Sex shop owners have won a High Court victory over licensing fees which could see them claw back an estimated ฃ1 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.