Two years ago, for the October/November 2017 edition, I wrote an article on the exploitation of the beer tie and how my attempt to break free of the tie using the market rent only (MRO) option of the Pubs Code was thwarted by Greene King. I finished that article by telling you that I was taking a complaint to the Pubs Code Adjudicator (PCA).
Here I tell the quite incredible tale of deceit, climbdown, collusion and cover-up arising from that complaint . . .
Deliberate derailment: There is no doubt that MRO has been deliberately derailed in a number of ways.
It was originally intended that MRO would be delivered easily by a relatively simple change to existing leases and a process of independent assessment of market rents. In the event of a dispute arising, a tenant could pay the PCA £200 to resolve it in accordance with the principles of the Pubs Code: fair and lawful, and that a tied tenant should be no worse off than a free of tie tenant.
However, this was obviously not what the Pub Owning Businesses (POBs) had planned. From the outset, they demanded unnecessary and onerous new leases for all tenants who wanted MRO. The only way to dispute these ‘unreasonable’ proposals is for a tenant to enter into a PCA arbitration which has turned out to be much more lengthy and expensive than originally anticipated. At the same time, POBs demanded that tenants had to pay for a further expensive arbitration to calculate the tied rent for the delay caused by the PCA MRO arbitration.
As it transpires, tenants either need a law degree or they need to employ advisers and experts to get through a PCA arbitration, and the process time for disputes to be ‘resolved’ has been two or three years in many cases. The PCA has produced no binding statutory guidance that could easily have resolved many of the issues and they do not make any effort, as a court would, to treat tenants as litigants in person with a naturally more limited understanding of the law than the costly POB lawyers.
In addition, the PCA has been unable to give straight answers to any questions asked by tenants or their representatives. Indeed, the PCA appears to have a completely unfathomable hostility towards tenants, the very people they were set up to protect.
The result has been that many pub tenants, like me, were forced to abandon their new legal rights just to pay a fair rent and to buy their beer from where they choose. Put simply, the PCA and the POBs have made it all too difficult.
This strategy of obstruction was made possible because somehow the provision in the original draft of the legislation for an MRO rent to be backdated was removed. This meant that there was no financial liability for POBs if they delayed matters. Indeed, POBs benefit from making it as difficult and as slow as possible because during the delay they hold on to the tie and all its financial benefits to them – and all its disadvantages to publicans.
However, I spotted a problem with their strategy very early on, at mid-term rent reviews in particular. Taking the Pubs Code and my lease together, I could not see how the POBs’ obstructive tactics could apply lawfully. This is because most existing leases include backdating provisions that can easily utilise a MRO rent to generate a fair backdating settlement.
Further, these backdating provisions in existing leases provide legal justification for MRO being delivered by a simple change to the existing lease. To do otherwise, and deliver MRO by a new lease as proposed by the POBs, results in these backdating rights in existing leases being sidestepped. This seems undoubtedly to be an ‘unreasonable condition’ in breach of the Pubs Code.
In addition, it seems to me that imposing an additional and costly arbitration upon a tenant if they choose MRO has to be in breach of the detriment provision in the Pubs Code.
Complaint: I made these points to Greene King during my MRO attempt in late 2016/early 2017, but they would not engage constructively. I consulted lawyers, but I could see no reasonable way around the issues without a long legal dispute while I was still shackled to my old tied rent and with a full tie to Greene King products. I decided, therefore, to agree the best tied rent I could, together with some purchasing freedoms, and, once that was signed, I then complained to the PCA in April 2017.
I submitted the complaint under the general detriment provision of the Pubs Code. It took eight months and some extraordinary correspondence with the PCA for them even to accept that my complaint could be considered under this provision.
I could not understand why the PCA were being so difficult but, looking back, I had made the reasonable assumption that the PCA had understood the Pubs Code. In particular, it seems to me now that the PCA had not even read Regulation 28 of the Pubs Code which had been identified by my barrister as a major barrier to the POBs’ approach in relation to mid-term rent reviews.
In the period of consideration of my complaint, I made contact with a number of key tenant campaigners – Dave Mountford and Chris Wright to mention a couple. I started to become active and I managed to muster some press attention for the anomalies that I had discovered. I wrote to the PCA on a policy level as the matters I raised affected everyone at a mid-term rent review. My correspondence was repeatedly rebutted by the PCA saying that I had to await the outcome of my complaint.
