Six transsexuals are claiming they have suffered discrimination because they were told to leave a Northamptonshire pub.
The landlord said another customer had complained
The incident happened last year at the Red Lion in Thornby.
The six are taking legal action against landlord John Gawthorp in a case funded by the Equal Opportunities Commission (EOC).
The landlord's solicitor, John Hill, denies there was any discrimination and said customers had complained when one member of the group visited the women's toilets.
The landlord then stopped serving the party.
Mr Hill said: "There isn't anything under UK legislation at the moment which prevents someone discriminating on the grounds of (gender) reassignment so far as providing services are concerned.
He doesn't mind them coming back, provided we can sort out the arrangements for the loos
solicitor for the Red Lion
"We don't accept that we did discriminate anyway."
Mr Hill said the legal action was a test case and no legal precedent has been set.
A spokeswoman for the EOC told BBC News Online she could not comment on the case itself, but acknowledged that the case does test a point of law.
She said: "At the moment there is legislation to protect transgendered people at work, but in this case it's related to goods, services and facilities.
"We're the statutory body that looks after sexual discrimination in this country, so when these areas need clarification, it's our duty to take a look at it."
Mr Hill said it was unfair that Mr Gawthorp would have to pay for his end of the legal action himself.
If he loses he will have to pay the court costs of the claimants.
He said his client would welcome the transsexual customers back to the pub at any time, provided some issues could be worked out.
Mr Hill said: "He doesn't mind them coming back, provided we can sort out the arrangements for the loos."