Memorandum submitted by The Duke Public
RE: PUNCH TAVERNS
1. Legal Battle
Five years ago, I bought the "The Duke"
public house, which had 14 years remaining on its lease. The original
agreement was with Inns Business Properties Ltd.
However, Inn Business Properties Ltd. were not
the registered leaseholder when they granted a new 15 year Lease
to the previous owner on 27 June 2002. Inn Business Properties
Ltd had in fact already transferred all of its assets on 20 August
2000 to the Punch Pub Company (IB) Limited (having previously
changed its name from Inn Business Group Ltd on 18 August 2000).
On 23 October 2000 Punch Pub Company (IB) Limited
sold all its assets (at a reduced valuation) to Punch Pub Company
(PTL) Limited (having also previously changed its name on 18 August
2000 from Punch Tavern Ltd). Punch Pub Company PTL Limited then
changed its name on 2 September 2004 to Punch Taverns (PTL) Limited.
Inn Business Properties Limited (ie who purported
to be the leaseholders of the Duke granted a Lease to the previous
owner on 27 June 2002) and Punch Pub Company (IB) Limited have
been dormant companies since 2000; both have not traded and both
have no assets, as confirmed in their trading accounts.
In 2004 I had a long legal battle with Punch
which included the validity of the lease; I lost this at a cost
of nearly £70,000.00.
Included in the £70,000 were Punch's costs
which came to the sum of £37,898.60. This had to be paid
within 14 days or Punch would have achieved their ultimate goal
which is to remove me from the Duke and ruin me financially. For
the record, during the first hearing on 16 September 2005 at Leeds
Magistrate Court, Punch informed the court that the damages suffered
by Punch were no more than £600 (six hundred pounds).
From the first day of purchasing my pub, Punch's
behaviour and conduct has been overbearing and high handed including
in the way in which Punch has sought to interpret and operate
the lease unfairly against me, this is despite reassurances from
their solicitors "in writing" that in 2004 that this
would not happen.
This all started when Punch imposed a Rate Valuation
Service in 2004 and 2005. This was done by them sending an invoice
for £70 per year. They insisted that I pay this amount when
I am more then capable to complete and deal with these forms myself,
at no cost.
Although I had "in writing" from my
BRM (Business Relationship Managers) at the time that I would
not be charged for this service, as I was going to deal with the
completion of this form myself, Punch still took the money out
of my account without my permission. When I stopped the Direct
Debt payments to Punch, this was followed by a letter from Punch's
Solicitors threatening me with legal action unless I agreed to
pay for this service and re instate the Direct Debt. I did not
agree to this, because I felt that Punch was abusing our agreement,
I decided to stop buying "Beer Tie" products from Punch,
and I informed them verbally and in writing on number of occasions.
Throughout this period, Punch continued to blatantly
interpret, enforce and impose the lease unfairly against me, Punch
did not deal with my legitimate concerns and complaints and most
importantly, Punch threatened me with legal action, when they
had no legal right to do so. They continued to try and impose
on me a Rate Valuation Service; which was the start of this unnecessary
legal dispute and it was then, that once again I informed Punch
that I would stop purchasing my beer from them, even though I
was under obligation to do.
In August 2005, I received a letter from Punch
Solicitors stating that Punch were taking me to court, to obtain
an injunction against me for breaching my lease agreement.
On 16 September 2005, Punch obtained a temporary
injunction in Leeds Magistrate Court, however the Judge gave me
permission to file a Defence and Counterclaim against Punch for
imposing terms and conditions upon me which Punch were not entitled
to do. Also interpreting and enforcing the lease unfairly against
me, defence under Article 81 and all costs were reserved.
This was then followed by a protracted course
of correspondence between my Solicitors and Punch's Solicitors.
During this time, Punch made no any attempt to resolve matters
or bring them to an amicable conclusion.
I did not have services of a Solicitor Up to
the Injunction hearing.
During November 2005, having obtained the services
of a Solicitor, Punch "without any prior notice", made
an application to Shoreditch County Court for an Order for Possession
to evict me, on the grounds that I was not paying any rent. When
in actual fact I had notified Punch on several occasions in writing
that the rent for the premises was being held by a third party.
