Scottish High Court of Justiciary Decisons

FIRST QUENCH RETAILING LTD v. THE PROCURATOR FISCAL, PERTH [2000] ScotHC 114 (22nd December, 2000)

[1] The appellant in this appeal by stated case is a Limited Company, First Quench Retailing Limited, although designed in the relevant Complaint simply as "First Quench". In terms of the Complaint, the company was charged, along with an employee Ian Brand, with an offence under the Licensing (Scotland) Act 1976, sections 67 and 68(1) and (7). The charge was to the effect that on 16 January 1999, from the licensed premises at Haddows, 10 Kinnoull Street, Perth, they, being the licence holders in respect of said premises did sell alcoholic liquor to a person under the age of 18 years, namely Jennifer Morrison, aged 15 years. The complaint contained a further charge directed against an employee of the appellant, Mrs. Suzanne Anderson, charging that on 16 January 1999 at Haddows she sold Miss Morrison four bottles of cider, contrary to section 68(1) and (7) of the 1976 Act. A plea of not guilty was accepted from Mr. Brand, and the matter went to trial in the District Court of Perth and Kinross at Perth in relation to the appellant and Mrs. Anderson. At the conclusion of the trial on 12 November 1999 the Justice found both accused guilty as libelled. The appellant was fined £1,000, and Mrs. Anderson was admonished.

[2] The questions for this court are whether the Justice was entitled to convict the appellant in respect of charge 1, and whether he was entitled to sentence the appellant to a fine of £1,000.

[3] On 16 January 1999, Suzanne Anderson was a part-time employee of the appellant company, and was working in their premises at Kinnoull Street, Perth. Jennifer Morrison bought five bottles of cider, which were sold to her by Suzanne Anderson. Miss Morrison's date of birth is 15 April 1983, and she was thus 15 years of age at the time. The Justice has held that she had the appearance of someone under the age of 18 and that such appearance "did alert Suzanne Anderson that Miss Morrison was under 18". Suzanne Anderson asked Miss Morrison for identification at the time of the transaction, and Miss Morrison replied that she did not carry any identification with her. However, Mrs. Anderson believed that Miss Morrison had shown identification to another colleague on another occasion, and said that she knew her from coming into the shop and had also seen her in a local club for over 18s only. The Justice has held that Mrs. Anderson, at the time of the transaction, was discussing with another employee in the shop the difficulties in identifying underage people who came into the shop, and finds that notwithstanding the doubts she had or should have had that Jennifer Morrison was under 18 and that no identification was produced by her she sold her the five bottles of cider.

[4] In terms of the last finding in fact, finding 23, the Justice finds that on 16 January 1999 First Quench sold alcoholic liquor to Miss Morrison, then aged 15 years, and that "First Quench did not exercise due diligence to prevent the occurrence of this offence". On behalf of the appellant, the submission in the present appeal is that the Justice was not entitled to find that they did not exercise due diligence to prevent the occurrence of the offence. In relation to conviction, that is the only issue in the appeal.

[5] At the relevant date, the appellant held an off-sales licence for the premises at Kinnoull Street. Mr. Brand was employed by them as manager of those premises, and was responsible for staff training at the premises. The appellant provided staff, on commencement of their employment, with a personal training record, which included sections on procedures regarding the sale of alcohol, and each employee, before dealing with members of the public, completed induction training up to a particular point on the personal training record. This training was completed in the back shop area of the premises, and consisted of instruction from Mr. Brand, reading material, listening to a cassette and answering questions on a pro forma worksheet. Suzanne Anderson had undertaken this training up to that point, including a section on "age". She did so on the instruction of Mr. Brand. Mr. Brand had been in previous posts with the appellant, and had received induction training from them about five years previously. He attended training sessions which informed him not only that it was against the law to sell alcohol to persons under the age of 18 but that "the only two forms of identification which were acceptable for proof of a person's age were either a passport or Prove-It" card and "that if he was in doubt as to a person's age he was to refuse to serve them alcohol unless such acceptable forms of identification were produced."

[6] Every three months, the appellant issued "declarations" to branches, and the branch manager was responsible for staff reading and signing and returning these declarations, signed, to head office. At Kinnoull Street, these declarations were often completed whilst working in a busy shop environment, and no separate time was set aside for the procedures to be carried out. Mr. Brand and Suzanne Anderson read and completed such declarations in September and November 1998.

[7] Finding 8 records that the appellant kept a book at the Kinnoull Street premises in which staff recorded details of refusals to sell alcohol, and that "It was left to each member of staff's discretion on whether to refuse to sell alcohol to a customer." The book records incidents where Ian Brand and Suzanne Anderson had refused to sell alcohol to persons they suspected of being under 18 in December 1998. Prior to taking over the management of the premises, Mr. Brand had attended a course which included a seminar where he was instructed that if there was any doubt about the age of the customer attempting to buy alcohol, they were to be refused unless a passport or Prove-It card could be produced as proof of age. In March and November 1997, he attended meetings at which he was required to complete a questionnaire, and signed a declaration confirming that he had received retraining in licensing matters.

