BII course to get his qualification to become a personal licence holder and was actually the Designated Premises Supervisor for both venues. He was on the payroll and was being paid net of tax with PAYE being fully complied with and the revenue receiving the correct amount. This was all audited and he was paid a good living wage. In addition, he was renting accommodation from my client. Certainly nothing was been hidden about his employment. The case of East Lindsey District Council was strikingly different in that the premises licence holder in that case had:

  • Employed the illegal worker without paperwork showing a right to work in the United Kingdom.
  • Paid him cash in hand.
  • Paid less than the minimum wage.
  • Did not keep or maintain PAYE records.
  • Reported to deduct tax from the employee.
  • Did not account to HMRC for the tax deducted but kept it himself.

In that case there were serious criminal offences being committed by the premises licence holder and the Licensing Sub-Committee in Braintree found that the case law provided significant points of difference from my client’s position. In addition, they were impressed with the evidence given by People Force International’s representative about the way the systems would be robust and audited moving forward. The Police, in their attempts for revocation jumped straight to paragraphs in the section 182 guidance that deal with the “reviews arising in connection with crime” suggesting in this case that as the premises licence holder had employed a person who was disqualified from work by reason of their immigration status, the jump should be straight to revocation.

However, the Committee was impressed with our argument citing paragraph 11.20 of the guidance which states “in deciding which of these powers to invoke, it is expected that Licensing Authorities should so far as possible seek to establish the cause or causes of the concerns that the representations identifies. The remedial action taken should generally be directed at the causes and should always be no more than appropriate and proportionate response to address the causes of concerns that instigated the review.”

The other section of the guidance document which is of critical importance in cases such as this, paragraph 2.6, was introduced in the April 2017 version of the guidance and states “the prevention of crime includes the prevention of immigration crime including the prevention of illegal working in licensed premises. Licensing Authorities should work with Home Office Immigration Enforcement, as well as the Police, in respect of these matters. Licence conditions are considered appropriate for the prevention of illegal working in licensed premises might include requiring a premises licence holder to undertake right to work checks on all staff employed at the licensed premises or requiring that a copy of any document checked as part of the right to work check are retained at the licensed premises.”

I was very impressed with the way that Braintree District Council approached this case and that the Licensing Sub-Committee grasped the points of difference between our instant cases and that of the East Lindsey decision. They determined that it was appropriate and proportionate to promote the licensing objectives to impose additional conditions on the licences which allows the premises to continue to trade. I should also point out that the two premises were significantly invested in. The quality of the fit out and interior of the two shops was exceptional. The CCTV system was all encompassing digital and covered internal and external positions. Importantly, the Committee commented on the fact that there had been no suggestion of any other crime and disorder issues at the premises, nor any intelligence to suggest that illegal workers had been employed since the original raid of the premises in November 2016.

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The Government responds to the report from the House of Lords Select Committee on the Licensing Act 2003

I have now had the opportunity to skim read the government’s response to the detailed call for evidence taken by the House of Lords Select Committee on the Licensing Act 2003.

Whilst the Government accepts that some changes need to be made, they do not accept the Committee’s report findings that a “radical comprehensive overhaul of the Licensing Act is needed.”

The Government has also stressed that it does not intend to hastily instigate an overhaul of the legislation but will make some changes to the statutory guidance under section 182 of the Act and look at the provision of good quality training to licensing committee members.

The Government rejects some of the recommendations outright and also comments that there are several recommendations which are a “spur to further work, particularly in respect of how the system of licensing can be made to function more effectively and the lessons that can be learned from the planning system.”

A few of the standout recommendations and the government response are as follows:

Conclusion/recommendation 7:

We believe that the debate and the consultation on transferring the functions of licensing committees and sub-committees to the planning committees must start now, and the pilots must follow soon as possible.

