If the landlord did wish to continue without the pretence of the session being a private club, the fine would only be payable if they lost. Most licencees stop, obtain the PEL or plead guilty.

There is more than a possibilty, that this licensee could win, if they maintain that it is not licensable public entertainment and the participants are not 'performers'.

There is more than a chance that the authority would back off, if they were faced with proving the event was licensable, especially with good local support and media coverage.

Have the local councillors been approached?