England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH
DIVISION (ADMINISTRATIVE AND
DIVISIONAL COURT)

		Royal Courts of Justice Strand, London, WC2A 2LL
		7 April 2004

Lord Justice Laws:

INTRODUCTORY

1. This is an appeal, with permission granted by the judge below, against a decision of Stanley Burnton J given in the Administrative Court on 3 October 2003 when he granted the application of Luminar Leisure Ltd, the respondents before us, for judicial review and quashed an order made in the Norwich Crown Court on 19 December 2002. By that order His Honour Judge Mellor QC and four licensing justices had allowed the appeal of Aaron Hitchcock, the appellant before us, against a refusal by licensing justices on 10 May 2002 of his application for a special hours certificate ("SHC") to extend his licensing hours by one extra hour until midnight every day from Monday until Saturday. I shall describe the premises in respect of which the application was made and the other facts of the case shortly.
2. The effect of the Crown Court's decision was of course to grant the SHC which was sought. The effect of the quashing order made by Stanley Burnton J in the Administrative Court was to revoke the SHC thus granted. However the judge also ordered that the matter be remitted to the Crown Court for the appellant's appeal to be heard afresh. Although there is no respondent's notice, after some discussion in the course of argument Mr Gouriet for the respondents has invited us not only to dismiss the appeal but also to revoke the order of remittal to the Crown Court. That is on the footing, as Mr Gouriet would have it, that a SHC could not lawfully be granted on the facts of this case; and in consequence there is nothing for the Crown Court to consider at any further hearing. The learned judge below, having as I have said granted permission to appeal to this court, also stayed the effect of his order for 21 days. On 21 October 2003, Pill LJ extended the stay until the determination of the appeal.

THE STATUTE

3. It is convenient first to set out the relevant statutory materials which are contained in the Licensing Act 1964 ("the 1964 Act") as amended. Although some other provisions were referred to in the course of argument, I may confine myself to the material parts of ss. 77 and 81:

"77. If, on an application made to the licensing justices with respect to licensed premises ..., the justices are satisfied-

(a) that the premises are-

(i) casino premises, or

(ii) premises for which a music and dancing licence is in force, and

(b) that the whole or any part of the premises is structurally adapted, and bona fide used, or intended to be used, for the purpose of providing for persons resorting to the premises-

(i) in the case of casino premises, gaming facilities and substantial refreshment, and

(ii) in the case of any other premises, music and dancing and substantial refreshment,

to which the sale of intoxicating liquor is ancillary, the licensing justices may grant, with or without limitations, a special hours certificate for the premises or, if they are satisfied that part only of the premises is adapted or used or intended to be used as mentioned in paragraph (b) of this section, for that part."

Until an amendment to the statute made in 1988, the justices' function under S.77 was mandatory, not discretionary. The earlier form of the section had the words ''the licensing justices shall grant a special hours certificate ..." But I should proceed to s.81:

"81 (2) At any time while a special hours certificate for any premises or part of premises is in force, the chief officer of police may apply to the licensing justices ... for the revocation of the certificate on the ground that, while the certificate has been in force -

(a) the premises have not, or the part has not, been used as mentioned in S.77 ...;

or that on the whole the persons resorting to the premises or part are there at times when the sale or supply of intoxicating liquor there is lawful by virtue only of the certificate, for the purpose of obtaining intoxicating liquor rather than for an appropriate purpose; and if the licensing justices ... are satisfied that the ground of the application is made out they may revoke the certificate."

S.81 (2)(a) defines "appropriate purposes", so far as relevant to the facts of this case, as dancing and the obtaining of refreshments other than intoxicating liquor.