[8] Finding 18 is in the following terms:

Finding 19 states that the appellant's training of staff assumed that reading material that was issued "was read in conjunction with the support and explanation from the manager." Anything less would not satisfy their training requirements. At the premises at 10 Kinnoull Street, Perth the reading material "was simply read by staff." Finding 20 states that on-going training took place during shop hours when the shop was often busy.

[9] Finding 21 is in the following terms:

[10] Cases will of course arise in which, due to failures in training, employees simply do not know of some requirement which is incumbent upon them in terms of their employer's rules, and in consequence do not comply with that requirement. In the present case, however, the findings do not suggest any possibility that Mr. Brand was ignorant of the appellant's requirements, where a customer's age was in doubt. It does not appear to be suggested that the appellant showed a lack of due diligence in ensuring that these requirements were known to Mr. Brand. Moreover, while the findings suggest that the mechanisms for ensuring that employees like Mrs. Anderson were aware of these requirements left some risk that they would be ignorant of them, it does not appear that Mrs. Anderson was thus ignorant. In his Note, the Justice expressly states that "Both Ian Brand and Suzanne Anderson were aware of the company's policy." The explanation for the sale in breach of company policy is rather, as the Justice explains, that Mrs. Anderson "clearly did not adhere" to company policy. The Justice formed the view that the application of the measures required to avoid her selling alcohol to those under the age of 18 failed "due to the ethos in the shop" created by Mr. Brand: "Staff made subjective decisions about age as opposed to removing doubt in the manner laid down in the training material provided by the appellant." In failing to obtain the appropriate evidence of age from Miss Morrison, the Justice regarded Mrs. Anderson as acting "in compliance with a local rule", and not through "deliberate disobedience."

[11] In submitting that the Justice was not entitled to convict the appellant, counsel acknowledged that the onus lay upon the appellant to show, on a balance of probabilities, that the appellant had exercised all due diligence to prevent the occurrence of the offence. In relation to the meaning of "due diligence" we were referred to Tesco Supermarkets Limited v. Nattrass 1972 AC 153, and in particular passages in the speech of Lord Diplock at page 199D and 203C-F. In delegating certain responsibilities to Mr. Brand, the appellant had not attempted to delegate their duty to exercise all due diligence. As Lord Diplock had explained, at page 203D:

The appellant had imposed duties upon Mr. Brand which were appropriate to his position as manager, and it was reasonable for them to rely upon him to fulfil those duties, and to operate a practice whereby inferior employees would comply with the company's requirements, which were known to Mr. Brand and to them. It was accepted, as had been emphasised by the court in Amag Limited v. Jessop 1989 S.C.C.R. 186 at page 195A, that the question as to reasonable diligence on the part of the appellant raised questions of fact and degree, which it was for the Justice to determine. But on the facts before the Justice, it could not be said that there was any failure in due diligence in the appellant's general delegation of responsibilities to Mr. Brand, or in the general system of ensuring that the company's requirements were known to Mr. Brand and inferior employees. These were reasonable steps to ensure that illegal sales would be prevented. The appellant could not reasonably be expected to know that Mr. Brand would simply depart from the appellant's requirements, and introduce an ethos and practice in conflict with these requirements, and in breach of his managerial duties. As an example of justifiable reliance upon an employee, counsel referred to Ahmed v. McDonald 1994 S.C.C.R. 320. And as an example of failure to convey instructions to an employee, he referred to Byrne v. Tudhope, 1983 S.C.C.R. 337. The present case could be compared with the former, and distinguished from the latter. As an example of an employee disobeying known rules, in circumstances where it could not be held that there was a lack of due diligence, reference was made to Gorman v. Cochrane 1977 S.C.C.R. Supp. 183. With regular declarations from Mr. Brand and staff, and with the book recording refusals to sell, the appellant had no reason to suppose that their known requirements were not being complied with and enforced by Mr. Brand.

[12] In relation to the facts of the present case, it was submitted that it was obvious that the appellant company had considered their legal obligations. They had issued full instructions to staff. They had taken steps to ensure that these were received, and read and understood. They had been received and read and understood. Moreover, there was a method of periodic confirmation of staff's awareness of the requirements. And a book was kept, indicating compliance. There was no suggestion that they knew of Mr. Brand's ethos or practice of non-compliance. There was nothing to suggest that they should have known of it. There was no indication that such a thing had happened at any other of their branches. And there was nothing to indicate that they condoned this practice in any way. While the Justice had held that there was a non-compliant local practice, there was no indication that departures from the appellant's requirements were at all frequent. In allowing inferior employees to exercise their personal judgment on occasion, Brand was deceiving the company. But there was no indication that there was any pattern of non-compliant behaviour, of a kind which one might expect to become known. It was accepted that the documentary material (which we found less than clear) contained no positive assertion by Mr. Brand or others that they were adhering to the appellant's known requirements. But there had been no indication that the requirements were proving difficult to adhere to; and it was implicit that departure from them was not seen by Mr. Brand as necessary or desirable. Counsel did not subject the Justice's reasoning to detailed scrutiny, submitting simply that his conclusion had no sound basis.

