Mitchells and Butlers Retail Ltd & Anor, Re Judicial Review [2004] ScotCS 244 (05 November 2004)

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Scottish Court of Session Decisions

You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Mitchells and Butlers Retail Ltd & Anor, Re Judicial Review [2004] ScotCS 244 (05 November 2004)
URL: http://www.bailii.org/scot/cases/ScotCS/2004/244.html
Cite as: [2004] ScotCS 244

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OUTER HOUSE, COURT OF SESSION

P1534/04

OPINION OF LORD MACKAY OF DRUMADOON

in the petition of

(FIRST) MITCHELLS AND BUTLERS RETAIL LIMITED and (SECOND) SPIRIT GROUP LIMITED

Petitioners;

for

Judicial Review of a policy decision of 8 September 2004 by Aberdeen City Licensing Board prescribing minimum prices for the sale of alcohol

Respondent:

________________

Act: Anderson, Q.C., Blair ; Balfour & Manson

Alt: Peoples Q.C. ; Morton Fraser

5 November 2004

Introduction
[1] The first and second petitioners in this petition hold public house licences in respect of licensed premises in Aberdeen. The respondent is the Aberdeen City Licensing Board, which is the licensing board for the City of Aberdeen, in terms of Section 1 of the Licensing (Scotland) Act 1976 ('the 1976 Act'). The petitioners' public house licences were granted by the respondent.

The respondent's policy of 8 September 2004
[2] At a meeting, held on 8 September 2004, the respondent endorsed a new policy on "Irresponsible Alcohol Promotions in Licensed Premises" ('the Policy') and set a minimum price tariff, detailing minimum prices for the sale of alcohol in on sale licensed premises in the City of Aberdeen.

[3] On 8 September 2004 the Chair of the respondent wrote a letter to all licence holders and nominated managers of licensed premises in the City of Aberdeen. That letter was in the following terms:-

" Dear Licence Holder

POLICY ON IRRESPONSIBLE ALCOHOL PROMOTIONS

You will be aware from receiving the consultation document and from media interest that the Licensing Board is to implement a new policy on irresponsible alcohol promotions with effect from 19^th October 2004, the first day of the October Quarterly Meeting. Licence holders expressed a great deal of support for the policy in their consultation responses.

The purpose of the new policy is to begin to tackle the antisocial behaviour and ill health which occurs as a result of binge drinking and drunkenness and to make the streets of our city safer places in which to live, work and play.

At a special meeting today the Licensing Board endorsed the new policy and set the minimum price at which alcohol should be sold. The new policy and the minimum price tariff are attached for your information. Licence holders who sell alcohol at prices below this tariff will be deemed by the Board to be irresponsible and will be required to explain to Board why they were doing so.

From 19^th October 2004 you are required to charge, as a minimum, the prices on the tariff for the alcoholic drinks listed. Please read the policy carefully. The policy has been finalised taking into account the views of those who responded to the consultation and some revisions have been made to reflect this. The survey results can be viewed on our web site at the address below.

As you can see the effects of the policy are twofold.

(1) Everyone who applies for a regular or occasional extension of permitted hours from 19^th October 2004 will have an additional condition attached to their extension which will oblige the applicant to adhere to the policy.
This condition will apply to all extended hours, that is, before 11am, after 11pm and 2.30-6.30pm on Sunday.

(2) In order to create a level playing field and apply the new policy to all premises at the same time, all on sale licence holders are to be asked to sign an undertaking that the minimum price tariff will apply during all the hours the premises are open.
This will ensure the minimum prices will apply to the permitted hours, (11am - 11pm) and to premises which do not have regular extensions.
The vast majority of those who responded to the consultation were willing to sign such an undertaking.
Therefore from 19^thOctober 2004 all on sale licensed premises and registered clubs in Aberdeen will have to sell alcohol at or above the prices indicated on the minimum price tariff.

Your letter of undertaking which states that you will comply with the policy is enclosed. Please sign this and return it no later than 5pm on Monday 4^th October 2004 to Arlene Burnett, Licensing, Legal and Democratic Services, Aberdeen City Council, Town House, Broad Street. Aberdeen, AB10 1AQ.

Should anyone fail to give the undertaking this Board will consider taking enforcement action as detailed in the policy. I would stress that no one wants to take these steps and it is hoped that you recognise that this is a genuine attempt by the Board to assist in alleviating the problems created by excess alcohol consumption.

If you are uncertain about any of these procedures you should obtain independent legal advice before submitting your undertaking.

Yours faithfully

Ronald Clark

Chair

Aberdeen City Licensing Board "

[4] Three sheets were enclosed with the letter. The Policy was set out on two of those sheets and the third sheet contained a pro forma declaration, for completion by licence holders. The sheets were in the following terms: -

" ABERDEEN CITY LICENSING BOARD

Policy on Irresponsible Alcohol Promotions

In Licensed Premises

Background and Purpose of Policy

Aberdeen City Licensing Board has been aware for some time of the increasing trend for alcohol promotions carried out in licensed premises in the City.

Extended happy hours, two for one offers, deep discounting and similar promotions encourage customers to binge drink, that is, consume large quantities of alcohol over a relatively short period of time. Binge drinking leads to drunkenness which, in turn, leads to health problems, anti-social behaviour and an increase in crime, especially crimes of violence. Grampian Police have provided statistics showing a recent marked increase in violent crime in the City and, significantly, much of this is alcohol related.

The Board is very concerned at this trend and is supported in this view by Grampian Police, Aberdeen Entertainment Licence Holders' Association, Aberdeen Excise Licence Holders' Association and the Community Council Forum.