THE FACTS

4. I turn to the facts. What follows is partly adaptation of the narrative given in the Crown Court judgment, partly direct citation of what was there said. The premises are known as the Lloyd's No 1 Cafe-Bar and are situated on the Riverside Development in Norwich. The appellant is the manager. Lloyd's No 1 is one of 56 such premises, the Lloyd's No 1 chain. There are extant SHCs in respect of the 40 of them. The chain belongs to J D Wetherspoon pIc, which also operates four other licensed premises in Norwich. The respondents are a trade competitor of Wetherspoon. They too operate licensed premises in Norwich. They appeared as objectors to the appellant's application for a SHC before the licensing justices, and were respondents to the appellant's appeal in the Crown Court.
5. A full justices on-licence had been granted in respect of the premises on 13 November 2001. A public entertainment licence was also granted. HHJ Mellor and the justices sitting with him inspected the premises. What they say is summarised in the Crown Court judgment thus:

"We noted:

the large curving dual purpose bar - for the ordering and taking away of alcoholic and other beverages and for the ordering of food:

the raised and railed off 'restaurant' area, part of which was clearly signed 'Diners Only':

the small dance floor - small in relation to the drinking areas as a whole and in relation to the number of people likely to resort the premises at busy times:

that the preponderance of the tables etc. away from the 'restaurant' area was of a suitable height for eating meals although there were also a substantial number at coffee table height:

that there was much open space available for occupation by standing drinkers:

that there were a number of plasma screens displaying moving images linked to constantly playing music so placed as to make it possible for virtually any customer so inclined to watch."

Then after reciting certain evidence, the Crown Court arrived at these factual conclusions:

"7 .... [I]t would appear that the taking of meals, often accompanied by intoxicating liquor, is the predominant use of the premises during the day, a substantial use down to 8 pm, a significant use until 9 pm and little more than a token use thereafter. The vast majority of the customers from 8 pm onwards are clearly drinkers. By reference to the published accounts of the respondent he [the witness Mr Hutson, Wetherspoon's managing director] pointed out that in an analogous premises to Lloyd's No l's - Chicago Rock Cafes11 % of the takings were for food itself (as against the appellant's 17.7%) and that in the case of their nightclubs food represented no more than 1 %. In the latter, of course, dancing might be expected to play a very much more significant part than it does in the appellants' premises.

8. The irresistible conclusion is that the motivation for seeking an SHC in this case is a desire to tap into the late night drinking market. The provision of facilities for eating, the opening up of the small dance floor and the linked continuing playing of music and images are intended because it is seen that the making of such provision is a condition precedent to the grant of an SHC. The reality is that there will be very little eating and not much dancing during the extra opening hour that will be the practical outcome of success in this appeal. The music and screens will play on. That said having provided the facilities - in particular the substantial refreshment - the appellant will have every incentive to wish to see them used."

THE RESULT IN THE CROWN COURT

6. There is no contest but that the premises are structurally adapted for the provision of music and dancing and substantial refreshment within the meaning of s.77(b) of the 1964 Act. So much was accepted by the Crown Court. The case turns on the interpretation and application of the words in s.77(b) "that the whole or any part of the premises is ... bona fide used, or intended to be used, for the purpose of providing for persons resorting to the premises ... music and dancing and substantial refreshment, to which the sale of intoxicating liquor is ancillary ... ".
7. The Crown Court held (paragraph 11), by reference to the decision of the Divisional Court in Richards v Bloxham (1968) 66 LGR 739 (to which I will have to return), that the requirement for the provision of music and so forth in s. 77(b) "is a requirement to provide facilities and not a requirement that customers use them". Then in paragraph 12 the court held that the concluding words of s. 77(b), ''to which the sale of intoxicating liquor is ancillary", likewise relate to ''the facilities intended to be provided". In paragraph 13 they refer to, but do not cite, certain further authorities and say this:

"In the light of those authorities we have considered the facilities to be provided and the use of the premises on a whole day basis, placed little emphasis on the relative significance of the provision for food and that for music and dancing, and have considered with care the important aspect of the ratio between food sales and drink sales. That aspect has fallen to be considered ... narrowly and by reference to those using the facilities provided when reaching a conclusion as to whether the statutory pre-conditions have been satisfied ..."

On that basis the court stated in paragraph 14 that they were

"satisfied that the sale of liquor to the relevant customers would be ancillary, in the full sense, to the provision for food and music and dancing and that the statutory pre-conditions are fulfilled."

It proceeded to exercise its discretion to grant the SHC.

