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Cite as: [2000] ScotSC 32

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BLUSINS LIMITED v. CITY OF DUNDEE LICENSING BOARD [2000] ScotSC 32 (27th November, 2000)

B384/99 BLUSINS LIMITED v DUNDEE CITY LICENSING BOARD

Hearing 8th. August, 2000.

 

Dundee, 27th. November, 2000. The sheriff, having resumed consideration of the cause,

Sustains the first crave of the summary application and in terms thereof, reverses the respondents' decision of 21st. October, 1999; ordains the respondents to grant forthwith the application for the renewal of the public house licence for McDaniels, 34/36 Whitehall Crescent, Dundee; assigns as a date for hearing parties on the expenses occasioned by this application.

 

 

 

 

Statutory Provisions:

Local Government (Scotland) Act, 1973, as amended.

Section 56:-

"(1) Subject to any express provision contained in this Act or any Act passed after this Act, a local authority may arrange for the discharge of any of its functions by a committee of the authority, a sub-committee, an officer of the authority or by any other local authority in Scotland.

(2) Where by virtue of this section any functions of a local authority may be discharged by a committee of theirs, then, unless the local authority otherwise direct, the committee may arrange for the discharge of any of those functions by a sub-committee or an officer of the authority.................

(14) References in this section.............. to the discharge of any of the functions of a local authority include references to the doing of anything which is calculated to facilitate, or is conducive or incidental to, the discharge of any of those functions."

 

Licensing (Scotland) Act, 1976, as amended.

Section 1.

" (1) For the administration of licensing with respect to alcoholic liquor on and after 1st.

July, 1977, Scotland shall have licensing boards constituted in accordance with the

provisions of this section.

(2) There shall be a separate licensing board for-

  1. the area of each council which is not divided into licensing divisions under section
  2. 46(1) of the Local Government (Scotland) Act, 1994, and

  3. each licensing division.
  1. Subject to subsections (5)(5A)(9) and (13) below, a licensing board shall consist of

not less than one-quarter of the total number of members of the of the council.....................

(5A) In no case shall a licensing board consist of less five members of the council.

 

Section 16(1)

" It shall be competent for any of the following persons to object in relation to any application to a licensing board for the grant (including the provisional grant) renewal or permanent transfer of a licence, namely:-

(f) a local authority for the area in which the premises are situated.

Section 17(1)

A licensing board shall refuse an application of the type described in subsection (2) below if it finds that one or more of the following grounds for refusal, being competent grounds, applies to it-

  1. that the applicant, or the person on whose behalf or for whose benefit the applicant will manage the premises, or, in the case of an application to which section 11 (applications by persons other than natural persons) applies, the applicant or the employee or agent named in the application is not a fit and proper person to be the holder of a licence............

Section 18.

  1. A licensing board shall within 21 days of being required to do so under subsection (2) below give reasons for arriving at any decision mentioned in section 5(2) of this Act.
  2. Reasons for decisions referred to in sub-section (1) above may be required to be given by the board in writing on a request being made to the clerk of the board, not more than 48 hours after the decision is made, by the applicant or, as the case may be, by the holder of a licence, or by any objector, or by any complainer who appeared at the hearing.

Section 39

(4) The sheriff may uphold an appeal under this section only if he considers that the licensing board in arriving at its decision-

  1. erred in law;
  2. based its decision on any incorrect material fact;
  3. acted contrary to natural justice; or
  4. exercised its discretion in an unreasonable manner.
  1. On upholding an appeal under this section the sheriff may -
  1. remit the case with the reason for his decision to the licensing board for reconsideration of its decision; or
  2. reverse or modify the decision of the licensing board."

 

Local Government (Scotland) Act, 1994.

Section 153 (1).

" For any financial year, the Secretary of State may by regulations prescribe that the amount payable as non-domestic rate in respect of any lands and heritage shall be such amount as may be determined in accordance with prescribed rules."

 

Human Rights Act 1998, Schedule 1 Art. 6

"1. In the determination of his civil rights and obligations........... everyone is entitled to a fair and public hearing by an independent and impartial tribunal established by law."

Statutory Instrument:

The Non-Domestic Rates (Levying)(Scotland) Regulations 1999

Paragraph 7.

" Where the notional liability in respect of any lands and heritages to which this Part applies and a day in the relevant year is-

  1. more than their upper transitional limit for that day (ascertained in accordance with regulation 9 below), the amount payable as rates in respect of those lands and heritages and that day shall, subject to Part V below, be that upper transitional limit;
  2. less than their lower transitional limit for that day (ascertained in accordance with regulation 10 below), the amount so payable shall, subject to that Part, be that lower transitional limit.

Paragraph 8.

The notional liability in respect of any lands and heritages to which this Part applies and any day shall be calculated in accordance with the formula -

RV x APF

366

where-

RV is the rateable value for those lands and heritages for that day; and

APF is the appropriate poundage figure, being

  1. 0.48, where those lands and heritages have a rateable value of less than £10,000 on 1st. April 1999; and
  2. 0.489, in any other case."

 

Cases Referred to:

Art Wells Limited t/a Corals v Glasgow District Licensing Board 1988 SCLR 531

Associated Provincial Picture Houses Limited v Wednesbury Corporation [1948] 1KB 223

Attorney-General v Guardian Newspapers Limited [1987] 1WLR 1248

Brown v Executive Committee of Edinburgh District Labour Party 1995 SLT 985

Derbyshire County Council v Times Newspapers Limited [1992] QB 770

Din v City of Glasgow District Licensing Board 1996 SLT 363

Fereneze Leisure Limited v Renfre District Licensing Board 1992 SLT 604

GA Estate Agency Limited v City of Glasgow District Council 1991 SLT 16

Kieran v Adams 1979 SLT (Sh. Ct.) 13

Law v Chartered Institute of Patent Agents [1912] 2 Ch. 276

Leisure Inns (U.K.) Limited v Perth & Kinross District Licensing Board 1993 SLT 796

Loosefoot Entertainment Limited v City of Glasgow Licensing Board 1991 SLT 843

Lorimers Breweries Limited v City of Glasgow District Licensing Board Glasgow Sheriff Court, 20 October, 1980 (unreported)

Low v Kincardineshire Licensing Court 1974 SLT (Sh.Ct.) 54

Mahmood v West Dunbartonshire Licensing Board 1998 SCLR 843

R v Birmingham Licensing Planning Committee ex parte Kennedy [1972] 2QB 140

R v Bowman [1898] 1QB 663.

R v London Borough of Southwark ex parte Bannerman 22 H.L.R. 459

R v Secretary of State for the Home Department ex parte Brind [1991] AC 696

R v Sheffield Confirming Authority ex parte Truswell's Brewery Company Limited [1937] 4 All E.R. 114

T, Petitioner 1997 SLT 724

Tennant v Houston 1987 SLT 317

Text Books :-

Licensing Law in Scotland : J.C. Cummins esp. page 104 and 291

Stair Memorial Encyclopaedia Volume 14 para. 454.

