Extreme Oyster & Anor v Guildford Borough Council

Section 16(1)(a) of the Licensing Act 2003 permits a landlord, and potentially other businesses with a sufficient nexus to the premises, to apply for a parallel or “shadow” premises licence. The application need not mirror an existing licence in every detail. The relevant question is whether the application concerns a category of licensable activity which the applicant’s business involves using the premises for. Differences in operating times, physical areas, door supervision or other conditions do not themselves defeat the statutory gateway. Any legitimate policy concerns should ordinarily be addressed at the substantive hearing. Whether a business has the necessary nexus, and whether it proposes to carry on the relevant business, are fact-sensitive questions. A licensing authority must also comply with its lawful delegation arrangements and policy.

Star Oyster Ltd owned two nightclub premises in Guildford and Extreme Oyster Ltd operated as Star’s trading company. The premises were occupied and licensed by Luminar Leisure Limited. Star and Extreme applied for eight parallel premises licences. Guildford rejected the applications at the threshold, concluding that the claimants did not satisfy section 16(1)(a) of the Licensing Act 2003.

The claim challenged the construction of section 16(1)(a), the effect of differences between the proposed and existing licences, the claimants’ proposed future use of the premises, the delegation of the decisions to a licensing officer, and the retention of application fees.

1. Outcome. The claim succeeded in substantial part. Applications 92057 and 105889 made by Star satisfied the section 16(1)(a) gateway and had to proceed to substantive determination. The decisions on the remaining Star applications and all Extreme applications were quashed and remitted for reconsideration. The fee issue was left undecided.
2. Construction of section 16(1)(a). A “shadow” licence is only a convenient description and has no special statutory status. The statutory gateway requires a sufficient nexus between the applicant’s business, the premises and the relevant licensable activities. It does not require the proposed licence to be identical, or materially identical in every respect, to the primary licence.
3. The court adopted a category-based approach derived from section 1 of the Licensing Act 2003. The decision-maker should ask whether the applicant carries on a business; whether that business involves use of the premises for licensable activities; which statutory categories of activity are carried on; and whether the application introduces a category not covered by those activities. An application may concern different operating times or conditions within the same category. It cannot pass through the gateway for a category, such as regulated entertainment, which is absent from the relevant existing activities unless the applicant itself proposes to carry on that category.
4. The fact that an application covers an area not co-terminous with a particular primary licence does not defeat the gateway, provided the area remains within premises used by the applicant’s business and the matching categories of activity are carried on under the relevant primary licences.
5. Proposed business. The court declined to add a further judicial gloss to “proposes”. Star’s case was independently affected by the decision-maker’s material mistake about the break clause in the lease. The court would have quashed the decision on that basis, but did not hold that an adverse decision on the alternative limb would automatically be irrational if based on accurate facts.
6. Extreme and delegation. Extreme’s more remote relationship with the premises did not automatically exclude its applications; the question was for the lawful decision-maker. Guildford’s reasoning was legally flawed. Further, because representations had been made on all applications and Guildford had not authorised the officer to determine the section 16 issue, the decisions breached the applicable delegation policy and legitimate expectation.