Licence revoked, renewal refused or an administrative cessation order issued? The right to a hearing, the duty to give reasons, deadlines and petitions.
A business licence is not a technical matter. It is a condition for operating, and it is often the principal asset of the business. That is why it is important to understand, first, who has the authority to decide on it.
Within the area of a local authority, the licensing authority is the head of the local authority or whoever he has authorised for that purpose; outside the area of a local authority, it is whoever the Minister of the Interior has authorised for that purpose (section 5(a) of the Business Licensing Law, 5728-1968). Alongside the licensing authority operate the "approval givers" — the ministers or whoever they have authorised — and a licence will not be granted unless each of them has given his approval (section 6(a) of the Law).
Each approval giver has a purpose of its own. Section 1(a) of the Law lists the purposes of licensing: proper environmental quality, including the prevention of hazards and nuisances; the prevention of dangers to public safety and protection against robbery and burglary; the safety of persons present at the business premises or in their vicinity; the prevention of the risk of animal diseases and the prevention of the pollution of water sources; public health, including proper sanitary conditions; fulfilment of the purposes of the planning and building laws; and compliance with the laws relating to fire safety. This structure has a practical consequence: a body entrusted with a particular purpose may not weigh considerations that fall outside it.
The powers of the licensing authority are not confined to granting a licence or refusing one. It may set conditions, limit the term of the licence, and — under section 7C(a) of the Law — revoke a licence or a permit, or suspend it, on its own initiative or on the initiative of an approval giver. The distinction between suspension and revocation is not merely semantic: as will be explained below, the very existence of the power of suspension is one of the central arguments against a sweeping revocation.
The central rule for our purposes is set out in section 7C(c) of the Business Licensing Law: "A licence or temporary permit shall not be revoked except after the holder of the licence or of the temporary permit has been given an opportunity to state his arguments".
This is not a recommendation but a precondition to revocation. It reflects a long-standing principle of Israeli administrative law, laid down in HCJ 3/58 Berman v. Minister of the Interior: an administrative body will not be permitted to harm a citizen in his person, his property or his occupation unless the person affected has been given a fair opportunity to present his defence.
Alongside the hearing, section 7C(b)(1) of the Law requires the licensing authority to consult with the relevant approval giver before revoking a licence on its own initiative.
The Law does not specify how the hearing is to be conducted — whether orally or in writing, how much advance notice must be given of it, and which documents must be made available for inspection. Administrative practice holds that the hearing must be genuine and not formal: before the decision and not after it, on the basis of a factual foundation that has been presented to the licence holder, and with a real willingness to consider his arguments.
No less important is the timetable that follows the decision. Section 7C(d) of the Law provides that notice of the revocation is to be sent within seven days of the date of the decision, and that the revocation takes effect at the end of thirty days from the date of the notice. In practical terms, those thirty days are the window in which one can turn to the court and seek interim relief before the business is closed. They are shorter than the period for filing a petition, and one should therefore not wait for that period to run its full course.
A different track applies to an expedited permit: section 7C(d1) of the Law allows an approval giver to revoke its approval on defined grounds — provided that the holder of the expedited permit has been given an opportunity to state his arguments — and such a revocation may take effect immediately.
Two common situations are not "revocation" in the narrow sense: refusal of a new application, and refusal to renew an existing licence. Express administrative duties apply to these as well.
The Administrative Procedure Amendment (Statement of Reasons) Law, 5719-1958 applies to a State employee, to an employee of a local authority and to any authority granted power by law (section 1) — and therefore to the licensing authority and to the approval givers. Section 2(a) of that Law provides that a person who has been asked in writing to exercise a power granted to him by law must decide the request and reply to the applicant in writing as soon as possible, and no later than forty-five days from the day the request was received. Section 2(b) lists exceptions, but even then, under section 2(c), written notice of the exception is required within that same period.
Section 2A of the Law lays down a separate duty: a public employee who has refused a request must notify the applicant in writing of the reasons for his refusal. Section 3 of the Law lists situations in which a public employee is exempt from giving reasons, but these concern particular situations — among them where the empowering law itself permits acting without giving reasons, State security and foreign relations, appointment to a position, unlawful harm to the right of another person, or the disclosure of a professional secret — and as a rule they do not exempt an ordinary business licensing decision from the duty to give reasons.
