R (Hemming (trading as Simply Pleasure Ltd) and Others) v Westminster City Council (No 2)
| Jurisdiction | England & Wales |
| Judge | Lord Mance,Lord Neuberger,Lord Reed,Lord Hughes |
| Judgment Date | 19 July 2017 |
| Neutral Citation | [2017] UKSC 50 |
| Date | 19 July 2017 |
| Court | Supreme Court |
[2017] UKSC 50
Lord Neuberger, President
Lord Mance
Lord Clarke
Lord Reed
Lord Toulson
Appellant
David Matthias QC
Charles Streeten
(Instructed by Westminster City Council Legal Services)
Respondents
Philip Kolvin QC
Victoria Wakefield
Tim Johnston
(Instructed by Gosschalks)
Heard on 11 May 2017
( with whom Lord Neuberger, Lord Reed and Lord Hughes agree)
This is a sequel to the Supreme Court's previous judgment dated 29 April [2015] UKSC 25; [2015] AC 1600. It is written with the benefit of the Court of Justice's answer dated 16 November 2016 (( Case C-316/15) [2017] PTSR 325) to the question which that judgment referred to the Court of Justice. The appeal concerns fees which were charged to the respondents on applying to Westminster City Council for sex shop licences for the three years ended 31 January 2011, 2012 and 2013 and which included the council's costs of enforcing the licensing scheme against unlicensed third parties running sex shops ("enforcement costs"). The respondents' applications all in the event succeeded, and I can call them "the licence holders".
Under domestic law the basis for charging such fees was and is found in paragraph 19 of Schedule 3 to the Local Government (Miscellaneous Provisions) Act 1982 as amended by the Policing and Crime Act 2009, section 27(7), reading:
"An applicant for the grant, renewal, variation or transfer of a licence under this Schedule shall pay a reasonable fee determined by the appropriate authority."
In respect of all years ending on 31 January up to 2010, Westminster City Council was entitled to determine a reasonable fee which included enforcement costs, and to require this to be paid on application for a sex shop licence, subject to refunding of the part relating to enforcement costs, if the application was not granted: see paras 6–7 of our previous judgment.
The position however changed with the coming into force in the United Kingdom with effect from 28 December 2009 of the Provision of Services Regulations 2009 (SI 2009/2999), giving effect domestically to EU Directive 2006/123/EC. The courts below held that, after this change, the only legitimate charges which Westminster City Council could levy related to the administrative costs of processing the relevant applications and monitoring compliance with the terms of the licence by licence holders (which I can call "processing costs"): see Court of Appeal judgment dated 24 May 2013 [2013] EWCA Civ 591; [2013] PTSR 1377, para 130. The council was not entitled to levy the (considerably larger) parts of the actual charges which related to the costs of enforcing the scheme against non-licence holders.
On that basis, the Court of Appeal ordered Westminster City Council to determine a reasonable fee excluding enforcement costs for each of the years ended 31 January 2011 and 2012, and to "determine afresh" a reasonable fee excluding enforcement costs for the year ended 31 January 2013. The distinction between "determining", in the first two years, and "determining afresh", in the third year, arose because the issues before Keith J [2012] EWHC 1260 (Admin); [2012] PTSR 1676 covered all years ending 31 January 2007 onwards, and he held by his judgment dated 16 May 2012 that the council's Licensing Sub-Committee had failed to determine any yearly fee after 7 September 2004 (when it determined the fee for the year ended 31 January 2005 and no more) until 5 January 2012 (when it determined the fee for the year ended 31 January 2013). All that had happened in the intervening years was that the council's officers had simply assumed that the same fee as set on 7 September 2004 continued to apply and had charged licence applicants accordingly.
Pursuant to the Court of Appeal's order, Westminster City Council made corresponding repayments totalling £1,189,466 to the licence holders on 28 June 2013, together, it appears, with a further £227,779.15 paid by mistake (since it related to licence holders not party to the present proceedings).
In our previous judgment, we took a different view from the courts below about the effect of the change worked by the 2009 Regulations giving effect to the EU Directive. We drew a distinction between two types of licensing scheme, at para 18 as follows:
"Type A: Applications for licences are made on terms that the applicant must pay:
(i) on making the application, the costs of the authorisation procedures and formalities, and
(ii) on the application being successful, a further fee to cover the costs of the running and enforcement of the licensing scheme.
Type B: Applications for licences are made on terms that the applicant must pay:
(i) on making the application, the costs of the authorisation procedures and formalities,
(ii) at the same time, but on the basis that it is refundable if the application is unsuccessful, a further fee to cover the costs of the running and enforcement of the licensing scheme."
We held that, both under domestic law (paragraph 19 of Schedule 3 to the Local Government (Miscellaneous Provisions) Act 1982) and by reference to EU law ( Directive 2006/123/EC, implemented domestically by the Provision of Services Regulations 2009), Westminster City Council was entitled to operate a scheme of type A in relation to the licensing of sex shops. We referred to the Court of Justice the question whether it was entitled to operate a scheme of type B. The Court of Justice has answered that question in the negative, on the basis that a requirement to pay a fee to cover the costs of running the licensing scheme and enforcing it against unlicensed operators, refundable if the application for a licence fails, constitutes an illegitimate charge in respect of the procedure for authorisation.
In the above circumstances, and despite the Court of Justice's answer in respect of type B, Westminster City Council submits that it is entitled to be paid or repaid the sums which it repaid to sex shop licence holders on 28 June 2013, following the Court of Appeal's order. The licence holders, on the other hand, submit that they are entitled to retain the repayment made to them in full, because it was charged in a way for which there was no warrant. The submissions on each side were complicated by reference to principles of unjust enrichment under both domestic and European law, in the latter case...
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