Decision

Award Summary – August 2019 - 5

Published 10 February 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

The arbitrator held that the tied pub tenant’s (“TPT”) request for a rent assessment did not succeed on the basis that there had been a review of the rent within the previous 5 years, and also found that the TPT had not been subject to a detriment on the ground that the TPT had exercised or attempted to exercise a right under the Pubs Code etc. Regulations 2016 (“Pubs Code”).

2. Background

The POB and TPT had an existing tied lease and towards the end of the lease term agreed a surrender and renewal. A new term and new rent starting on the renewal date in the existing lease, with a 5-year rent review, was agreed. The existing lease included a rent review date effective the day before the renewal date.

The TPT requested a rent assessment 2 years after the lease renewal, as the TPT considered that there had not been a rent assessment in the previous 5 years. The POB rejected the request on the grounds that there had been a new rent agreed in conjunction with the lease renewal 2 years previously and so a rent review had been concluded within a period of 5 years ending with the date of the TPT’s request. The TPT referred the issue to arbitration.

3. Issues

1. The TPT claimed that they were entitled to a rent assessment under regulations 19(2)(a) and 66(2)(b) of the Pubs Code as they had not had a rent assessment in the 5 years ending on the date of their request.

2. The TPT claimed that they had suffered detriment as prohibited under regulation 50 of the Pubs Code as a result of the POB unlawfully rejecting the request for a rent assessment in the knowledge that one had not been carried out in the previous 5 years.

4. Relevant Legislation and Rules

The Pubs Code provides under Regulation 19(2)(a) that if a rent assessment has not ended within the previous 5 years, a POB must conduct a rent assessment if so requested by a TPT.

Regulation 66(2) of the Pubs Code provides that within the first five years after the Pubs Code came into force, a TPT can request a rent assessment if no such assessment and no rent review have been concluded within the past five years. For the purposes of regulation 66, a rent review is concluded when the rent is agreed in writing between the POB and TPT.

Under regulation 50 a POB must not subject a TPT to any detriment on the ground that the TPT exercises, or attempts to exercise, any right under the Pubs Code.

5. Arbitrator’s Findings

The arbitrator held that there had been no rent assessment in the 5-year period ending with the TPT’s request.

The arbitrator considered whether the agreement to a new rent at lease renewal constituted a “rent review”.

The arbitrator noted the ordinary meaning of “rent review” is an adjustment to the rent that takes place at stated intervals in a lease. They considered that there had been no evidence submitted by the parties as to whether the agreement as to rent in the new tied lease was intended to replace the rent review under the previous lease, and also no evidence to suggest that the TPT’s decision to enter into a lease surrender and renewal was anything other than a voluntary choice. The arbitrator also considered that had there been no surrender and renewal agreement in this case, it is a matter of speculation as to whether or not the rent review in the old tied lease would have been concluded having regard to the provisions of regulation 66(2).

The arbitrator held that if the TPT in this case had the right to request a rent assessment this would allow the TPT to seek a further re-evaluation of rent within the first 5-year period of the new lease, which the arbitrator noted they had no reason to conclude was not a lease with a new rent agreed to freely by the TPT.

The arbitrator did not consider that Parliament reasonably intended to provide the TPT, on renewal, to a right to a rent assessment earlier than if the TPT had been entering into a tenancy for the first time.

Further, the arbitrator found that as the TPT did not have a right to request a rent assessment that the TPT had not been subject to a detriment by not being provided with one, and that there had been no breach of regulation 50 in this case.