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Jersey Business Legal Services | A recent Jersey case which looks at the terms of a business licence

In a recent judgement, Karolina Klonowska -v- The Chief Minister [2016] JRC 127, the Royal Court overturned the decision of the Chief Minister to refuse to vary the conditions of a business licence issued pursuant to the Control of Housing and Work (Jersey) Law 2012.

By way of background, the Appellant came to Jersey three years ago and accordingly she has Registered status.

On 12 November 2014, she and a colleague (who also held Registered status) submitted an application for a business licence under Article 26 of the 2012 Law to carry on a patisserie business to be known a “Sweet Heaven”, from premises in 15 Bond Street, in respect of which they had taken a three year lease.

The application was refused by officers of the Population Office, under delegated authority from the Respondent, pursuant to the Respondent’s then policy of not granting business licences to persons who are not “Entitled” or “Entitled to Work”, unless clearly in the best interests of the community to do so. The Appellant appealed that decision to the respondent who maintained the refusal.

On 8th December 2014, the Population Office received an application by a friend of the Appellant to carry on the same business from the same premises under the same name. That application was granted, as he held Entitled status. The licence contained the following condition: “The undertaking is not permitted to engage any Registered staff.”

On 26 August 2015, the Population Office received two applications from Mr Barnham:-

  1. The first was for a change in the ownership of the undertaking as to 60% to Mr Barnham and 40% to the Appellant
  2. An application in the name of Mr Barnham for additional staff, namely the Appellant

The application was supported by letters from the Appellant and Mr Barnham, the latter stating that his personal situation had changed, causing frequent closures of the business and the loss of customers. The application to change the ownership of the undertaking was granted on 9th September 2015, but subject to the same condition as the previous licence, namely that the undertaking was not permitted to “engage any Registered staff”. The application for additional Registered staff was however refused, again because of the Respondent’s declared policy of not permitting Registered staff to be engaged by an undertaking, unless it was clearly in the best interests of the community to do so.

Quoting from the Population Office’s letter of 9th September 2015:- “ The restriction on business licences regarding Registered permissions is intended to maintain job opportunities for Entitled/Entitled for Work persons since providing work opportunities to persons whose status is Registered will place, or has the potential to place demands on the Island’s limited resources, for example, health, education, housing, transport systems.

In addition, the Policy of the Minister is to grant Registered permissions where it is compellingly demonstrated that this will deliver sizeable economic or social value. It is noted the business has been unable to recruit Entitled? Entitled for Work persons to perform these particular roles but this is not considered a compelling enough justification to depart from policy.

Furthermore, the application for Registered staff related to an undertaking which provides services that are readily available from the other undertakings in the Island and where there is demand without the need to permit additional Registered staff given the Policy of the States of Jersey to control migration.”

Compliance officers delivered the refusal letter to the business to ensure that the Appellant was not working there. When they arrived, she was there and she told them that she was purely helping out.

On 11th September 2015, the Population Office received a note from Mr Barnham saying that he had ceased trading on 1st August 2015, and had not given anybody permission to work or trade in the business. Compliance officers visited the business again to advise the Appellant that she could not operate the business as she did not have permission to work in it and she did not have permission to be the 100% beneficial owner.

On 7th October 2015, the Population Office received an appeal from the Appellant against the decision of 9thSeptember, in the form of an e-mail, in which she stated that the situation had changed, as she was now the only owner of Sweet Heaven and the only person who could work in it. She also put forward a case to suggest that she was promoting Jersey by producing an exceptional product which attracted visitors and for which she used Jersey products.

The Population Office treated her appeal as an application to become the 100 % beneficial owner of the undertaking and for permission to work within it as a “Registered member of staff (working principal).”

By this stage, the policy of the Respondent in relation to persons with Registered status owning undertakings had changed and is as now set out in paragraph 27 of the Business Licensing Guidance Notes:- “there is no presumption against people who are not resident or Registered from being the beneficial owners of an undertaking. However, ownership does not confer any right to work in an undertaking or to obtain a permission to work in that undertaking (and permission may be refused if there are reasonable grounds to believe this to be the case.)

In November 2015, the Appellant was granted a business licence to conduct the undertaking, subject to the following conditions:

That the undertaking is carried on in accordance with the information presented for the carrying on of an undertaking for the creation and retail of cakes and associated produce.

The undertaking is permitted to engage an unlimited number of Entitled/Entitled for Work staff.

The undertaking is not permitted to engage any Licensed staff.

The undertaking is not permitted to engage any Registered staff”.

Having granted that licence to the Appellant, the Respondent refused the application to permit the appellant to work within it as a Registered person. The reasons given for the refusal included the fact that providing work opportunities to a person whose status is Registered will place, or has the potential to place demands on the Island’s limited resources. Furthermore, the application for the Registered permission relates to a business which provides a service that is readily available from other businesses in the Island and where there is demand for such service, the expectation is that other businesses will respond to that demand without the need to permit a Registered permission.

In terms of deciding whether to allow the appeal or not, the Royal Court had to determine whether it considered that the decision was reasonable or unreasonable. In a case where there had been a procedural irregularity, the Court would not quash the decision in every case. The procedural error or unfairness would have to be sufficiently serious so as to render the decision itself unreasonable, for the Court to intervene.

The Court agreed with the reasoning behind the respondent’s decision but it did raise a concern as to apparent inconsistency of the respondent on the one hand granting the appellant a business licence to carry on this undertaking and on the other hand, imposing a condition that she could not work within it. The Court analysed the position in the following way: The Appellant has a licence to do something – ie to carry on a business from these premises in Jersey. However, the Appellant in carrying on this business cannot engage herself. As the business owner, she cannot properly be described as staff because ‘staff’ refers to persons who work for an organization. It is conceptually impossible for the Appellant to employ or engage herself or provide herself with her own service and so this condition may not on its own, be sufficient to prevent the Appellant from working in the business which she has a licence to conduct. What it says she cannot do is engage any other person with Registered status. When the Appellant made the initial application, the Appellant made it clear that she was the only owner of the business and that she was the only person who could work in it. In other words, the application was for her to run the business.

Whilst the court felt that the Respondent would have been perfectly entitled to refuse to grant her a licence because in essence the Applicant was applying for a licence to work, which her Registered status would not have afforded her. Instead the Respondent granted her a licence to carry on the undertaking which therefore entitled her, at least, to manage, direct and control the business, whilst at the same time, imposing a condition aimed at preventing her (the court thought ineffectively) from working within the business; a distinction in the context of a one person business which is unworkable and unfair.

The court therefore decided to reverse the refusal to vary the condition of the business licence and vary it so that it reads:-“Miss Karolina Klonowska, as the licence holder and as long as she remains the licence holder, is permitted to work in of for the undertaking but, subject to that, no individual with Registered status is permitted to work in or for the undertaking.”

If you need to discuss the terms of your business licence, please call Rebecca Morley-Kirk on 630530.

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