Transfers and Consent: a new Batch of Gremlins

ON THE PROPOSED SECTION 33A OF THE AIR WEAPONS AND LICENSING (SCOTLAND) BILL TO ALLOW “ANY PERSON” TO SEEK TRANSFER OF A PREMISES LICENCE UNDER THE LICENSING (SCOTLAND) ACT 2005

At Stage 2 of the Air Weapons and Licensing (Scotland) Bill, the Government inserted an amendment to introduce a new way of transferring a licence, under a new s.33A of the Act. This provision seeks to allow “any person” to apply to transfer a licence. This comes as a result of several years worth of grief from just about everyone involved in the licensing system in Scotland that the terms of s.34 of the 2005 Act are a dog’s breakfast and create considerable technical and practical difficulties. This culminated in submissions to the Parliament from the Law Society of Scotland licensing sub-committee and Institute of Licensing to plead for s.34 to be revised. I attended the Parliament in person to give evidence on behalf of the Institute of Licensing and raised the issue of transfers to the Local Government and Regeneration Committee face to face.

Someone listened and has sought to make a difference which is most welcome. We now have the proposed s.33A which dispenses with s.34 altogether and creates a new regime which I have repeated in full as follows:

48A Transfer of premises licences
(1) The 2005 Act is amended as follows.
(2) In section 33 (transfer of premises licence on application of licence holder)—(a) for subsections (1) to (3) substitute—
(1) Any person, other than an individual under the age of 18, may apply to the appropriate Licensing Board for the transfer of a premises licence to the person (such person being referred to in this section and section 33A as the “transferee”).
(1A) An application under subsection (1) must—
(a) specify the date on which the transfer is to take effect, and
(b) be accompanied by—
(i) the premises licence to which the application relates or, if that is not practicable, a statement of the reasons for failure to produce the licence, and
(ii) a written statement signed by the holder of the premises licence consenting to its transfer to the transferee (a “consent statement”) or, if that is not practicable, a statement of the reasons for failure to obtain the licence holder’s written consent.”,
(b) in subsection (4), after “constable” insert “, unless the Board must refuse the application under subsection (8A)”,
(c) in subsection (8), before paragraph (a) insert—
(za) the application is accompanied by a consent statement referred to in subsection (1A)(b)(ii),”
(d) after subsection (8) insert—
(8A) If the application is not accompanied by a consent statement referred to in subsection (1A)(b)(ii), the Board must refuse the application, unless the Board dispenses with the requirement for a consent statement under section 33A(4).”.
(3) The title of section 33 becomes ” Application for transfer of premises licence“.
(4) After section 33 insert—

33A Application for transfer: further provision

(1) This section applies where a Licensing Board receives an application under section 33(1) for the transfer of a premises licence.
(2) The Board must take all reasonable steps to give notice of the application to the premises licence holder.
(3) Subsection (4) applies where the application is not accompanied by a consent statement referred to in section 33(1A)(b)(ii).
(4) The Board may dispense with the requirement for a consent statement if satisfied that the transferee has taken all reasonable steps to contact the premises licence holder in order to obtain consent but has received no response.
(5) Where the Board decides under subsection (4) not to dispense with the requirement for a consent statement, the Board must give notice of the decision, and of the reasons for it, to the transferee.
(6) Where the Board decides under subsection (4) to dispense with the requirement for a consent statement the Board must hold a hearing under section 33(9) for the purpose of considering and determining the application.
(7) Where the Board grants the application, the transfer of the licence takes effect—
(a) on the date specified in the application in accordance with section 33(1A)(a), or
(b) where the Board grants the application after that date, on such date as the Board may determine.”.
(5) Section 34 (transfer on application of person other than licence holder) is repealed.

Licensing practitioners were encouraged that our pleas over transfers had been heard. Disappointed that submissions on surrender and provisional licences had been misunderstood and rebuffed, but still viewing this as a “win”. It may seem ungracious then to be critical of the proposed solution; but some of the gremlins we sought to despatch will not only continue to titter and cry havoc, but indeed the new s.33A may have the same impact as feeding such little monsters after midnight!

The crux of this whole issue is about securing the transfer of a licence to someone who has a legitimate right to hold that licence. Invariably, this is someone who has a legal right to occupy the premises. Section 33A creates an obligation to supply a letter of consent from an existing licensee and this is where the fun begins.