Furthermore, The Judge during the hearing in September 2005 had
not ordered the rent arrears to be paid. After much correspondence
between my solicitors and Punch Solicitors the proceedings were
discontinued and it was accepted that the rent had been paid.
In May of 2006 Punch made an application to
The Royal Courts of Justice in the Strand in front of a "Master",
Punch insisted that I had no claim against them and no grounds
for a counter claim & defence against them. Punch continued
to "pursue vigorously for a permanent injunction" against
me. The Master stated that he did not have the power to grant
a permanent injunction and said it had to be heard by a High Court
Judge. Once again all costs were reserved however my costs continue
to spiral upwards.
In August 2006, I was given legal advice that
I did not have sufficient funds to fight Punch under Article 81
as he anticipated my costs would be in excess of £100,000.
I decided to make an application to The High Court to change my
Defence & Counter Claim, on the grounds that Punch had imposed
terms upon me which they were not entitled to do. Also that they
had interpreted and enforced the lease unfairly against me, which
included the following:
(a) Imposing on me services and charges for
(b) Delivery of Defective Goods.
(c) Imposing on me a Premium Rate telephone
(d) Imposing Delivery charges for non normal
(e) Deliveries made outside normal delivery
(f) Delivery of Insurance schedule and Details
of Premium Payable without explaining what I was paying for.
Please note, under the terms of the lease, I
am under obligation to buy all "Beer Tie" products exclusively
from Punch, at very expensive prices and in some cases, as much
as twice the price of any other suppliers.
In October 2006 I was warned to attend hearing
in The High Court in The Stand in front of a High Court Judge.
By this time I run out of money and I could no longer afford the
services of legal representative for this hearing.
A month before the hearing in The High Court,
I received a copy of the Insurance Schedule and "1 week"
before the hearing I received full credit for two years Rate Valuation
Service which Punch had imposed on me which was the start of this
entire unnecessary legal dispute.
To my surprise and amazement, the whole hearing
was conducted between The High Court Judge and Punch Barristers
as if I was not present. The High Court Judge rejected all my
Defence and Counterclaims. And to add insult to injury regarding
Premium Rate Telephone Line, The High Court Judge said that I
was not under any obligation to use this line and that I can always
write to Punch.
My case was thrown out, I then had to pay all
of Punch's costs. However, when The High Court Judge saw that
Punch was demanding £41,000, he ordered the costs be referred
to The Cost Judge unless an agreement could be reached.
I made an Application for An Appeal and on 21
March 2007 it was refused as being totally without merit.
In October 2007, Punch got a date for cost hearing
and The Judge did not take into consideration at any time that
the costs Punch were looking for was for damages suffered to the
sum of no more than £600. I was ordered to pay £37,898.60.
Throughout this period, Punch never once offered me any additional
time or any kind of help to pay these costs. At no stage did they
attempt to reach an early amicable resolution to this matter.
2. Poor Quality Products
The delivery of beer products are covered under
the Supply and Sale of Goods Act, However Punch has had little
or no regard for there obligation under this Act..
During the legal dispute and up to few weeks
ago, I still continue to receive poor quality products. In January
2008, I started receiving kegs of beer with a very short shelf
life. When I double checked, I received kegs of beer with a shelf
life of seven days.
During the 2004 Enquiry, Giles Thorley of Punch
informed the Committee that the shelf life of the beer products
supplied has a shelf life of a minimum of three months. When I
complained to Punch about this, I was told that it is only 28
days and if I received anything less than that it should be returned
during the same delivery. After the delivery is accepted, Punch
refuses to deal with any complaints.
On a recent Friday evening, two kegs of Becks
Vier Beer were flat. When I look at the labels these showed the
Beer to have a long shelf life. However on closer examination
of the barrels, I could clearly see they were in poor condition
and would explain the condition of the beer within.
I do feel the poor quality of goods supplied
is part of Punch's ongoing attempts to remove me by destroying
my business. The reason I say this is, if I have no beer to serve
people with I have people to serve. I am still receiving barrels
without seals, damaged bottles of beer and generally poor quality
3. Premium Rate Telephone Line
We all have to call Punch for legitimate concerns
and complaints, in relation to deliveries and delivery problems,
also with regards to cellar equipment and repairs and other unforeseen
problems and complaints under our obligation to purchase all "Beer
Tie" products exclusively from Punch.
