Scottish Sheriff Court Decisions

MRS. MARGARET CARR BAXTER v. CENTRAL FIFE DIVISIONAL LICENSING BOARD and THE CHIEF CONSTABLE OF FIFE CONSTABULARY [1999] ScotSC 8 (15th April, 1999)

JUDGMENT OF SHERIFF F J KEANE

in the cause

Mrs MARGARET CARR BAXTER,

Pursuer

against

CENTRAL FIFE DIVISIONAL LICENSING BOARD

First Defenders

and

THE CHIEF CONSTABLE OF FIFE CONSTABULARY

Second Defenders

_____________________________________________

The Sheriff, having resumed consideration of the cause, sustains the pursuer's pleas in law and repels those of the first defenders; dismisses the plea in law for the second defender; reverses the decision of the first defenders made on 30 October, 1998 under section 31 of the Licensing (Scotland) Act 1976 to suspend for a period of one year the public house licence held by the pursuer in respect of the premises "Panthers", High Street, Kirkcaldy; Sanctions the employment of counsel; Finds the first defenders liable to the pursuer in the expenses of this appeal and remits the account thereof, when lodged, to the Auditor of Court to tax and to report.

This is an appeal under the Licensing (Scotland) Act against a decision by the first defenders under section 31 of the Licensing (Scotland) Act 1976 to suspend for a period of one year the public house licence held by the pursuer in respect of "Panthers", High Street, Kirkcaldy. Appearance for the second defender was entered for any interest he might have had but no further representation was made on his behalf.

The pursuer and first defenders were agreed that the facts were as narrated in the Record. The facts were that on 24 September, 1998, members of the Licensing Board and police officers called at the premises as part of a routine inspection and were reluctantly given access to the function hall on the second floor. An employee claimed that this part of the premises, which was on the second floor, was not normally used but there were no signs of dust on the furniture or on beer bottles discarded in the hall and cigarette butts in the ashtrays appeared fresh. Various posters placed around the walls indicated recent and forthcoming events in this part of the premises. The cigarette butts were later analysed and the presence of cannabis was confirmed. The pursuer was to be the subject of a police report to the Procurator Fiscal for contravening section 8(d) of the Misuse of Drugs Act, 1971 (knowingly permitting the smoking of cannabis in premises). As a result of this information the second defender on 1 October, 1998, lodged a complaint with the first defenders inviting them to consider a hearing to consider suspension of the licence on the grounds that (a) the pursuer was no longer a fit and proper person to be the holder of a licence; and (b) the use of the premises in respect of which the licence was held had caused undue public nuisance or a threat to public order and safety.

In terms of section 31(4) of the Licensing (Scotland) Act 1976, the first defenders on receipt of the complaint required to decide whether or not to hold a hearing on the issue and at their first quarterly meeting on 2 October, 1998 the complaint was considered. The then chairman, Councillor Daniel Leslie, of the first defenders made reference to the complaint to the other members and proposed that there be a hearing on the issue asking the members if there should be a "hearing on why we should not take the licence from them". It was decided to hold a hearing.

On 30 October, 1998, the first respondents held the hearing and the said Councillor Leslie was a member of the first defenders although not chairman on this occasion. The agent for the pursuer was heard by the first defenders and submitted that there was evidence of cannabis being present but no evidence to support the allegation by the second defender that the pursuer knowingly permitted the smoking. Accordingly it could not be held that the pursuer was not a fit and proper person to hold a licence, nor could it be held that public nuisance had been caused. It was also explained to the first defenders that the function room was not used as a function room as it was not equipped as such and was in a mucky state; its use was allowed to bands or groups to practice or mix tapes and some of the rubbish which had been recovered from the room indicated dates for use by June 1996 and July 1997. In relation to the group who inspected the premises in September 1998 being allowed into the premises reluctantly it was explained on behalf of the pursuer that she was not present and the member of staff there had been faced with a large group and knew that the function room was in a poor state. The pursuer's agent was unable to say if the drink which had been consumed in the function room had been supplied from the downstairs bar or not. The first defenders thereafter unanimously held that both grounds of the complaint had been established. In relation to the question of suspension of the licence a motion to suspend the pursuer's licence for one year was carried by seven votes to two against a motion to suspend the licence for a period of three months.

The first defenders thereafter issued written reasons for their decision by letter dated 17 November, 1998.

It was submitted for the pursuer that the first defenders had erred in law in reaching their decision that the pursuer was not a fit and proper person to hold a licence. Reference was made to Singh & Kaur v Kirkcaldy District Licensing Board 1988 SLT 286. It was submitted that following that case the first defenders had not asked themselves the proper question as to whether or not the pursuer was a fit and proper person to hold the licence. Reference was made to the decision and reasoning of the first defenders in relation to the fitness of the pursuer and in particular to her having fallen short of the standard of care incumbent on a licence holder. The first defenders had gone on to state "That drugs were used on the premises is a very serious matter for which the licence holder must have degree of responsibility. Arrangements for the use of the second floor premises were made by the licensee as manager of the premises and she had a duty to ensure that her premises were not used for any illegal activity". It was submitted that such a standard of duty was wrong in law and the duty imposed was the wrong one. The test for unfitness required evidence that the pursuer was to blame; thereafter the question was whether the extent of blame was such as to render her not fit to hold a licence. Reference was made to the unreported case of Sohal v City of Glasgow Licensing Board 30 October, 1998, Sheriff Kearney, in which the question was posed at p. 14 as to what acting on the part of the appellant constituted the de facto basis for inferring that he was not a fit and proper person. The circumstances of the present case were similar in that the first defenders had insufficient information before them to infer misconduct and they directed themselves wrongly in law in imposing upon the pursuer a duty of ensurance without any question as to whether there might be a defence of due diligence. It was submitted that in the present case the first defenders should have asked themselves two questions in relation to the question of the fitness of the pursuer. Firstly, was she to blame, and secondly, if so, to what extent. What did the pursuer do or fail to do that no reasonable licence holders would do or fail to do. A member of the first defenders had indicated that if a licence holder was not responsible for licensed premises this would be to drive a coach and horses through the Licensing Act; further it was recorded that a member of the first defenders had moved that the pursuer was not a fit and proper person on the grounds that being the licensee and a responsible person in the place where there was cannabis she was responsible and not a fit and proper person. This clearly was an error in law. A clear explanation had been given to the first defenders of the use of the function room and for unfitness to be established the first defenders should have asked what there was to put the pursuer on notice regarding the presence of cannabis or what checks regarding the presence of cannabis required to be made; however, they had applied a rule of strict liability. Further, if the proper question had been asked the first defenders would have had no basis for inferring the unfitness of the pursuer.

In relation to the ground of suspension relating to the use of the premises, it was submitted for the pursuer that this was also flawed. There was no evidence that drugs had in fact been in supply. Further the first defenders had stated in their letter of reasons "There being no dispute that drugs had been used in the function suite, nor that the use of drugs is an illegal activity, the Board unanimously concluded that a criminal activity having taken place on the premises, by definition a threat to public order or safety had occurred". This equated criminal activity with the threat to public order and safety. Again the wrong question had been asked. The question should have been whether or not the use had caused undue public nuisance or a threat to public safety. There had been no evidence as to when or how the nuisance took place.

In relation to the ground of appeal that the first defenders acted contrary to natural justice it was submitted that the conduct of Councillor Leslie when he was chairman was symptomatic of the whole approach of the first defenders; while his remark had been made at an earlier stage of the proceedings it was still part of the suspension process when it was still for the first defenders to be satisfied as to what they should do on the evidence and at a time when it was for the grounds of the complaint to be made out rather than there being a burden put on the pursuer. Reference was made to Mahmood v West Dunbartonshire Licensing Board 1998 SCLR 843 @ 847A-C and 848. In the present case Councillor Leslie was chairman of the first defenders and given the remark he made, the suspicion was that he was not approaching the matter in an unbiased manner and that there was an appearance that justice was not impartial. At the meeting when the grounds were held to have been established he indicated that he thought there were grounds for suspension although at that stage the grounds for suspension had not been established. Reference was also made to Tennent Caledonian Breweries Ltd v City of Aberdeen District Licensing Board 1997 SLT (Sh Ct) 2.

It was further submitted on behalf of the pursuer that if her appeal was upheld the suspension of her licence should be revoked by the court in terms of section 39(6) of the Acct; there had been no proper basis in fact to hold that the pursuer knew or ought to have known about the drug and there was no evidence of there having been undue public nuisance or threat to public order or safety. Reference was made to Leisure Inns UK Ltd v Perth & Kinross District Licensing Board 1993 SLT 796 in support of the proposition that since there had been no adequate material before the first defenders for holding that the ground of suspension had been established since there was no proper basis of fact for their reasons, there was no point in remitting the matter back to them. Further, if the breach of natural justice was held to be established the question of whether there could be a fair hearing by the first defenders could not be satisfactorily answered. Reference was also made to Botterills of Blantyre v Hamilton District Licensing Board 1986 SLT 14 @ 16.

