Memorandum submitted by Karl Harrison
I write further in receipt of the uncorrected
transcript and letter in that regard from the Committee Office.
I have written separately with one correction to my answer to
Q177. I'm taking this opportunity to follow up with further information
in relation to my answers to five questions. Taking each in turn:
Q 166. Please see enclosed
a copy of notes in relation to the court case (not printed
here) involving Punch Taverns from November of this year and
to which I referred. I understand that Simon Clarke may also have
provided information in this regard.
Q 167. You invited me
to comment further about the enforceability or otherwise of the
proposed BBPA code of practice.
As a preliminary point I would say that we have
still not seen a draft of this proposed code. I understand that
it is now again in the process of being further revised. I would
comment simply as follows:
(1) Codes of Practice are commonly used by companies
or sectors where the application of law is not the preferred route
of those producing the codes. I think this is one of those cases.
It does not seem to me that there is any serious intent here from
the BBPA or its members to address the concerns raised by your
Committee in its Report from May of this year.
(2) The BBPA cannot bind all those companies
that operate tied leases as they are not all members. A member
of the BBPA can, in any event, resign and no longer be bound by
any terms of membership.
(3) All existing leases are deeds. A deed can
only be varied by a deed and nothing else. As such, without a
deed of variation then any terms of a code of practice will not
be binding in the case of any existing lease. A code could only
be binding on new tenants if the document is included within the
body of the lease or as a schedule to it.
(4) To be binding and effective a code of practice
would need to be drafted independently, be binding upon all companies
operating vertically integrated, exclusive supply agreements in
the pub sector, and enforced rigorously by an independent party
or the Courts. As such a statutory code, mandatory for all those
companies operating tied leases, would need to be in place. In
effect, a license to operate, much as already happens in other
sectors, and indeed in the pub sector in the case of regulated
entertainment, liquor licensing etc.
Q 177. I commented that
we were taking Counsel's advice in relation to various matters
concerning rent and mentioned that we would revert to you in this
regard. We are indeed seeking the advice of leading Counsel on
the following issues:
The implications of the Brooker Judgement
The implications of the RICS report including
the potential for retrospective claims, by tenants, against experts.
(RICS noted that a correct reading of the its extant guidance
would leave a tied tenant not worse off than if non-tied (sic).
Also noted that the RICS had not at any time endorsed any particular
split of the Divisible Balance
The potential for clarification in the
Court, of the application of current law to the valuation process
in use in the pub sector.
The use by the VOA of an entirely different
valuation system for assessing rental values in connection with
the provision of Rateable Values.
We are happy to update you in due course once
we have received the advice.
Q 185. I contradicted
Mrs Simmonds' (BBPA) version of events in relation to the withdrawal
of the PIRRS website. Mrs Simmonds claimed it was a "technicality"
whereas in fact it was due to the substantial non-disclosure of
interests by chartered surveyors wishing to be part of the scheme
and who failed to disclose their work for large pub-owning companies.
I attach here my e-mail to Neil Robertson (CEO of the BII) of
3 November and his response of 4 November (not printed
here). This will confirm to you the real reason for the withdrawal
of the website, the proper behaviour of Mr Robertson and incorrect
assertion of Mrs Simmonds.
Q 196. I contradicted
Mrs Simmonds (BBPA) in relation to her assertion that she was
not aware of the Direct Debit scheme being used in connection
with the withdrawal of "fines" from tenants' bank accounts
following allegations of "buying-out" supported by evidence
from Brulines. I stand by my account that I made Mrs Simmons aware
of this personally during the course of my meeting with her, at
her offices, on Wednesday 16 September 2009. I enclose here
a copy of my email dialogue with Mrs Simmonds in relation to the
arrangements for that meeting (not printed here) such that
you can be assured that it took place. I raised a number of issues
with Mrs Simmonds at that time including the intimidation that
occurred using Brulines and the removal of money from tenants'
accounts using the Direct Debit scheme. As I said in my evidence
to your Committee this month; not much seemed to sink in.
Q210. I referred in my
answer to a document from Enterprise Inns plc in relation to AWP
machines and a copy of that document is enclosed here (not
19 December 2009