Emerging from the shadows

Traffic lights iStock 000003944828XSmall 146 x 219What are the practical implications of a recent High Court decision on shadow licences? Paddy Whur explains.

The claimants in the High Court case of Extreme Oyster/Star Oyster Limited and Guildford Borough Council [2013] EWHC 2174 (Admin) had submitted applications for what were described as “shadow” licences to Guildford Licensing Authority.

This term has no legal definition in the Licensing Act 2003, but the applicants in real terms had lodged Premises Licences for premises which already had Premises Licences granted to a third party who was operating part of the premises. The second claimant, Star Oyster Limited was the freehold owner of two nightclub premises in Guildford, known as The Casino and Players Lounge and Bar Mambo. Luminar Leisure Limited held Premises Licences for both premises. The first claimant, Extreme Oyster Limited, was the trading limb of Star Oyster Limited. They had operated Bar Mambo prior to Luminar taking over in 2012.

In May 2012, when Luminar were exercising their power to remove the Star Oyster from the premises, Star applied for “shadow” licences in respect of these areas within them.

The claimants wished, for commercial reasons, to have the benefit of licences operating in parallel to those held by Luminar.

Guildford Licensing Authority refused the claimants' applications on the basis that they had failed to satisfy the terms of section 16 of the Licensing Act 2003. This section means that applicants for a premises licence must qualify under one or more of the “gateway criteria” imposed by that Section. One of those “gateway criteria” is directly relevant to Guildford’s refusal:

Section 16 applicant for Premises Licence

(1) The following persons may apply for a Premises Licence –

(a) A person who carries on, or proposes to carry on, a business which involves the use of the premises for the licensable activities to which the application relates.

During the High Court case, Guildford Borough Council advanced three specific policy grounds in support of its approach:

(a) Section 16 does not provide for a “free for all”. In restricting the pool of possible applicants Parliament clearly considered there was benefit in doing so.

(b) Numerous licences make enforcement more difficult. Clarity of responsibility is important as noted by the current Guidance at paragraph 8.17.

(c) Unrestricted applications place an undue burden on licensing authorities.

[Paragraph 42 of the judgement]

Mr Justice Turner dismissed point (a) of the defendants’ argument stating that no one suggests that Section 16 provides a “free for all”. He went on to say “it is self evident that Parliament would not have imposed the Section 16 gateways unless it considered that some benefit would thereby be achieved. This, however, begs the question as to where the line is to be drawn. The existence of the line cannot, of its self, determine its position”.

The judgment goes on to highlight that contentions (b) and (c) are not without some weight. However, he stated that the weight was not sufficient in his view to preclude a broad interpretation of Section 16 (1). Through paragraphs 44 to 50 of his judgement he highlights where a broad interpretation should be followed for the following reasons:

  1. R (Daniel Thwaites plc) v Wirral Borough Magistrates’ Court and others [2008] EWHC 838 (Admin), highlights that a wider approach to the interpretation of 16 (1) (a) facilitates the policy aims mentioned in the case, whereas those advocated by the defendant does not.
  2. The applicant for a shadow licence may have very good and perfectly legitimate business reasons to include different licensable activities in a second licence than the first. The automatic exclusion of such applications from further consideration under section 16 would “celebrate in triumph of bureaucracy over common sense”.
  3. If there were any sound policy reasons for taking issues with the terms of the second licence as against those in the primary licence then these should be considered at a full hearing on their merits rather than being dismissed outright.
  4. If Parliament had decided to preclude the making of a second/subsequent licence application then this would have been mentioned in the primary legislation or the Guidance.
  5. Section 17 of the Act treats the “relevant licensable activities” as enjoying a separate conceptual existence from, for example, the times during which it is proposed that the relevant licensable activities are to take place.

At paragraph 81 of the judgment Mr Justice Turner states, “there was no justification for Guildford to act in breach of its Delegation Policy. Public and the claimants had a legitimate expectation that this policy would be followed. I am, therefore, satisfied that the decision on Section 16 is one that ought not to have been determined by Mr Curtis-Botting alone and would quash his decisions on this basis also. I would add that the answer to the question whether, in any given case, there is a sufficient nexus between an existing business and the licensable activities to which an application is made may not always be straightforward and that it would not be generally inappropriate for policies to provide for licensing sub-committee’s to make the relevant determination rather than to delegate it to an individual officer”.

The practical conclusion of the case was that the judge declared that Star’s applications were compliant with Section 16 (1) (a) and must be allowed to proceed to a substantive hearing to determine the merits of their application.

Mr Justice Turner was happy that the landlord’s were carrying on a business which involved the use of the business to which the application related for licensable activities and therefore met the Section 16 (1) (a) gateway criteria.

This undoubtedly could have practical importance in the way that companies seek to have multiple licences on individual sets of premises and we will report as to developments as and when we see them.

Paddy Whur is a partner at Woods Whur. He can be contacted by This email address is being protected from spambots. You need JavaScript enabled to view it..