Pubs code adjudicator raises concerns over Calderbank letters

By Georgina Townshend contact

- Last updated on GMT

Unnecessary pressure: PCA Paul Newby is concerned over Calderbank Offer letters
Unnecessary pressure: PCA Paul Newby is concerned over Calderbank Offer letters

Related tags: Public houses in the united kingdom, Dispute resolution

The pubs code adjudicator (PCA) has urged tied pub tenants to alert him if they receive a Calderbank Offer letter from their pubco during tied rent reviews, after concerns one has “broken a commitment to no longer use them”.

A Calderbank Offer letter is a written offer made by one party to the other party aimed at settling the dispute between them and which is usually labelled "without prejudice save as to costs". 

If a Calderbank Offer letter is sent, then its contents cannot be referred to the dispute resolver – usually the arbitrator in this context – until the proceedings relating to the main issues in the dispute have ended and an award of costs is being considered.

In its latest bulletin,​ the PCA office said its view on that this type of dispute resolution clause should not be used by a pub-owning business in a way that “frustrates or prevents a tied pub tenant from accessing their pubs code rights.”

This week, PCA Paul Newby said he is concerned a pubco, which he has declined to name, is still handing out Calderbank letters, despite the “business giving him a firm commitment that they would no longer be used as a matter of course during negotiations in market-rent-only (MRO) option disputes.”

‘Unnecessary pressure’

At the end of June, Newby published “clear advice” that Calderbank Offer letters should not be used by a pub-owning business if this action placed “unnecessary pressure” on a tied pub tenant to withdraw a pubs code arbitration, “particularly if the letter did not make it clear that agreeing to the offer ended the MRO process,” he said.

“I took this action because I was concerned that such letters, which had been sent to a number of tenants, were working contrary to the pubs code’s core principle that there should be fair and lawful dealing between pub-owning businesses and their tied pub tenants,” said Newby. 

“I had heard concerns that tied pub tenants could be intimidated into giving up their rights by the receipt of such a letter. 

“Subsequently, I was given a firm undertaking that such letters would not be used as a matter of course.”

Prepared to take further action

However, recently Newby has heard “anecdotally” that Calderbank Offer letters are still being sent. 

“If this is inhibiting tenants' code rights it is very concerning and I am prepared to take further regulatory action in this matter but I need to have the evidence,” he said. 

“At this stage I am not naming the business concerned because I do not have the necessary evidence but I would welcome information from tied pub tenants or their representatives about letters received since 20 June that diminishes their access to code rights. This information will be treated in complete confidence.”

Related topics: Legislation

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