Decision

Award summary – May 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 given a valid Market Rent Only (“MRO”) notice (the “Notice”) to the pub-owning business (“POB”), rejecting the POB’s arguments about the missing telephone number and incorrect date for the MRO event.

The Notice was deemed to have been served on the POB on the date of the arbitration award, and so the POB had to provide a MRO full response (free of tie proposal) in accordance with regulation 29 of the Code

1. Factual Background

The POB had sent a Rent Assessment Proposal (“RAP”) to the TPT, who then requested a MRO proposal to go free of tie. In response, the POB asked the TPT to send a MRO notice complying with regulation 23 of the Code. Regulation 23(3) sets out what the MRO notice must include.

The TPT sent their Notice and asked the POB to confirm it was now correct. The POB responded seven days later to inform the TPT their Notice was not acceptable for two reasons.

• The TPT’s contact telephone number was not included.

• The date on the Notice for the MRO event was incorrect.

2. Arbitrator’s Findings

2.1 Telephone number not included (regulation 23(3)

The POB argued that the requirements of regulation 23(3) – which include the TPT’s telephone number - were mandatory and that a failure to provide the specified information would invalidate the Notice. The arbitrator disagreed, finding that the TPT’s failure to provide a telephone number in the Notice did not invalidate it.

The arbitrator found that:

• regulation 23(3) is to make sure the POB can give a full and timely response to a MRO request by being able to correctly identify the TPT and the premises and have the means to contact them. Although the TPT had not provided the telephone number in the Notice, the POB had this information;

• a rejection of the Notice for this reason would not be consistent with the principle of fair and lawful dealing by POBs (section 42(3) of Part 4 of the Small Business, Enterprise and Employment Act 2015);

• the POB had suffered no detriment from the TPT not providing their telephone number in the Notice. By contrast, the TPT would suffer detriment if the Notice was found to be invalid, as they could not then pursue the MRO option; and

• some TPTs did not have a telephone number and could still send a valid MRO notice.

2.2 Date provided on the Notice (regulation 23(3)(d))

The TPT included the date the MRO event had occurred in their Notice as required by regulation 23(3)(d). The POB disagreed with this date.

The MRO event in this case was the receipt of a Rent Assessment Proposal (“RAP”). The TPT said they were on holiday when the POB sent the RAP and they had put the actual date they received it on their Notice.

The POB argued the MRO event in the Notice should have been the date the TPT was ‘deemed’ to have received the RAP (in accordance with regulation 8 of the Code which deals with periods of time and deciding when certain events occur). The ‘actual’ date the TPT had included in the Notice was 12 days after the POB’s ‘deemed’ date of receipt.

The arbitrator found the POB suffered no detriment from the TPT including the actual date they received the RAP and that it would be unreasonable to reject the Notice for including this.

The arbitrator noted that if the deemed date of receipt was the correct date as the POB claimed, this could cause difficulties for the TPT. It would not always be possible for a TPT to have all the information it needed to calculate the actual date the POB had sent the RAP.

Did regulation 8 (‘Periods of Time’) apply?

Regulation 23(2) says the POB must receive the Notice within 21 days of the date the MRO event occurred. The MRO event in this case is found in regulation 27, which says the MRO event is the date a TPT ‘receives’ a RAP. The arbitrator considered regulation 8 (‘Periods of Time’) and noted it applies to a time period in connection with the POB sending/providing the RAP. But it only applies to limited matters in connection with receiving information and regulation 8 does not refer to receiving ‘proposals’.

Even if the MRO event should have been the deemed date of receipt, the arbitrator did not consider that in accordance with the principle of fair and lawful dealing, the legislation intended that a mistake in the date in the MRO notice would make the entire MRO process invalid. Particularly as there was no dispute that a RAP was sent or about the type of MRO event.

In any event, whichever of the dates was used for the MRO event, the POB had received the TPT’s Notice within the required 21-day period under regulation 23(2).

2.3 Time taken to raise concerns about the Notice

When the TPT sent their Notice they had asked the POB to confirm it was in order. The POB did not raise its concerns for a further seven days. The 21-day period for sending a valid MRO notice had expired by this point (if calculating it from the POB’s ‘deemed’ date the RAP was received).

The TPT therefore had no time to deal with the concerns the POB had raised. It was for the POB to acknowledge the MRO request ‘as soon as reasonably practicable’ (regulation 29(2) of the Code) and a delay of seven days could not be classed ‘as soon as reasonably practicable’ in this case.