England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
(Appeal from West London Magistrates' Court – sitting 25th and 26th February 2009)

		Royal Courts of Justice Strand, London, WC2A 2LL
		25th February 2010

Belinda Bucknall QC (sitting as a Deputy High Court Judge) :

1. This is an appeal by way of case stated against the decision of DJ Clark on 26^th February 2009 to award costs summarily assessed in the sum of £20,000 against the Appellant following her appeal against the decision of the Respondent to revoke the Appellant's two premises licences. The extent to which the appeal can be said to have been successful and the bearing that has on the costs order is considered below. The costs have not yet been paid.
2. The Appellant invites the Court to set aside the costs order in its entirety on the ground that (1) the judge had no power to order a successful appellant to pay the Respondent's costs and (2) the order was so wholly unjust and unreasonable as to be akin to the imposition of an unlawful financial penalty.
3. The underlying facts are that the Appellant's premises at 69 Barlby Road, Kensington, a general convenience store, had the benefit of a premises licence granted in July 2005 ("the July 2005 licence") permitting the sale of alcohol for consumption elsewhere. On 20^th December 2005 and during the currency of the 2005 premises licence, Trading Standards Enforcement Officers conducted a test purchase operation at the premises and a bottle of wine was sold to a 16 year old girl (accompanied by a 14 year old girl) by a member of staff, one Kannan Ramaiya.
4. In due course, the Appellant extended the premises to include 71 Barlby Road and she applied for a new premises licence which was granted in April 2006 ("the 2006 licence"). The 2006 licence was on conditions which required, inter alia, that: (1) all members of staff that sell alcohol shall be properly trained in the legal requirements to sell alcohol and a record shall be kept both of the training given to staff members and an acknowledgement kept that staff members have been trained; (2) the premises shall operate a "Challenge 21" policy and ask for proof of age from anyone they suspect of being under 21 years of age; and (3) the premises shall keep a refusals book where records are kept of every occasion on which the premises refuse to sell alcohol for any reason.
5. Due to what appears to have been an oversight on the part of all concerned, the 2005 licence was not surrendered and remained in force.
6. On 30^th July 2007 Trading Standards conducted a second test purchase operation at the premises, during which a bottle of wine was sold to a 14 year old girl, without any challenge to her age, by another member of staff, one B. Patel. Shortly thereafter, on 7^th August 2007 the Appellant was interviewed about this event and her compliance with the conditions attached to the 2006 licence. On 16^th October 2007 the Senior Trading Standards Officer, Jonathan West, wrote to the Appellant, issuing a formal warning. On 25^th March 2008 Trading Standards Enforcement Officers conducted a third test purchase operation at the premises, during which the girl to whom the wine had been sold in July 2007 (who was now 15) was sold a can of Stella Artois lager by another member of staff, one Sudjity Sudarsam. On 8^th May 2008 the Appellant was interviewed and she produced a refusals book which was kept at the premises but which contained no record of any refusal to sell alcohol.
7. On 3^rd June 2008 the Trading Standards made an application, which was supported by the police, for a review of the 2006 licence on the grounds that the "protection of children from harm" licensing objective was being undermined. The application recommended the reviewing committee to consider revocation of the licence. On 28^th July 2008 following a hearing, the Local Authority's Licensing Sub-Committee revoked the 2006 premises licence on the ground that there had been a failure to promote two of the licensing objectives, namely the protection of children from harm and the prevention of crime and disorder. That, however, left the 2005 licence in force, it seems that the Appellant was unwilling voluntarily to give it up and on 27^th September 2008 the Licensing Sub-Committee held a second hearing and on the same facts revoked that licence only.
