SHERIFFDOM OF LOTHIAN AND BORDERS SITTING AT EDINBURGH

DECISION BY

SHERIFF N. McPARTLIN

IN

INTERLOCUTOR and NOTE

in causa

GROSVENOR CASINOS LTD,

PURSUERS

against

THE CITY OF EDINBURGH LICENSING BOARD

DEFENDERS

and

GALA MAYBURY CASINO,

OBJECTORS

EDINBURGH, 31 August 2006

The sheriff, having resumed consideration of the cause, remits the matter to the defenders to re-consider their decision of 26 June 2006 to refuse the pursuers' application for a new gaming licence relative to premises at 121/125 Fountainbridge, Edinburgh.

NOTE:

The pursuers were the applicants for a new gaming (casino) licence for premises at 121/125 Fountainbridge, Edinburgh. The defenders are the City of Edinburgh Licensing Board, who refused the application at their meeting on 26 June 2006. The pursuers have appealed against that decision to this court. Gala Maybury Casino has entered the process as objectors.

The application for the licence was under the Gaming Act 1968. The appeal is governed by provisions in the Licensing (Scotland) Act 1976, particularly section 39.

When the appeal called for a hearing on 20 August 2006, the defenders sought leave to amend their third Answer to the effect that the application had been refused under paragraph 18(2)(b) instead of 18(1) of Schedule 2 of the Gaming Act and by inserting averments that the Statement of Reasons issued by them erroneously referred to paragraph 18(1) instead of 18(2)(b), that being an error of expression. An existing averment that it was not shown to the defenders' satisfaction that a substantial demand already existed on the part of prospective players for gaming facilities of the kind proposed to be provided by the pursuers was to be amended to say that it was not shown to the defenders' satisfaction that an unmet substantial demand already existed on the part of prospective players for gaming facilities of the kind proposed to be provided by the pursuers.

Paragraph 18 of Schedule 2 to the Gaming Act 1968 is in the following terms:-

"18(1) The licensing authority may refuse to grant a licence under this Act if it is not shown to their satisfaction that, in the area of the authority, a substantial demand already exists on the part of prospective players for gaming facilities of the kind proposed to be provided on the relevant premises.

(2) Where it is shown to the satisfaction of the licensing authority that such a demand already exists, the licensing authority may refuse to grant a licence if it is not shown to their satisfaction -

(a) that no gaming facilities of the kind in question are available in that area or in any locality outside that area which is reasonably accessible to the prospective players in question, or

(b) where such facilities are available, that they are insufficient to meet the demand."

These provisions set out the basis on which a licensing authority may refuse to grant a licence, although it should be noted that nothing in the provisions obliges the authority to refuse the licence, so that the authority always has a discretion to grant a licence. Sub-paragraph (1) of paragraph 18 allows the authority to refuse a licence if it is not shown to their satisfaction that a substantial demand already exists. Under sub-paragraph (2), even where the authority is satisfied that such a demand already exists, they may still refuse to grant a licence if it is not shown to their satisfaction either that there are no gaming facilities to meet the demand or that the facilities available are insufficient to meet the demand.

In moving for leave to amend, Mr Lindsay, counsel for the defenders, stated that it was clear to everyone that paragraph 18(1) could not have been the basis of the Board's decision. That sub-paragraph would apply only to the situation where there were no gaming facilities of the kind applied for, which was clearly not the case here. Mr Lindsay invited me to look at the Statement of Reasons and, if I were satisfied beyond reasonable doubt that it referred truly to a decision under 18(2)(b), then I should allow the amendment. He went on to say that, in the event of the amendment being refused, the defenders would concede the appeal.

Mr Anderson, QC, for the objectors, stated that the objectors had always assumed that the reference in the Statement of Reasons to 18(1) was an error of expression and that the objectors did not oppose the amendment. Mr Anderson invited me to read the transcript of the proceedings before the Board, from which it was clear that the submissions by parties concentrated on 18(2)(b).

