Test Purchasing and Under Age Sales: Are the Spirits Willing?
Alan Dewar QC presented a paper on test purchasing and under age sales to the CLT Licensing Conference on 8th May 2013 and commented, in particular, on the recent landmark Inner House decision in LIDL UK GmbH v City of Glasgow Licensing Board  CSIH 25, 5th April 2013. Alan appeared in that case for the Glasgow Board.
The paper read as follows:
Test purchasing is a relatively new feature of licensing law in Scotland. Its parameters and uses are still being mapped out and only a fledgling body of case law (north and south of the Border), has been generated. But against that background, we can begin to ask how useful a tool test purchasing is in combating the sale of alcohol to children and young persons. Is it proving effective in rooting out under age sales, or is it more trouble than it is worth? Should it be used more widely, or should it be deployed selectively and only acted upon by way of review proceedings before licensing boards in truly serious cases?
These are but some of the questions that test purchasing throws up. I intend in this paper to address a few of these, primarily through the prism of the recent Inner House decision in LIDL UK GmbH v City of Glasgow Licensing Board  CSIH 25, 5th April 2013, a case in which Scott Blair, Advocate, and I, appeared for the Board.
Scott Blair asked me to speak at this Conference shortly after we had argued the case before the Inner House. In agreeing to do so, I hoped that the decision of the Court would be issued ahead of today to allow discussion of it, and so it has turned out. But I was under no illusions. Having argued the case before the Division, I had little doubt which way it was going to go. Yes, Scott had managed to persuade Sheriff J K Mitchell that the decision of the Board was a sound one. By the end of the Inner House hearing, on the other hand, I rather suspected that the real interest in the case was going to be the basis upon which we would lose. And, once again, so it has turned out.
I have seen the decision described as a “landmark” ruling on test purchasing. Who am I to disagree? But, having said that, I wonder just how important it will prove to be? At one level it might be thought to have put paid to review proceedings being considered appropriate in cases where there has been a single failed test purchase, and to it being thought proper for a Board to apply any of the section 39 steps or sanctions with the issue of deterrence in mind. But on a deeper analysis, matters may not be quite as straight forward as that. I’ll return to that in due course. In the meantime, I’ll deal with a little history and remind you of how test purchasing is dealt with under the Licensing (Scotland) Act 2005 (“the 2005 Act”).
The position under the 1976 Act
I can deal with this pretty quickly as there isn’t such a position, as the issue simply didn’t feature in the Licensing (Scotland) Act 1976 (“the 1976 Act”) or, as far as I’m aware, any of its predecessors. But there was a precursor in another, not entirely unrelated context, to what now appears in the 2005 Act.
That context was tobacco related products in relation to which there was in 2003 a pilot scheme across four local authority areas. A number of safeguards were employed and one material difference to what is enacted in the 2005 Act was that the tobacco scheme was to be operated by trading standards officers rather than the police. For those interested, the background can be found in the Scottish Executive Tobacco Products Test-purchasing Pilot Scheme here.
Of more direct interest, perhaps, is the question whether the notion of test purchasing might fall foul of the law on entrapment. A number of cases have tested this issue north and south of the Border, and the net result is that as long as test purchasing operates within the well developed common law confines, it is unobjectionable on entrapment grounds. It was put this way in the Divisional Court in England and Wales by Lord Bingham CJ in Nottingham City Council v Amin  1 Cr App R 426 at 431, a taxi licensing case, where his Lordship said the following:
“On the one hand it has been recognised as deeply offensive to ordinary notions of fairness if a defendant were to be convicted and punished for committing a crime which he only committed because he had been incited, instigated, persuaded, pressurized or wheedled into committing it by a law enforcement officer. On the other hand it has been recognised that law enforcement agencies have a general duty to the public to enforce the law and it has been regarded as unobjectionable if a law enforcement officer gives a defendant an opportunity to break the law, of which the defendant freely takes advantage, in circumstances where it appears that the defendant would have behaved in the same way if the opportunity had been offered by anyone else.”
That approach was followed by the House of Lords in two cases concerning the supply of heroin, R v Looseley; R v G  1 WLR 2060, and much the same approach has been followed in Scotland: see Cook v Skinner 1977 JC 9 and MacDonald v Skinner 1977 JC 29, both licensing cases. The matter was dealt with by Lord Justice-General Emslie in the following terms:
“It is not in doubt that in cases of this type in Scotland the test of the competency of such police evidence is: “Was it fair to the accused?” and that in determining that matter the Court has to try to reconcile two important interests which are liable to come into conflict, namely (i) the interests of the citizen to be protected from illegal or irregular invasion of his liberty by the authorities, and (ii) the interest of the State to secure that evidence bearing on the commission of a crime and necessary to enable justice to be done shall not be withheld from a court of law on any mere formal or technical ground…………It is clear from the decided cases to which we were referred, that where the Court has held that evidence has been obtained unfairly there has been established, on the part of the police officers concerned, conduct which clearly amounted to a trick upon the accused, and, in particular, a trick which involved positive deception and pressure, encouragement or inducement to commit an offence which, but for that pressure, encouragement or inducement, would never have been committed at all.”