Administrative Law; Wade & Forsyth esp. pages 415 & 416.

 

NOTE

This process was an appeal by way of summary application brought under Section 39 of the Licensing (Scotland) Act, 1976, as amended. In particular, it was an appeal against the respondents' refusal to renew a public house licence for premises known as McDaniels at 34/36 Whitehall Crescent, Dundee. The respondents are the relevant licensing authority for the City of Dundee. It is a matter of agreement that on 21st. October, 1999 the appellants' application for the renewal of the public house licence for the said premises was refused. A Statement of Reasons for the decision was requested and provided by the respondents, all in terms of section 18 of the foresaid Act, a copy of which was lodged in process and incorporated into the pursuers' pleadings brevitatis causa. The Statement of Reasons, in turn, referred to a letter of objection dated 12th. October, 1999, written by the Revenues Manager of Dundee City Council, alleging that Kathleen Robbie, who was the appellants' nominee to be responsible for the day to day running of the premises, was not a fit and proper person to be the holder of a licence, which the nominee is statutorily required to be in terms of Section 17(1)(a). The crux of the objection was that Mrs. Robbie was a director of both Blusins Limited, the appellants, and Hillerod Limited and her husband was the company secretary of both these companies. These companies owed Dundee City Council £26,141.52 in respect of what were described as "unpaid Non Domestic Rates." It was alleged that the companies, Graeme Robbie, the husband of Kathleen Robbie and said Mrs. Robbie were all connected and it was suggested that she, in effect in cahoots with her husband, was involved in a scheme to avoid paying rates. Accordingly, she was not a fit and proper person to be the holder of a licence. The respondents went further and, in a schedule, supplied details of various companies and the involvement of Mr. and Mrs. Robbie in these companies, which companies were said to have a history of non-payment of rates. In respect of the present appellants, the schedule demonstrated that between October, 1995 and March, 1999 they had accumulated a deficit so far as concerns their liability to pay business rates to Dundee City Council of £21,435.29. Further, there was a history of companies called Firmalt Limited, which had had its registered office at 34 Whitehall Crescent, Dundee (the address of the public house known as McDaniels) and whose company secretary was listed as Robbie & Co and sole director was Rose Easson and Ecofirm Limited, whose registered office address was also said to be 34 Whitehall Crescent, Dundee, whose company secretary was Graeme Robbie and whose directors were Graeme and Kathleen Robbie, both of which companies had ceased to trade, leaving outstanding rates which could not be collected, of a total figure in excess of £13,000. It was further suggested that the appellants had "sub-let" the public house premises which were the subject of this application to a company called Assetfair Limited, whose registered office is at 134 Douglas Street, Glasgow, but whose company secretary is Robbie & Co and sole director is Graeme Robbie. It was said in the note of objections that Assetfair Limited had the current non-domestic rates liability at the time of the application, in respect of the public house premises, and it was further said that that company had an outstanding liability to Dundee City Council as the rating authority of £3,591.40. The point was further made that, associated with the application for the renewal of the licence, was an application for its permanent transfer to yet another company called Hillerod Limited, which had its registered office at 42 Dudhope Crescent Road, Dundee and whose company secretary was Graeme Robbie and sole director was Kathleen Robbie, though, given that Assetfair Limited appeared to be running the business in the public hou

According to the Section 18 Statement of Reasons, the solicitor who had represented the appellants at the respondents' meeting on 21st. October, 1999 when the application was being considered, stated that any member of the Licensing Board who was also a member of the Finance Committee should disqualify himself from participation in the consideration of the application. I was informed that all the members of the respondents on the particular occasion were, as it happens, also members of Dundee City Council Finance Committee. The respondents were advised by the solicitor for the City Council who was present that, in his opinion, they should only not participate if they had been involved in the stating of the objection. That latter advice was accepted and no member of the respondents disqualified himself. The City Council Revenues Manager then addressed the respondents, the local authority being a competent objector in terms of Section 16(1)(f) of the 1976 Act, as amended, to the effect that there were a number of companies with the same people behind them, namely Graeme and Kathleen Robbie. These companies did not pay rates due to the Council. They appeared to "move themselves around" and as soon as the Council "think they know where they are to collect the amounts due, they move again." Since the objection was lodged, £4,489.12 had been paid by Assetfair Limited leaving £3,591.40 outstanding and a total unpaid in respect of the other companies listed in the schedule of around £21,000. Mrs. Robbie's involvement with these companies "in the deliberate avoidance of paying these debts" made her "not a fit and proper person to hold a licence."

According to the Section 18 letter, Mr. Muir, Solicitor, Dundee, who had appeared for the appellants before the respondents' meeting of 21st. October, 1999, had claimed not to understand the meaning of the objection and queried whether what was being suggested was that a person with debt was not a fit and proper person to hold a licence. In any event, Mrs. Robbie did not owe any money to Dundee City Council. Though the Council Finance Department had gone back five years and examined a number of companies and the involvement in these companies of Mr. and Mrs. Robbie, there was no documentary evidence to prove that there was anything fraudulent in the way their companies had conducted their business. If there was a deliberate policy to defraud creditors, then the "proper forum for that" was with the police or procurator fiscal. There were no complaints about the running of the premises. This was "a heavy-handed attempt" to get money from Mrs. Robbie. There was nothing illegal in a company ceasing to trade. If there was any impropriety that was a matter for "Companies House." There were no criminal charges against Mrs. Robbie and there never was any intention to defraud creditors. There are explanations for the "collapse" of these companies "and this happened for accountancy and tax reasons." " Directors," said Mr. Muir, " do not set the policy of a company; rather they follow the instructions of the shareholders. It is not at the behest of directors as to when a company ceases to trade. It certainly does not mean they are unfit to hold a licence. The rates due by the present company were paid on 12 October 1999 and Mr. and Mrs. Robbie would give their full co-operation to try to recover money from the other companies. However there was no way the companies could be resurrected and pay over £26,000."

In amongst the foregoing passage, much of which has the appearance of disingenuousness, it is interesting to observe that, in this context, Mr. Muir was apparently instructed to give undertakings on behalf of both Mr. and Mrs. Robbie.

Mr. Muir had been asked by the respondents' chairwoman why the various companies had ceased trading. While he responded to the question, it does not appear to me that the answers given could be or were considered sufficient.

The City Council's Revenue Manager responded that there was a long history of the Robbies operating companies which did not pay their debts. He was not saying that anyone who was in debt was not a fit and proper person to hold a licence. He was, however, trying to demonstrate that the Robbies had so managed the affairs of their companies so as to avoid paying debts.

Mr. Muir retorted that this was not a licensing issue, it not being the function of the Licensing Board to recover rates.