Mr Skinner, counsel for the pursuers, opposed the amendment as coming far too late. He submitted that this was a complete change of front by the Board and pointed out that this was the second appeal in respect of this application, the earlier appeal having been conceded on the basis that the Statement of Reasons was inadequate. Mr Skinner submitted that the Statement was clear. It was echoed in Answer 3 for the defenders, which gave the 18(1) test. The pursuers had relied on the Statement, irrespective of what parties had sought to put in issue before the Board. The reference in the Statement to "a substantial unmet demand" did not reflect the application of an 18(2)(b) test.

Having adjourned to consider this matter, I confined myself to reading the Statement of Reasons itself and not the transcript of the proceedings before the Board. This is what Mr Lindsay had invited me to do. I decided not to follow the suggestion from Mr Anderson to take the transcript into account, partly because the defenders were not inviting me to do so, but principally because the Board's own Statement of Reasons must be the best indication of what issues they considered and what the basis of their decision was.

The Statement of Reasons begins by informing the applicants that the application was refused in terms of paragraph 18(1) of Schedule 2 to the Gaming Act 1968. It contains a narrative of the proceedings before the Board, including a summary of the submissions for the objectors and the submissions for the applicants. I do not wish to narrate the whole of the Statement but I noted that it included a view expressed on behalf of the objectors that "There was no existing client base for the premises and the necessity placed upon the licence applicants by the legislation was that they establish to the Board's satisfaction that there was substantial unmet demand which could only be addressed by the granting of the application for the licence." With regard to the submissions for the applicant, the following is recorded "He (counsel for the applicants) stressed that in terms of paragraph 18(1) of Schedule 2 it was necessary for Board members to be satisfied that there was substantial unmet demand for gaming facilities which could be met by the grant of this licence." It is also recorded that the applicants made a submission with reference to paragraph 18(2)(b) which their counsel described as critical.

The ratio of the Board's decision is expressed as follows:-

"In reaching their decision, the Licensing Board considered very carefully the material before them and all that had been said to them in the course of the presentations made to them. They were fully aware of their discretion to grant a licence application even where it had not been established to their satisfaction that there was substantial unmet demand. On this occasion they were satisfied on the basis of what they had heard and advice received that there was no substantial unmet demand. They determined that the figures included in the demand advice note prepared in relation to this specific application had to be considered against the whole range of the provision of facilities and not by reference only to peak times.

In terms of their discretion they had still to decide whether they should grant the licence sought. They could consider whether there was lack of competition or lack of attractive facilities, catering to every taste. They were not satisfied on the basis of what they had heard that these factors were present to any significant extent. The Board were conscious that they did not wish the grant of a licence to stimulate any additional demand. In this regard they took the view that a large part of the applicants' proposals could have the effect of stimulating demand. The Board were particularly concerned over the licence applicants' intention to hopefully encourage a younger clientele to use the facilities.

For these reasons the Licensing Board resolved to refuse the application in terms of paragraph 18(1) of Schedule 2 to the Gaming Act 1968."

Although I accept from Mr Anderson that the several provisions in paragraph 18 are not entirely discrete, the Board were very clear in stating that their decision was under 18(1). Answer 3 for the Board in the appeal justified the decision on that ground alone. The Board then sought to amend their pleadings by referring to 18(2)(b), presumably on the basis that they see it as distinct from 18(1). Having read the Statement of Reasons, I was not satisfied that it must be interpreted as a decision based on 18(2)(b). That particular provision is concerned with the sufficiency of facilities to meet demand but the reference to facilities in the Statement is oblique. The gravamen of the decision was that the Board were satisfied that there was "no substantial unmet demand", rejecting in terms the submission of the applicants in respect of 18(1). The Board also expressed concern about the risk of stimulating additional demand, which, on one view, may reflect a consideration of 18(1).