Fiona Dickie, the new Deputy Pubs Code Adjudicator at the time, was given my complaint. A qualified barrister, she arrived in post in November 2017. She made some substantive arbitration decisions which had not materialised prior to her arrival. She also wrote some statutory advice on whether MRO should be delivered by a new lease or a variation to an existing lease. This seemed reasonable and appeared to support many of the points in my complaint, albeit the level of clarity was still limited. I naively thought that this would be addressed when she dealt with my complaint.
I was to be disappointed. Extraordinarily, at the BEIS (Department for Business, Energy & Industrial Strategy) Scrutiny Committee in June 2018, Ms Dickie disparagingly described tenant representatives as ‘a few loud voices’. These are people who have spent many years, mostly as volunteers, trying to protect tenants from these big companies and who brought about the change that was supposed to be delivered by the PCA. They deserve recognition and respect for what they have done and continue to do: there is absolutely none from Mr Newby or Ms Dickie.
In addition to the statutory advice that Ms Dickie issued in March 2018, Mr Newby had also previously written some statutory advice in July 2017 that I had not originally seen and had not fully digested until later in the process of my complaint. That advice did not support my position at all.
When I eventually got proper sight of it – I am not sure when – I immediately knew that it was confused on the interpretation of the Pubs Code, but all I could do was wait for the PCA to deal with my complaint as they would not engage with me otherwise.
Funnily enough, Greene King also did not mention Mr Newby’s statutory advice in their defence of my complaint. This makes me certain that they also knew it was legally incorrect even though the Advice Note said that they had agreed it. It is also interesting to read back the correspondence from Greene King’s solicitors, as they clearly use language that indicates that they knew that what they were doing was deliberately obstructive.
In terms of the PCA I really do not know who knew what at any particular point. However, I can say that I have correspondence sanctioned by Mr Newby and Ms Dickie that shows an extraordinary level of ignorance on parts of the Pubs Code relating to the issues I raised. It is also evident in the language used in several documents produced by the PCA that they completely misunderstood the relationship between the Pubs Code and existing leases.
Mr Newby’s judgment: In September 2018 I finally received the outcome of my complaint. Ms Dickie had washed her hands of it after being arbitrator on it for 10 months and Mr Newby took it upon himself to determine that I was completely wrong.
He claimed that Greene King were fully and lawfully correct; it was not detriment that Greene King had a policy to ignore the backdating rights In current leases; and it was not detriment that Greene King were insisting upon another arbitration at a cost of up to £20,000 if I did not desist from pursuing MRO.
When I put it as starkly as this, I’m sure readers will wonder how on earth Mr Newby came to these conclusions as it’s obvious that I was being penalised by Greene King for considering MRO but Mr Newby justified it. He is a statutorily appointed lawmaker and judge who defies logic and can determine and deal with issues in any way he chooses. The normal conventions of integrity, openness and transparency of a public body do not appear to exist with the PCA unless you force them upon him with political or judicial intervention.
I protested at both a case and a policy level that the PCA had misunderstood the Pubs Code and how it interfaced with my lease. I even obtained a refreshed legal opinion from my counsel which I provided in full. It highlighted a very clear anomaly with Regulation 28. However, even when faced with a glaring error in black and white, Mr Newby stuck to his guns and closed my case. He also ordered me to pay the maximum amount of costs to Greene King of £2,000. I have not paid that and Greene King has not pursued it with the normal vigour they have for outstanding monies.
I thought about an appeal to the High Court, but I concluded that the detriment provision in the Pubs Code did not provide a comprehensive and clear enough resolution to justify that expense and risk. My legal team, who I could only afford to deploy piecemeal, were also very unsure of the whole picture. I thought, therefore, that I should continue to pursue the issue on a policy level.
In the meantime, Mr Newby was insisting that my arbitration result should be published. This was before he had even published the PCA policy on lifting confidentiality. I said no because the judgment was legally incorrect and I did not want it to set an incorrect precedent. Mr Newby, however, would not accept my no to the point that I had to threaten him with an injunction to desist. He obviously wanted to close the matter down completely, but I was not allowing that to happen.
The PCA then went further and tried to close down my communications. Mr Newby refused to deal with me or my solicitor on a policy level, even though Chris Wright had appointed me as a representative of the Pubs Advisory Service. It took a letter from my MP, Theresa Villiers, to the Pubs Code Minister pointing out that the PCA, as a public body, had a duty to respond to questions by a clearly interested party.
Following this and within weeks of him ruling against me, saying there was no issue and that he would not engage further, Mr Newby finally admitted on 22 January 2019 that there was a legal anomaly in his interpretation of Regulation 28 of the Pubs Code. He undertook to consult POBs but he would not give a timescale for doing so.
