Council to appeal after High Court deals sex shop licence fee blow

Westminster City Council has said it intends to appeal a High Court ruling that it must repay licence fees paid by sex shops in Soho.

The challenge to the local authority's fee regime was brought by seven owners of 13 sex shops in Soho and Covent Garden.

The central element of their claim was that while a duly authorised licensing committee had determined the annual fee for sex shops for 2005/06 at £29,102, it had failed to determine a fee for any year thereafter. In January 2012 the committee set the renewal fee at £18,737.

The council submitted that the fee for 2005/06 was a rolling annual fee.

The claimants’ barrister, Philip Kolvin QC of Cornerstone Barristers, also argued that Westminster was prevented from making a profit from the licensing fee regime. This meant there should be an account of the fee income, with the claimants credited for any surplus.

Mr Justice Keith earlier this month found in favour of the sex shop owners. He also held that a change in the law in December 2009 – when the Provision of Services Regulations came into force – meant that for authorisation schemes covered by the regulations, enforcement costs could not be recharged to licensed operators.

The judge acknowledged that the claimants were the beneficiaries of Westminster’s enforcement of the system.

“Since they get much of the benefit of that enforcement, should they not have to pay for at least some of it?,” he said.

“I see the force of that, but it does not necessarily follow that those who benefit from a service provided by a local authority should have to pay for it. Many services are funded from the local authority's general fund, whether the source of that fund is the council tax paid by local residents or businesses or funding from central government, especially when the community as a whole benefits from that service.”

Mr Justice Keith added that the fact that Westminster had preferred over the years to use the licence fee to charge the operators of sex establishments for enforcing the system did not affect the proper interpretation of the 2009 Regulations.

The judge concluded that the claimants should be credited with the enforcement costs for 2010/11, 2011/12 and 2012/13.

Westminster was ordered to determine the fees from 2006/07 to 2012/13 and refund the excess of fees collected over the fees as determined.

Cllr Tony Devenish, Westminster’s Cabinet Member for Licensing and Public Health, said: “Naturally we are disappointed at this decision which we intend to appeal. Westminster City Council has always maintained that the use of licence fee income to enforce against illegal sex shops is a proper use of public money, protecting the quality of life for our residents and visitors including the global reputation of London.

“Enforcing against the illegal sex trade actually benefits those who are legitimate operators in the sex industry. With millions of extra visitors about to descend on London to celebrate the Jubilee and Olympics, it is critical people see the best face of our city. Since 1999 Westminster Council has closed 68 illegal sex shops. This is part of our determination to regulate the industry in Soho and ensure London is at its best ahead of this summer’s celebrations.”

See also: Counting the cost – Philip Kolvin QC explains the background to the case.