Multiple Businesses Using Premises? ‘Mirror’, ‘Shadow’ And Premises Licences
Eligibility For Premises Licence As Defined Under The Licensing Act 2003
Section 16 (1) (a) – (i) of the Licensing Act 2003 provides for various categories of person to apply for a premises licence. However, the largest group of applicants probably fall within the remit of section 16 (1) (a) that provides for the eligibility of:
“a person who carries on, or proposes to carry on, a business which involves the use of the premises for the licensable activities to which the application relates …”
As for the meaning of ‘licensable activities’ it is defined at section 1 (1) of the 2003 Act as including:
“(a) the sale by retail of alcohol,
(b) the supply of alcohol by or on behalf of a club to, or to the order of, a member of the club,
(c) the provision of regulated entertainment, and
(d) the provision of late night refreshment.”
What Are ‘Mirror’ Licences And ‘Shadow’ Licences?
The grant of a mirror or shadow licence involves second or more licensees being granted premises licences in addition to the primary premises licence.
As for the term ‘mirror licence’ in R (Extreme Oyster And Star Oyster Ltd) v. Guildford Borough Council [2013] EWHC 2174 (Admin), [2014] LLR 126, QBD at [31] counsel for the respondent licensing authority defined this as “a licence in identical terms to the primary licence insofar as it relates to the ‘licensable activities’ covered by the latter”.
A ‘shadow licence’ is an additional premises licence to the primary premises licence that might not be identical in terms to the primary premises licence.
‘Carrying On A Business’ – Grant Of A Shadow Or A Mirror Licence Does Not Require Secondary Licensees To Carry On A Licensable Activity
In Hall & Woodhouse Ltd v. Poole Borough Council [2009] EWHC 1587 (Admin), [2009] LLR 436, QBD at [23] – [25] Richards L.J. rejected the contention advanced on behalf of the respondent licensing authority that grant of a premises licence presupposes that the applicant carries on licensable activities such as the sale of alcohol.
The manner in which section 16 (1) (a) defines eligibility involves conceptual distinctions whereby different classes of person may qualify for a premises licence through different gateways.
Section 16 (1) (a) of the 2003 Act refers to the eligibility of a person who carries on (or proposes to carry on) a business which involves the use of the premises for the licensable activities to which the application relates. In Hall & Woodhouse Ltd the pub landlord had a reversionary proprietary interest in a public house which it protected by obtaining the grant of a secondary premises licence to it. It was apparently a ‘mirror’ licence that included as a licensing condition that amongst other requirements alcohol consumption in the beer garden after 11 pm was prohibited. Richards L.J. decided that as a landlord it carried on a ‘business’ that involved the ‘use of the premises’ for licensable activities because, for example, as part of its business the landlord company charged rent to the pub tenants at that particular property [24]. However, the landlord company did not as a matter of fact carry on licensable activities. Those activities were carried on by the pub tenants who failed to abide by some of the licensing conditions. Therefore, the pub landlord’s appeal was allowed against various criminal convictions for carrying on licensable activities on premises otherwise than under and in accordance with an authorisation contrary to section 136 (1) of the Licensing Act 2003.
Lack Of Judicial Clarity Concerning The Extent To Which It Is Possible To Protect Future Or Contingent Business Activity With Shadow Licences
It is now settled law that eligibility of secondary licensee for premises licences does not require the terms of their licence to be identical in terms (mirror licences).
In Extreme Oyster And Star Oyster Ltd at [32] – [57], the High Court (Turner J.) specifically rejected the respondent licensing authority’s contention that eligibility for a shadow licence presupposes that its terms are not in important respects different from the primary premises licence.
However, generally it remains important that the licensable activities within the primary and secondary licences are the same. For example, a shadow licence ordinarily could not be granted to a person who specifies that he carries on a business involving the use of premises, say, for regulated entertainment if the primary premises licence specifies sale by retail of alcohol and not regulated entertainment as a licensable activity. In such circumstances for an applicant to be eligible for shadow licence which includes a separate or an additional licensable activity he would need to show that he proposes not merely to be involved in a business that involves the use of premises for such licensable activities, but that it is proposed that such different licensable activities will actually be carried on whether by himself or another actual or proposed applicant for a shadow licence.
Unfortunately there is little clarity as the meaning of the phrase ‘proposes to carry on a business’. In Extreme Oyster And Star Oyster Ltd the Court declined to provide any further judicial gloss as to the proper interpretation of the word ‘proposes’. It remains unclear how near in the future has to be the proposed carrying on of the business for the purposes of the Licensing Act 2003. However, in that case the Court of Appeal’s approach in Mainwaring v. Trustees of Hentry Smith’s Charity [1998] QB 1 at 18E (that concerned the Landlord and Tenant Act 1987) was regarded as consistent with the ordinary meaning of the word ‘proposes’. In Mainwaring Bingham MR held that the term:
“describes a state of mind somewhere between mere consideration of a possible course of action at one extreme and a fixed and irrevocable determination to pursue that course of action at the other … [it means something] … different from the word ‘intends’. A man may propose to do a thing without having formed a fixed and settled intention to do it. A ‘proposal’ … Means that a project must have moved out of the ‘zone of contemplation … into the valley of decision’ … ”
In Extreme Oyster And Star Oyster Ltd the claimant stated its intentions in respect of the future of its business at the premises were [63]:
i) To protect it in the event that its tenants went into liquidation or surrendered its licence, or was the subject of review proceedings.
ii) To protect it in the event that its tenants failed to pay / were late paying their rent.
iii) In the event that it gave notice to quit and retake possession pending redevelopment of the premises, to enable it to run the premises in the meantime.
iv) To enable it to market the premises or parts of the premises should the tenants stay in possession for the full term of the tenancy that had a one – year ‘break’ clause.
The respondent licensing authority contended that such stated intentions did not fit within the meaning of the phrase ‘proposes to carry on a business …’. However, the High Court declined to express a view as to whether these statements of intention in principle would be sufficient for the claimant to be eligible for a shadow licence. The court limited itself to quashing the decision to refuse to grant premises licences partly because the decision – maker had considered the applications under the mistaken apprehension that the lease with the claimant’s tenants contained a 3 – year break clause. However, the court then remitted the case to the licensing authority for findings to be made afresh, indicating that if the authority were to refuse a licence on a correct understanding of the facts, this would not necessarily involve an irrational exercise of its administrative discretion.
Assistance with the issues raised above can be provided by the licensing team upon request. Call us in strict confidence and without obligation to see how we can assist you, on: 08454 903 567