Response

The basic structures of the planning and licensing system are similar and our focus will be on improving how the two regimes communicate and interact at local level. There is good practice in many local areas that we will disseminate and build on, for example whether there is additional support that local residents could be given to frame and present their concerns about a licensing application to the Committee effectively. Local planning authority is already listed in the Act as a responsible authority and therefore has a statutory role in considering applications for the grant, variation or review of a premises licence.

Recommendation 8:

Licensing authorities should publicise the reasons which have led them to settle an appeal, and should hesitate to compromise if they are effectively reserving an earlier decision which residents and others intervening may have thought they could rely on.

Response

We agree that there should be transparency around the decisions made on the licensing appeals, in particular for local residents who may have attended a hearing and expect the decision to be implemented. This is anticipated to be picked up in the section 182 guidance.

Recommendation 9:

We recommend that appeals from licensing authorities should no longer go to Magistrates’ Courts, but should lay to the planning inspectorate, following the same course as appeals from planning committees.

Response

The Government notes that Committee’s comments on the appeals process. We do not intend to change the system so that licensing appeals no longer go to the Magistrates’ Courts but lay to the planning inspectorates.

Recommendation 18:

We recommend that notice of an application should not need to be given by an advertisement in a local paper. Notices should be given predominantly by online notification systems run by the Local Authority.

Response

The Government considered that the removal of the requirement to advertise details in a newspaper would be a step backwards from the efforts the government has made to empower local people and local areas in tackling local alcohol related problems.

Recommendation 32:

We recommend that licensing authorities be given the power to object Temporary Event Notices, alongside police and environmental health officers. The Government dismissed this but suggested that section 182 guidance should recommend that licensing authorities consider how to bring TEN’s to the attention of residents who may be particularly effected, for example if there have been previous complaints about premises.

Response

Feedback from licensing authorities suggests that having the power to object to TENs would not be practical within the statutory time period allowed, due to the high volumes received and the additional scrutiny that would be required.

Recommendation 39:

We recommend that development and implementation of a comprehensive police licensing officer training programme, designed by the College of Policing. Whilst we accept that such an undertaking will require additional funds, these costs will likely be more than offset if the quality of police licensing decisions is improved, thereby reducing the number of appeals and other corrective procedures.

Response

The Government agrees that comprehensive training should be available to all officers required to undertake licensing duties.

Recommendation 42:

We support the Government’s current move to transfer cumulative impact policies from the section 182 guidance and to place them on a statutory footing as this will introduce much needed transparency and consistency in this area.

Response

Whilst this was put on hold during the consultation process, the changes will continue to be introduced by the Police & Crime Act 2017 which will amend the Licensing Act 2003 to place CIP’s on a statutory footing.

Recommendation 49:

We believe it is appropriate that no Early Morning Restriction Orders have been introduced and we recommend that, in due course, the provisions on EMROs should be repealed.

Response

Although no licensing authorities have implemented an EMRO, we believe it is important to keep this tool available should any licensing authority wish to consider whether it is suitable for use in their area.

It is interesting to note from the report that a vast majority of the most contentious recommendations are not to be pursued or at the very oust introduced into the section 182 guidance document rather than primary legislation.

The full report can be found at the following link and we will of course update as we see further progress on this report:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/657231/CCS207_CCS1017254842-1_Cm_9471_Govt_Response_Licensing_Act_PRINT_3_.pdf

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Paddy Whur is successful in persuading South Yorkshire Police to allow Area Nightclub, Sheffield, to reopen

It is Sunday afternoon, I have walked the dogs and my Yorkshire Puddings are rising nicely as I prepare Sunday dinner for the family. My day off comes to an abrupt end when the operators of Area Nightclub (home of Gatecrasher) contact me to see if I can help them. There has been a major incident in the premises overnight, and as a result of stabbings that occurred, the premises have been closed immediately via a Closure Notice issued by South Yorkshire Police.

