Unfair Sex Shop Licences

Last month Derby City Council agreed to repay nearly £9000 each to the 2 licensed sex shops in the town.

Store owners of Simply Pleasure and the Private Shop have pointed out that the council of unjustifiably hiked fees to milk the shops for as much money as possible.

A recent High Court judgement ruled this over charging to be illegal and that councils are only allowed to charge licence fees in line with administration expenses.

In 2010-11, the council had charged £1,500 for a licence renewal for each shop and, in 2011-12 and 2012-13, £4,380. But, following the key legal test case, it reduced that fee to £495. The council is paying back the excess totalled over 3 years.

Now a refund is being rightfully claimed by a 3rd shop which closed in 2011. John Foster, the former owner of Bargain Pleasure, in Monk Street, which shut in September 2011, has told how he intends to pursue Derby City Council for thousands of pounds he says he should not have had to pay. And he has revealed plans to use any money he gets back to put towards a new shop in Abbey Street. Foster said:

The council had put the charge up from £1,500 to £4,380 and I couldn't pay it that year.

Derby City Council will repay nearly £9000 each to the 2 licensed sex shops in the town.

Store owners of Simply Pleasure and the Private Shop have pointed out that the council of unjustifiably hiked fees to milk the shops for as much money as possible. It was also suggested high fees were imposed as a deterrent to their kind of business.

A recent High Court judgement ruled this over charging to be illegal and that councils are only allowed to charge licence fees in line with administration expenses.

Tim Hemming, owner of Simply Pleasure, said: They thought they could get away with it. He asked how councils could charge sex shops hundreds of pounds more than zoos for licences.

Jonathan Isaby, TaxPayers' Alliance political director, said the council could not be allowed

To fleece perfectly legitimate businesses by charging over the odds for licences. Circumstances are hard enough for businesses trying to make ends meet at the moment without having local authorities adding to their woes with erroneous bills.

The cash being paid back to these shops is money that should never have been taken by the council in the first place.

In 2010-11, the council had charged £1,500 for a licence renewal for each shop and, in 2011-12 and 2012-13, £4,380. But, following the key legal test case, it reduced that fee to £495. The council is paying back the excess totalled over 3 years.

Mike Wallace, a director of Darker Enterprises, which owns Private Shop, said the licence fee being paid for that store had been out of sync with other businesses in the city. He said:

I think councils came along when the shops first came out and thought they could make a bit of cash and charge high fees as a deterrent.

Mike Kay, the council's head of environmental health and licensing, said a policy recommendation has been approved to repay what is owed . He said the £17,550 total would come from council funds . When asked why the council had decided to charge the amounts that it did, he said:

A policy decision was made at the time which has subsequently been found to be incorrect.

A sex shop chain has won a major victory against extortionate license fees charged by Westminster City Council, in a landmark decision .

The council has been ordered to slash the license fees it currently charges sex shops after various outlets, led by Simply Pleasures Ltd, brought their case to the appeal court. Timothy Hemming, owner of Simply Pleasures, based on Brewer Street, and six other shop owners had argued that at most, only 10% of the fees were justified.

Since 2005, Westminster City Council has charged sex shop owners in the West End of London £ 29,102 for their annual licence. In 2009, new European laws came into force in the United Kingdom, which prevented licensing authorities from charging fees going beyond the actual costs of the licensing process.

The council was challenging an earlier High Court ruling made in May last year that a European directive would not permit the licence fees paid by legitimate sex shop proprietors to include the cost of enforcement against unlicensed shops.

Licenses could now cost £ 1,100. The ruling will also force the council to repay more than £ 1m in overcharged fees collected since 2010.

Hemming said:

I think I can speak on behalf of licensees to say that we are all very much delighted at the verdict.

You never expect any outcomes in courts but we thought that our case was justified in being there.

The whole point of taking the council to court was because we thought the fee was excessive - we just wanted Westminster to justify the fee or admit that £30,000 was an extravagant amount.

Cllr Nickie Aiken, Westminster's cabinet member for public 'protection' and premises said the decision would have:

massive implications for local authorities nationwide. This is not just about sex shops, this affects almost everything for which councils charge to carry out enforcement.

Westminster is considering leave to appeal against the judgement.

Local authorities are mounting a legal challenge so as to be able to continue using inflated sex shop licence fees as revenue to fund their pet projects.

