EXTRA DIVISION, INNER HOUSE, COURT OF SESSION
Lord Eassie Lord Mackay of Drumadoon Lord Wheatley	[2013] CSIH 25 XA130/11 OPINION OF THE COURT delivered by LORD MACKAY OF DRUMADOON in the cause LIDL UK GmbH Pursuers and Appellants; against CITY OF GLASGOW LICENSING BOARD Defenders and Respondents: _______________

Act: Dean of Faculty, Skinner; Harper Macleod LLP

Alt: Dewar QC, Blair; City of Edinburgh Council

5^th April 2013

Introduction

[1] This is an appeal against an interlocutor of the sheriff at Glasgow, dated 4 November 2011, pronounced in a summary application at the instance of LIDL UK GmbH ("the appellants") against the City of Glasgow Licensing Board ("the respondents"). In terms of that interlocutor the sheriff, Sheriff J.K. Mitchell refused the appellants' appeal by way of summary application against the decisions of the respondents dated 16 May 2011 to the effect (a) that grounds had been established in terms of section 39(1) of the Licensing (Scotland) Act 2005 ("the 2005 Act") for reviewing the appellants' Premises Licence ("the Premises Licence") authorising the sale of alcohol at the appellants' retail premises at 300 Victoria Road, Glasgow, G42 7RW ("the appellants' premises") and (b) that it was necessary and appropriate for the purposes of the licensing objective of preventing crime and disorder to suspend the Premises Licence for a period of five days from 17 May 2011, in terms of section 39(2) of the 2005 Act.

[2] The appellants own and operate supermarket premises throughout various countries in Europe, including Scotland. The event giving rise to the respondents' decisions of 16 May 2011 took place at the appellants' premises at 300 Victoria Road, Glasgow on 18 February 2011.

[3] Since 1 September 2009, the appellants have held a Premises Licence in respect of those retail premises. The licence was issued by the respondents under the provisions of section 17 of the 2005 Act and authorises the sale of alcohol for consumption off the appellants' premises. In February 2011, five of the appellants' employees who worked at the appellants' premises, including Gary Singleton, held Personal Licences. These were also issued by the respondents and enabled the holders to supervise or authorise the sale of alcohol (sections 71 and 76 of the 2005 Act).

[4] Since the appellants' Premises Licence for 300 Victoria Road, Glasgow was first issued, the appellants have provided training for members of their staff as to their duties under the 2005 Act and the importance of not selling alcohol to persons under the age of 18 years. Such training is provided at the outset of each staff member's employment with the appellants and thereafter by way of refresher courses at intervals of six months.

[5] Those employees of the appellants who hold Personal Licences also undergo the requisite training, which includes training provided by the appellants and external training required of any holder of a Personal Licence (see sections 74(3)(b) and 91(1) of the 2005 Act).

[6] In addition to the training that members of the appellants' staff were required to undertake, in February 2011 the appellants operated a "Challenge 21" policy with which all members of staff acting as checkout assistants in the appellants' premises required to comply. The "Challenge 21" policy required any member of staff dealing with a customer, who wished to purchase alcohol, to scan the container of alcohol at the till. This caused the till to provide the member of staff with an electronic prompt to check if the customer being served appeared to be over 21 years of age. If the member of staff dealing with the customer considered that the customer might not be over 21 years the "Challenge 21" policy required that member of staff to call for the assistance of a supervisor, who held a Personal Licence. The policy required that the customer should then be asked for identification and proof of his or her age. If the customer was established to be 18 years of age or older, the member of staff could then complete a manual till entry and the sale of the alcohol.

[7] On 18 February 2011 the Chief Constable of Strathclyde, in exercise of his powers in terms of section 105 of the 2005 Act, authorised a young person aged 16 years of age to buy or attempt to buy alcohol at the appellants' premises. This procedure is known as a test purchase. The young person, who was aged between 16 and 16 1/2 years, took a bottle of wine from a shelf in the premises to a checkout. Mr Singleton, the appellants' manager on that day, was on duty at that checkout. He sold the bottle of wine to the young person without asking for any identification or carrying out any check as to the young person's age. Following a disciplinary hearing, Mr Singleton was subsequently dismissed by the appellants on account of his failure to comply with their "Challenge 21" policy. Having watched the CCTV footage of the test purchase, the view taken on behalf of the appellants was that the young person involved did appear to be under the age of 21.

[8] The judgment of the sheriff at Glasgow sets out what he describes as being the undisputed background to the decisions made by the respondents:

[4] By letter dated 27 April 2011 (no.5/1 of process) Chief Inspector MacGuire on behalf of the Chief Constable of Strathclyde Police wrote to the defenders in terms of section 36(1) of the 2005 Act making application for a review of the premises licence for the pursuer's premises. The application was made in terms of section 36(3)(b) on a ground relevant to the licensing objective stated in section 4(1)(a) of the 2005 Act, namely, preventing crime and disorder.

[5] In this letter the Chief Constable provided certain information to the defenders. The letter advised that as a result of numerous complaints from within the local community regarding increased underage drinking and youth disorder, the Community Policing Team was tasked with focusing on those community concerns and directing resources accordingly. "In the light of information gathered, it was decided to conduct Test Purchase Operations for alcohol at the 10 premises identified within the relevant locality". The letter stated that "(A) Test Purchase Operation may be carried out in premises for either of the following reasons:

·      there is intelligence to suggest that alcohol is being sold illegally to persons under 18 years of age from specific licensed premises and/or

·      there is intelligence indicating that persons under 18 years of age are consuming alcohol in the locality where the licensed premises are also situated."

The letter also advised that "Test Purchasing provides police with an effective tool in the fight against underage sales and underpins the "no proof - no sale" provision which represents a vital safeguard in tackling under aged drinking and the resultant anti-social behaviour which adversely affects many communities".

[6] The letter details the stringent controls for the recruitment of test purchasers and the control of Test Purchase Operations. It is worth setting out these in detail, as follows:

"The young person - who must be between 16 and 16 1/2 years of age at the time of a Test Purchase Operation - is continually assessed in their appearance, level of maturity and general character. Importantly, if in the opinion of the lead officer, the young person looks older than 16 1/2 years of age, the young person will not be used in a Test Purchase Operation.

