Decision

Award summary – March 2017 - 1

Published 24 March 2021

Applies to England and Wales

Award Issued: 2017

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.

Summary of the Findings

The arbitrator found the tied pub tenant (“TPT”) had not breached any procedural requirements in making their referral to the Pubs Code Adjudicator (“PCA”). The arbitrator concluded they had jurisdiction to hear the dispute about the pub-owning business’s (“POB’s”) Market Rent Only proposal.

1. Factual Background

The TPT referred the POB’s Market Rent Only (“MRO”) proposal to arbitration, claiming it did not comply with the Pubs Code. The POB argued that the TPT’s referral was in breach of the requirements for referring a dispute because the TPT had not done the following.

• Provided the POB with notice of their view that the MRO proposal was non-compliant as required by section 49(2) of the Small Business, Enterprise and Employment Act 2015 (SBEE Act 2015).

• Waited 21 days after notifying the POB before referring the dispute to arbitration as required by section 49(2) of the SBEE Act 2015.

• Informed the POB of their intention to take the matter to arbitration before making the referral as required by regulation 32(3) of the Pubs Code (“the Code”).

The TPT argued that the POB had suffered no detriment from their actions. By comparison, a rejection of the TPT’s referral would have caused the TPT a very real detriment as they would not have the protection of the Code.

2. Arbitrator’s Findings

2.1 Compliance with Section 49(2) of the SBEE Act 2015

The arbitrator found section 49(2) of the SBEE Act 2015 was not relevant to this dispute and so they did not need to consider if the TPT had breached those requirements. The effect of section 45(4) of the SBEE Act 2015 is that sections 48 to 52 do not apply to MRO disputes.

2.2 Compliance with Regulation 32(3) of the Code

Written notification

The arbitrator concluded that a completed referral notice was an acceptable form of notification. While the arbitrator found regulation 32(3) of the Code applied to this dispute, it does not specify the form that a written notification to the POB should take.

Timing of notification

The arbitrator found that the POB’s representative received the notification several hours before the PCA received the referral. Regulation 32 says the parties must notify each other ‘before’ the referral is made to the PCA. Regulation 8 makes provision for how to interpret “periods of time” in the Pubs Code. The arbitrator found regulation 8 did not apply as they found the use of the word ‘before’ in regulation 32 referred to a ‘point in time’ and not a ‘period of time’. The arbitrator further noted that regulation 8 was only meant to provide guidance where no evidence was available on the timing of the notification. In this case, there was evidence available and the arbitrator was able to make a finding on the facts. Notification had been given to the POB before the referral was made and therefore the TPT had not breached regulation 32(3) of the Code.

Jurisdiction

The arbitrator went on to consider whether they would have had jurisdiction to hear the substantive dispute about the MRO proposal if they had found the tenant had in fact breached regulation 32(3). The arbitrator considered that regulation 32(3) was meant to encourage the parties to engage with one another before referring a dispute for arbitration. But they found there were no express or implied sanctions (punishments) within that regulation to suggest a breach would mean the arbitrator had no jurisdiction to hear the substantive dispute.