The Board recognises that licensees on the whole are responsible persons. However the Board is also aware that there are licensees who offer promotions of low cost alcohol which contribute to drunken behaviour and its associated problems.

Whatever form the alcohol promotion takes, the basic concern is that alcohol is sold at such low prices that binge drinking is encouraged. The Board therefore resolved that promotions which encourage this activity are irresponsible and should be eliminated.

Having considered a number of options as to how this can be achieved the Board has decided to introduce a minimum price tariff which will apply across the City. Sales of alcohol at prices below this tariff will be considered by the Board to be irresponsible, and action will be taken by the Board to consider whether such licensees remain fit and proper persons to be the holders of the licences.

This policy will not apply to off sale licensed premises.

This policy will come into force on 19^th October 2004, the date of the October quarterly meeting.

Procedure:

In order to ensure that irresponsible alcohol promotions are eliminated, the Board has decided (a) that the policy will apply to all on sales licensed premises and registered clubs, (b) to introduce a condition to all occasional and regular extensions of permitted hours, and (c) to require all licence holders to sign an undertaking to the effect that they will comply with the minimum price tariff all the time the premises are open for business and (d) to require all licence holders to provide tap water free of charge on request.

The minimum price tariff will be as follows:

1. In the case of draft beers, lagers, ales, cider and stouts £1.75 per pint or a pro rata equivalent in respect of any multiple or fraction thereof.

2. In the case of spirits, fortified wines or liqueurs £1.20 per 25ml measure or a pro rata equivalent in respect of any multiple or fraction thereof.

3. In the case of wine £1.25 per 125ml measure or a pro rata equivalent in respect of any multiple or fraction thereof.

4. In respect of any p.p.s.'s (premium package specialities), p.p.l.'s (premium packaged lagers) or f.a.b.'s (flavoured alcoholic beverages) £1.75 per 275ml bottle or unit thereof.

5. The sale of jugs of cocktails being measures of spirits and/or liquors and/or soft drinks shall be retailed at a pro rata equivalent to £1.75 per 275ml, for example, a one litre jug of cocktail can be retailed at a price of not less than £6.36.

6. In the case of non premium beers and lagers £1.50 per 275ml measure or a pro rata equivalent in respect of any multiple or fraction thereof.

The condition will be introduced to all occasional extensions as soon as the policy is approved in its final form. For regular extensions of permitted hours the condition will be introduced commencing at the October Board 2004.

Enforcement of Policy

Should the applicant fail to adhere to the policy or breach the condition the Board will consider the following:

(a) Whether the applicant is a fit and proper person to be the holder of the licence.

(b) Whether or not in terms of Section 47(1) Law Reform (Miscellaneous Provisions) (Scotland) Act 1990 the benefit to the community as a whole outweighs the detriment to the locality particularly, with regard to public safety and the likelihood of public nuisance occurring in that customers could be encouraged to "binge drink".

(c) Whether, in light of (a) the Board should consider enforcement action including, as appropriate, suspending the licence in terms of Section 31 and 32 of the Licensing (Scotland) Act 1976 or imposing a restriction order in terms of Section 65 of the Act.

In addition all licence holders are expected to sign a formal undertaking to the effect that the minimum price tariff will apply during all the hours that the premises are open.

ABERDEEN CITY LICENSING BOARD

Declaration in relation to the policy on irresponsible alcohol promotions.

The declaration should be completed by all licence holders (including Registered Clubs) in respect of all trading hours.

Name of Premises ____________________________________________

Address of Premises ____________________________________________

____________________________________________

I declare that I shall comply with Aberdeen City Licensing Board's policy in respect of irresponsible alcohol promotion and will ensure that alcohol is not sold on the above mentioned premises at any time at a price below that advertised on Aberdeen City Licensing Board's published minimum price tariff.

Signature __________________________________________________

(of licence holder/Section 11 nominee/agent)

Designation __________________________________________________

Print Name __________________________________________________

Date __________________________________________________

Address of Signatory: ______________________________________

______________________________________

______________________________________"

Background to respondent's policy
[5] As is clear from the terms of what was sent to all licence holders on 8 September 2004, the background to the adoption of the respondent's Policy on Irresponsible Alcohol Promotions is public concern about the occurrence and consequences of what is referred to as 'binge drinking'. That public concern was a subject dealt with in the Report of the Nicolson Committee, which was published in August 2003, following the Committee's Review of Liquor Licensing in Scotland. The Report explained that 'binge-drinking' is the name given to the practice of drinking very substantial quantities of alcohol within a very short period of time. The Report indicated that it had been represented to the Committee, by many consultees, that binge drinking was actively encouraged by a small number of bars and night clubs, which engage in deep price discounting and other promotional activities of an irresponsible kind.

[6] The Report summarised the dangers associated with excessive drinking within a short period of time and noted these as including (a) harmful effects, sometimes of a serious kind, on the health of those who engage in binge drinking, (b) binge drinking acting as a trigger for behaviour that is undesirable and unacceptable to the community at large and (c) binge drinking leading to violence and public disorder. Whilst the Report of the Nicolson Committee noted that not all price discounting and price promotions are objectionable, the Committee expressed the view that grossly irresponsible discounting and other promotional activities, which simply encourage binge drinking, must if possible be controlled in the public interest (Para. 12.5) and made specific recommendations as to how that could be achieved.

[7] Since the Report of the Nicholson Committee was published, the Scottish Executive has begun a consultation exercise, which will culminate in the Executive introducing legislation designed to amend the 1976 Act. One particular issue that is being consulted upon is how to tackle irresponsible promotions and price discounting that encourage binge drinking.