Having considered these competing submissions, the respondents decided unanimously that Mrs. Robbie was not a fit and proper person to be the holder of a licence. There seemed to be a history of companies involving Mr. and Mrs. Robbie incurring debt and ceasing to trade before the debt could be recovered. It was noted that Mrs. Robbie was a director in only one of the three companies which had ceased to trade but there was patently a close working relationship between Mr. and Mrs. Robbie. Their sequence of apparent corporate disasters appeared to be more than "coincidence or misfortune." The recent rates payment by Assetfair Limited and the appellants appeared to have been triggered by the objection to the present application. Otherwise, the pattern appeared to be of a company being set up, ceasing to trade and then being replaced by another company after leaving unpaid debt. Rates are a community debt and to be involved in the conduct of business over a long period of time to avoid paying such a debt reflected adversely upon Mrs. Robbie's fitness to be the holder of a licence. The respondents accordingly refused the application on the basis that Mrs. Robbie, as the person proposed to be responsible for the day to day running of the premises, was not a fit and proper person to be the holder of a licence, which is a valid ground for refusal in terms of section 17(1)(a) of the 1976 Act, as amended.

In Art. 3 of Condescendence in their summary application, the appellants averred that the respondents had acted contrary to natural justice, a potentially valid reason for an appeal to the sheriff in terms of Section 39(4)(c) of the Act. This related to the refusal of members of the City Council Finance Committee sitting on the appellant's board considering this application to disqualify themselves. It was averred that natural justice required that any member of the respondents should not be, nor appear to be, a judge in a matter in which they had an interest. It was further averred that "Members of the Board who had sat on the City Council's Finance Committee when non-domestic rates were fixed or otherwise discussed," had an interest and should have disqualified themselves, as should any member of the City Council Finance Committee "at the time the objection was lodged." It was averred that the "circumstances were such as to create in the mind of a reasonable person the suspicion that the Board may not be impartial."

In Art. 4, the appellants averred that the respondents, in refusing the appellants' application, had erred in law. Again, that is a potentially valid basis for an appeal, in terms of Section 39(4)(a). Two bases for error in law were averred. First, it was suggested that the issue which the respondents should have been considering was the fitness of the appellants, and not their Section 11 nominee, to be the holder of a licence. The respondents had, in effect, conflated the alleged failures of Mrs. Robbie, her husband and companies with whom they had been associated, with unfitness on the part of Blusins Limited, without considering the record of Blusins Limited. Secondly, there had been no information before the respondents about the authority of the City Council's Revenue Manager to initiate an objection to the respondents and to represent the interests of the local authority thereanent. It was alleged that it was not within the area of responsibility designated to him by the local authority. The first of these two issues was not argued before me. It may very well be the case that the respondents ought to have considered the fitness of the appellants to be the holders of a licence, but they did not. It does not mean that they were not entitled to consider the fitness of the nominee. On the contrary, they have a statutory duty to do so in the light of an objection to her fitness.

In Art. 5, it was averred that the respondents had exercised their discretion in an unreasonable manner in refusing the application, yet another potentially valid basis for an appeal, this time in terms of Section 39(4)(d). It was averred that "no reasonable Board properly instructed could have concluded on the information before the Respondents that the Applicants were not a fit an proper person to be the holder of a liquor licence." In any event, Mrs. Robbie owed no money to the City Council, no documentary evidence had been produced relating to any alleged conspiracy, Mrs. Robbie had only been a director of one company referred to in the objection, there was no basis for concluding that she was involved in the conduct of the business over a long period of time to avoid paying rates, there was no specification of the nature of the alleged close business relationship with her husband and in the operation of companies which ceased to trade leaving rates unpaid; in particular, there was no specification of the part played by her in the operation of Holburn SA, Firmalt Limited and Assetfair Limited which had resulted in the avoidance of rates. There was no basis for concluding that she had any culpability in the matter.

Finally, in Art. 6, it was submitted that the respondents had proceeded on an incorrect material fact, another potentially valid ground for objection, this time in terms of Section 17(4)(b) of the 1976 Act. The incorrect material fact was said to be the respondents proceeding "on the basis that there was a history of companies connected to Mrs. Robbie incurring debt and ceasing to trade before it was paid." That, with respect, does not seem to me to be a fact at all, but a conclusion. It was further averred that "the respondents proceeded on the basis of the conspiracy alleged by the council. There was no such conspiracy. Nor was there any proper basis to entitle a reasonable Board to conclude that there was such a conspiracy involving Mrs. Robbie." Again, it does not seem to me that anything in these averments is a fact as opposed to a deduction or inference to be drawn from facts.

Counsel for the appellants, having set the scene by narrating the background, intimated that there were four grounds upon which he intended to argue that the appeal should be allowed. He first submitted that the respondents had erred in law in taking account at all of the objection by the Revenue Manager of the City Council. In his submission, this was not a valid objection. He conceded, as he was obliged to, that the local authority for the area in which the licensed premises were situated was a potentially competent objector, in terms of Section 16(1)(f) of the Act, but he then pointed to the terms of sub-section (2) pointing out what was required of a competent objector, specifically that the objection should be in the form of a written notice and should be lodged with the clerk to the board not less than seven days before the date of the hearing, that it had to specify the ground of objection and that it had to be signed "by the objector or his agent."

Counsel directed me to the text of Licensing Law in Scotland by Mr. J.C. Cummins, especially page 104 and to what he submitted was the analogous position of chief constables. According to the text, in Lorimer's Breweries Ltd v City of Glasgow District Licensing Board Glasgow Sheriff Court, 20 October, 1980, unreported, it was held that an assistant chief constable who had signed a letter of objection could competently do so as the chief constable's agent in terms of section 16(2). He did not refer me to the actual decision. He then directed me to Section 56 of the Local Government (Scotland) Act, 1973, which provides, so far as relevant:-

"(1) Subject to any express provision contained in this Act or any Act passed after this

Act, a local authority may arrange for the discharge of any of their functions by a

committee of the authority, a sub-committee, an officer of the authority or by any

other local authority in Scotland.

  1. Where by virtue of this section any functions of a local authority may be discharged

by a committee of theirs, then, unless the local authority otherwise direct, the

committee may arrange for the discharge of any of those functions by a sub-

committee or an officer of the authority.

  1. References in this section ..... to the discharge of any of the functions of a local

authority include references to the doing of anything which is calculated to

facilitate, or is conducive or incidental to, the discharge of any of those functions."

It was accordingly competent to delegate power to the Director of Finance but that begged the question what power had been delegated to him and from him to the Revenues Manager.

Counsel then directed me to Dundee City Council's Standing Orders, especially at pages 47 and 81 and 82. Para 1.1 of page 47 provides that the Director of Finance is the "proper officer" for the purposes of Section 95 of the Local Government (Scotland) Act, 1973 as amended. At pages 81 and 82, the extent of the authority of the council delegated to him is set out. Counsel referred to paragraph 24 on page 82 as the apparent source of the authority for the Director of Finance to maintain the objection to the appellants' licence application, though I observe in passing that reference might also have been made to paragraph 12. He observed that a local authority normally functions through a committee system, with certain of the authority's functions being delegated to the Finance Committee and, in turn, by them to the Director of Finance and, in the specific context of collection of non-domestic rates, that process had been followed in the case of Dundee City Council, but it was not evident that there had been any further delegation to any employee of the Council, such as the Revenues Manager - to be contrasted, for example, with paragraph 16 on page 81 where the Revenues Manager was specifically included in the delegated authority to sign cheques on the authority's account. In any event, the authority delegated to the Director of Finance by paragraph 24 of page 82 was, so far as relevant to the present cause, authority to take action to collect outstanding rates, not to object to an application to a licensing board even if it might be said of the applicant or the applicant's nominee that the legal person was unfit to hold a licence by virtue of having demonstrated a propensity to avoid paying rates. By posing the question how does the objection secure the payment of rates, one could see that the objection could not be said to relate to that and therefore was outwith the scope of the delegated authority. I pause simply to observe that it was suggested that there was a direct correlation, at least in time, between intimation of the objection and a payment of £4,489.12 towards an outstanding liability for non-domestic rates by Assetfair Limited, which might be the pragmatic answer to the aforesaid question. To explain the lack of objection to the competency of the objection before the respondents at the original hearing, counsel submitted that those instructing him were entitled to assume that the Revenues Manager did have delegated authority to raise the objection and maintain it in his personal appearance before the respondents and it could not be implied that the appellant had waived any right in respect of the competency of the objection in an absence, understandable in the circumstances, of full knowledge of the extent to which authority had been delegated by the local authority. However, and in any event, it was counsel's submission that the objection was inherently incompetent and waiver could not render it competent. Of course, if there was no valid objection before the respondents at the hearing of the application, then the application must be granted, there being no basis for any determination that the nominee, Mrs. Robbie, was not a fit and proper person to be the holder of a licence. I should therefore allow the appeal and grant the application.

Counsel's second proposition in support of the appeal was that, esto the objection was competent, in deciding that the appellants' nominee was not a fit and proper person to hold a licence, the respondents acted contrary to natural justice. I was referred to the decision in Mahmood v West Dunbartonshire Licensing Board 1998 S.C.L.R. 843, wherein, at page 847, the learned Lord McCluskey, giving the Opinion of the Court, said, " In our view, however, the Scottish authorities make it plain that it is the duty of the court which is determining the facts in a case of this kind to consider all the circumstances and to arrive at a view, which is essentially one of fact, as to whether or not the circumstances proved or admitted are such as to create in the mind of a reasonable man a suspicion that justice was not impartial. That was the test for the sheriff, as the judge of fact, to apply." Proceeding on the hypothesis that the objection was competently advanced on behalf of the local authority, it was coming from the Director of Finance who, patently, had a direct responsibility to the Finance Committee. The Director of Finance was, in effect, the agent of the Finance Committee. The objection could be said to be being taken on behalf of the Finance Committee. The respondents had been asked by the appellants' agent at the time to identify its members who were also members of the Finance Committee. It turned out that they all were. The respondents, in effect, albeit wearing a different hat, determined the issue in favour of an objection which they, or, at any rate, their agent, had raised. The objection related to the collection of non-domestic rates i.e. it went to the very root of their function as a Finance Committee. It was, said counsel, blindingly obvious that they were both objectors and the party determining the objection. This, said counsel, would create in the mind of a reasonably objective observer the notion that justice was not being seen to be done. He further referred me to Tennant v Houston 1987 SLT 317 and Brown v Executive Committee of Edinburgh District Labour Party 1995 SLT 985. Tennant was a criminal case where the accused pled guilty to a contravention of Section 86 of the Town and Country Planning (Scotland) Act 1972 where sentence was passed by a justice of the peace who was accompanied on the bench by another justice who was also a councillor for the district whose planning department had issued the enforcement notice, the breach of which had led to the criminal proceedings. There was no evidence that the councillor accompanying the justice who passed sentence had influenced the justice, but the High Court quashed the sentence on the basis that "the mere presence on the bench in the circumstances (of the councillor from the district which had issued the enforcement notice) would be bound to give rise in the mind of any reasonable man to a suspicion that the bench was not being impartial."

In Brown's case, Mr. Brown and eight other councillors, who were all members of the Labour Group on the then City of Edinburgh District Council, had the temerity to vote with the Conservative motion on some issue. Four days later, a special meeting of the Edinburgh District Labour Party passed a motion highly critical of the councillors concerned and disciplinary proceedings were initiated against them. Some of the individuals involved in passing the motion of censure would be members of the disciplinary committee which would hear the cases against the rebel group of councillors and it was apprehended that they might just have prejudged the issue. Mr. Brown and the eight other councillors sought suspension and interdict. At the hearing on their motion for interdict ad interim, the learned Lord Ordinary (Osborne) concluded that they were entitled to interim interdict, saying in his Opinion, at page 990A, " The question for me is whether the circumstances founded upon amount to a basis for a reasonable apprehension of 'something so prejudicial to a fair and impartial investigation of the question[s] to be decided as to amount to a denial of natural justice.' In my opinion they do. Each member of the disciplinary body would be performing a judicial duty and would require to bring to the discharge of that duty an unbiased and impartial mind. If he or she has a bias which renders him or her otherwise than an impartial judge, he or she is disqualified from performing that duty. Indeed, so jealous is the policy of the law of the purity of the administration of justice, that, if there are circumstances so affecting a person acting in a judicial capacity as to be calculated to create in the mind of a reasonable man a suspicion concerning that person's impartiality, those circumstances are themselves sufficient to disqualify, although in fact no bias exists."

It was counsel's submission that the present circumstances were indistinguishable from the approach encapsulated in these two decisions. No reasonable man could consider that the decision in the present case, taken as it was by persons who were members of the finance committee of the local authority, albeit while they were wearing their hats as members of the licensing board, against an objection initiated by the council's Revenue Manager, was without suspicion of bias. The question whether the finance committee were themselves involved to any significant extent in determining what the non-domestic rate should be was neither here nor there. I should sustain the appeal and grant the application.

Counsel's third proposition was that, esto, the respondents had a valid objection before them and that they had not breached natural justice in the light of the composition of their membership in considering the application and objection then, in any event, in refusing the application on the ground that Mrs. Robbie was not a fit and proper person to hold a licence, the respondents had exercised their discretion wrongly. In fact, putting it bluntly, said counsel, the respondents had made a complete hash of it. There was no onus on the applicant to demonstrate that the nominee was a fit and proper person to hold a licence. The respondents in the present case had inverted the onus. In Din v City of Glasgow District Licensing Board 1996 SLT 363 it had been determined by the Extra Division of the Inner House which heard the appeal from the sheriff that there was no onus on an applicant to satisfy a licensing board that he was a fit and proper person to hold a licence. Lord McCluskey, giving the Opinion of the Court, stated at page 366E, "It appears to us that the board may well never have asked itself the correct question, namely 'has it been shown to our satisfaction that the applicant is not a fit and proper person to hold a licence ?'