This premium rate telephone line was imposed
by Punch from the 30 January 2004. I challenged this when I noticed
my telephone bills were increasing in April/May 2004. However
I received no response from Punch. Please note, they have changed
the number recently but it is still a premium rate number. I have
still received no response to my complaints from Punch regarding
the new number.
Under the 0870 premium telephone line rates,
Punch can charge up to 10p per minute and Punch can vary this
charge at any time they wish to do so. The financial benefits
to Punch using the 0870 number are:
(i) Punch earns money from every phone call
received, whatever the reason;
(ii) Punch has the benefit of making phone
calls to any UK land line for FREE, no additional costs to Punch;
(iii) Punch does not have any monthly and
annual charges; and
(iv) Punch earns money from any phone call
received 0870 number when diverted to UK land line.
The unfairness of these charges is also seen
by the fact that Punch does not incur any charges whatsoever by
making calls to their tenants as a result of having the benefit
of the 0870 number. All the charges are therefore being borne
by the tenants. Furthermore these are the only contact numbers,
so there is no way of contacting them without incurring this charge.
4. Accounting Practices
It was in The Guardian this time last year,
regarding Punch Taverns and Giles Thorley, so called The Boss
of Punch Taverns. How much money he is earning and how he is the
third highest paid Director in the country. Giles Thorley got
£10 million in 2007 and similar amounts in previous years.
It was also in the news at the same time and
also covered in the TV News on all channels, how big companies
pay very little or no tax and one of the sectors mentioned which
pay little or no tax was the pub sector, ie companies like Punch
I had to carry out great deal of research regarding
Punch and their activities to help to win my case. I have obtained
from the Companies House over 50 Punch accounts @ £3.00 each.
One of the areas I needed to research was titles and company accounts
to find how my pub got transferred from one company to another
and who had the correct title.
One of the accounting practises which made things
very difficult was the constant change of names of Punch companies,
just before and just after the Punch company sells or and transfers
its assets to another Punch company at very reduced market valuation,
when the property prices at the time were increasing, they then
no pay tax and it becomes a dormant company. All these Punch companies
are now dormant companies with losses and in some cases very large
In one of the Punch accounts, about four years
ago, The Spirit Group was sold by a Punch Company with a £144
million loss as one off bad debt, changed its name and became
a dormant company, with very big losses. Last year another Punch
company bought it back when they were rumours of a higher bidder.
Is also appears that these dormant Punch Companies
issue or and keeps on issuing shares to the Directors of Punch
and always the highest amount of shares issued to Giles Thorley
and in some cases, the second highest to Robert McDonald, the
Finance Director who retired this time last year. It appears on
paper that Punch Taverns PLC which was in the 100 of The Stock
Market until early part of this year exists for the benefit of
"The Directors of Punch Taverns. There is a site on the internet
which lists all shares which must be reported.
It may be a coincidence but the man who might
be responsible for these accounts, The Financial Director left
Punch Taverns this time last year. Another Punch Director, Mr.
Francis Patton also left last Christmas.
5. Punch and Gambling
Punch has joined up with various gambling companies
to provide and encourage gambling in the in their nearly 8000
pubs, ie. Punch Tavern's with a new "On Line Casino".
Imagine the scenario, William Hill or Ladbrokes
customers, while gambling and most of the time losing money, are
able to buy alcohol in any betting shop and be under the influence
of alcohol and carry on gambling and carry on losing more money.
Now imagine the scenario the other way. People
drinking alcohol in pubs and while they are drinking many of these
Punch tenants and leaseholders will be obliged to sell these casino
cards or encourage gambling to their customers to make ends meet
and make considerably more money for Punch Taverns. This is due
to the pressure being put on tenants and leaseholders though so
As everyone knows, a smoking ban is affecting
the pub trade. Punch is constantly coming up with more ideas or
and ways, regardless of the coincidences, to make more money for
Punch in order to be able to cover their very heavy debts and
One of the conditions in the lease which Punch
used against me to help to win their case is that, Punch has got
the right to introduce other services and in a nutshell, Punch
can introduce and impose on their tenants and leaseholders any
other services they like.
