The High Court has rules that non-party costs orders can be issued under the Licensing Act but rules of natural justice must apply.

In the case of Aldemir v Cornwall Council [2019] EWHC 2407 (Admin) Mr Justice Swift considered the question of whether magistrates acting pursuant to their appeal jurisdiction under section 181 of the Licensing Act 2003 have the power to make non-party costs award i.e. awards of costs against persons who are not the parties to the appeals before them.

The High Court case follows an unsuccessful appeal by the then premises licence holder Eden Bar Newquay Ltd ("EBNL"), which operated premises at 1 Beach Road in Newquay, known as Eden Bar against the revocation of the premises licence.

The sole shareholder in and director of EBNL was Mr Memet Aldemir's brother Nimetullah Aldemir, who is resident in Cyprus. Memet Aldemir was the designated premises supervisor.

The High Court transcript sets out the circumstances as follows: “Although the precise details are not clear, it appears that as at April 2018, the Beach Road premises were owned by Mr Memet Aldemir, and leased by him to EBNL. Mr Memet Aldemir also owned the fixtures and fittings used on the premises; he was employed by EBNL as its general manager. Finally, for the purposes of section 15 of the 2003 Act, he was the designated premises supervisor for Eden Bar.”

During the appeal proceedings before the Magistrates’ Court, District Judge Baker was asked by the council to make an order for costs. Refusing an adjournment, she ordered Mr Memet Aldermir to pay £30,935.50 in costs of the Eden Bar appeal, saying he was the ‘controlling force’ of the company.

An application to the Magistrates Court to state a case was later made on 10 December 2018.  District Judge Baker stated the case on 7 March 2019 which contained the following questions:

(1) Did she have any statutory power to order costs against a non-party?

(2) If she had such a power was it reasonable to make such an order in this case?

(3) Were the total costs reasonable?

(4) Was she wrong to hear and determine an application for costs against Mr Aldemir who was not a party to the licensing appeal, was not present at court, did not have legal representation in court, and had no notice of the application?

Reporting on the case, Local Government Lawyer reported that Mr Justice Swift concluded that:

• The power at section 181(2) of the 2003 Act includes the power to make a costs order against a non-party.

• He could fully understand District Judge Baker's frustration at the way in which Mr Aldemir had conducted himself during the litigation. Nevertheless, an application for costs against a non-party was a course of action that was out of the ordinary and could, as was the case here, lead to significant financial consequences. “It is important that such an application is heard and determined in accordance with a fair procedure.”

• The principles of natural justice must be observed. “The person against whom the application is made must have fair notice of the application and the grounds on which it is made, and a fair opportunity to respond to the application. I do not consider those principles were observed in this case.”

• When the applications are reconsidered they should be determined in accordance with the principles formulated by the courts in the context of non-party costs applications under section 51 of the Senior Courts Act 1981.The costs orders made against Mr Aldemir were therefore to be set aside and reconsidered by the District Judge.

Source: Local Government Lawyer