365 Days and Counting
How the Pubs Code is failing Part 3 — Trudy Faulkner and the Rifleman’s Arms
On the 23rd July Trudy Faulkner put in her MRO request under regulation 19 of The Pubs Code. Trudy had a rent review due in September 2015 and had been fighting the stance of Marston’s ever since they decided that they would very kindly reduce her rent from 25k to 22k per year.
Maybe to some a 3k reduction in rent could be seen as a win, but Trudy’s case was different. Very different.
Marston’s were the first Pub company to introduce the “retail agreement,” a quasi semi-managed operation which crucially dictated the selling price of the beer. In Trudy’s case, after the failure of a pub in her locality called ‘The Pillar of Salt’ it was revamped as a retail pub, which undercut her prices by 32%. Not content with this, they then did it again with another pub called ‘The Freemasons,’ instead this one was another variation called “foundation” with the same predictable effect to her sales.
Meeting’s with senior members of the Marston’s team resulted in not the slightest bit of sympathy. On one memorable occasion, the individual at that time responsible for rents, Judith Rafique, flatly refused to accept that the two pubs closest to The Rifleman’s undercutting her by more than a quid a pint would impact on her sales. It was notable that Mrs Rafique was soon to be put in charge of Marston’s MRO negotiations!
Eventually we were passed on to the Marston’s surveyor of choice James Baker.
Trudy met with George Walker (James Baker’s top man) who was keen to back up Marston’s position. Eventually after many pointless emails this author met Mr Walker to discuss either a rent reduction or a surrender of the remaining 9 year lease, as Trudy had recognised that she couldn’t carry on for ever. During this predictable meeting Mr Walker offered a rent of 18k which meant Trudy was going to make about 4K a year instead of nothing, which was a concession of sorts. As for a surrender he stated that the lease “wasn’t worth anything” which whilst patently true was a shocking admission from a surveyor who was backing up a rent of 18k for a Pub crippled by other Marston’s pubs. After recognising my rather shocked expression Mr Walker asked me not to repeat that statement much to my amusement (sorry George).
I told Mr Walker that he could either accept a rental offer of 10k and discounts or we would simply take MRO as we were aware that this was eligable under the Code due to go live the next day. Unfortunately Mr Walker wasn’t aware of the detail of regulation 19 as his casual “I dont think you can do that” fell on deaf ears.
Eventually, after much argument about the regulation, the PCA realised that there was actually something in the code that allowed an MRO request for those who had outstanding rent reviews and Marston’s begrudgingly submitted their MRO offer on the 9th September 2016.
Whilst now the MRO offers are well documented, Trudy’s was one of the first, and we realised very quickly that we were facing an exploitation of the code we really should have foreseen.
An MRO rental offer of 46k, £11,500 up front and 6 months (£23,000) deposit meant with a few generous add ons for stamp duty and costs, Trudy had to find more than £34,500 before Marston’s would hand over a new agreement that could have been provided for less than the price it costs to hold the average beer festival.
The fact that this could all have been done in 5 minutes and a Deed of Variation was not lost on us and was soon confirmed by Kathy Lee Cole of the PCA later that year.
On the 28th September Trudy duly submitted her referral to challenge the “unreasonable terms” of the MRO agreement under regulation 32 and then we waited.
And waited………..
And waited……….
Throughout the tortuous procedure that the PCA followed, Trudy kept her spirits high, appearing on radio and TV to discuss her issues and how the Code was failing her. Greg Mullholland went to see her as part of a press story and for a while The Rifleman’s Arm’s became the cause celebre of the lack of action indicative of the PCA, until the many, many other Pubs that followed, got bogged down in the same lack of activity and became as well known as hers.
By January all the processes had been followed and we were awaiting a response; only to discover that no response was forthcoming as the PCA were unable to make a decision because neither ourselves nor Marston’s had made a good enough case.
And so we had to start the process all over again.
This we then did and as of today’s date we are no closer to finding out if the terms offered to Trudy are reasonable or not and no closer to finding out if MRO could be offered via a Deed of Variation or not.
Now I accept that I may not be the brightest individual in the world but I have helped Trudy through this process since that fateful day a year ago and whilst at times the process raised questions I always had Simon, Chris or David Morgan to fall back on. Therefore the question must be asked, if it takes two attempts to get this process right how does the average tenant, with no support, no resources and no money stand a chance?
During this year Trudy lost her very supportive BDM (they do exist apparently) who left Marston’s with no job “unable to lie to tenants day in and day out” his final words to Trudy being “don’t stop fighting”.
She has had a further two Marston’s Pubs, The Olde Cock Inn and The Railway turned into retail and foundation agreements, meaning that she now has four Pubs surrounding her all charging roughly a quid a pint less than she can afford to do. And each one is owned by her own “business partner” — not really the SCORFA that she envisaged when signing up!
She has experienced deliveries with incorrect orders and short date coded products. Due to cash flow, her ordering is as tight as she can make it and when she runs out she had to drive to the depot in Wolverhampton, (a two hour round trip) unable to pay the standard £75 plus vat for an off day delivery charge. Suddenly and with no prior warning she is told that the staff at the depot are unable to help her put her 9 or 11 gallon kegs in her car, stating “Health and Safety” regulations. If she can’t find someone to go with her she simply runs out.
And all the time she is paying over £200 per barrel more than if she had gone MRO back in July 2016 and still paying approximately 10 grand a year minimum more than her tied rent should be and knows that none of this will be backdated to September 2015.
Great idea this Pubs Code isnt it?
Whilst the code was not purely designed for MRO there was never any doubt that this would be the main reason that people used it. Similarly it should have been abundantly clear to us, that as the tied model had been abused so badly that on average between 80–90% of the profit was taken by the Pubco, they would be fighting tooth and nail to keep it.
However, what was undeniable is that Paul Newby with his 30 odd years experience would have had no doubt that Deed of Variations were the common— in fact the normal way of changing lease agreements.
In fact the key argument, made so eloquently by our own Simon Clarke, was that, all we were asking for was the same procedure that the Pubco’s already have. In every lease there was a clause allowing the Pubco to release the tenant from the tie, and it was this that we wanted repeating — a few hundred quid for a DOV.
But no — that wasnt to be, and we are now left with poor Mr Newby facing the question that he, and we, all know he is doing everything to avoid answering.
If he rejects the “unreasonable terms” argument then the Code has failed in its entirety, not able to produce either the “fair and lawful dealing” or the “tied tenant shall be no worse off”.
If he supports it, then its all over for the Pubco’s and Brewers who are facing the transfer of all of the vast amount of money the abuse of the tie has apportioned.
While we are all waiting to see which way he jumps, Trudy will no doubt keep fighting.