The test purchaser is told that all questions asked by the seller must be answered truthfully. In particular, if challenged, the test purchaser must state their correct age and, if the initial attempt to buy alcohol is refused, the test purchaser must not try to persuade or coerce staff to make a sale.

These steps are taken to minimise the likelihood of a careless mistake which should, in any event, be less likely in licensed premises adhering to a challenge 25 policy and where all staff have received training in accordance with the legislative provisions".

[7] The Chief Constable's letter also states:

"At about 7.25 pm on Friday, 18 February, a Test Purchase was conducted at the subject premises and the Test Purchaser was sold a bottle of 'Cimarosa Zinfandel Rose Wine (10.5% ABV) without being asked for identification or being challenged as to their age, notwithstanding the display of 'challenge 25' flyers at the point of sale. Consequently, the person who served the test purchaser - Mr Gary Singleton (the Duty Manager and personal licence holder) - is now the subject of a report to the Procurator Fiscal at Glasgow regarding the contravention of section 102 of the Licensing (Scotland) Act 2005".

"The test purchaser assisting Strathclyde Police on Wednesday, 2 February 2011 was 16 1/2 years of age and conducted 10 other Test Purchase Operations that evening. In all the other premises, staff refused to sell alcohol to the test purchaser on the grounds that the test purchaser was too young to buy alcohol."

[8] For completeness it should be noted that the letter continues:

"At 7.40 pm on Thursday, 3 March 2011, a second Test Purchase Operation was conducted at the premises. On that occasion, the sale assistant asked the test purchaser to provide identification and the sale of alcohol was refused."

[9] In terms of section 38(1)(b) of the 2005 Act, the defenders fixed a hearing for 16 May 2011 for the purposes of considering and determining the Premises Licence Review Application submitted by the Chief Constable. At the hearing the respondents had before them a report from the Licensing Standards Officer, submitted by him in terms of section 38(4)(a) of the 2005 Act, in response to his receipt of a copy of the Premises Licence Review Application. The Licensing Standards Officer reported that the review application had been examined in terms of the legislation in force and the stated policies of the respondents and no complaints had been received or areas of non-compliance established relative to the operation of the appellants' premises. As a consequence the Licensing Standards Officer had no adverse comments to make.

[10] During the hearing on 16 May 2011 the respondents were addressed by Inspector Ross, on behalf of the Chief Constable, and by Andrew Hunter, solicitor, for the appellants. On behalf of the appellants it was accepted that there had been a failure to pass the first test purchase organised by the Chief Constable. It was explained that had occurred because Mr Singleton had failed to comply with what he had been taught during his training with the appellants and, in particular, with the appellants' "Challenge 21 policy". The respondents were informed that the police had been in error in reporting that Challenge 25 posters had been displayed in the appellants' premises. It was accepted on behalf of the Chief Constable that the posters may have related to the appellants' "Challenge 21" policy. The respondents were also informed that the errors Mr Singleton made had been recorded on CCTV footage and involved him failing to challenge the age of an individual who appeared to be under 21 years of age. That failure was not acceptable to the appellants and Mr Singleton had been dismissed.

[11] The appellants' solicitor further advised that following the events of 18 February 2011, all members of the appellants' staff at 300 Victoria Road, Glasgow went through further refresher courses. The solicitor submitted that the appellants' pass of the second test purchase on 3 March 2011 supported the validity of the appellants' "Challenge 21" policy and the procedures that the appellants had in place at their premises to prevent alcohol being sold to persons under the age of 18 years. Thus the failure to pass the test purchase on 18 February 2011 had been the fault of Mr Singleton, rather than indicative of any fundamental system failure on the part of the appellants as holders of the Premises Licence. At the conclusion of the hearing on 16 May 2011 the respondents announced that they were satisfied that grounds of review had been established and that it was necessary and appropriate in terms of the licensing objective of Preventing Crime and Disorder to suspend the appellants' Premises Licence for a period of 5 days.

[12] On 6 June 2011 the defenders issued a Statement of Reasons. After summarising the information placed before the respondents in advance of the hearing and during the hearing itself, the Statement of Reasons continued:

"Having done so [retired to consider the application], the Board was of the view that the ground for review set out in the Premises Licence Review application had been established as the licensing objective of Preventing Crime and Disorder had been engaged by the occurrence of the sale of alcohol to a person under 18 in the course of a test purchase, constituting an offence in terms of section 102 of the Act.

In determining that the ground for review had been established, the Licensing Board considered that the sale of alcohol to an individual under the age of 18 had been made by someone in a senior position at the premises who had failed to take reasonable steps to comply with the law. In the view of the Board it would have been reasonable to have expected the Personal Licence Holder in these circumstances to have asked the test purchaser for identification, which would have resulted in a pass of the test purchase. It was of concern to the Board that the underage sale had been conducted by a Personal Licence Holder who had undertaken a personal licence qualification accredited by the Scottish Ministers and who had been responsible for providing training and supervision on alcohol sales to other staff at the premises, as per the submissions made by Mr Hunter.

The Board considered that the carrying out of a test purchase operation under section 105 of the Act is an opportunity to test, under controlled circumstances, the policies and procedures in place at premises which are intended to reduce the risk of alcohol being sold to persons under the age of 18. In this particular case there had been a clear departure from the policies and procedures which had been outlined to the Board.

In the view of the Board there was a significant discrepancy between the sale of alcohol to a person aged 16 and a half and the 'Challenge 21' policy the Licence Holder repeatedly submitted they adhere to. It was clear to the Board that this significant discrepancy had also been accepted by the Premises Licence Holder having regard to their decision to dismiss the employee in question. Having failed to take the reasonable step of requiring identification from someone who resulting in an offence having been committed under section 102 of the Act, the Licensing Board considered that the licensing objective of Preventing Crime and Disorder had been engaged and therefore the ground for review had been established.

While the Board was aware of the decision in an appeal case determined by Inverclyde Sheriff Court, as referred to by Mr Hunter, in the particular circumstances of this case the Board considered that it did have sufficient material before it to make a finding that the ground for review had been established notwithstanding that this was a single incidence of a failed test purchase.

