§ Mr. Menzies CampbellI beg to move amendment No. 92, in page 48, line 29 after '(a)', insert
'in subsection (1) after the words "applicant or" in line 7, the words "or any partner or director thereof or any person having a substantial interest therein,(ab).'.
§ Mr. SpeakerWith this it will be convenient to consider amendment No. 93, in page 48, line 41 at end insert:—
'(4A) In section 31 of the principal Act, (suspension of licence on receipt of complaint), in subsection (2)(a) after "licensed holder" insert the words "or any director or partner thereof or employee or agent with the responsibility for the day to day running of the premises, or any person having a substantial interest therein, or any person on whose behalf or for whose benefit the premises are managed".'.
§ Mr. CampbellI shall begin by again declaring an interest. I have already declared a professional interest in that from time to time I have practised before the licensing board and from time to time I am consulted by those with an interest in licensing matters. It is appropriate to make that declaration of interest because the issue about which I shall speak is one upon which I have been professionally consulted by Dundee district licensing board. However, it is a matter of general application because circumstances have been presented to the Kirkcaldy board and, more recently, before the Renfrew district licensing board. That shows that the issue to which the amendments are directed has application throughout Scotland.
The issue arises out of the grounds upon which an application may be refused or a licence suspended. Section 17(1) of the Licensing (Scotland) Act 1976 sets out fair grounds upon which a licence may be refused. The first of those is that
the applicant … is not a fit and proper person to be the holder of a licence".Some controversy has arisen about whether, in the case of a limited company that applies for a licence, the licensing board is entitled to look behind the legal personality of the limited company and at the character of its directors, to determine whether they are fit and proper persons to be the holders of a licence. It is argued by some that, because of the way in which the legislation is framed, the board would be entitled to look at the character of the company and at the character of the manager of the premises, but not at the character of the directors of the company. That has caused some concern in a number of instances.It follows from that that, if an application is made under section 17(1) of the principal Act for the suspension of a licence, one of the grounds of which provides that the licence holder is no longer a fit and proper person to be the holder of a licence, if the licence holder is a limited company it is not possible to look at the character of the directors of that company.
The practical consequence of that is that, although a limited company that applies for a licence and obtains it may have a board of directors comprised of men of total probity and acceptability, the shares of that company might be transferred and the directors of the company changed. It may be that the new directors of the company would not, under any circumstances, be the sort of individuals to whom a licensing board would have been disposed to grant a licence. In some cases, that is perceived by licensing boards to be a considerable restriction on their quite legitimate and, in my view, perfectly proper power to restrict the issue of licences to persons—I use the word in its broad sense—who are fit and proper people to receive such a licence.
The most recent case, which the Minister may already have to hand, involves Renfrew district licensing board. It was reported in the 1990 Scottish civil law reports on page 436. I shall read from the rubric of that decision. Sheriff Stoddart of Paisley held that
the board had misinterpreted ss. 17(1)(a) and 17(3) and were not entitled to look at the characters of any persons other than the company itself and its proposed manager.That means that it was and would be quite improper for a board to look at the character of the directors of the company that had applied for a licence.There is some controversy about whether that is the correct view, but it is a recorded case in which a sheriff took that view. Consequently, in the minds of a number of 1149 licensing boards in Scotland there is a doubt about the precise nature of their powers. The purpose of the amendment and of the related amendment No. 93 is to seek to remove that doubt. The words that we seek to insert at the appropriate place are:
any partner or director thereof or any person having a substantial interest therein".The phrase, "any partner thereof" relates to the fact that in Scotland a partnership may have a legal personality separate from its partners. That is why it is necessary to make a reference to "any partner". I explained earlier the reason for the words "or director thereof", and the wordsor any person having a substantial interest thereinwill deal with the circumstances in which the majority shareholding may be in the hands of an individual who would not otherwise be regarded as a fit and proper holder of a licence.9.15 pm
Amendment No. 93 relates to the circumstances in which, under section 31, an attempt may be made to suspend a licence. At present, the only ground given is that the holder is no longer thought to be a fit and proper person. Amendment No. 93 would insert the words
or any director or partner thereof or employee or agent with the responsibility for the day to day running of the premises".That harks back to section 11. It refers also toany person having a substantial interest therein, or any person on whose behalf or for whose benefit the premises are managed.That refers to the terms of section 17(1)(a).I hope that the Minister will feel well disposed towards the amendments, which are meant to reflect substantial judicial uncertainty as to precisely what interpretation section 17(1)(a) will bear and to assist licensing boards, which are worried that a corporate veil may be available to individuals who might otherwise not be considered proper persons to hold licences. By creating a £100 off-the-shelf company having two £1 shares, and by using a person of good character to serve as an employee or agent, people who under no circumstances would be admitted to the onerous responsibilities of holding a licence would be able to subvert the considerable concern that chief constables, licensing boards and members of the public may feel at the fitness of certain individuals to have the responsibility for the sale of exciseable liquor.