Counsel submitted that the approach taken in this case made it clear that a licensing board had to conclude that a person was fit and proper unless it was demonstrated to them that he was not. The court now had to consider what the respondents had said to justify their conclusion that Mrs. Robbie was not a fit and proper person to hold a licence. She had no personal liability for any outstanding non-domestic rates due to Dundee City Council. She was a director of the appellants and of Ecofirm Limited. The appellants only owed about £182, said counsel, in outstanding rates and Ecofirm Limited had long since ceased to trade owing about £7,500 in non-domestic rates. That company had overstretched its resources by engaging in a substantial refurbishment of the premises. So on what basis had she been declared to be unfit ? According to the Section 18 Statement of Reasons it appeared to be the respondents' conclusion that there was weight in the assertion by the objector, having regard to the evidence of links between Mr. and Mrs. Robbie and the various companies referred to, that she was a participant in a plot to avoid paying rates for the premises and that, since rates were a community debt, being involved in the conduct of the business over a long period of time to avoid paying such a debt reflected adversely upon Mrs. Robbie's fitness to be the holder of a licence. On the proper approach to the determination of this issue, counsel referred me to the decision in Leisure Inns (U.K.)Limited v Perth and Kinross District Licensing Board 1993 SLT 796, wherein the learned Lord Justice Clerk (Ross) put it succinctly, at page 798J, when he said, "Behind every ground for refusal there must be adequate reasons, and for these reasons, there must be a proper basis in fact." It appeared, submitted counsel for the appellants, that the respondents sought to infer that Mrs. Robbie was somehow responsible for a deliberate course of conduct to cheat or defraud the local authority of rates and was thereby unfit. It could not be the case that a failure to pay debts per se is ipso facto a proper ground of objection, said counsel. A person was either solvent or insolvent. There was no intermediate category. There was no suggestion that Mrs. Robbie had been disqualified as a director of any company. To entitle them to reach the conclusion they did, the respondents would require to be in a position to demonstrate that Mrs. Robbie was part of a conspiracy to avoid paying rates. That would have to be demonstrated on the balance of probabilities. There would therefore require to be evidence of "engineering of an omission of a liability to pay," but there was no such evidence. There was no evidence to support a conspiracy to avoid paying rates. There was no evidence in what was alleged to be such a conspiracy of the part played by Mrs. Robbie. Such evidence as there was demonstrated that she was a director of one company which had ceased to trade leaving a liability to pay rates. That was a company which had got involved in a re-furbishment of premises at a higher than anticipated cost. There was no source of evidence from which one could deduce the existence of a conspiracy. There was no information as to what she did, but the respondents concluded that they could look at the behaviour of companies in which she was not a director because she was alleged to have a close business relationship with her husband. That conclusion involved an assumption not warranted by the evidence before the respondents. You could not simply attribute the "sins of the husband," esto he had sinned, to the wife. There was no specification of the alleged business relationship between them or its extent. No explanation was advanced as to why she should have any interest in any company of which she was not a director. Was it to be inferred that she was alleged to have acted as a shadow director and, if so, what was it sh

Counsel's final proposition was that, on a fair reading of the Section 18 letter, it was clear that what had taken place at the hearing of the respondents had nothing to do with Mrs. Robbie's fitness to hold a licence and everything to do with the appellants' rates arrears. The respondents adopted an approach which was reflective of and proceeded on account of the fact that all members of the respondents were also councillors on Dundee City Council. He submitted that the approach appeared to elevate rates to a special category of debt meriting special treatment. I confess I had rather thought that rates were, as at least a matter of statutory provision, something of a special category of debt. Be that as it may, that was his submission. To try to collect arrears of rates was an abuse of the respondents' functions as a licensing board. They were not entitled to use their powers for the benefit of the city council and, as counsel put it, pour encourager les autres.

In this context, counsel referred me to the text of the second edition of Wade & Forsyth on Administrative Law, esp. pp. 415 and 416. At page 416, there is a passage which informs me about two English liquor licensing cases where the licensing justices on the one hand and the Birmingham statutory licensing planning committee on the other were both criticised and had their decisions overturned for attempting to extract payments from applicants in ways which were described by the courts either as "wholly unjustifiable" or as "unreasonable;" R v Bowman [1898] 1QB 663; R v Birmingham Licensing Planning Committee ex p. Kennedy [1972] 2QB 140. Unfortunately, I was provided with a copy of only the second of these authorities, though the first case is referred to in that judgment both in the record of the arguments advanced to the court on behalf of the licensing committee and in the judgment of Lord Denning MR in such a way as to make it clear that the decision did not relate to a requirement to pay outstanding rates as a pre-condition of the grant of a licence but to pay a wholly unlawful and unjustifiable payment of £1,000 to reduce the local authority's rates burden as such a pre-condition. The second case too was something of an exceptional case, involving a practice which had been allowed to develop, apparently with Home Office approval, whereby applicants for a new licence would not receive from the local authority a certificate of non-objection to the application, a necessary pre-requisite to a successful application, unless they paid a sum of money to purchase a licence in suspense relating to former licensed premises destroyed by wartime bombing, thus relieving the local authority of the cost of compensating the local breweries whose public houses had been destroyed. Not surprisingly, the Court of Appeal regarded this policy as "invalid and capable of grave abuse."

While I accept that an exercise of power of grant or refusal for such an improper purpose would clearly be an inappropriate exercise of discretion on the part of a licensing board, I do not consider that either of these cases come anywhere near to the circumstances of the present.

Counsel then referred to what he described as a recent Scottish case involving licensed premises in Edinburgh called "La Belle Angel," but which he was otherwise unable to identify. He claimed that in this case the owners of licensed premises had let out the premises to bands for what he referred to as "gigs." The bands then advertised these gigs at these premises via various forms of promotion including posters. The local authority environmental health department, not surprisingly, expressed concern at this practice. He informed me that Edinburgh District Licensing Board took a policy decision to refuse regular extensions to premises whose proprietors had been involved in promoting these bands, especially when they had engaged in "fly postering." This was said to have been justified on the basis that such extensions would occasion "undue public nuisance." The licence holders were of the opinion that this was an illegitimate attempt by the Licensing Board to enforce planning regulations and thus an illegitimate use of their powers. I confess to not having followed this part of counsel's submission and I am unclear whether any court had to resolve issues arising from the foregoing circumstances and, if they did, what that court's decision was and what relevance it might be to the present circumstances, but that was no doubt my fault.

In any event, said counsel, in the present case there was a clear reason for the objection and the decision by the respondents was an attempt to put the local authority into a "favoured" financial position, and that, he submitted, was an improper exercise of its discretion. Rates could legitimately be recovered in a variety of ways. Normal enforcement procedures could have been operated. If the local authority had considered that the companies were being operated in a manner in which they continued to trade, including incurring liability for local authority rates, when they were insolvent, then a complaint could have been made to the Department of Trade and Industry. A petition for the liquidation of the company concerned could also have been initiated. All these routes were legitimate. The method of using the power of refusal of a renewal application to get rates paid was not legitimate. I should accordingly grant the appeal.