Having found that a ground for review had been established, the Licensing Board required to consider whether it was necessary or appropriate to take any of the steps set out in section 39(2) of the Act. These steps are:

(a) to issue a written warning to the licence holder;

(b) to make a variation of the licence;

(c) to suspend the licence for such period as the Board may determine;

(d) to revoke the licence.

In the view of the Board the occurrence of a failed test purchase under the controlled circumstances described by the Chief Constable pointed to a defect in the application of the policies and procedures at the premises for detecting persons attempting to buy alcohol who are under the age of 18. In the view of the Board, the policies and procedures in place both at the time of the first test purchase and thereafter should have been adequate in order to prevent the test purchase having been failed. That being so, the Board concluded that the failed test purchase, notwithstanding that the second test purchase was passed, highlighted a failure at the premises to follow the Premises Licence Holder's own policies and procedures and therefore the Board considered it necessary and appropriate to take one or more of the steps outlined in section 39(2) in order to prevent a recurrence of the commission of an offence under section 102 of the Act in a locality where the Police had concerns regarding increased underage drinking. For the avoidance of doubt, in reaching this decision the Licensing Board did not consider that there was any information before it of any intelligence or other information to suggest that alcohol had previously been sold to persons under the age of 18 at these premises.

The Licensing Board therefore considered that a short period of suspension of five days was necessary and appropriate in order to promote the Licensing Objective of Preventing Crime and Disorder. While a longer period of suspension had been considered, the Board concluded that a short period of suspension of five days was an appropriate and proportionate disposal in all the circumstances of the case, acting in the public interest and taking into account the measures in place at the premises to reduce the risk of underage sales occurring.

While the Board took into account the terms of the report provided by the Council's Licensing Standards Officers, which was to the effect that they had no comments to make in relation to the issues set out by the Chief Constable in the Premises Licence Review application, it did not consider that it in any way detracted from the terms of the information provided by the Chief Constable as, in the view of the Board, the matters disclosed therein related to matters more properly dealt with by the Police rather than Licensing Standards Officers. However, based on the terms of the report, the Board did not consider that the Review Hearing had given rise to any additional grounds for review, as per the terms of section 38(6)(b) of the Act."

[13] In their appeal to the sheriff the appellants' craved inter alia the quashing of the decisions of the respondents dated 16 May 2011 finding that grounds for review of the appellants' Premises Licence had been established and suspending the appellants' Premises Licence for a period of five days from 17 May 2011. Following a hearing before the sheriff on 29 September 2011, which was confined to submissions on behalf of the parties, by interlocutor dated 4 November 2011 the sheriff refused the appeal and ordered that the respondents' Premises Licence be suspended for the unexpired portion of the five day period with effect from 14 November 2011.

Statutory Provisions

[14] Before turning to consider what was said by the sheriff in his judgment, it is convenient to set out some of the relevant provisions of the 2005 Act:

"4 The licensing objectives

(1) For the purposes of this Act, the licensing objectives are -

(a) preventing crime and disorder,

(b) securing public safety,

(c) preventing public nuisance,

(d) protecting and improving public health, and

(e) protecting children from harm.

...

36 Application for review of premises licence

(1) Any person may apply to the appropriate Licensing Board in respect of any licensed premises in relation to which a premises licence has effect for a review of the licence on any of the grounds for review.

(2) An application under subsection (1) is referred to in this Act as a "premises licence review application"

(3) The grounds for review referred to in subsection (1) are-

(a) that one or more of the conditions to which the premises licence is subject has been breached, or

(b) any other ground relevant to one or more of the licensing objectives.

(4) A Licensing Standards Officer may make a premises licence review application on the ground specified in subsection (3)(a) only if -

(a) in relation to the alleged ground for review, the Officer or any other Licensing Standards Officer has issued to the licence holder a notice under section 14(2)(a)(i), and

(b) the licence holder has failed to take the action specified in the notice to the satisfaction of the Officer.

(5) A premises licence review application must specify the alleged ground for review, including in particular -

(a) where the ground is that specified in subsection (3)(a), the condition or conditions alleged to have been breached,

(b) where the ground is that specified in subsection (3)(b), the licensing objective or objectives to which the alleged ground of review relates.

(6) The Licensing Board may reject a premises licence review application if the Board considers the application -

(a) is vexatious or frivolous, or

(b) does not disclose any matter relevant to any ground for review.

(7) Where the Licensing Board rejects a premises licence review application under subsection (6), the Board -

(a) must give notice of the decision, and the reasons for it, to the applicant, and

(b) where it is rejected on the ground that it is frivolous or vexatious, may recover from the applicant any expenses incurred by the Board in considering the application.

(8) In any proceedings by a Licensing Board for the recovery of expenses under subsection (7)(b), a copy of any minute of proceedings of the Licensing Board -

(a) recording the Board's rejection of the application and the grounds for rejection, and

(b) certified by the clerk of the Board to be a true copy,

is sufficient evidence of the rejection and of the establishment of the grounds for rejection.

...

38 Review hearing

(1) Where a Licensing Board -

(a) makes a premises licence review proposal, or

(b)  receives a premises licence review application,

the Board must hold a hearing for the purposes of considering and determining the proposal or application unless, in the case of a premises licence review application, the Board has rejected the application under subsection 36(6).

(2)    A hearing under subsection (1) is referred to in this Act as a "review

hearing".

(3)    Where a review hearing is to be held, the Licensing Board must-

(a)  in the case of a premises licence review application, give notice of the hearing to the applicant, and

(b)  give notice of the hearing and a copy of the premises licence review proposal or application to-

(i)            the licence holder, and

(ii)           any Licensing Standards Officer for the area in

which the premises concerned are situated, unless, in the case of a premises licence review application, the applicant is such an Officer.

(4)    Where a Licensing Standards Officer receives under subsection (3)(b)(ii)

a copy of a premises licence review proposal or application-

(a) the Officer must, before the review hearing, prepare and submit to the Licensing Board a report on the proposal or application, and

(b) the Licensing Board must take the report into account at the hearing.

(5)    The Licensing Board may, for the purposes of the review hearing-

(a)  obtain further information from such persons, and in such manner, as the Board thinks fit, and

(b)  take the information into account.

