PIRRS or Arbitration, a vital question?
City Pot Boy has been reading with close interest the two current cases reported in the Morning Advertiser (7th and 14th April 2011) of whacking great rent reductions against Enterprise Inns. You see City Pot Boy is up for a five yearly review on his tied pub next November and the time is winding down to what will as like as not be warfare between PB and his Pub Co. Which way to go? PIRRS or Arbitration?
These two arbitration results go against the Pub Co grain of “well if you take us on,we will win and you will be landed with our costs”. Both articles in the MA confirm massive Arbitration costs and how cheap PIRRS would have be as the Enterprise preferred option. So City PB decided to do a bit of research and tracked down David Morgan who was mentioned in both cases representing the Tenants. It seems all is not as was the printed word!
Settling down over a Dark Star Hophead and a Harvey’s Best in the constantly busy Harp in Chandos Place (‘cos it was handy for Leicester Square tube),a disturbing tale began to emerge from a man more than a little careful with his words. Enterprise confirmed (7th April) that the Fox and Duck case could have been resolved by PIRRS for “£2000 each” not at “costs well over £20,000” for Arbitration.
The PIRRS application would have been £2000 for each side plus the Tenant having to cough up about £1,000 for the legals in the Deed of Variation that is a required part of the referral to the PIRRS expert. (£5,000 total). If the Tenant went ahead under his own steam, then no extra cost for the tenant. Same as in Arbitration, but on his own, he would have been up against a hired Enterprise “independent expert” to present the Enterprise case. Hardly a level playing field methinks. Enterprise and Punch NEVER let their own BRMs or ARMs handle PIRRS or Arbitration referrals. Its always an expensive outsider who broadly dances to their tune. The Tenant would be on his own!! Pause for a big deep breath there!
Seems in the Fox and Duck Arbitration case, both sides had their own people (AG & G for Enterprise and Cooksey’s for the Tenant) to put their cases, just the same as if the whole thing went to PIRRS. So no cost saving at all. The point of somehow saving £15,000,which City PB thinks is well OTT, is only there to scare the hell out of anyone thinking of going to Arbitration rather than PIRRS.
Now the other case, with the 43% rent reduction. Fleuret’s handled the Enterprise case, Cooksey’s the tenants. Seems the Tenants are being ultra coy about being named, as they fear Enterprise reprisals. Sad old world innit. David Morgan says that when he was contacted by the MA to confirm the news rumour of the massive reduction, he was never asked about costs and never mentioned it. The MA would not have known about the costs and the article says that “Enterprise declined to comment”. Yet, surprise surprise, the article stated “costs have yet to be settled and could top £30,000”.Now just where did that little gem come from City PB wonders. You can draw your own obvious conclusions !!
It is now confirmed by Morgan that the tenants outlay was in total about £7.500 and that Enterprise were ultimately responsible for the Tenants costs.SO where did the £30,000 come from? Perchance it was a crude attempt from persons unidentified, to yet again scare off Tenants from going to Arbitration. Where, when and if they win, not only can they get their costs back, but they get a full reasoned Award and a good old chance that the Arbitrator won’t be in the pocket of the Pub Cos, like so many that City Pot Boy could name.
A lot of Surveyors have had to take a hard look at the latest RICS Guidelines, if they incur the wrath of the RIC’s, it could be a lot more costly than losing a Pub Co as a client, especially when some of the bigger ones are looking very suspect at this moment of time, maybe it’s a good time to change horses.
Going back to the costs, it’s like product placement in advertising, subtle and sneaky, but if repeated often enough, becomes accepted. But then again, who pays for the BII administrated PIRRS scheme? It’s a mandatory levy on the members of the BBPA, of which almost all the Pub Cos are members.
Back to the Dark Star, not anything like Timmy Taylors, but a cracking pint nevertheless.
City Pot Boy.
Note:-It would appear that some Arbitrators are charging between £300 and £400 per hour, which has dramatically increased the cost of Arbitration.
Please refer to http://www.usenumberone.com/arbitrators-pricing-market/
The views expressed are not necessarily the editors and www.buyingapub.com accepts no responsibility for them, we do try to avoid offensive or litigious statements being made. They are written by concerned professionals in the industry who feel that these issues should be raised to ensure that all licensees are made fully aware of many hidden pitfalls.