Licence and Liability – The Importance of Due Diligence for Scottish Companies

by Emma Flood Curated Media on September 10, 2014

licensing-scotland-due-diligenceRecent case law has highlighted the importance for Scottish licence holders to exercise due diligence to ensure they have done everything possible to stop licensing offences being committed.

Under Scots law, licence holders may be liable for the mistakes of employees, or for the deception of underage customers if they are unable to prove that they have carried out appropriate due diligence.

The Legal Framework – The Licensing (Scotland) Act 2005

The Licensing (Scotland) Act 2005 outlines multiple criminal offences for which licence holders can be held to be vicariously liable for the infringement of the law by an employee or agent.

Furthermore changes introduced under the Criminal Justice and Licensing (Scotland) Act 2010, made changes to the law which means that the licence holders may be held vicariously liable for such offences even if they did not know they were happening.

However, there is a defence available to those who have done everything in their power to ensure that the offences are not being committed – the defence of due diligence.

The importance of due diligence has been demonstrated in recent case law, whereby those convicted of a licensing offence have had their conviction overturned by demonstrating the due diligence they had taken.

The Defence of Due Diligence

In order to successfully use this defence you must be able to prove that

  1. You were unaware the offence was being committed; and
  2. You carried out all due diligence in your power to ensure the offence was not committed.

In order to prove that all possible due diligence has been carried out, all staff should be adequately trained and records of this should be kept. This should include intensive training for staff new to the licensing rules and updates and refresher training sessions for staff.

Your company should also have written policies which foster a zero-tolerance culture in breaches of licensing legislation and staff should be aware of these.

Recent Case LawThe Epic Group Scotland Ltd v Shanks

In the case of The Epic Group Scotland Ltd v Shanks [2014] HCJAC 20, the licence holder was convicted of selling alcohol to two girls who were aged 17. The operator was able to provide substantial evidence that appropriate due diligence had been carried out: age verification checks had been made; there had been adequate staff training; and they were adhering to the “challenge 25 policy”. However the court made the conviction on the basis that the underage sale had taken place demonstrating the ineffectiveness of these actions.

On appeal however, the court determined that the test of this defence was not whether it was effective in preventing offences from occurring, but that all due diligence had been put in place to prevent the underage sale from happening.

There is an important lesson here for all Scottish companies subject to the Licensing (Scotland) Act 2005. As leading Scottish licensing lawyer Stephen McGowan commented in his recent post on his Licensing Blawg:

The case demonstrates the fundamental importance of strong due diligence and should also serve as a reminder that in a case where the licence holder is tricked on purpose, perhaps some consideration should be given to those doing the deceiving. In this case, incredibly the two girls had actually been used as prosecution witnesses against the operator.

Recent Case Law – Feeney v Paisley Procurator Fiscal

Furthermore, in Feeney v Paisley Procurator Fiscal [2014] HCJAC84 the holder of a premises licence for an off licence was convicted as a result of a sale by an employee to a person who was underage when he was not present and was not aware of the sale.

The licence holder led evidence to prove that the staff member had been provided with adequate training in both refusing the sale of alcohol and in asking for identification.

Furthermore, there were prompts on the till to ask for id when alcohol was being sold. However, the justice determined that the licence holder approach should have been ‘more robust’ leading to the conviction.

The conviction was appealed and subsequently quashed, the appeal court outlined that the justice was not aware of the defence of due diligence under the Licensing (Scotland) Act 2005. (and, indeed, as Stephen McGowan humorously notes, the court appreciated that the justice had to:-

contend with “the complexity of the legislation and its amendments” (cue groan from every licensing solicitor in Scotland!).

The appeal court concluded that the evidence led by Mr. Feeney amounted to adequate due diligence, with the court being directed to the Epic case.


These cases demonstrate the fundamental importance of demonstrable due diligence in protecting licence holders from conviction where they are deliberately deceived, or for actions out with their control.

While it is common sense that business owners in Scotland should ensure that all measures are taken to prevent underage sale, these cases prove that such practices may be valuable in ensuring that licence holders are not liable for offences for which they are not truly at fault.

Further, for any business owner or manager looking to ensure they are on the right side of the law, it is highly recommended that professional legal advice is obtained in this area. Any practitioners wishing to add further comment on their experience with the 2005 Act are more than welcome to do so (contact us here or get in touch on Twitter).


Photo credit: Flickr (Quinn Dombrowski)

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