Anyone who has dealt with the legislation will know it is very impactful and immediate and can lead to a business disappearing pretty quickly. The legislation in question is the Anti-Social Behaviour, Crime and Policing Act 2014. This removed s161 of the Licensing Act 2003 and replaced it with the new powers which are available in respect of a wider list of premises, not just licensed premises.

CHAPTER 3 Closure of premises associated with nuisance or disorder etc is the Chapter of the legislation which is relevant. Section 76 of the legislation deals with the power to close premises immediately by service of a closure notice.

S76(1) A police officer of at least the rank of inspector, or the local authority, may issue a closure notice if satisfied on reasonable grounds—

(a) that the use of particular premises has resulted, or (if the notice is not issued) is likely soon to result, in nuisance to members of the public, or

(b) that there has been, or (if the notice is not issued) is likely soon to be, disorder near those premises associated with the use of those premises, and that the notice is necessary to prevent the nuisance or disorder from continuing, recurring or occurring.

(2) A closure notice is a notice prohibiting access to the premises for a period specified in the notice.

(5) A closure notice must—

(a) identify the premises;

(b) explain the effect of the notice;

(c) state that failure to comply with the notice is an offence;

(d) state that an application will be made under section 80 for a closure order;

(e) specify when and where the application will be heard;

(f) explain the effect of a closure order;

(g) give information about the names of, and means of contacting, persons and organisations in the area that provide advice about housing and legal matters.

(6) A closure notice may be issued only if reasonable efforts have been made to inform—

(a) people who live on the premises (whether habitually or not), and

(b) any person who has control of or responsibility for the premises or who has an interest in them, that the notice is going to be issued.

(7) Before issuing a closure notice the police officer or local authority must ensure that any body or individual the officer or authority thinks appropriate has been consulted.

So, the notice had been served, the premises were emptied of customers and were to remain closed for 24 hours, the maximum period permitted under S77(1) of the Act. This was then subsequently extended by 7 hours, as is permitted under S77(4) if authorised by a superintendent.

This meant that I needed to get to the premises and conduct a full audit, including looking at the CCTV and all management controls. Time was tight as, once a notice is served, the snowball is rolling down the hill and picking up pace, as the court must consider whether a closure order should be imposed within 48 hours of it being applied for.

The legislation is brutal:

S 80 Power of court to make closure orders

(1) Whenever a closure notice is issued an application must be made to a magistrates’ court for a closure order (unless the notice has been cancelled under section 78).

(2) An application for a closure order must be made—

(a) by a constable, if the closure notice was issued by a police officer;

(b) by the authority that issued the closure notice, if the notice was issued by a local authority.

(3) The application must be heard by the magistrates’ court not later than 48 hours after service of the closure notice.

(4) In calculating when the period of 48 hours ends, Christmas Day is to be disregarded.

(5) The court may make a closure order if it is satisfied—

(a) that a person has engaged, or (if the order is not made) is likely to engage, in disorderly, offensive or criminal behaviour on the premises, or

(b) that the use of the premises has resulted, or (if the order is not made) is likely to result, in serious nuisance to members of the public, or

(c) that there has been, or (if the order is not made) is likely to be, disorder near those premises associated with the use of those premises, and that the order is necessary to prevent the behaviour, nuisance or disorder from continuing, recurring or occurring.

(6) A closure order is an order prohibiting access to the premises for a period specified in the order. The period may not exceed 3 months.

(7) A closure order may prohibit access—

(a) by all persons, or by all persons except those specified, or by all persons except those of a specified description;

(b) at all times, or at all times except those specified;

(c) in all circumstances, or in all circumstances except those specified.

(8) A closure order—

(a) may be made in respect of the whole or any part of the premises;

(b) may include provision about access to a part of the building or structure of which the premises form part.

(9) The court must notify the relevant licensing authority if it makes a closure order in relation to premises in respect of which a premises licence is in force.