(6)    In particular, the Board may-

(a)  request-

(i)            the attendance at the review hearing of any person

for the purpose of providing information, and

(ii)           the production at the review hearing by any person

of any documents in that person's possession or under that person's control, and

(b)  take into account any information relevant to any ground of review even though it is not relevant to any circumstances alleged in the review proposal or application under consideration.

...

39 Licensing Board's powers on review

(1) At a review hearing in relation to any premises licence, the Licensing Board may, if satisfied that a ground for review is established (whether or not on the basis of any circumstances alleged in the premises licence review proposal or application considered at the hearing) take such of the steps mentioned in subsection (2) as the Board considers necessary or appropriate for the purposes of any of the licensing objectives.

(2) Those steps are -

(a) to issue a written warning to the licence holder,

(b) to make a variation of the licence,

(c) to suspend the licence for such period as the Board may determine,

(d) to revoke the licence.

(3) On making a variation under subsection (2)(b), the Board may provide for the variation to apply only for such a period as they may determine.

...

102 Sale of alcohol to a child or young person

(1) A person who sells alcohol to a child or a young person commits an offence.

(2) It is a defence for a person charged with an offence under subsection (1) (referred to in this section as "the accused") to show that -

(a) the accused believed the child or young person to be aged 18 or over, and

(b) either -

(i) the accused had taken reasonable steps to establish the child's or young person's age, or

(ii) no reasonable person could have suspected from the child's or young person's appearance that the child or young person was aged under 18.

(3) For the purposes of subsection (2)(b)(i), the accused is to be treated as having taken reasonable steps to establish the child's or young person's age if and only if -

(a) the accused was shown any of the documents mentioned in subsection (4), and

(b) that document would have convinced a reasonable person.

(4) The documents referred to in subsection (3)(a) are any document baring to be -

(a) a passport

(b) a European Union photocard driving licence, or

(c) such other document, or a document of such other description, as may be prescribed.

(5) A person guilty of an offence under subsection (1) is liable on summary conviction to -

(a) a fine not exceeding level 5 on the standard scale,

(b) imprisonment for a term not exceeding 3 months, or

(c) both.

103 Allowing the sale of alcohol to a child or young person

(1) Any responsible person who [...]
[1] allows alcohol to be sold to a child or young person on any relevant premises commits an offence.

(2) A person guilty of an offence under subsection (1) is liable on summary conviction to -

(a) a fine not exceeding level 5 on the standard scale,

(b) imprisonment for a term not exceeding 3 months, or

(c) both.

...

141 Offences by bodies corporate etc.

(1) Where -

(a) an offence under this Act has been committed by-

(i) a body corporate,

(ii) a Scottish partnership, or

(iii) an unincorporated association other than a Scottish partnership, and

(b) it is proved that the offence was committed with the consent or connivance of, or was attributable to any neglect on the part of-

(i) a relevant person, or

(ii) a person purporting to act in the capacity of a relevant person,

that person, as well as the body corporate, partnership or not, as the case may be, unincorporated association, is guilty of the offence and liable to be proceeded against and punished accordingly.

(2) In subsection (1), "relevant person" means-

(a) in relation to a body corporate other than a council, a director, manager, secretary, member or other similar officer of the body.

(b) in relation to a council, an officer or member of the council,

(c) in relation to a Scottish partnership, a partner, and

(d) in relation to an unincorporated association other than a Scottish partnership, a person who is concerned in the management or control of the association.

...

141B Vicarious liability of premises licence holders and interested parties

(1) Subsection (2) applies where, on or in relation to any licensed premises, a person commits an offence to which this section applies while acting as the employee or agent of -

(a) the holder of the premises licence, or

(b) an interested party.

(2) The holder of the premises licence or, as the case may be, the interested party is also guilty of the offence and liable to be proceeded against and punished accordingly.

(3) It is a defence for the holder of a premises licence or an interested party charged with an offence to which this section applies by virtue of subsection (2) to prove that the holder of the licence or, as the case may be, the interested party-

(a)  did not know that the offence was being committed by the employee or agent, and

(b)  exercised all due diligence to prevent the offence being committed.

(4) Proceedings may be taken against the holder of the premises licence or the interested party in respect of the offence whether or no proceedings are also taken against the employee or agent who committed the offence.

(5) This section applies to an offence under any of the following provisions of this Act-

...

section 102(1),

section 103(1),

... "

The Sheriff's judgment

[15] In his judgment of 4 November 2011 the sheriff expressed the view that the 2005 Act took a different and wider approach to matters of public interest concern than the Licensing (Scotland) Act 1976 ("the 1976 Act") had done. He sought to distinguish observations made by Sheriff Kearney in Sohal v Glasgow Licensing Board [1999] 13 SLLP 12, that in the absence of a criminal conviction a Licensing Board should not shut its eyes to the possibility that the defence of due diligence might be capable of being made out on the facts presented to it. He viewed the wider approach set out in the provisions of the 2005 Act as involving taking action in respect of premises licences that was necessary or appropriate for the purposes of achieving one or more of the licensing objectives, each of which was an expression of public interest concerns. The new statutory process was part of a regulatory scheme which had been devised in the public interest and was not about the determination of criminal law liability, which remained the function of the criminal courts (para [37]).

[16] Sheriff Mitchell continued:

"[38] In this case, the Chief Constable of Strathclyde Police sought review of the pursuer's premises licence on grounds relevant to the licensing objective of preventing crime and disorder. This arose for the reasons set out in the Chief Constable's letter dated 8 April 2011 and was against a background of complaints from local residents in respect of increased underage drinking and youth disorder. The local community policing team was tasked with focusing upon these concerns and decided to carry out test purchase operations.

[39] The defenders regulate the sale of alcohol and one of the statutory licensing objectives in doing so is the prevention of crime and disorder. In my judgment, for the reasons advanced by counsel for the defenders, this licensing objective is wide enough to include consideration of deterrence. If underage drinking and youth disorder is taking place in a particular area or locality then the question arises as to whether the licensing objective of preventing crime and disorder is being maintained in that area. In my judgment, any sale of alcohol to a person under the age of 18 years in a test purchase operation at licensed premises should be a matter for concern to the defenders, as it was to the Chief Constable and should be to right thinking members of the public.

