These two claims for judicial review and appeal by way of case stated (together, “the claims”) concern applications made by the Commissioner of Police for the Metropolis (“the Commissioner”) for Closure Orders under the Anti-Social Behaviour, Crime and Policing Act 2014 (“the 2014 Act”) in respect of six massage parlours in Soho which were suspected of operating as brothels. Those applications were refused on 2 November 2016 by the District Judge (“the DJ”) on the basis that the Commissioner had not proved the alleged criminal conduct to the requisite standard. The Claimants/Appellants in this matter (to whom I shall refer as “the Claimants”), who operate massage parlours at the properties concerned, were therefore successful in resisting the Closure Orders. However, the DJ refused to order costs and compensation in favour of the Claimants. It is those refusals which form the basis of the claims before me.

Operation Lanhydrock was a joint Metropolitan Police, City of Westminster and Modern Slavery and Kidnap Unit Command Investigation into six premises believed to have been systematically operating as brothels disguised as massage parlours across London’s West End and Chinatown. The evidence giving rise to that belief comprised the following:

A number of “reviews” of each of the premises on a website in relation to sexual services offered at the premises. These services included the alleged availability of “extended sessions” during which clients engaged in a variety of sexual acts with “masseuses” upon payment of money;

Advertisements on another website, described as “London and the UK’s biggest erotic and sensual massage directory”, which appeared alongside pornographic images; and

Intelligence from the Safer Neighbourhoods Team and Westminster City Council, including that:

informants had reported that women working at the premises were offering sexual services to customers; and

there had been reports of aggressive touting in the area around the premises by female members of staff dressed provocatively

Under s.76 of the 2014 Act, the Commissioner has the power to issue Closure Notices in respect of premises if she is satisfied on reasonable grounds that the use of the premises had resulted, or was likely soon to result, in nuisance to members of the public or disorder near those premises. Closure Notices have the effect of preventing any person (except the owner and persons habitually resident there) from entering or using the premises. Given the evidence available, the Commissioner considered that there were reasonable grounds for believing that the use of the premises resulted in or was likely to result in nuisance or disorder. Accordingly, on 20 October 2016, six Closure Notices were issued under section 76(1) of the 2014 Act.

Also on 20 October 2016, six search warrants were executed simultaneously at the six premises. Several items of a sexual nature were found at certain of the premises and at one of the premises, a police officer walked in on a couple having sexual intercourse in a room upstairs.

The Closure Notices were served under section 79(2) of the 2014 Act. Once the Closure Notices are served, the Commissioner has a short window of up to 48 hours in which to apply to the Magistrates for a Closure Order under s.80 of the 2014 Act. A Closure Order may prohibit access to the premises by all persons for a period of up to three months.

In the present case, that application for a Closure Order was made on the following morning, 21 October 2016, to Hammersmith Magistrates’ Court. It was agreed that the substantive hearing, to determine whether Closure Orders should be made by the court under s. 80 of the 2014 Act, should be adjourned to 27 October 2016. I am told that the solicitor for the premises did object to the continuation of the Closure Notices, but the Magistrates decided that the continuation of the Closure Notices pending the full hearing was necessary in respect of all six premises (in accordance with section 81(4) of the 2014 Act).

At the adjourned hearing on 27 October 2016, those acting for the premises applied to adjourn proceedings on the basis that they were seeking permission to judicially review the validity of the Closure Notices on the grounds that there had been a failure to comply with the requirement under s.76(6) of the 2014 Act to inform persons having an interest in the premises that the notice is going to be issued. It is not in dispute that the Commissioner did not inform all of the relevant parties that the notice was going to be issued. The reasons for that, as set out in the police evidence lodged in support of the Closure Order, were the confidentiality of the operation, the suspected role of some of the interested parties in the organised criminal network and the nature of the offences being investigated. There was also a concern that some of the females being required to work at the premises were or may have been victims of trafficking in human beings, and that informing persons that a Closure Notice was going to be issued would undermine or compromise police efforts to engage with those victims.

This application for a further adjournment was refused by DJ Snow. DJ Snow accepted the Commissioner’s argument that any questions of invalidity of the Closure Notices were a matter for judicial review and should not delay the Magistrates’ determination of the application for Closure Orders. Directions were made and the substantive hearing was adjourned to 1 November 2016.

On 28 October 2016, the Claimants brought an urgent claim for judicial review (‘the First JR’) against the Commissioner’s decision to issue the Closure Notices and DJ Snow’s refusal to hear submissions regarding non-compliance with section 76(6). It was suggested in the First JR that there be a rolled-up hearing on 1 November 2016. On 31 October 2016, the Claimants made an application to this Court for urgent consideration of the First JR by the next day and prior to the substantive hearing in respect of the Closure Orders. Jefford J refused that application, considering it neither possible, practicable nor necessary to hold a rolled-up hearing on such an urgent basis.

