Supplementary memorandum submitted by
The BESC report recommended (paragraph 98) that
"given the impossibility of distinguishing between beer dispensed
and sold, beer run off and disposed of preparatory to serving,
and water used to clean the lines, we believe pubcos should not
be allowed to rely on data from Brulines equipment to enforce
claims against lessees accused of buying outside the tie."
On publication of the BESC report, James Dickson,
Brulines Chief Executive, stated the following:
it was considering legal action over
claims made in the report questioning the accuracy of its equipment.
However, MPs are covered by Parliamentary privilege. At best,
it's irresponsible. At worst it's scandalous. They are very lucky
to have that after writing this trash. But I take heart from the
fact that very little credibility will be given to them, given
the current furore over their expenses."1
In another article, Brulines, said that the
report was a "misrepresentation" of its products and
that no member of the BEC had sought clarifications from it on
either of the claims made. The company said: "The BEC inquiry
appears to have relied upon one specific example (and some unstated
others) and assume that this is representative of 22,000 public
houses. The report's findings in relation to Brulines and dispense
monitoring were ill informed, one sided, misleading, and unrepresentative."2
Brulines were specifically referring to the
submissions of David Law. Members of the Committee may recall
that individuals who had offered written submissions were asked
if those submissions could be forwarded to parties for response.
Contrary to James Dickson's implication that Brulines were not
afforded the opportunity to respond to the submitted allegations
of inaccuracy, unjust and inappropriate use of their equipment,
the BESC Volume II evidence actually contains their response,
via Enterprise Inns, Ev 113 confirming they were given and
took the opportunity to comment.
As one might expect, from a company founded
by Derrick Collin who was convicted of conspiracy and blackmail
at Ipswich Crown Court in 1986, the response in Ev 113 was
The equipment and overall system continue to
provide misleading and inaccurate information, as demonstrated
most recently by a Brulines calibration visit to the Eagle Ale
House. In summary the only dispense between 10 and 11 o'clock
on 13 November 2009 was by a Brulines technician who
was in direct telephone contact with the analyst at head office.
The technician dispensed from four product lines, it was acknowledged
by the analyst but the system failed to record the dispense, a
false reading of 33% inaccuracy. The difference between Brulines
dispensed and delivered beer figures is currently 700 gallons
over an 18 week period, over 20% difference over what has
been delivered. A negative variance of around 200 gallons
over the same period would attract suspicion of buying out and,
other than their word a, licensee would have no defence.
The Fair Pint Campaign has obtained an expert's
report into the Brulines equipment, concluding that the equipment
is materially inaccurate and as such is not fit for the purpose
to which it is put by pub owning companies, and the opinion of
counsel in relation to the use of Brulines equipment by pub owning
companies and its promotion by Brulines plc. which concludes that
criminal offences may have been committed by some of the parties
involved and that "consideration should be given to making
a complaint to the Office of Fair Trading over the practice considered
in this Advice, a practice that has caused so much understandable
consternation among lessees."
Finally, I have received an email from Wendy
Martin, Director of Policy for LACORS, on the issue of the Brulines
equipment which indicates there are concerns, a methodology of
testing has been established, but appears not to have been published
to Trading Standards authorities and is denied by Trading Standards
in Stockton-Upon-Tees, and that Brulines are failing to voluntarily
cooperate with LACORS and provide equipment for type approval
The pub owning companies, and brewers that operate
tied leases, are continuing to employ a system and equipment supplied
by Brulines plc. for the purposes of monitoring the dispense of
draught products (beer, lager and cider) by pub tenants. In most
cases the lease provides the landlord with the power to enforce
the installation of such equipment on the premises. The lease
normally further grants the landlord rights to enter the premises
on reasonable notice to inspect the equipment and makes it a breach
of the lease for the tenant to interfere with the equipment.
Reports from Brulines are used by pub owning
companies to accuse tenants of "buying-out"purchasing
tied products from sources other than the nominated supplier of
the landlord. The accusation is often conducted in an aggressive
way using electronically enhanced information from Brulines plc.
to threaten the tenant with legal action unless a "fine"
(usually of an arbitrary quantum) and an administrative charge
are paid, and a "confession" signed. The landlord will
often present the evidence obtained from Brulines as compelling
evidence against the tenant that will persuade a Court of the
tenant's breach rendering it hopeless for the tenant to offer
a defence or to go to the cost of doing so. The letters and draft
"confessions" from pub owning companies are worded in
such a way as to imply that remedies against the tenant, such
as judgement in the courts or forfeiture of the lease are mere
formalities when of course the landlord would need to properly
make out their case in the court in the usual way.
In the last BESC report the Committee were rightly
critical of these procedures and the company, Brulines plc., who
supply the equipment and data. Your Chairman attended on site
at the Eagle Tavern to inspect the equipment for himself and to
witness its inaccuracy. Since that time The Fair Pint Campaign
has obtained an expert's report into the Brulines equipment from
SGS, the world leader in inspection, verification, testing and
certification. The work in preparing the report was carried out
Dr Phil Mark, SGS's National Manager for Engineering and Instrumentation
in the UK. The report concludes that the equipment is materially
inaccurate and as such is not fit for the purpose to which it
is put buy pub owning companies.
