Gala Casinos Ltd, R (on the application of) v Gaming Licensing Committe for the Petty Sessional Division of Northampton

THE DEPUTY JUDGE: This is an application for judicial review of the decision of the Gaming Licensing Committee for the Petty Sessional Division of Northampton made on 20th September 2006.

The Licensing Committee on that date granted a casino licence to Beacon Casino Ltd ('Beacon') for the premises in Weedon Road, Northampton.

The Second Claimant operates a casino at Regent Street, Northampton. The First Claimant operates a casino at Sol Central, Northampton. The two claimants were objectors before the justices who comprised the Licensing Committee.

Permission to apply for judicial review was refused on the papers by Bennett J but granted by Calvert-Smith J after a renewed oral application on 21st March 2007. He did so "with considerable hesitation and on the limited knowledge that he had of the matters which gave rise to the written decision."

The Defendant Licensing Committee has not appeared or been represented. In a letter to the Court of 3rd September 2007, the Clerk to the Justices explains that this is their normal position and that the Committee does not instruct counsel due to the cost. This is not to be regarded as a change of position or dissatisfaction with the decision reached. The Committee was content for the Court to decide whether its decision was right or wrong. That is not quite accurate. It is not for the Court to decide whether the Committee's decision was right but only whether it was wrong in law and, if so, whether it ought to be quashed.

The effective opponent on the present application for judicial review was Beacon.

In addition to the two casinos operated in Northampton by the Claimants, the Licencing Committee was aware that a further licence to operate a casino in Northampton had been granted. This had been in October 2000 and was for premises in Commercial Street in that city. The successful applicant in that case was LCI Ltd. In 2003 those premises were sold to Kerzner International, a South African casino operator. There was before the Licencing Committee a letter dated 18th September 2006 from Kerzner to Gala Coral Group Ltd (the parent company of the two Claimants). There was attached to the letter a chronology of what had been happening since Kerzner acquired the property and a press release dated 14th August 2006. The letter and its attachments said (in summary) that the building development on the Commercial Street property had been completed in July 2006 at a cost of some £4 million. These documents also referred to an agreement made in August 2006 between Kerzner and Aspers to enter into a joint venture to operate the casino as an Aspers branded property. Kerzner was proceeding with fit out designs. Fit out costs were estimated to be at a further £8 million. The letter concluded:

The Claimant's challenge focuses on the paragraph that says "We note the press release by Aspers in respect of the licence granted to the Commercial Street premises, but knowing that this has remained dormant for six years, we have not taken [it] into our considerations."

The Claimants allege that the Committee here erred in law since: (a) they took account of the press release, but not, apparently, the covering letter from Kerzner or the chronology; (b) alternatively, on the basis of all the evidence before the Committee, the decision to leave the Kerzner/Aspers project out of account was irrational; (c) the Committee took account of population growth over the following 15 years, but was then rationally obliged to take account of the opening of the Kerzner/Aspers casino.

The Committee was required to consider Beacon's application for a casino licence under the Gaming Act 1968. That Act has now been repealed by the Gaming Act 2005 but it still applied to this application. Schedule 2 paragraph 18 of the 1968 Act provides as follows:

It is common ground that paragraph 18(1) is not material, since there was evidence that a substantial demand already existed on the part of prospective players for the gaming facilities of the kind proposed to be provided on the relevant premises.

It is also common ground that paragraph 18(2)(a) was not material since gaming facilities of the kind in question were available in that area, at least in the form of the two existing casinos operated by the Claimants.

The real issue for the Committee (or perhaps, more accurately, the first issue for the Committee relevant to the present application for judicial review) was whether it had been shown to the satisfaction of the licensing authority in the words of paragraph 18(2)(b) "where such facilities are available, that they are insufficient to meet the demand."

I say that this was the first issue because, even if Beacon had not satisfied the Committee on this score, it is also common ground that the Committee would still have had a discretion to grant the application for a casino licence nonetheless.

Paragraph 18(2)(b) speaks of a situation where facilities "are available". Mr Walsh, on behalf of Beacon, did not suggest that the Committee could lawfully have disregarded the Kerzner/Aspers project simply because the casino had not yet opened and its facilities were not then presently available. He referred to the decision of the Divisional Court in R v Licensing Justices of the Brighton Crown Court ex parte Sergeant Yorke Casino Ltd given on 19th June 1979. Despite its age, I was told that this decision had never since been questioned. In that case the Crown Court had directed themselves that paragraph 18(2) meant that a licensing authority should consider gaming facilities already in operation and also such facilities for which a licence had been granted and which the licensee firmly intended and was able to establish that he was going to open. The applicant for judicial review in that case contended that the Crown Court should instead have taken into account existing facilities and also those for which a licence had been granted (in other words, without the qualification that the Crown Court had added in respect of premises for which licences had been granted but where the casino had not yet opened).

