My Lords, I beg to ask the Lord Chancellor whether Magistrates in the discharge of their duties as licensing justices are not bound to be guided by the state of facts established before them in each case; and whether they are entitled to refuse the renewal of a licence to a licensed house in order to carry out a prearranged policy of reducing the number of licensed houses; and whether the hearing of an appeal to Quarter Sessions against the refusal to renew a licence is not a rehearing to which the above principles should apply.
I trust I may ask your Lordships' kind indulgence for a very few moments while I call attention to the present position of the licensing trade in this country. Until recently it has always been held, and the licensing justices have practically acted on that assumption, that so long as a licensed house was well-conducted the tenure of the licence was indisputable. Your Lordships are well aware that the goodwill of a licence is valued for the purpose of rating, and that it also has to be paid for in cases of compulsory purchase by railway companies and other public bodies. On the death of a lease-holder goodwill is charged, whereas without a licence there could be no goodwill, and on the death of a freeholder succession duty is charged on the assumption that the licence will endure during the whole life of the successor, and on the death of a mortgagee the whole nominal amount is assessed and duty paid thereon. If the licence does not hold good, if there is no goodwill in the licence, it is evident that the position of the second mortgagee must be 822 absolutely worthless, and the position of the first very much deteriorated.
I would also call your Lordships' attention to the fact that as regards the pre-1869 beer houses, the position is unassailable, has much as the licence cannot be taken away except for misconduct, and I think it is a fair inference to draw that when this privilege was granted to beerhouse licence-holders in 1869, it was not done out of any special favour to them, but because at that time it was the almost universal opinion of Parliament and the public generally that the position of full licence-holders was quite as favourable as, in fact was similar to, that which was then granted by Parliament to beer houses. But quite recently an entirely new position has been taken up by the licensing benches. It has always been held that the licensing justices were bound in their discretion to act judicially and according to knowledge derived from facts laid publicly before them. But now quite a new position has been taken up, and the licensing justices claim in many instances an absolutely unfettered discretion to deal with the property of licence-holders as they may think fit, without any regard whatever either to the conduct of the houses, their value, or their suitability—in other words, the licensing magistrates in many instances claim the right to confiscate the property of the licence-holders, which represents very often the savings of a lifetime, and the only means of livelihood that the holders possess, without any sort of compensation whatever, and without any reason assigned, more than that, in their opinion there are more licensed houses in the district than they think are required.
I would venture to point out to your Lordships that the value of a licence, that is to say the goodwill that attaches, to it, as regards licensed property, maybe roughly taken at an average of two-thirds or three-fourths of the selling value. Indeed, I am told that in some parts of London, apart from the City, the value is greater than that—something like four-fifths. Therefore, it is clear that to take away the licence from a. property is practically to ruin the property and the owner of it. That the position as regards the licence-holder is 823 a serious one I think the following facts will convince your Lordships. I have lately seen a summary of 700 reports or declarations recently made by benches of magistrates throughout the country, and I find that in more than 50 per cent, of them the justices state their intention next year to reduce the number of licences by refusing renewals. The modus operandi, as a rule, is that the owners are invited to make proposals for reductions, and failing this, the justices have threatened to take the matter into their own hands. Often a reduction of so many per cent, on the number of houses is suggested, going in some instances so far as one-third of the total number of houses, and if any hesitation is shown on the part of the holders, threats have been held out by the bench.
But the worst of it all is that there is no finality in this matter. There is no security that, when great and serious sacrifices have been made one year, other and more excessive ones will not be asked for the next. I observe in a letter in The Times that the chairman of a bench of magistrates in a well-known midland city speaks of insurance of licences as being a fit and proper manner of obtaining compensation. That is true up to a certain point, but only up to a certain and limited point. It has been possible to insure the value of licences, but that has only been because it has been understood that the licences would be renewed. But now that the renewal of licences is to depend only on the fancy, and on the very often hostile feeling, of the benches before whom they come, it may be certain that no insurance company will insure property which rests on such a precarious basis. Insurance companies, frightened at the present condition of affairs, have already increased their rates to an amount which it is almost impossible to accept. I trust that the noble and learned Earl on the Woolsack will be able to give some assurance that in the future the licensing justices will be actuated not by mere fancy and caprice, but by considerations of facts and justice.
