Licensing for Commercial Conveyancers
A brief guide to the impact of the Licensing (Scotland) Act 2005 for commercial property transactions.
1. INTRODUCTION & OVERVIEW
The regulation of licensing in Scotland is undergoing fundamental change: the biggest overhaul of the laws for over 30 years. A new Act has been passed, the Licensing (Scotland) Act 2005; which will come into force, in full, on 1st September 2009. Until that date, licensing is still governed by the Licensing (Scotland) Act 1976, but applications under the 2005 Act are being lodged and granted now; in a “transitional” period between the two Acts, so that when the new Act comes live all licensed premises in Scotland will have the relevant permissions in place in order to keep trading.
What this means, in simple terms, is that every single licensed premises in Scotland has to re-apply for their own licence. With approximately 20,000 of such premises, including clubs, the workload for those involved in this process has been tremendous and fraught with difficulty.
A “conversion” application is an application to convert a 1976 licence into a 2005 licence. It is effectively a new licence application but under a special procedure.
2. THE LICENSING (SCOTLAND) ACT 2005
The 2005 Act operates on a platform of five “licensing objectives”; these are principles which are fundamental to just about every aspect of the new licensing regime. The five licensing objectives are:
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Preventing crime and disorder
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Securing public safety
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Preventing public nuisance
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Protecting and improving public health
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Protecting children from harm
The central tenet of the 2005 Act is that it is illegal to sell or supply alcohol unless in accordance with a “premises licence” (there is provision for occasional licences but these are not greatly significant to commercial property transactions and are not mentioned further here). Provision is also made for “personal licences”. Licensing will still be dealt with by licensing boards. There is greater scope for communities to have a say in how licensed premises are run; and less scope for the police to have their say.
The 2005 Act caters for variations to existing licences; transfers; and extensions to the licensed hours.
2.1 PREMISES LICENCES
The single “premises licence” is a licence which authorises the sale of alcohol from the premises to which it relates. It replaces the seven types of licence available under the 1976 Act, for example hotel and public house.
2.2 PERSONAL LICENCES
The “personal licence” gives the holder the ability to authorise the sale of alcohol. Each premises licence must have an individual named as the “premises manager”, and this person must be a holder of a personal licence. There may be more than one personal licence holder employed on a premises.
2.3 THE OPERATING PLAN
Each premises licence has an “operating plan”. The operating plan is a novel creation under the 2005 Act and is one of the single most significant aspects of the new regime. It may shortly be termed as a manifesto which outlines the way in which the premises may be operated. The crucial thing to grasp here is that it does not just control the sale of alcohol; but any other activity which takes place on the premises.
This is a fundamentally different approach to the regulation of licensed premises and allows licensing boards to make rules about how a premises may be run even if it has nothing to do with the sale of alcohol.
The operating plan will be a key document in commercial transactions of the future as the premises cannot be operated but for the terms of it.
3. CONVEYANCING SCENARIOS DURING TRANSITION
*Sample missives for each of these scenarios are provided in the attached excerpt from “Scottish Licensing & Gambling Law: A Practical Guide” (Avizandum, 2009). The excerpt is confidential and is strictly for Tods Murray staff only, for copyright and publishing reasons.
Applications to convert through to new system had to be lodged by special dates, dependant on when the 1976 licence was due to expire. There is only one deadline remaining: 16th January 2009. All other licence holder will either have their new premises licence in place; have the application lodged and pending; or have decided not to convert, perhaps due to costs.
If you are involved in a conveyance of a premises where no 2005 Act application has been lodged this can either mean that (a) it is due to be lodged by 16th January 2009; or (b) the current licence holder has missed their deadline and lost their “grandfather rights”.
In the first case, this is good news. It means that the conversion application has yet to be lodged and the incoming licence holder will be able to tailor it to suit their proposed running of the operation. But there are, clearly, several questions to be answered. Who determines the form of the application? Who picks up the bill?
In the second case, the loss of grandfather rights does not mean they have lost the licence; it simply means that a conversion application will be lodged late and therefore may be refused on the ground of overprovision
If the conversion has already been granted then the missives will require to include provisions for transferring the 1976 and 2005 licence to the incoming party; the missives may also require provisions in relation to varying the 2005 licence so that the operating plan is in such terms as the buyer/tenant desires. Otherwise, they will be stuck with a licence which may not allow them to operate the way they want.
It may be the case that the buyer will just take the 2005 licence as is, and trade based on the existing terms until such times as any variation they make subsequent to the completion of the transaction takes effect.
With the mess of transition over and done with; there will only be one licence to worry about – the premises licence. Missives will therefore take account of the preservation and transfer of that licence only.
4. NEW LICENCE APPLICATIONS UNDER THE 2005 ACT
An application for a premises licence requires to be supported by 5 items: an operating plan, a layout plan, a general description, certificates of suitability, and the fee. We have discussed the operating plan above. The layout plan is an architects drawing and there is a specific layout specification laid down in regulations.
The certificates of suitability are certificates from planning, building control and environmental health to attest to the following:
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Planning: that the appropriate planning permission is in place
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Building control: that a certificate of completion is in place
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Environmental health: that the premises complies with food hygiene laws
In the normal scheme of things, developers and others will leave the licensing to last; but under the new system that will not be a prudent approach: these certificates have to produced with the new licence application; and note that a certificate from building control will only be issued after a completion certificate; in other words, after the works are complete!
The good news is that the 2005 Act provides for a provisional premises licence application, which only requires the planning certificate; but it still requires the operating and layout plan so early thought will have to be given to such matters. Licensing should not be the last piece of the puzzle.
5. TRANSFER APPLICATIONS UNDER THE 2005 ACT
Applications to transfer a licence may be made by the existing licence holder; or another party in one of the following circumstances:
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The licence holder dies
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The licence holder becomes incapable
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The licence holder becomes insolvent
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The licence holder is dissolved
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The business is transferred by sale or otherwise to another person
Application is made by way of a form lodged with the Board and attracts a fee. There is a special type of application procedure in which you can lodge a transfer and variation simultaneously; allowing an applicant to have a clear idea about whether any proposed changes he may have will be approved before taking on the licence. This novel procedure could be used to assist the conveyance and protect the purchaser.
For further information, contact a member of our Hospitality and Leisure Team