The Eagle House Tavern in Battersea had a rent of £53,000pa. However, Enterprise Inns offered to lower that to £47,000 at rent review. Clarke said he was determined to fight the case.
He initially offered a rent of zero, before making an offer of £13,000pa claiming this was the rate at which he would be no worse off than a free-of-tie tenant.
The process of the rent review had been ongoing for almost three years since Clarke originally served rent review notice in November 2010 — 12 months before the rent review was due.
The decision for a rent of £34,000 was arrived at by an independent expert, after the pubco and the licensee put in documentary evidence and counter arguments as stipulated in his lease.
Financial pressure
Clarke said: “We wanted arbitration so we could get a reasoned award. Under arbitration they are bound by the Arbitration Act and there is a right of appeal and they would have explained the reasoning behind their decision.
“I am not happy with the decision, but relieved as we were under some financial pressure.”
Simon Townsend, chief operating officer, Enterprise Inns said: “We absolutely did not want it to go to arbitration as this involves more expense and time.
“All we wanted to know was what the open-market rent should be for the pub and the lease it is on. It was two years overdue and that was with an independent expert being used, so there was no way we were going to do anything that would drag it on even further.”
Adjudicator
Enterprise said that it offered a lower rent than £47,000 to try to get the rent review resolved.
Clarke said this was an example of why the statutory code planned by the Government was essential as it was proposed that tenants would be able to put such a case to an independent adjudicator.
Enterprise paid Clarke and his co-director, Dave Law, £37,000 in back rent. However, Clarke said the independent expert cost them around £10,000.