[8] Against that background, it is hardly surprising that senior counsel for the petitioners made clear during the course of his submissions that no attack was being made on the good faith of the respondent. It was accepted that the members of the respondent saw the Policy as being desirable and capable of attaining the respondent's avowed purpose of beginning 'to tackle the antisocial behaviour and ill health that occurs as a result of binge drinking'. It was not suggested that the members of the respondent were not entitled to hold such a view. The only issue raised was whether the Policy adopted by the respondent on 8 September 2004 is lawful. The petitioners contend that it is not.

The petitioners' applications
[9] As I have indicated, the respondent's October Quarterly Meeting was due to take place on 19 October 2004. In anticipation of that meeting the petitioners lodged a number of applications: (a) in terms of Section 17 of the 1976 Act, seeking the renewal of certain of their public house licences and (b) in terms of Section 64 of the 1976 Act, seeking regular extensions of the permitted hours in respect of certain of the public house licences, which they currently hold.

[10] The present petition was raised during September 2004. Article 2 of the petition summarises the respondent's Policy as being a "policy whereby it (i) requires the petitioners to sign an undertaking not to sell alcohol at any of their licensed premises during normal permitted hours except at or above minimum prices specified therein and (ii) that in addition, a condition to that effect would be inserted in any grant of regular or occasional extension of permitted hours in terms of Section 64(6) of the 1976 Act". In the petition the petitioners seek declarator that the respondents' Policy is unlawful and ultra vires of the 1976 Act and production and reduction of the Policy.

[11] Subsequently, on 13 October 2004 the respondent's Depute Clerk wrote to those applicants for regular extensions of permitted hours, who had not submitted, by 4 October 2004, a letter of undertaking in the terms of the draft declaration attached to the letter dated 8 September 2004. The letter dated 13 October 2004 was in the following terms:-

" Dear .........

APPLICATION FOR REGULAR EXTENSION OF PERMITTED HOURS

PREMISES: ............

You will recall that Aberdeen City Licensing Board recently wrote to you/your client introducing its Irresponsible Alcohol Promotions Policy. A copy of that letter is enclosed.

In terms of the Policy the Board requested that you/your client submit a letter of undertaking by 4^th October 2004 agreeing to comply with the Policy and to ensure that you/your client would not sell alcohol at the price below that advertised on the Board's published minimum price tariff.

I note that you/your client have not yet submitted your letter of undertaking, and that the above application calls before the Board at its forthcoming quarterly meeting on 19^th October 2004.

In the circumstances I therefore cite you/your client to attend the meeting of Aberdeen City Licensing Board and be legally represented if desired, on Tuesday 19^th October 2004 in the Town & County Hall, Castle Street, Aberdeen commencing at 10.30am.

At the meeting you will be required to explain either (a) why you have not complied with the Board's request or (b) why your application constitutes a special case as to why the Policy should not apply to you.

Failure to adhere to the Board's policy may result in the Board refusing your application.

Should it be the case, however, that you/your client have simply forgotten to submit the undertaking please do so now. I enclose a fresh letter of undertaking for you to sign in case you have mislaid the original.

If you/your client submit the signed letter of undertaking signed before 19^th October, attendance at the Board will not be required.

Yours faithfully, "

On account of the raising of these proceedings, at the Quarterly Meeting on 19 October 2004, applications in the name of the petitioners and other applicants were adjourned to a further meeting of the respondent, which will take place on 9 November 2004.

Statutory provisions
[12] Applications to the respondent for the grant and renewal of public house licences fall to be dealt with in accordance with the provisions of Section 17 of the 1976 Act. That section provides:-

"Grounds for refusal of application

17.-(1) A licensing board shall refuse an application of the type described in subsection (2) below if it finds that one or more of the following grounds for refusal, being competent grounds, applies to it-

(a) that the applicant, or the person on whose behalf or for whose benefit the applicant will manage the premises or, in the case of an application to which section 11 of this Act applies, the applicant or the employee or agent named in the application is not a fit and proper person to be the holder of a licence;

(b) that the premises to which an application relates are not suitable or convenient for the sale of alcoholic liquor, having regard to their location, their character and condition, the nature and extent of the proposed use of premises, and the persons likely to resort to the premises;

(c) that the use of the premises for the sale of alcoholic liquor is likely to cause undue public nuisance, or a threat to public order and safety ;

(d) that, having regard to-

(i) the number of licensed premises in the locality at the time the application is considered; and

(ii) the number of premises in respect of which the provisional grant of a new licence is in force,

the board is satisfied that the grant of the application would result in the overprovision of licensed premises in the locality,

and otherwise shall grant the application.

(2) The grounds on which different types of application may competently be refused by a licensing board are those mentioned opposite the respective types of application set out below -

new licence, including the provis- those set out in subsection (1)

ional grant of such a licence

renewal of licence those set out in paragraphs (a) to (c) of subsection (1) above

.....

(3) In considering the grounds for refusal mentioned in paragraph (a) of subsection (1) above, the licensing board may have regard to any misconduct on the part of any person mentioned in that paragraph, whether or not constituting a breach of this Act or any byelaw made thereunder, which in the opinion of the board has a bearing on his fitness to hold a licence.

(4) An applicant for the grant of a new licence, including the provisional grant of such a licence, or for the renewal or permanent transfer of a licence may appeal to the sheriff against a refusal of a licensing board to grant, renew or transfer the licence or to grant the licence in respect of the permitted hours on Sunday, as the case may be.

.....

