Decision

Award Summary – October 2021 - 1

Published 15 December 2021

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.

This summary can be read in conjunction with the PCA Factsheet on Trigger Events.

1. Summary of Findings

The arbitrator found that there was no Trigger Event and as a consequence both the tied pub tenant’s (“TPT”) Market Rent Only (“MRO”) notice and request for a rent assessment proposal (“RAP”) were invalid.

2. Background

The TPT is the tenant of a public house (the “Premises”), and the pub owning business (“POB”) is the landlord of the Premises.

The TPT claimed that an event occurred that is a Trigger Event giving the option to the TPT to give a MRO Notice requiring the POB to provide it with the option of a MRO-compliant tenancy and to request a RAP.

The MRO notice and RAP request were refused by the POB.

3. Relevant Legislation and Rules

A TPT will have the option to serve a MRO Notice and request a RAP from the POB if a Trigger Event occurs. Trigger Events are defined in Section 43(9) of the Small Business, Enterprise and Employment Act 2015 and Regulation 7 of the Pubs Code etc. Regulations 2016 (“Pubs Code”). A Trigger Event must be an event which is beyond the control of the TPT, was not reasonably foreseeable, and has a significant impact on the level of trade that could reasonably be expected to be achieved at the tied pub.

Further, amongst other conditions, under regulation 7 of the Pubs Code in order for an event to be a valid Trigger Event it must either:

• affect only the TPT’s pub; or
• also affect other pubs in the local area but be unlikely to affect all pubs in England and Wales. Where the event affects other pubs in the local area, it must directly relate to a change in the tie that the POB has imposed on the pub or have an effect which is directly related to changes in the local area.

This is set out at regulation 7(5)(b) of the Pubs Code which provides that where an event affects other pubs in the local area, in order to be a Trigger Event, it either must be directly related to a change in the tie by the POB and/or it is an event which:

(b) has an effect which is directly related to changes in the local area such as (i) changes to the local infrastructure; (ii) changes to local employment; (iii) long-term changes to the local economic environment; (iv) changes to local environmental factors.

Where the requirements of a trigger event are satisfied a TPT may ask their POB for a MRO option and/or a RAP.

4. Issues

The TPT asked the arbitrator to determine that a Trigger Event had occurred in this situation and order that the POB must therefore provide to them a RAP and an option of a MRO compliant tenancy as the TPT’s requests had been valid.

The POB submitted that the examples given in regulation 7(5)(b) are each changes in local circumstances, and that the specific examples given are to assist in understanding the earlier words in the section. The POB argued that each example in the sub-section are the effects of very significant and long-term events, which it claimed are not of the same character as events in this case, involving the cancellation of various sports leagues. It also argued that this case involved a sequence of events, namely a series of cancelled bookings, none of which individually would meet the criteria of s.43(9)(c), namely that a Trigger Event “has a significant impact on the level of trade that could reasonably be expected to be achieved at the tied pub”.

The TPT submitted that the events mentioned in regulation 7(5)(b) were examples and that the event fell within the relevant criteria. The TPT acknowledged that there had been a sequence of events, but argued that it would have been nonsensical to have entered a separate claim for each.

5. Findings

The arbitrator determined that a sequence of cancelled bookings at the Premises did not constitute a Trigger Event in this case.

The arbitrator concluded that the TPT was seeking to rely on a sequence of smaller events, none of which would have had the necessary significant impact on its own.

The arbitrator found that if the events were bundled to create a single larger event that did have a significant impact on trade as required by the legislation, then it is clear that the actual event at the root of each was the COVID-19 restrictions, which they considered was not an applicable trigger under regulation 7.