R (on the application of Hemming (trading as Simply Pleasure Ltd) and Others) v Westminster City Council

JurisdictionEngland & Wales
JudgeLord Reed,Lord Toulson,Lord Mance,Lord Neuberger,Lord Clarke
Judgment Date29 April 2015
Neutral Citation[2015] UKSC 25
Date29 April 2015
CourtSupreme Court

[2015] UKSC 25

THE SUPREME COURT

Easter Term

On appeal from: [2013] EWCA Civ 591

before

Lord Neuberger, President

Lord Mance

Lord Clarke

Lord Reed

Lord Toulson

R (on the application of Hemming (t/a Simply Pleasure Ltd) and others)
(Respondents)
and
Westminster City Council
(Appellant)

Appellant

Nathalie Lieven QC David Matthias QC Jacqueline Lean

(Instructed by Westminster City Council Legal Services)

Respondents

Philip Kolvin QC Victoria Wakefield

(Instructed by Gosschalks Solicitors)

Interveners (1–4)

Timothy Dutton QC Robert O'Donoghue

(Instructed by Russell-Cooke LLP)

Interveners (5 and 6)

Michael Fordham QC Hugh Mercer QC

(Instructed by Bevan Brittan LLP)

Intervener (The Local Government Association)

Written Submissions Only

(Instructed by The Local Government Association Corporate Legal Advisor)

Intervener (Her Majesty's Treasury)

George Peretz QC

(Instructed by Government Legal Department)

Interveners

1. The Architects Registration Board ("ARB")

2. The Solicitors Regulation Authority ("SRA")

3. The Bar Standards Board ("BSB")

4. The Farriers Registration Council

5. The Law Society

6. The Bar Council

7. The Local Government Association

8. Her Majesty's Treasury

Heard on 13 January 2015

Lord Mance

(with whom Lord Neuberger, Lord Clarke, Lord Reed and Lord Toulson agree)

1

The appellants, who I shall call Westminster City Council, are the licensing authority for sex establishments (including "sex shops") in Westminster under Schedule 3 to the Local Government (Miscellaneous Provisions) Act 1982. The respondents have at all material times been licensees in respect of some sex shops in Westminster.

2

The agreed statement of facts and issues records that an applicant for the grant or renewal of a sex establishment licence for any year had to pay a fee made up of two parts, one related to the administration of the application and non-returnable, the other (considerably larger) for the management of the licensing regime and refundable if the application was refused. By way of example, for the year 2011/12 the total fee was £29,102, of which £2,667 related to the administration of the licence and was non-returnable, while £26,435 related to the management of the licensing regime and was refundable if the application was refused. Refundable in this context clearly meant refundable in law.

3

The respondents, during the course of the proceedings before the Supreme Court, appeared to the court to be throwing some doubt on the agreed fact that the second part of the fee was refundable. However, not only was that agreed in the statement of facts and issues, but it was accepted by both courts below: see Keith J's judgment dated 16 May 2012, [2012] PTSR 1676, para 32 and the Court of Appeal's judgment dated 24 May 2013, [2013] PTSR 1377, para 32. Further, the practice of refunding the second part of such a fee was recorded as long ago as 1985 in R v Westminster City Council, Ex p Hutton, tried and reported with R v Birmingham City Council, Ex p Quietlynn Ltd (1985) 83 LGR 461, 517. It is one which sex shop operators like the respondents must, on the face of it, have been aware of and have been able to enforce as a matter of public law. I see no basis in these circumstances for proceeding on any other basis.

4

The central issue is whether it was legitimate under domestic and/or European Union law for Westminster City Council to charge the £26,435 in 2011/12, or similarly refundable sums in other years. The respondents contend that it was not, essentially on the basis that these sums were, although refundable in the case of unsuccessful applicants, payable on account of the costs of enforcement of the licensing scheme which were unrelated to the costs of processing applications and should have been borne out of Westminster City Council's general funds and/or were, although payable on application by all applicants, sums which could only benefit successful applicants. I note that this was, of course, why they were refundable.

5

In domestic law, Westminster City Council relies upon paragraph 19 of Schedule 3 to the 1982 Act as authorising such fees. Paragraph 19 provides that:

"An applicant for the grant, renewal or transfer of a licence under this Schedule shall pay a reasonable fee determined by the appropriate authority."