For the first defenders it was submitted that there had been no error in law on their part. The function room had been used for smoking cannabis and the pursuer had been charged with an offence under the Misuse of Drugs Act 1971. The question of unfitness was one of strict liability and there could be no defence of due diligence. Since the matter was not one of criminal law the standard of proof was less but it was not enough for an applicant to say that he knew nothing regarding the matter. Reference was made to the unreported case of Mahmood v West Lothian District Licensing Board, Linlithgow Sheriff Court, 11 May, 1998, Sheriff McLean. The first defenders in the present case had been entitled to proceed on the information before them; they could not be expected to wait on the decision in relation to any prosecution of the pursuer. It was, moreover, clear from the terms of section 31 that the question of being a fit and proper person was one which imposed an absolute duty on the person responsible. In relation to the use of discretion by the first defenders reference was made to McKenzie & another v Renfrew District Council Licensing Board & another 1991 SCLR 859. It was also submitted that the fact of the premises having been used for drugs amounted to misconduct on the part of the pursuer in failing to ensure that drugs were not taken on the premises. The use of drugs on the premises in itself amounted to nuisance and a threat to public order or safety. The first defenders were entitled to reach their decision regardless of what others might think and it was for them to find whether or not someone was unfit and whether there had been nuisance. There had been no error in law.

In relation to the question of natural justice it was submitted that Councillor Leslie was not normally the chairman of the first defenders and had on the day of his remark replaced the chairman who was ill. At the stage of proceedings when he made the remark what was required in terms of section 31(4) of the Licensing Act was a decision on whether or not to hold a hearing on the issue contained in the complaint submitted to the board. The phrase used by him was unfortunate but it did not indicate that he was approaching the matter in a biased way.

In relation to the question of the exercise by the first defenders of their discretion reference was made to Latif v Motherwell District Licensing Board 1994 SLT 414 and to Ranachan v Renfrew District Council 1991 SLT 625 as indicative of the test to be applied. It was submitted that the exercise of their discretion both in the matter of suspension and in its term was reasonable and should not be interfered with.

In deciding on whether or not there was an error in law by the first defenders I have considered the terms of section 31(2)(a) and 31(3)(a) of the Licensing (Scotland) Act 1976. The former subsection permits the first defenders to order the suspension of a licence holder on the grounds that she is no longer a fit and proper person to be the holder of a licence. The latter subsection permits the first defenders to have regard to any misconduct on the part of the holder of the licence, whether or not constituting a breach of the Act or any byelaw made thereunder, which in their opinion has a bearing on fitness to hold a licence. My understanding of the submissions on behalf of the first defenders was that the licence holder has an absolute duty to ensure that no illegal behaviour occurs on the premises. When I raised the question it was maintained that if an illegal act took place in licensed premises then the licence holder was failing to comply with his obligations and was misconducting himself whether he knew of the act or not. Accordingly, if, as in the present case, there has been such behaviour, which on the evidence would amount to at least the illegal possession of cannabis by someone on the premises, the pursuer had been failing in her responsibilities as licence holder. She was not entitled to plead, as she would be in a criminal situation, defences of lack of knowledge or due diligence which are specified in section 71 of the Act. I accept that as stated in Mahmood v West Lothian District Licensing Board that the substance of a complaint need not be proved to the standard necessary in criminal cases. I do not accept the proposition put forward on behalf of the first defenders that a defence similar to that indicated for criminal cases cannot be pled in proceedings such as the present. Proceeding from the premiss of the first defenders relating to the responsibility of a licence holder it would appear that they reached the conclusion that this amounted to misconduct which rendered the pursuer to be no longer a fit and proper person to be the holder of a licence. Looking at such an argument it seems to me that to follow it, the situation could arise where a licence holder could be charged and acquitted in a criminal court due to a defence of due diligence having been upheld and at the same time, separate from criminal proceedings, because that person's responsibility as licence holder involved the absolute duty of ensuring that there was no illegal behaviour in the premises the same person could be held to be no longer a fit and proper person to hold a licence due to misconduct. To my mind misconduct must involve some form of knowledge of acts or omissions in the management of the premises to the extent that some degree of culpability can be demonstrated or inferred. If that is established then, depending on the degree of misconduct, a conclusion can be reached as to whether or not that renders the licence holder unfit. Further, if the reasoning of the first defenders were to be applied to the case of Singh & Kaur v Kirkcaldy District Licensing Board both partners and the partnership would have been held not to be fit and proper persons. Following that case and the unreported case of Sohal v City of Glasgow Licensing Board I have concluded that the responsibility of a licence holder is not absolute and that what is required is evidence to show how the licence holder misconducted himself in terms similar to those which I have outlined. In such a situation it would be open to a licence holder to put forward a defence including one of due diligence or its equivalent. If misconduct had then been established in the sense which I have outlined it would then have been open to the first defenders to consider whether the misconduct they had found established entitled them to find that the pursuer was no longer a fit and proper person to hold a licence.