8. In due course the Appellant appealed the revocation of both licences. It is unclear why she felt it necessary to do so in the case of the 2005 licence because reinstatement of the 2006 licence would have served her purpose. For whatever reason, however, she did so, with the result that two appeals had to be processed by the Defendant up to the beginning of the hearing of the appeal relating to the 2006 licence at which stage agreement was reached that the issues which were common to both appeals would be determined in that appeal. The appeal relating to the 2005 licence was only finally disposed of at the end of the hearing of the appeal relating to the 2006 licence when it was dismissed by consent. The Appellant gave oral evidence at the appeal and also adduced accountancy evidence, both to the effect that if the sale of alcohol at the premises were to cease the premises would probably be unprofitable and would cease trading. Evidence to this effect was not presented by her at either of the review hearings.
9. As recorded both in the notes of the judgment produced by the Respondent and from the Case Stated, the judge took a very unfavourable view of the Appellant, both as to her veracity and as to her approach to compliance with the conditions of the 2006 licence.
10. As to her veracity he concluded that the Appellant's evidence, including her evidence that she had trained the staff properly and supervised them robustly, was not to be believed on any point except one, namely that the premises would not be commercially viable if alcohol could not be sold.
11. As to her approach to compliance with the conditions of the 2006 licence his view was that the Appellant regarded the conditions of her licence as unimportant and an unfair restriction of her ability to trade; she had not kept records of refusals to sell alcohol, staff had not been properly trained and they were not supervised robustly; staff were given a book to take home and read but no checks were made to ensure that they had read and assimilated its contents. He further concluded that this was still the situation at the time of the appeal.
12. He was also critical of the fact that very shortly before the hearing and in breach of case management directions she had produced a small bundle of documents in support of her evidence that since the revocation of the premises licences she had taken steps to comply with the licence conditions. In light of his views about her veracity and her approach to compliance with the licence conditions it is implicit that he did not accept that assertion.
13. He took the view that he would be justified in rejecting both appeals in their entirety but given his view that the objectives of the licensing legislation could be met by the imposition of a stringent new condition that only the Appellant and one other member of staff (to be identified to the Licensing Authority within 24 hours) were to sell alcohol and his concern about the impact on the community if the premises closed, he decided to give her "one last chance". It was on that basis that he allowed the appeal in relation to the 2006 licence. The Appellant can be said to have succeeded on her appeal, but it was hardly a resounding victory.
14. Costs were addressed immediately after judgment was handed down. The Appellant, through her counsel, Mr. Deal, stated that she was not seeking an award of costs. The Respondent was asked if it wished to make any submissions as to costs and through its counsel, Mr. Walsh, presented a schedule of costs (which he told me without objection from Mr. Deal) was a detailed breakdown of the total figure of £23,305.10. The Appellant did not seek an adjournment so that she could investigate the amount and/or prepare submissions on the law with the consequence that the judge proceeded to deal with costs at once.
15. As he phrased it in the Case Stated, the judge was of the opinion that the Appellant, through her conduct, had brought the revocation of the licence entirely upon herself. During oral argument, counsel for the Appellant suggested that this passage in the Case Stated was an afterthought, designed to justify an unjustifiable order. The Appellant's note of the judgment makes it clear that this criticism of the judge is without foundation; it was his contemporaneous view, although expressed in different words. The judge also took into account his criticisms of the Appellant, his view that she was keener on making money than complying with the terms of the licence and her very late production of documents without explanation. He made an order for costs in favour of the Defendant in the sum of £20,000 on the basis that such an amount was justified. It is relevant when considering that order to bear in mind that since the Appellant's accountancy evidence was adduced in order to compare the profitability of the premises with, and without, the sale of alcohol, the judge had rather better evidence of the Appellant's means to pay such costs than is often the case. The Appellant does not complain that she is unable to pay this sum.
16. The questions posed for the opinion of the court are two-fold:-

