MRO fight to cost licensee £25,000

By Michelle Perrett

- Last updated on GMT

Costly proceedings: the Woodman pub is going through MRO arbitration
Costly proceedings: the Woodman pub is going through MRO arbitration

Related tags: Star pubs, Renting, Dispute resolution

A licensee, fighting his case for the market-rent-only (MRO) option, said it is going to cost him £25,000 despite using the pubs code adjudicator (PCA). 

Tom Helliwell, lessee of the Woodman in Highgate, north London, is currently disputing his MRO offer through Star Pubs & Bars. He said that in order to fight the case effectively, he will have to pay £17,000 in fees to his lawyer to get the case to the independent adjudicator, fees for an independent assessor of £3,000 and a £5,000 for his representative at the assessment.

He said: “I am lucky to be able to afford this cost. We are one of the first cases through the PCA and hope that the costs will reduce once there are some precedents set through the system.

“But we do not know any of any precedents from previous cases that could have lowered the legal costs because all arbitration is kept between the parties. We also are not allowed to discuss what the adjudicator decides. Would I have started the process if I knew the costs were going to be so high? Definitely. If you saw my rent offer, you may mistakenly think I am leasing Buckingham Palace rather than a suburban London pub.”

A spokesperson for Star Pubs & Bars said: “We can't comment on the use of advisers working on behalf of our lessees in MRO cases, or the fees that they charge.

“However, we also recognise that this is a new and complex process for all. As cases are determined by the PCA and further guidance is issued, we would hope that the process will become quicker and more simple.”

The PCA said that as with any formal dispute resolution process, costs will be higher if the case is complex and there are multiple issues in dispute. 

A spokeswoman for the PCA said: “However, the law does not require tenants to be professionally represented and tenants should think carefully about whether they can represent themselves or how they procure legal services. 

“The PCA recommends that tied pub tenants may wish to seek professional advice in the first instance and notes that some tenant associations provide free initial advice. Tenants must decide what is right for their business. Where tenants do not have legal representation, the arbitrator nevertheless seeks to ensure that both parties have a fair opportunity to put their case and rebut the other party’s case.”

Following an arbitration, the successful party can seek to recover their costs from the unsuccessful party. The law caps it at £2,000 for the tenant to pay but there is no cap on the costs the tenant may recoup.

The PCA said it is currently carrying out a fact-finding exercise collecting evidence to identify whether there are obstacles to tenants and pub-owning businesses taking up their code rights.

Related topics: Legislation

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