The substantive hearing of the application for Closure Orders therefore went ahead on 1 November 2016 at Hammersmith Magistrates’ Court with DJ Matson presiding. All six premises were legally represented. It was not in dispute at that hearing that the requirement to inform under s.76(6) had not been complied with. Whilst the Closure Notices had been sought on the basis of likely nuisance and disorder, by the stage of the hearing, the focus of the Commissioner’s case had shifted to the alleged criminal behaviour on the premises, and the applications for Closure Orders were made on this basis, as permitted by s. 80 of the 2014 Act.

After hearing evidence from a number of witnesses and considering documents presented to her, DJ Matson decided that whilst, “there are many things in this case which may lead to the suspicion that sexual services were being carried out at some of these premises”, the test in s.80(5) of the 2014 Act for making Closure Orders was not satisfied and they should not be made. DJ Matson’s decision was issued on 2 November 2016.

The premises had remained closed for a period of 13 days from the issuing of the Closure Notices on 21 October 2016 until the refusal of the Closure Orders on 2 November 2016. The massage parlours lost business in that period. The Claimants made applications for their costs and for compensation in respect of losses incurred as a result of the Closure Notices. These applications were dealt with on the papers and, on 27 February 2017, DJ Matson handed down her decision. In dealing with costs, the DJ applied the principles established in Bradford Metropolitan District Council v Booth [2001] LLR 578 (“Booth”) and in R(Perinpanathan) v City of Westminster [2010] EWCA Civ 40 (“Perinpanathan”) , including that a straightforward ‘costs follow the event’ approach may not be appropriate in cases involving public authorities acting reasonably in the public interest, and that in such cases the starting point and default position is that no order for costs should be made. The DJ found that:

The DJ also dealt with compensation. Under s.90(5) of the 2014 Act, compensation may be awarded where the court is satisfied that the applicant for compensation is not associated with the impugned conduct on the basis of which the Closure Notice was issued, that reasonable steps were taken to prevent the impugned conduct, that financial loss has been incurred in consequence of the Closure Notice, and that, having regard to all the circumstances, an award of compensation is appropriate in respect of that loss. As to compensation, the DJ said as follows:

That reasoning was expanded upon in the case stated:

The DJ went on to state that although the requirements of s.90(5)(a) to (c) of the 2014 were met:

The DJ also confirmed that she did not take into account the Commissioner’s failure to comply with s.76 (6) in her decisions not to award costs or compensation.

Notwithstanding the fact that they had succeeded in resisting the Closure Orders, the Claimants persisted with the First JR. Permission was refused in respect of the First JR by Morris J on 27 February 2017 on the basis that the claims were otiose as by then the proceedings in respect of the Closure Notices had already been resolved in the Claimants favour. However, on the basis that the Claimants’ claim in respect of s.76(6) was strong, Morris J made the provisional order that the Commissioner pay the Appellants’ costs of the application for judicial review incurred up to and including 1 November 2016, subject to any objections raised by the Commissioner. The Commissioner did object to costs being ordered.

The Claimants also applied for permission to seek judicial review of DJ Matson’s decision not to award costs and compensation (“the Second JR”). That claim was brought on three grounds, namely:

Ground 1 : In determining the applications for costs and compensation the DJ failed to have regard to the fact that the Closure Notices served by the Commissioner were served in breach of the requirements of the 2014 Act;

Ground 2 : In determining whether or not to award compensation from central funds the DJ applied the wrong test and/or had regard to immaterial considerations;

Ground 3 : the DJ’s determination of the Applications for costs and compensation ‘en bloc’ was procedurally unfair and/or demonstrates a deficiency in the reasons for the Decision.

The Commissioner resisted Grounds 1 and 3.

On 18 April 2017, Langstaff J granted permission in respect of Ground 2 which challenged the failure to award compensation. However, Langstaff J refused permission in relation to the costs aspects under Grounds 1 and 3 of the Second JR and the application to have the Second JR consolidated with the renewed application for permission in respect of the First JR, stating that:

On 7 June 2017, the Claimants appealed against DJ Matson’s decision by way of Case Stated. The questions posed by the DJ for determination by this Court are:

On 27 June 2017, with the consent of the Commissioner, Supperstone J ordered that the First JR be listed as a rolled-up hearing, to be heard together with the Second JR and the appeal by way of Case Stated.

Section 76 of the 2014 Act, so far as is material, provides:

Section 77 provides that the maximum period that may be specified in a Closure Notice is 24 hours unless the conditions of subsection 2 are met in which case the maximum is 48 hours. Those conditions were met in the present case.

Section 78 provides for circumstances in which a Closure Notice may be cancelled or varied and s.79 prescribes the requirements for service of Closure Notices.

Section 80 addresses the power of the court to make Closure Orders, applications for which must be heard no later than 48 hours after service of the Closure Notice. Under s.80(5) the Court can make a Closure Order if it is satisfied:

Section 81(3) and (4) provides that the Court may adjourn the hearing of applications for a maximum period of 14 days and, in doing so, order that the Closure Notice continue in force pending the adjourned date.

By s.86(1) a person who without reasonable excuse remains on or enters premises in contravention of a Closure Notice (including a Notice continued in force under s.81) commits an offence.