(6) Any person entitled under this section to appeal to the sheriff against the grant or refusal of a licence may appeal to the sheriff against a decision of a licensing board to attach a condition to a licence, being a condition mentioned in section 38(3) or 101(2) of this Act."

That section accordingly requires a licensing board to refuse an application for the grant or renewal of a public house licence if it finds that one of the statutory grounds for refusal applies. Otherwise a licensing board shall grant or renew the licence. If a licensing board grants or renews a public house licence, it does not have any power to impose conditions on the public house license, unless in accordance with the provisions of sections 18A, 38(3) or 101(2) of the 1976 Act.

[13] It was agreed between the parties that there are no other provisions in the 1976 Act, which would entitle the respondent to attach any condition to any public house licence held by the petitioners. It was also agreed that the provisions of Sections 18A and 101 of the 1976 Act are not applicable to the renewal of the petitioners' public house licences and that no byelaws have been made by the respondent under Section 38 of the 1976 Act, which would entitle the respondent to impose conditions on the renewal of public house licences held by the petitioners.

[14] Section 53 of the 1976 Act defines the permitted hours for public house premises. Applications by holders of public house licences for regular extensions to permitted hours fall to be dealt with by the respondent in accordance with the provisions of Section 64 of the 1976 Act. They provide:-

"Occasional and regular extensions of permitted hours

64.-(1) Any person holding a public house licence, a hotel licence, a restricted licence, a restaurant licence, an entertainment licence, a refreshment licence or a licence under Part III of this Act, in respect of any premises, may apply to the licensing board within whose area the premises are situated for the grant of an occasional or regular extension of permitted hours, and at the same time as he makes the application he shall send a copy of the application to the chief constable.

(2) A licensing board may grant an application for an occasional extension of permitted hours in connection with any occasion which the board considers appropriate, and such a grant shall authorise the person to whom it was granted to sell or supply alcoholic liquor in the premises to which the application relates during such period not exceeding one month and between such hours and on such day as may be specified in the grant.

(3) After considering the application and any objections made thereto, a licensing board may grant an application for the regular extension of permitted hours if, having regard to the social circumstances of the locality in which the premises in respect of which the application is made are situated or to activities taking place in that locality, the board considers it is desirable to do so, and such a grant shall authorise the person to whom it was granted to sell or supply alcoholic liquor in the premises to which the application relates during such period in the year succeeding the date of the grant and between such hours and on such days as may be specified in the grant.

.....

(6) A licensing body may attach such conditions as it thinks fit to the grant of an occasional or regular extension of permitted hours under this section, and if-

(a) the holder of the licence or his employee or agent contravenes such a condition he shall be guilty of an offence; or

(b) such a condition is contravened as regards any club, every person whose name is, at the time of the contravention, contained in the list lodged under subsection (3)(b) of section 103 of this Act, or as the case may be in the new list last lodged under subsection (5) or (5A) of that section, in respect of that club shall be guilty of an offence:

Provided that a person shall not be convicted of an offence under this paragraph if he proves that the contravention in question took place without his knowledge or consent.

.....

(8) A licensing board shall not grant an extension of permitted hours under this section if it considers that the extension of permitted hours under this section is likely to cause undue public nuisance or to be a threat to public order or safety.

....."

[15] Section 47(1) of the Law Reform (Miscellaneous Provisions) (Scotland) Act 1990 ('the 1990 Act') provides: -

" A licensing board shall not grant an application under section 64 of the (1976) Act for an extension of permitted hours unless it is satisfied by the applicant, taking account of the factors mentioned in subsection (3) of that section -

that there is a need in the locality in which the premises in respect of which the application is made are situated for a regular extension of the permitted hours; and
that such extension is likely to be of such benefit to the community as a whole as to outweigh any detriment to that locality."

[16] During the debate before me the parties were agreed that a licensing board is entitled to adopt policies in connection with the discharge of its functions under the 1976 Act, provided such policies are relevant to the statutory provisions within which licensing boards require to operate. A licensing board may adopt and apply a policy, provided that it gives each applicant for the grant or renewal of a licence or an extension of permitted hours the opportunity to argue that the policy should not be applied to his application or his licence or any extension of permitted hours relating to his licence. It was also a matter of agreement that a licensing board must apply its mind to each application before it. A policy cannot be applied rigidly, without giving an applicant or a licence holder the right to be heard. In this regard reference was made to Elder v Ross & Cromarty Licensing Board 1990 S.C.L.R.1, Cinderella's Rockafella's and Another v Glasgow District Licensing Board 1994 S.C.L.R.591 and Bass Inns & Taverns Ltd v City of Glasgow District Licensing Board 1996 S.L.T. 242.

Submissions for petitioners
[17] The petitioners challenge the Policy on the basis that it is unlawful. Senior counsel for the petitioners argued that the language of the Policy was unambiguous, when it indicated an intention to seek an undertaking from all licensees, under threat of enforcement proceedings. The enforcement of the Policy was an integral part of the Policy. It was not apparent from the terms of the policy document that the application of the Policy could be disputed by a licence holder. Nor was that apparent from the terms of the accompanying letter, dated 8 September 2004, whatever may have been stated on behalf of the respondent in the letter of 13 October 2004.

[18] Senior counsel for the petitioners submitted that two questions arose: (1) Is the respondent entitled, as a matter of law, to demand an undertaking of the nature it has sought?, and (2) Is the condition which the respondent intends to apply to all regular extensions of permitted hours permissible as a matter of law?

