Decision

Award Summary – November 2022 – 1

Published 13 April 2023

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’s advice note PCA Advice Note: Timing of referral for arbitration by tied pub tenants (non-MRO disputes) for information about the PCA’s view on the time limit around referrals to arbitration.

1. Background

This preliminary award concerned whether the Arbitrator had jurisdiction to determine a number of issues around the provision by the Pub-Owning Business (POB) of 2 Rent Assessment Proposals (RAPs) to the Tied Pub Tenant (TPT).

The TPT had received two RAPs from the POB five years apart. The TPT sent a letter to the POB purporting to be a 21-day notice under s49(2) of the Small Business, Enterprise and Employment Act 2015 (SBEEA 2015) and subsequently referred a number of matters to arbitration including alleged deficiencies with the two RAPs

2. Issues

The issues before the Arbitrator to determine whether they had jurisdiction to hear the substantive claims were as follows:

• What contents are required for a 21-day notice under s.49(2) of SBEEA to be valid?
• Did the TPT give a valid 21-day notice under s.49(2) of SBEEA in respect of issues in this case?
• In respect of the period for referrals under s.49(4) of SBEEA, when should that period be considered to end in this case?
• Did the TPT make their referrals within the time limit?

3. The relevant legislation

S48(1) of SBEEA 2015 provides that “[i]n accordance with the following provisions of this section and section 49, a tied pub tenant may refer a dispute between the tenant and the pub-owning business concerned to the Adjudicator for arbitration.”

S48(2) of SBEEA 2015 also provides “[i]f the Pubs Code specifies that particular provisions of the Pubs Code are arbitrable, a dispute may be referred to the Adjudicator only to the extent that it relates to an allegation by the tenant that the pub-owning business has failed to comply with an arbitrable provision of the Pubs Code.”

S49 of SBEEA 2015 relates to the time scales of referring a matter for arbitration by TPTs. It states at s.49(2) “…the dispute may not be referred until after the expiry of the period of 21 days beginning with the date on which the tenant notifies the pub-owning business of the alleged non-compliance.” S49(4) provides “In all cases, a dispute may not be referred after the expiry of the period of 4 months beginning with the first date on which the dispute could have been referred.”

4. Arbitrator’s Findings

Validity of notice under s.49(2)

S49(2) provides that a TPT may not refer a dispute for arbitration until they have given the POB 21 days’ notice of an alleged breach of the Pubs Code. The POB argued that for the 21-day notice to be valid there must at the least be a reference to the provisions within the Code that are alleged to not have been complied with, and as the TPT did not include details of the particular provisions alleged to have been breached the notice was therefore not valid. The TPT submitted that its notice was valid, stating it outlined the dispute as it related to the regulated matters (i.e. rent assessment) and gave justification and prior notice of the TPT’s intention to have the matters referred to the PCA.

The Arbitrator considered that whilst it would be good practice for TPTs who serve a s49(2) SBEEA 2015 notice to reference the relevant provision of the Pubs Code which they allege the POB has breached, TPTs are not required to do so in order for such a notice to be valid. The Arbitrator found that for a notice to be valid a TPT should set out each alleged breach such that the POB can understand what the breach being alleged is.

The Arbitrator considered the contents of the TPT’s notice given to the POB. They held that three of the alleged issues before them in the arbitration could be read as being within the TPT’s complaints raised in the notice but found that two issues now raised by the TPT could not be said to have been included as part of the TPT’s notice. These two issues were therefore not within the Arbitrator’s jurisdiction as the required notice had not been given to the POB under s49(2).

Period for referrals under s.49(4)

S49(4) provides that a TPT may not refer a dispute more than four months after the first date when the dispute could have been referred. The Arbitrator considered that in most cases the four-month period would commence 21 days after the act complained of occurred. Their view was also that in circumstances where the TPT had no knowledge of the act complained of that the 21 days for giving notice followed by the four-month referred period would not begin until the TPT could have become aware of that act. They therefore considered that for a referral to be valid in this case it must be made within 4 months and 21 days after the act complained of was known to the TPT.

Of the three issues in the referral that had been held to be included in the 21-day notice, the Arbitrator considered that two of them had been referred in time and one was out of time. They determined that allegations concerning the RAP served five years previously were out of time as they considered the TPT should have known about the alleged deficiencies within a reasonable space of time after receipt and to say that the TPT did not realise the deficiencies until receipt of the second RAP five years later was not reasonable. The Arbitrator held that any dispute must have arisen within a relatively short space of time from receiving the first RAP and implementing its provisions.

In respect of the dispute about the second RAP the Arbitrator found that the date of the dispute would be when the TPT had knowledge of the act complained of. The Arbitrator considered in this case (whilst acknowledging the subjectivity of this approach), that this TPT should have time to receive the RAP, read the same and understand its content before concluding that a dispute had arisen. The Arbitrator formed the view that a two-week period for consideration of the second RAP was a reasonable period of time in forming that a dispute had, indeed, arisen and considered that the limitation period of 4 months and 21 days began to run from that date.