Section 90 of the Act deals with compensation and provides:

It is agreed that there are three principal issues to be determined in these claims:

Issue 1: Did the DJ apply the proper test for the award of compensation pursuant to s.90 of the 2014 Act;

Issue 2: What are the legal consequences of the Commissioner’s failure to comply with s.76(6) of the 2014 Act; and

Issue 3: Was the DJ’s ‘en bloc’ approach to costs and compensation correct?

The parties’ submissions on these issues may be summarised as follows:

The Claimants say that the proper test for compensation pursuant to s.90(5) of the 2014 Act requires the Court to apply the four-stage test set out at subsections (a) – (d). Consequently:

The starting point is not that there should be no order for compensation. On the contrary, where (as in this case) subsections (a)-(c) are satisfied, there is a presumption that compensation will be awarded.

Compensation is awarded from central funds. Thus, the principles relating to costs awards against public authorities derived from cases such as Booth and Peripanathan designed to prevent a chilling effect on regulatory activity, do not apply.

The Commissioner does not take issue with the Claimants’ submissions on the proper approach to compensation.

The Claimants submit that the Commissioner’s failure to comply with the statutory requirements for issuing the Closure Notices is relevant and material to whether, and if so, in what amount, the court should make an award of compensation and/or costs. In particular, the Claimants submit that:

The relevant authorities on costs require the court to have regard to the Commissioner’s compliance with relevant procedural rules, including, in the present case, compliance with s.76(6).

The Commissioner’s non-compliance was “substantial” since:

Section 76(6) is an important procedural safeguard. Its purpose is to consult as well as inform. It provides an opportunity for those specified to explain why it is unnecessary to issue a closure notice and/or to take steps to prevent any nuisance or disorder from continuing, occurring, or recurring, thereby removing the need for a closure order application.

Section 76(6) triggers the requirement for service of the closure notice pursuant to s.79(e).

The search warrant and closure notice procedure should not be conflated. The intention to execute a search warrant does not negate the requirement to inform those with an interest in the Premises of the intention to issue a closure notice.

The Closure Notices were thus invalid. This was a matter relevant to the determination of costs and compensation.

The Commissioner submits that compliance with s.76(6) in the context of this case was irrelevant to the question of whether to award costs and compensation because, in the absence of any allegation of a breach of the Closure Notice (such breach giving rise to a criminal offence), the legality or otherwise of the Notice had no impact upon the jurisdiction of the Magistrates to make a Closure Order or any decision on costs at the end of a Closure Order hearing. The Commissioner also contends that there was, in any event, substantial compliance with s.76; that strict compliance with s.76(6) would have made no difference to the outcome; and, in the words of DJ Matson, the Commissioner “ acted reasonably and properly in making the application itself ”.

The Claimants say in respect of this issue that the relative strength of the Commissioner’s case against the different premises required the question of costs and/or compensation to be determined on a ‘premises-by-premises’ basis. It is also submitted that the ‘ en bloc ’ approach is unfair and amounts to a failure to give reasons as to why costs were not awarded to each of the parties.

The Commissioner submits that DJ Matson was entitled to approach the applications for costs ‘en bloc’ given that the premises had been targeted as part of the same police operation, the applications for Closure Orders had been brought together and on the same grounds, and the Commissioner’s conduct in respect of them all was essentially the same. DJ Matson applied the correct legal test when considering costs and the fact she dealt with them together did not affect this.

In relation to the issue of separate consideration of the applications for compensation, the Commissioner’s stance is neutral.

The first issue can be dealt with briefly due to the helpful stance taken by the Commissioner in not taking issue with the Claimants submissions. The essential complaint here is that the Magistrates erred in law by applying principles relevant to the award of costs to the exercise of their discretion as to compensation. I begin by considering the power to award costs.

The Magistrates’ power to award costs arises under s.64 of the Magistrates Courts Act 1980 . This provides:

The application of this broad discretion as to costs in the context of public authorities carrying out enforcement functions was considered in Booth . Lord Bingham CJ held that the question of costs in such cases could be summarised in three propositions:

The last of these principles, which seeks to avoid any ‘chilling effect’ on the regulatory activities of public authorities that might arise if costs merely followed the event, was further considered in the case of Perinpanathan . After an extensive review of the authorities, Stanley Burnton LJ, said as follows:

These principles apply to costs. However, the DJ had applied the same principles to the award of compensation under s.90 of the 2014 Act on the basis that there would also be financial prejudice to the police if compensation were awarded. In my judgment, the DJ erred in so doing:

Unlike an award of costs, any award of compensation under s.90 of the 2014 Act is made out of central funds. Thus, there would be no financial prejudice to the paying authority in the event such an order is made;

The absence of financial prejudice to the paying authority means that there will not be any ‘chilling effect’ on its regulatory activities in the way that there might be had such compensation to be paid out of its own budget;

The suggestion by the DJ, namely that there is financial prejudice to the particular public authority in question (and therefore a dissuasive effect on the issuing of Closure Notices) because any award out of central funds would still mean a payment from public funds, cannot be accepted. It is reasonable to assume that the reason Parliament provided for compensation to be paid out of central funds is precisely in order that the police and local authorities can reasonably exercise their powers in respect of Closure Notices and Orders without the fear of having to pay large sums by way of compensation in the event that such notices or orders are successfully resisted;

There is, therefore, no basis for suggesting (as did the Magistrates in this case) that the starting point or default position in claims of compensation is that there should be no award. Whether or not an award should be made depends on all of the matters to be considered under s.90(5) of the 2014 Act.