[19] It was submitted that the Policy adopted by the respondent involved the respondent seeking to add a "condition" to the petitioners' public house licences, during the currency of those licences and in the event of their renewal. That was ultra vires of the respondent, as was the respondent threatening to found on the failure of licence holder to sign a letter of undertaking. Senior counsel submitted that it was clear from the Policy Document itself and from the letter of 8 September 2004 that was what the respondent intended to do and had commenced doing.

[20] Senior counsel for the petitioners argued that the policy was ultra vires because there was no warrant in the 1976 Act allowing a licensing board to require an undertaking from licence holders, in a manner which amounted to the licensing board seeking to impose a condition into a public house licence, during the currency of the licence. It was submitted that even the provisions of Section 64(6) of the 1976 Act did not authorise the respondent to impose a condition on a regular extension of permitted hours, in the terms of the undertaking that the Policy indicated was being required from all licence holders. Senior counsel argued that there were provisions in the 1976 Act enabling the respondent to control drunkenness. Those provisions did not, however, include the power to set minimum prices for the sale of alcohol. In drawing a distinction between what a licensing board could enquire into at the stage a licence is being granted or renewed, as opposed to what a licensing board could not do, during the currency of a licence, reference was made to R v Edmonton Licensing Justices, ex parte Baker and Another [1983] 2 All.E.R. 549 and R v Windsor Licensing Justices, ex parte Hodes [1983] 2 All.E.R. 551.

[21] A second reason for arguing that the policy was ultra vires was that it would interfere with the terms of trade between licensees and their customers. It was accepted that one of the purposes of the Policy was to seek to control drunkenness. However, it was submitted that whilst the avowed purpose of the Policy was not to regulate trade, that was, in fact, what would result from the application and enforcement of the Policy, which sought to dictate the minimum prices above which alcohol must be sold, during the currency of public house licences. It was difficult to imagine anything that would go further to the heart of licence holders' trade with their customers than the terms of the Policy and the requirement that licence holders charge, as a minimum, the prices set out in the minimum price tariff. The Policy constituted a blatant interference with the petitioners' freedom to trade. Such interference was unlawful. Reference was made to Chertsey Urban District Council v Mixnam's Properties Ltd [1965] A.C. 735 and to Stewart v Perth & Kinross Council 2004 SLT 383.

[22] It was also argued that the application of the Policy in Aberdeen would be arbitrary, having regard to the fact that similar restrictions on the prices that licence holders could charge would not apply in areas falling within the responsibility of other licensing boards. A fourth pointer to the unlawfulness of the Policy was that because any exception to the Policy would undermine the Policy, and weaken its credence, the Policy required to be viewed as one that would be applied without exception.

[23] Criticism was also made about the references to enforcement proceedings, as set out on the second page of the Policy. The provisions of Section 31 could only be relied on by a licensing board, when a complaint had been received that a licence holder is no longer a fit and proper person to be the holder of a licence or that the use of the premises, in respect of which the licence is held, has caused undue public nuisance or a threat to public order or safety. The enforcement provisions found in Section 32 were concerned with the character, condition and the nature and extent of the use of licensed premises, rather than the fitness of a license holder. Those in section 65, relating to the imposition of restrictions orders, were also dependent on a licensing board receiving a complaint.

Submissions for respondent
[24] Senior counsel for the respondent submitted that the respondent's Policy was lawful. Any policy of a licensing board had to be applied having regard to the law relating to policies, to which I have already referred. It was not necessary to spell that out in the Policy Document, which the respondent had approved and issued to licence holders on 8 September 2004. The Policy was a 'general policy'. When dealing with applications or enforcement proceedings, the respondent would be prepared to consider arguments that the Policy should not apply to particular premises or that a condition requiring adherence to the Policy should not be attached to a particular occasional or regular extension of permitted hours. It was wrong to suggest that the respondent had closed its mind to such issues and had thus rendered the Policy unlawful. Indeed the respondent had already received intimation that a number of those who had lodged applications for consideration at the October Quarterly Meeting intended to address the respondent as the application of the minimum price tariff to their premises.

[25] It was argued on behalf of the respondent that it was not unlawful for a licensing board to ask for an assurance from an applicant as to how he intended to operate the premises he sought to have licensed and to take that assurance into account in deciding whether or not to grant a licence. Likewise it was argued that there was nothing unlawful in seeking undertakings from the holders of existing licences, provided that the subject matter of the undertaking was directed towards a licensing purpose, such as the reduction of binge drinking. As the petitioners accepted that the Policy was intended to achieve such an objective, the position was different from that in Stewart v Perth & Kinross Council, where the objective of the condition, which had been challenged as being ultra vires, had not been one of the purposes of the legislation under which the condition had been imposed. Nothing in the 1976 Act prohibited the respondent from adopting a 'general policy' of acting in the manner the respondent had decided to act and imposing the condition the respondent intended to impose on regular and occasional extensions to permitted hours

Discussion
[26] I should begin by indicating that no point was taken by the respondent that judicial review at this stage was not an appropriate procedure to challenge the legality of the respondent's Policy. Clearly such a challenge could also be mounted in an appeal to the sheriff under the provisions of section 39 of the 1976 Act, such as would be competent were the respondent to refuse to renew a licence holders' public house licence or take enforcement proceedings against the licence holder, following the licence holder's refusal to comply with the respondent's minimum price tariff. Cindarella's Rockafella's Limited and Another v Glasgow District Licensing Board, is an example of where the policy of a licensing board was challenged by way of judicial review.

