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Costs awards in licensing appeals

Licensing Bar 146x219A group of residents in Mayfair were recently ordered to pay the licensing appeal costs of another group of residents. Gary Grant explains why.

By applying established principles of non-party costs awards in licensing appeals to a new factual situation, a District Judge in the City of London Magistrates’ Court has ordered a residents’ group to pay some £10,000 in costs to their neighbours in a separate but conjoined appeal.

The appeal arose from the grant of a premises licence by Westminster City Council authorising serviced offices in London’s Mayfair to sell alcohol to the office users. Two sets of nearby residents (the Farm Street Residents and the Hill Street Residents) both appealed that decision to the magistrates’ court but on different grounds and by way of two separate complaints.

Given that these two appeals arose from the same impugned decision they were, understandably, conjoined by the Court and ordered to be heard together at a three-day appeal hearing, with the consent of all the parties.

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Whilst it is rare, but not unheard of, for two sets of residents to appeal a council’s decision, what was exceptional in this case was that the Hill Street Residents then sought to run a “cut-throat” line of attack at the appeal that undermined the interests of the Farm Street Residents.

In relation to costs, the crucial issue (one of many in the appeal) concerned a condition attached to the premises licence by the council requiring all deliveries and collections to take place in Hill Street, i.e. outside the front entrance of the serviced offices. However, the Hill Street Residents, somewhat ungallantly, sought on appeal to amend this condition to ensure that deliveries and collections took place in Farm Street instead. In other words outside their neighbours’ homes rather than their own.

Unsurprisingly, the Farm Street Residents robustly resisted their neighbours’ advance. They served unchallenged expert evidence confirming that in light of the physical layout of the respective streets and delivery points, the council’s decision to direct deliveries and collections via Hill Street was the correct one. It better promoted public safety and served to prevent a public nuisance. Caught in the uncomfortable and lonely area between a rock and a hard place, Westminster City Council took a neutral approach at this appeal.

The Farm Street Residents reached a full agreement with the serviced offices on how to settle the appeal (involving restrictions on use of the external garden) over a fortnight before the 3 day appeal hearing was due to be heard. The Farm Street Residents, very properly, continued their polite efforts to persuade their neighbours not to pursue their unwelcome attempt to reverse the deliveries and collections condition. Costs warnings were repeatedly and fairly given, but regrettably ignored.

At the eleventh hour the Hill Street Residents also managed to reach an agreement with the serviced offices settling the appeal and, eventually, abandoned their request to amend the controversial condition on deliveries and collections.

However by this time (just one clear working day prior to the 3 day appeal hearing) the bulk of the legal work preparing for the appeal hearing had already been carried out, at significant expense to the Farm Street Residents. It was unfair, they submitted, that they should be financially penalised for successfully defending the deliveries condition rightly imposed by Westminster City Council against the attack on it by the Hill Street Residents. They applied to the Court for an order that the Hill Street Residents pay a proportion of their costs to reflect the work they carried out defending this point.

The power to make such an order lies in the wide-discretionary nature of section 181(2) of the Licensing Act 2003 that permits a Court to make “such order as to costs as it thinks fit”. This wide power provides the court with an “unfettered discretion” to make costs awards including, by way of example:

(a) Against parties who have technically succeeded in their appeal but have conducted themselves unreasonably (e.g Prasannan [2010] EWHC 319); and,

(b) Against “non-parties” to an appeal in exceptional and appropriate circumstances. (See authorities cited in Paterson’s Licensing Acts 2015 at paragraph 5.8A, Vol 1, p 2493).

Although, in the past, most non-party costs orders have involved instances where, for example, an individual company director has been ordered to personally pay costs even though his company was formally the “party” in a licensing appeal, the District Judge accepted the submissions of the Farm Street Residents that this established a general principle that costs awards could be made against non-parties to an appeal in “exceptional and appropriate circumstances”. Such circumstances existed in the present case where residents in a conjoined appeal had unreasonably conducted themselves at the expense of a party in the other appeal.   

Although no decision of a magistrates’ court is of binding authority, District Judge Jeremy Coleman, in a written reserved judgment dated 4 November 2015, noted that:

“In reality both appeals became part of one court case. Having consented to the joining together of the two appeals, I find there to be an overall responsibility on all parties to the court and to each other, to progress the case, seek to reach a settlement at all times, and prepare efficiently for an effective hearing. The waste of court time caused by last minute settlements at the door of the court is a constant concern in all areas of litigation. I find that I have the power to award costs between the appellants in this case … I find that the failure to reply to correspondence and deal with offers to settle the proceedings does amount to an unnecessary or improper act or omission resulting in the [Farm Street Residents] incurring additional costs. I therefore find it appropriate to exercise my discretion to order costs against [the Hill Street Residents] in favour of the [Farm Street Residents]."

Gary Grant of Francis Taylor Building represented the Farm Street Residents instructed by Jeremy Hudson of Charles Russell Speechlys solicitors.

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