As the decision as to compensation was made on an incorrect legal basis it falls to be quashed. Mr Streeten, on behalf of the Claimants, invites me to go further and requests that a mandatory order be made requiring the DJ to award compensation. This request is made on the basis that the requirements for the award of compensation under s.90 (5) of the 2014 Act were satisfied and the DJ gave no reason as to why it would not be appropriate to make the award.

Section 90 (5) of the 2014 Act provides that the court has a discretion to order the payment of compensation out of central funds if it is satisfied that the requirements of subsections (a) to (c) are satisfied, and that, having regard to all the circumstances, it is appropriate to order payment of compensation in respect of that loss. Mr Streeten submitted that, if it was found that subsections (a) to (c) were satisfied, then that raised a presumption (albeit not an express statutory one) that compensation would be awarded unless it was inappropriate to do so. In my judgement, there is no such presumption. Had that been the intended effect of the section, it could have said that compensation “shall” be awarded in these circumstances unless it would be inappropriate to do so. Instead, the section expressly confers a discretion in terms of compensation and requires the court to have regard to “all the circumstances” in determining whether it is “appropriate” to order payment of compensation. It therefore remains open to the court not to award compensation even if subsections (a) to (c) are satisfied. However, if it chooses to take that course it must explain why it is doing so. That is particularly so given that, in order to satisfy subsections (a) to (c), the court would necessarily have concluded that there was limited culpable behaviour on the part of the applicants and that they took reasonable steps to prevent the impugned conduct from occurring. Where a person has incurred loss in those circumstances, it is incumbent upon the Court, if it decides not to award the statutory compensation, to explain why.

In this case, the DJ appears to have decided not to award compensation not because of any conduct on the part of the Claimants, but because it was considered that the Commissioner had acted reasonably and properly in making the application. That, to my mind, is to focus on the wrong conduct. Whilst the Commissioner’s conduct may undoubtedly be taken into account as part of the overall circumstances, at the stage of deciding upon compensation, and having concluded that there was little or no culpable conduct on the part of the Claimants, and that there was financial loss, it seems to me that it would primarily be factors related to the Claimants’ conduct which might render it appropriate not to award compensation. No such factors were identified in the DJ’s reasons.

Notwithstanding the absence of any such factors, it does not seem to me that this Court should make a mandatory order requiring the DJ to award compensation. To do so would be to usurp the function of the DJ who is in the best position to consider all of the circumstances that might bear upon the appropriateness of making such an award, including the particular loss claimed to have been incurred. Although the DJ did not expressly identify any factors against the award of compensation, that was in the context of an incorrect application of s.90(5) and where it had been assumed that the starting position should be no award of compensation. Had the DJ approached the matter as required by s.90(5), she may well have identified other factors which, in her assessment, made it inappropriate to award compensation. The appropriate course, in my judgement, is for the matter to be remitted to the Magistrates, and for the DJ to reconsider the issue of compensation without regard to the principles in Booth and Perinpanathan , and on the basis that subsections (a) to (c) of s.90 are satisfied in order to determine whether, having regard to all the circumstances, it would be appropriate to order payment of compensation in respect of each of the Claimants’ claimed loss.

In view of the above, the answer to each part of the first question of the case stated is in the negative.

The first part of Mr Streeten’s submission on this issue is that the relevant authorities on costs required the Court to have regard to the Commissioner’s failure to comply with relevant procedural rules. He relies, in particular, upon Perinpanathan . The application for costs in that case arose out of the exercise by the police of seizure powers respect of cash under the Proceeds of Crime Act 2002 . Once seized, the Commissioner applied under s.298 of that Act for the forfeiture of the cash. The Magistrates dismissed that application, accepting evidence produced by the claimant that the cash had been intended for lawful purposes. However, the Magistrates refused to make an order for costs. This was on the basis that the police had reasonable grounds for the suspicion that cash had been intended for use in unlawful conduct. On the claimant’s appeal, Lord Neuberger said:

Mr Streeten submits that the requirement set out in Perinpanathan , for Magistrates to scrutinise the behaviour of the police carefully in order to determine whether they acted reasonably and properly, meant that the DJ was bound to consider whether there had been compliance with the procedural requirements for issuing a Closure Notice, and that any failure in that regard necessarily meant that their behaviour could not be regarded as reasonable and proper. However, in Perinpanathan , it was not alleged, as in this case, that there was any prior unlawful act or failure to act on the part of the police which rendered the act of seizure a nullity or invalid. Once the claim of invalidity was raised in the present case, the DJ proceeded on the basis that any question of validity was a matter for judicial review, and that, furthermore, the facts giving rise to that claim of invalidity should not be taken into account in determining the issue of costs. The question is whether the DJ was correct to take that approach.