Counsel concluded his submissions with a brief reference to the remedies available to a sheriff in such a summary application by reference to Section 39(6) of the Act. Sub-section (6) provides that, "On upholding an appeal under this section the sheriff may-

  1. remit the case with the reason for his decision to the licensing board for reconsideration of its decision; or (b) reverse or modify the decision of the licensing board." Sub-section (7) contained further provisions applicable where the matter was remitted to a board for re-consideration. It was counsel's submission that if I agreed with the proposition advanced by him that there was no basis for the finding that Mrs. Robbie was not a fit and proper person to be the holder of a licence, then I should simply reverse the decision of the respondents and ordain them to issue a renewal certificate, there being no point in inviting them to re-consider. The same applied, he argued, if there had been a breach of natural justice, under reference to GA Estate Agency Ltd v City of Glasgow District Council 1991 SLT 16, wherein Lord Dunpark, giving the Opinion of the Court in an appeal from the sheriff dealt with by the Second Division, in a case concerning an application under section 34 of the Gaming Act 1968, said at page 18A, " As it is abundantly clear that the committee gave no reasons for its refusal, we deal with this case upon the basis that there was a blatant, deliberate contravention of the principles of natural justice. In our opinion the result is that the committee should not be given a second attempt to justify their refusal and that the sheriff exercised his discretion wrongly in remitting this case to the committee." I should therefore ordain the respondents in the present case to grant the application.

Mr. Woodcock, for the respondents, responded to counsel's submissions in the order in which they had been advanced to me. Firstly, therefore, he argued that there was no substance to the submission that the objection was incompetent and ought not to have been entertained. Mr. Bailey, the City Council Revenues Manager, did have the requisite authority to maintain an objection on behalf of Dundee City Council. He directed me to page 82, paragraph 24 of Dundee City Council's standing orders and also to page 69, paragraph 1. The latter provides, at sub-paragraph (ii) that "Any power delegated to a chief officer in terms of this scheme may be exercised by such officer or officers of his or her department as the chief officer may authorise." Although who a "chief officer" is is not spelt out, since paragraph 2 on page 69 refers, in terms, to "Directors/Chief Officers," I think I am entitled to infer that the Director of Finance is a chief officer. According to Mr. Woodcock, under reference to R v London Borough of Southwark, ex p. Bannerman et al 22 H.L.R. 459, no formal evidence of Mr. Bailey's authorisation was required. Schiemann J. at page 463 said, " In my judgment, it is commonplace, both in Local Authority matters and in Central Government matters, for decisions to be taken in the name of somebody who is not himself in any meaningful sense the decision maker. The court will not, in the absence of evidence of wrongdoing of some form, investigate the internal organisation of a department. It is assumed that those who write letters on behalf of their superiors have the authority to do so." There is no evidence of wrongdoing in the present case and, seeing the sense in the approach adopted by the learned judge in England, I am content to adopt the approach followed by him and discount the suggestion that the City Council Revenue Manager did not have the authority to write the letter constituting the objection, provided the authority to do so was vested in the Director of Finance.

On that topic, Mr. Woodcock rested his case on the terms of paragraph 24 of page 82 of the standing orders, namely that, inter alia, the Director of Finance has delegated authority to "take all necessary actions with regard to the billing, collection and recovery of any Community Charge, Council Tax, Non Domestic Rate Income or Miscellaneous Income due to the Council." It was Mr. Woodcock's submission that authority to the Director of Finance to object to the renewal of an application for a public house licence fell within the scope of taking "all necessary actions" with regard to billing, collection and recovery of non domestic rate income. This proceeded on the proposition that if the licence were renewed, there would be likely to be further loss to Dundee City Council.

Not only does it not appear to me that objecting to the fitness of a person to be a licence holder could properly fall within the desiderated scope of delegated authority in terms of paragraph 24 of page 82 of the Council's standing orders, but also it appeared to me that Mr. Woodcock's approach, justifying the action by reference to the likelihood of future failures to pay rates, seemed dangerously close to the approach which, in my opinion, was soundly criticised in the two English cases to which counsel referred me of R. v Bowman and R v Birmingham Licensing Planning Committee, ex p. Kennedy (supra). Paragraph 24 delegates authority to the Director of Finance to take measures to enforce the recovery of various types of revenue due to the local authority. It does not authorise the "blacklisting" of potential applicants for licensing because of their failure to make due payment. I am accordingly of opinion that it has not been demonstrated that the Director of Finance had appropriate authority delegated to him by Dundee City Council to initiate this objection, which renders the objection invalid and incompetent. I do not consider that any assistance or support for the respondents' position can be gleaned from the terms of section 56(14) of the Local Government (Scotland) Act, 1973, as amended without wholly distorting the language of that section. Since the inevitable consequence of that conclusion is that there was no valid objection before the respondents for them to consider, the appellants' nominee could not be said to be not a fit and proper person to hold a licence and the application accordingly must be granted. The respondents would have no choice in the absence of a valid objection but to do so (Din v City of Glasgow District Licensing Board, supra) and so there is no point in remitting the matter to them for their further consideration.

However, lest this matter proceed further, it is appropriate that I should deal with the other arguments advanced to me.

Mr. Woodcock next turned to the argument that there had been a breach of natural justice on the part of the respondents in reaching the decision they did. He conceded that all of the members of the respondents who sat upon the board considering the appellants' application were members of Dundee City Council's Finance Committee and he accepted that, when the respondents were considering the application, the propriety of members of the finance committee considering the application was challenged by the appellants' then agent. It was therefore a matter which fell properly to be considered in the context of this appeal, but it was an argument without foundation. He referred to Section 153 of the Local Government (Scotland ) Act, 1994, which provided that it was the Secretary of State who had the discretion to prescribe regulations determining the amount of the non-domestic rate. He further referred me to the Non-Domestic Rates (Levying)(Scotland) Regulations 1999 and, in particular, to paragraphs 7 and 8 thereof, by which the non-domestic rates had been fixed, now by the relevant Scottish Minister of State. The local authority were the collection agency but they played no part in determining what the rates payable should actually be. He also referred me to para 454 of Vol. 14 of the Stair Memorial Encyclopaedia, which informed me that, "Although local authorities remain responsible for the collection of non-domestic rates, rate income is remitted to the government and then paid out to councils on a per capita basis. The amount of non-domestic rate income collected by an authority has no influence on the total of its aggregate external finance." The involvement, accordingly, of finance committee members in determining the level of non-domestic rates was zero and it made no difference to the finance received from central government by the local authority how much of the non-domestic rates were collected by any given authority. There could therefore be no question of impropriety on the part of members of the finance committee taking part in this decision by the respondents. Esto they had any interest at all in the collection of outstanding non-domestic rates, that interest could properly be described as remote. He referred me to Low v Kincardineshire Licensing Court 1974 SLT (Sh. Ct.) 54. In particular, he directed me to a passage at page 55 in the decision of the learned sheriff (Russell Q.C.) in which with eminent prescience he anticipated the difficulties which now confront me, saying:-

" This letter containing the town council's objections was signed by Mr. Ian B. Robertson, solicitor, town clerk of the burgh, after a town council meeting had been held on 27th. February 1973 at which he attended and at which it was decided to object to the application. It falls to be observed that two of the baillies present at that town council meeting (the chairman and one other) were among the 11 persons who sat making up the licensing court to consider the application. Although this might seem surprising to one's sense of natural justice it is not intended as any criticism of the individuals, for it is neither incompetent nor illegal, so far as I can see upon a study of the legislation, and it is no more than a curious reflection on the somewhat unsatisfactory framework which Parliament has given us for the control of betting licences."