What this amounts to, then, is that entrapment will not succeed as a defence or a ground of opposition to what has been done unless some unfair trick has been played upon the accused or respondent causing him or her to commit an offence which he or she would would not otherwise have committed. Such a possibility always exists as a matter of fact, and in some cases it is not entirely easy to draw the line between what the law regards as legitimate police behavior and what amounts to a trick, but the reality is that the issue is unlikely to arise very often in test purchasing as regulated under the 2005 Act.
And to that I now turn. But for those who wish to look in more detail at entrapment, I commend an article written by Scott Blair entitled “Test-Purchases, Entrapment and the Fairness of Licensing Board Proceedings” (2006) SLLP 31.
The position under the 2005 Act
Test purchasing is dealt with succinctly in section 105 of the 2005 Act in the following terms:
“(1) A child [a person under the age of 16] or young person [a person aged 16 or 17] who buys or attempts to buy alcohol (whether for himself or another person) commits an offence.
(2) It is not an offence under subsection (1) for a child or young person to buy or attempt to buy alcohol if the child or young person is authorised to do so by the chief constable for the purpose of determining whether an offence is being committed under section 102 [which makes it an offence to sell alcohol to a child or young person].
(3) A chief constable may authorise a child or young person to buy or attempt to buy alcohol as mentioned in subsection (2) only if satisfied that all reasonable steps have been or will be taken to avoid any risk to the welfare of the child or young person.”
By virtue of the Licensing (Scotland) Act 2005 (Commencement No. 2 and Transitional Provisions) Order 2006 (SSI 2006/286) subsections (1) to (3) of the 2005 Act and a number of related provisions were commenced on 1st June 2002.
Following the operation of a pilot scheme in Fife, test purchasing in relation to alcohol became available on a national basis in December 2007. I understand that operations are generally conducted on an intelligence led basis i.e. purchases will be attempted in licensed premises where police have reason to believe that underage sales are or may be occurring on a regular basis.
Also of relevance in the present context is the Guidance on the 2005 Act issued by the Scottish Executive (as it then was) in April 2007 under section 142 of the 2005 Act. In terms of section 142(3), Boards must have regard to this Guidance. The Guidance covers a wide range of topics. Paragraph 105 of that Guidance is in point in the present context and provides as follows:
“It is hoped that, in the majority of cases, transgressions will be resolved before there is a need for boards to apply sanctions, for example through LSOs and the licence holder. This means any cases that reach the stage of review, and the potential imposition of sanctions, will have a history of non-compliance, and for that reason will not be entirely trivial. Boards will be faced with a range of different scenarios and have a choice of action they can take.”
It may be thought that this paragraph makes it entirely clear that sanctions will only be appropriate where there is a history of non-compliance, and the Court certainly viewed matters in that way in the LIDL case, but it does, I suggest, require to be borne in mind that the Guidance is no more than that i.e. its precepts are not mandatory and Boards will be faced with many different factual scenarios, some serious, some less so, and will still require in a review hearing to arrive at its own view, exercising its own judgment, as to whether (in terms of section 39(1) “a ground for review is established” and, if it has, whether it considers it necessary or appropriate to take any of the steps set out in subsection (2) such as a written warning, a suspension, or a revocation of the licence.
I do not propose today to attempt to deal comprehensively with all of the issues that may arise at review hearings dealing with failed test purchase scenarios. Time would not permit that. But as this audience will be well aware, one of the most contentious issues that has arisen so far is encapsulated in the following question that I pose:
Should action as regards possible suspension (or indeed any of the section 39(2) steps) only take place where there have been two or more failed test purchases, or might a serious single failure properly lead to a suspension or other sanction?
In tackling that apparently straightforward question, I propose to look, among other things, at whether punishment is an appropriate basis for action under section 39; whether some sort of finding of fault on the part of the licence holder is necessary to justify action under section 39; and whether deterrence (in relation to the licence holder who is the subject of the review proceedings, or others, or both) is a relevant issue for a Board to consider when contemplating action under section 39.
And that is where the LIDL case comes in as it dealt with all of these issues, although not perhaps as exhaustively as might, at first blush, be thought. The principal reason for making that last point (a somewhat cautionary note) is that cases and disposals in this area are are, very much, fact specific. That means that it has to be kept in mind that the Inner House decided the LIDL case entirely on the factual scenario with which the case is concerned. And while the Court has given some pointers as to how similar cases may be dealt with in future, its Opinion, I suggest, will by no means be the last word on test purchasing. Only time will tell where the issue goes next.