In my judgment, the DJ was correct to do so.

The DJ was correct to consider that any challenge to the validity of the Closure Notice was a matter for judicial review and not within the jurisdiction of the Magistrates’ Court: I was referred to the case of R (Byrne) v Commissioner of Police of the Metropolis [2010] EWHC 3656 (Admin) (“Byrne”) , in which there was an appeal against the decision of the Crown Court that it did not have any jurisdiction to consider an allegation that the police had failed to have regard to guidance before the issuing of a Closure Notice under the Anti-Social Behaviour Act 2003 (“the 2003 Act”). The provisions as to Closure Notices and Closure Orders under the 2003 Act bear some similarity to those under the 2014 Act, except that there was no equivalent to s.76(6) in the 2003 Act. It is important to note, however, that under the 2003 Act, as under the 2014 Act, it was only once a Closure Notice was issued that an application could be made for a Closure Order. There was also a requirement under the 2003 Act that a person must have regard to guidance in discharging the functions under that Act. As to the question of the Magistrates’ and the Crown Courts’ jurisdiction to hear challenges in respect of the Closure Notice, Moses LJ said as follows:

I was also referred to the earlier case of Errington v Metropolitan police authority [2006] EWHC 1155 (Admin) (“Errington”) in which Collins J dealt with a similar issue arising under the 2003 Act. In that case it was claimed that the Closure Notice was defective on its face and therefore invalid. The Magistrates on that occasion decided to adjourn its proceedings pending a decision on the issue of invalidity by the High Court. As to that decision Collins J said as follows:

It is abundantly clear from these authorities that Magistrates should not generally consider the validity or otherwise of the Closure Notice in an application for a Closure Order. It is also clear from these authorities that had there been an attempt to prosecute any of the Claimants for a breach of the Closure Notices then of course the validity or otherwise of the notices could have been raised by way of defence. In the present case there is no question of there being a breach of the Closure Notices by any of the Claimants. The Magistrates’ jurisdiction to hear the application for Closure Orders is not affected by any shortcomings in the Closure Notices.

Mr Streeten developed a series of sophisticated submissions in support of his contention that the scheme under the 2014 Act was such that the failure to comply with s.76(6) ought to have been taken into account in the determination of costs and/or compensation. It was contended that:

The power to make a Closure Notice and a Closure Order are inextricably linked such that one cannot deal with the latter without considering the validity of the former;

Section 76(6) of the 2014 Act imposes an obligation to consult with affected persons prior to issuing a Closure Notice;

The Commissioner’s failure to consult rendered the Closure Notice, and any act reliant upon that notice, a nullity;

It could not be said that there was substantial compliance with the s.76(6) within the meaning of R (Jeyeanthan) v Secretary of State for the Home Department [2009] EWCA Civ 216;

If the Closure Notices were unlawful by reason of any of the above, then it could not be said that the application for a Closure Order was a “reasonable and proper act” for the purposes of assessing costs.

It was submitted that the effect of ss.76 and 80 of the 2014 Act is that the Closure Notice and Order are “inextricably linked” and that there is no separate power to apply for a Closure Order; they are simply two stages of a single closure power. I was invited to consider material in Hansard as to the effect of these provisions. It is well-established that reference may be made to such material if provision in question is ambiguous or obscure or its literal meaning would lead to absurdity: Pepper v Hart [1993] 1 AC at 634D-E. In my judgement, however, there is no ambiguity in relation to these provisions, and it would not be appropriate to consider ministerial statements. In my judgment, any link between these stages does not preclude the Magistrates from considering the application of a Closure Order even when the Closure Notice is said to be invalid.

Sections 76 to 79 of the 2014 Act deal solely with the powers conferred on the police and local authorities in respect of Closure Notices. There is no supervisory jurisdiction conferred on the Magistrates’ under these sections. The Magistrates are not, in particular, required to satisfy themselves that any Closure Notice is valid before considering an application for a Closure Order. Thus, whilst there may be a link between the Closure Notice and a Closure Order, in that an application for the latter cannot be made without the former having been issued, there is nothing in the statute that requires the Magistrates to go beyond confirming that a Closure Notice had been issued. As was the position under the 2003 Act, the issuing of the Closure Notices merely “triggers the magistrates’ jurisdiction” (see Byrne ). In my judgment, the Magistrates did not, in these circumstances, have jurisdiction to determine the issue of the validity of the Closure Notices.

Mr Streeten further submits that, if that is right then, at the very least, the Magistrates should always adjourn the proceedings before them in order to enable any judicial review challenge to be heard and determined first. As is apparent from the extracts from Byrne and Errington cited above, such an approach is considered to be incorrect (see Errington at [14]). I agree. To adjourn proceedings in respect of a Closure Order whenever there is a challenge by way of judicial review in respect of the Closure Notice would fundamentally undermine the operation of the legislation, which is intended to provide a fast and flexible remedy in cases of substantial nuisance or disorder.