The claim failed. Lord Widgery LCJ said on the third page of the transcript (reading from paragraph E):

Lord Widgery's reference there to the importance of the Crown Court's "local knowledge" was a matter to which he returned later in the judgment, when he said at page 6 of the transcript and when speaking of the powers under the Gaming Act 1968:

These sentiments were endorsed by the other member of the Court, Lloyd J, who said (also at page 6 of the transcript):

Mr Kolvin, on behalf of the Claimants, accepted that in deciding whether there was an unmet need for gaming facilities, the Licencing Committee was entitled to consider the particular segment of the market at which the applicant's casino was directed. He argues, however, that the Licencing Committee in this case did not leave the Kerzner/Aspers casino project out of account because it would be directed to a different segment of the gambling market, but simply because it considered the licence for that casino to be dormant.

Mr Kolvin observes that the letter from Kerzner International was solicited by the Claimants after the Chairman of the Licencing Committee had asked, on the first day of the hearing, whether the Kerzner casino was going to happen. On that occasion the following exchange took place:

Mr Kolvin submits that it was accepted by Mr Jackson, a witness called by Beacon, that the Kerzner/Aspers casino had to be taken into account. This exchange took place in the course of Mr Jackson's cross-examination by Mr Kolvin:

Mr Walsh submits that in accordance with the Sergeant Yorke case it was for the Committee to decide what approach to take to casinos for which licences had been granted but which were not yet in operation, or indeed for which a single licence had been granted but which was not yet in operation. In this case, it was open to the Committee to disregard the Kerzner/Aspers casino since there was little or no evidence as to the type of gamblers it intended to attract and therefore no basis for saying that it would fill the demand for the more modest form of gambling (and at an out-of-town location) which the Committee considered that the existing two casinos did not meet and which the Beacon proposal would. Mr Walsh accepts that the letter from Kerzner was admissible evidence (a Licensing Committee is not precluded from admitting hearsay evidence). Mr Walsh also accepted that at some point in the future the Kerzner/Aspers casino would open. However, the letter did not speak to the segments of the market at which the casino would be pitched and the Committee was entitled to take the view that, even if that casino did open it would not fill the gap in the market which the Committee had previously identified.

Mr Kolvin replies that the Kerzner/Aspers casino satisfied even the stricter test applied by the Brighton Crown Court in the Sergeant Yorke case since the licencee firmly intended and had established that it intended to open. The Committee's reason for discounting the Kerzner/Aspers' casino was the dormancy of that licence, not its irrelevance. He observes that, in any case, there was some evidence from Mr Pardo-Roques that a casino run by Aspers in Newcastle was not pitched as an upper market exercise out of reach of lower market players. The Newcastle casino was very busy and very large. The official transcript has an inaudible section, but the evidence of Mr Macgregor, the Group Legal counsel of the Claimants, is that Mr Pardo-Roques added that the Aspers' operation appealed to a broad range of customers. There was also evidence that the proposed casino in Commercial Street, Northampton would be around 30,000 square feet, which would make it one of the largest casinos in the UK when it opened.

In my judgment the Claimants have failed to establish that the Licencing Committee erred in law in reaching its decision. The term "dormant" was perhaps not as clear as it might have been, but the Claimants have not advanced a 'reasons' challenge to the decision. They rest their case on the failure of the Committee to take account of a material factor or factors and/or the irrationality of the decision.

The Committee cannot have left out of account the fact that the building had been completed. As the Claimants' grounds for seeking judicial review say, it was there for all to see. And as the Chairman said on the first day of the hearing in the passage we I have quoted above: "we obviously know that the premises exists."

Nor am I persuaded that the Claimants have shown that the Committee left out of account the cover letter or chronology provided by Kerzner. The press release, to which the Committee expressly referred, was part and parcel of the same document of which the letter and chronology also formed part. It is not to be inferred that a decision-maker has failed to take account of a particular piece of evidence because that piece is not mentioned in the decision. I do not think that it would be right to make that inference in the present case.

The Sergeant Yorke case demonstrates the importance which is to be attached to the local knowledge of the primary decision-makers - in that case the Crown Court, in this case the Licensing Committee. The Claimants' argument that they satisfied even the Brighton Crown Court's test does not meet this point. Lord Widgery in that case did not require licensing authorities to adopt even that approach. On the contrary, he opposed the idea that Parliament had been prescriptive as to the approach to be adopted. Of course this was accompanied by the caution that the Court would intervene if the licensing authority had erred in law, but the message in the forefront of that case is that the Court would be particularly respectful of the authority's assessment of local conditions. In this case, the Committee decided that Kerzners/Aspers project should not be taken into consideration because it had been dormant for 6 years. For the reasons which I have given, the Committee cannot have meant by that phrase that nothing had happened over this period. Plainly a building had been constructed and there was information that a joint venture agreement had been made with Aspers to run the casino. Mr Kolvin invites the Court to conclude from these facts that the Committee had simply reached an irrational decision. But in my judgment it is permissible to read the Committee's decision as meaning that because the casino had not begun to operate even after this length of time, it was impossible to tell whether it could meet the gap in the present market in Northampton which the Committee had previously identified.