Once this starts, due to poor trading in the
pubs partially due to the smoking ban, it will lead to plans to
turn each pub into "Small Pub Casinos" and kill off
the "Traditional British Pubs".
It has always been illegal to gamble with money
in a pub, and paying for this voucher to gamble or and any other
form of gambling is no different. The customer gambling in a pub
under the influence of alcohol (a person drinking a pint or two
pints is under the influence of alcohol).
Punch Taverns, the biggest pub company, should
not be able to get away with any loopholes or and clever ideas
and start to impose this "Service" on their nearly 8,000
leaseholders and tenants. There are many tenants and leaseholders
struggling out there. Punch will put pressure and make deals with
tenants and leaseholders in return to introduce On Line Gambling
in Punch pubs, especially the vulnerable and the ones struggling
to make ends meet.
6. Rent Review
It is a myth that rent reviews are carried out
by BRM who is someone working closely with you and understands
your business and the area etc. I have had so my different BRM's
it is impossible to build a proper working relationship when things
are constantly changing and their conduct.
My rent review was carried out by "Portfolio
Manger" just like an Estate Agent and whose ultimate goal
is to increase the rent by whatever means possible. I informed
this "Portfolio Manager" that I have successfully agreed
a reduction in my Rates with the Rates Valuation Officer working
for the Government. This was due to the fact that my turnover
is not going up and is actually going down and all over heads
and running costs are constantly increasing.
Portfolio Manager's response was, Punch does
not operate like that and they look at the market value etc and
Punch works out the rent if the Pub was going on the market on
that day and it had nothing to do with the trade. I have got the
copies of the correspondence and to cut a long story short, he
demanded an increase or we have to go to Arbitration as per his
Please note, my lease is index linked and it
goes up automatically every year according to the official government
Bearing in mind I have had a legal battle with
Punch and no funds available, I had no alternative but to agree
to the increase because I could not afford the additional legal
cost for Arbitration. It is very clear to me that Punch would
use all means possible to increase the rent:
"The most important reason why Punch likes
to control Rate Valuation is that if the rate does not go down,
it automatically justifies the rent increase".
7. Punch and Freeholder
Since the rent review with the Portfolio Manager,
I have been approached on number of times to agree to be repositioned
regardless of the consequences to me and my business. Punch does
not own the freehold and the freeholder needs my pub to develop
the site which Punch is in agreement.
Furthermore, I have learned that the freeholder
wanted to develop the site for some years now and I believe it
is for this reason; Punch has dragged me through the High Courts
at very considerable expense and finical ruin, in the hope they
would remove from the premises and allowing them to proceed with
any redevelopment plans unhindered by my presence.
Due to a fall in share prices, The City started
to look very closely at the Pub Companies and especially Punch
who have the largest debt and borrowing. And I quote" Investor
concern over the health of the nation's two biggest pubs groups,
Punch Taverns and Enterprise Inns, gained momentum over the summer
and shares in both have now lost more than half of their value
since the start of the year". You do not need any better
proof or and hard evidence better then from the City Analyst and
1. "Morgan Stanley's Jamie Rollo said that
rents have been growing faster than inflation and pub sales while
pub co profits have been growing at a faster rate than lessees,
financial assistance is on the up and the number of pubs available
for lease is rising. "Rents have been rising for at least
15 years now, he went on to say and I quote "There is also
some evidence that pub companies have been taking a bigger share
of the pie than their lessees.
Rollo said that monitoring of the pubs available
on Punch and Enterprise's websites showed an increase in lessees
exiting the industry with between 14-16% of the estate now vacantup
from 12-14% last year.
2. Merrill Lynch analyst Jamie Rollo wrote in
a recent research note that 20% to 30% of Punch and Enterprise's
leased pubs were now uneconomic, with licensees making less than
the 20,000 pounds a year considered necessary to make a pub worth
3. Mark Brumby of Blue Oar Securities was also
critical of Punch and Enterprise's treatment of tenants. "They've
ratcheted up rents time and time again and jacked them up to such
a point where the pubs are running on a margin which is uneconomic,"
4. Brumby expects the rate of closures to go
down before the Christmas holiday season before accelerating again
in January. "The pubs will bend over backwards to stay open
for the second half of December which is a complete windfall.