CONCLUSIONS IN THE ADMINISTRATIVE COURT

8. Stanley Burnton J held that the Crown Court had misdirected itself. He referred (paragraph 23) to "the overall requirement that the purpose of the licensee must be that the supply of liquor will be ancillary to the provision of music and dancing and substantial refreshment". Then I should set out paragraphs 25-27 inclusive:

"25. The licensee's purpose will not be that there are to be ancillary sales of liquor if, to take a clear case, his purpose is, taking the permitted hours as a whole, that the majority of persons should purchase liquor without using the facilities for music and dancing and substantial refreshment. The intentions of those using the premises may not be directly relevant to the questions arising under section 77, but where there are other similar premises run by the same proprietor (as in the present case), what occurs at those premises may be relevant to any issue as to the purpose for which the instant premises are to be used. If, in other similar premises, the sale of liquor is not ancillary to music and dancing and substantial refreshment, it is open to the justices to find that the purpose in relation to the premises they are considering is similar.

26. Furthermore, the sale of liquor is not ancillary if it is on the whole independent of the provision of music and dancing and substantial refreshment. The fact that it is ancillary for a small minority of those attending the premises will not make it ancillary for the entirety. That follows as a matter of the language of s.77, including the references to 'part of the premises', which would otherwise be largely unnecessary, and, for the reason given above, from the provisions of s.81, as well as the authorities referred to above. If it were otherwise, the provision of music and dancing and substantial refreshment to a small minority of customers in a small part of the premises would justify the grant of an SHC covering the supply of liquor to all customers. What is in substance a public house could become entitled to an SHC.

27. It is on this point that in my judgment the Crown Court erred. For the purposes of determining whether the statutory preconditions for the grant of an SHC were satisfied, it considered, in paragraph 14 of the judgment, only whether the sale of liquor would be ancillary to the provision of food and music and dancing for those making use of that provision. Those were the 'relevant customers' defined in the last sentence of paragraph 13 of the judgment. By definition alone, or virtually so, the sale of liquor to such persons will be ancillary to the provision of music, dancing and food. It does not follow that if the Court were to consider the entirety of persons resorting to the premises, the licensee's purpose would be found to be the same."

THE APPELLANT'S ARGUMENT

9. The essence of the appellant's criticism of the judgment below is that the learned judge "failed to draw the essential distinction between the bona fide provision of facilities by the licensee and user by the customers" (see the skeleton argument prepared for the appellant by Sir Richard Beckett QC and his junior at paragraph 27.1). There follows a submission as to what are the appropriate questions to be asked on an application for a SHC:

"It is submitted that the two appropriate questions are:

(a) are the requirements of s.77 satisfied if the licensee's bona fide purpose is to provide music and dancing and substantial refreshment to which the sale of intoxicating liquor is ancillary? and

(b) is it an appropriate exercise of discretion then to grant the SHC despite coming to the conclusion that at times the bulk of the customers will not avail themselves of such faculties?" (skeleton argument, paragraph 27.2)

Sir Richard's argument then seemingly attributes to the judge below the proposition that a SHC may only properly be granted where all the customers at the premises must make use of the facilities of food and/or music and dancing.

THE AUTHORITIES

10. The principal decision, and also the first in time, upon which Sir Richard relies is Richards v Bloxham, to which I have already referred in passing. Lord Parker CJ stated:

"[S.77] is dealing entirely with the provision of facilities and not with user. The words 'bona fide used, or intended to be used' appear, but the purpose thereafter is the purpose of providing facilities."

Sir Richard submitted that this is a statement of principle which is of the first importance in considering the general approach to be taken to s.77 cases. More concretely, his argument was that once it is proved or accepted that the licensee was providing, or intended to provide, the necessary facilities for music and dancing and substantial refreshment in the premises or the part of the premises relevant to his application for a SHC, the likely take-up of those facilities by customers resorting to the establishment is neither here nor there for the purposes of the criteria mentioned in s. 77(b).

