The importance of safeguarding your pub's premises licence

By Jonathan Smith

- Last updated on GMT

Related tags: Licence, The residents, Developer

Keep a check: Make sure you know what is happening to the licence
Keep a check: Make sure you know what is happening to the licence
It is so important to look after your premises licence. I know that it is an obvious point really, but I have come across two examples recently in practice that illustrate just how easily things can go wrong.

The first relates to the south of England and a developer who purchased a rather tatty boozer, which had caused local residents problems with customers drinking and smoking outside, unchecked. The developer, much to everyone’s general approval, knocked the pub down and built a rather smart wine bar/restaurant with some expensive flats above it.

The premises licence for the boozer had been transferred to the developer and was, therefore, regarded as secure. The developer was about to submit a variation application to change the boozer into his rather nice wine bar when a cursory enquiry at the licensing department of the local authority revealed that the licence had lapsed.

How could this be when the licence had been transferred to the developer several years ago and as he was completely solvent there appeared to be no way in which the licence could not be in force?

However, it transpired that as property prices fell around 2009, the developer, without giving much thought to the matter, let the pub to a temporary tenant to try and mitigate its loss and the temporary tenant took the licence. No register of interest was recorded and, unfortunately, the temporary tenant, a limited company, became insolvent within just a few months and the licence had accordingly lapsed.

Of course, the developer was unlucky. Nine times out of 10 the licence would have been transferred back without difficulty, but as soon as the licence was transferred to the temporary tenant it effectively became ‘at risk’, due to the way the premises were run (‘badly’), the solvency of the company and its integrity in not surrendering the licence if a dispute with the developer arose.

In practice, what would have been a variation application on the plans to change the nasty boozer over to a nice wine bar became an application for a new premises licence.

Often in licensing, as in life, there are unforeseen consequences and here, of course, the new application attracted representations from the residents who had not enjoyed the boozer and relished the tranquillity following its closure. They did not want to go back to the ‘bad old days’, and the residents who had bought the very expensive flats as part of the development above the new wine bar/restaurant did not want their city apartments to have a noisy neighbour below them.

The result was the grant of a licence with many more conditions than its predecessor, despite the operation being better.

Letter of consent
A second example is the purchase of a restaurant with an existing premises licence. Again, there is a developer who has agreed with the existing tenant that it should go and he has signed a deed of surrender. Indeed, the former tenant has been paid a considerable sum of money by the landlord to leave the premises and had done so.

Unfortunately, the developer had not invited the tenant (a limited company) to sign a form of consent at the completion of the surrender and no transfer to the developer, to protect the licence pending the letting of it to a new tenant, had been made.

The new tenant had, therefore, been faced with the prospect of sending a form of consent to transfer to the old tenant when this could have been avoided if the developer had protected the licence properly.

The former tenant and holder of the licence then became awkward and refused to sign the letter of consent, thus meaning that the somewhat long-winded, ‘all reasonable steps’ route had to be taken in the absence of consent and all because one piece of paper was not signed when the opportunity arose!

The licence is, in essence, only several pieces of paper and a plan, but in practice it is so much more; in many areas — for example, central London and where there is a cumulative impact area — the presence of the premises licence is extremely valuable and considerably increases the worth of any building.

It is, therefore, vitally important to try and protect it as much and as far as you are able to do so.

As I have already indicated, related issues, such as what amounts to ‘reasonable steps’ and whether a landlord should hold the licence itself or transfer it to a tenant and register an interest, will be discussed in a later legal article.

Related topics: Licensing law

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