Decision

Award Summary – June 2019 - 1

Published 5 January 2022

Applies to England and Wales

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.

1. Summary of findings

The arbitrator made a declaration, based on the pub owning business’s (“POB”) concession, that the POB was in breach of regulations 19(1)(b) and 20(1) of the Pubs Code etc. Regulations 2016 (“Pubs Code”) in failing to provide the tied pub tenant (“TPT”) with a rent assessment proposal (“RAP”) and other documents required under those regulations.

2. Factual background

The TPT requested a RAP under regulation 19(1)(b) of the Pubs Code. In its reply, the POB asserted that it was not obliged to provide a rent assessment.

The TPT chased the POB for a response, identifying that regulation 20(1)(b) required the POB to provide a rent assessment proposal within 21 days from the TPT’s request. The POB reiterated that it was not required to deliver a RAP. The TPT referred the dispute to the PCA for determination. In the meantime, the TPT assigned its leasehold interest in the pub.

The POB asserted that:

1. Following the assignment, the TPT was no longer a “tied pub tenant” for the purposes of section 70(1) of the Small Business, Enterprise and Employment Act 2015 (“2015 Act”) and therefore, the POB argued, the TPT no longer had the right to pursue a referral under the 2015 Act or under the Pubs Code.

2. The main remedy sought by the TPT (the sending of a RAP) could no longer be ordered and that other remedies, including compensation, were not particularised and/or could not be awarded by an arbitrator due to the lack of jurisdiction.

The TPT submitted that it no longer wished to pursue an order compelling the POB to provide a rent assessment but instead sought an order declaring that the POB’s conduct in refusing to provide a RAP (and in doing so, blocking the TPT’s access to the Market Rent Only procedure) was unlawful and caused the TPT loss in the form of diminution in value of the leasehold interest in the property.

Subsequently, the POB admitted in written submissions that it had been under an obligation to provide a RAP to the TPT but argued that the arbitrator did not have the power to make a declaratory award because the question of whether it had breached the Pubs Code was now no longer a matter in dispute between the parties.

3. Arbitrator’s findings

The arbitrator confirmed that they had the power to make a declaration that the POB had breached the Pubs Code in respect of the POB’s failure to provide a RAP to the TPT.

The POB had argued that as a result of its admission that it had been obliged to send a RAP to the TPT, the question as to whether the POB was in breach of the Pubs Code ceased to be a matter to be determined for the purposes of section 48(3) of the Arbitration Act 1996. The arbitrator did not agree with the POB and considered that they had the power to make a declaration as to any of the matters originally referred to arbitration, and any matters that could be referred or otherwise arose for determination in the course of the proceedings. This power was not limited to declarations in respect of issues or matters referred that were still “live” when the power was exercised – it also applied to matters which were conceded or admitted.

The POB sought to persuade the arbitrator that if they did have the power to grant a declaration in this case, such a power was discretionary, and that the arbitrator should not exercise their discretion to make a declaration in this case. The POB argued that as the arbitrator had no jurisdiction to award compensation to the TPT in this arbitration (an issue which had already been determined in the proceedings) the TPT would now have to seek compensation through the courts, and that the arbitrator should not prejudice the POB by making a declaration in this arbitration and should leave it to the courts to consider the issue themselves.

The arbitrator considered that it would have been wrong not to provide certainty on the issue in question and held that the refusal of a declaration now would deny the TPT the fullest justice to which it was entitled. The arbitrator acknowledged that the TPT sought the declaration in order to rely on it in potential subsequent proceedings seeking compensation, and had they not already determined they had no jurisdiction in this case to decide that claim, the TPT would otherwise have been entitled to have the application for compensation determined in this arbitration based on the POB’s concession. The POB had chosen to make the concession, which it had done in an explicit and considered way, rather than argue the issue. The arbitrator noted that the POB could not make a concession and then expect to be in a better position against the TPT than if it had argued the issues and lost. The arbitrator considered that making a declaration would not cause injustice to the POB and any adverse consequences for the POB were firmly outweighed by the injustice that a refusal to grant a declaration would cause to the TPT.

Accordingly, the arbitrator made a declaration, based on the POB’s concession, that the POB was in breach of regulations 19(1)(b) and 20(1) of the Pubs Code in failing to provide the TPT with a RAP and other documents required under those regulations.