[27] In considering the issues raised in these proceedings, it is obviously necessary for me to reach a view as to what the respondent's Policy involves. In that regard, it is appropriate that I should proceed on the basis that the Policy is as set out in the two page Policy Document, which was issued to license holders and the nominated managers of licensed premises with the letter of 8 September 2004. The terms of the policy document are self-explanatory. It is undoubtedly correct that a licensing board is bound by the general law, in applying any policy it adopts. Nevertheless, the structure of the Policy, and the terms in which the respondent resolved to adopt the Policy and to write to licence holders on 8 September 2004, make it very difficult, if not completely impossible, to foresee any circumstances in which the respondent would refrain from applying the Policy when dealing with an application for the grant or renewal of a public house licence or when granting a regular or occasional extension to permitted hours. The terms of the letter of 8 September 2004 are, in particular, peremptory - "Licence holders who sell alcohol at prices below (the minimum price) tariff will be deemed by the Board to be irresponsible and will be required to explain to the Board why they are doing so. .... From 19^th October 2004 you are required to charge, as a minimum, the prices on the tariff for the alcoholic prices listed. .... Everyone who applies for a regular or occasional extension of permitted hours from 19^th October 2004 will have an additional condition attached to their extension which will oblige the applicant to adhere to the policy."

[28] In these circumstances, it is clear that the respondent have already begun to apply the Policy to all holders of public house licences. All of them received the letter of 8 September 2004, which (i) indicated that as from 19 October 2004 licence holders would be required to charge as a minimum the prices determined by the respondent, (ii) asked the licence holders to sign and return a letter of undertaking by 4 October 2004, (iii) indicated that if they failed to do so, they would be deemed to be irresponsible and the respondent would consider taking enforcement action against them, (iv) appeared to treat the letter of undertaking that was being sought as having equivalent effect to the condition that was to be attached to all regular or occasional extensions, obliging the applicant to adhere to the Policy during the hours covered by the extension. In that regard, it may be important to bear in mind that breach of a condition imposed in terms of section 64(6) of the 1976 Act, on a regular or occasional extension of permitted hours, can constitute a criminal offence.

[29] The dispatch of the letter of 13 October 2004, to those applicants for regular extensions who had not returned a letter of undertaking by 4 October 2004, is a further indication that the Policy is already being applied to licence holders. Moreover the letter of 13 October 2004 explicitly linked the failure to return a letter of undertaking to the determination of the recipient's application for an extension of permitted hours. In these circumstances, it is unlikely that any of the recipients of the letters of 8 September 2004 and 13 October 2004 regarded the request for a letter of undertaking as being a mere invitation to provide a non-legally binding undertaking, as opposed to it being the initial step in the application and enforcement of the Policy, whose stated intention is to introduce and apply a minimum price tariff across the on sales licensed premises in the City of Aberdeen. On that analysis, I am far from persuaded that in endorsing and beginning to apply the Policy the respondent has complied with the legal principles applicable to the policies of licensing boards, to which I referred earlier.

[30] However, in considering the legality of the Policy, it is also necessary to consider the question as to whether a licensing board, such as the respondent, has power to determine the minimum prices at which the holders of public house licences can sell alcohol (a) during permitted hours and (b) during any regular or occasional extensions to permitted hours. That is because unless a licensing board has such powers, the respondent's Policy could not be lawful.

[31] I deal first with the sale of alcohol during permitted hours, in licensed premises covered by public house licences. As the provisions of section 17 make clear, when public house licences are granted or renewed, a licensing board, such as the respondent, has no power to attach any conditions to the licence, unless recourse can be made to the provisions of sections 18A or 101 or the provisions of byelaws made under section 38. It is agreed that sections 18A and 101 have no applicability in the present proceedings and that the respondent has not made any byelaws under section 38.

[32] If a licensing board, when granting or renewing a public house licence, has no power to impose a condition laying down the minimum prices at which alcohol can be sold in the public house during permitted hours, does the licensing board have power to exercise or achieve such regulation and control in any other way? In particular, can a licensing board achieve such control by seeking (or requiring) from a licence holder, during the currency of his public house licence, an undertaking that during permitted hours the licence holder will only serve alcohol at or above minimum prices which the licensing board has determined? Does a licensing board have power to threaten a licence holder with the use of enforcement action, if the licence holder fails to sign such an undertaking? Does a licensing board have the right to indicate to an applicant for the grant or renewal of a public house licence that unless the applicant is prepared to undertake to sell alcohol at or above the minimum prices fixed by the licensing board, the applicant will be deemed to be irresponsible and his application will be determined on that basis? Taking it one stage further, could a licensing board indicate to an applicant for the grant or renewal for a public house licence that unless the applicant is prepared to give an undertaking to sell alcohol, at or above the minimum prices fixed by the licensing board, his application will be refused?

[33] In my opinion, the answer to all of those questions is in the negative. A licensing board might well take the view that adopting a policy of requiring that alcohol be sold in accordance with a minimum price tariff, could prevent binge drinking from occurring in on sales licensed premises, within its jurisdiction. Even if a licensing board was to proceed on such a basis, the licensing board would, in my opinion, be acting outwith its statutory powers, and thus unlawfully, if it adopted and sought to impose a requirement that licence holders sold alcohol at or above minimum prices, which the licensing board had itself fixed.