11. In my judgment, however, it is important to notice what was the true issue arising on the facts in Richards v Bloxham. The case arose from a police application to revoke a SHC under s.81 (2). In the court below the justices had found that "a small proportion" of those resorting to the premises in the hours covered by the SHC were there only to drink. That was the factual basis of the s.81 (2) application, which was however dismissed by the justices, and the Divisional Court upheld their decision. It will be seen, then, that all that was necessary for the conclusion in that case was a finding that it is not a requirement of a lawful SHC under s. n that every customer, or prospective customer, to the premises in the extra permitted hours has to be there to enjoy a meal, music or dancing. In any event, notwithstanding the emphasis placed by the Lord Chief Justice on the provision of facilities, the case does not suggest that the requirement that the justices be satisfied that the premises (or part) are used or intended to be used for the stated purpose should in some way be sidelined or downgraded. If it did, I would with great respect question its correctness. At the same time, I certainly acknowledge that the use or intended use referred to in the statute is use by the licensee and not use by the customers. But the effect of this distinction, as I shall seek to demonstrate, is by no means as potent for Sir Richard's argument as he would have us accept.
12. The next case to which I should refer is Carter v Bradbeer [1975] 2 AER 571. The appellant was convicted by the justices of offences of selling liquor outside permitted hours. He had a SHC applying to the whole of the premises. But the main activity on the premises was the consumption of liquor. The principal issue in the case was whether the counters from which drinks were served were "bars" within s.76(5) of the 1964 Act. That issue, of course, has no analogy in the present case. However in the Divisional Court Lord Widgery CJ said this at 577b - c:

"It must be remembered I think that the consumption of liquor in the special hours period, for want of a better phrase, is liquor which is to be ancillary to dancing, music, refreshment or all of those things. It is an ancillary service, and one has to regard Parliament I think as expecting that the provision of liquor shall be suitable for service as an ancillary and no more."

The case went to their Lordships' House, where Viscount Dilhorne stated ([1975] WLR 1204, 1213):

"These provisions show that it was Parliament's intention to secure that the sale of intoxicating liquor under a special hours certificate should always be ancillary to music and dancing, and that premises to which a special hours certificate applied should not be what was called in argument a 'late night pub"'.

13. Young v O'Connel l(judgment 17 May 1985: The Times, 25 May 1985) was an appeal by way of case stated in which the first question posed by the magistrates for the opinion of the High Court was as to the meaning of "ancillary" in s.77 of the 1964 Act. Glidewell J discussed Carter v Bradbeer and another case, Ex p. Plaos. He said:

"In my judgment, in considering whether to grant a special hours certificate, a comparison of the relevant importance of the sale of liquor to the provision of music and dancing and food does matter. Indeed it is essential to make that comparison, in my judgment, in order to decide whether the sale of liquor will be ancillary."

14. In Shipley [1998] 1 WLR 1438 the issue (which mattered because of a restriction imposed by the licensing justices of a start time on the permitted hours allowed under a SHC) was whether, on days when a SHC operated, the hours permitted for the sale of intoxicating liquor were those specified in the certificate in substitution for the general hours permitted in the ordinary way under s.60 of the 1964 Act. This court held that the hours were those thus specified. That issue, of course, is not relevant here. However reference was made in the course of argument to this observation made by Simon Brown LJ as he then was at 1456B - C:

"During whatever hours of trading are permitted by the special hours certificate the drinking must 'on the whole' be ancillary to the provision of food and/or entertainment; a special hours certificate should not be granted to an ordinary public house so as to turn it into a 'late night pub"'.

15. The last case is Schofield [2001] 1 AER 660. The Deputy Judge, Mr Beatson QC as he then was, described the "primary issue" before him thus (paragraph 5):

" ... whether. .. an SHC can be given even though, on an SHC day, music and dancing and substantial refreshment are not. .. provided at the same time throughout the permitted licensing hours of the SHC on that SHC day."

