Calling time

The transitional period for the Licensing Act is coming to an end. Richard Arnot reports on the implications for property lawyers

While licensing lawyers will be familiar with the act, property colleagues might not yet appreciate the implication of the changes.

The topic of the moment is the increasing concern over the number of affected businesses that have failed to appreciate the importance of what is about to befall them. The act provides for three significant dates that create the timetable for change. The transitional period, during which all existing licences must be converted to the new style of licences, began on 7 February this year. It was expected that local authorities would be overwhelmed with applications for conversion, but unfortunately, the excitement felt by those of us that perhaps have an unhealthy interest in all matters legal was not universally shared, and weeks passed with very little activity.

A number of local authorities had received only a handful of applications by the beginning of April. It appears that the licensed industry adopted a mañana attitude to the process and attempts to instill a sense of urgency and drama have fallen on deaf ears.

The second significant date was last Saturday (6 August). This was the date upon which the ‘grandfather rights’ period of the transitional process ends. Applications received in respect of existing premises during the aforementioned period should, in theory, be merely rubber-stamped and applicants will receive their new licence in exactly the same terms as their current justices licence. The application process is relatively simple. The significance of this, however, appears to have escaped a large proportion of the industry. Newcastle City Council has received less than half of the applications it would have expected and it would appear that we are not doing much better nationally. It is anticipated that a significant number of licensed premises will fail to take advantage of grandfather rights. The consequences, both in time and costs, will be substantial.

By common consensus, the first licensing act appeared in around 1490. The authority to license the sale of alcohol was given to local magistrates who, for the past 500 years, have been responsible for giving licences to those who wish to sell alcohol. Licensing acts have come and gone over the years, the tenor usually reflecting the attitude towards to alcohol prevalent at the time. However, the system has remained, in principle at least, more or less the same. The Licensing Act 2003, however, gives responsibility for the regime to local authorities. This was probably the most hotly contested proposal when the changes were being debated. There was universal concern that this would not be helpful, but the Government has been determined. Those of us with experience of dealing with local authorities in regard to public entertainment licensing remain to be convinced this will provide a system that is efficient and flexible.

Current legislation, principally the Licensing Act 1964, provides that a justices licence is granted to an individual for a particular premises. Those wishing to sell alcohol must present themselves to the magistrates court, which will decide whether or not they are capable of being sufficiently responsible. The new act replaces the aforementioned single licence with two new types of licences.

The premises themselves will require a licence, called a premises licence, which authorises the provision of licensable activities. The Licensing Act 2003 does not deal exclusively with the sale of alcohol, it deals with a number of activities, including the provision of entertainment. The premises licence lasts indefinitely, unless suspended, revoked or surrendered. Interestingly, this licence need not be held by an individual. Companies can apply for premises licences. This has resulted in debate as to who, in particular circumstances, should apply. Tenanted estates have had to ask themselves whether they should be the premises licence holder or their tenant. Some have chosen to hold the licence, appreciating that were their tenants to be the licence holder they would have the authority to surrender the licence and, therefore divest the premises of the authority to sell alcohol. Others, however, have appreciated the inherent risks in holding the licence when they could be liable for offences committed on the premises.

From a property perspective, the new act has implications for those proposing to purchase or lease the premises that either are, or are to be, licensed. If an existing tenancy does not account for changes in the law, what are the implications for the landlord and tenant relationship? If premises are being purchased at the moment, has a premises licence been applied for? What protection would a tenant have if a landlord who holds a premises licence behaves in such a way that it could be jeopardised?

In addition, the Licensing Act 2003 provides for a system of personal licences. Instead of individuals holding a licence for particular premises, an application can be made by a suitably qualified person for a personal licence, which effectively confirms that they have the necessary experience to sell alcohol.

Every premises licence must nominate an individual, known as a designated premises supervisor, who can be held to account should there be difficulties. This person must have a personal licence. Indeed, every premises licence will be subject to the mandatory condition that the sale of alcohol must be specifically authorised by a personal licence holder. This does not necessarily mean that a personal licence holder must be present throughout trading hours, although some local authorities are interpreting this more strictly than others, but there must at least be a personal licence holder present most of the time. Some licensed businesses are applying for personal licences for all of their serving staff, while others are applying simply for the designated premises supervisor. Those that are licensees under the current regime can take advantage of grandfather rights, provided their application was made before the 6 August. Again the number of applications has been underwhelming.

If applications are late then the process for conversion becomes more complicated and potentially troublesome. Instead of serving the relevant local authority and police force with an application, applications must be served on at least seven statutory authorities, advertised in the press and on the premises. This obviously could result in an application being objected to. It is not uncommon for licensed premises to have the occasional dispute with their neighbours and the potential for difficulties for some premises is a concern. If objections are received, a hearing must be convened by the local authority, and the application for premises which may have traded for many years, will be considered. There is no absolute guarantee that a licence would be granted.

If a premises licence has not been granted by 24 November, which is the end of the transitional period, then the authority to sell alcohol ceases. The premises can no longer engage in licensed activities and if they do those involved will be liable to a fine of up to £20,000 and/or six months in prison.

Richard Arnot is a partner and head of licensing at Mincoffs