*THE LORD CHANCELLOR (the Earl of HALSBURY)
My Lords, before answering the terms of my noble friend's Question, there are two preliminary observations I should like to make. In 824 the first place, considering the position I hold with regard to litigation that may come before this House, you will quite understand that I am simply answering an abstract question without reference to any particular case that may have occurred or that may occur. In the next place, I had no reason to suppose—until I heard what my noble friend had said, and I am greatly surprised to hear it—that magistrates generally had entered into any kind of resolution on the subject. I should deprecate that very much for this, among other reasons, that the question whether there should be compensation when any licence is taken away is one of considerable debate on both sides of politics; and if any bench of magistrates have identified themselves with a policy either one way or the other in respect of that matter, I should lament it for this reason, among others, that they have other and constant duties to perform, and I believe, notwithstanding what is sometimes said about them, that they perform those duties to the entire confidence of the country. I believe the country generally recognises the deep debt of gratitude it owes to the magistrates for the mode in which they perform their duty.
To the first part of the Question, I answer very distinctly that I do think magistrates are bound, in the discharge of their duties as licensing justices, to be guided by the state of facts established before them in each case; and I think if they were to proceed on some preliminary view of the policy that they ought to pursue, they would be exceeding their duty. I feel some hesitation in quoting my own views, which were expounded at some length in the well-known case of Sharpe v. Wakefield, in which I pointed out that the magistrates should proceed judicially—that is to say, not necessarily, as I pointed out in a subsequent case, by all the forms in which strictly judicial proceedings are guided, but that they must have regard to those principles of justice and the recognition of the rights of other people, which is the basis of the administration of justice in whatever court it is administered, and that they must not, to use the language of my noble friend, proceed capriciously or from mere fancy. In the case to which I have already 825 referred, Lord Hannen points out very clearly what is the distinction between acting judicially and acting capriciously. He says—Instances have been brought before the Courts where justices have expressed and acted upon a general intention with regard to all licences, whereas it is their duty to consider each individual case on its own special merits. The object of the 26th Section of the Act of 1874 appears to be to enforce this duty, and to require the justices to particularise the special ground on which they consider the personal attendance of the applicant necessary.I think I may quote an instance in which Lord Selborne gave a very valuable judgment, where there was a general Act of Parliament prescribing the hours at which public-houses should be open. He pointed out that, although in that case the matter was left to the discretion of the magistrates, it must be a discretion applicable to a particular district and a particular case, and that a general resolution on their part was ultra vires—that they had no right to come to such a conclusion. His words are very pregnant and applicable to the present matter—I cannot but think that their Lordships may have lost sight of a distinction which exists between the evasion of an Act of Parliament passed in derogation or restriction of the legal rights and liberties of the subject, and the evasion of a Act which confers for public purposes powers that would not otherwise exist…. Without, meaning to deny that it is confided to the discretion of the magistrates to determine what particular localities require other powers for opening and closing than those specified, it is obvious that such discretion as they have is not an arbitrary discretion to define any localities they please, but they must be such localities as they consider, in the honest and bonâfide exercise of their own judgment, to require a difference to be made. The participle 'requiring' is connected with the substantive 'locality,' and therefore it must be a requirement arising out of the particular circumstances of the place.Lord Cairns, in giving judgment in the same case (Macbeth v. Ashley, 1874), used very important words indeed. He said—Now, my Lords, I will assume, though it is not for your Lordships now to decide, as the question has not arisen, that this may be a discretion which may be exercised more than once. That may be so, and upon that I express no opinion; but of this I am quite certain, that if magistrates, under the guise of exercising a discretion, had taken portion after portion of their district, not with reference to the particular wants or requirements of each portion, but in order by degrees to take possession of the whole district, and under the pretence of 826 exercising a discretion for each portion, had virtually subverted the