[40] At the hearing before the defenders on 16 May 2911, the narrative advanced on behalf of the Chief Constable was only challenged by the pursuer in one respect, namely, that at the material time the premises were actually using "Challenge 21" in accordance with the pursuer's then policy and not "Challenge 25". No issue turned on this point. Accordingly, the material facts advanced on behalf of the Chief Constable were undisputed. There was a sale to someone who did not look older than 16 1/2 years of age and the sale was made by the duty manager, who was the holder of a personal licence. He did not even ask for identification from this very young test purchaser. The undisputed information advanced on behalf of the Chief Constable was plainly relevant to the licensing objective of preventing crime and disorder.

[41] In my judgment, the sale of alcohol under test procedure conditions to a person under age 18 years of age constitutes an offence in terms of section 102: that is what section 102(1) states but constitution of the offence does not require that a particular person is found guilty of its commission. In any event, on the undisputed narrative before the defenders, the statutory defences contained in section 102(2) could not have been maintained by the duty manager, who took no steps to establish the age of the purchaser and the police did not use anyone who looked to them to be more than 16 1/2 years of age. In my judgment, counsel for the pursuer was correct not to go so far as to suggest that the defenders had to await the outcome of any criminal proceedings. Counsel submitted that the defenders must have some information bearing on the facts of the case. In my judgment, as a matter of law, the defenders were entitled to proceed on the undisputed information put before them. Counsel was critical of the remarks of the Chairman at the Hearing. If the transcript is accurate, it appears that at page 97 the Chairman suggested that the defenders rather than the police sent out test purchasers. Whilst care must always be taken to ensure impartiality at all times, I do not think that this comment suggests any bias. I note that the defender's solicitor stated that he had to take the police report "as read". If so advised, he could have made any inquiry he considered appropriate prior to the hearing. In the event, he did not challenge the police report as to the age or apparent age of the test purchaser.

[42] In my judgment, the Statement of Reasons for the defenders' decision must be read as a whole and, when so considered, it is clear that the mere fact of an underage sale at the pursuer's premises was not the sole basis upon which the defenders were satisfied that the ground for review was established. In my judgment, contrary to the submission made on behalf of the pursuer, the defenders did not apply a strict liability test in the sense contended for by the pursuer's counsel. I do not accept that the defenders proceeded solely upon the mere occurrence of a single sale to an underage person. In my judgment, it is clear that the defenders considered all the undisputed information referred to in the Statement of Reasons and were satisfied that the ground for review in the Chief Constable's application was established. The fifth paragraph of page 3 of the Statement of Reasons beginning "Having done so..." should not be read in isolation. I do not accept the submissions of counsel for the pursuer that the defenders had no criticism of the pursuer's system or that none is articulated in the Statement of Reasons. And I do not consider that the submission of the appellant's solicitor to the defenders to the effect that "this was not a fundamental system failure on the part of 'Lidl' was correct. In my judgment, the defenders had sufficient information before them to entitle them to reach the conclusion that they did. In my judgment, for the reasons given by the defenders in the Statement of Reasons on the undisputed material before them the defenders were entitled to be satisfied that a ground relevant to the statutory licensing objective of preventing crime and disorder was established.

[43] In my judgment, it is clear from the Statement of Reasons that the defenders did not ignore the fact that the second test purchase was passed and were mindful that they did not consider there was any information of any intelligence or other information to suggest alcohol had been previously been sold to persons under the age of 18 at these premises. When the considerably trained duty manager, who in the pursuer's system was meant to supervise other more junior staff, failed to ask someone who did not look more than 16 1/2 years of age for identification and then sold alcohol to him on licensed premises there was, in my judgment, sufficient material to entitle the defenders to conclude that there was a serious defect in the premises licence holder's system for preventing such sales which compromised the licensing objective of preventing crime and disorder. In my judgment, the defenders reasonably concluded that the failure of the pursuer's system on the occasion of the first test purchase was a serious one. It exposed that when the duty manager personally sold alcohol there was no failsafe check to prevent under age sales. In my judgment, the defenders did not err in law in holding that the ground of review specified by the Chief Constable was established. Counsel for the pursuer was correct to recognise that the defenders in reaching this decision could not be said to have exercised their discretion unreasonably.

[44] The defenders next had to consider whether it was necessary or appropriate for the purposes of the licensing objective of preventing crime and disorder to take any of the steps laid down in section 39(2). In my judgment, the defenders as a Licensing Board have a wider area of discretion under the 2005 Act than was formerly the position under the 1976 Act. In deciding what was "necessary" or "appropriate" the defenders required to keep the licensing objective of preventing crime and disorder in view and any step they decided upon had to further that goal. The defenders were entitled to consider the matter of deterrence in deciding what steps were necessary or appropriate for the purpose of that licensing objective. I accept the submission of counsel for the defenders that the matter of deterrence serves to remind premise licence holders of the need to maintain high standards in respect of the sale of alcohol and the possible consequences of failure to adhere to such standards. It should serve to remind licence holders of the need to employ staff who are likely to comply with licensing law, the necessity of being vigilant in respect of systems for preventing underage sales and necessary staff training. I also accept that suspension of a premises licence can promote the licensing objective of prevention of crime and disorder by sending a message that more needed to be done to prevent underage sales of alcohol."

Submissions on behalf of the appellants

[17] Before this court it was argued on behalf of the appellants that the purpose of the review procedure provided for in sections 36-39 of the 2005 Act was to look forward, with a view to regulating the sale of alcohol consistently with the licensing objectives. In particular the wording of section 39 was of importance. The exercise of the respondents' powers had to be relevant to the licensing objectives. Otherwise there would be a risk of cases involving the sale of alcohol, in circumstances that were apparently contrary to the provisions of section 102 and 141 B of the 2005 Act, not being reported to the procurator fiscal at all, on account of the fact that the premises licence holder may have open to him a defence of due diligence in any charge brought against him. Instead, such cases might be reported to a licensing board by way of an application for review with an invitation to the licensing board to impose a penalty by suspending or revoking the licence, even where the licence holder had exercised all due diligence.