Accordingly, I came to the view that the Statement of Reasons could be construed as referring either to 18(1) or to 18(2)(b) and I was not satisfied beyond reasonable doubt that it referred only to the latter. For these reasons I refused leave to amend.

The appeal having been upheld, ex concessu, I heard submissions on what order I should then pronounce. It was open to me to remit the matter to the Board for a re-consideration of the application, or to reverse the decision of the Board and direct them to grant it.

For the applicants, Mr Skinner invited me to adopt the latter course. Mr Anderson and Mr Lindsay moved for a remit for re-consideration. I summarise the arguments briefly.

Mr Skinner produced very helpful written submissions, which he expanded in his address. He made four points. Firstly, the Board had had two chances to consider the application and each time had failed to deal with it properly. The applicants could have little confidence that they would deal with it properly a third time. Secondly, the relevant test which the Board should have applied was under paragraph 18(2)(b), which includes comparison of the quality as well as the quantity of the existing facilities. On that approach, they were bound to grant the application, having regard to the admitted deficiencies of an existing casino, referred to by its owners in an application heard immediately after that of the applicants. Thirdly, there was real risk that the attitude of Board Members would have hardened. In Botterills of Blantyre v Hamilton DLB 1986 SLT 14, the Inner House approved the decision of a sheriff to reverse a board's decision for that reason. Fourthly, the position of the applicants had been irreversibly prejudiced by the grant, at the same meeting of the Board, of a new licence for a large casino to replace an existing one. Mr Skinner referred to Doyle v City of Glasgow DC 1995 SLT 327 and Douglas v City of Glasgow DC 1996 SLT 713. These appeals related to the refusal of taxi licences and it was recognised that there could be no remit to the Council for reconsideration, as the taxi licence quota was full and refusal was inevitable.

Mr Anderson, moving for remit to the Board for re-consideration, denied that there was any evidence that the Board had set their face against the applicants or that the Board could not be trusted with the responsibility of hearing the application again. This was not a case of breach of natural justice. No sheriff had examined the merits of the appeals and the pursuers should not get a windfall benefit. Mr Anderson referred to Matchurban v Kyle and Carrick DC 1995 SLT 505, an appeal against the refusal of an entertainment licence. On the question of whether to remit or reverse, Lord McCluskey delivering the opinion of the court said:- "This is not an easy matter because there is some risk that attitudes may have hardened having regard to the history of these applications. The applications themselves were made in 1992 and only after the successful appeal on the preliminary planning issue. On the other hand, however, Parliament has decided that the decision on matters of this kind should be taken by the local licensing authority and there would need to be compelling reasons for removing from such an authority the responsibility for taking such decisions."

Mr Lindsay adopted Mr Anderson's submissions. He also disputed Mr Skinner's contention that the grant of the application was inevitable had the Board applied the correct statutory test. Mr Lindsay went on to assert that the grant of a new casino licence to other applicants did not change the landscape significantly because it was in effect a replacement.

Reflecting on these submissions, I take guidance from the words of Lord McCluskey in Matchurban. While there has been approval of reversals by sheriffs of the decisions of statutory bodies, in certain cases, sheriffs should in principle be slow to interfere. In the present case, the appeal has been conceded due to ambiguity in the Statement of Reasons, with the result that the merits of the application have not been fully discussed before me. In these circumstances, I cannot endorse Mr Skinner's assertion that the application was bound to succeed on the merits. The merits are a matter for the Board and, in my view, it would not generally be in the public interest for a sheriff effectively to grant a casino licence by default.

The grounds on which the appeal has been conceded do not imply that Members of the Board failed to deal with the application properly, only that there was a failure to make clear the reasons for their decision. I think it proper to remit the matter to them for re-consideration. I am confident that Members will ensure that any future decision is clearly expressed. No doubt, it will be recognised that the applicants have been placed in a difficult position by the way events have progressed and Members may find it instructive to consider the submissions summarised in this note.