Hemming (t/a Simply Pleasure Ltd) & Ors v Westminster City Council

A licensing authority may charge only a reasonable fee connected with the authorisation process. Since the domestic implementation of the Services Directive, that fee must not include the cost of investigating or prosecuting unlicensed operators. Surpluses and deficits must be carried forward so that the authority does not make a profit, although an approximate calculation may suffice. The authority itself must determine the fee; the court will not order an independent accounting exercise. A restitutionary claim challenging an unlawful public-law demand must ordinarily proceed as judicial review, but time may be extended where the claimant reasonably lacked the information needed to identify the unlawfulness.

The claimants operated licensed sex shops in Westminster. They challenged the Council’s demand for annual licence fees, alleging that fees had not been separately determined after 2004, that earlier surpluses had not been carried forward, and that enforcement costs had unlawfully been included after the Provision of Services Regulations 2009 came into force.

They also sought restitution of the excess paid in the preceding five years. The issues included the proper procedural route, limitation, the Council’s duty to determine reasonable fees, the treatment of surpluses and deficits, the recoverability of enforcement costs, and the appropriate relief.

1. The claim succeeded. The Council had not determined a licence fee for 2011/12 or for the preceding years since 2005/06. The fee had not rolled over indefinitely merely because the 2004 resolution contained no express end date.

2. A restitutionary claim whose primary focus is a public-law decision must be treated as a claim for judicial review. The claimants’ delay was excused because they were entitled to assume that the fees had been lawfully determined and did not obtain sufficient information until shortly before issuing the claim.

3. The Council was required to carry forward previous surpluses and deficits when determining annual fees. The adjustment need not be mathematically exact, provided that the position broadly comes out correctly over time. The relevant accounting exercise extended back to the year ending 31 January 2007.

4. The Council alone had to determine the fees. An independent account or master’s scrutiny was inappropriate, although a later determination could itself be challenged if reached by a flawed process.

5. Regulation 18(4) of the Provision of Services Regulations 2009, implementing article 13.2 of the Directive, limited charges to the reasonable and proportionate cost of the authorisation procedures and formalities. Those costs included administration, applicant vetting and investigation of licensees’ compliance, but not the cost of investigating and prosecuting unlicensed operators.

6. The Council was ordered to determine reasonable fees for the years ending 31 January 2007 to 31 January 2013 in accordance with the judgment, and to repay the difference between the sums paid and the fees determined. The precise final relief and costs were reserved for written representations.