§ Mr. Ernie Ross (Dundee, West)Concern is felt among members of licensing committees when they suspect that, as the hon. and learned Gentleman suggests, an individual has created a company and is hiding behind another person with the clear intention of circumventing the licensing authority's original decision to refuse a licence because of that individual's character.
§ Mr. CampbellThe hon. Gentleman makes the point most succinctly.
The amendments are an attempt to prevent people who would otherwise not be entitled to a licence from obtaining and enjoying the benefits of one by the device of creating a company and employing a person of good character as their manager or employee. Given the sophisticated licensing system that we now have north of the border, such a deception should not be possible. I hope that the Minister is sympathetic to the principle, even if he is not in agreement with the wording of the two amendments.
§ Mr. McAllionI add my words of support to those of the hon. and learned Member for Fife, North-East (Mr. 1150 Campbell), because there is growing concern in Dundee that an unwelcome situation could rapidly develop. If the sheriff court appeal decision is upheld—I understand that it has gone to the Court of Session—the licensing board might have to accept that it is not in a position reasonably to refuse licences to individuals who are not fit and proper persons.
In a recent case in Dundee, the applicant for a licence had a record of theft and drug abuse, but the licence was refused more because it related to premises which had been used for the sale of pornographic material. It was refused, but if those people had set up a shell company and hidden behind it and the people who managed it on their behalf, if the sheriff court decision had been upheld, the licensing board believed that it would have had no alternative but to grant a licence to the shell company, thereby allowing people to gain control of a licence who are not the kind of people who could be considered as fit and proper to hold it.
It is not merely the licensing board which is concerned. The local authority and the police are also worried about this development. As they pointed out, it is the wording of the 1976 Act which is wrong. It is too loose and is open to interpretation. That loophole has to be closed by the Minister. I hope that he will listen carefully to the amendment and will accept it.
§ Lord James Douglas-HamiltonWe have heard an interesting legal argument. The amendments would considerably widen the fit and proper person criterion in section 17 of the 1976 Act to enable the refusal of a licence and, in section 31, the suspension of a licence.
I understand that the interpretation of the "fit and proper person" criterion, where the applicant or licence holder is a corporation or company, has been raised in particular cases. The hon. and learned Member for Fife, North-East has mentioned one case which bears out what I believe to be the position. The issue has been whether criminal records of directors and companies are relevant to consideration of the criterion.
The view has been taken that the fact that one partner or director was not a fit and proper person did not necessarily mean that the partnership was not fit and proper to hold the licence, especially if another person was responsible for the day-to-day running of the premises. Also, it has been maintained that a number of factors may be relevant to the consideration of a company's application, such as whether the company has any criminal convictions, whether there is a history of any difficulties with other licensed or unlicensed premises owned or managed by the company, and whether it obeys the law on the health and safety of its employees. In the Government's view, that interpretation and the existing statutory provisions are appropriate and adequate and there is no justification for widening the criteria in the way that the amendments propose.
