Award Issued: 2021
Publisher’s Note: The Pubs Code Adjudicator encourages openness and transparency in the operation of the Pubs Code etc. Regulations 2016. Publication of awards made in Pubs Code arbitrations, or summaries of those awards, enables the industry to better understand previous decisions and consider how the Pubs Code is being applied in individual cases. Neither the Pubs Code Adjudicator nor an arbitrator is bound to follow published awards in applying the law, but such awards can be used to support the industry’s consideration of the proper interpretation of the Pubs Code. Parties are encouraged to take independent professional advice about their situation.
The outcome of an arbitration is based on its own facts and the evidence produced in the case and is not binding in other cases where the landlord and tenant are not the same. The Pubs Code Adjudicator does expect a regulated pub-owning business to consider its understanding of the law in light of each award that makes a finding on the interpretation of the statutory framework and to adjust its behaviour towards tenants as appropriate. The publication of an arbitration award or an award summary does not mean the Pubs Code Adjudicator endorses the decision and it does not form legal advice about any issue.
This summary is provided to assist in understanding the arbitration decision. It does not form part of the decision or reasons for the decision.
In conjunction with the summary, you should read about PCA regulatory action as a result of this arbitration here.
1. Summary of the findings
On the facts of the case, the arbitrator found for the pub-owning business (“POB”) in relation to all issues in this arbitration.
2. Factual background
The POB sent two emails to the tied pub tenant (“TPT”) in November 2018 which the POB claimed complied with the requirements for information that must be provided to TPTs under Part 2 and Schedule 1 of the Pubs Code etc. Regulations (“Pubs Code”).
3. Issues and the arbitrator’s decision
The TPT made a number of allegations in relation to the POB’s conduct around their tenancy. The arbitrator found that the POB had not breached the Pubs Code in respect of any of the allegations. The arbitrator’s findings included the following:
3.1 Information required under Part 2 and Schedule 1 of the Pubs Code
The arbitrator found that the information provided to the TPT in emails sent by the POB did comply with the requirements set out in Part 2 and Schedule 1 of the Pubs Code, that any deficiency in the information provided was merely clerical and that the rent valuation was of benefit to the TPT and their advisers. The arbitrator also considered that a rent valuation was not required in any event.
3.2 Rent Proposal
The TPT contended that the rent proposal had not complied with the requirements of the Pubs Code. The TPT had also made complaints about the contents of this rent proposal, including alleging that it had been embellished and contained information that had not been included in a previous version. The POB contended that any different properties in the document were due to it being a “live” document with some of its properties changing over time, and also asserted that there was not a requirement on it under the Pubs Code to serve a rent proposal in respect of a new letting.
The arbitrator accepted the POB’s arguments about the content of the documentation, and also considered in any event that it was not a requirement for the POB to provide a rent proposal in this case.
3.3 Notification of TPT’s Enhanced rights under the Code
The TPT alleged that they should have been notified by the POB as to when 12 months had passed of their occupying the pub under a tenancy at will agreement, and that the POB had not done this.
The arbitrator found that as a matter of fact the POB had sent notification to the TPT of its enhanced rights under the Pubs Code in respect of the passing of 12 months. The arbitrator further noted however that providing such notification was not a requirement of the Pubs Code.
3.4 Schedule of Condition
The TPT argued that the schedule of condition sent by the POB as required under the Pubs Code was deficient in that it did not report on the state of the residential part of the pub.
The arbitrator accepted the POB’s argument that the alleged deficiency in the schedule of condition was the result of the POB’s surveyor being unable to gain access to the residential premises because they were occupied by the TPT and did not find for the TPT.
3.5 Business Plan
The TPT argued that the business plan was deficient in that a section for labour costs had not been completed by the POB. The POB argued in response that the projected forecasts of the TPT’s surveyor included projections for labour costs.
The arbitrator found on the evidence that as a matter of fact the projected forecasts of the TPT’s surveyor included projections for labour costs.
3.6 Information Relating to Market Rent Only (“MRO”)
The TPT argued that information relating to MRO notices and the POB’s policies relating to MRO, were not adequately explained by the POB.
The arbitrator found as a matter of fact that the POB had sent a relevant guide containing the information to the TPT in an email, and accepted the POB’s assertion that other matters, such as any amendments to standard terms, would have been discussed in the negotiations leading up to the grant of the tenancy.
3.7 Repairs and Maintenance
The TPT argued that the POB did not adequately explain to them details and charges relating to repairs and maintenance.
The arbitrator found as a matter of fact that the relevant costs were contained in the tenancy on which the TPT had taken professional advice and that all charges would have been discussed for the preparation of the business plan.
3.8 Gaming Machines
The TPT argued that they were obliged to be tied on amusement/gaming machines and that this was a breach of the Pubs Code.
The arbitrator found as a matter of fact the tenancy excluded the right to have amusement machines and that the TPT was not obliged to have gaming machines.
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