Westminster City Council, backed by 15 other councils from across the country, has launched a Court of Appeal application expected to be of widespread importance.

The council is challenging a High Court declaration that a European directive requires that licence fees should reflect administration charges, and not be used as a source of revenue. In the current case under consideration, legitimate sex shop proprietors in Westminster are being asked to bear the cost of enforcement against unlicensed shops via inflated fees around the £ 30,000 mark.

Prior to the introduction of the 2009 Provision of Services Regulations under the Directive, reasonable enforcement costs were allowed under the 1982 Local Government (Miscellaneous Provisions) Act.

Council chiefs claim domestic laws that allowed the use of fees for policing purposes are being overridden by EU legislation in a way that could open the floodgates for illegal sex shops . They argue that controlling the sex trade in UK cities should be a matter for local councils, not Brussels .

Other local authorities fear that, unless Westminster wins its case, other licence fees, currently be levied above the cost of administration, could be effected including the licensing of markets and street trading.

The High Court declaration under challenge had been won by the proprietors of 13 sex shops, of which 11 were in Soho and two in nearby Covent Garden. The court found that Westminster Council was massively overcharging for licences and was not setting the fees according to the cost of administration as required by the European directive.

Gosschalks Solicitors in Hull city centre acted for successful claimants in a case that saw Westminster City Council come under scrutiny after it was revealed it had been charging too much for granting and renewing licences to trade to operators of sex shops in its area.

Stephen Dillon, partner at Gosschalks Solicitors said:

Since December 28, 2009, Westminster had been illegally charging licensees, through their annual fee, for costs incurred by Westminster Council taking action against unlicensed sex shops. As a result, the lawful licensed sex shops were being charged far too much in their licensing fee to trade.

The case has also now created more work for Gosschalks. Dillon said there will be about 40 other local authorities to investigate and reminded people who are required to have a local authority licence to trade to consider whether they have been, or are being, overcharged. Dillon suggested that licensees could take advantage of the Freedom of Information Act to find out more details on how councils have arrived at their licence fees.

Gosschalks will now be making requests to other local authorities. Dillon said: We will be asking how the figures have been calculated. It may be that they are legitimate but until we ask, we won't know.

Since the ruling in May, Westminster City Council asked for permission to appeal but it was rejected.

Nine businesses in Soho and Covent Garden won a High Court victory after claiming the council acted illegally by charging them up to £ 26,000 extra a year to help fund its crackdown on unlicensed premises.

Mr Justice Keith, handing down judgment last month, said a new European directive did not permit the council to add the premium to its annual sex establishment licence. This means the 13 establishments owned by the nine firms, including Simply Pleasure, Janus and Darker Enterprises, are in line to be refunded about £ 50,000 or more each in excess charges.

But the Standard has learned that Westminster Council is determined to appeal against the judgment as it doesn't want to have to pay itself for continuing raids against unlicensed shop. Tony Devenish, Westminster's cabinet member for public health, said:

Who else pays? Do you think it's fair that the taxpayer pays for the illegal activity of others? It's like saying if you don't go out and commit crime yourself, why should you pay for the police force? We clearly can't have unregulated sex establishments in the West End, they lead to criminality.

But Tim Hemming of Simply Pleasure said:

I think I can speak for all the licensees in Westminster and we are very pleased with the judgment. At the end of the day, we were paying £ 30,000 a year for a licence that was not set correctly. You can't put a punitive charge on something that is legal. We just felt they were charging us too much money and it's been proven.

Sex shop owners have won a High Court victory over licensing fees which could see them claw back an estimated £ 1 million.

A judge has ruled that Westminster City Council unlawfully used licence fee income to enforce against illegal sex shops. Mr Justice Keith declared that a recently introduced European directive did not permit the determination of a reasonable licence fee to include the costs of enforcement.

Tony Devenish, the council's Cabinet member for licensing and public health, spouted:

Naturally we are disappointed at this decision, which we intend to appeal.

Westminster City Council has always maintained that the use of licence fee income to enforce against illegal sex shops is a proper use of public money, protecting the quality of life for our residents and visitors, including the global reputation of London.

Enforcing against the illegal sex trade actually benefits those who are legitimate operators in the sex industry.