The licensing board should be concerned with the operation of the licensed premises, rather than with past actions or reputations of persons with an interest in the company which owns the premises. If, through the subsequent actions of directors or partners, the company acquires convictions or a poor reputation for licensing, those should be relevant considerations in relation to the exercise of powers under sections 17 or 31.
§ Mr. Menzies CampbellI may not have made myself clear. If a certain individual with criminal convictions applies for a licence, the chief constable may object to the application on the ground that he is not a fit and proper person. If the same person buys a company for £100 off the shelf, with two £1 shares, and obtains a reputable person to manage the premises on a day-to-day basis, making himself a director, through the device of the corporate veil he is able to obtain a licence that no licensing board would have given to him. In the face of that, how can the Minister say that the Government are satisfied with the legislation?
I do not know whether the Minister has had the opportunity to read Sheriff Stoddart's judgment. He said that the board
were not entitled to look at the characters of any persons other than the company itself and its proposed manager".I know that there is some controversy, but that is the view of one sheriff. In that sheriffdom, Renfrew district licensing board will be bound by that view.Is the Minister seriously telling the House that it is right for someone who, by reason of their character, would not be entitled to obtain a licence none the less to be able to create a company for £100 and use that mechanism to obtain a licence? Surely that cannot be the Government's view. If it is, public opinion will be surprised.
§ Lord James Douglas-HamiltonThe hon. and learned Member has put his point of view. The relevant considerations are any difficulties that a company might have had with other licensed or unlicensed premises that it owned or managed.
The criterion used by the hon. and learned Gentleman to amend the sections in the way proposed would widen the criterion beyond what was originally intended, and beyond what we consider to be appropriate or necessary. I hope that the hon. and learned Gentleman will not press his amendment.
§ Mr. Ernie RossI think that we shall be pressing the amendment to a Division. The Minister did not listen to what was said by the hon. and learned Member for Fife, North-East (Mr. Campbell). We do not want such a company to have a licence in the first place. The Minister suggests that an individual who is unable to get a licence under the normal licensing procedure should be allowed to form a company and that we should then wait and see whether that company turns out to be a good company. We do not want either that person or his company to have a licence. In a number of instances, however, that has happened. The Minister misses the point completely.
§ Lord James Douglas-HamiltonI see the point clearly. If a company is run by several people, the fact that one person may not be a fit and proper person does not necessarily mean that the company is not a fit and proper body to have the licence.
§ Mr. DewarI have listened with interest to the point made by the hon. and learned Member for Fife, North-East (Mr. Campbell). He made a reasonable and persuasive case. It does not seem to be in the public interest that people who, because of their past record and character, would be laughed out of the licensing court should be able to buy a £100 company which they wholly control, since they own the entire equity, hire a manager of apparent respectability and happily thereafter enjoy the fruits of holding that licence.
1152 I suppose that it is possible to argue that, while the manager is in place, everything may be reasonably well run because of his integrity, but that is a matter for argument. One can envisage the pressures that might develop which would make the position less satisfactory. Apart from that speculative point, it is clear that the beneficial owner of the company would pocket the profits. I do not believe that that was ever intended. Certainly we should not wish to defend that position.
I hope that the Minister will not take it amiss when I say that he is being a little obtuse in misunderstanding a simple point and the thrust of the hon. and learned Gentleman's arguments. I ask him to address the question in its simplest form. Let us assume that two partners who have been in trouble with the licensing courts over the years, who have a bad record and who are unlikely to be regarded by the police as suitable for holding a licence, buy an off-the-shelf company, provide themselves with that fig leaf and the additional cover of a manager of no known bad form and then sit back and enjoy the fruits of holding their licence. Can that be satisfactory? Is it defensible? Yet that is happening. There are precedents for the fears that have been expressed. The Minister ought to think again.
