Supreme Court to hear landmark Hemming case on licensing fees

February 28, 2014

Westminster City Council has been given permission to take to the Supreme Court the landmark Hemming case concerning the setting of licensing and regulatory fees.

In May 2013 the Court of Appeal ruled in R (Hemming & Others) v Westminster City Council [2013] EWCA Civ 591 that – as a result of the Services Directive 206/123/EC coming into force in December 2009 – licensing authorities could not charge licensees (in this case sex shop owners in the West End) more than the costs of the authorisation procedures themselves.

It upheld Mr Justice Keith’s ruling in the High Court that while the costs of the authorisation – including monitoring compliance of operators – were fairly part of the fee, the costs of enforcement against unlicensed third party operators were not.

The city council had sought to argue that there should be no distinction between the enforcement of licensed and unlicensed operators.

But in the Court of Appeal Lord Justice Beatson said: “It is difficult to see how even a strained interpretation enables the ‘cost of authorisation procedures and formalities’ to include the cost of prosecuting unlicensed operatives who have not applied for authorisation.”

The Court of Appeal refused Westminster permission to appeal to the Supreme Court but the council has now successfully applied direct.

Peter Large, Westminster City Council’s Head of Legal & Democratic Services, said: “We believe this is an extremely important case, with potentially far-reaching implications. It will effectively determine whether it is still possible for anyone to operate a self-funding licensing and regulatory service – across the UK.

“That is why the council’s argument is supported by a broadening coalition of interested parties who realise what is at stake. Clearly, we are pleased that we have been given leave to challenge the Court of Appeal’s ruling and look forward to the hearing in the Supreme Court.”

The Court of Appeal ruling reportedly left Westmister facing a potential £2m payout. The authority’s cabinet member for public protection and premises, Cllr Nickie Aiken, warned at the time that the decision would mean “a free-for-all for the sex industry”.

Cornerstone Barristers’ Philip Kolvin QC, who appeared for the sex shop owners in both the High Court and the Court of Appeal, later argued in a book that fees regulations governing premises licences, personal licences and club premises certificates were unlawful as a result of the Court of Appeal’s findings.

He said the Licensing Act 2003 (Fees) Regulations 2005 were lawful when they were published in 2005 but became unlawful when the Services Directive came into force.

Kolvin argued that the 2005 regulations fell foul of the rule even though the fees in the regulations were set by central government rather than local licensing authorities.

He claimed that the issue potentially affected fees for more than 600,000 licences in England and Wales.

Fees regulations for 600,000+ licences are unlawful says top QC

LGA urges councils to review locally set licence fees after Hemming ruling

Local authorites, licensing fees and the Hemming case by Paddy Whur