A Simply Pleasurable victory

A Simply Pleasurable victory

Hemming (t/a Simply Pleasure Ltd) v Westminster City Council 2013 EWCA Civ 591,2013 All ER (D) 319 (May)

Gosschalks was instructed by the operators of 11 licensed sex shops in Soho and two more in Covent Garden and the West End. The operators wanted to challenge the annual licence fee of £29,102 levied by Westminster City Council. This fee had been charged by Westminster since 2005 despite European directives (which came into force in 2009) requiring that licence fees should reflect the cost of the administration of the licensing system and not the cost of enforcement and prosecution of unlicensed operators. It was estimated during the course of the proceedings that over £26k of the fee charged by Westminster reflected the costs of enforcement and prosecution.

In April 2011, the sex shops applied to judicially review the level of the fee arguing that, at most, 10% was justified. The High Court ruled in favour of the sex shops in May 2012 stating that the Council “has not, since 28 December 2009, been permitted to take into account the cost of investigating and prosecuting persons, firms or companies who operate sex establishments within [the Council’s] area without a licence." The judge subsequently found that Westminster had not validly determined a licence fee for any year after the year ending on 31 January 2006. He ordered it to do so and to make restitution of the difference between the payments it had received and the lawful fee set.

Westminster, however, appealed to the Court of Appeal arguing that this would have very wide and serious implications for other licensing regimes in this country and that the interpretation of the European regulations was wrong. The Court of Appeal dismissed that appeal and ordered Westminster to properly calculate the costs of administering the licensing regime and pay back any overpayments. It’s estimated that Westminster will have to repay around £2million subject to any further appeal that it may make.

This has implications in any area where a local authority is able to set its own fees. For example, planning applications and street trading licences and in future for certain applications made under the Licensing Act 2003 where there’s already legislation pending which will allow authorities to set their own fees. The Home Office has delayed the introduction of that legislation pending this judgment.

Return to the updates archive »