6

Under this provision, it was established domestically some 30 years ago that a fee could be charged under paragraph 19 to reflect the costs not only of processing of applications but also of "inspecting premises after the grant of licences and for what might be called vigilant policing … in order to detect and prosecute those who operated sex establishments without licences": R v Westminster City Council, Ex p Hutton (1985) 83 LGR 516, quoted in the Court of Appeal's judgment, para 13.

7

The correctness of this case law, as and when decided, is in my view unquestionable. I also have no doubt that it is, as a matter of domestic law, open to a licensing authority under paragraph 19 of Schedule 3 to require an applicant for the grant or renewal of a licence to pay a fee to cover the running and enforcement costs of a licensing scheme, and to make this fee payable either (a) outright, as and when the licence is actually granted pursuant to the application or (b) on a refundable basis, at the time when the application is lodged. The respondents' contrary submission reads the wording of paragraph 19 over-restrictively.

8

However, the respondents submit that, even if paragraph 19 is so read, the position has changed as a result of the making, under section 2 of the European Communities Act 1972, of the Provision of Services Regulations 2009 (SI 2009/2999) to give effect to Directive 2006/123/EC on services in the internal market. Regulation 18 of the 2009 Regulations provides:

"(2) Authorisation procedures and formalities provided for by a competent authority under an authorisation scheme must not -

(a) be dissuasive, or

(b) unduly complicate or delay the provision of the service.

(3) Authorisation procedures and formalities provided for by a competent authority under an authorisation scheme must be easily accessible.

(4) Any charges provided for by a competent authority which applicants may incur under an authorisation scheme must be reasonable and proportionate to the cost of the procedures and formalities under the scheme and must not exceed the cost of those procedures and formalities."

Under regulation 4:

"'authorisation scheme' means any arrangement which in effect requires the provider or recipient of a service to obtain the authorisation of, or to notify, a competent authority in order to have access to, or to exercise, a service activity …"

9

Paragraphs (2), (3) and (4) of regulation 18 implement article 13(2) of the Directive. Despite their reformulation, no-one suggests that these paragraphs have any wider or different effect than article 13(2). Article 13(2) reads:

"Authorisation procedures and formalities shall not be dissuasive and shall not unduly complicate or delay the provision of the service. They shall be easily accessible and any charges which the applicants may incur from their application shall be reasonable and proportionate to the cost of the authorisation procedures in question and shall not exceed the cost of the procedures."

10

Article 13(2) is part of section 1, headed "Authorisations" in Chapter III of the Directive. Article 9, the first article in section 1, reads:

"Member States shall not make access to a service activity or the exercise thereof subject to an authorisation scheme unless the following conditions are satisfied:

  • (a) the authorisation scheme does not discriminate against the provider in question;

  • (b) the need for an authorisation scheme is justified by an over-riding reason relating to the public interest;

  • (c) the objective pursued cannot be attained by means of a less restrictive measure, in particular because an a posteriori inspection would take place too late to be genuinely effective."

Article 4(6) contains this definition:

"'authorisation scheme' means any procedure under which a provider or recipient is in effect required to take steps in order to obtain from a competent authority a formal decision, or an implied decision, concerning access to a service activity or the exercise thereof …"

11

Section 2 of Chapter III of the Directive, headed "Requirements prohibited or subject to evaluation", specifies in article 14 various "prohibited requirements", to compliance with which Member States may not make access to, or the exercise of, a service activity in their territory subject. One is an obligation to provide or participate in a financial guarantee or to take out insurance from a provider in their territory, but it is expressly provided that this shall not exclude a requirement to have insurance or a financial guarantee, or participate in a collective compensation scheme. Section 2 thus suggests that conditions attaching to the actual exercise of a service activity, once any necessary authorisation has been obtained, are a separate matter from the authorisation scheme and authorisation procedures and formalities. Similarly, Chapter IV, headed "Free movement of services" provides that Member States may not make access to or the exercise of a service activity in their territory subject to compliance with any requirements which do not respect general principles of non-discrimination, necessity and proportionality set out in article 16(1) or which involve certain requirements set out in article 16(2). Again, this suggests that the actual regulation of access to or the exercise of a service activity is a distinct matter from any prior authorisation scheme and its procedures, with which section 1 of Chapter III is concerned.

12

The courts below regarded article 13(2) as covering charges made to successful as well as...

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6 cases
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