Mr Walsh put it too high when he said that there was no evidence that the Commercial Street casino was going to open in 2007. There was evidence, in the form of the press release, that this was the expected date. However, the length of time which it had taken the Commercial Street project to get as far as it had in September 2006 would also have justified the Committee in being somewhat sceptical as to when this casino would actually open. In this sense, too, the term "dormant" was not wholly inapt.

I stress that I reach this view on the basis of the evidence which was before the Committee. Beacon sought to adduce a witness statement from Gary Holmes, dated 23rd August 2007 that there had been no signs of work on Commercial Street property at that date or for two months previously. In reply, the Claimants sought to adduce evidence from Andrew Herd of the Aspers Group that work had been delayed by a planning application which had been made in November 2006 and granted in March 2007 and a further planning permission granted in May 2007. The casino was now expected to open in June 2008. None of this post-hearing evidence particularly assists one way or the other in demonstrating whether or not the Committee erred in law when it made its decision in September 2006.

If I was wrong as to whether the Committee did err in law on one or more of the grounds that the Claimants have argued, I would anyway conclude that the decision ought not to be quashed. Even if the Committee erred in the reasons which they gave for leaving the Kerzner/Aspers project out of account, the error would have been immaterial if the Committee would anyway have inevitably granted Beacon's application. Mr Walsh accepted that this was the correct test. R (Smith) v North East Derbyshire Primary Care Trust [2006] 1 WLR 3315, [2006] EWCA Civ 1291 confirms that this is so and shows further that probability is not enough (see the judgment of May LJ at paragraph 10).

In this case, as Mr Walsh submitted, the Committee found there to be a gap in the existing market. It was a gap for, in the words of Sir Richard Beckett QC, counsel for Beacon, "a humbler casino". There was no evidence from Kerzner (even in hearsay form) as to the segment or segments of the market at which they expected their casino to be directed. Mr Pardo-Roques' evidence concerned the Newcastle casino operated by Aspers. The letter from Kerzners said that it was intended to operate the Commercial Street premises as an "Aspers branded property" but that left considerable uncertainty as to what the phrase meant and there was no witness from Kerzner to explain further. The sparse information about the scale of the planned casino at Commercial Street did not suggest that it would fill the gap in the market for a "humbler casino".

Mr Kolvin submitted that the Committee was influenced by the general population growth that Northampton was projected to experience. He argues that the Committee commented on the ability of one casino to satisfy demand for many years. The growth of customers attending the two casinos presently operating was attributed to population growth. The development programme of the government envisaged a further significant increase in population in the permitted area (the area over which the Justices had a licensing jurisdiction). The Committee believed that this would inevitably create a latent unmet demand. Mr Kolvin submitted that it was significant that the Committee's observations about the Kerzner/Aspers project came within this section of the decision. If, he submits, the Committee had in mind the projected population growth over the life of the development programme (some 15 years), it would, at least, have been possible that the Committee's decision would have been different if it had taken into account the ability of the Kerzner/Aspers casino to satisfy that demand.

In my judgment, though, this part of the Committee's decision cannot be divorced from its earlier section where the Committee had identified a need unmet by the present providers. Beacon's proposal was directed at that particular segment of the market. Read as a whole, the effect of the later part of the decision was that the projected population growth was likely to increase this gap in the market. It was, after all, only that gap which was relevant to the type of casino which Beacon was applying to operate.

Mr Kolvin also argued that the Committee was affected by the nuisance of drug-dealers and prostitution in the area of the Regent Square casino. He said that no similar finding had been made in relation to the Commercial Street area. This is true. However, I do not think that it assists Mr Kolvin very much or at all. The Committee referred to these matters because they had been raised by one of the witnesses. However, it is to be noted that no similar finding was made either in relation to the other operating casino, i.e. Sol Central. The absence of such a finding in relation to Sol Central did not deter the Committee from finding that a licence should be granted to Beacon. No more, in my view, could it be said that the absence of such a finding in respect of Commercial Street might have produced a different result.

The extracts from the cross-examination of Mr Jackson which I have quoted above do not lead me to a different conclusion: the first question was somewhat diffuse and the second was directed more at the issue of monopoly.

I should make clear that in reaching my decision, I have not been affected by the absence of any representations to the Licencing Committee from the Gambling Commission or the other statutory regulators. The Advice produced by the Commission for the 2006 Sessions made clear (see paragraph 10) that the Commission's stance would generally be neutral unless there were issues of concern relating to the individual application. The absence of representation from the other statutory bodies was also likely to be neutral on the question of whether there was unmet demand.

I have not referred to all of Mr Kolvin's submissions but I have considered them. Despite the care and lucidity with which they were presented, they have not persuaded me that the Committee erred in law or, if it did, this should lead to the decision of the Committee being quashed.

Accordingly this application is dismissed.