§ Mr. Ernie RossIt is not just that. We have discovered that such companies own more than one public house by means of this procedure. That is even worse. People who are not fit and proper persons to hold one licence now hold a number off licences by means of the shady deal of creating companies.
§ Mr. DewarMy hon. Friend reinforces the point. I hope that I have made it clear that we sympathise with the thrust off the amendment. We hope that the Minister will be able to adopt a more flexible view than that which he has adopted in the past few minutes.
§ Lord James Douglas-HamiltonThe amendments might deal with the problem, but they are widely drawn. For example, they require the board to consider what constitutes a substantial interest. At this stage, we cannot agree to amendments which raise important and difficult legal issues of that nature.
§ Mr. Menzies CampbellI do not know whether I was wrong to detect a sudden burst of reasonableness in what the Minister has just said. Is he saying that he is willing, having heard what has been said fairly vociferously on the Opposition side of the House, to take the matter away and consider it? He should remember that the Bill must be considered by another place. If he is not saying that—he shakes his head to show that he is not—I shall feel compelled to press the amendment to a vote.
I give the Minister one last chance. It will look pretty peculiar to the public of Scotland if the Minister is not willing to take the opportunity to prevent the abuse that the hon. Members for Dundee, East (Mr. McAllion) and for Dundee, West (Mr. Ross) have outlined in such stark and eloquent terms.
9.30 pm
It cannot be sensible to allow people who as individuals would not be allowed the responsibility of running licensed premises to create, through the corporate veil, a wholly dud mechanism to deceive the licensing board, for that is effectively what it is. The deception may be understood by the licensing board, but deception it undoubtedly is. It drives a horse and cart through the efforts of licensing 1153 boards to control the fitness, propriety and character of those who make applications before them. I urge the Minister, who has shown a willingness to respond to the force of argument, to give one last consideration to the point, because I assure him that if he does not give the sympathetic consideration for which we are arguing, public opinion in Scotland, and perhaps opinion on licensing boards, will find it difficult to understand his position.
§ Question put, That the amendment be made:—
§ The House divided: Ayes 102, Noes 154.
1154| Division No. 318] | [9.30 pm |
| AYES | |
| Abbott, Ms Diane | Jones, Barry (Alyn & Deeside) |
| Ashdown, Rt Hon Paddy | Kaufman, Rt Hon Gerald |
| Barnes, Harry (Derbyshire NE) | Kennedy, Charles |
| Barnes, Mrs Rosie (Greenwich) | Leadbitter, Ted |
| Barron, Kevin | Lofthouse, Geoffrey |
| Bennett, A. F. (D'nt'n & R'dish) | McAllion, John |
| Bidwell, Sydney | McAvoy, Thomas |
| Blunkett, David | McCartney, Ian |
| Boateng, Paul | McFall, John |
| Callaghan, Jim | McKay, Allen (Barnsley West) |
| Campbell, Menzies (Fife NE) | McKelvey, William |