[13] On behalf of the Crown, the advocate depute submitted that the Justice's conclusion, and the conviction, were justified. At its highest, his submission appeared to be that any system which was ineffective on a particular occasion was to be seen, by that fact alone, as revealing a lack of due diligence. "The proof of the pudding is in the eating". But having regard to the "reasonableness" test indicated in Tesco, he did not insist in this contention, in this strict form. He submitted that where there was a policy or system which, if operated, would prevent offences, an important element in considering whether the employer had shown due diligence would be the steps, if any, which he took to check whether the system was being operated properly, and to detect failures or departures. He distinguished small businesses, where the employer was present and directly participating, from larger businesses, where wide managerial responsibilities were delegated. In the former, checking and detection might need no real "system". In the latter, it would not be enough to lay down a system, and leave it to a manager to ensure its application. There would have to be a backup system, independent of the manager, to check that he was fulfilling his responsibilities. Questions as to whether a theoretically adequate system was in fact effective could arise even with small businesses: Davenport v. H.M. Advocate (unreported 1 November 1994). But as Lord Reid had pointed out in Tesco, "a paper scheme and perfunctory efforts to enforce it" would not be due diligence on the part of the employer.

[14] That was what was missing here. There was no real check, by supervisors or other, on whether Mr. Brand was doing what he was relied upon to do. That was what the justice had seen as a failure in due diligence.

[15] We do not doubt that a failure in due diligence may lie in the absence, or inadequacy, of checks upon those whose duty it is to apply and enforce policy. And if that is the basis of the Justice's decision, it seems to us that the conclusion is one open to him upon the basis of the facts found. But there is at least some doubt as to whether this is a correct analysis of his reasoning. He concentrates very substantially on the question of training, rather than the question of whether the known requirements were in fact being applied. Having said that there was no doubt in his mind that the appellant failed to establish a proper system to prevent the sale of alcohol to persons under the age of 18, and that the offence had occurred, he continues as follows:

He goes on to say that there were three areas in particular which concerned him. The first of these relates to the "local rule", and Mrs. Anderson's non-adherence to company policy. The second area of concern was "in regard to the environment within which the training took place", during shop hours when the shop was often busy: the Justice says that it seemed to him that "very little thought had been given to the way in which the continuous training took place in terms of ensuring that it could be done effectively in an often busy shop environment." In relation to the third area of concern, the Justice says this:

[16] What the Justice appears to have in mind is that there were not merely potential, but actual defects in training, which led to this offence taking place, and which would have been detected by the appellant company if they had had a system for checking that the training was actually taking place. He does not appear to be considering the somewhat different question of whether, after training had taken place, and when trained employees were faced with customers, there was a check upon whether they were in practice applying the rules which, as a result of their training, they knew had been imposed by the appellant.

[17] We do not think that the Justice's reasoning is as well explained as it might have been. But reading what he says as a whole, it is clear that he was not holding that training had failed in the sense exemplified in other cases, with an employee simply not knowing what the rules were. That being so, it seems to us that the Justice is taking a wider view of effective training: effective training will involve not merely instruction of the employees, so that they know the "paper scheme", but conveying to them the importance of complying with that scheme, and not departing from it simply because, in a given case, they think it reasonable to do so. Upon that approach, the "enforcement" of a scheme, and any checks on its enforcement, will not be a separate and subsequent matter. Effective training will itself contain elements which are designed to ensure that a scheme is followed in practice. And that is something which an employer exercising due diligence will provide for, and check, at the training stage. With some hesitation, we have come to the view that this is the approach of the Justice; and we are satisfied upon that basis that he was entitled to hold as he did, that due diligence was not exercised by the appellant. We therefore answer the first question in the case in the affirmative.

[18] The second question relates to sentence. The fine of £1,000 was the maximum available in the circumstances. It was drawn to our attention that the appellant had taken many of the appropriate steps which would eliminate offences of this kind. It was suggested that the maximum sentence would be required in cases where there was a wilful offence, and that correspondingly, in a case such as the present, with a single offence, unknown to the appellant, a lesser fine must be appropriate. While the Justice says that he "took into account that the appellant was a company", he does not refer to any other specific circumstance as justifying the maximum penalty. Where the maximum available penalty is a relatively modest one, we are not persuaded that it will be appropriate only in the very worst cases. And we are satisfied that the means of the offender are a relevant consideration. However, in the whole circumstances of this case we are persuaded that the maximum was excessive. We answer the second question in the negative, quash the fine of £1,000 and replace it with a fine of £500.