Drink problems

In the months before the smoking ban came into force in 2006 we saw adverts about the change in law on the side of buses, in flyers and leaflets, on bus shelters, in the press and on the news. There was much discussion and consternation, but it was quite clear what was to happen on the appointed day, 26 March 2006. The Licensing (Scotland) Act 2005 and its impact on licensed premises in Scotland (and that of the 20 or so SSIs that require to be read along with the Act), have not been quite so well advertised. It is predicted that the difficulties and costs associated with the 2005 Act will cause a 20-25% decline in licensed premises in Scotland.

Some may recall the dawn of the 1976 Act. No fuss was made; no special applications were required. When an applicant required to renew their existing licence, they applied for renewal and were sent a licence with “Licensing (Scotland) Act 1976” written at the top. It was that simple; but life was different then.

Scotland’s problem relationship with alcohol, and the links between its misuse and health issues, crime and antisocial behaviour, remain the subject of much concern. It was recognised that the 1976 Act provided no assistance to those trying to combat these problems. As a result, Sheriff Principal Gordon Nicholson was tasked with undertaking a review of “all aspects of liquor licensing law and practice in Scotland, with particular reference to the implications for health and public order; to recommend changes in the public interest; and to report accordingly”. The Nicholson Report was followed up by a further report by Peter Daniels, chief executive of East Renfrewshire Council, who was charged with examining the regulation of off-licences and making recommendations as to (1) better engagement and consultation at community level on the grant of licences; and (2) management and enforcement mechanisms which will help to prevent off-licences being a focus for antisocial behaviour.

The 2005 Act has emerged from the Nicholson and Daniels Reports, and it is important to remember this background as we are assailed by more and more requests from licensing boards for information and changes.

Countdown time

The Act comes into force at 5am on 1 September 2009, “T” day. As at this date, every licensee who wishes to be able to trade in the sale of alcohol going forward must have a premises licence, an appointed premises manager (who holds a personal licence), and must ensure that all staff who are involved in the sale of alcohol are appropriately trained. Licences granted under the 1976 Act, together with regular extensions of permitted hours and children’s certificates, continue automatically without the requirement for renewal until “T” day, when they terminate. Currently we are seven months into the 18 month period of “transition”. Two “last lodging dates” have passed, 7 March and 6 June; two are to come, 3 October 2008 and 16 January 2009. Much has been learnt along the way in terms of wording of applications, access by children, outside areas, even down to the colouring of layout plans.

Most applicants are seeking to convert their existing 1976 Act licence in terms of the Special Procedure Regulations (SSI 2007/454). These applications benefit from the rather limited “grandfather rights” which (1) allow the applicant to continue trading under their 1976 Act licence; (2) avoid the premises being caught in an “overprovision” assessment; and (3) avoid the applicant having to provide certificates of suitability in relation to the premises from building control, environmental health and planning.

An applicant’s relevant “last lodging date” is dictated by the month of renewal of the existing 1976 Act licence. Having been instructed by clients who were not aware of the exact date of last lodging and asked for assistance with an application the day before the relevant date, I have been faced with having to advise that if that date was missed, the clients would have to obtain certificates of suitability, only to be told that the property in question had asbestos and lead pipes – no certificate of suitability would be granted without a very expensive upgrading project.

A hearing to “consider” the application should be held within six months of the date of receipt of the application by the board. Applications lodged on or around 7 March should have been “considered” in the early part of this month. Most boards are treating this six month time period as being the time within which the application is to be processed, reported on and decided. In practice, applicants are finding that some boards are allowing matters to be “adjourned” even though this takes the application outwith the six month limit and involves the applicant in further cost and uncertainty. There is no sanction on a board in terms of the regulations if they do so.

Issues with the premises

As with all new systems there are snagging issues. Trying to revolutionise a regime which has been in existence for over 30 years and which affects upwards of 17,000 licence holders was never going to be easy, but what we have seen has been fairly remarkable. Sight has been lost of the fact that the 2005 Act does not come into force until 1 September 2009. Objections have been accepted by boards even though they were late, frivolous or related to matters regulated under other enactments.

More particularly, applications have been objected to by the support departments because baby changing facilities were not yet installed, signage for a ladies’ toilet was upside down, light bulbs had blown, fire doors required to open in the other direction, bin bags blocked access routes, or the licensed area had not been delineated in red. Luckily after the first round of board meetings, common sense prevailed and many of this type of “objections” turned into representations only and could be dealt with in early course by the applicant. 

Objections from building control teams across Scotland in relation to inadequate sanitary provision or fire requirements are however a different story. These are true objections to applications and have been accepted by boards, even though s 27(7) of the 2005 Act specifically provides that licensing boards may not “impose a condition on the premises licence which relates to a matter (such as planning, building control or food hygiene) which is regulated under another enactment”.

In addition, the Scottish Government confirmed in its Guidance to Licensing Boards that it did not intend this Act to be used as a tool to force the upgrading of licensed premises to current building standards. Many board policy statements also echo these sentiments, but they have been forgotten and applicants are faced with having to agree to drastically reduced capacity figures for the premises to correspond with sanitary provision, or carry out the works. 

What can be done? A small restaurant is told to install two new toilets but this is physically impossible. A listed building is told to install a banister immediately adjacent to a stained glass window, again a physical impossibility. Luckily for the clients involved in these two examples, compromises are likely to be reached, but what if the support department is adamant that these works are required and the board refuses to grant the premises licence until an undertaking to do the works is reached?

