However, this attitude changed in 1967 as legislation was introduced that charged many popular coffee houses with operating public halls without a license - getting this designation because although they were not serving alcohol, they were charging for entertainment. McHugh along with help from Pierre Berton argued that this was unlawful and they ended up winning the case. McHugh and his employees also condemned riots and drunken behavior. When 2,000 youths caused a riot in Yorkville in April of 1965, employee Brian Walker stated that "the people who listen to our folk music and jazz are not the hoodlums who take part in street riots".
Tragedy struck the Penny Farthing on May 11th 1967 while during a confrontation, a 17 year old jumped up on a half wall outside the venue and kicked a 37 year old man in the chin who then fell back, hit his head on the curb and died. The youth was jailed and later sentenced to manslaughter.