With millions of extra visitors about to descend on London to celebrate the Jubilee and Olympics, it is critical people see the best face of our city.

The landmark ruling was a victory for Simply Pleasure Ltd and six other long-standing licensees of 11 sex shops in London's Soho and two others in Covent Garden and the West End selling adult sex toys, DVDs, and books and magazines.

The judge said that in the past the cost of enforcing the licensing system was often reflected in the licence fee. But in 2009 new regulations were introduced to implement EU Directive 2006/123/EC, which was aimed at creating a free and competitive market for services within the European Union .

The judge said that whatever domestic law had permitted in the past , the directive did not allow the licence fee to exceed the administrative costs covering the steps which an applicant for a licence has to take if he wishes to be granted a licence or to have his licence renewed. The judge said:

The fact that the council has preferred over the years to use the licence fee to charge the operators of sex establishments for enforcing the system does not affect the proper interpretation of the 2009 regulations.

For all these reasons, therefore, I have concluded that since the year beginning February 1 2010 the council has not been permitted, when determining the reasonable licence fee for sex establishments, to reflect the fee which it determines the costs of enforcing the system.

Pressure group, Large Cause, represents licensed sex shops who feel that expensive licenses are an unfair when competing with unlicensed shops selling similar lines. The group took legal action against Ann Summers suggesting that one representative Ann Summers store should be licensed too.

The claim by Large Cause that the Ann Summers store in Brewer Street, Soho, should be required to apply for a sex shop licence culminated in a two day hearing at the City of Westminster Magistrates Court, London, on February 11th.

Large Cause Ltd, which stands for Licensed Adult Retail Group Encourage Councils Abolish Unlicensed Sex Establishments, now faces legal costs of £100,000.

District Judge Michael Snow rejected the private prosecution on three separate points – but they were related to who was bringing the prosecution and their reasons for doing so, rather than the nature of the case.

He told the parties: The motivation behind this prosecution appeared to be profit rather than upholding the law. And to allow this matter to proceed would be an affront to justice.

An application for costs has been made by Ann Summers legal team and this will be heard on March 3rd.

A sex shop owner has been ordered to pay almost £11,000 after refusing to get a licence from the council.

Martin Hale was taken to court by Southampton City Council when he ignored warnings that he needed to renew a licence for his Adult Gift Shop in Howard Road.

Hale challenged whether his shop came within the definition of a sex shop, denying that he needed a sex establishment licence.

But District Judge Calloway, sitting at Southampton Magistrates' Court, ruled he had no doubt in his mind that the premises were a sex shop.

Hale admitted three offences of trading without a licence. He was sentenced to fines totalling £6,000 and ordered to pay £4,973 costs.

The council charges a £7,500 fee for sex shop licence applications.

Hale has now applied for a licence which is due for consideration at a meeting next month.

Bournemouth trading standards and licensing officers have taken part in a day of enforcement against four premises in the town to investigate whether they are selling sufficient sex articles to warrant a sex shop licence.

They visited Chez L'Amour at the Triangle, 18+ on Holdenhurst Road, Blue Bazaar on Christchurch Road and Ann Summers on Commercial Road, which all currently trade without sex establishment licences on the basis that they do not offer a significant degree of sex articles.

But licensed sex shop owners, who pay thousands of pounds for a licence, allege these shops are effectively unlicensed sex shops and have urged the council to investigate.

It comes at a time when a group called Large Cause Ltd (Licensed Adult Retail Group Encourage Councils to Abolish Unlicensed Sex Establishments) is taking legal action against Ann Summers Ltd on the same grounds.

In a statement, Ann Summers said they had had direct communication with Bournemouth council and been told they were not in breach of licensing laws. Chief executive Jacqueline Gold said: Allegations made against us are wholly unsubstantiated and we are confident the courts will find that there is no case to be answered.

And Jason Sherratt, owner of Chez L'Amour, said: My shop's a bit of both. I have a selection of normal DVDs and some other little novelties as well as some adult material. I wouldn't say I'm a full-on 'explicit' shop, so we just have a sign on the door warning people that there are adult things inside.

Senior licensing officer Sarah deBruin said the law was vague when it came to ascertaining exactly what was a sex shop. The definition of a significant degree of sex articles has never been tested in the courts but recent legal advice provided for Leeds City Council suggested the threshold could be placed at just 10 per cent.