It was suggested that there is some conflict in the authorities as to whether the Court should adjourn proceedings in these circumstances, given that, in an older case, Quietlynn limited v Plymouth City Council [1988] 1QB 114, it was held that:

In my view, a proper reading of that passage in Quietlynn Ltd does not suggest that in every instance where there is challenge by way of judicial review the proceedings before the Magistrates should be adjourned. The latter part of the passage refers to the presumption of validity and the continuation in force of the decision in question until it has been struck down by the High Court. Adjourning proceedings in the face of an undetermined challenge by way of judicial review would not give effect to that presumption. However, even if the Claimants’ reading of that passage is correct, I note that it predates the decisions of the House of Lords in Boddington v British Transport Police [1992] 2 AC 143 and R v Wickes [1998] AC 92 which formed the basis of the judgements in Byrne and Errington . I was invited not to follow the judgments in Byrne and Errington . However, I see no error in the approach taken in those judgments and see no reason not take the same approach here. Accordingly, I find that the Magistrates were correct in this case not to adjourn the matter and to leave any issues regarding the validity of the Closure Notice to the High Court.

Mr Streeten further submitted that s.76 confers a fundamental procedural protection on property owners and those with an interest in affected properties in that the Commissioner is required to consult with them prior to issuing a Closure Notice. It is said that this would provide owners and those with an interest in the premises with an opportunity to explain, if it is the case, that the conduct giving rise to nuisance or disorder is not occurring such that the issuing of a Closure Notice is not necessary. It is also said that the failure to comply with this important procedural safeguard renders the Closure Notice a nullity.

Dealing first with the contention that s.76(6) requires consultation, it is my judgement that s.76(6) does not have that effect. I say that for the following reasons:

There is a separate, express provision dealing with the obligation to consult under s.76 (7). This provides that before issuing a Closure Notice the police officer or local authority must ensure that any body or individual the officer or authority thinks appropriate has been consulted. Given this provision, it is unnecessary, in my judgment, to import into s.76(6) any further or other obligation to consult.

Section 76 itself is in terms that the Closure Notice may be issued only if reasonable efforts have been made to inform affected persons that the notice is going to be issued . It seems to me that the use of the words, “ is going to be issued ”, indicates that, by the stage the obligation to inform arises, the relevant officer has already satisfied himself within the meaning of s.76 (1) on reasonable grounds that there is likely to be nuisance or disorder, and that the notice is necessary to prevent that nuisance or disorder from continuing. Any conclusion that the notice was “necessary” could only have been lawfully reached if, on reasonable grounds, the relevant officer had concluded that no lesser measure than the issuing of the notice would suffice. In the circumstances, further consultation with potentially affected persons once the decision to issue had been made would be otiose. Had the intention behind s.76(6) been to require consultation with those affected before any decision is made to issue the notice then the subsection would have been in terms that persons should be informed that a notice “might” be issued or that the authority was considering issuing one.

Reliance was also placed on the case of Westminster City Council v Mendoza 2001 EWCA Civ 216, another case dealing with Closure Notices in respect of premises believed to be used as sex establishments, this time under the Local Government (Miscellaneous Provisions) Act 1982 (“the 1982 Act”). In that case, there had been a failure to serve the Closure Notice properly on some of the occupiers of affected premises, and the issue was whether that failure vitiated subsequent applications. Having regard to the particular statutory scheme in question, the Court held that the failure to comply with the procedural requirements did not render the result a nullity. I was also referred to the following passage in the judgment of Lord Woolf CJ:

Mr Streeten sought to persuade me that the reference there to the “opportunity to discontinue” activities under the 1982 Act is mirrored in the operation of s. 76 (6) of the Act in that the obligation to inform prior to the issuing of notice would also enable parties to discontinue activities. However, the opportunity to discontinue in the Mendoza case only arose after the service of the Closure Notice. It does not, therefore, support Mr Streeten’s contention, which relates to a prior stage. In any case, there was an express provision under the 1982 Act which meant that the Council was obliged to take account of the discontinuation of illicit activity after the service of the Closure Notice. Under the 1982 Act, the Council had a discretion to apply for a Closure Order following the service of a Closure Notice and could do so at any time within a period of not less than 14 days and no more than six months after the service of the Closure Notice. (Contrast that with the present scheme under which the police or local authority must apply for a Closure Order and must do so within 48 hours of service of the Closure Notice.) Moreover, the exercise of the discretion under the 1982 Act was expressly subject to s.4(2) of that Act under which the Council could not apply for a Closure Order if it was satisfied that the use of the premises as a sex establishment had been discontinued and that there was no reasonable likelihood of any further breach. There is no such provision under the 2014 Act. Accordingly, there is no warrant for importing any similar “opportunity to discontinue” following the Closure Notice here. The very short timetables applicable under the 2014 Act further militate against there being any such opportunity.