Less appeal?

Thoughts turn to appeal. Appeal against a refusal of a premises licence differs from the procedure for appeal under the 1976 Act, which was by way of summary application to a sheriff or petition for judicial review in the Court of Session. Section 131 of the 2005 Act, the Licensing (Procedure) Scotland Regulations 2007 (SSI 2007/453) and the Act of Sederunt (Summary Applications, Statutory Applications and Appeals etc Rules) 1999 (as amended), create what on first reading is a maze of legislation.

In terms of the new rules, appeal is now by way of stated case to the sheriff principal if it concerns a premises licence and to a sheriff in relation to a personal licence. As always, it is imperative to note the timings dictated by the new legislation. A note of appeal must be lodged with the relevant sheriff clerk not later than 14 days from the “relevant date”, which is either the date of the board’s decision or, where a statement of reasons has been required, the date of issue of the statement.

In the note of appeal the grounds of appeal are stated; they remain as they were under the 1976 Act. It is then for the licensing board to state the case in response to the grounds of appeal, and thereafter there is the usual period of adjustment. Where there is no statutory right of appeal under the 2005 Act, an applicant can still present a petition for judicial review in the Court of Session.

Issues of personal bar and the competence of appeal are raised in the situation where a premises licence has been granted by the board but is subject to an unacceptable condition. Personal bar may be argued against an applicant if they have “accepted” the condition at the board hearing to avoid the application being refused. In addition, the terms of

s 23(7) of the 2005 Act, which states that the board must grant the application as modified “if the applicant accepts the proposed modification”, will no doubt be raised by the board.

The issues of competence arise in relation to s 131 of and sched 5 to the Act, under which appeal can only be made against refusal of the premises licence. It remains to be seen whether a court would allow an appeal in a case where the premises licence has been granted and the applicant seeks to rely on Wolfson v Glasgow District Licensing Board 1981 SLT 17 and other decisions relevant to the 1976 Act.

More practical problems

The difference in interpretation of capacity figures between the applicant and building control has created difficulties, and premises licences are being granted with much reduced capacity figures being applied to the premises. Applicants were asked to state how many customers can be in the premises in order for the boards to gather this information and use it in an assessment of overprovision. Building control have however used their own method of capacity calculation based on the cubic area in question, which results in a much reduced figure. The end position is that on-sales licensed premises will have to use some sort of checking system to ensure compliance with the capacity figures stated in their premises licence. How can this happen? Boards will argue no doubt that the imposition of these figures is “necessary or expedient” in terms of the board and the applicant fulfilling the licensing objectives (s 27(6) of the Act).

Other practical issues of concern to applicants (and their agents) have been boards seeking to reduce off-sales hours, even though these have already been reduced from those previously enjoyed under the 1976 Act and can be from 10am to 10pm. Some Boards consider that off-sales should only be from 11am from Monday to Saturday and from 12:30pm on a Sunday. Early opening on-sales premises also cannot be assured that their existing hours will be preserved under the new regime. It seems that boards are reluctant to grant hours which involve selling alcohol for more than 14 hours in one 24 hour period, even though a premises may have enjoyed being able to serve shift workers from 6am and office workers up until 1am for years without issue.

Access by children and young people is also being heavily regulated and restricted, with some premises losing the ability to allow children and young people to be in the premises. Finally, the issue of what is “one area” for alcohol display in off-sales premises has also tested patience, with applicants being told that this is one shelved area (which leads to having to give the number of shelves in the area). This cannot be correct and arguments have been made at boards across Scotland that “one area” can be a number of aisles or shelved areas as long as they are all together. 

To sum up, transition is a testing time for all involved. “Expect the unexpected” has been the mantra adopted by most specialist agents in this field. Licensing implications should be considered at the very beginning of a new project or instruction and it is very much a case of “caveat emptor”.

Caroline K P Brown is an associate with Lindsays and is a member of their Hospitality and Leisure Group, specialising in licensing and licensing litigation n

Property transfers – the licensing traps

Commercial property practitioners will also be aware of the difficulties that the new regime creates for drafting.

Historically, planning permission granted for a premises tied in with the type of licence applied for and granted, be that a hotel, public house, restaurant licence etc. No longer will we have these distinct “types” of licences and this change impacts on obtaining planning consent for new projects.

The timing of “transition” is creating chaos in terms of the buying and selling of commercial properties. For the buyer, has the outgoing seller submitted their grandfather application in time before the relevant last lodging date? If they have not, will this create difficulties for the buyer in terms of obtaining a new premises licence, as certificates of suitability are required and the grant of the application could take over six months? If the seller has submitted a “grandfather” application, does the draft operating plan allow the buyer to operate as they would like? Has the seller agreed to do any works, agreed to any capacity figures or other condition which would create issues for the new buyer? Additionally, who is responsible for the costs of submitting these applications? Should this be the landlord or the tenant? Who is ultimately concerned about ensuring that the premises licence works for both parties? Equally importantly, who pays for any works required?

The answers to these questions will of course all depend on the facts and circumstances and the terms of the lease in place, but does that lease take account of the 2005 Act and can these costs be passed on? It is important to note when examining these questions that existing rent review provisions within leases are also unlikely to take account of the Act. Even the usually fairly simple temporary and permanent transfer of existing licences to new parties could take months to be decided under the Act if the chief constable raises any issues. The 2005 Act could have a real impact on the commercial viability of licensed premises, given the potential for unexpected conditions to be attached and the length of time for decisions by the licensing board to be made.