[34] In the first place, such an approach would be contrary to the provisions of section 17(1) of the 1976 Act. They provide that if a licensing board finds that one of the grounds for refusal applies, it must refuse an application, but that otherwise it must grant the application and do so without imposing any conditions. During the currency of a public house licence, a licensing board has no power to seek to impose additional non-statutory controls on the licence holder or his licensed manager, in the manner that the respondent has sought to done. In my opinion, that is so even if one accepts the argument advanced on behalf of the respondent to the effect that it is open to a licence holder, such as the petitioners, to decline to sign an undertaking and to argue that the policy should not apply to them. Similarly, the respondent could not refuse the grant or renewal of a public house licence solely on the basis that the applicant was unwilling to give an undertaking to sell alcohol in accordance with the minimum price tariff which it has fixed. That is because, before an application for the grant or renewal of a public house licence can be refused, a ground of refusal under section 17(1) of the 1976 Act has to be made out. The declared intention of the respondent to deem as 'irresponsible' a licence holder who sells alcohol at prices below those in the minimum price tariff, indicates a willingness, indeed an intention, to adopt a pre-conceived view, which would be incompatible with the respondent's duty to follow an unbiased approach, when considering applications for the grant and renewal of public house licences, in accordance with the provisions of section 17. How could the respondent consider each application on its merits, and with an open mind, if it had already deemed the applicant to be 'irresponsible'? Unless such conduct on the part of a licensing board can be prevented, on the basis that it would be unlawful, it would be possible for a licensing board to make the grant or renewal of public house licences dependent upon the willingness of an applicant to comply with what were, for all practical purposes, 'conditions' of the respondent's own choosing (as opposed to conditions authorised by statute or bye-laws made under section 38 of the 1976 Act).

[36] In their submissions, both senior counsel sought to rely on certain passages from the speeches in Stewart v Perth and Kinross Council. Senior counsel for the respondent sought to distinguish the case on a variety of grounds, including that it had been concerned with a condition imposing a positive requirement on a second hand car dealer, to disclose information to potential buyers, as opposed to the circumstances of the present dispute in which the respondent's Policy is intended to require licence holders to refrain from doing something, namely selling alcohol below the minimum prices set by the respondent. In my opinion, such a distinction is without validity. The respondent's Policy could just as easily be viewed as requiring the holders of public house licences to do something positive, namely to charge prices for alcohol at or above the minimum prices set by the respondent.

[37] In my opinion, when considering whether the respondent has power to require the holder of public house licences to sell alcohol at or above the minimum prices, which the respondent has set, it is necessary to look not only at the stated purposes of the respondent in seeking to exercise such a power, but also at the nature and effects of the action that would be taken if such a power exists. Even if a policy of a licensing authority has a legitimate purpose, it cannot interfere with the terms of trade between a licence holder and his customer, unless the licensing authority has statutory authority to do so.

[38] As a licensing board such as the respondent is a creature of statute, it is ultimately a question of statutory construction whether a licensing board has an implied power to regulate the minimum prices, at or above which alcohol must be sold during permitted hours. Adapting the words used by Lord Hope of Craighead in para.28. of his speech in Stewart v Perth and Kinross Council, 'the search is for some indication that it was the intention of Parliament' that licensing boards would have power to regulate the minimum prices at which alcohol can be sold (see also para.57 in the speech of Lord Rodger of Earlsferry, in which he quotes from and founds upon passages in the speeches of Lord Reid and Lord Upjohn in Mixnam's Properties Limited v Chertsey UDC [1965] AC 735, and para.72 in the speech of Baroness Hale of Richmond). In my opinion, the passages from the speeches of Lord Hope of Craighead, Lord Rodger of Earlsferry and Baroness Hale of Richmond support the view that if Parliament had intended that licensing boards should have power to regulate or impose restrictions on the terms on which licence holders should sell alcohol to their customers, it would have said so expressly. In that regard, it may be important to bear in mind that retail price maintenance was abolished very many years ago.

[39] In my opinion, the provisions of the 1976 Act do not give licensing boards the power to regulate, either directly or indirectly, the minimum prices below which alcohol may not be sold during permitted hours. There are no provisions in the 1976 Act entitling a licensing board to impose conditions on the grant or renewal of every public house licence. The imposition of minimum prices during permitted hours would involving a licensing board exercising greater control over the granting of public house licences and the activities of the holders of public house licences than section 17(1) of the 1976 Act provides for. Furthermore, there is no indication in any other part of the 1976 Act, including sections 18A, 18B and 38, that Parliament intended that a licensing board would have power to exercise control over the prices at which alcohol could be sold during permitted hours. And finally, although this is a factor of lesser importance, there are other sections in the 1976 Act dealing with the control of the layout of licensed premises (sections 10, 25 and 36), the types of alcohol which may be sold in licensed premises (section 29), the extent of permitted hours (section 53) and the control of drunken behaviour (sections 74 - 79), which, when read with the provisions of sections 17 and sections 31, 32 and 65, indicate that Parliament has made provision for seeking to prevent and deal with drunkenness that might cause undue public nuisance or a threat to public safety and enabling licensing boards to take action in respect of licence-holders and licensed premises, in the event that such drunkenness has occurred.

[40] In considering these issues, I have, of course, had regard to the cases of R v Edmonton Licensing Justices, ex parte Baker and Another and R v Windsor Licensing Justices, ex parte Hodes to which I was referred. They illustrate how a licensing authority, such as the respondent, is perfectly entitled to explore with an applicant for a licence how the applicant would propose to operate his premises in the event that a licence was granted. Indeed, in his judgment in R v Edmunton Licensing Justices, ex p Baker, at pages 548-549, Woolf J, as he then was, saw nothing wrong in justices dealing with an application for the grant of an off-licence asking the applicant for an assurance as to how he intended to operate the licence and taking that assurance into account in deciding whether or not to grant a licence. In that case, the statutory provision under which the justices were operating, section 3 of the Licensing Act 1964, was in wide terms and gave the justices a considerable discretion.

