Star Pubs & Bars Ltd v Pubs Code Adjudicator

An appeal against a financial penalty under section 58(3) of the Small Business, Enterprise and Employment Act 2015 permits challenge to the reasons for selecting a penalty, including the assessment of seriousness, harm and awareness. It does not permit challenge to the underlying findings that the Pubs Code was breached, or to facts essential to those findings. Such challenges must be brought by judicial review.

Specific disclosure may be ordered where necessary for the fair disposal of the appeal. Confidentiality and the public interest in preserving regulatory investigations must be balanced against the appellant’s right to defend itself. A confidentiality ring may provide an appropriate solution.

Star appealed under section 58(3) of the Small Business, Enterprise and Employment Act 2015 against a £2 million penalty imposed by the Pubs Code Adjudicator for alleged breaches concerning stocking requirements and market-rent-only proposals.

At a preliminary hearing, the court considered applications to amend the appeal, adduce evidence, obtain disclosure, define the scope of the statutory appeal, and determine whether the appeal should proceed by rehearing or review. Star had also brought a protective judicial review claim challenging findings in the investigation report. The central issue was the boundary between an appeal against the imposition or amount of a penalty and judicial review of the underlying investigation findings.

1. Applications. Star was granted permission to amend its notice of appeal because the proposed procedural-fairness ground had a real prospect of success. It was arguable that section 54 required an opportunity to comment on a proposed financial penalty and its reasons before imposition. The alternative common-law fairness and Article 1 of Protocol 1 arguments also had a real prospect of success. Permission was granted to rely on Mr Mountstevens’s witness statement under CPR 52.21(2)(b).

2. Disclosure. The applicable test was whether disclosure was necessary for fairly disposing of the proceedings. Relevance alone was insufficient. The court had to balance the public interest in the Pubs Code Adjudicator’s ability to obtain candid information, including the risk of a chilling effect, against Star’s right to a fair and full first judicial hearing. The anonymised tenant evidence was directly relied on in assessing the scale of harm, which was one of the three essential foundations of the penalty decision. Disclosure was therefore ordered within a confidentiality ring limited to Star’s external lawyers and one or two in-house lawyers. The arrangement protected commercial personnel from learning the tenants’ identities while enabling Star to investigate and answer the evidence.

3. Scope of the statutory appeal. Sections 53 to 58 establish discrete stages: investigation, report, selection of enforcement measure, and penalty. Section 58(3) confers a right of appeal against the choice to enforce by financial penalty and against its amount. The “grounds” for imposing the penalty include the assessment of the nature and seriousness of the accepted breaches, harm, and awareness, including whether conduct was deliberate or wilfully negligent.

   The appeal does not permit a challenge to whether the pub-owning business committed the breaches. Nor may it challenge facts essential to the findings of breach, where setting them aside would fundamentally undermine those findings. Such matters fall to judicial review. The court did not attempt to disentangle the pleaded matters at this preliminary stage and directed the parties to clarify which issues belonged to the appeal and which to judicial review.

4. Review or rehearing. The question whether the appeal should proceed by review or rehearing was not determined preliminarily. Both forms require the appellant to establish that the lower decision was wrong or unjust because of serious procedural irregularity. A rehearing is not invariably a rehearing in the fullest sense and may merge with review. The appropriate decision was best left to the court hearing the substantive appeal after considering all relevant material.

Issues 1 and 2 were granted, disclosure was ordered on Issue 3, Issue 4 was determined as stated above, and Issue 5 was deferred.

This was a preliminary hearing in an appeal to the Administrative Court under section 58(3) of the Small Business, Enterprise and Employment Act 2015. The judgment does not state that the appeal itself had previously been determined.