Street traders lose legal challenge over “innovative product” criterion imposed by council

A High Court judge has dismissed a legal challenge brought by street traders over a council's implementation of a regulatory framework that requires stall owners to sell products not readily available on the high street.

In Poole & Anor, R (On the Application Of) v Birmingham City Council [2021] EWHC 1198 (Admin), HHJ David Cooke dismissed all five grounds brought by the claimants and said it would be "wholly disproportionate to quash the entire policy".

The case was brought by two Birmingham street traders who are the chair and secretary of the Birmingham Street Traders Association (the BSTA), an informal and unincorporated group.

The claimants' challenge of the Birmingham City Council Street Trading Policy 2020, centred on a key consideration which reads:

"The types of goods allowed to be sold will be considered on a pitch by pitch basis and specified on the consent. The quality of goods and innovative approach will be considered…

Innovative products refers to goods that are not readily available within the High St market place…"

According to Section 1 of Birmingham's policy, the framework is intended to create a street trading environment "which is sensitive to the needs of the public and businesses, provides quality consumer choice and contributes to the character and ambience of the local environment whilst ensuring public safety, preventing crime disorder and nuisance".

The claimants argued that the policy should be quashed and remitted on the following grounds:

1. The Innovative Products Criterion (“IPC”) was in breach of Regulation 15 of the Provision of Services Regulations 2009
2. The IPC was in breach of Regulation 21
3. The IPC was unclear and dissuasive
4. The general conditions were not reasonably necessary
5. The IPC was contrary to the statutory purpose of the Local Government (Miscellaneous Provisions) Act 1982.

On the first ground, Sarah Sackman, counsel for the claimants, argued that the "Innovative Products Criterion" (the IPC) laid out in the policy breached Regulation 15 (2)(b) of the 2009 Regulations, which says that any criteria set out in an authority's authorisation scheme must be "justified by an overriding reason relating to the public interest".

Ms Sackman said that the IPC was a criterion on which the consent policy was based but that it was not "justified by an overriding reason relating to the public interest". It could not be so justified, she said, because it had an economic objective, and ECJ case law (Commission v Spain [2011] 2 CMLR 50) established that "purely economic objectives cannot constitute an overriding reason in the public interest".

Considering this, Judge Cooke said: "Insofar as the ECJ has held matters to be excluded from the permissible scope of public interest on the grounds of pure economic consideration it has been considering much more serious and targeted measures directly bearing on the freedom of establishment of businesses across state boundaries in violation of (now) the TFEU."

He added: "The provision in question here is not such a measure; it is part of an overall package of considerations which are properly considered together since their application is one of combined evaluation by the Council rather than separate individual consideration.

"That package is plainly not in my view 'purely economic', though it is obvious that some or all of its components have economic effects, in the wide sense that they affect the way in which business is carried on or impose costs on businesses, or even in the almost as wide sense that Ms Sackman contends for."

Instead, the package is "predominantly concerned with other matters," Judge Cooke said, "such as the enhancement of the urban environment that are, in my judgment, equally plainly matters of proper concern for an authority such as the Council".

Judge Cooke rejected the argument that the IPC was not justified by a reason relating to the public interest.

On the second ground, the claimants submitted that the IPC amounted to a case-by-case application of an economic test making the granting of authorisation subject to an assessment of the appropriateness of the activity in relation to the economic planning objectives set by the competent authority, contrary to Regulation 21(1)(e) of the 2009 Regulations.

Secondly, Ms Sackman argued that the IPC created an indirect involvement of competing operators in the granting of authorisations, contrary to Regulation 21(1)(f).

According to Judge Cooke, Regulation 21 applies to an "economic test" assessing the "appropriateness" of an activity against "economic objectives" of the authority. But the council is not applying any economic test when it considers the IPC in relation to an application, Judge Cooke said, since "it does not consider the economic result of effect of selling the goods, either on the market as a whole or on other participants, but only whether they are different in some respects from others available locally." Judge Cooke rejected the argument.

Turning to the claim that competing operators could indirectly influence the granting of authorisations, Judge Cooke rejected the contention that the IPC was likely to be decisive in a significant number of cases.

