Introduction

In the landmark case of Kaagobot Ltd and Others v City of Edinburgh Council and United Sex Workers ([2023] ScotCS CSOH_10), the Scottish Court of Session addressed the contentious issue of licensing Sexual Entertainment Venues (SEVs) within Edinburgh. The petitioners, operators of SEVs, challenged the City of Edinburgh Council's decision to impose a nil cap on SEVs, effectively banning their operation from April 2023. The additional party, United Sex Workers, representing sex workers predominantly comprised of strippers, also sought the reduction of this decision.

The core legal dispute centered on the interpretation of Schedule 2 of the Civic Government (Scotland) Act 1982, as amended by the Air Weapons and Licensing (Scotland) Act 2015. Specifically, whether a nil determination under paragraph 9(5A) of Schedule 2 constitutes an absolute ban on SEVs or merely creates a rebuttable presumption against granting licenses.

Summary of the Judgment

Lord Richardson, delivering the judgment, held that the City of Edinburgh Council had erred in its construction of the relevant statutory provisions. The court concluded that the nil determination made by the Council under paragraph 9(5A) of Schedule 2 effectively constituted an absolute ban on SEVs, not merely a rebuttable presumption. Consequently, the court ordered the reduction of the Council’s decision, thereby reinstating the possibility for SEVs to obtain licenses subject to the established criteria.

The judgment emphasized that the legislative framework intended to grant local authorities the power to impose complete bans on SEVs by determining that the appropriate number was nil. The court found that the Council's interpretation, which suggested discretion in granting licenses despite a nil cap, was inconsistent with the statutory language and the legislative intent.

Analysis

Precedents Cited

The judgment extensively referenced prior cases to elucidate the appropriate construction of licensing provisions. Key among these were:

• Miss Behavin' Limited v City of Belfast Council [2007] UKHL 19: This case dealt with the licensing of sex shops in Northern Ireland, where the House of Lords held that the local authority's power to refuse licenses was broad, emphasizing the wide margin of appreciation afforded to local bodies.
• Coyle v City of Glasgow Council 1997 SC 370: Pertained to the licensing of taxis, establishing that statutory language such as "shall refuse" implies a mandatory refusal when specific conditions are met.
• Douglas v Perth & Kinross Council 2017 SC 523: Highlighted the principle that errors in law do not necessarily invalidate a decision, but only if such errors materially affect the outcome.
• Belfast City Council v Miss Behavin' Limited [2007]: Reinforced the understanding that licensing authorities possess substantial discretion in regulating activities within their jurisdictions.
• R (Lumsdon v Legal Services Board) [2016] AC 697 and R (Mott) v Environment Agency [2018] UKSC 10: Addressed proportionality and good administration under EU law principles.

Legal Reasoning

The Court's legal reasoning hinged on a meticulous interpretation of the statutory language. Paragraphs 9(4), 9(5)(c), and 9(5A) of Schedule 2 were scrutinized to determine their intertwined functions. The use of "shall refuse" in paragraph 9(4) indicated an absolute requirement to decline licenses when the number of SEVs met or exceeded the determined cap. Paragraph 9(5A) imposed a mandatory duty on the local authority to establish and publicize the appropriate number of SEVs, which, in this case, was set to nil.

The Court concluded that this statutory framework did not allow for discretionary licensing in the face of a nil determination. Instead, the nil cap singularly translated to a total prohibition on SEVs within Edinburgh unless future statutory amendments provided otherwise.

Additionally, the Court addressed the respondent's argument that the nil determination was merely a rebuttable presumption, emphasizing that the legislative scheme was distinctly designed to empower local authorities to implement outright bans if deemed necessary. The absence of any procedural safeguards or explicitly stated exceptions further reinforced the Court’s interpretation.

Impact

This judgment sets a significant precedent in Scottish administrative and licensing law by clarifying that a nil determination under the specified statutory provisions results in an absolute ban rather than a discretionary cap. The implications are multifaceted:

• For Local Authorities: Underscores the necessity for precise legal interpretations when administering licensing schemes, particularly those with substantial socio-economic implications.
• For SEV Operators: Restores the potential for SEVs to operate in Edinburgh, subject to compliance with existing licensing criteria, thereby safeguarding their economic interests and employment opportunities.
• For Trade Unions and Workers: Reinforces the protections for workers in the sex industry by maintaining regulated and safer working environments as opposed to unregulated bans.
• Legal Framework: Highlights the importance of alignment between legislative intent and administrative practice, potentially influencing future amendments or the drafting of similar provisions in other jurisdictions.

Complex Concepts Simplified

Rebuttable Presumption

A rebuttable presumption is a legal assumption that can be challenged and overturned with sufficient evidence. In this case, the respondent argued that a nil determination acted as a rebuttable presumption, meaning that SEVs could still be granted licenses despite the cap. However, the Court clarified that, given the statutory language, the nil cap definitively bans SEVs rather than merely setting a presumption.

Proportionality

Proportionality is a principle in law that ensures that any interference with rights is balanced and not excessive relative to the aim pursued. The petitioners argued that the nil cap was a disproportionate interference with their rights under the European Convention on Human Rights. The Court, however, found that the decision was proportionate, given the legitimate aims of preventing public nuisance, crime, and protecting vulnerable groups.

Public Sector Equality Duty

This duty requires public authorities to consider the impact of their decisions on different groups to eliminate discrimination and promote equality. The petitioners contended that the Council failed to adequately fulfill this duty. The Court, however, agreed that the Council had met its obligations by conducting thorough consultations and impact assessments.

Conclusion

The Court of Session's decision in Kaagobot Ltd and Others v City of Edinburgh Council and United Sex Workers is a pivotal moment in the regulation of Sexual Entertainment Venues in Scotland. By decisively interpreting a nil determination as an absolute ban, the Court has provided clarity on the extent of local authorities' powers under the Civic Government (Scotland) Act 1982, as amended. This ruling not only reinstates the operational viability of SEVs in Edinburgh but also affirms the necessity for legal precision in administrative actions that significantly impact businesses and workers.

Moving forward, local authorities must exercise their licensing powers with a clear understanding of statutory mandates to avoid similar legal challenges. SEV operators and related trade unions can now engage more confidently in the regulatory landscape, equipped with the knowledge that a nil cap unequivocally prohibits SEVs unless legislative changes are enacted.

In the broader legal context, this judgment reinforces the importance of aligning administrative decisions with legislative intent and statutory language, ensuring that governance is both lawful and transparent.