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Mon 10th Jul 2017 - Group of 13 multi-site operators report they have ‘lost confidence’ in Pubs Code Adjudicator
Group of 13 multi-site operators report they have ‘lost confidence’ in Pubs Code Adjudicator: A group of 13 multi-site operators have signed an open letter in which they say they have lost confidence in the Pubs Code Adjudicator (PCA), which has been set up to oversee the statutory Pubs Code, resolving disputes between tenanted pub companies and their lessees. They have also called for the position of Paul Newby as its head to be ‘reconsidered’ because of a conflict of interest. The letter comes after the group of companies made critical comments about long delays at the PCA over adjudications in relation to Market Rent Only (MRO) applications, which allow lessees to end the tie and have a commercial rent applied to their pubs. The letter states: “We have read the response from PCA to our call for more urgent action. We are incensed by the nature of the reply that has some suggestion that the inactivity of PCA has somehow reduced risk for the parties to the MRO process. We would make the following points. 1: We are not asking for any favour on any single case. We are asking only that PCA acts with urgency on all cases which are now becoming a backlog. This is what the office of PCA was set up to do - regulate behaviour, deal with cases and fairly adjudicate; 2: We refer to the comment regarding the test case. We offered test cases. The Pub Owning Businesses refused after several more weeks of prevarication. They seemed to struggle to agree amongst themselves about the approach or about being bound by a case against one of the other Pub Owning Bodies. We have no such issues amongst ourselves; 3: The nature and complexity of the legislation necessitates that tenants need professional advice. The PCA would prefer that this was not legal advice but clear and positive direction is required on the points and interpretation of law. If the PCA were to provide direction, then some of this may be avoided but direction is absent; 4: However, the most disturbing part of the PCA response is this. The PCA suggests that the slow progress has had the effect of reducing risk to the parties involved. Whose risk? This shows a complete lack of understanding of the practical or financial process and it may demonstrate a very concerning bias on the part of the PCA; 5: The only beneficiary of any delays will be the landlord Pub Owning Businesses who continue to receive the greater part of the pub profit during the MRO process. The rent mechanism means that the discount lost by the tenant will always be higher than the additional rent and under the rules, the tenant has no effective redress. The only beneficiary from “kicking it into the long grass” can be the Pub Owning Business and that is the tactic. The only risk reduced is the risk to the Pub Owning Business tied income while the tenant appetite or ability to pursue the process is severely tested. This lack of understanding and lack of direction by the PCA shows that the legislation is not fit for purpose. The legislation has provided the Pub Owning Businesses with the ability to hide behind the law in their efforts to delay the MRO rights of the tenant. It has not protected the position of tenants through the process. This statement by the PCA brings Mr Newby’s appointment further into question because it displays a lack of impartiality. None of us objected to his appointment and we were happy to allow his actions to speak for him. However, at this stage, there has been no action and a statement such as this, which looks to favour short term income protection of the Pub Owning Businesses, simply make us question his motives. We are aware from other articles that Mr Newby is a Fleurets shareholder and a significant creditor for amounts in excess of £200,000. Fleurets derive a substantial element of income from Pub Owning Businesses and this must affect the risk to Mr Newby’s debt. Perhaps he is in too difficult a position to balance all of these issues. It may be time to reconsider the appointment. It is difficult to find RICS members that would not be conflicted by their financial association with pub owning Businesses and given the issues of interpretation and application of the law, perhaps an independent adjudicator with a legal background would be more impartial in the early stages of this process.” Signatories to the letter are the chief executives of All Our Bars, Barter Inns, GC Mallen, New Pub Company, Pub People Company, Thorley Taverns, Windmill Taverns, Ascot Inns, Golden Lion Group, McLean Inns, Oak Taverns, Pleisure and Whiting & Hammond.


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