R v Birmingham Licensing Planning Committee, ex parte Kennedy
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE KARMINSKI |
| Judgment Date | 28 January 1972 |
| Judgment citation (vLex) | [1972] EWCA Civ J0128-2 |
| Court | Court of Appeal (Civil Division) |
| Date | 28 January 1972 |
[1972] EWCA Civ J0128-2
In The Supreme Court of Judicature
Court of Appeal
Appeal by the Licensing Planning Committee for the Licensing Planning Area of Birmingham from order of Queen's Bench Division of the High Court of Justice dated 21st December 1971.
The Master of the Rolls (Lord Denning)
Lord Justice Karminski and
Lord Justice Orr
Mr. RAYMOND SEARS (instructed by Messrs. Sharpe Pritchard & Co., agents for Mr. F.D. Mountford of Birmingham) appeared on behalf of the Licensing Planning Committee for the Licensing Planning Area of Birmingham, Appellants.
Mr. TUDOR PRICE (instructed by Messrs. Beckman and Beckman) appeared on behalf of Mr. Stephen Kennedy, Applicant.
In Birmingham the Licensing Planning Committee have adopted a system which is called "equation of barrolage". It has been applied for nearly twenty years. Now we have to consider whether it is valid, or not.
Before stating the facts, I must describe the system. One aspect of it is the existence of licence "in suspense". This arises out of the extensive redevelopment taking place in Birmingham. Most of the licensed premises in Birmingham are owned by one or other of two big brewery companies. Many of these licensed premises were destroyed during the War. Others were in slum clearance areas and have been demolished, or are soon to be demolished. The licences have not been extinguished, but have been put "into suspense". When one or other of these brewery companies wish to acquire a new licence on a new site, they produce these licences "in suspense" and surrender them in exchange for the new licence. It gives them a good leverage in aid of their application. It helps the authorities, too, in deciding priorities between the applicants.
The other aspect of the system is the existence of "licensing planning areas". These are areas which suffered devastation during the War. Birmingham is one such area. By statute there is established for each such area a "licensing planning committee". The function of this committee is to control the number, nature and distribution of licenced premises in the area. The Licensing Planning Committee consists, as to one half, of licensing justices for the area, and as to the other half, of representatives of the Corporation (which is the planning authority). In order to get a new licence, an applicant has to go before the Committee and see if they object or not. If they object, he can go no further. Ifthey do not object, they give him a "certificate of nonobjection", and he can go ahead and apply to the Licensing Justices.
The result is that, in Birmingham, in order to get a new licence, an applicant has to get: (i) Planning Approval from the Planning Authority; (ii) a certificate of non-objection from the Licensing Planning Committee; (iii) new On-Licence from the Licensing justices.
This brings me to the system of "equation of barrelage". It was adopted in the 1950's by the Licensing Plinning Committee for Birmingham. It was this: If an applicant wanted a new licence for new premises, he was required to estimate the amount of trade which he was likely to do, expressed in terms of a number of barrels ("barrelage" as it is called). The Licensing Planning Committee then required him to surrender licences "in suspense", giving a trade equal to that of the projected now licence — so that he had to surrender equal barrelage to that which he was requiring. As I have said, the two big brewery companies in Birmingham held nearly all the licences "in suspense". If one of these two brewery companies applied for a new licence, they would surrender a sufficient number of these to makeup the same barrelage as that estimated for the new licence. But, if the applicant was a newcomer, he would be expected to acquire sufficient licenoes "in suspense" to make up the barrelage. To do this, he would have to go to a brewery company and buy them. He would have to pay what they asked. Then, armed with the licenses "in suspense" so bought, he would surrender them: and in return he would receive the "certificate of non-objection".
This system benefited the Corporation of Birmingham and thetwo brewery companies for this reason: If there were no such system of "equation of barrelage", the Corporation of Birmingham (on compulsorily acquiring the old licensed premises) would have to pay to the brewery company, the full value of the licensed premises, including the value of the licence in suspense. But, under the system of "equation of barrelage" the Corporation would not have to pay out any money for the- licences in suspense. They would be surrendered by the brewery companies, or by the newcomer who had bought them.
The Corporation frankly recognised the financial advantage to them. In a memorandum submitted to a Departmental Committee, they said: "The principle of equating barrelage must be accepted by all applicants if the local authority is not to be left to pay out considerable sums for compensation in respect of licences which will never be re-sited".
The Corporation of Birmingham adopted this policy in the utmost good faith. They consulted the Home Office about it and got their approval. But Birmingham, was the only area, apart from Coventry, which adopted this policy. The policy came up for consideration in 1965 by a Committee over which Mr. Ramsay Willis, Q.C. (as he then was) presided. The Committee said (on page 25): "We believe "that in those few areas where the equation of barrelage was practised and the Licensing Planning Committee were faced with the necessity for a drastic overall reduction in the number of licences, the system was not unreasonable in relation to on-licences".
So much for the system adopted in Birmingham. I will now turn to the facts in the present case.
Mr. Kennedy is the managing director of Magnum Hotels Ltd., which is a hotel company with a Birmingham subsidiary. They wish to crect a fine new hotel opposite New Street Station in Birmingham. It is to be more luxurious than anything at present in Birmingham. It is to have 200 bedrooms, a restaurant for 280 people, and a banqueting hall for 300. Every bedroom is to have a bathroom and colour television. There is to be air conditioning throughout. It is to cost over a million pounds. The company say that this new hotel will greatly help in the development of Birmingham. On 6th May, 1970, they applied to the planning authorities and obtained planning permission for the hotel. But they now want a Justices' on-licence so as to be able to sell intoxicating liquor to all-comers. Inasmuch as this is a licensing planning area, before going to the Licensing Justices, the Company have first to go to the Licensing Planning Committee and obtain a certificate of non-objoction. On making enquiries, the Company were told that they would not be likely to got such a certificate unless they surrendered licenses in suspense. The estimated barrelage required for this new hotel was 1,450 barrels. So the company had to try to buy licences in suspense for that barrelage. They found that they could buy them from one of the two big brewery companies in Birmingham, Each brewery company asked £10 a barrel. So, in order to get 1,450 barrelage, the company would have to pay £14,508 to a brewer. Each of the brewers offered, however, a concession. If the new hotel company would "tie" themselves, so as to take their beer from one brewer only, the price would be reduced from £10 to £7 a barrel. In other words, £10,150 for 1,450 barrelage.
Mr. Kennedy, the managing director of the hotel company, tookstrong objection to this syiem. He said he was not prepared to buy barrelage. He treated it as a matter...
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