Sheffield Council has admitted failing to consider gender equality issues when licensing a city strip club.
The authority was due to be challenged in court over its decision to grant a sexual entertainment venue licence to Spearmint Rhino in Brown Street in May 2016.
The claimant, who has not been named, said the council had not considered the impact the strip club would have on gender equality, as it was required to do by law under the Public Sector Eqaulity Duty.
Many of the 71 objections to the licence application had raised equality as an issue, but the council did not refer to its duty in either its decision or the minutes of the hearing.
The case was due to go to judicial review last week, but the council settled with the claimant out of court - thereby admitting that it had failed to consider equality.
There was no financial element to the claim, and the settlement does not affect the decision to renew the Spearmint Rhino licence in April this year, despite 97 objections.
A spokesman said the council felt it had taken account of equality issues in 2016, but realised it had not done an equality impact assessment to provide evidence of that.
The spokesman added: "So, while we felt we had complied with the law, we could not prove it with a document.
“We therefore felt it was in the best interests of taxpayers to settle the claim out of court, rather than going to a judicial review which we could well have lost. This would have resulted in far higher costs to the authority.
“We take people’s views extremely seriously when considering licensing applications here in Sheffield. For example, we allow all objectors to speak at renewal hearings – something many local authorities do not allow - which means such meetings can take several hours.
“We have learned our lesson from this case and have already made changes to ensure such mistakes cannot happen again.”
Solicitor Louise Whitfield, who represented the claimant, said the case was an 'important victory' for her client and others concerned about 'the harmful impact of sex entertainment venues on women'.
She added: "It is now clear that a local authority considering any such licence applications must look long and hard at the adverse impact on gender equality of letting such an enterprise exist at all.
"Otherwise it will be acting unlawfully and will be subject to legal challenge."
Today’s top stories: