Scottish Court of Session Decisions

[1] On 25 October 2002 the first respondents, the City of Glasgow Licensing Board, considered an application by the appellants for the grant of a betting office licence for premises known as and comprising 2192 Paisley Road West, Glasgow, in terms of the Betting, Gaming and Lotteries Act 1963, as amended. Objections to the grant of the application had been received from the second respondents, who operate a betting office at 52 Hillington Road South, Glasgow, and from the third respondents, operators of a betting office at 2246 Paisley Road West, Glasgow. In addition, objections had been received from a number of members of the public. The second and third respondents were legally represented at the meeting of the first respondents on 25 October 2002, but the remaining objectors were not.

[2] After hearing detailed submissions on behalf of the appellants and the second and third respondents, the first respondents determined to refuse the application on a number of grounds set out in their Statement of Reasons, in terms of paragraph 19(b)(ii) of Schedule 1 to the 1963 Act. That part of that paragraph provides as follows:

[3] In their Statement of Reasons for their decision, the first respondents stated, inter alia, as follows:

[4] Following the making of the foregoing determination by the first respondents, the appellants appealed to the sheriff against that determination. In that appeal it was contended on behalf of the appellants that the first respondents had erred in law in refusing that application; that they had exercised their discretion in an unreasonable manner in refusing their application; and that they had acted contrary to natural justice in refusing the application. A hearing of that appeal took place before the sheriff on 9 and 10 April 2003, at which the appellants and the respondents were represented. On 7 July 2003, the sheriff refused the appeal. The appellants have now appealed to this court on the ground that they are dissatisfied in point of law with the decision of the sheriff, in terms of section 39(8) of the Licensing (Scotland) Act 1976. The grounds of the appellants' appeal are in the following terms:

[5] Having set forth the circumstances just described, senior counsel for the appellants drew our attention to the provisions of paragraph 20(1) of Schedule 1 to the 1963 Act. The effect of that provision was that, unless one of the grounds of refusal specified in paragraphs 15 to 19 of the Schedule could be identified, the licensing authority was not entitled to refuse an application for the grant of a betting office licence. In this particular case, the first respondents had purported to invoke the ground of refusal set forth in paragraph 19(b)(ii). That provision was couched in language which indicated that the licensing authority had a discretion to refuse an application

It was important to recognise the significance of the word "inexpedient" in this provision. The meaning of that word in the context of the legislation was not wholly clear. In that connection reference was made to William Hill (Scotland) Limited v. Dundee City Council Licensing Board, Ladbrokes Limited and Stanley Leisure plc (25 November 2003)(unreported). At page 15 of the sheriff's judgment resort was had to the definition of the word in the Shorter Oxford English Dictionary. "Inexpediency" was there defined as "the quality of being inexpedient; disadvantageousness; unadvisableness, ... " and "inexpedient" as "not expedient; not advantageous, useful or suitable; inadvisable". It was submitted that, in the present case, the first respondents had not identified anything which would be inexpedient, in the sense of inadvisable, which would result from the grant of the application. The Statement of Reasons did not set out an intelligible, or, indeed, any basis for the refusal of the application. If the question was asked why a third betting shop would be disadvantageous, the decision gave no answer to the question. It was submitted that it did not follow from the fact that existing demand for such facilities was being met that a third shop would be disadvantageous. It had to be accepted that the extreme case of a whole street which contained nothing but betting shops would be disadvantageous to the community in which it lay, since there would be no room for necessary facilities such as grocers, newsagents and other important retail outlets. However, where some disadvantage was perceived to be likely to result from a grant, it had to be spelled out in the reasons for refusal. In relation to the demand in the locality, it ought to be recognised that competition between different betting shops might be advantageous. Yet, if competition existed, the existing demand could very well have been met. The use of the words "the demand for the time being in the locality" in paragraph 19(b)(ii) suggested that what had to be considered was the existing demand. On that basis, the appellants had not attempted to support their application by reference to the stimulation of future demand. However, it appeared from pages 8 and 9 of the first respondents' reasons that they had been concerned with the issue of stimulation of demand. The first respondents had, in effect, attempted to justify their decision by claiming that existing demand was being met by the existing facilities and that therefore it would be inexpedient for a new licence to be granted. The flaw in that position was that they had not stated why there would be inexpediency in making a grant. There was no material before the first respondents to demonstrate that a third betting shop would in fact stimulate demand for such facilities. Further, looking at the objections which had been tendered to the application, none of them sought to suggest that the grant of the application would result in an unsatisfactory mix of retail premises. There was nothing in the first respondents' Statement of Reasons to show why it was expedient to refuse the application.

[6] It was submitted that the proper approach to the legislation under consideration had been explained in William Hill (Strathclyde) Limited v. The City of Glasgow Licensing Board and Others (23 July 1992)(unreported). At page 16 of the Opinion of the Court, it was indicated that it was necessary for licensing boards first of all to assess the facts; then they required to make a single discretionary judgment of inexpediency, on the basis of those facts, if they wished to refuse an application. Reliance was also placed on Mecca Bookmakers (Scotland) Limited v. East Lothian District Licensing Board 1988 S.L.T. 520. At pages 522 and 523, Lord Jauncey explained what were relevant considerations in dealing with an application such as this. It was also made clear in Tote Offices Limited v. Ron Nagle (Turf Accountants) Limited 1968 Sol. J 881 that considerations beyond demand could be taken into account. In William Hill (Caledonian) Limited v. The City of Glasgow Licensing Board 2003 S.C. 289, the court had been concerned with the adequacy of the reasons given by the licensing authority for their decision. In relation to the application of paragraph 19(b)(ii), the court held that the licensing authorities reasons had been inadequate. That case bore a similarity to the circumstances of the present one. In the present case there was insufficient material to enable the first respondents to conclude that it would be inexpedient to grant the application. They had misdirected themselves in relation to the issue of the stimulation of demand, focused in ground of appeal 2(d).

[7] Senior counsel for the appellants turned next to the matters raised in the second main ground of appeal, in which it was contended that the sheriff had erred in law in failing to hold that the first respondents had acted contrary to natural justice. The focus of this contention was the conduct of Councillor Macdiarmid, the Vice-Convenor of the first respondents. A transcript of the proceedings before the first respondents had been prepared. At page 43 of the appendix there began the passage which was the basis of this submission. Following upon an invitation by the Convenor to any member of the Board who wished to do so to ask any questions, Councillor Macdiarmid had launched into a speech which ran over many pages indicating that he was averse to the provision of further betting shop facilities. At page 60 of the appendix, he made certain remarks which indicated that he did not have an open mind in relation to the application. The words used in that passage indicated that Councillor Macdiarmid was anticipating that the case would go "somewhere else to a superior judgment". Having regard to the arrangements for appeals to the court, this remark implied that Councillor Macdiarmid had formed the intention to vote for the refusal of the application before he had heard all that was to be said in favour of it.

[8] Senior counsel for the appellants, in response to a question from the court, recognised that Councillor Macdiarmid's remarks at page 60 of the transcript might be construed in different ways. When he said that "this will go somewhere else to a superior judgment", it was conceivable that he was referring to the issue of the impact of the public interest in relation to such cases as this; however, the submission was that the quoted remark was a reference to the instant case. On that view, it demonstrated that Councillor Macdiarmid did not have an open mind on the matter. That was the conclusion which an impartial and informed observer would have reached in the light of these events. In this particular connection senior counsel for the appellants relied upon Tote Offices Limited v. Ron Nagle (Turf Accountants) Limited and Others and, in particular, the observations of the Lord Chief Justice Parker at page 882. Reliance was also placed on Hoekstra .v H.M. Advocate (No. 2) 2000 S.L.T. 605 at pages 610 to 611, where Lord Justice General Rodger observed that a judge performing a judicial duty had to bring an unbiased and impartial mind to bear on the task and had to be seen to be impartial. It was submitted that Davidson v. The Scottish Ministers [2004] UKHL 34 also supported the appellants' position. Reference was made to the observations of Lord Bingham of Cornhill in paragraph 7 and to those of Lord Hope of Craighead in paragraph 58. The fact that Councillor Macdiarmid was simply one member of a Board of 12 did not undermine the appellants' submission. His membership of the Board, in association with his remarks, would have created in the mind of an impartial and informed observer the view that there was a real possibility of the whole Board lacking impartiality.

[9] Senior counsel for the appellants drew our attention to Piper v. Kyle and Carrick District Council 1988 S.L.T. 267, since it was a decision which bore certain similarities to the facts of the present case. Although its conclusion might be thought to be contrary to the submissions made for the appellants, the arguments addressed to the court, and hence its approach, as disclosed at pages 268 to 269, differed from that taken in more recent cases. The concept of the impartial and informed observer was not employed. Accordingly, it was submitted that the decision should be treated with caution.

[10] As regards the disposal of the case, in the event of the court acceding to the appellants' submissions, it was contended that the court should remit the case to the sheriff, with a direction that the sheriff should remit it to the appellants with a direction that the application for the licence should be granted. The alternative option would be for a remit to be made for reconsideration by the Board differently constituted and, in particular, without Councillor Macdiarmid. However, this latter course was not favoured; the first respondent had had many opportunities in recent times to apply the law correctly. In this case they had not done so; the matter should now be taken out of their hands.

[11] Senior counsel for the first respondents moved the court to refuse the appeal. In the event of the court concluding that the appeal should be allowed, the case ought to be remitted to the first respondents for reconsideration, since the application for the licence remained a matter which was proper for the exercise of their discretion. In that connection reference was made to Matchurban Limited v. Kyle and Carrick District Council 1995 S.C. 13, at page 15. There might be cases where attitudes had hardened to such an extent that a remit to the Licensing Board might be inappropriate; however, the instant case was not one of those. The course now desiderated by the first respondents was followed in William Hill (Caledonian) Limited v. City of Glasgow Licensing Board 2003 S.L.T. 668. There was no question of attitudes having hardened in relation to the present matter. The first respondents' decision in relation to the appellants' application was the only one which they had made in relation to the premises concerned. In the event of the court not being prepared to order that the matter be remitted to the first respondents for reconsideration and if there were to be a remit to the sheriff, it should be made clear that the sheriff would require to consider the merits of the case de novo, in order to give the objectors to the application a fair hearing. Anything else would amount to a contravention of Article 6.1 of the European Convention on Human Rights.

[12] Turning to the matters raised in the appellants' second main ground of appeal, senior counsel for the first respondents accepted that the criterion set forth in Porter v. Magill [2002] 2 AC 357 was applicable. In particular, the observations of Lord hope of Craighead in paragraphs 102 to 105 were pertinent. The court had first to ascertain all of the circumstances which had a bearing on the suggestion that the tribunal was biased; it then had to ask whether those circumstances would lead a fair-minded and informed observer to conclude that there was a real possibility, or a real danger, the two being the same, that the tribunal was biased. If it were the case that one member of a multi-member tribunal had acted in an inappropriate way, it was then necessary to look at the effect, if any, upon the tribunal as a whole. Such a situation might result in the vitiation of the resultant decision. In this connection reference was made to Piper v. Kyle and Carrick District Council. Davidson v. The Scottish Ministers was a case in which Lord Hardie had taken an active part in the making of the decision under consideration. The result of that situation was that the resultant decision was held to have been vitiated not upon the ground of actual bias, but upon that of apparent bias.

[13] Dealing with the particular circumstances of the present case, it was submitted that what Councillor Macdiarmid had said did not feature in the decision of the first respondents. In his remarks during the course of the hearing, he had displayed detailed knowledge of the geography of the locality and the attitudes of certain of the residents there. However, that state of affairs was unexceptionable; section 1(4) of the Licensing (Scotland) Act 1976 provided for a Licensing Board composed of elected members of the Council. Inevitably they would bring local knowledge of geography and public attitudes to the decision-making process. Section 2 of the 1976 Act provided for disqualification of certain persons from acting as a member of a Licensing Board; there was no question of Councillor Macdiarmid being disqualified from acting as such a member in terms of that provision.