I was also taken to the decision of the Supreme Court in Bank Mellat v HM Treasury [2014] AC 700. In that case, the Treasury had exercised powers under the Counter Terrorism Act 2008 to make an order prohibiting all persons operating in the financial sector in the UK from entering into or continuing any transaction with a major Iranian commercial bank. (It will be immediately apparent that the circumstances of that case, in which considerations of foreign policy and national security played a significant part, are very far removed from the present case). The order in that case was held to be disproportionate for various reasons including the fact that the bank had not been consulted prior to the making of the order and had had no opportunity to make representations. Lord Sumption stated as follows:

I do not consider that there is, by analogy, any similar duty here to consult prior to issuing a Closure Notice:

The 2014 Act expressly provides for a rapid opportunity for affected persons to make representations at the hearing of the application for Closure Orders. The s.80 hearing goes beyond merely reproducing the right which should be available on an application for judicial review. At the s.80 hearing, the Magistrates can make the order only if satisfied of a number of matters including that the order is “necessary” (with all the safeguards that that entails, including that there is no less intrusive measure that would suffice) to prevent the behaviour, nuisance or disorder from continuing, recurring or occurring;

The timescales under the 2014 Act are far shorter than those which were imposed by the order in the Bank Mellat case, and prejudice to goodwill by reason of the interruption of business activity is thereby minimised. I do not accept Mr Streeten’s submission that the temporary effect of a Closure Notice is such as to cause irreversible damage to goodwill. Furthermore, unlike the position in the Bank Mellat case, there is provision under the 2014 Act for compensation in the event that affected persons incur a loss;

To require the police to engage in consultation prior to the issuing of the notice would be likely to frustrate or undermine the purpose of the legislation, which is to provide a “fast and flexible remedy”

See the Home Office guidance in respect of the powers under the act, which provides that the closure power is intended to be “a fast, flexible power that can be used to protect victims and communities by quickly closing premises that are causing nuisance or disorder.”

I accept Mr Walsh QC’s submission that the primary purpose of the obligation to inform under s.76(6) is to enable persons who might be affected by the closure of premises to make such arrangements as may be appropriate to avoid breaching the notice.

Mr Streeten submits that s.76 (6) cannot have the primary purpose contended for by the Commissioner because if it were to do so it would render the service provisions under s.79 redundant. Section 79 sets out the requirements to fix a copy of the notice on a prominent place on the premises and to points of access, any outbuildings, and to give copies of the notice to persons who appear to have control of or responsibility for the premises, people who live in the premises and any person who does not live there but who was informed under s.76(6) that the notice was going to be issued. In my judgement, the service requirements under s.79 serve a different purpose to the obligation to inform under s.76(6). At the point where persons are being informed that a notice is going to be issued, they would still have the right to enter the premises and make any arrangements that may be necessary for dealing with the imminent closure of the premises, whereas once the notice is actually served, pursuant to s.79, affected persons cannot enter the premises at all.

In order to make good his submission that the failure to comply with the obligation to inform arising under s.76(6) of the Act rendered the Closure Notice a nullity, Mr Streeten took me to some landmark administrative law authorities such as Hoffmann La Roche [1975] AC 295, DPP v Hutchinson [1990] 2 AC 83 and Boddington . It is not necessary to cite the passages to which I was taken, which are very well-known, and do not, to my mind, advance the Claimants’ argument. Perhaps of more assistance in this context is the judgment in R (Jeyeanthan) v Secretary of State for the Home Department [2000] 1 WLR 354 to which I was also taken, and in which the Court of Appeal considered the effect of the failure to use a mandatory prescribed form in the course of asylum proceedings. Lord Woolf MR (as he then was) held at (362 C-G):

Given the statutory requirement under the 2014 Act that a closure notice may be issued only if reasonable efforts have been made to inform affected persons that the notice is going to be issued, it seems to me that the requirement is not one that may be waived. Thus, it is necessary to consider whether there has been substantial compliance with the requirement (as the Commissioner contends) and what are the consequences of non-compliance.

Mr Streeten submitted that there cannot be substantial compliance given the important consultative purposes of s.76(6). For reasons already set out above, I do not agree that the provision does have those purposes. The Claimants were not deprived of an opportunity to make representations. They had that opportunity at the hearing of the application for the Closure Orders which were to be heard very shortly after the issuing of the Closure Notices. The Claimants have not suggested that the Closure Order proceedings themselves were deficient in that respect.

In the circumstances, where all the affected persons:

had notice of the application for a closure order;

were present at the hearing of that application; and

had an opportunity to make representations (which in the event led to a successful outcome for the Claimants),

Given my conclusion that the Magistrates were correct to consider that questions of the validity or otherwise of the Closure Notice are not questions for them, it follows, in my judgment, that those questions, and the facts giving rise to them, are also not relevant to the determination of costs. If that were not so, then the Magistrates would, in assessing costs, have to take into account matters in respect of which they would not have had an opportunity to reach a final determination. That could result in unfairness. Furthermore, if the Magistrates had expressed a view on the correctness or otherwise of conduct relating to the challenge on validity, then it could be encroaching onto territory reserved for the Court dealing with the judicial review.

I do not consider that any unfairness would result from the exclusion of matters relating to validity from the Magistrates’ assessment on costs. Insofar as any costs issues might arise out of those matters, then they could be addressed, if necessary, by the Court dealing with the Judicial Review.

The answer to the second question in the case stated is also in the negative.

As already set out above, costs are a matter for the Magistrates’ discretion. (see paragraphs 40-41 above). It is also important to bear in mind that a more restrictive costs approach applies in cases such as the present one where the starting and default position is no order as to costs.

The Claimants’ complaint under this head is that that the DJ should not have grouped the Claimants together when it came to costs and that she disregarded her own findings as to the differences between them. The Claimants place heavy reliance on the DJ’s conclusion that, “There are many things in this case which may lead to the suspicion that sexual services were being carried out at some of these premises.” (Emphasis Added)

It was submitted that the reference to “some of these premises” necessarily implies that there was no, or very little, evidence to give rise to the suspicion in respect of other premises. However, a fair reading of the entirety of the DJ’s judgment reveals that each of the premises was considered in turn, and that at least some evidence giving rise to a suspicion of sexual activity was present for all of them. That included the premises at 52 Rupert Street. Although the quantity of evidence in relation to this property was less than for others, the DJ still found that a search of the premises had disclosed mouthwash, chewing gum, baby wipes, some form of “sex toy”; and that the property is included on a website where those who pay for sexual services post reviews. The DJ did not accept the evidence of a police officer as to the effect of a sign on the wall at this property, which was said to relate to sexual activity, and there was evidence from a Westminster City Council officer that whilst the premises had a “colourful history” there was nothing detrimental in its recent history. The DJ’s conclusion was that this material was not sufficient to show, on the balance of probabilities that the person has engaged, or is likely to engage, in criminal behaviour on the premises. The DJ reached the same conclusion, albeit on the basis of other evidence, for all six premises.

Furthermore, there was nothing to distinguish the Police’s actions in respect of the six premises. They were all targeted as part of the same operation; they were the subject of Closure Notices issued in similar terms; and the applications for Closure Orders had been heard together and pursued on the same bases. The DJ’s conclusion that the Police had acted “reasonably and properly” was applicable to conduct in respect of all of the premises.

In these circumstances, there was nothing wrong in principle in the DJ taking an overall approach to costs rather than on a property-by-property basis.

Even if costs had been considered on a property-by-property basis, the strong likelihood is that the DJ would have come to the same conclusion, namely that no costs should be awarded. The different levels of evidence relating to each of the properties were not such as to render the ‘en bloc’ approach wholly inappropriate. The position might have been different had there been no evidence at all to support proceedings against some of the premises, or if the Police’s conduct in respect of some of them fell markedly below the standard applied to the others. However, as stated above, that was not the case.

The Claimants also argue that the DJ’s failure to deal with the costs application on a property-by-property basis necessarily meant that no party was in a position to know why they were not awarded their costs. As such it was argued that the reasons of the DJ did not meet the standard required by English v Emery Reinbold and Strick Ltd [2002] EWCA Civ 605. In my judgement, it was clear to the Claimants why costs were not awarded: The default or starting position in cases such as this is that there should be no order as to costs: See Bradford MDC v Booth [2001] LLR 151. The DJ’s reasons, as already discussed, dealt with each of the properties, and the DJ concluded that the Police had acted reasonably and properly. The only proper inference to be drawn from the DJs conclusions is that that finding applied to the Police’s conduct in respect of all the properties involved. In my judgement, there was no failure to explain.

As for compensation, the Commissioner takes a neutral stance. I have already concluded that the Magistrates’ approach to compensation was incorrect, and I have directed that the matter be remitted for reconsideration (See Issue 1 above). An ‘en bloc’ approach to the assessment of compensation would be unworkable and incorrect. That is because the Magistrates are required by s.90(5) of the 2014 Act to consider the position of each applicant for compensation separately in order to determine whether they were associated with the behaviour on the premises concerned and (if they are the owner or occupier of the premises) whether they had taken reasonable steps to prevent it. Furthermore, if satisfied that the requirements of s.90(a) to (c) are met then the Magistrates must go on to consider whether it is appropriate to award compensation in respect of that loss; that is to say the particular loss claimed by the applicant. That loss might well be different for each applicant depending on the effect that the closure had on their particular business. In these circumstances, it is incumbent upon the Magistrates to consider the position of each applicant individually to determine whether compensation should be awarded. For these reasons, in directing that the matter of compensation be remitted to the Magistrates, I also direct that the position of each applicant be considered separately.

Any inconsistency with the position on costs is justified, in my judgment, by the specific statutory provisions dictating what is to be taken into account in deciding whether to award compensation.

For the reasons set out above, I find that:

The Claimants succeed in respect of Issue 1 and the assessment of compensation. The matter shall be remitted for reconsideration in accordance with the terms of this judgment;

The Claimants fail in respect of Issue 2 and the effect of the failure to comply with s.76(6) of the 2014 Act;

The Claimants fail in respect of Issue 3 insofar as it relates to costs, but succeed insofar as it relates to compensation.

Permission is refused in respect of the First JR.

The Second JR succeeds in respect of Ground 2 (proper test for compensation). The DJ’s decision as to compensation is quashed.

The parties are to attempt to agree the terms of an order for this Court’s approval.