[18] The Dean of Faculty further submitted that the purpose of sections 36-39 of the 2005 Act was not to punish the premises licence holder who had exercised due diligence. That would defeat the will of Parliament, which is that a premises licence holder should not be punished for the sale of alcohol to a young person under the age of 18 years, if he has used due diligence. Sections 36 and 39 should not be deployed to usurp the function of Part VIII of the 2005 Act, dealing with the prosecution of offenders.

[19] It was stressed that in the present case it was important to bear in mind that the appellants, in contrast to Mr Singleton, had not been referred to the procurator fiscal. In the event however, the penalty imposed on them by the respondents by way of suspending their Premises Licence for a period of five days constituted a punishment, rather than an attempt to further a licensing objective. The Dean of Faculty pointed out that the respondents had erred in the fifth paragraph on page 3 of the Statement of Reasons where it was indicated that what had occurred in the course of the test purchase on 18 February 2011 had constituted an offence in terms of section 102 of the 2005 Act. When the matter had been before the Licensing Board, Mr Singleton had not been convicted of contravening section 102. He too had a defence of due diligence open to him. Nor had the appellants been convicted of such an offence. Indeed they had never been charged with any offence.

[20] Turning to the next two paragraphs on page 3 of the Statement of Reasons, the Dean of Faculty stressed that those paragraphs contained no criticism of the appellants' policies relating to the sale of alcohol and the training of members of their staff. On the contrary, as the respondents themselves recorded in the Statement of Reasons, what had occurred had been "a clear departure from the policies and procedures which had been outlined to the Board". It was accordingly clear that the respondents had found grounds for review established on the basis of a single failed test purchase, which failure was not attributable to the appellants.

[21] The Dean of Faculty submitted that it was important to note that when the respondents then turned to consider whether it was necessary or appropriate to take any of the steps set out in section 39(2) of the 2005 Act there was again nothing in the Statement of Reasons to indicate that the respondents had any criticism to make of the policies or procedures of the appellants. Whilst the Statement of Reasons referred to "a defect in the application of the policies and procedures at the premises for detecting persons attempting to buy alcohol who are under the age of 18" it was quite clear that was referring only to the incident involving Mr Singleton and his failure to apply the appellants' policies and procedures. Nor did the Statement of Reasons make any reference to deterrence, whether there was a requirement for deterrence and, if so, who was to be deterred. In these circumstances the Statement of Reasons provided no clear explanation as to why the respondents found it necessary and appropriate to impose the period of suspension that they had done. That contrasted with the approach adopted by the respondents in the submissions they placed before Sheriff Mitchell and this court.

[22] Turning to the judgment of the sheriff, the Dean of Faculty submitted that the sheriff had erred in what he had to say about the observations of Sheriff Kearney in Sohal v Glasgow Licensing Board [1995] 13 SLLP 12. Whilst the 2005 Act might have adopted a wider approach to taking account of the public interest, than the 1976 Act had done, the approach was not significantly different. For that reason the observations of Sheriff Kearney were still of assistance, not least of all because of the relevance of due diligence when a licensing board was considering a review application of the nature with which this case is concerned.

[23] It was submitted that the sheriff had also been in error in what he had said in paragraph 39 about the question of deterrence. Whilst it was acknowledged that deterrence could, in some cases, be of relevance when a licensing board is considering a premises licence review application, in the present case there was nothing to suggest that the respondents had considered any issue of deterrence and addressed questions such as who and from what was it intended to deter. No reference had been made to deterrence in the Statement of Reasons.

[24] The sheriff was also to be criticised for his analysis in paragraph [42] where he rejected the submission that the respondents had been applying a strict liability test and in paragraph [43] where he had concluded that there was sufficient material to entitle the respondents to conclude that was a serious defect in the respondents' system for preventing sales to person under the age of 18. Notwithstanding that no serious defect had been identified by the respondents in their Statement of Reasons, counsel for the respondents had sought to found on the alleged existence of such a defect during their submissions to the sheriff, and also in submissions before this court.

[25] Under reference to the grounds of appeal which had been lodged the Dean of Faculty also argued that Sheriff Mitchell had erred (a) in failing to recognise that the respondents had erred in law and acted unreasonably by proceeding on the assumption that Mr Singleton had in fact been convicted of a contravention of section 102 of the 2005 Act and basing their finding that grounds for review were established on that assumption alone; (b) in failing to recognise that the respondents had erred in law and acted unreasonably by holding that it was necessary and appropriate to suspend the appellants' Premises Licence; (c) in holding that the respondents had provided adequate reasons for their decision to suspend the appellants' Premises Licence; (d) in holding that there was a serious defect in the appellants' system or preventing the sale of alcohol to persons under the age of 18 years of age; (e) in holding that respondents had been entitled to rely on the issue of deterrence when deciding to suspend the appellants' Premises Licence, notwithstanding there had been no reference to that issue during the hearing before the respondents and no mention of the issue in the Statement of Reasons: and (f) in holding that the decision to suspend the appellants' licence had been proportionate in all the circumstances.

[26] Reliance was also placed by the Dean of Faculty on what had been said by Sheriff Principal Stephen in Tesco Stores Limited v Midlothian Licensing Board Edinburgh Sheriff Court 17 April 2012 about the licensing board in that case having "exercised their discretion unreasonably by seeking to impose a regime which infers strict liability in the event of a failed test purchase."

Submissions on behalf of the respondents

[27] Senior counsel for the respondents began by submitting that the regime provided for under the 2005 Act was much broader than that under the 1976 Act. For that reason it was appropriate to proceed with caution when relying on authorities under the 1976 Act.

[28] Under reference to the case of Tesco Stores Limited v Midlothian Licensing Board (supra) it was submitted that the present case was not a strict liability case, for the reasons given by Sheriff Principal Stephen in paragraph 78 of her Judgment. She had been correct to distinguish the present case on its facts on account of the concern in the locality for underage drinking and disorder and the important role of Mr Singleton, the duty manager.