Full instructions taken, we headed for court and hopefully the chance to have a proper conversation with the Police before the hearing. We had been advised to be at court for 10 am. When we arrived there was nothing listed and we were told it would be 2 pm. Fortunately the Police station sits next to the court so we went to see if the Police were amenable to having a conversation with us.

Throughout the morning we were able to discuss a number of measures which the operator was happy to incorporate into the management controls at the premises. The Police thought that if those measures could be placed as conditions on the premises licence, then they would be happy for the premises to be allowed to open. In those circumstances, we agreed to submit a minor variation to add those conditions to the licence and the Police issued a cancellation notice under S78, which meant that the court was no longer seized of anything to adjudicate on and there was no need to adjudicate on the closure order.

This was a great example of how an operator and the responsible authorities can work together for a mediated conclusion which everyone is happy with.

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J D Wetherspoon PLC refused appeal in Leeds Magistrates Court

I was delighted to represent Arc Inspirations Limited as a party in the Appeal by J D Wetherspoon PLC against the decision of Leeds City Council to refuse it a new premises licence for the former Elinor Lupton Centre in Headingley.

The Elinor Lupton Centre, being part of the old Leeds Girls High School, sits in a residential area away from the commercial centre of Headingley. A number of residents and Arc Inspirations had objected to the grant of a premises licence for the site. On 29 November 2016 Leeds Licensing Authority’s Licensing Sub-Committee heard the application by J D Wetherspoon PLC and refused to grant it a licence.

District Judge Mallon had accepted my submissions that my client, Arc Inspirations Limited, should be allowed to be an interested party and I represented Arc’s interests at the Appeal. The main issues which Arc wished me to bring out, in support of the residents who also objected, centered around the potential for an increase in crime and disorder, were the application to be granted, through a change to the Otley Run (an organised pub crawl through Headingley) and the impact on major match days at the Headingley Rugby League and Cricket grounds.

My clients chair the Headingley Pubwatch and were deeply concerned that the introduction of a 500 capacity premises in the location applied for could have a significant effect on the overall management of licensed premises in the area. Having led Pubwatch for a number of years and having formed strategies for all operators to comply with in relation to the Otley Run, there were significant concerns that premises such as these could significantly reverse the positive steps that had been achieved.

The case came before District Judge Mallon and Stephen Walsh QC represented the Appellant, with Sarah Clover representing Leeds City Council.

After hearing all of the evidence and submissions on behalf of all parties, District Judge Mallon determined that the licence should not be granted, and therefore dismissed the Appeal. In her judgment she set out that the premises fell within the Headingley Cumulative Impact Policy Area which establishes a rebuttable presumption that new grants of premises licences will be refused, unless the applicant can demonstrate that a grant would not exacerbate the cumulative impact already suffered in the area.

The District Judge found that a 500 capacity premises so close to major sporting stadia and in the heart of the Otley Run would have a negative impact on the licensing objectives. She went on to say: “this brings the Court to what it perceives to be the fundamental contradiction at the heart of the Appellant’s case – it does not want to be a student pub and wants to appeal to local residents, yet two-thirds of these are students; it wants to bring in customers from elsewhere, but has a car park with 17 spaces; it wants to encourage a food-led approach whilst offering shots at 3 for £5. The Court does not doubt the honesty of the Appellant’s case, but it is contradicted by the evidence; and, of course, this analysis is not assisted by the evidence of how the business would respond on the occasions of one or other of the sports grounds hosting a match, with the huge increase in trade that would bring”.

I was delighted with the decision of District Judge Mallon and the fact that, in her reasons, she incorporated many of the issues that I had raised in submissions and cross examination of the witnesses.

I have always been of the view that these premises do not lend themselves to being such a high capacity public house, when the impact would be felt by residents and given the potential for an increase in crime and disorder in the wider area, as a result of major sport events and the Otley Run taking place.

