Westminster pick up costly tab

 Today three judges of the Court of Appeal, led by Master of the Rolls Lord Dyson, dismissed the Council's appeal. The effect of the judgment is that Westminster City Council will have to repay the great majority of fees charged since the beginning of 2010. Also, the Council has been ordered to pay interest at 10% above the Bank of England Base Rate and "indemnity costs" because it rejected an offer to compromise the claim on much better terms at the start of the proceedings. 

Almost exactly a year ago we wrote about the case of Timothy Martin Hemming (T/A Simply Pleasure Ltd) & 6 ORS v Westminster City Council who had recently won their case against Westminster in the High Court.

The case concerned the annual licence fees for sex shops charged by Westminster.  The annual fees for such licences must be determined each year by a duly authorised Licensing Committee in accordance with the Local Government (Miscellaneous Provisions) Act 1982.  Although the 2005/2006 fee was determined to be £29,102 Westminster failed to repeat the process again until 2012 when a reduced fee of £18,737 was determined.

In the intervening period demands for £29,102 were issued to the Claimants (the operators of the sex shops) each year.  The Council claimed in the case that the £29,102 was a 'rolling fee' for the intervening period and therefore they were not required to re-determine it each year. The Court rejected this argument.

The Claimants sought an Order from the Court requiring the Council to properly determine the fees for the intervening periods and sought direction from the Court as how properly this should be done.

The Claimants argued that the Council was not permitted to make a profit from their Sex licensing fees and that any surplus from year to year should be credited to the Claimants.  Although the Council contested this principle the Judge sided with the Claimants and established the principle that surpluses as well as deficits are to be carried forward.

When deciding which costs could be included within the Licence fees the Claimants argued although it was previously lawful to include licence fees within the costs of enforcement, it became unlawful when the 'Provision of Services Regulations 2009' came into force on 28th December 2009. The Claimants stated only 10% of the overall fee levied was justifiable.

In todays Judgement, Westminster City Council was also ordered to recalculate fees going back to 2004 because of deficiencies in its procedures for determining fees. The cost to the Council of the award, the interest and costs is likely to approach £2 million.

In respect of Alcohol Licensing, the Judgment will limit the scope of fees which Licensing Authorities may set following the introduction of Police Reform and Social Responsibility Act 2011.

The Home Office has delayed introducing Regulations implementing the new powers and the Hemming Judgement must now be essential reading for those preparing the Regulations.

Here is a link to theapproved  Judgement.