Dealing briefly with the facts, the case was concerned with the LIDL store at 300 Victoria Road, Glasgow. The background was that the police had received numerous complaints from within the local community regarding increased underage drinking and youth disorder in the locality. The police decided to carry out test purchase operations for alcohol at the 10 premises identified as being within the relevant locality. The test purchaser was 16.5 years of age. In all of the premises other than the LIDL store staff refused to sell alcohol to the test purchaser on the basis that he was too young to buy alcohol. In the LIDL store the test purchaser was sold a bottle of wine. A month later a second test purchase at the same LIDL store was attempted. On the second occasion the sales assistant asked the test purchaser to provide identification and the sale of alcohol was refused. A review hearing before the Glsgow Board took place at the instigation of the police and determined that grounds for review had been established, and that it was necessary and appropriate for the purposes of the licensing objective of preventing crime and disorder that the premises’ licence relating to the store should be suspended for a period of five days, all in terms of section 39(2). An appeal was taken by LIDL to the Sheriff but was rejected. That decision was appealed to the Court of Session and that appeal was upheld. The reasons for the decision of the Inner House are set out in the Opinion of the Court delivered by Lord Mackay of Drumadoon dated 5th April 2013.
In broad terms, the Inner House took the view that the process of review is essentially forward looking and should not be concerned with imposing a penalty in respect of some past event that is not likely to recur; that, having regard to the fact that LIDL had promptly investigated the matter and dismissed the employee responsible for the sale, he having breached the policies and procedures in which he had been fully trained, a ground of review relating to LIDL (as opposed to the employee) had not been made out and did not justify the sanction imposed; and that, in proceeding as it did, the Board, in imposing a penalty against a licence holder who was not at fault, had apparently misapprehended its proper function as a licensing board. On that basis the Court refused to remit the matter back to the Board for reconsideration and granted the appeal, thereby, via the Sheriff, revoking the suspension and bringing the review proceedings to a close.
All very straightforward, one might think. A pretty comprehensive dismissal of the actings of the Board and an end, perhaps, to review proceedings based on a single failed test purchase. At one level that may be so. The reality, I suggest, is a little more complicated.
Let us begin with the issue of punishment. It might be said that the decision of the Inner House sets itself against the notion that the powers of a Board may be used punitively. While there may be room for argument on this, the fact of the matter is that the review provisions in the 2005 Act do not refer to the imposition of a “penalty”, but rather, as outlined above, the taking of a “step”.
This fits with the general notion that in the interpretation of statute, Parliament is presumed not to confer powers for the purpose of punishment unless there are clear indications that this was the intention of Parliament. Accordingly, a step which is imposed purely for the purpose of punishment is not likely to be regarded as legitimate.
That is not to say, however, that the consequences of a step may not be punitive in effect. Plainly the revocation of a licence has considerable financial consequences. But, I suggest that the punitive effect must be the consequence of a step rather than the reason for it.
There is, in my view, probably some force in the point taken by the Inner House, under reference to paragraph 105 of the Scottish Guidance set out above, that review powers are in general to be seen as relating to situations in which there is a history of non-compliance and where the position is relatively serious: see paragraph 35 of the Opinion of the Court.
But in saying this I pause to observe once more that the Guidance is not binding and is expressed in rather loose terms. A Board can depart from the Guidance if it gives a reason to the Scottish Ministers for doing so: see section 142(3) and (4) of the 2005 Act. This might allow a Board to take a stronger or more robust line on certain matters if local circumstances warrant it.
In this respect it can be said that the approach of the Inner House fits with the nature of the licensing objectives being broadly preventative in nature and that that is probably what the Court meant at paragraph 35 of the Opinion when it considered that “the process of review is essentially forward looking”.
This embraces the notion that in some (probably not many) cases, steps can be taken which will interrupt for a period, or permanently, an inconsistency with the licensing objectives. Permanent interruption could embrace revocation. A periodic interruption could embrace a period of suspension appropriate in the circumstances, or a variation of the terms of the licence might represent a middle way. In each case, I suggest, it will be necessary to link the step to one or more of the licensing objectives and where the step that is taken is one of suspension or revocation, considerations of proportionality must plainly be to the fore, not least because that is a possible ground of appeal of the decision of the Board.
If the situation arises where the Board cannot have confidence that by passage of time and taking of steps any inconsistency of the licensing objective would not be likely to recur then plainly it would be open to the Board to consider revocation of the licence. The effect may be punitive but the basis upon which the step has been taken cannot be punitive.