What happens when reasons are not given? Section 6(a) of the Law lays down a rule of considerable practical importance: the decision is not invalidated on that ground alone, but in any proceeding before an appeals committee or an appeal tribunal, or before a court, the burden is on the public employee to show that the decision was lawfully made. In other words, the burden of proof shifts to the authority.
Section 5 of the same Law adds a duty that is sometimes forgotten: where the decision of the public employee is subject to an administrative appeal or to an appeal under an enactment, he must notify in writing the person entitled to file it of the existence of that right, of the manner of filing and of the applicable time limits.
As for the non-renewal of a licence that had customarily been renewed year after year — it is an accepted argument in administrative law that such a decision is closer in substance to a revocation than to an initial refusal, and that it therefore requires heightened justification and a better-grounded evidentiary basis. This is a doctrinal argument, and it must be established on the facts of each individual case.
The expression business owners commonly use is a "closure order". The language of the Law is different: section 20 of the Business Licensing Law deals with an "administrative cessation order". The distinction is important, because the route for challenging such an order is entirely different from the route for challenging the revocation of a licence.
An administrative cessation order is issued on the basis of a report submitted by an inspector, and only by a person listed in section 20(c) of the Law: the head of the local authority in whose area the business is located; a senior employee of the Ministry of the Interior, outside the area of a local authority; the district police commander; a district commander in the National Fire and Rescue Authority; a senior employee of the Ministry of Environmental Protection; the director of the National Food Service, the head of the National Environmental Health Division or a district physician in the Ministry of Health; the director of the Veterinary Services; and the chief labour inspector.
Section 20(d) of the Law requires the order to include certain particulars — among them a description of the facts on the basis of which it was decided to issue the order, confirmation that the duty of consultation was fulfilled, and particulars regarding the right to apply for the cancellation of the order. Section 20(e) requires consultation with a prosecutor or with a legal adviser before the order is issued; in urgent circumstances the order may be issued first, provided that it is brought before the prosecutor or the legal adviser for his position no later than three days thereafter. Each of these requirements can be examined — and the absence of any one of them may give rise to a ground of challenge.
The timetable is tight. Under section 21 of the Law, the order remains in force for thirty days from the day it was issued, unless it is cancelled earlier by the person who issued it or by the court; at the end of that period the person who issued the order may apply to the Magistrates' Court or to the Court for Local Affairs to extend its validity, and the filing of the application leaves the order in force for a further seven days.
The challenge itself is made under section 22(a) of the Law: a person who considers himself aggrieved by the order may apply for its cancellation to the Magistrates' Court or to the Court for Local Affairs in whose jurisdiction the business is located. The court will not cancel the order unless it is shown that the business was operating lawfully, that the requirements for issuing the order under the Law were not met, or that one of the grounds of administrative law justifying its cancellation exists. Note: filing the application does not stay the execution of the order unless the court decides otherwise. Section 22(b) provides that the application is to be heard in the presence of both parties within seven days of the day it was filed.
A decision to refuse a licence, to revoke it or to attach conditions to it is an administrative decision, and it is subject to review by the Court for Administrative Affairs, since business licensing matters are among the matters listed in the First Schedule to the Administrative Affairs Courts Law, 5760-2000. The proceeding is called an administrative petition.
Two rules are particularly important. The first — section 8 of the Administrative Affairs Courts Law provides that the Court for Administrative Affairs hears an administrative petition and an administrative appeal in accordance with the grounds, the powers and the remedies under which the Supreme Court sitting as the High Court of Justice hears matters. That is to say, the full toolbox of administrative law is available to the business owner. The second — section 9 of that Law empowers the court to grant an interim order at any stage of the proceeding and on such conditions as it may determine. This is the remedy intended to prevent the closure of the business until the petition is decided.
The time limit for filing an administrative petition is set by regulations: as a rule forty-five days from the date on which the decision was duly published, from the day on which the petitioner received notice of it, or from the day on which he became aware of it — whichever is the earliest — and without delay. The court has the power to extend the time limit. As noted above, where the revocation of a licence takes effect at the end of thirty days from the notice, or where an administrative cessation order is pending, waiting until the end of the forty-five days may prove, in practical terms, to be too late.