Furthermore The Fair Pint Campaign has obtained
the opinion of counsel in relation to the use of Brulines equipment
by pub owning companies and its promotion by Brulines plc.
On its website The company says the following:
"In the early 1990s we created a business
concept that would considerably benefit owners and operators within
the UK Licensed on-trade, and especially the tenanted pub sector,
to turn information into profit.
Our core product, Dispense Monitoring, records
the exact volume of liquid that passes to each fount at any minute,
of any hour, on any day. It recognises the brand performance of
draught beers, ciders, lagers, spirits and post mix and
helps you maintain an effective line-cleaning regime.
All of this has proven to be so successful, we
now have systems in over 22,000 pubs and manage data from
more than one in three pubs within the UK."
The assertion of accuracy is not supported by
the findings of Dr Mark of SGS and the opinion of counsel is that
criminal offences may be being committed by Brulines plc. It is
also notable to observe that the equipment supplied by Brulines
plc. is not generally used by any companies other than those owning
pubs for leasing under tied arrangements where the equipment supplied
by Brulines is used in connection with revenue protection. Indeed,
even pub owning companies such as Punch Taverns only use Brulines
in their tenanted estate and not in all their managed estate.
The equipment is inaccurate and not reliable for other purposes
The legal opinion states that the use of Brulines
to fine tied tenants means that it is probable that the equipment
is "used for trade" and therefore falls under the terms
of Section 7 of the Weights and Measures Act 1985.
The Fair Pint Campaign has received a letter
from Wendy Martin, Director of Policy for LACORS on the issue
of the Brulines equipment. Ms Martin is of the view that:
1. The equipment is in some cases being used
"in trade" and that if so enforcement action could be
taken in relation to its use. This would concur the opinion of
Mr Gary Grant
2. That Brulines has developed a method of testing
the equipment in conjunction with its home Trading Standards office
in Stockton-upon-Tees. Following contact with Stockton-upon-Tees,
Trading Standards they seem unaware of any accepted testing method.
In the absence of details I am requesting it from LACORS. Ms Martin
seems to have doubts about this new agreed testing regime and
confirms that it does not include the effects of external influences
or the accuracy of the equipment. This is also of concern in the
light of the report Fair Pint have received from SGS.
3. That the accuracy of the equipment is in doubt
and that Brulines should submit it to the National Measurement
Office, part of the Department of Business, Innovation and Skills,
Brulines has yet to comply with the LACORS request.
4. If Brulines plc does not submit its equipment
for testing then LACORS would consider pressing the NMO for a
change in legislation to require approval of this equipment regardless
of its use in trade or otherwise.
Fair Pint are this week submitting to Ms Martin
the report from SGS and also the opinion received from Mr Gary
Grant with a request that further action is taken and a report
published by LACORS. Ms Martin may wish to comment further before
the Committee reconvening on the 8 December 2009 and
I will ensure any progress is reported.
It is the understanding of the Fair Pint Campaign
that the BBPA, along with the BII and the FLVA is attempting to
agree a protocol for the use flow monitoring equipment in tenanted
pubs. Fair Pint understand that Brulines plc. is not a party to
such a protocol and that the document does not include reference
to the accuracy of the equipment.
Fair Pint are concerned about the agreement
between the BBPA, the BII and the FLVA on the use of the flow
monitoring equipment. The agreement totally disregards the concerns
expressed by the Business and Enterprise Select Committee about
the accuracy of the equipment its inability to distinguish between
the flow of beer down the line compared to water used for cleaning
or even gas from kegs.
The agreement between the BBPA, the BII and
FLVA seems to totally ignore the fact that tenants have legal
rights to challenge accusations made by pub owning companies about
buying out of the tie and that questions of breach of contract
or forfeiture of leases should properly be decided by the courts
not by pub companies applying rules that they have written.
Given the clear inaccuracy of the equipment,
Fair Pint believe that Brulines cannot be relied on to police
the contractual obligations of tied tenants. Fair Pint believe
that action needs to be taken to prevent the use of Brulines information
to fine or otherwise punish tenants for breach of contract unless
the equipment is capable of certification under the terms of the
Weights and Measures Act 1985.
The findings of the experts report and legal
opinion commissioned by the Fair Pint Campaign corroborate the
concerns about the use of the Brulines equipment as a means of
contractual enforcement originally reported by David Law and demonstrated
to the committee at The Eagle Ale House in 2008. The methodology
of it's use by pub owning companies is, at best, highly questionable
and it is the view of counsel now that criminal offences may be
being committed in relation to the claims of Brulines plc. in
marketing the equipment and also in relation to Weights and Measures
Fair Pint believe that the equipment is not
fit for purpose at this time and should be removed from the premises
of tied tenants with immediate effect.
Urgent LACORS investigation of the accuracy
and appropriate use of the Brulines system.
Urgent guidance to be provided to all Trading
Standards authorities to enable appropriate action and enforcement
of powers to implement fraud proceedings and forfeit the equipment
where it is used unjustly or falsely.
20 November 2009