(A couple of asides: It should be noted that this is new in terms of primary legislation for alcohol licensing. Although in practice letters of consent are ubiquitous, there is no legal requirement for them. Secondly, the wording has been lifted from the Gambling Act 2005 but without regard to the interim effect procedure that Act allows, nor the “remedy” that Act caters for where a licence can be revoked where it is no longer used by the current licensee, so that a new one can be sought. The use of the Gambling Act wording is odd when the Government could have just as easily used the wording from the Licensing Act 2003 which would have avoided this additional drama)

THE SECTION 33A GREMLINS

Gremlin One: Any application for transfer under s.33A MUST be accompanied by the letter of consent or a statement as to the reasons for failure to obtain it. So even from the off there is a problem. Could a clerk reject an application as incompetent if the consent letter is not within, but a covering letter says it will be delivered under separate cover (which is not uncommon)?

Gremlin Two: The idea of specifying a transfer date is bound to cause a chuckle or two in some quarters. Licensing board processing times vary immensely so that idea that a date could be proposed, which the board would have regard to, is ignorant of that and indeed of conveyancing practice. And remember that under the same Bill boards will have 9 months to process a transfer! (Remember that this is lifted from the Gambling Act 2005, where specifying a date makes more sense when there is a provision for interim effect)

Stripe the Gremlin*: The big bad difficulty is that the proposals only allow a board to grant the transfer absent consent if the applicant has failed to contact the existing licence holder. What if the existing licence has been contacted but refuses to give consent out of spite or cannot give consent because they simply unable to do so?

Here are some examples.

Example A

A licence holder becomes insolvent. The insolvency practitioner is required to achieve best results for the creditors and that is likely to be by selling the business. The business cannot operate going forward without the licence and therefore the IP needs control of that licence. But it is the insolvent person or entity who, under s.33A as proposed, holds all the cards as it is they who hold the licence! The bankrupt could demand a “ransom” for the letter of consent which may expunge any value in the insolvency meaning any creditors will be even further out of pocket. Yet the licence holder no longer has legal capacity because of the insolvency or a right to the business or the premises from which the business operates. This perversely could find the insolvency practitioner having to pay the person who has become insolvent for the letter of consent. Section 33A leaves no room for the clerk’s discretion as to whether the IP could “step into the shoes” of the insolvent person and could result in arguments under insolvency law. These cases can be very messy. Why not have a clear and simple solution?

Example B

A tenant leases a shop from a bank, who own the building within which the shop is situated. The tenant is evicted by the bank as he has (a) not paid the rent [or] (b) been caught selling alcohol to children [or] (c) any number of other reasons. He now has no legal right to occupy the premises. The bank lines up another tenant and a lease is entered into. The old tenant, who no longer has any right or say over the property, with-holds consent out of spite. The bank, or indeed the new tenant, cannot get the licence and can never get the licence because the old tenant is wilfully with-holding consent. What happens now? There is no remedy for the bank or the new tenant. They cannot apply for a new licence because you cannot have two licences for one premises. You are then left with having to get the original licence revoked. A review request much be based on a breach of conditions or one of the five licensing objectives. Which objective is engaged here?

Example C

A licence holder is declared mentally incapable as a result of a medical condition. That person cannot use s.33 of the Act as they have no legal capacity to do so, and someone seeking to take over the licence under the new s.33A cannot get consent from that personfor the same reason. What then? We are left with common law arguments about whether an appointed guardian can make a s.33 application?

Conclusion: a Further Appeal to the Government

In each of these examples each clerk and each board will have their own views. Why not just sort it out on the face of the Act to avoid this sort of legal complexity and headache? In short compass, there should be a power for a licensing board to allow a transfer absent consent where they are satisfied that is correct to do so. Licensing boards across Scotland already allow transfers absent consent where it is justifiable, for example where proof of right to occupy is produced such as a land certificate or lease when a landlord is retrieving a licence from an erstwhile tenant who has disappeared into the night.

*For those unfamiliar with the reference Stripe is the name of the mohican boasting “leader” of the little movie monsters and therefore the protagonist of most of their bedevilment.

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About Stephen McGowan

Leading Scottish licensing solicitor at TLT. Chairman of BII Scotland.
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