Hemming – Supreme Court Judgment Answers Questions And Raises Others

01 Jan 2018

Licensing, Public Law and Judicial Review

The sex fee wars are set to continue following the long-awaited ruling of the Supreme Court. The Court has cast doubt on the legality of Westminster City Council’s charging regime by referring it to the European Court of Justice for further consideration. However, the Court has ruled that the Council could have charged the same sums in a different manner. But the sting in the tail is its ruling that such fees are subject to European Treaty concepts of proportionality, whose reach and defining principles will inform the next generation of licence fee debates.

Philip Kolvin QC, the Head of Cornerstone Barristers, who acted for the claimants in the case, will be conducting a Masterclass on licence fees from 3rd – 5th June in London, Leeds and Birmingham.The Masterclass will include a full debrief on the issues flowing from the Supreme Court judgment.

A transcript of the judgment can be found here.

Philip Kolvin QC says:

“The Hemming case has shone a clear light on the practice and principles of charging. It has established that fees must be determined by a committee or officer with delegated authority to do so, that they must be kept under review, that both surpluses and deficits are to be carried forward, and that authorities must ring-fence the fees and may not make a profit from the system. The decisions in the High Court and the Court of Appeal established that renewal fees could include monitoring and compliance costs. The main issue in the Supreme Court was a narrow one, applying more to Westminster than any other authority, of whether an applicant could be charged the costs of prosecuting those without a licence. The High Court and a unanimous Court of Appeal said no. The Supreme Court said maybe, subject to proportionality, a test upon which it has declined to give any guidance.

Westminster argued that it could charge such fees because a prosecution is an authorisation procedure within the meaning of the Services Directive. The Supreme Court gave short shrift to that. Westminster also said that it could charge the whole fee – including sums representing prosecution costs – up front, provided that it refunded those sums to losing applicants. The Supreme Court decided that that was sufficiently unclear to require the consideration of the European Court of Justice, a process which will take 18 months or so to complete. But the Supreme Court decided that the Council could retrospectively set fees on a basis suggested by the Court, that part of the fee was paid up front and the remainder – representing the prosecution costs – were paid on success. In so deciding, the Court has held that, charged in that way, the sum representing the prosecution costs, although charged to a licence applicant, is not a “charge incurred from the application” under the Services Directive. While that is convenient domestically, since it allows the professional regulators, who intervened in this case, to continue charging the professions as before, it is a linguistic and logical riddle which will take some time to unpick in future litigation both here and in Europe. For the Hemming claimants, lawful operators who were paying £29,000 each year for each of their licences, £27,000 of which was levied to fund the Council’s £350,000 a year campaign to hound unlicensed criminals from the borough, the fight for justice must continue.

Philip Kolvin QC led Victoria Wakefield of Brick Court Chambers and Matt Hutchings of Cornerstone Barristers, instructed by Stephen Dillon of Gosschalks.