However, of more interest to me having regard to the task I now face, was how Sheriff Russell dealt with the presence of the depute town clerk, who also happened to be the depute clerk to the licensing court, when the court was considering, in private, the objection by the town council to the appellant's application for a betting shop licence. Under reference to what the sheriff described, in my opinion, correctly, as "the cherished rules of natural justice," he said, "Looked at from the appellant's point of view, there is, in my view, a breach of the normal rules of fair play if he finds himself outside the court while the town clerk, the objector, is in consultation with the court conferring with them."

Later, emphasising this point, he states:-

"In circumstances such as the present, it is vital that the rules of natural justice be observed and one of the requirements is that it is openly apparent that no party with an interest has the opportunity to confer with the court outwith the presence of another party."

These latter statements are, of course, entirely consistent, in my opinion, with the approach of the High Court in Tennant's case to which counsel for the appellant had referred. One can also sense the unease on Sheriff Russell's part about the "relationship" as a matter of fact, between councillors who took the decision to formulate the objection and the members of the licensing court who sustained the objection, but he appeared to feel unable to do anything about that because of the legislative framework.

Of course, when Sheriff Russell was expressing his anxiety about the involvement of councillors in decisions of licensing courts where the local authority was an objector, the focus on the Convention for the Protection of Human Rights and Fundamental Freedoms, notwithstanding that the United Kingdom had become a signatory thereto in 1951, was less evident to the court in 1974, than to-day. Although the decision appealed against was, of course, taken and this hearing proceeded prior to 2nd. October, 2000 when the terms of the Convention became directly applicable in the domestic law of the United Kingdom, courts in this country had been having regard to the Convention as an aid to construction of statutory provisions or to determine the scope of the common law for some time, as well as to inform the exercise of judicial (as opposed to administrative) discretion - see R v Secretary of State for the Home Department, ex parte Brind [1991] AC 696; Attorney-General v Guardian Newspapers Ltd [1987] 1 WLR 1248; and Derbyshire County Council v Times Newspapers Ltd [1992] QB 770. Art 6(1) of ECHR provides:-

" In the determination of his civil rights and obligations ........everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law."

I confess to the same difficulty as appears to have been experienced by Sheriff Russell, particularly in the light of the terms of Art 6(1), in seeing how any licensing board, which, by the statutory requirements for its constitution must consist of not less than one quarter of the council members for the area in which it sits, could ever, if justice has to be seen to be done, be a fair and impartial tribunal in the determination of an objection by the same local authority, as is the situation here, notwithstanding that the statutory framework clearly envisages such a board considering such an objection - see sections 1 and 16(1)(f) respectively. However, having regard to the expression of opinion by the Lord President in T, Petitioner 1997 SLT 724, that the Convention could only be prayed in aid if there was an ambiguity in the relevant legislation, and there does not appear to be any such ambiguity, and it is not for me to make declarations that statutory provisions are inconsistent with the requirements of the Convention, and, in any event, the respondents would be entitled to pray in aid the provisions of section 6(2)(a) of the Human Rights Act, 1998, I shall confine myself to considering the existing law in relation to natural justice and its breach.

A licensing board must conduct its proceedings in a quasi-judicial manner and with proper regard for the rules of natural justice - Kieran v Adams 1979 SLT (Sh.Ct.) 13. It is bound to consider any application and objection validly before it. Mr. J.C. Cummins in his highly regarded textbook on Licensing Law in Scotland suggests at page 291 that the maxim nemo iudex in causa sua applies to proceedings before a licensing board. He suggests, at page 292, that " It now seems settled that the court will apply the 'reasonable man' standard propounded as follows in Law v Chartered Institute of Patent Agents [1912] 2 Ch. 276 at 289 - 'If there are circumstances so affecting a person acting in a judicial capacity as to be calculated to create in the mind of a reasonable man a suspicion of that person's impartiality, those circumstances are themselves sufficient to disqualify although in fact no bias exists.'

Applying the foregoing considerations to the present circumstances, notwithstanding that what took place was inevitable standing the statutory requirements to which I earlier alluded, I cannot escape the conclusion that the reasonable man would be surprised to find members of the finance committee of Dundee City Council, albeit wearing their hats as members of the respondents, determining an objection to an application by the City Council Revenues Manager on the basis that the nominee of the licensee concerned was not a fit and proper person to hold a liquor licence by reason of her alleged involvement in the evasion of payment of non-domestic rates. There is no more fundamental rule of natural justice than that a man shall not be a judge in his own case and, in my opinion, that is how these circumstances would be viewed by a reasonable and objective bystander, namely that these finance committee members were ruling on an objection initiated by the finance department. In these circumstances, I conclude that in ruling on the objection, the respondents perpetrated a breach of natural justice and on this basis too the appellant is entitled to have their decision overturned. I recognise that this decision, particularly when one now adds to decisions taken after 2nd. October, 2000, the requirement that a public authority (such as a licensing board) will require to act in a manner not incompatible with Convention rights, has the potential to render contrary to natural justice any decision taken in relation to a statutorily competent objection by a local authority but that seems to me to be the inevitable consequence of statutory provisions whereby a licensing board must consist to a substantial extent of members of a local authority for the area in which it sits from which authority it is entitled to entertain objections - i.e. statute creates the devil of making the licensing board a judge in its own cause.

For the sake of completeness, I should record that Mr. Woodcock also referred me to R v Sheffield Confirming Authority ex parte Truswell's Brewery Co. Ltd. [1937] 4All ER. 114 wherein Lord Chief Justice Hewart stated :-

" It is essential that those who occupy the position of a confirming authority should not only be unbiased, but also so related to the matter in hand as to be free from any suspicion of bias. That is, I venture to think, a most important matter."

I agree with those sentiments and do not consider in the present circumstances that the decision in this case can be said to be free from any suspicion of bias. I cannot agree with Mr. Woodcock's submission that there was no breach of natural justice.

