Hi Lyle,
It is very common in England and Wales to limit numbers to what the exits can accommodate in preference to increasing the exit provision to meet what the premises can potentially hold at maximum occupancy. If this were not the case there would be thousands of premises that would need to fit additional exits.
If we went along the lines of increasing the exit capacity to what the premises can hold in every case then we would run into all sorts of problems in trying to make a judgement on the maximum potential occupancy. There are many places where 0.25 sq. m/person would not be unreasonable on a busy Friday night and many other places where there are a lot of fixed seating areas that limit occupancy, so how would we make a judgement on what would be the right occupancy factor for each premises? Not easy.
The fire strategy or the fire risk assessment (in the absence of a strategy) should stipulate the maximum number of occupants, based on exit capacity, and the responsible person should stick to this. If this is done in line with the applicable guidance then how could anyone ever claim that conditions were unsafe (barring all other factors, of course).
If an enforcing authority tried to prosecute on the basis that a premises could potentially hold more people than the exits could accommodate but that it never did, then it would be laughed out of court. No one has been put at any risk.
Having said all that there are times when a judgement about the management of a premises leads one to think that there may be times when the occupancy level exceeds the capacity of the exits. In such cases it is not unreasonable for the enforcing authority to insist on additional exits.
The responsible person has to be absolutely honest with you and tell you what the absolute maximum occupancy is.
I understand that this case concerns the application for an entertainments licence and in such cases the situation is not easy as it involves trying to convince someone, who often knows very little about fire safety, how the required level of safety will be met. This person may have some guidance that they interpret as a set of absolute rules. They can be convinced but it requires a rigorous set of compensatory measures that goes far beyond merely making a statement that the numbers will be kept down to some pre-determined safe level. For example, details will have to be given on how the people will be counted, how records will be kept continuously updated, who will be responsible, how it will be assured that during a busy night this person will still have time to continue checking that numbers are kept within the limit. And so on.
Good luck.