[29] Counsel argued that the respondents had been entitled to reach the decision they did. On receipt of the review application and having heard the submissions at the hearing on 18 April 2011 the respondents were concerned that something had gone wrong at the appellants' premises when the first test purchase was carried out. As a consequence the respondents required to consider what it was appropriate they should do to promote the licensing objective founded upon by the Chief Constable. They required to investigate and consider what could be done to prevent such an occurrence happening again. The appellants themselves had never identified fully what had gone wrong. All they had said was that it had been a mistake by their duty manager, for reasons that were not ascertained.

[30] Turning to the terms of the Statement of Reasons it was submitted that there could be no doubt that the licensing objective preventing crime and disorder, which had been founded upon by the Chief Constable, was engaged. On any view there had been a prima facie breach by the duty manager of section 102 of the 2005 Act. It was difficult to see how Mr Singleton could have defended the criminal proceedings against him. During the hearing before the respondents there had been no challenge to the suggestion that Mr Singleton faced a prima facie case. Nor had it been submitted on behalf of the appellants that he had prospects of successfully defending the charge against him on the grounds of due diligence. Likewise it had not been suggested that the appellants would have had a defence of due diligence had they been prosecuted.

[31] Senior counsel for the respondents submitted that the respondents had been concerned that there was a defect in the application of the policies. The respondents had not, however, applied strict liability. Nor had they been concerned with what had happened at other retail premises. They were concerned that what had admittedly occurred at the appellants' premises should not happen again. Under reference to the transcript of the proceedings before the respondents on 18 April 2011 it was pointed out that there was a measure of uncertainty as to the reason, if any, why Mr Singleton had not followed the correct policies and procedures. There was indeed some doubt as to what the Challenge 21 policy required when the employee on duty at the checkout was himself a personal licence holder. Did he require to engage the assistance of another Personal Licence holder, in the same way that other employees were required to do, or could he deal with the customer on his own?

[32] Although a full explanation had not been forthcoming from the appellants, it would appear that Mr Singleton had made two errors. Firstly he had failed to respond to the electronic prompt from the till and consider whether the purchaser was over 21 years of age. If having done so he remained unsure whether the customer was over 21 years of age, his second error had been not to seek the assistance of a colleague, before asking the prospective purchaser for proof of his age.

[33] It was stated by counsel that before the respondents had taken their decisions they had been of the view that if Mr Singleton could fail to comply with the appellants' policies and procedures it raised concern for the future as far as meeting the licensing objective was concerned. An error had been committed in respect of a serious matter. Alcohol had been sold to a young person under the age of 18 years. If all that had happened had been an error on the part of an employee, the respondents would have been reluctant to hold that grounds for review had been established and it would not be proper for them to impose a penalty. However, in the present case, said counsel, there had been uncertainty as whether there was any scope for improving the appellants' procedures and policies. There had also been a concern that Mr Singleton had not understood the "Challenge 21" policy despites his involvement in the training of other employees.

[34] The Licensing Board had a wide discretion as to the action they took and the suspension they had imposed was, said counsel, because they were concerned to deter the same offence occurring in these premises. The respondents had, said counsel, an ongoing concern that merited more than a written warning.

Discussion

[35] At a review hearing held in terms of section 38 of the 2005 Act a licensing board is required, in light of the terms of section 39 of that Act, to consider whether a ground for review of the premises licence in question has been established and, if a ground is established, whether it is necessary or appropriate for the purposes of any of the licensing objectives to take one or more of the steps listed in section 39(2). While a licensing board necessarily has to consider the earlier factual allegations upon which the application or proposal for review is made, the process of review is essentially forward looking. It involves examining whether the continuance of the particular premises licence in issue, without taking any of the steps listed in section 39(2), would be inconsistent with endeavouring to achieve the licensing objective in question. The process of review is therefore not directed to imposing a penalty in respect of some past event which is not likely to recur to an extent liable to jeopardise the licensing objective. The guidance issued by the Scottish Ministers on 4 April 2007, under section 142 of the 2005 Act, to which a licensing board is bound to have regard, is consistent with that view of the statutory provisions. Paragraph 105 of the guidance states:

"105. It is hoped that, in the majority of cases, transgressions will be resolved before there is a need for boards to apply sanctions, for example through discussions between LSOs and the licensing holder. This means any cases that reach the stage of review, and the potential imposition of sanctions, will have a history of non-compliance, and for that reason will not be entirely trivial. Boards will be faced with a range of different scenarios and have a choice of action they can take."

[36] With those observations on the nature of the exercise we turn first to consider the factual basis of the decision of the respondents in this case. It is clear that all that had occurred was that on the single occasion of the first test purchase on 18 February 2011 a young person had been sold a bottle of rosé wine without having been challenged as to his or her age. As the respondents acknowledged in their Statement of Reasons, there was no information before them of "any intelligence or other information to suggest that alcohol had previously been sold to persons under the age of 18 at these premises". Accordingly, insofar as the Chief Constable had informed the respondents of concerns respecting the prevalence of under-age drinking in the locality, there was nothing offered to show, or even to suggest, that the appellant's shop premises had been the source of supply to the under-age drinkers in question. The second test purchase exercise on 3 March 2011 was, of course, met with a challenge to the purchaser's age and a refusal to sell.

[37] Next, as a further aspect of that factual basis, it was accepted by the respondents that, on receipt of the information that the sale had been made, the appellants had promptly investigated matters; they had viewed their internal CCTV footage; and they had readily concluded that the employee concerned, Mr Singleton, had breached the policies and procedures which they had established and in which he had been fully trained. The appellants' response had been unequivocal. Mr Singleton had instantly been dismissed. Accordingly, whatever the reason, if any, for Mr Singleton's lapse, he no longer remained in the appellants' employment. In addition to dismissing Mr Singleton, the appellants had immediately put all their employees through an additional training programme to enforce yet further the employees' awareness of the need to adhere to the procedures and policies the appellants had laid down to ensure that alcoholic drinks are not sold to those of insufficient age to lawfully purchase such drinks.

[38] Further, it is clear, not only from the Statement of Reasons issued by the respondents, but also from the terms of the transcript of the proceedings before the respondents, that the respondents accepted the existence of the appellants' policies and procedures and that those policies and procedures were adequate, and should, if applied, have prevented sales of alcoholic drinks to a child or young person. Within the third full paragraph on page 4 of the respondents' Statement of Reasons, the respondents say:

"In the view of the Board the occurrence of a failed test purchase under the controlled circumstances described by the Chief Constable pointed to a defect in the application of the policies and procedures at the premises for detecting persons attempting to buy alcohol who are under the age of 18. In the view of the Board, the policies and procedures in place both at the time of the first test purchase and thereafter should have been adequate in order to prevent the test purchase having been failed."

Nothing was suggested during the course of the hearing before the respondents, by means of the questions posed by members of the Board, or otherwise, to the effect that the respondents' policies or procedures were themselves open to any criticism. It is also to be noted that in his report the Licensing Standards Officer, whose duties included supervising the appellants' compliance with conditions of their premises and the provisions of the 2005 Act, had no criticism to offer respecting the appellants. The lack of such criticism within the Statement of Reasons appears not to have been recognised by Sheriff Mitchell in paragraphs [42] and [43] of his judgment, which we have set out in para [16] above. In our opinion Sheriff Mitchell erred in not noting the absence of such criticism during the hearing before the respondents and in purporting to identify criticisms of the appellants' practices and procedures as having been open to the respondents, notwithstanding that the respondents had made no mention on them in their Statement of Reasons.

[39] Having regard to the terms of the transcript of the proceedings and the Statement of Reasons it is difficult to identify any cogent reason for which the respondents could properly have come to the view that grounds existed for a review of the appellants' Premises Licence. In the same paragraph of the Statement of Reasons, to which reference was made in the preceding paragraph, the respondents narrate that the failed test purchase "highlighted" a failure at the premises to follow the appellants' policies and procedures, and then go on to say:

"... the Board considered it necessary and appropriate to take one or more of the steps outlined in section 39(2) in order to prevent a recurrence of the commission of an offence under section 102 of the Act in a locality where the police had concerns regarding increased under-age drinking. For the avoidance of doubt, in reaching this decision the Licensing Board did not consider that there was any information before it of any intelligence or other information to suggest that alcohol had previously been sold to persons under the age of 18 at these premises."

[40] In the next paragraph of the Statement of Reasons the respondents continue:

"The Licensing Board therefore considered that a short period of suspension of five days was necessary and appropriate in order to promote the Licensing Objective of Preventing Crime and Disorder. While a longer period of suspension had been considered, the Board concluded that a short period of suspension of five days was an appropriate and proportionate disposal in all the circumstances of the case, acting in the public interest and taking into account the measures in place at the premises to reduce a risk of under-age drink sales occurring."

But nothing is offered by way of reasoning as to why, with Mr Singleton having been dismissed and satisfactory systems in place, the one isolated failure in question, which was not shown to be related to the concerns about under-age drinking in the locality, should render it appropriate to review the appellants' Premises Licence by taking any steps for the future.

[41] The absence of rational grounds for review is, if anything, underscored by the step which the respondents took by way of their review of the premises licence, namely the imposition of a suspension for a period of five days. Plainly, suspension of a premises licence may be appropriate in circumstances in which there are deficiencies, whether in the state of the premises, or the procedures or training of the staff, or the like, which can be remedied during the period of suspension. However, the respondents did not offer in their Statement of Reasons, or indeed during the hearing of the appeal before this court, any explanation of any corrective purpose which made it necessary and appropriate that the appellants' Premises Licence should be suspended for five days.

[42] We are therefore left with having to draw the virtually inevitable inference that the objective of the respondents in suspending the licence for five days was to impose a financial penalty upon the premises licence holder on the sole basis that one employee had departed on a single instance from the employers' procedures and instructions. As counsel for the appellants stressed, the provisions of section 141B of the 2005 Act deal with the liability of the holder of a premises licence to penal sanctions in respect of his vicarious responsibility for an offence committed by an employee, including an offence under section 102. However that liability is subject to a defence of want of knowledge that the offence was being committed by the employee and the exercise of due diligence. In our opinion there was nothing in the materials before the respondents to substantiate any knowledge on the part of the appellants of the apparent contravention of section 102 by Mr Singleton or any failure by the appellants to exercise due diligence.

[43] Accordingly, the submission of counsel for the appellants to the general effect that the respondents' decision was to substitute a strict, penal liability on the employer for an offence committed by the employee, in place of the structure and provisions of the 2005 Act for the imposition of penalties has, in our view, much force.

[44] We would add that while before the sheriff, and indeed before this court, the notion of deterrence was canvassed as a justification of the decision to impose a period of five days suspension, that notion finding particular attraction before the sheriff, deterrence was not suggested by the respondents in their Statement of Reasons. We can understand why the Statement of Reasons does not seek to proffer any explanation based on deterrence. Plainly the appellants were not in any need of deterrence, since they had acted responsibility before Mr Singleton's lapse and also in response to it. Imposing a penalty upon a premises licence holder who is not at fault can hardly be seen as justified by any proper notion of the deterrence of others.

[45] For these reasons we consider that the decision of the respondents involved an error of law in the respects that it involves an apparent misapprehension of the proper function of a licensing board and results in a decision which on the materials before the respondents they could not properly and rationally have reached. For these reasons the appellants' appeal to this court falls to be allowed.

[50] At the close of his submissions, counsel for the respondents raised the issue of the procedure to be followed in the event that the appeal was to allowed. He explained that the membership of the respondents had changed since 16 May 2011 and invited this court to return the review application to the respondents for reconsideration.

[51] Having regard to the passage of time since 18 February 2011 and the extent to which the events of that day have been discussed and debated during the hearings before the respondents on 18 April 2011 , before the sheriff and before this court, we do not consider that would be appropriate to remit the review application back to the respondents for further consideration. In allowing the appeal, we shall accordingly make an order (i) recalling the sheriff's interlocutor of 4 November 2011, (ii) remitting the summary application to the sheriff and (iii) directing the sheriff to reverse, in terms of section 131(5) of the 2005 Act, the decisions taken by the respondents at the conclusion of the hearing on 16 May 2011 of (a) finding that grounds for review of the appellants' Premises Licence for 300 Victoria Road, Glasgow had been established and (b) suspending that licence for a period of 5 days from 17 May 2001 and to refuse the application for review.