In other cases of a less serious nature the Opinion of the Court suggests that the Board will, when imposing a period of suspension, have to have in view what is appropriate having regard to the need to impose a period of suspension sufficient to cure the underlying problem. So, for example, if the underlying problem is one of training or defective policies then a period of suspension could be imposed of sufficient length to allow measures to be taken to cure the defects in question.
So much for punishment. I now deal with the issue of fault. With reference to paragraph 42 of the Opinion, in which the Court is critical of the Board for imposing a penalty against LIDL when there was no finding of fault in relation to it (as opposed to its employee), the argument for the Board was that this was not a case of strict liability and that the sanction was not imposed for the purposes of securing a financial penalty. That was not what was said in the Statement of Reasons. However, the Court inferred that a financial penalty was indeed the purpose, and one might think that it was entitled to do so.
In this context, I do not read the reference in paragraph 42 to the availability of a due diligence defence to LIDL as meaning that fault must always be present on the part of a licence holder before a step can be taken, or indeed that a Board needs to investigate fully a due diligence defence.
The Inner House was plainly concerned with the circumstances arising from an allegation of a sale to an under-age person where such a defence might be available to the licence holder. It must be the case that a Board has in view considerations of proportionality in determining to impose a sanction of suspension and it is well established law that proportionality must include a determination of the relative fault or otherwise of the persons involved.
I suggest therefore that in cases of under-age sales, consistent with existing case law, the Court will expect the Board to have regard to the possibility that a due diligence defence might be made out in determining what steps might be taken.
Of course that in turn depends on what the Board is told at the hearing and to that extent there remains, I suggest, a practical onus on a licence holder to provide information in that regard. It is not enough, in my view, for an agent simply to say that a due diligence defence might be available. Flesh would have to be put on the bones. Nor does a Board have to hold a trial, as it were. It still has the option of deferring matters pending the outcome of criminal proceedings or, if not minded to do so, to consider matters on the material before it.
What role, if any, has the issue of deterrence in review proceedings? Looking at matters generally, I am not of the view that the decision of the Inner House precludes the Board from having regard to considerations of deterrence in taking a step on review. The Court mentions that possibility at paragraph 41 albeit that it discounts its proper use on the facts in the LIDL case because it did not form part of the reasons given. The Court does not however suggest that that would be an improper basis for review. Further it was not argued for LIDL that deterrence could not be a relevant consideration. What matters in terms of section 39(1) of the 2005 Act is whether, on the evidence before the Board, a ground for review has been established and, if it has, whether the Board considers it necessary or appropriate for the purposes of any of the licensing objectives to take any of the steps mentioned in section 39(2).
It is also relevant to recognise that the Licensing Act 2003 which governs licensing in England and Wales, and its related guidance, can be read as embracing considerations of deterrence. Case law to date in England supports that view: see R (Bassetlaw District Council) v. Worksop Magistrates’ Court  EWHC 3530 (Admin).
Although the Scottish Guidance is silent on the question of deterrence, my view is that in the absence of any clear indication in the 2005 Act or the Guidance that deterrence is not a legitimate factor, it would still be open to a Board to have deterrence in mind in considering whether any of the steps mentioned in section 39(2) should be taken. Arguments along these lines were presented to the Sheriff in the LIDL case and accepted by him, and I do not read the Opinion of the Inner House as undermining the legitimacy of that approach.
It seems to me that the decision leaves open the possibility of a sanction being imposed to deter a licence holder, and conceivably other licence holders, from certain forms of behaviour or from adopting certain practices in the future.
But it is also apparent that any decision which has considerations of deterrence inherent in it would be all the stronger if the step imposed had the effect of affording an appropriate opportunity for any defects in the practices within the relevant premises to be remedied.
So, I suggest that, arising from the Opinion of the Court, the issue of deterrence as a basis for the exercise of review powers can be used but should perhaps be used sparingly. Or at the very least, if deterrence is part of the thinking underlying a disposal it should be set out explicitly in the Statement of Reasons what the justification for that is.
Is the 2005 Act operating as the Scottish Parliament intended? Is there a need for change?
I come to my title. The Sheriff accepted that, having regard inter alia to the licensing objectives set out in section 4 of the 2005 Act, the approach of the Board in review proceedings under that Act required to be broader and more far reaching than had been the case under the 1976 Act regime. The Inner House did not consider that there was very much to that argument. So, the Spirits that I refer to in my title in the guise of the Glasgow Board might be willing to take a rather broader, more imaginative, view of their powers but the Spirits in the form of our Inner House judges are not. Perhaps there is no great surprise in that. Ultimately, it will be for the Scottish Parliament to determine whether the 2005 Act is being operated as intended, and, if considered appropriate, to provide, in the form of legislative change, a clearer indication as to what the true aim of test purchasing is intended to be.
Alan Dewar QC
8th May 2013