It’s time to ditch ‘duty to trade’

Consultation to update board guidance is long overdue

The ‘duty to trade’ interpretation of the law is “just plain wrong”

YOU might think it’s a dry and tasteless chew, a legalistic document that has no relevance to your business – in short, something safely omitted from your reading list.

But the manner in which licensing boards approach their decision making will at some point impact your business.

So, what’s the significance of the Scottish Government’s consultation on proposed new statutory licensing guidance?

Based on provisions contained in English licensing law, Section 142 of the Licensing (Scotland) Act 2005 allows Scottish ministers to publish guidance “as to the exercise of [boards’] functions” under the Act.

The first guidance was issued 12 years ago, before the 2005 Act came fully into force. It has remained untouched, now covered in cobwebs, while the English version has undergone several updates.

Not surprisingly, there has been considered pressure from licensing boards for a long overdue root-and-branch overhaul – particularly since there has been a whole raft of amendments to the Act since 2007.

In fact, there was an expectation that a new version would be published last year so that boards would have some assistance with the preparation of new policy statements – particularly in the ever-controversial area of overprovision.

The guidance did not have a happy start.

It misstated the new law relating to the licensing of filling station forecourt shops, tripping up the licensing board in Aberdeen and leading to a successful appeal against the refusal of a licence for a Co-op store in the city.

There’s something of an irony here. Where a board elects to depart from the guidance, it’s obliged to give notice to the Scottish ministers and set out its reasons.

But, as the Aberdeen case demonstrates, following the guidance is not a guarantee that the law has been properly applied.

Although the Act has been in operation for almost ten years, not one single notification has ever been given – and that certainly does not mean that boards are slavishly following the guidance.

Take, for example, the suggestion that there’s a ‘duty to trade’.

According to the guidance as it stands, operators face a premises licence review if they fail to trade during all of the licensed hours authorised in terms of the operating plan.

There’s at least a whiff of common sense: the guidance recognises that there may be occasions on which trading will require to be suspended because of, for example, adverse weather conditions. So it’s good to know a licence isn’t at risk if the premises is cut off from the world by an avalanche.

In my view – and I’ve yet to meet anyone in the licensing community who disagrees, including board clerks – the ‘duty to trade’ interpretation of the law is just plain wrong.

Certainly, compliance with the operating plan is a condition of a licence.

So, for example, a licence holder who held a function where that ‘activity’ was not permitted would be in breach. But having permission to carry on an activity is quite a different matter from an actual duty to do so; and the notion that a business could be penalised for not selling alcohol is, to say the least, counter intuitive.

There was an attempt to draw a line under this absurdity back in 2010 when Morrisons Supermarkets was told by North Aberdeenshire licensing board that the actual hours it traded would be monitored by standards officers; and if these did not reflect the authorised hours there was a risk “of a premises licence review being triggered”. Morrisons challenged that approach in the Court of Session; and, disappointingly, for technical reasons, it failed to obtain a ruling.

In the intervening nine years there has not been a single instance of a licence holder being hauled over the coals on the basis of a ‘duty to trade’.

Nevertheless, it has made a comeback in the new guidance, currently subject to consultation.

It’s expressed in a rather softer fashion, but there’s no fundamental shift from the view that the law requires an ‘open all hours’ approach.

You can be sure that lawyers responding to the consultation will make it clear that the time has come to ditch the so-called ‘duty’.

Jack Cummins is one of Scotland’s leading licensing lawyers. Every month he writes on licensing law and answers readers’ questions in SLTN.

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Jack Cummins is unable to enter into personal correspondence on readers’ questions. The advice offered in SLTN is published for information only. No responsibility for loss occasioned by persons acting or refraining from action as a result of material contained in SLTN can be accepted by the author or publisher.