As the weeks went into months waiting for Mr Newby to confirm his position, I got involved in some other PCA cases with other POBs. I could see that Mr Newby and Ms Dickie continued to ignore the anomaly and were making legally incorrect decisions. In one case in particular, solicitors acting for EI Group (Enterprise) gave the whole game away. It was not just Regulation 28; there were numerous Pubs Code Regulations at odds with the POB obfuscation tactics. It also became clear that the PCA did not even have jurisdiction for all of the issues and that their statutory advice issued in July 2017 was legally incorrect on a number of levels.
In the continued absence of the PCA saying anything substantive enough for a judicial review, I turned the focus to the POBs on those specific issues which I considered were not, in fact, within the PCA’s jurisdiction. I threatened to take EI Group to court on behalf of their tenants if they would not explain their position by 28 June 2019. I had crowdfunded some of the funds to do so and I had lined up some tenants for whom I could act.
Climbdown: Finally, on 7 June 2019 the PCA moved. They withdrew their statutory advice of July 2017 and issued new statutory advice that stated the correct position on Regulation 28. This was a huge and humiliating climbdown for them. That statutory advice was akin to a court judgment and had been in place for nearly two years. They had until that point refused to listen to my ‘loud voice’.
However, they did not explain what they had got wrong in the old advice, they did not fully explain the new position for tenants and they did not devise any remedies for tenants who had lost as a result of this major error.
I have asked the PCA to explain these matters; other tenant bodies have asked; the press has asked. The PCA repeatedly refuses to do so. Their core line is that they are allowed to change statutory advice. They also say that they are consulting the industry on ‘best practice’. But this is not a best practice issue: it’s a definitive position and what has happened is a significant misrepresentation of contractual and statutory rights.
There are tenants who have been billed higher rents than the PCA now says are permitted because of Regulation 28. There are tenants who have accepted new leases that they didn’t have to and have lost out on tens of thousands of pounds on backdating. There are also many tenants who have abandoned their rights or who simply did not take them up because the process was misrepresented.
It is unfathomable why a supposedly independent public body would refuse to elaborate on this almighty mess.
Ministers also refuse to comment, saying that it’s the PCA’s responsibility to manage the Pubs Code. The British Pub Confederation wrote to the Business Minister calling for Mr Newby’s head. There has been no substantive response that I am aware of.
I have also asked POBs to explain their position following the new PCA stance and not one will respond. Greene King has even refused to explain to me as one of their leaseholders how the matter impacts upon our lease.
Using the Freedom of Information Act, I asked the PCA to see the correspondence between the PCA and the POBs agreeing the now withdrawn Statutory Advice Note. The PCA has refused and I am having to appeal to the Information Commissioner.
I also asked the PCA if they can set aside my clearly incorrect PCA arbitration judgment so that I can address the matter with Greene King by other means. The PCA refuses to do so and has just referred to previous correspondence. They have not even explained what powers they have in this regard.
There is a complete wall of silence that I know will not be broken until I get a reasonable chance of an intervention from a court. That is not as easy as it seems, given the PCA’s role as lawmaker and judge and the way events have unfolded. However, I am confident that we will find a way through.
I have a complaint lodged with Mr Newby’s professional body and another raised with him about his conduct of the whole matter. I am also reviewing whether I also have grounds to lodge a complaint about Ms Dickie’s professional conduct.
The Statutory Review of the Pubs Code is underway and we can only wait to see what is concluded. I have to say that I am not confident that it will bring about the breadth of change needed to protect publicans and open the POB cartel to smaller brewers.
One thing of which I am certain is, however, that tenants will continue to be let down if there is no change of leadership in the PCA. Tenants and their representatives have zero confidence in them. I find it incredible that either of them can look any tenant in the eye, but they do.
In response to everything that has gone on, the PCA has announced a formal investigation, its first ever, into the stocking requirements of Heineken and Star Pubs and Bars. While this is certainly an issue that needs looking at, there are, as described above, much more significant issues that should have already been investigated in the first three years of wasted opportunity for the Pubs Code.
To me, there is only one conclusion. We don’t yet have a truly independent PCA – and we desperately need one to save our favourite tenant-operated drinking pubs.
Gary Murphy, Ye Olde Mitre Inne, High Barnet
Editor’s note: Gary’s article was written before Mr Newby announced that he would be standing down at the end of his current contract.