He then took together, as they appeared to him to be inseparable, the two submissions of counsel that the respondents had based their decision on an incorrect material fact and in any event had exercised its discretion in an unreasonable manner. The test for this was to be found in Loosefoot Entertainment Limited v City of Glasgow Licensing Board 1991 SLT 843. It was formulated by Sheriff Gordon and specifically approved by an Extra Division comprising Lords McCluskey, Morison and Kincraig. It was in the following terms, viz:-

" In my view, therefore, it is open to me to accept that the board's decision must be upheld in an appeal under section 39(4)(d) unless it can be said to have acted in the absence of any factual basis or that its decision was so unreasonable that no reasonable board would have reached it or, of course, on the ground that it took account of matters which it should not have taken into account and failed to take into account matters which it should have taken into account." The derivation of the test was, of course, the judgment in Associated Provincial Picture Houses Limited v Wednesbury Corporation [1948] 1KB 223.

In the present case, said Mr. Woodcock, there was no great dispute, if any, about the material which was before the respondents at the time they dealt with the application and objection. The terms of the objection were before them as was the schedule of "misbehaving companies" and the arguments advanced before the respondents were set out in the Section 18 Statement of Reasons. The issue for the court was one of interpretation of the information furnished rather than any issue about its content. It was clear from the case of Art Wells Ltd (t/a Corals) v Glasgow District Licensing Board 1988 S.C.L.R. 531 that it would be competent to appeal if the respondents had drawn an incorrect inference from the facts laid before them. The standard of proof - I think he really meant the mode and requirements of proof - were not prescribed. The standard of proof of any disputed fact would be the balance of probabilities. The basis for the refusal in the present case was section 17(1)(a) and, insofar as there was also an application for the permanent transfer of the licence in terms of section 25 of the Act, the only basis for the refusal of such a transfer was that the person to whom the licence was to be transferred or that person's nominee was not a fit and proper person to be the holder of a licence, section 25(4) was also relevant. The respondents had to be "satisfied," and so there had to be a basis in fact from which they could be so satisfied. It was accepted that the material placed before the respondents would not suffice to support a criminal conspiracy but the standard of proof was not beyond reasonable doubt. What had been produced was sufficient to give rise at least on a prima facie basis to the inference that the companies referred to were being operated in such a manner as to evade payment of non-domestic rates.

Under reference to the Section 18 statement of reasons, Mr. Woodcock pointed out that the respondents had clearly understood that the debts were not personal to Mrs. Robbie but were due by companies with which either she or her husband or both of them were involved. Nor could it be said to be the position of the respondents that anyone who was in debt was not a fit and proper person to be the holder of a licence, but there was all the difference in the world between managing one's affairs with the assistance of commercial funding and managing one's affairs so as to avoid paying creditors, particularly preferential ones. There was a clear inference from the schedule that Mr. and Mrs. Robbie, who were husband and wife and, therefore, by inference at least, had a close personal relationship, were also involved in a close business relationship. In the five years since April, 1995, it appeared that six separate companies had played some part in the commercial operation known as McDaniels Bar, namely Holburn S.A., a Panamanian registered company, the present appellants, Firmalt Limited, Ecofirm Limited, Assetfair Limited and McDaniels (Dundee) Limited. Mrs. Robbie was a director of McDaniels (Dundee) Limited, Ecofirm Limited and the appellants. She was also a director of Hillerod Limited, a company whose registered office was at 42 Dudhope Crescent, Dundee and whose company secretary was her husband, Graeme Robbie. Hillerod Limited were licensees of three other premises in Dundee where there was said to be a similar pattern of rates evasion. It was plain from a consideration of the directorships of these companies that Mr. and Mrs. Robbie featured regularly and it could properly thus be deduced that there was a close business relationship. They were the only directors of the foregoing companies.

It was accepted that Mrs. Robbie featured only in respect of one of the companies which had ceased to trade, but three of the companies involved in the commercial operation and ostensibly with the rates responsibility had ceased to trade since 1995, apparently leaving no assets to merit a liquidation. The respondents did not require to be satisfied beyond all reasonable doubt. Three companies all involved in the one public house ceasing to trade within a four year period, however, suggested a pattern beyond mere coincidental misfortune. It bore the inference of a deliberate scheme when it was further taken into consideration that there appeared to be a division between those companies who held the licence and those companies who operated the premises. Being engaged in a conspiracy to avoid paying rates was a clear indication of unfitness to be the holder of a liquor licence. It was not correct to view the respondents' decision as part of a rates collection process. This was dealt with by the respondents as an issue of fitness and not in any other respect. Accordingly, the respondents were fully entitled to reach the conclusion which they did and I should refuse the appeal so far as it was based upon grounds three and four of counsel's argument.

It is clear from Loosefoot's case, wherever else, that the determination of competing facts in relation to a liquor licence application is for the licensing board and that the sheriff can only interfere with their determination if their decision turns on an incorrect material fact, and I did not understand counsel to submit that any of the facts, as opposed to the inference drawn from the facts, were incorrect. It is, however, also clear from the Art Wells case that an appeal is competent on this basis if the licensing board has drawn an inference from facts that they could not reasonably draw, which, in any event, would be an unreasonable exercise of their discretion. Similarly, whether a nominee is an unfit person to hold a licence is substantially a matter of fact for a licensing board, so long as there is some demonstrable element of culpability on the part of the rejected person. As a matter of generality, in my opinion, no exception could be taken to a decision by a licensing board to regard as unfit to hold a licence a person, whether legal or natural, who wilfully entered into a scheme to evade liability for tax or rates or the like, especially where these payments related to the premises concerned. Fitness of an applicant or nominee is to be assessed in general terms.

I am not persuaded that, in the circumstances of this case, the respondents were not entitled to reach the conclusion they did on the material which was placed before them. In my opinion, viewed objectively, the material demonstrates an unusual state of affairs in which a number of companies appear and disappear for no reasons adequately explained either to the respondents or, for that matter, in the course of the appeal to me. Given the concomitance of the number of companies with the non-payment of rates, in my opinion there was prima facie justification for the respondents reaching the conclusion that they were seeing a deliberate policy to evade the payment of rates and that the nominee, Mrs. Robbie, was intrinsically involved in that process. That being so, had the objection been taken properly by the local authority in accordance with its standing orders, and had the application and objection been considered by a licensing board the constitution of which did not amount to a breach of natural justice, I would have refused the appeal. However, for the reasons already given, I do not consider that I have any alternative but to grant the appeal.

Equally, for the reasons advanced by counsel for the appellants in respect of the first two heads of the appeal, I do not consider that I have any choice other than to now grant the application. If there was no competent objection before the respondents, then they would have been obliged to grant the application. Given, in any event, that I have concluded that there has been a breach of natural justice by the respondents constituted as they were at the time of the decision, I do not consider that it would be a proper exercise of my discretion to remit the matter to the respondents for their further consideration.

Accordingly, in terms of Section 39(6)(b) I shall reverse the decision of the respondents and ordain them to grant the application for the renewal of the public house licence.

In all the circumstances of this case, I consider it would be appropriate for parties to address me on the subject of expenses once they have had an opportunity to reflect on the content and import of this judgment.


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