| Campbell-Savours, D. N. | McLeish, Henry |
| Canavan, Dennis | Madden, Max |
| Carlile, Alex (Mont'g) | Mahon, Mrs Alice |
| Clarke, Tom (Monklands W) | Marshall, David (Shettleston) |
| Clay, Bob | Marshall, Jim (Leicester S) |
| Clwyd, Mrs Ann | Maxton, John |
| Cohen, Harry | Michael, Alun |
| Coleman, Donald | Michie, Bill (Sheffield Heeley) |
| Cook, Robin (Livingston) | Moonie, Dr Lewis |
| Cousins, Jim | Morgan, Rhodri |
| Crowther, Stan | Murphy, Paul |
| Cryer, Bob | Nellist, Dave |
| Cunliffe, Lawrence | O'Brien, William |
| Dalyell, Tam | Orme, Rt Hon Stanley |
| Darling, Alistair | Patchett, Terry |
| Dewar, Donald | Powell, Ray (Ogmore) |
| Dixon, Don | Primarolo, Dawn |
| Dobson, Frank | Rogers, Allan |
| Duffy, A. E. P. | Ross, Ernie (Dundee W) |
| Dunnachie, Jimmy | Skinner, Dennis |
| Eastham, Ken | Smith, C. (Isl'ton & F'bury) |
| Ewing, Harry (Falkirk E) | Steel, Rt Hon Sir David |
| Ewing, Mrs Margaret (Moray) | Steinberg, Gerry |
| Fearn, Ronald | Strang, Gavin |
| Flynn, Paul | Turner, Dennis |
| Foot, Rt Hon Michael | Vaz, Keith |
| Foster, Derek | Wallace, James |
| Fyfe, Maria | Walley, Joan |
| Galbraith, Sam | Wardell, Gareth (Gower) |
| George, Bruce | Wareing, Robert N. |
| Godman, Dr Norman A. | Watson, Mike (Glasgow, C) |
| Harman, Ms Harriet | Welsh, Andrew (Angus E) |
| Haynes, Frank | Williams, Alan W. (Carm'then) |
| Hogg, N. (C'nauld & Kilsyth) | Wilson, Brian |
| Home Robertson, John | Winnick, David |
| Howarth, George (Knowsley N) | Wise, Mrs Audrey |
| Howell, Rt Hon D. (S'heath) | Worthington, Tony |
| Hughes, John (Coventry NE) | Young, David (Bolton SE) |
| Hughes, Robert (Aberdeen N) | |
| Illsley, Eric | Tellers for the Ayes: |
| Ingram, Adam | Mrs. Ray Michie and |
| Janner, Greville | Mr. Malcolm Bruce. |
| NOES | |
| Alison, Rt Hon Michael | Bennett, Nicholas (Pembroke) |
| Amess, David | Biffen, Rt Hon John |
| Arbuthnot, James | Bonsor, Sir Nicholas |
| Arnold, Jacques (Gravesham) | Boscawen, Hon Robert |
| Ashby, David | Boswell, Tim |
| Aspinwall, Jack | Bottomley, Mrs Virginia |
| Baker, Nicholas (Dorset N) | Bowis, John |
| Batiste, Spencer | Braine, Rt Hon Sir Bernard |
| Bendall, Vivian | Brazier, Julian |
| Browne, John (Winchester) | Kirkhope, Timothy |
| Bruce, Ian (Dorset South) | Knight, Greg (Derby North) |
| Buck, Sir Antony | Knight, Dame Jill (Edgbaston) |
| Budgen, Nicholas | Lang, Ian |
| Burns, Simon | Latham, Michael |
| Burt, Alistair | Lee, John (Pendle) |
| Butler, Chris | Lightbown, David |
| Carrington, Matthew | Lord, Michael |
| Carttiss, Michael | Macfarlane, Sir Neil |
| Chapman, Sydney | MacKay, Andrew (E Berkshire) |
| Clark, Sir W. (Croydon S) | McNair-Wilson, Sir Michael |
| Clarke, Rt Hon K. (Rushcliffe) | McNair-Wilson, Sir Patrick |
| Conway, Derek | Malins, Humfrey |
| Coombs, Anthony (Wyre F'rest) | Mans, Keith |
| Coombs, Simon (Swindon) | Maples, John |
| Cormack, Patrick | Marshall, John (Hendon S) |
| Davies, Q. (Stamf'd & Spald'g) | Martin, David (Portsmouth S) |
| Davis, David (Boothferry) | Mellor, David |
| Day, Stephen | Meyer, Sir Anthony |
| Dicks, Terry | Miller, Sir Hal |