[14] Looking in greater detail at the contents of Councillor Macdiarmid's remarks, it was apparent that the appellants' argument was founded upon what was recorded at page 60 of the transcript of proceedings. It was said that what was recorded at page 60 of the transcript demonstrated an impropriety on the part of Councillor Macdiarmid, who, it was contended, showed at that point that he had made up his mind concerning the application, before hearing all that was to be said in support of it. That view of what was recorded at that part of the transcript proceeded upon a misunderstanding on the part of the appellants. When Councillor Macdiarmid said: " ... we are anticipating that this will go somewhere else to a superior judgment ... ", he was referring to the matter of the appropriate definition of the public interest, which had been discussed in the immediately preceding pages of the transcript. He was not referring to the instant case. Later, on page 60 he said: "And you are all learned counsel, so I would be interested in your definitions so we can form our judgment." There he was making it clear that the first respondents had not at that stage reached any conclusion on the merits of the appellants' application. It should not readily be assumed that Councillor Macdiarmid was doing other than endeavouring to perform his duties property and to keep an open mind concerning the application before him. Applying the tests which had been explained in Porter v. Magill, there was no breach of natural justice arising out of the situation. If, contrary to that submission, it had to be concluded that, at the stage in question, Councillor Macdiarmid's mind was closed, then the approach in Piper v. Kyle and Carrick District Council ought to be followed.

[15] As regards the appellants' first main ground of appeal, it was submitted that the contents of paragraphs 2(a) and (b) of the grounds of appeal were important. It was necessary to understand the effect of the legislation involved. Paragraph 19(b)(ii) of Schedule 1 to the 1963 Act spoke of a refusal of an application being competent where the grant "would be inexpedient having regard to the demand for the time being in the locality for the facilities afforded by licensed betting offices and to the number of such offices for the time being available to meet that demand." Accordingly, if it were shown to the satisfaction of the first respondents that demand in the locality was being met by the existing facilities, that was enough to entitle them to refuse the application. However, the Board could, but did not require to, have regard to other matters, as appeared from the Opinion of Lord Jauncey in Mecca Bookmakers (Scotland) Limited v. East Lothian District Licensing Board. What occurred when a Licensing Board considered an application amounted to a single exercise of a discretionary judgment, taking into account the demand in the locality and the existing facilities in the locality to meet that demand and other relevant circumstances. The word "inexpedient" used in paragraph 19 did not import into the necessary consideration any matters other than demand. There was no multi-stage process of consideration; there was a single discretionary judgment. Thus it was not necessary for a Licensing Board to look for any particular deleterious consequences resulting from over provision of betting shop facilities, although, of course, such matters could be examined as part of the exercise of discretion. There was a premise underlying the legislation that over-provision of betting shop facilities was, in itself, disadvantageous and inexpedient, without more.

[16] There had been certain criticisms of the first respondents' Statement of Reasons in relation to the issue of stimulation of demand. That matter had been debated before the first respondents at the hearing, as appeared from page 63 and following of the transcript. Paragraph 19(b)(ii) of Schedule 1 to the 1963 Act contained language which recognised that it entitled a Board to refuse a grant where the number of licensed betting offices in being in a locality adequately catered for existing demand. The structure of the licensing system reflected a philosophy that demand should not be stimulated, but existing demand met. Support for the view that the object of the legislation was not to stimulate new demand, but to satisfy existing demand could be obtained from Regina v. Essex Quarter Sessions, ex parte, Thomas [1966] 1 All E.R. 353, at page 355. Reference was also made to the report of the Royal Commission on Betting, Lotteries and Gaming 1949 to 1951 (Cmd. 8190, at paragraphs 186 to 260 and 261). Thus what was said by the first respondents in their Statement of Reasons at pages 8 and 9 was correct. The first respondents recognised that competition between betting office facilities was beneficial and already existed in the locality. The view which the first respondents took concerning not stimulating demand was in accordance with the public interest.

[17] Senior counsel for the second and third respondents adopted the submissions made on behalf of the first respondents. Dealing first with appropriate means of disposal of the case in the event of the appeal being allowed, it was submitted that the application should be remitted back to the first respondents for reconsideration. The appropriateness of that course was reinforced by the factor that the case was now more than two years old; in consequence of the passage of time circumstances might have changed. In any event, in the intervening period there had been a change in the composition of the first respondents in consequence of elections. If, however, the court were to take the view that in all material respects the first respondents had acted properly, but that the actions of Councillor Macdiarmid had rendered the proceedings flawed, it would be inappropriate for the court to direct that there should be a grant. There would require to be a remit back.

[18] The principal submission of the second and third respondents was, however, that the appeal should be refused. Dealing first with the issue of the alleged breach of the principles of natural justice, it was submitted that Councillor Macdiarmid's interventions in the proceedings were quite proper and in the public interest. His observations amounted to a legitimate expression of view from the locality. As regards the crucial observations at page 60 of the transcript, there was no indication that he had a closed mind on the application. His remarks indicated that the reverse of that was the case.

[19] Returning to the appellants' first main ground of appeal, contained in paragraph 2 of their grounds, two questions arose: (1) What was the existing demand? (2) What betting offices existed to meet the demand for the time being? The first respondents had made a judgment relating to inexpediency based upon their assessment of existing demand and existing facilities; that judgment could not be challenged. The first respondents were required to consider the issue of demand and had done so. However, other factors could enter into the exercise of their discretion, such as the desirability of some degree of competition, as appeared from Mecca Bookmakers (Scotland) Limited v. East Lothian District Licensing Board, at page 523.

[20] It was submitted that the first respondents had given sufficient and coherent reasons for their decision. Indeed eleven separate reasons could be identified in the Statement of Reasons at pages 7 and 8. None of the factors which the first respondents had taken into consideration were said to have been irrelevant. The statement of the first respondents' reasons was a model of its kind. The appeal ought to be dismissed.

[21] Senior counsel for the appellants replied.

[22] We deal first with the criticisms made of the first respondents' Statement of Reasons, focused in their first main ground of appeal contained in paragraph 2 of the grounds of appeal. In this context, the provisions of paragraph 19(b)(ii) of Schedule 1 to the 1963 Act are important. That part of the relevant legislation provides that

It is evident from these provisions and, in particular, the use of the word "may" that the licensing authority is given a discretion to refuse an application for a grant in the circumstances defined in sub-paragraph (ii). The provisions of that sub-paragraph are clearly focused upon the demand for the time being in the locality for the facilities afforded by licensed betting offices and the number of such offices for the time being available to meet that demand. It is provided that the grant may be refused, if it would be inexpedient having regard to those matters. In the course of the submissions of senior counsel for the appellants, an attempt was made to persuade us that the word "inexpedient" in the legislation had the effect of importing into it a need to identify some deleterious consequence of the provision of facilities beyond those necessary adequately to meet the existing demand, if there were to be a refusal. The argument was to the effect that the first respondents had failed to identify any such deleterious consequences, with the result that they were not entitled to reach the conclusion that they did that the grant would be inexpedient. We consider that the statutory provisions themselves contain no basis for such a contention. In our view, having regard to the ordinary and dictionary definitions of the word, referred to in William Hill (Scotland) Limited v. Dundee City Council Licensing Board, Ladbrokes Limited and Stanley Leisure plc and the context in which it is used in this legislation, the meaning is simply that the grant would not be useful in the circumstances having regard to the factors mentioned. In particular, we do not consider that before an application may be refused, on the basis of a conclusion about demand for the time being in the locality for the facilities afforded by licensed letting offices and the number of such offices for the time being available to meet that demand, some particular and specific deleterious consequence which would follow, if it were to be granted, must be identified.

[23] Before coming to the terms of the first respondents' decision itself, we think it also appropriate to consider the remaining parts of the language used in paragraph (ii). The appropriate authority is enjoined by the legislation to have regard not merely to whether, in some undefined way they consider it inexpedient to grant a licence, or even to whether they consider it inexpedient, taking into account factors such as whether existing demand is being met. Rather, they require to consider whether the proposed grant would be inexpedient having regard to

Although the language is perhaps somewhat cumbersome, we consider that, in this provision, Parliament quite simply had in mind to confer upon the appropriate authorities a discretion to refuse an application where the existing facilities were judged by them sufficient to meet the existing demand in the locality for such facilities. The use of the expression "for the time being" in those parts of the paragraph dealing with demand and facilities appears to us to point to that conclusion. Thus, if the appropriate authority were to reach the conclusion that a proposed facility was not needed for the purposes of meeting the demand existing for the time being, it would have the discretion to refuse to grant the relevant application.

