Pub Companies - Business and Enterprise Committee Contents

Supplementary memorandum from Enterprise Inns (regarding individual cases)

  I am now in a position to address the various submissions that were made to the BEC inquiry by a number of current and former Enterprise licensees.

  I have summarised my assessments of each case below, but have also attached the more detailed responses that have been made to each case by members of my staff who are most familiar with the circumstances. In the case of the Eagle in Battersea, I have also included a letter from James Dickson, Chief Executive of Brulines plc, who has addressed some of the more technical issues raised regarding the use of flowmetering equipment.

  In relation to the matters raised by Mr Law, my summary assessment is as follows:

    1. There has clearly been some antagonism between Mr Law and the landlord (previously Whitbread and since 2002 ETI) ever since he was unsuccessful in his application to take on the original lease.

    2. There also appears to be a history of issues relating to dispense data, initially between Mr Law and his then employer (the lessees), and latterly between Mr Law (as joint lessee) and ETI. The grounds for concern (on the part of ETI) have always been valid, albeit the explanation eventually provided (by Mr Law and Mr Clarke) has led to resolution of the issues.

    3. Mr Law makes a number of spurious and unfounded assertions in his submission which are not supported by fact or evidence.

    4. Mr Law appears to be on something of a campaign in relation to the use of beer monitoring equipment, raising a number of questions over accuracy and process. None of these issues stand scrutiny, and I enclose a detailed response from the Chief Executive of Brulines which addresses each issue in turn.

    5. Mr Law and Mr Clarke (who has provided evidence separately to the Inquiry), having paid £125,000 for the remaining term of the lease for the Eagle, have now made several attempts to change the basis of the terms of the agreement they initially purchased. Sadly, this has not provided a sound base on which a productive and constructive trading relationship between ETI, Mr Law and Mr Clarke could be based.

  In relation to the submission by Mr D, my summary assessment is as follows:

    1. Mr D has sought to completely re-invent the circumstances which led to his bankruptcy, indeed with the benefit of hindsight justification, now seeks to blame Enterprise entirely for the financial situation he allowed himself to get into, owing substantial sums to HMR&C.

    2. Mr D failed to resolve a four year dispute which led to HMR&C petitioning for his bankruptcy. At no time during this period did Mr D raise concerns or complaints in relation to the profitability of the three sites he occupied under Enterprise leases.

    3. Mr D's submission to the inquiry is littered with fabrications and innuendo, none of which is supported by the documentary evidence we have.

    4. Following Mr D's departure, at his own request, from St F's, all matters were handled by administrators acting on behalf of Mr D's creditors, of which Enterprise were one. Enterprise did not recover all of the monies owed by Mr D.

    5. Mr D makes a scurrilous and entirely false insinuation in relation to the recent fire at the St F's. I can confirm that all statutory compliance certificates were in place at the time of the aforementioned fire, and it is the preliminary conclusion of the Fire Brigade investigation that the incident was caused as a result of a burning chip-pan, inadvertently left unattended by staff at the premises. I am pleased to report that the individual who was hurt in this incident is now recovering.

    6. Finally, I can confirm that the total number of licensee changes in all three pubs since Mr D left occupancy is six, and in only one case was that as a result of a failed substantive agreement. All other occupancies were on a temporary basis while we sought new substantive tenants.

  In relation to the submission by Mr C, my summary assessment is as follows:

    1. We were unable to agree the terms of the rent review, as the level of information disclosure by Mr C was poor, and despite several expert valuations being produced at Enterprise's cost. Mr C eventually appointed David Morgan (founder of the Fair Pint campaign) to act on his behalf, and we were able to agree the level of rent payable based on a detailed proposal made by David Morgan.

    2. Until that point in time, no rent offer had been made by Mr C, for which reason Enterprise only agreed to pay Mr C's costs for the period after the offer was made and accepted.

    3. Mr C has continued his policy of non-disclosure by failing to provide any factual information to support his claim for financial assistance, nor allow the installation of flowmetering equipment with which to validate the trade at the pub. The company has therefore been unable to agree to provide financial support. Mr C has responded by detailing his version of events to local news and TV media.

    4. Mr C is a vocal critic of Enterprise, and of pub companies in general, and we have been unable to form the basis of a sensible working relationship with him.

    5. The area around Skewen has suffered long term economic decline, and a number of pubs have closed in recent years, which should provide Mr C with the opportunity to grow his business. Enterprise owns a number of pubs in Skewen and the surrounding area, some of which are extremely well run by long-established retailers, and others are being very effectively operated by temporary tenants and managers to restore damaged businesses.

  In relation to the submission made by Mr M, my assessment is as follows:

    1. Notwithstanding the fact that there clear differences between Mr M's description of his period of occupation of the Blaenogwr and the company's documentary evidence, this does appear to be a very unfortunate case of a business failure despite the best attempts of Mr M and the company.

  In relation to the submission by Mr K of the Crown and the Town Hall Tavern, my summary assessment is very straightforward:

    1. Mr K occupies two Enterprise pubs on entirely different agreements—one attracts discounts and the other doesn't.

    2. Mr K and his business partners entered into a brand new, non-discounted lease at the Town Hall Tavern, with full knowledge and understanding of the prices attached to the lease, and their impact on the rent payable for the pub. Enterprise leases are entirely clear regarding the purchasing obligations entered into by lessees.

    3. Mr K has wilfully breached the terms of his lease by purchasing drinks supplies from an unauthorised source (albeit his other ETI leased pub) at terms that are incorrect in relation to the level of rent paid at the Town Hall Tavern.

    4. On 3 February 2009, damages equivalent to the level of margin lost by the company were agreed and accepted by Mr K, and he has been allowed to remedy the breach and remain at the pub.

  In relation to the submission made by Ms W, this case has taken up an immense amount of management time over the course of the last few years, and remains completely unresolved. I would summarise as follows:

    1. There has been not one single occasion on which Ms W's allegations and complaints have been supported by the facts and the documentary evidence available, yet this has not stopped Mrs W from embarking upon a completely unjustifiable campaign of actions against the company, including a court action for alleged harassment.

    2. Every occasion on which the company has been required to defend its actions have resulted in judgements in the company's favour. This specifically includes the action for alleged harassment which was thrown out by a judge on the grounds that Ms W's claims were "totally unfounded and without any merit whatsoever".

    3. Ms W was ordered to pay all the costs of the actions she has taken, and has consistently failed to do so.

    4. Ms W's trading account with the company has continued in arrears, despite the company agreeing a new rent level for the business with Ms W and her adviser David Morgan.

    5. At the date of writing, Ms W has still not complied with her statutory obligations to provide electrical safety certificates for... , nor complete the works under which such safety certificates would be granted.

    6. In summary, I have to concur with the observations and inferences of our Divisional Director who has overseen the relationship between the company and Ms W over a number of years, that Ms W has comprehensively failed to make a success of her business at... not least as a result of the amount of time, energy and money she has expended on a completely unjustifiable campaign against the company.

    7. Should the committee require it, we have extensive records of documentation and correspondence relating to this case which support the company's position throughout.

  I hope that the observations above, when combined with the detailed responses provided by my staff, demonstrate that in the cases represented by these submissions, Enterprise staff have always sought to act in a professional, transparent and mutually acceptable way during the period of our business relationships with licensees. Unfortunately, there are, and will be, occasions on which we have to take robust action in order to protect the interests of the company, but I am satisfied that in these cases, my staff have taken the appropriate course of action for the right reasons.

20 March 2009

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