[41] In the course of his submissions, senior counsel for the petitioners did not dispute that when considering the petitioners' applications, whether for the renewal of public house licences or the grant of regular extensions to permitted hours, it would be open to respondent to enquire how the petitioners intend to operate particular premises, whether during permitted hours or an extension to permitted hours, and to seek assurances or non-binding undertakings from the petitioners. What those assurances or non-binding undertakings might relate to could only be finally determined in the light of the factual circumstances of individual applications.

[42] If the respondent sought information or assurances from the petitioners and applications were refused, then such decisions could trigger an appeal to the Sheriff, in an application relating to the renewal of a public house licence, or a further judicial review in the event of a refusal of an application for a regular extension to permitted hours.

[43] In neither situation, would the respondent have as extensive a discretion as the Edmunton Licensing Justices had. The respondent would require to operate within the statutory frameworks, laid down in the 1976 and 1990 Acts, and, in accordance with the provisions of section 18 of the 1976 Act, would require to provide a statement of reasons for its decision. However, whatever issues the respondent raised with the petitioners and whatever information it received from the petitioners, the licensing board's decisions, whether to grant or refuse the petitioners' applications for the renewal of public house licences, would require to be taken in accordance with the provisions of section 17 of the 1976 Act. Likewise, its decisions whether to grant or refuse the petitioners' applications for regular extensions would require to be taken in accordance with the provisions of section 64 of the 1976 Act and section 47(1) of the 1990 Act.

[44] As far as the granting of regular extensions, under the provisions of section 64 of the 1976 Act and section 47(1) of the 1990 Act, is concerned, the statutory provisions are, of course, different, from those found in section 17 of the 1976 Act. But a question of statutory construction still arises. Section 64(6) provides that a licensing board can attach such conditions as it thinks fit to the grant of an occasional or regular extension of permitted hours. Those terms are wide. Read literally, those provisions might be thought to be wide enough to allow a licensing board to do what the respondent has intimated that it has decided to do, namely to attach to every regular or occasional extension of permitted hours a condition that will oblige the licence holder, who has been granted the extension, to comply with the respondent's Policy on Irresponsible Alcohol Promotions.

[45] In my opinion, the statutory power to impose conditions on a regular or occasional extension must be subject to some limitation. Imposing the condition provided set out in the Policy would go beyond regulating the licence holder's use of his licensed premises during the extension to permitted hours. It would amount to regulating the terms upon which the licence holder could trade with his customers, in this instance by laying down minimum prices for the different alcoholic drinks that would be available. If a licensing board could set minimum prices for alcohol, in order to prevent the antisocial behaviour and ill health, which occur as a consequence of certain sections of the population engaging in binge drinking, would it be open to a licensing board to lay down minimum prices designed to cut down on the consumption of alcohol by all members of the public, with a view to improving the general health of the whole population? Once consideration is given to the possible reasons a licensing board might have for seeking to regulate the prices at which alcohol is sold in public houses, the question as to whether Parliament intended that licensing boards should be able to regulate and control prices charged in on sales licensed premises is sharply focused.

[46] In my opinion, support for the view that the power to impose conditions under section 64(6) is not unlimited is to be found in the passages in the speeches of Lord Hope of Craighead and Lord Rodger of Earlsferry in Stewart, to which I have referred. The effect of the respondent's Policy is not just to kerb binge drinking. The Policy is intended to regulate the minimum prices at which alcohol can be sold at any time when on sales licence premises are open. By doing so it interferes with and regulates the terms of trade between the licence holders of licensed premises and their customers. No authority had been produced in support of the contention that Parliament intended to give licensing boards the power to do so, even when it enacted the provisions of section 64(6). Having considered the whole terms of the 1976 Act, as amended, including section 64(6), I have reached the conclusion that Parliament did not intend to give licensing boards such a power.

[47] In my opinion the fact that the imposition (whether directly or indirectly) of a condition requiring alcohol to be sold at or above minimum prices might achieve a reduction in excessive drinking, including a reduction in binge drinking, and the fact that the respondent's policy appears to command wide support within the City of Aberdeen, are not sufficient to bring the endorsement and application of the Policy within the scope of the respondent's statutory powers.

Decision
[48] In light of the authorities to which I have already referred, I am satisfied that Parliament never intended that licensing boards would have the implied power to regulate the terms on which (and in particular the prices at which) the holders of public house licences would be able to sell alcohol to their customers during extensions to permitted hours. In reaching that conclusion, I do not rule out the possibility that it might be possible to evolve a condition, which could be imposed in accordance with the provisions of section 64(6) of the 1976 Act and which was designed to prevent, or at least reduce, the risk of excessive drinking occurring during extensions to permitted hours, Whether or not that is possible, I have reached the conclusion that those parts of the respondent's Policy which seek to require that alcohol be served at or above minimum prices both during permitted hours and extensions of permitted hours are ultra vires the respondent's powers.

[49] In these circumstances, I shall sustain the first plea in law for the petitioners. I shall also grant decree of declarator that the respondent's Policy on Irresponsible Alcohol Promotions in Licensed Premises, dated 8 September 2004, is unlawful and ultra vires the respondent's powers under the Licensing (Scotland) Act 1976 and grant decree of production and reduction of the Policy.

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	Scottish Court of Session Decisions
You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Mitchells and Butlers Retail Ltd & Anor, Re Judicial Review [2004] ScotCS 244 (05 November 2004) URL: http://www.bailii.org/scot/cases/ScotCS/2004/244.html Cite as: [2004] ScotCS 244