High Court rules 'Shadow' licences legal

The High Court has delivered its judgment in relation to Extreme Oyster Ltd and Star Oyster Ltd (the freehold owner of the "Casino and Players Lounge" and "Bar Mambo" in Guildford) and Guildford Borough Council. The Council had been accused of inappropriately rejecting applications for ‘shadow' licences on the premises.

Extreme Oyster Ltd and Star Oyster Ltd had lodged applications on the basis that they sought to protect the venues' licences should the company that currently operates them (Luminar Leisure Ltd) go into liquidation or lose its own licences for example through suspension or revocation. It was claimed the ‘shadow' licences would allow Extreme/Star to take over, without complications, control of the site from Luminar, which was liable to a break clause in its lease.

The Council had previously rejected all of the applications made on the basis that the applicant had failed to comply with the terms of Section 16 Licensing Act 2003.

However, in the High Court, Mr Justice Turner ruled that a landlord could apply for a shadow licence stating that "In my view, it matters not for the purposes of the application of section 16(1)(a) whether the shadow licence application covers an area entirely co-incident with any given primary licence. So long as the extent of the shadow licence application does not stray beyond the parameters of the premises used by the applicant as a business and that the matching categories of licensable activities are carried out under the primary licences relating thereto then the threshold of section 16(1)(a) is surmounted."

In a nutshell, a pub company can therefore apply for a ‘shadow' licence as long as the licensable activities do not supersede those on the licence held by the tenant.

In compliance with Section 16, the Landlords were therefore deemed to be carrying on a business which involved the use of the business to which the application related for licensable activities. Further, considering the broader scope and whether section 16 related to just existing rather than proposed use it was also held that applications could also be made were the Landlord proposed to carry on a business which involved the use of the premises for the licensable activities to which the application related.

The full decision can be found here.