Decision

Award Summary – July 2021 - 1

Published 18 November 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.

Since this arbitration referral, the PCA has issued statutory advice on the time limit for referring a non-MRO dispute to the PCA for arbitration, which can be read here.

1. Summary of findings

In this preliminary award the arbitrator found that in order to make a valid referral for arbitration the tied pub tenant (“TPT”) was not required to issue separate notices of dispute to the pub-owning business (“POB”) in relation to issues about communication from the POB in response to an initial notice and about the refusal of the request for a rent assessment proposal (“RAP”).

2. Factual background

Section 49 of the Small Business, Enterprise and Employment Act 2015 Act requires the TPT to notify the POB of an alleged breach of the Pubs followed by a period of 21 days before the TPT can refer a dispute under the Act to arbitration.

The TPT had sent an email to the POB. This email contained a request that the POB provide the TPT with a RAP under regulation 19(2)(a) of the Pubs Code, as the TPT contended that there had not been a rent assessment for 5 years, and also contained allegations about a breach of the requirement of fair and lawful dealing under regulation 41(1)(c) of the Pubs Code. The email stated that it was the TPT’s 21-day notice to the POB before making a referral to the PCA.

The POB’s Code Compliance Officer (“CCO”) responded to the email rejecting the request for a RAP and stating that if the TPT did not agree with the reason for rejection, they should provide a further 21-day notice of their intention to refer a dispute to the PCA arbitration. Shortly afterwards in a second letter, the POB’s CCO rejected the alleged breaches of the Pubs Code in relation to “fair trading”.

The TPT then made a referral to the PCA for arbitration.

3. Issues

3.1 Jurisdictional issue

In this award the arbitrator determined the preliminary issue of whether the TPT had properly referred all of the issues they wanted the arbitrator to determine, given that the TPT had not provided a separate 21-day notice under section 49 of the 2015 Act dealing with either the POB’s refusal of their request for a RAP or their complaints about the CCO’s response.

The issues referred for arbitration by the TPT fell into 2 categories, namely the breach of the principle of fair dealing and about the POB’s refusal of the TPT’s request that it provide a RAP. The POB contended that the TPT could not:

1. raise an issue about the CCO’s response to their allegations of breach, as that correspondence took place after the email giving notice and it was not possible for the notice to pre-date the issue complained about; and

2. refer for determination matters related to the POB’s refusal to provide a RAP, including around an agreement entered into 3 years prior which the POB claimed meant that the TPT was not entitled to a RAP. The POB argued that the email could not be a notice in relation to issues about the RAP request because at the time the POB had not refused the request for a RAP. The POB asserted that further a notice was required from the TPT following the refusal in order to make a referral.

In respect of the issues, the TPT argued that it was neither reasonable nor necessary for a further notice, and that the notice provided the required trigger for the referral to arbitration.

4. Arbitrator’s findings

In summary, the arbitrator held the tied TPT was not required to issue separate notices in relation to issues about the CCO’s response to their notice by email and about the refusal of the request for a RAP raised in their referral.

The arbitrator considered that the purpose of s.49 is to provide the timing mechanism for the referral of a dispute to arbitration. The notice must identify the matters in dispute. The dispute may have a number of elements. The parties agree that the notice identified the categories of allegations.

4.1 The POB’s CCO response to the allegation of breach

The arbitrator held that there is no doubt the POB rejected the issues in relation to both the allegations regarding fair dealing and in relation to the request for a RAP. The distinction between issues about the allegations about breach of the principle of fair dealing was a technical, artificial distinction. Ultimately, the arbitrator held that there is no requirement for the TPT to serve a further, separate notice in relation to the issue regarding the CCO’s response as it was no more than a sub-set of the main issue.

4.2 The request for a RAP

The arbitrator held that the TPT was not under any obligation to provide a further notice. The arbitrator considered that following the TPT’s notice, the POB’s response letter rejected the request for the RAP and crystallised the dispute. The arbitrator noted that no authority had been provided in support of the POB’s assertion that following rejection of a request for a RAP, a TPT is required to issue a further section 49 notice.