Casino licensing and collateral challenges

Gambling iStock 000001239081XSmall 146x219A decision from the High Court has wide significance regarding later challenges to licence grants through the medium of statutory reviews, writes Philip Kolvin QC. The judgment is of importance to public lawyers generally.

The High Court has delivered an important judgment in the field of casino licensing. While the judgment in R (Clockfair Limited) v Sandwell Metropolitan Borough Council and Grosvenor Casinos Limited [2012] EWHC 1857 (Admin) has ramifications for licensing practitioners, it has a wider significance for public lawyers in the complex field of collateral challenge.

The facts were that Grosvenor had held licences for a bingo club and a casino at its premises in Oldbury under the Gaming Act 1968. It operated the former but not the latter licence.

On transition to the Gambling Act 2005 it applied successfully to convert its licences to bingo and casino premises licences respectively. It continued to operate its bingo club but not its casino.

In 2010, Clockfair, a local casino operator, applied to review the casino licence on the grounds a) that the licence had not been used and b) that the original grant had not been lawful since section 152 of the Gambling Act precludes the issue of two premises licence for a single premises. Grosvenor responded by applying to transfer the licence to another premises. Both applications were listed on the same day before separate licensing sub-committees.

Upon hearing of the review, the Council’s legal advisor held that section 152 did not preclude the issue of a second licence, but that in any event since no legal challenge had previously been made to the licence the ground of review amounted to an impermissible collateral challenge. I.e. having not challenged the original grant by way of judicial review, a challenge by way of statutory review was an impermissible collateral challenge. He accordingly forbade the parties from making representations based upon the illegality of the original grant. The Council dismissed the application for review and granted the application to transfer the licence.

Clockfair appealed to the Magistrates’ Court, which dismissed the appeal, holding that section 152 of the Act was irreconcilable with section 164 of the Act, which obliges an authority to issue a licence it had granted. He also held that it was too late to challenge the original grant, since the time for judicial review had passed.

The High Court (Mr. Justice Lloyd Jones) allowed Clockfair’s appeal. He held that section 152 forbade the issue of a second licence. The Respondents argued that section 152 governed new grants but not grandfathered licences. The Judge disagreed: it governed both. Further, while the duty in section 164 generally obliged an authority to issue a licence it had granted, this was to be read subject to the prohibition in section 152 which governed the particular situation where, at the moment of issuing a licence, there is already a licence in existence on the premises.

While the Respondents had placed reliance on non-statutory guidance issued by the Department of Culture Media and Sport purportedly amounting to a guarantee that gaming licences under the former legislation would be grandfathered into premises licences under the new Act, the Judge held that this only dealt with the general situation and not the particular case where there was already a licence on the premises. He also held that he was doubtful as to the extent that non-statutory guidance could assist in the interpretation of statutory provisions.

Importantly for licensing lawyers, he did not accede to an argument that reviews could not be used to call into question the validity of the initial grant. Rather, the provenance and pedigree of licences were material matters for consideration at the review stage.

Of great importance to administrative lawyers generally is the Judge’s acceptance of Clockfair’s submission that the rule against collateral challenge does not extend to preventing a statutory body with express statutory power to revoke or modify an authorisation from examining the pedigree of the authorisation.

Mr. Justice Lloyd-Jones quashed the decisions and remitted the applications for redetermination, making it clear that the weight of the consideration that the licence had been invalidly issued was a matter for the licensing authority. He rejected the Respondents’ suggestion that the authority, having already weighed other factors in the balance, should now only consider that additional individual factor. He held that the authority should consider all material factors in the round.

Philip Kolvin QC is a barrister at Cornerstone Barristers. He represented Clockfair in this case.