Two pubcos threaten PCA with judicial reviews over MRO advice

By Michelle Perrett

- Last updated on GMT

Pubs code: letter claims PCA is exceeding its powers
Pubs code: letter claims PCA is exceeding its powers

Related tags Pubs code Pubs code adjudicator Greene king Ei Group

The pubs code adjudicator (PCA) faces potential court action from Greene King and Ei Group – both of which dispute the legality of advice given for the market-rent-only (MRO) option.

Separately, both pub companies have threatened judicial reviews after claiming that the advice note issued in March by the PCA called Market-Rent-Only Compliant Proposals​ is unlawful and was not consulted on adequately.

The pubcos have claimed that the publication of the advice is ‘ultra vires’, a legal term meaning it is beyond the powers of the PCA.

The advice note said that an MRO proposal does not have to be via a new lease agreement and confirmed that tied pub tenants should be no worse off than non-tied tenants.  

Withdraw advice note

TLT Solicitors, lawyers for Greene King, sent a letter to the PCA on 18 May 2018, which has been seen by The Morning Advertiser​ (MA​).

It said that the advice note must be withdrawn and if the PCA fails to respond adequately within 14 days, it will issue proceedings for a judicial review. It also said it would seek an order for the payment of costs.

Greene King accused the PCA of exceeding its powers, trying to rewrite legislation and bypass what parliament intended.

“It attempts to supplement what some critics might be said (sic) was missing from the 2015 act but this is not a function for PCA to undertake,” the letter said.

Wrong in law

Greene King said that the statement claiming that an MRO proposal should be consistent with the terms of the pubs code, such as fair and lawful dealing and a tied tenant being no worse off than a non-tied tenant is “wrong in law”.

A Greene King spokesperson told MA​: “We have supported and promoted the code since its inception. However, without any prior consultation, this latest advice note came as a complete surprise and we believe it goes beyond the legal remit of the adjudicator, making a complex negotiation more difficult for all parties.

“We have requested it is reconsidered to provide clarity for all pub companies and their tenants. We have always acted within the spirit of the code laid out by parliament and continue to do so.”

The Greene King letter is not the first to be sent to the PCA. On 27 April 2018, Gosschalks Solicitors, acting for Ei Group, sent a letter that has also been seen by MA​.  

It disagreed with the view that an MRO-compliant tenancy could be offered by both a deed of variation and new tenancy. It also claimed that the advice note should not be relied on in determining referrals under the code.

Pubs code clarification

The letter said that it would apply for an order declaring that the advice note or parts of the note are “unlawful”.

An Ei Group spokesperson said: “We have always maintained that there are elements of the pubs code that require clarification to be effectively implemented for the benefit of all parties. Specifically with regards to the PCA’s MRO tenancy terms publication from March 2018, there are a number of items, which we believe are open to interpretation and may be incorrect in law.

“In the absence of any consultation prior to the publication, we have now raised these matters with the PCA and are awaiting his response. We hope that the clarification that we seek will be forthcoming and enable the regulation to be properly applied.”

The PCA declined to comment.

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