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When Licensing and the Criminal Law Collide

A recent case that I dealt with in the Midlands provides an insight into the overlapping worlds of licensing and the criminal justice system.

The clients, who run an off-licence, initially approached us to assist them in defending a review of their Licensing Act premises licence. The application had been made by Trading Standards, following a raid on the premises which had turned up a large amount of counterfeit and other illicit tobacco, concealed behind wooden partitions in the stock room. Interestingly, Trading Standards had chosen not to use the summary review procedure, which would have enabled the Local Authority to take interim steps in respect of the licence pending a full review hearing. That procedure was available to them, as the allegation amounted to one of serious crime being associated with the premises, but they chose instead to use the standard review process.

On behalf of the premises licence holding company, it was said that the directors had been unaware of the presence of the cigarettes until the raid took place. An employee, who was also the son of one of the shareholders, had confessed some time afterwards to hiding them there, having been prevailed upon to do so by an acquaintance. He had since been dismissed. This explained why, at the time of the raid and their subsequent PACE interviews, the director and shareholder had been unable to offer any explanation for the find.

We submitted statements to the Local Authority in preparation for the review hearing, setting out our clients’ case and also describing the various measures that the company had put into place since these unfortunate events, including dismissing the employee, passing a company resolution no longer to employ family members, and installing CCTV in the stock room. This was the first time that Trading Standards had heard our clients’ explanation, and they understandably sought an adjournment of the review hearing, in order to enable them to conduct a PACE interview of the employee concerned. We consented to this, and the story he gave in interview was consistent with our clients’ version of events.

This notwithstanding, Trading Standards asked that a new date be fixed for the review hearing, and this was duly done. In the intervening period, however, the prosecution brought by Trading Standards against the licence holding company and its director came up for hearing before the Magistrates’ Court and we were instructed to defend both parties at the trial.

There were some 22 charges brought, arising under the Consumer Protection Act 1987 and the Trade Marks Act 1994. The allegations related to possessing for sale counterfeit tobacco and products not bearing the health warnings required by law. The prosecuting authority had no evidence of actual sales of the articles in question being made: indeed, the premises had passed a number of test purchases aimed at flushing out illegal tobacco sales.

This being the case, the Prosecution had to prove to the requisite criminal standard of proof, beyond all reasonable doubt, that the company and its director were aware that the illicit tobacco was on the premises and were keeping it there with a view to selling it, or that they had failed to exercise all due diligence in allowing it to be there. We were instructed to enter not guilty please to all charges on the basis of the employee’s claim that he had been bullied by a third party, without anyone else’s knowledge, into stashing the tobacco at the premises.

Both the employee and the company director appeared as witnesses at the trial, and their accounts were entirely consistent with everything that had been said previously. The Bench of lay Magistrates listened to all the evidence, which took all day, and concluded that the Prosecution had not proved its case beyond all reasonable doubt. The employee’s explanation was sufficiently credible to cast a doubt upon the guilt of the company and its director. Not guilty verdicts were returned in respect of all charges and we were able to recover some £14,000 in costs against Trading Standards.

It is somewhat unusual for costs to be recovered against a Local Authority upon a successful defence of a prosecution, as it only happens when the Court considers that the Authority has acted unreasonably in pursuing the case. Here, because the flaws in the evidence and the Defence’s explanation had been repeatedly set out to the Council’s lawyers in correspondence in the run-up to the trial, the Court felt that proceeding with the prosecution had been unreasonable.

Our clients were, understandably, delighted with the result in the Magistrates’ Court, but there remained the question of the review proceedings, which were listed for hearing some weeks afterwards. It came as something of a surprise, then, when, a couple of days after the acquittals, the Local Authority got in touch to say that Trading Standards were prepared to abandon the review, as long as our clients would consent to a condition being placed on the premises licence to the effect that the stock room be covered by CCTV. As mentioned above, this had already been put in place and so this represented an excellent result for our clients, who were otherwise potentially facing the revocation of the licence.

The simple fact of the acquittals on the criminal charges did not, of itself, prevent the review from going ahead. As noted above, the standard of proof in a criminal case is extremely high – beyond all reasonable doubt, or “99.9% certainty of guilt”- in order to secure a conviction. The same high standard does not apply in civil cases, which are decided on the balance of probabilities, otherwise known as the principle of “more likely than not”. Although the employee’s version of events in this case was enough to cast sufficient doubt in the minds of the Magistrates, it might not have satisfied the Licensing Committee to their required standard. Furthermore, the Committee might well have felt that the management of the premises generally demanded scrutiny and standards to be addressed, due to the fact that, even on the Defence case, the employee had been able to stash a large amount of illicit tobacco on the premises without being detected. It is also worth noting that costs are not recoverable at licensing hearings until the matter reaches the appeal stage.

In the event, though, Trading Standards clearly decided to take a pragmatic approach in a case that had already consumed very significant time and resources. It appears that they felt that the introduction of back-of-house CCTV would be sufficient – when taken together with the other measures that our clients had already put in place – to prevent similar problems from arising at the premises in the future. Such pragmatism does not invariably manifest itself in the licensing field, however, and it is worth remembering that an acquittal in a criminal trial does not necessarily preclude a review of the licence being pursued on grounds of crime associated with the premises.