He said: "In any particular application, it may or may not be relevant at all and if it is it will be a matter of chance whether it has any determinative effect on the outcome. In those circumstances, in my judgment, any connection between a competitor's actions and the outcome of an application is too remote and fortuitous for it to be considered that he is involved, even indirectly, in the making of the decision and I reject the argument to that effect." 

Ms Sackman's third ground argued that the IPC was not "clear", "unambiguous" "objective", or "transparent and accessible" contrary to Regulations 15(2) (d)(e) and (g), which made the application procedure "dissuasive" and "unduly complicate", contrary to Regulation 18(2).

Referring to Ground 3, Judge Cooke said that in his judgement there was nothing in these points.

He added: “It would be overinterpreting the Regulations and the [Services] Directive to require an absolute degree of certainty in advance as to the outcome of an application, such as the claimants in effect contend for. It is no doubt the case that to the extent the IPC comes in to consideration it involves an exercise in evaluation by the Council's officers, but so do many of the other criteria that are not objected to.

“It may be said that the drafting leaves something to be desired in that it states that ‘innovative approach’ will be considered, but then goes on to define (and refer in the assessment framework to) a different term, ‘innovative products’. But this is no more than the degree of inconsistency frequently encountered in all manner of documents and does not lead to any real difficulty in interpretation by the court or applicants as to what is meant - an "innovative approach" must mean selling ‘innovative products. The condition is sufficiently ‘clear’ and ‘unambiguous’.”

The final two grounds (4 and 5) were taken together by the judge. The claimant submitted that the 1982 Act has a limited statutory purpose, i.e., to regulate street trading in the interests of safety, the protection of the public and protection of public rights such as rights of traffic. As a result, anything beyond that, and in particular anything amounting to an economic objective such as influencing what goods are sold was outside that purpose and so unlawful, Ms Sackman claimed.

Judge Cooke said: "Certain of the conditions attached to consents are not, she says reasonably necessary for such a purpose and so not within the powers given to the Council under Sch 4. The statement of grounds seeks to attack the requirement of the policy that applicants must specify what goods they intend to sell and that the consent granted will be limited to sale of the specified goods as outside this purpose and a restriction on competition since no similar condition attaches to fixed shops.

"In relation to that, it sufficient [sic]  in my judgment to say that there is no foundation for such a statement of purpose whatever in the 1982 Act itself. On the contrary, the powers and discretions it creates are expressed in entirely general terms."

He added: “The requirement to specify the types of goods sold is, as is apparent from the policy and preceding documents, imposed because the Council wishes to ensure that street traders take adequate responsibility for ensuring that their goods are of minimum legal standards and are not, for instance counterfeit, and that their officers will have effective powers to enforce such matters.

“Pursuing such a purpose cannot be said to be outside the statutory purpose of the Act (and would be within even the limited purpose Ms Sackman argues for). It is no objection that there may be other measures available to enforce compliance with such legal standards, such as prosecution by trading standards officers. The Council is entitled to take the view that the possibility of revocation of a consent is an appropriate additional weapon in its compliance armoury.”

Judge Cooke dismissed the claim.

Concluding his judgment, he said: "In case the matter goes further however I should say that had I been with the claimants on any of the matters relating to the IPC, which was the principal focus of their claim, I would not have made an order quashing the policy as a whole, or quashing the decision to adopt it, but limited any remedy to a declaration that would have prevented the council from taking the IPC into account in any assessment of an application.

"Ms Sackman submitted that where a decision was found to be unlawful, the normal remedy is for the decision to be quashed and remitted so that it may be taken again lawfully. But questions of remedy are as she accepts discretionary, and it would in my judgment be wholly disproportionate to quash the entire policy because one small aspect of it was found to be unlawful. If the policy were quashed, the council would have no basis in place to regulate the existing consents or evaluate new ones, until it was able to put a new policy in place, which would likely entail the expense and delay of a further consultation process.”

Judge Cooke added: "The policy would however be perfectly operable without the IPC, which is unlikely in any event to come into consideration until 2022 when existing consents fall to be renewed and there may be competition for pitches. By that time, the policy will have been reviewed and, if it had been found that the IPC was unlawful, it would no doubt be removed during any such review."

Jonathan Manning of 4-5 Gray’s Inn Square appeared for Birmingham City Council.

Sarah Sackman and Conor Fegan of Francis Taylor Building appeared for the claimants, instructed by Simpson Millar.

Adam Carey