Update | Licensing: summary reviews, shadow licences, gambling

The higher courts have considered two significant matters for operators of premises covered by the Licensing Act 2003. First, the fog created by the hopeless drafting of the summary review procedures '¨has to some degree been dispersed, but not in the way that operators would have liked. Secondly, 'shadow licences' have received '¨judicial approval which allows safeguards for freeholders whose premises are used for licensable activities by tenants.

On the gambling front, the Gambling Commission has been active in two important areas, embarking on a national underage test for operators and underlining again the importance of primary gambling use in licence applications.

Summary review

Summary reviews, introduced in 2007, confer draconian police powers to fast track reviews of alcohol licensed premises associated with serious crime or serious disorder (section 53A Licensing Act 2003). Police application is made to the relevant licensing authority which must then arrange for a hearing of the application to take place within 28 days.

The authority must within 48 hours consider whether to take any 'interim steps' pending the full hearing of the review. The steps, which take effect immediately, are to modify the conditions of the licence; exclude a licensable activity; remove the designated premises supervisor; or suspend the licence for up to three months.

Interim steps may be imposed without giving the premises licence holder the opportunity to attend but in such cases the licence holder may request a hearing to make representations. '¨There is no appeal from that hearing to the magistrates' court.

There is an appeal to the magistrates' court on the decision of the full review hearing and the decision will not take effect for 21 days and, if an appeal is lodged, until that appeal is determined or abandoned. But what of the interim steps? Suppose the interim steps included suspension of the licence for three months and at the review hearing the suspension was lifted but replaced by conditions that the licence holder felt had to be appealed. Would the licence continue to be suspended pending the appeal?

Guidance issued by the Secretary of State in 2007 considered that the interim steps continued but a District Judge in Chief Constable of Cheshire v Gary Oates (19 December 2011, unreported) held the contrary deciding that interim steps ceased at the review hearing. The guidance was subsequently withdrawn. However, the arcane provisions contained in sections 53B and 53C have been revisited. Section 53B states that the interim steps are 'pending the determination of the review' - is that the review hearing or the appeal hearing if there is one? Section 53C2(c) appears to support the view that the interim steps cease at the review hearing but the section is extremely badly drafted.

It has been argued that the High Court in 93 Feet East Ltd v London Borough of Tower Hamlets [2013] EWHC 2716 (Admin) decided that the Oates decision could not stand and that interim steps continue past the full review hearing. However, this was a permission hearing only and it appears from the transcript that the learned judges comments are less than unequivocal on the matter. As such its authority is questionable. It remains to be seen whether it is more persuasive than the Oates decision. The position remains unclear in several respect and legislative action is overdue.

'Shadow' licences

By section 16 Licensing Act 2003 to apply for a premises licence an applicant must come within one of a number of categories. By far the most common is "a person who carries on, or proposes to carry on, a business which involves the use of the premises for the licensable activities to which the application relates" (section 16(1)(a)). In Extreme Oyster & Anor v Guildford Borough Council [2013] EWHC 2174 (Admin) club premises were run and the premises licence held by a tenant. The claimant, the freehold owner of club premises, applied for a licence for its premises to run in parallel with the licence held by the tenant. The parallel licence would safeguard the freeholder in the event of insolvency, transfer, surrender, review and any other issues that may arise.

The application for a 'shadow licence' was submitted to Guildford Borough Council, which refused to accept the application. The was done by an officer of the authority on the basis that the applicant did not come within section 16(1) of the Act. However, the court, relying on Hall & Woodhouse Ltd V Poole Borough Council [2009] EWHC 1587 (Admin) distinguished a person who carries on licensable activities at the premises from a person who is in the business of carrying on licensable activities at the premises. Either or both of those two persons would be eligible to pass through the portal of section 16(1). The case lays down useful guidelines for such applications. It also considered whether the matter had been properly delegated to an officer, concluding that it had not and that Guildford had acted in breach of its Delegation Policy.

Gambling Commission

The Gambling Commission continues to be proactive in pursuing its aim to 'Keep gambling fair and safe for all'. The commission published an advice note, 'Approach to test purchasing', in May 2011. Test purchases have been conducted around the country and the latest test purchase programme was announced on 22 July 2013 'to directly test the effectiveness of under-age gambling policies and procedures at arcades, betting shops, bingo clubs and casinos'. The commission will look for evidence that operators have the necessary safeguards in place to prevent underage gambling. In a press release issued on 22 August 2013 the commission expressed concern that tests of smaller adult gaming centres and independent betting shops had shown weaknesses in preventing access to machines by young people - failing to prevent access in over half the tests conducted.

An advice note has also been issued on 'primary gambling activity'. Section 172 of the Gambling Act 2005 limits the number of higher stake gaming machines for each category of premises. The commission has stressed repeatedly that the primary gambling activity of the premises must accord with the category of premises licence and must not become an adjunct to or be replaced by gaming machines.

For example, in an advice note to betting operators (Jan 2011) the commission wrote that 'Those seeking to operate betting premises where betting appears not to be the primary gambling activity can expect to face difficulties in being granted a premises licence and are likely to attract further regulatory attention from the Gambling Commission.' As such, the commission has made representations on more than 20 premises licence applications where it considered that the primary gambling activity was machines and all have '¨been withdrawn.

However, in June 2014 the bookmaker Paddy Power was successful in an appeal to the magistrates' court against the decision of Newham Council to refuse a licence on the grounds of preventing crime and disorder and that the primary profits would come from fixed odds betting terminals. The district judge expressed the view that the concept of primary use was an area solely for the Gambling Commission, not for licensing authorities.

In response the commission issued a press release on 17 July 2013 in which it stated that '¨it did not agree with that suggestion and '¨reminded licensing authorities of their powers '¨and the fact that they must have regard to guidance issued and codes of practice published by the commission, including those on primary gambling activity. SJ