The first week of January is going to be when reality dawns,"
5. Charles Stanley analyst Sam Hart believes
Punch's balance sheet is overleveraged and further measures in
addition to the dividend suspension will be required to shore
up cash. "Debt covenants will probably have to be renegotiated
and the possibility of a rights issue, debt-for-equity swap and
disposals cannot be completely ruled out," he said.
6. The Financial Times quotes analyst Charles
Winston of Redburn Partners, who believes that Punch must sell
around £335 million worth of pubs to avoid further refinancing.
"Punch's problem is that it has placed pretty much all of
its assets into securitisations but it has left some debt outside,"
analyst Charles Winston told the paper. "Given that the cash
is likely to be trapped within all three of the group's securitisations
in the coming years, this asset/debt mismatch means that it really
has very few options".
9. PR by Punch and BRM's
Since it was announced that there would be an
Enquiry into Pub Companies again, the trade papers, which are
all clearly influenced by the power of the Pub companies are full
of PR exercises regarding how well and how much the Pub Companies
are helping, all their tenants. I registered my complaint with
my BRM about these press reports which are very biased and untrue
but I have not heard anything from Punch or and from my BRM.
There is no competition between The Pub Companies.
Each pub company does as they please at the considerable expense
of their tenants & leaseholders.
All Pub Companies have very large buying &
controlling power from all beer manufactures and all Pub Companies
control pricing. It is for this reason; we constantly see major
price differences between pubs and supermarkets.
As I quoted aboveMorgan Stanley... "There
is also some evidence that pub companies have been taking a bigger
share of the pie than their lessees"
Mark Brumby of Blue Oar Securities was also
critical of Punch and Enterprise's treatment of tenants.
Punch's conduct and Punch's representatives
conduct including providing false and inaccurate information for
the Injunction and Summary Judgment is well documented. Punch,
in fact alleged that it had been denied access to the property
on various occasions when such allegations were clearly untrue.
Despite numerous requests, from myself and my
previous solicitors HLF, as of today's date, I still have no idea
what was carried out in my pub by the Punch's representative or
agent on 24January 2006 when I was absent from the Pubwires
were cut and despite requests as to what was carried out in my
absence, I have not been given any information whatsoever.
Recently, during another visit by Punch's representatives,
after the inspection, report was produced and asked a member of
my staff to sign this when I was not present. No copy of this
report was left. After many complaints, a copy has been provided
but despite all complaints to Punch & BRM, no one informed
me of what is written in this report.
Given Punch's conduct, I am of the firm opinion
that Punch would use any threat to enforce the Injunction against
me, as they did previously when Punch's representatives Brulines,
who on occasions when they have attended my property, have made
it clear that they can do what they like as they have the benefit
of the Injunction.
As I mentioned earlier, Punch has nearly 8000
tenants and leaseholders. If Punch is allowed to abuse their power
and position, blatantly interpret, enforce and impose the lease
unfairly by imposing Rate Valuation Fee's, Delivery Charges, Premium
Rate Telephone line's, Defective Products and other new conditions,
services and charges as Punch wishes, on every £100 obtained
unlawfully by Punch, it is £1 million pounds clear profit
to Punch. On every £1,000 obtained unlawfully by Punch, it
is £10 million clear profit to Punch and I am of a firm belief
that Punch employ BRM's for this reason bearing in mind the conduct
If Punch is allowed to make such profits in
breach of their implied obligations and/or when they are not entitled
to impose such charges by abusing the power or position then I
would suggest that Punch is making an unlawful and wrongful profit:
"Punch is a very ruthless company and they
do not take any prisoners. Punch is getting away with what is
not in the lease agreements. Punch, blatantly interprets, operates,
enforces and imposes the lease unfairly towards all Punch's nearly
8000 tenants and leaseholders, Punch imposes new services and
conditions, Punch does not deal with legitimate concerns and complaints,
Punch always threatens with legal action, when this fails, Punch
drugs hard working leaseholders & tenants through High Courts
of this Country at considerable costs and financial ruin, unless
you agree to submission and ONLY under Punch's terms".
22 September 2008