| Douglas-Hamilton, Lord James | Mills, Iain |
| Dover, Den | Mitchell, Sir David |
| Dunn, Bob | Monro, Sir Hector |
| Evennett, David | Morris, M (N'hampton S) |
| Fairbairn, Sir Nicholas | Morrison, Sir Charles |
| Fenner, Dame Peggy | Moss, Malcolm |
| Fookes, Dame Janet | Neubert, Michael |
| Forman, Nigel | Newton, Rt Hon Tony |
| Forsyth, Michael (Stirling) | Nicholson, David (Taunton) |
| Franks, Cecil | Norris, Steve |
| Freeman, Roger | Paice, James |
| French, Douglas | Patnick, Irvine |
| Fry, Peter | Pawsey, James |
| Gardiner, George | Porter, David (Waveney) |
| Glyn, Dr Sir Alan | Price, Sir David |
| Goodlad, Alastair | Renton, Rt Hon Tim |
| Goodson-Wickes, Dr Charles | Riddick, Graham |
| Greenway, Harry (Ealing N) | Ridsdale, Sir Julian |
| Greenway, John (Ryedale) | Rifkind, Rt Hon Malcolm |
| Gregory, Conal | Shaw, David (Dover) |
| Griffiths, Peter (Portsmouth N) | Skeet, Sir Trevor |
| Grylls, Michael | Smith, Sir Dudley (Warwick) |
| Hamilton, Hon Archie (Epsom) | Stewart, Allan (Eastwood) |
| Hamilton, Neil (Tatton) | Stewart, Andy (Sherwood) |
| Hanley, Jeremy | Taylor, Ian (Esher) |
| Hannam, John | Taylor, John M (Solihull) |
| Hargreaves, A. (B'ham H'll Gr') | Thatcher, Rt Hon Margaret |
| Hargreaves, Ken (Hyndburn) | Thompson, D. (Calder Valley) |
| Harris, David | Thompson, Patrick (Norwich N) |
| Hawkins, Christopher | Thornton, Malcolm |
| Hayward, Robert | Thurnham, Peter |
| Hicks, Mrs Maureen (Wolv' NE) | Tracey, Richard |
| Hill, James | Tredinnick, David |
| Hind, Kenneth | Trotter, Neville |
| Hordern, Sir Peter | Twinn, Dr Ian |
| Howard, Rt Hon Michael | Waddington, Rt Hon David |
| Howarth, G. (Cannock & B'wd) | Walden, George |
| Howell, Ralph (North Norfolk) | Walker, Bill (T'side North) |
| Hughes, Robert G. (Harrow W) | Watts, John |
| Hunt, Sir John (Ravensbourne) | Wheeler, Sir John |
| Hunter, Andrew | Widdecombe, Ann |
| Jack, Michael | Wilkinson, John |
| Janman, Tim | Winterton, Nicholas |
| Johnson Smith, Sir Geoffrey | Woodcock, Dr. Mike |
| Jones, Gwilym (Cardiff N) | Yeo, Tim |
| Jones, Robert B (Herts W) | Young, Sir George (Acton) |
| Jopling, Rt Hon Michael | |
| Kellett-Bowman, Dame Elaine | Tellers for the Noes: |
| Kilfedder, James | Mr. Tom Sackville, and |
| King, Roger (B'ham N'thfield) | Mr. Timothy Wood. |
§ Question accordingly negatived.
§
Amendment made: No. 20, in page 48, leave out line 50 and insert—
'(7) In section 64 (extensions to permitted hours), for subsection (4) there shall be substituted the following subsections—
§ "(4) A licensing board shall not grant an application from the holder of a public house licence for an occasional or regular extension of permitted hours on Sundays except—
- (a) as respects premises to which section 59 of this Act applies and for the purposes of that section; and
- (b) in the case of other premises, as respects any period or periods after half-past two in the afternoon,
§ (4A) Nothing in subsection (4) above shall prevent the granting of an application for an occasional or regular extension of permitted hours on a Saturday for a period which continues into Sunday morning.".'.—[Lord James Douglas-Hamilton.]