general rule laid down by the Legislature; if, I say, your Lordships were to find, which I cannot imagine or suppose you ever would find, the magistrates adopting that course for the purpose of doing what I must describe as evading an Act of Parliament, your Lordships would not be prepared to sanction, but would discountenance and prevent the exercise of a power so used.It seems to me that in those observations may be found what is, I think, manifestly the law on that subject—that where you are exercising a discretion which the magistracy has had conferred upon it, you must in each case exercise the discretion, and not for any purpose, however praiseworthy, attempt to act the part of legislators instead of doing that which the Legislature requires you to do—act as judges in determining each particular case. How can the Legislature ever define the exact circumstances in which a licence is not to be granted? It would be impossible to define it. Therefore, you must leave it to the discretion of the justices, but the Legislature assumes that the discretion so given must be exercised judicially, and with reference to the real needs and requirements of the locality and conditions under which the licensed house is already held. It must be remembered—and it sometimes seems to be forgotten—that a licensed house can only have been licensed by the justices, and it would be an intolerable thing to suppose that although the justices themselves may be different—there may be different men on the bench, some may have passed away—they should oscillate backwards and forwards in their policy until there was nothing like continuity of policy in the body to which they belonged. Take the converse case. Supposing some of the justices were to suggest that it would be a better thing to have free trade in licences; supposing they came to the conclusion that it would be much better that anybody who applied for a licence should get one. Would anybody admit that that was an exercise of their discretion within the meaning of the statute? If such a resolution were arrived at on the other side beforehand, I think it would be equally beyond any discretion entrusted to the magistrates by the Legislature.
I may say with regard to another part of the Question that where you are dealing with the renewal of licences one has to 827 be careful not to overstate the case on either side. It is perfectly true that the renewal of a licence is a new licence—new in the sense that magistrates have the same discretion in granting it for the next year that they had for the last year. That is a proposition which cannot be denied. The Legislature, I think, has assumed that there was a difference in the mode of dealing with the two cases, because it is in the Act of 1872 specially enacted that all applications for renewal of licences shall be dealt with by evidence given on oath. I read with very great satisfaction some observations made by my noble friend Lord Lindley when presiding at Petty Sessions. Speaking as the Chairman, he pointed out with great force, and in words in which I concur, the mode in which justices should approach this question. He said—It is obviously much easier to determine whether it is desirable to grant or refuse a new licence than it is to determine whether to renew a licence already granted. It is true no owner or tenant of a public-house has a right to have his licence renewed, but the expectation that it will be renewed, unless there is good reason why it should not, is founded on human nature, and is perfectly reasonable, and cannot lie ignored by any fair dealing man. Outlays are made on the face of it, and the expectation gives a market value to the house which can be very closely estimated by persons accustomed to value such matters.I think what the noble Lord has said in reference to the mode in which the Government treats these houses in exacting taxation adds much to Lord Lindley's observation that—To refuse to renew a licence may be to inflict serious loss on the owner or tenant of the house, possibly on both, and no body of gentlemen can be expected to do this without coming to the conclusion that sufficient reasons exist for taking such a step. Hut, as already stated, misconduct is not the only legitimate ground for refusing a renewal.I think that expounds with great force, and with perfect justice, the true relations of this subject—the duty of the justices, and I concur with every word my noble friend has said—always remembering that if you are arguing the strict matter of the law, there is no doubt the justices have a discretion in this sense, that if you can find that they have taken into consideration the matter, and have come to the conclusion that such and such a licence ought not to be renewed, although you may not 828 agree with them on the grounds on which they have proceeded, nevertheless it is their discretion and not yours. I can answer the final part of the Question put to me, simply by saying that a court of Quarter Sessions, like every other court, is bound to proceed on the same principles. I hope the noble Lord is not dissatisfied with the answer I have given.
House adjourned at twenty minutes past Five o'clock, till To-morrow, half-past Ten o'clock.