 

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Club Flamingo sees its Sexual Entertainment Venue Licence returned after year-long battle

I was instructed to represent City Traders, the owners of Club Flamingo on Alie Street, Aldgate, to attempt to have its Sexual Entertainment Venue Licence (SEV) returned after an unsuccessful renewal application in 2016.

The decision which brought about the immediate closure of the venue was like an exam question, made significantly harder by the fact that we had not been instructed from the outset. The Licence had been the subject of a contested annual renewal and non-specialist lawyers had undertaken representation of the company.

SEV applications are always some of the most tricky, and Tower Hamlets Licensing Committee had refused the licence renewal because they had felt distinctly underwhelmed with the quality of the application to renew. There is a lesson to be learnt here: I would never look to represent my clients in attempting to secure a property deal on new premises. I simply do not have the legal training to do my client’s instructions justice. It is the same with Licensing Applications which become contested, particularly SEV applications. Non-specialist representation had meant that many of the subtle issues (and some not so subtle) had been missed. The renewal process in 2016 had got out of hand and, upon reading all of the papers and the decision, I could easily see that the situation would take some unravelling.

The licensing and control of Sex Establishments is governed by the Local Government (Miscellaneous Provisions) Act 1982. Schedule 3 deals with the licensing and renewal of licences for premises such as Club Flamingo. Paragraphs 8-13 are the critical parts of the Schedule and, in particular, paragraph 12.

Paragraph 12(3) deals with the discretionary grounds that the Licensing Authority has to grant or renew licences.

The discretion to refuse is engaged in the following situations:

(a) that the applicant is unsuitable to hold the licence by reason of having been convicted of an offence or for any other reason;

(b) that if the licence were to be granted, renewed or transferred the business to which it relates would be managed by or carried on for the benefit of a person, other than the applicant, who would be refused the grant, renewal or transfer of such a licence if he made the application himself;

(c) that the number of sex establishments in the relevant locality at the time the application is made is equal to or exceeds the number which the authority consider is appropriate for that locality;

(d) that the grant or renewal of the licence would be inappropriate, having regard —

(i) to the character of the relevant locality; or

(ii )to the use to which any premises in the vicinity are put; or

(iii) to the layout, character or condition of the premises, vehicle, vessel or stall in respect of which the application is made.

The Licensing Committee had refused the 2016 renewal application for Club Flamingo under sub-paragraphs (a) and (d). This refusal meant that any attempt to over turn the decision became complicated. We lodged an appeal to Thames Magistrates Court for the refusal under para (a) as the legislation gives a statutory right of appeal. The lodging of the appeal stays the decision of the Authority. If that were the only ground for refusal then the premises would have been allowed to reopen.

BUT, and it was a big BUT, the renewal had also been refused under para (d), which has no statutory right of appeal. As a result, we worked in collaboration with Philip Kolvin QC of Cornerstone Chambers to apply for permission to judicially review this ground of refusal, and we had to apply for a stay of the decision while the High Court adjudicated on the point, as there is no automatic stay under this para.

We were granted permission, and a stay, which in these types of cases is hugely significant as it means that the premises can reopen and trade pending the substantive decisions in the Magistrates’ Court Appeal and the High Court action. Philip Kolvin QC had persuaded the High Court on his written submissions that there was an arguable case, which was a major step in unlocking the issues.

I am grateful that, at this stage, Tower Hamlets Council representatives accepted our invitation to meet and discuss the full case, as I had never had an opportunity to engage with the Authority previously, due to not being instructed from the outset.

I was able to supply significantly more information about the company, operation and management of the business than had been made available to the Licensing Committee as part of the previous renewal application. We were able to offer additional conditions to be attached to the licence, and as a result the Authority agreed to settle both the statutory appeal and the Judicial Review proceedings, something which allowed the licensee to have certainty to continue to invest.

This was all concluded satisfactorily last week, when the Licensing Authority agreed to renew the licence again for 2017-2018. A considerable amount of work had been undertaken to unravel the issues of the previous refusal.