Again, the issue there identified is not directly in point arise here. But these observations of the Deputy Judge are with respect helpful:

"42. The first respondent's basic submission is that section 77 requires only that the premises are used or intended to be used for the purpose of providing music and dancing and substantial refreshment, and that this requirement relates to the use or intended use of the premises by the licensee, not by the customers. This submission appears to involve the artificiality of the court's concluding that provision is made for a facility which is not in fact provided during part of the permitted hours ... But. .. accepting the submission that the concern of the statute, particularly in the case of an intended use, is with the overall aggregate rather than the position in individual cases, I have, on balance, concluded that the first respondent's basic submission is correct. Although it may seem artificial to say that a licensee is providing music and dancing and substantial refreshment at times when they are not in fact available at a particular moment, if one assesses the position by considering the overall use of the premises by the licensee during the permitted hours it is not in fact artificial.

43. There remains the submission that the practical effect of this construction of section 77 would be to negate the decision in Ex parte Shipley ... I do not consider that the practical effect of this construction of section 77 would be to negate the decision in that case that SHCs were not to be used to license late night pubs ... This is because in cases such as this, it will be necessary for the justices to conclude, as the justices did in this case, that the purpose for which the applicant for an SHC intends persons to resort to the premises is to take advantage of the catering and entertainment facilities to which the sale of liquor is ancillary. This will be a question of fact and degree for licensing committees to determine in individual cases. Clearly, in cases where there are large periods when all three are not available, there will be difficult cases at the border line."

CONCLUSIONS

16. To my mind the cases establish these propositions:

i) "Use" and "intended use" in s.77 refer to use by the licensee, not use by the establishment's customers (Richards; Schofield).

ii) The fact that some customers are only interested in buying drink in the hours permitted by a SHC does not of itself mean that the SHC is improper or unlawful (Richards); nor does the fact that all three facilities - music, dancing, substantial refreshment - are not all available at the same time (Schofield).

iii) The requirement that the sale of liquor be ancillary to the stated purposes has to be looked at by reference to the whole day's licensing hours, because the SHC replaces the ordinary on-licence as the authority for the sale of liquor (Shipley).

iv) However, the power to grant a SHC is not to be used to license a "late night pub" (Carter, Shipley, Schofield: see also Young).

17. In my judgment, Sir Richard's argument places more weight on propositions (i) and (iii) than they can properly bear. (i) necessarily engages some perception of customer use. The licensee could not assert in good faith the required use or intended use, by him, unless it were his subjective intention and objective expectation that customers should enjoy the hours permitted by the SHC by resorting to the premises primarily (the adverb allows for proposition (ii)) for the statutory purposes. (iii) cannot support the grant of a SHC in a case where it is shown that the licensee's intention and expectation is that during the extra time permitted customers will resort to the premises primarily only to drink rather than for the statutory purposes. If it were otherwise, proposition (iv) would be nullified. But proposition (iv) states a central element in the legislature's purpose in enacting s.77.
18. Thus in my judgment Sir Richard's argument produces the result that a licensee may in principle obtain an extension of hours by means of a SHC where there is no realistic expectation that customers will resort to the premises for music or dancing or substantial refreshment during the extra permitted time; where the only perceived and intended advantage is the sale of drink over a longer period. While on this approach the s.77 facilities must be made available during the additional hours, there need be no real prospect that they be taken up. The reality is that in such circumstances the provision of liquor, during the extra time, is not ancillary to the provision of the s.77 facilities. The fact that it is, as required, truly so ancillary during other hours of the day cannot make a difference.
19. In my judgment Stanley Burnton J arrived at the right result. The contrary view would vouchsafe a deployment of s.77 for a purpose at variance from that for which it was enacted.
20. I would accordingly quash the Crown Court's decision. In view of the Crown Court's findings of fact at paragraphs 7 and 8 of their judgment, it is I think very difficult, perhaps impossible, to see how this case could have been properly resolved other than by refusal of the SHC. In that event the proper course may be to issue a mandatory order requiring the Crown Court to dismiss the appeal to it. However as I have said (paragraph 2) there is no respondent's notice seeking such relief, as I think there should have been. In the circumstances, although limited submissions were made at the hearing before us as to the form of relief which ought to be granted or to have been granted in the Administrative Court, I would allow the parties a further opportunity to advance argument as to the proper order to be made in light of this judgment, if my Lords are in agreement with it.

Lord Justice Longmore:

21. I agree.

Lord Justice Peter Gibson

22. I also agree.