Officers' findings from their visits will be reported to a private meeting of the council's licensing board on November 3. Councillors will then decide whether there is any evidence to prosecute any of the businesses and whether they want to pursue this.

City centre sex shops claim Nottingham's Ann Summers store should be subject to licensing conditions.

There are no age restrictions on who can enter the shop in Smithy Row – which sells goods ranging from lingerie to sex toys and softcore 18 rated adult DVDs [Many high street shops sell lingerie and 18 rated DVDs. Some sell a few sex toys as well).

Yet similar stores such as The Adult Gift Shop in Goose Gate, Hockley, and The Private Shop, in Upper Parliament Street, have to apply for an expensive annual licence to trade, which includes a condition that they enforce a strict over 18 policy.

Licences are required where a significant degree of sex related articles are for sale – a term not yet defined by the courts. Each licensing authority determines its own interpretation.

Local sex stores claim Ann Summers is over what they would expect is the threshold. It comes as an Ann Summers store in Soho, London, faces private prosecution for trading without a sex establishment licence under the Local Government (Miscellaneous Provisions) Act 1982. They are due to enter a plea on October 14.

Marilyn Hawkes, owner of The Adult Gift Shop said: It is a gripe among a lot of stores. There are quite a few stores across the country involved in checking Ann Summers shops in their local area. We went out to check the Nottingham one. That's when we realised that they were selling a lot more sex items than they were two to three years ago. I don't think the council realise the level of teenagers and people who go in to Ann Summers with buggies. They don't necessarily see it as a problem. They don't look at it in the same way as they do with our store. But children could pick something off the shelf that they shouldn't be exposed to.

Mrs Hawkes said Ann Summers was also allowed to have a prime city centre location next to the Council House – yet licensed stores were not allowed in that area. Mrs Hawkes added that licences cost £6,500 a year, but Ann Summers did not have this administrative burden.

A spokesman for Nottingham's The Private Shop said: It is something I have never understood because it always appeared to us that no one ever seemed to be bothered about Ann Summers (not having a licence).

A spokesman for Nottingham City Council said: There would appear not to be widespread public concern about this issue as we have received only one complaint, in January 2009, from a company claiming that Ann Summers was illegally trading as a sex shop. We have been taking a view, on a case by case basis, on whether a significant degree of sex related articles are for sale. We visited the premises earlier this year and we are satisfied that the local branch does not need a sex establishment licence.

A previously unknown group, Large Cause Ltd (Licensed Adult Retail Group Encourage Councils Abolish Unlicensed Sex Establishments) have been successful in their application before a district judge to issue a summons against Ann Summers Ltd for trading without a sex establishment licence under the Local Government (Miscellaneous Provisions) Act 1982 at their Brewer Street shop in London's Soho.

Large Cause was created as a fighting platform to try and encourage local councils to adopt a uniform approach to the licensed sex shop industry, and to encourage them to enforce the 1982 act.

Ann Summers now face a criminal prosecution and have to enter their plea on the 14 October at 2pm.

The move follows a number of complaints earlier this year to local councils across the country from a number of licensed sex establishments, who contended that Ann Summers were operating unlawfully across the country.

Licences are required where a significant degree of sex related articles are for sale – a term that has not yet been definitely defined by the courts.

Complaints to local authorities alleged that the majority of products on sale and for display within the Ann Summers shops consisted of sex related articles requiring a licence – an assertion rejected by all the local authorities who inspected their local outlets. Where there was any dispute, councils reported that the chain was happy to reduce the amount of merchandise on sale to an acceptable level.

The prosecution also follows calls for councils to reduce their sex establishment licence fees. Whilst councils have a wide discretion in setting their fees providing they do not profit from doing so, these range from a few hundred pound a year to more than £30,000 a year in some areas. Licensed operators have criticised chains such as Ann Summers for being able to operate without this additional administrative and financial burden.

A representative from Large exclusively told Licensing News that the group wanted to also see the Act used against retailers trading under council's radars by not attempting to be licensed: Ann Summers are our prime concern because they are the most visible, but there are many more. Almost every UK-based sex product website trades unlicensed and every party planner should have an individual licence as their income is derived from sex articles to a significant degree. We know councils have no real interest in any of this, but they are accountable and should act .