[24] Following this approach, we have examined the reasons given by the first respondents for their decision between pages 7 and 9 of their Statement of Reasons. Their conclusion is, we think, summed up at page 8, where they say:

We consider that the first respondents, having reached that conclusion in the light of the material before them and having given reasons as to why they were not persuaded by the appellants' contentions in relation to the claimed public benefit which would flow from increased competition and the standard of the proposed facilities, were entitled in terms of paragraph 19(b)(ii) to refuse the appellant's application, without identifying any particular deleterious consequence that a grant of that application might be supposed to cause.

[25] Criticism, at least in the written grounds of appeal, was directed to the language used by the first respondents immediately following on the passage which we have just quoted where they said:

We do not think that the criticism of that passage advanced on behalf of the appellants was justified. While the appropriate authority is not required by paragraph 19(b)(ii) to refuse an application for a grant, where existing demand is met by existing facilities, if they think that some useful purpose would be served by making the grant, in our view, it is evident that the focus of the legislation is upon the meeting of existing demand, rather than the stimulation of new demand. We are confirmed in that view by what was said by Lord Parker, C.J. in Regina v. Essex Quarter Sessions ex parte Thomas, at p.355. For the reasons advanced on behalf of the second respondents it seems not unreasonable to suppose that, when drafted, the legislation reflected a philosophy that, at least in general, demand should not be stimulated. In any event, in the final sentence of their Statement of Reasons the first respondents said that they were

We consider that no error of principle appears from that passage. Having concluded that the granting of the appellants' application would be inexpedient in the sense of being not useful, we consider that the first respondents were entitled to conclude that it would not be in the public interest that it should be granted. In all these circumstances, we reject the appellants' first main ground of appeal.

[26] Turning now to the second ground of appeal, contained in paragraph 3 of the Grounds, we begin by observing that there was no dispute before us concerning the approach which ought to be taken to such issues. The proper approach was set forth in Porter v Magill by Lord Hope of Craighead in paragraphs 102-105. At paragraph 103 he said this:

That was the test applied in Davidson v. The Scottish Ministers by Lord Bingham of Cornhill in paragraph 17.

[27] In the light of that approach, it is now necessary to examine the participation of Councillor Macdiarmid in the proceedings at the hearing of the appellants' application, in order to see whether the principles of natural justice have been contravened. As the argument developed before us, attention came to be focused mainly upon what he had said, as recorded at page 60 of the transcript, and, in particular, in the sentence:

The contention of the appellants was that the subject of this observation, the "this" which "will go somewhere else to a superior judgment", was the instant case. Having considered the context of this observation and, in particular, the discussion which preceded it from pages 54 to 60, we have reached the conclusion that these words do not, and were not intended to, refer to the instant case. In our view, reading the transcript of Councillor Macdiarmid's observations fairly, we conclude that the subject of these words was the controversy which Councillor Macdiarmid perceived as existing in relation to the public interest. It appears to us that that is plain from the opening words of Councillor Macdiarmid on page 60: "Could Mrs Stacey and Mr Campbell come forward to the microphone and help me in terms of this definition of public interest?" Those words immediately precede the words which were the focus of the appellant's submissions. Accordingly we conclude that the appellants' contention in this part of their appeal was based upon a misunderstanding of the meaning of the language used by Councillor Macdiarmid. Upon that view, no implication of bias or a closed mind can arise from that language. We are reinforced in that view by what follows the words already quoted on page 60: " ... and you are all learned counsel so I would be interested in your definitions so we can form our judgment." It appears to us that those words clearly indicate that Councillor Macdiarmid did not have a closed mind in relation to the appellants' application, but was striving to reach a proper conclusion upon it. It seems clear, too, that in the earlier passage, fairly read, he was legitimately putting certain concerns, apparently expressed by members of the public, to the appellants' representatives for their comments. For all these reasons, we reject the appellants' second ground of appeal.

[28] It follows from what we have said that the appeal as a whole must be refused. Having reached this view, we find it unnecessary to consider the issue of what would have been the effect of a conclusion that Councillor Macdiarmid himself was biased, or had closed his mind to the arguments being addressed to the first respondents, an issue of the kind which was addressed in Piper v. Kyle and Carrick District Council. Furthermore, having reached the conclusion which we have, it is unnecessary for us to express any view on what would have been the appropriate disposal of this appeal, had it been allowed, an issue about which there was considerable discussion before us.