In deciding on the ground of appeal relating to the use of the premises I have considered the terms of sections 31(2)(b) and 31(3)(b) of the Act. The former subsection provides for suspension on the grounds that the use of the premises "has caused undue public nuisance or a threat to public order or safety". The latter permits a board to have regard to "any misconduct on the part of persons frequenting licensed premises occurring in those premises or any misconduct in the immediate vicinity of the licensed premises which is attributable to persons frequenting the premises". I note in passing that Allan & Chapman's The Licensing (Scotland) Act 1976 in the notes to section 17 envisages the causation of public nuisance or the threat to public order as arising out of the use of the premises for the sale of alcoholic liquor. The evidence before the first defenders appeared to be that cannabis had been smoked in the function room. There was no evidence of supply in the sense of passing on. On my understanding of "nuisance" there had been no evidence of how or when the smoking had taken place nor how this amounted to undue public nuisance. There certainly had been misconduct by a person in the premises, whether that person was frequenting them or not. The first defenders had gone on to conclude that since a criminal illegal activity had taken place on the premises a threat to public order and safety had occurred. When I asked for clarification on how this conclusion had been reached I was informed that both in relation to nuisance and threat to public order and safety it was what the first defenders thought was involved in these concepts and not what others such as the public might think. To me it appeared that the first defenders were equating any illegal criminal activity as a threat to public order and safety. There must be few licensed establishments where no illegal criminal activity, in particular as a result of the consumption of alcohol, has taken place but I am surprised at it being maintained that every single illegal criminal activity could amount to a threat to public order and safety except in the remotest sense. Certainly there could be instances where those frequenting licensed premises and involved in a course of criminal activity such as drug dealing might be regarded as misconducting themselves to the extent of being such a threat. I do not see how on the evidence it could be concluded that there was in fact, by the smoking of cannabis at some time, a threat to public order or public safety. As in the reasons for the finding in relation to the fitness of the pursuer so in relation to the finding in relation to the premises it would appear that the first defenders have applied an absolute standard and I consider that they have erred in law also in this respect.

The ground of appeal that the first defenders acted contrary to natural justice was based on what was said by Councillor Leslie at the meeting of the first defenders on 2 October, 1998. A complaint had been received from the second defender and the first defenders were required in terms of section 31(4) of the Act to decide whether or not to hold a hearing on the issue. The chairman did not ask this question of the other members of the first defenders but instead asked if there should be a "hearing on why we should not take the licence from them". This question to my mind would appear to take away from the other members of the first defenders the option to decide what should have been decided then, namely whether or not to hold a hearing. Not only did it do that but it put the purpose of a hearing as being why they should not take the licence away. In other words, as was submitted on behalf of the pursuer, the hearing would not be to ascertain if the complainer had made out the grounds in the complaint but rather would be to ascertain why the licence should not be taken away; the implication would appear to be that it would be for the pursuer to make out grounds to the contrary. While it was submitted on behalf of the defenders that the phrase, though unfortunate, was uttered before a decision on the merits was reached and that the first defenders had not approached the full hearing in a biased way, nevertheless, applying the test approved in Mahmood v West Dunbartonshire Licensing Board, I consider that the remark was such as to create in the mind of a reasonable man the suspicion that justice was not impartial in that a decision was taken on the basis of the remark both to hold a hearing and to hold it for the purpose of deciding not on a balanced view of the merits of the complaint but on the view that it should be for the purpose of ascertaining why the licence should not be taken away, possibly indicating thereby that it should be taken away. To my mind for the first defenders to proceed to the hearing and their decision in the circumstances narrated was contrary to natural justice.

I have dealt with the substantial merits of the appeal which effectively preclude me from the necessity of considering the question of the length of suspension. I was addressed on this on behalf of the first defenders. That which was imposed was the maximum as against a minority vote for a suspension of three months. While the first defenders were entitled to take into account the circumstances prevailing in their area and how they saw the public interest, their decision was based on their erroneous view of the law in the absolute terms I have described. Accordingly, in exercising their discretion they were proceeding from a false premiss. In such circumstances they exercised their discretion wrongly.

I have reversed the decision of the first defenders without remitting the case back to them. I have done this following the opinions in Leisure Inns UK Ltd v Perth & Kinross District Licensing Board. As I have indicated, the factual matters which were established did not entitle the first defenders to reach their decision and it is therefore pointless to require them to reconsider on the basis of the same facts. Further, in view of the finding on the breach of natural justice argument I do not consider it appropriate to remit back.

Parties were agreed that expenses should follow success and accordingly I have awarded these in favour of the pursuer. I have also sanctioned the employment of counsel in view of the nature of the case and its importance to the pursuer.