What are the common grounds of challenge in licensing cases? The absence of a hearing, or a hearing that is merely formal; the absence of reasons, together with the burden of proof that this shifts to the authority; a factual foundation that is incomplete, out of date or inconsistent with the conclusion reached; a departure from the uniform specification or from the authority's own guidelines; extraneous considerations — for example, a consideration falling outside the purpose entrusted to the approval giver; and selective enforcement, an argument recognised in the case law (HCJ 6396/96 Zakin v. Mayor of Be'er Sheva), which is particularly relevant where one business on a street is closed and others are not.
One ground deserves separate emphasis: proportionality. Freedom of occupation is enshrined in Basic Law: Freedom of Occupation, section 4 of which permits an infringement of it only "to an extent no greater than is required". Hence the argument that revoking a licence or closing a business is a drastic measure where less harmful means were available to the authority — temporary suspension under section 7C(a) of the Law, a demand to remedy defects, or the imposition of a condition.
Alongside the judicial route there is also an internal route: section 7C5 of the Law allows an objection to be filed against a requirement imposed by the licensing authority or by an approval giver, or against a refusal to grant a licence or a permit, in accordance with the time limits and procedures set out in regulations. Note two limitations: the Law expressly provides that filing the objection does not suspend the validity of the decision unless it has been decided otherwise, and the language of the section concerns a requirement or a refusal — and not the revocation of an existing licence.
Business licensing cases are conducted under time pressure, and the course of a case is often determined by the work done in the first days after the decision or the order is received.
Our office accompanies business owners through every stage of the process: examining the decision or the order and identifying defects in the process by which it was made; preparing for a hearing and presenting an orderly factual foundation before the decision is taken; a reasoned approach to the licensing authority or to the approval giver; filing an objection where that route is open; filing an administrative petition together with an application for an interim order; and filing an application to cancel an administrative cessation order in the Magistrates' Court or in the Court for Local Affairs. In appropriate cases we also make use of a request under the Freedom of Information Law in order to obtain the licensing file, the inspectors' reports and the positions of the approval givers.
Every case is examined on its own circumstances and on the basis of the specific documents it contains, and nothing stated here guarantees any particular outcome. If you have received a decision revoking a licence, refusing to renew one, or an administrative cessation order, we recommend seeking legal advice promptly, given the short time limits.
Section 7C(c) of the Business Licensing Law provides that a licence or temporary permit shall not be revoked except after the licence holder has been given an opportunity to state his arguments. The absence of a hearing is therefore a defect in the process, and it gives rise to a ground for challenging the decision. That said, invalidity does not follow automatically: the argument must be raised before the authority and before the court, and it is the court that will determine the outcome in the circumstances of the case. Given the short time limits, it is important to act as soon as the notice is received.
The time limit is set by regulations: as a rule forty-five days, running from the earliest of the date on which the decision was duly published, the date on which notice of it was received, or the date on which the petitioner became aware of it — and without delay. The court has the power to extend the time limit. It is important to stress that this time limit is not the same as the practical timetable: the revocation of a licence takes effect at the end of thirty days from the notice (section 7C(d) of the Law), and an application to the court for an interim order is therefore usually required earlier.
Section 2A of the Administrative Procedure Amendment (Statement of Reasons) Law requires a public employee who has refused a request to notify the applicant in writing of the reasons for his refusal. Section 6(a) of that Law provides that the decision is not invalidated on that ground alone, but in any proceeding before an appeals committee or an appeal tribunal, or before a court, the burden is on the public employee to show that the decision was lawfully made. In practical terms, this is a real procedural advantage for the business owner.
No. Section 22(a) of the Business Licensing Law expressly provides that filing the application does not stay the execution of the order unless the court decides otherwise. The application is filed in the Magistrates' Court or in the Court for Local Affairs in whose jurisdiction the business is located, and under section 22(b) it is to be heard in the presence of both parties within seven days of the day it was filed. It is therefore advisable to include in the application a request to stay execution as well.
The Law does not expressly impose a duty to hold a hearing before refusing to renew a licence, unlike the arrangement that applies to revocation. That said, it is an accepted argument in administrative law that the non-renewal of a licence that had customarily been renewed is similar in substance to a revocation, and that it therefore requires heightened justification and a better-grounded evidentiary basis. At the same time, the duties of replying in writing and of giving reasons under the Administrative Procedure Amendment (Statement of Reasons) Law apply. The argument is always examined in light of the specific circumstances of the case.