SHERIFFDOM OF TAYSIDE CENTRAL AND FIFE

B753/10

JUDGMENT OF SHERIFF PRINCIPAL

R A DUNLOP QC

in the cause

MITCHELLS & BUTLERS RETAIL LTD

Appellants

against

DUNDEE CITY LICENSING BOARD

Respondents

__________________

Act: Mr Skinner, Advocate instructed by R & J M Hill Brown & Co, Solicitor, Glasgow

Alt: Mr Woodcock, Solicitor, Dundee

DUNDEE, 6 December 2010. The Sheriff Principal, having resumed consideration of the cause, answers the first question in the stated case in the affirmative; therefore allows the appeal and reverses the decision of the Dundee City Licensing Board taken on 18 March 2010 to issue the appellants a written warning in terms of section 39(2) of the Licensing (Scotland) Act 2005 following a finding that the appellants had contravened paragraph 7 of schedule 3 of the said Act; certifies the appeal as suitable for the employment of junior counsel; finds the respondents liable to the appellants in the expenses of the appeal; allows an account thereof to be given in and remits the same, when lodged, to the auditor of court to tax and to report.

NOTE:

[1] This is an appeal by way of stated case against the decision of a Licensing Board to issue a written warning to the appellants in terms of section 39(2) of the Licensing (Scotland) Act 2005 (hereinafter referred to as "the 2005 Act"). The warning was issued following a review of the appellants' premises licence for the Nether Inn, Dundee when the Licensing Board found that there had been a breach of one of the mandatory conditions of the licence, namely that set out in paragraph 7 of schedule 3 to the 2005 Act.

[2] Paragraph 7 provides as follows:-

"Where the price at which any alcohol sold on the premises is varied -

(a) the variation (referred to in this paragraph as "the earlier price variation") may be brought into effect only at the beginning of a period of licensed hours, and

(b) no further variation of the price at which that or any other alcohol is sold on the premises may be brought into effect before the expiry of the period of 72 hours beginning with the coming into effect of the earlier price variation."

[3] The findings in fact in the stated case are as follows:-

1. The appellants are the holders of a premises licence for the Nether Inn, 134 Nethergate, Dundee DD1 4ED;

2. There is in operation at the premises a "discount card" scheme for students allowing them, upon obtaining a card, to enjoy a discount on alcoholic drinks at the premises;

3. The discount is not available to customers who do not possess a card;

4. There is during any 72 hour period a mixture of card holders and non card holders on the premises;

5. The discount card scheme is not limited by time and the price differential between card holders and non card holders is fixed so that the two categories of prices remain the same over any 72 hour period."

[4] The Licensing Board took the view that discounts offered to certain categories of customer but not others amounted to a breach of paragraph 7 of schedule 3. They took the view that where there are different amounts being charged for the same alcoholic drink this amounted to a price variation prohibited by paragraph 7. The first question in the stated case is whether the Licensing Board erred in reaching that conclusion. The answer to that question depends on the proper construction of paragraph 7.

[5] Counsel for the appellants appeared to concede that the wording of paragraph 7 was ambiguous but submitted that that ambiguity could be removed if one had regard to the purpose of the provision. He submitted that its purpose was the prevention of "binge drinking" and in particular so called "happy hours" during which the price of alcohol was reduced for a short period of time. The reason for the condition was that nobody should be encouraged by a short term reduction in pricing to drink large amounts of alcohol in a short period of time. He submitted that the ethos of the schedule 3 provisions was clearly focussed by the relevant minister who, when addressing the Scottish Parliament's Local Government and Transport Committee during consideration of the Licensing (Scotland) Bill, stated that the government considered "irresponsible promotions" to be those that actively encourage people to consume in a shorter period a larger amount of alcohol than they would otherwise consume" (Scottish Parliament - Local Government and Transport Committee Official Report, 20 September 2005). This sentiment was repeated in the Licensing (Scotland) Bill Policy Memorandum (paragraph 131) and it was stated in the Explanatory Notes relating to the Act ultimately passed that paragraph 7 precluded "happy hours".

[6] Against this background counsel submitted that paragraph 7 did not strike at differential pricing structures. He questioned the relevance of the 72 hour provision if the approach of the Licensing Board were well founded and pointed out that in that event there would require to be a uniform price for each product throughout all parts of the licensed premises, thus sweeping away the traditional distinction between for example a lounge bar and a public bar. He submitted that there was no hint of a suggestion that that was the intended object of the provision in question within either the Nicholson report, which was the precursor to the 2005 Act, or in any of the policy papers pertaining to the passage of the bill through the Scottish Parliament.

[7] In responding to these submissions the solicitor for the Licensing Board submitted that, while removing the distinction between different parts of licensed premises may not have been the intention of paragraph 7, that was the inevitable consequence of the wording of that provision. He submitted that the purpose of paragraph 7 was to make it less commercially attractive for licensees to offer discounted prices. The appellants' scheme was in reality a promotion, the maintenance of which was subsidised by those paying the full price of the alcoholic product. This cut across the policy objective of paragraph 7 which put the focus firmly on the price of alcohol. Differential pricing involved by definition a variation in the price of a particular alcoholic product from one moment to the next.

[8] In my opinion the submissions for the appellants are to be preferred. The starting point in the application of paragraph 7 is "the price at which any alcohol is sold." In itself that phrase says nothing about whether individual alcoholic products must be sold at a uniform price and the lounge bar/public bar distinction referred to by counsel is an example of circumstances in which one might readily expect such a differential pricing structure to exist within the same licensed premises. Nor in my opinion is there anything in the wider provisions of paragraph 7 which precludes differential pricing of individual products. Rather the focus of attention is the variation of an existing price within a prescribed period of time. Thus at the beginning of a period of licensed hours the question is what are the prices prevailing or set at that time and it is nothing to the point that there may be different prices for the same product. But once the prices have been set, even if different prices for the same product, it is those prices which may not be varied within a period of 72 hours thereafter. In my view that construction reflects the natural meaning of the words used in paragraph 7 but in any event is consistent with what I consider to be the underlying purpose of this provision as reflected in the various parliamentary comments and explanatory notes to which counsel referred, namely the avoidance of circumstances in which people are encouraged to consume in a shorter period of time a larger amount of alcohol than they would otherwise consume. In other words it is a measure aimed at discouraging "binge drinking".

[9] As finding in fact 5 makes clear, the price differential between card holders and non card holders is fixed so that the two categories of prices remain the same over any 72 hour period. It follows that in my opinion there has been no unlawful variation of prices in breach of the provisions of paragraph 7 of schedule 3 and that accordingly the first question in the stated case ought to be answered in the affirmative. In these circumstances question 2 does not arise.

[10] Parties were agreed that in these circumstances the proper course was simply to allow the appeal and reverse the decision of the Licensing Board. Parties were also agreed that the expenses of the appeal should follow success. Counsel for the appellants moved for certification of the appeal as suitable for the employment of junior counsel. The respondents took up no position in regard to that motion. In my view the novelty and importance of the point warrants the granting of that motion.