Award Summary – December 2020 - 1
Published 8 December 2021
Applies to England and Wales
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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
This referral to arbitration deals with whether the referral had been made in time under section 49(4) of the Small Business, Enterprise and Employment Act 2015 (the “2015 Act”). The arbitrator held that the referral by the Tied Pub Tenant (“TPT”) was time barred and consequently, the arbitrator did not have the power (jurisdiction) to arbitrate the referral.
2. Background
The TPT is the tenant of a public house (the “Premises”) and the POB is the landlord of the Premises.
The TPT had a 10-year lease of the pub which was coming to an end and the POB served a section 25 notice to end the lease and opposed the grant of a new lease. Before the expiry of the tenancy, the POB changed its mind on opposing the grant of a new lease and parties met for a without prejudice meeting. At this meeting, a rent proposal for the new lease was presented to the TPT, culminating in a new lease for a further 10 years being entered into in January 2018 (the “Lease”).
In May 2020, the TPT wrote to the POB stating that the requirement to continue to pay rent during the COVID-19 pandemic meant that the TPT was: “now subject to a non-compliant rent assessment”. The TPT’s letter asked the POB to concede liability in relation to an alleged failure of fair and lawful dealing and the alleged non-compliant rent assessment and to send a fully compliant rent assessment proposal by return.
The POB responded to the TPT rejecting that a referral to the Pubs Code Adjudicator (“PCA”) was appropriate, setting out the actions taken to mitigate the impact of the pandemic, and stating that the offer of a rent concession to the TPT was not a ‘rent assessment’.
The TPT responded to the POB and sought to clarify that the TPT’s letter was referring to the 2018 rent assessment. Before, the POB could respond, the TPT made an arbitration referral to the PCA in June 2020.
3. Relevant Legislation and Rules
Section 49 of the “2015 Act”) provides that a TPT can only refer a dispute after the expiry of the period of 21 days beginning with the date on which the TPT notifies the POB of the alleged non-compliance. Section 49 also prohibits disputes being referred to arbitration more than 4 months after the first date when the dispute could have been referred.
The TPT also sought to rely on the provisions of the Limitation Act 1980 (“the 1980 Act”). The 1980 Act allows two exceptions from the rule that strictly limits the time in which actions can be brought. These are in respect of personal injury claims or death, and actions being brought under the Human Rights Act. However, the 1980 Act provides that its provisions will not apply in the event that an alternative limitation period is prescribed under any other statute.
4. Issues
The TPT sought a finding from the Arbitrator that:
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The 2018 rent was non-compliant under the Pubs Code etc. Regulations 2016 (“the Pubs Code”).
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The POB’s actions were a breach of the principle of fair and lawful dealing.
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The arbitrator should direct the POB to provide a compliant rent assessment or a rent proposal to the TPT.
However, the POB argued that the TPT’s referral was out of time under s49 of the 2015 Act as it had been made more than two years after the first date on which the dispute could have been referred.
5. Time Limit
The POB argued that the alleged act of non-compliance by the POB took place in early 2018 (i.e. when the Lease was entered into). The POB submitted that the ‘first date on which the dispute could have been referred’ in accordance with section 49(4) of the 2015 Act therefore arose in early 2018, and that the TPT waited almost two and a half years before notifying the POB of its alleged non-compliance and then making a referral.
The TPT argued in response that the four-month time limit to make the referral had not been breached, as the TPT could only refer a matter for arbitration when it held sufficient knowledge about the breach in order to act.
The TPT argued that the “date of knowledge” is a well understood principle applied in accordance with the 1980 Act, and that the time frame set by the Pubs Code (including the PCA webpage and guidance) should not overrule the 1980 Act.
The POB argued that the 1980 Act does not override the time limits in the Pubs Code and/or the 2015 Act. The POB also asserted that the “date of knowledge” principle under the 1980 Act related to actions in respect of personal injuries and actions under Fatal Accidents legislation and was not of general applicability in all limitation contexts.
Further, the POB argued that section 39 of the 1980 Act makes it clear that the 1980 Act will not apply in the event that an alternative limitation period is prescribed under any other statute. The POB also argued that an ability for tied pub tenants to make referrals without limitation of time would create substantial injustice.
6. Arbitrator’s Findings
The arbitrator held, in dismissing the TPT’s claim, that the TPT was time barred from making their referral to arbitration.
In agreeing with the POB’s submission, the arbitrator confirmed that the 1980 Act does not override the timescales of the Pubs Code and/or the 2015 Act.
The arbitrator found that the time limits in the 2015 Act applied and that as a result the TPT was out of time when it made its arbitration referral.
The arbitrator also confirmed that as they had found that the TPT’s referral was time barred, that they therefore had no jurisdiction to decide the wider issue of whether the 2018 rent was compliant with the regulations under the Pubs Code.