(1) Was it wrong to award costs against the Appellant?

(2) Was it wrong to award such costs in the sum of £20,000?

17. As to the first question, the Appellant's contention that the costs order was wrong had four stages as follows:-

(1) Section 64(1) of the Magistrates Court Act 1980 provides that:-

"(1) Upon the hearing of a complaint, a magistrates' court shall have power in its discretion to make such order as to costs –

(a) on making the order for which the complaint is made, to be paid by the defendant to the complainant;

(b) on dismissing the complaint, to be paid by the complainant to the defendant,

as it thinks just and reasonable; …"

(1) Section 181(2) of the Licensing Act 2003 provides an unfettered discretion as follows:-

"On an appeal in accordance with that Schedule [5] against a decision of a licensing authority, a magistrates' court may,

(a) dismiss the appeal,

(b) substitute for the decision appealed against any other decision which could have been made by the licencing authority; or

(c) remit the cast to the licensing authority to dispose of it in accordance with the directions of the court,

and may make such order as to costs as it thinks fit."

(2) In Crawley Borough Council v. Attenborough and Attenborough [2006] EWHC 1278 (Admin) Scott Baker LJ said:-

"For my part I see no practical distinction between the terms of section 181 and section 64(1) of the Magistrates Court Act."

(3) Therefore, applying section 64(1), costs must follow the event with the result that the judge had no power to order the successful Appellant to pay the costs of the Respondent.

18. Crawley Borough Council v. Attenborough and Attenborough does not support the conclusion for two reasons. First, the issue in that case was whether a full order for costs should have been made in favour of the largely successful Respondents and secondly the court was not exercising its power under section 64(1) but under section 181(2). Accordingly Scott Baker LJ's comments about section 64(1) are both obiter and unsurprising given that under both sections the court had undoubted power to make an order for costs in favour of that party.
19. In licensing appeals the powers of the court in relation to costs are governed by section 181(2) and not section 64(1) with the result that whatever the true construction of section 64(1) may be, I do not have to consider it. There is no scope for fettering the former by construing it in light of the provisions of the latter, as was submitted on behalf of the Appellant during the course of argument, as a variant of stage (3) above. The two provisions are entirely independent of each other and Parliament doubtless had good reason for making it clear that in licensing cases where the permutations of result may frequently be very much more complex than a simple success or failure, the court has an unfettered power in relation to the costs. That being so, the court's discretion is subject only to the usual requirement that in deciding what order is just, it must take into account all relevant matters and must not take into account irrelevant matters.
20. Complaint is made on behalf of the Appellant that the judge erred in taking into account an irrelevant matter namely the fact that (1) she produced certain documents late and (2) he admitted them. As to (1), the Appellant's failure to comply timeously with the case management directions and her last minute production of certain new documents which deprived the Respondent of the opportunity of investigating their authenticity were clearly among the matters which the judge was entitled to take into account when deciding costs. As to (2), the fact that he allowed her to adduce them has no impact on the relevance to costs of her failure to produce her documents when she should have done. This objection therefore fails.
21. Consideration of all of the matters which the judge took into account leads to the clear conclusion that there was no error of law; he had a discretion to make a costs order in favour of the Respondent and he exercised it on proper grounds. I therefore answer the first question "No".
22. As to the second question, the Appellant contends, in reliance upon R v. Highgate Justices ex parte Petrou [1954] 1 All E.R. 406, that the costs order was so unjust as to be akin to a financial penalty and therefore unlawful. In that case the Appellant was the owner of premises which she let to another party for use as a club. The other party was charged with 10 offences relating to the supply of liquor at the premises and the Appellant was joined to show cause why the club should not be struck off the register. The other party was convicted, fined and ordered to pay 20 guineas of the prosecution's costs of 21 guineas. The club was struck off the register and the Appellant was ordered to pay £100 costs. On a motion for an order of certiorari it was held that since the other party had already been ordered to pay all but one guinea of the prosecution costs, the order against the Appellant was a penalty in the guise of costs. In the present case, there are no facts which would justify the conclusion that the order was a penalty dressed up as costs. The costs were summarily assessed on the basis of a written breakdown of the Respondents' costs and the order was for a lesser sum than that claimed. The amount was substantial but bearing in mind that the Respondent had to process two appeals due to the Appellant's refusal to give up her 2005 licence and that it was represented at the oral hearing lasting two days by leading counsel the amount is not obviously unjust. I therefore answer the second question "No".