Flow monitoring equipment – lessons learnt

[Unique Pub Properties v Onifas Limited, 2011] the Court had to decide if there could be an implied provision that Enterprise/Unique would not install flow regulating or monitoring systems which were unlawful or unable to support an accurate monitoring.   In that case the Court decided that there could be no such implied obligation. Nonetheless, in this case, the tenant contended that, despite the express wording, the lease could not be understood to have included, within the scope of “flow monitoring systems”, a system which, at the time the lease was granted, had not then been developed. This point was quickly dealt with by the Judge on the footing that the i-draught system was obviously a flow monitoring system. 

Dispense or flow equipment?

The second argument, a little more sensible than the first, was, however, that flow monitoring equipment could not be seen as dispense equipment.  The argument went that dispense equipment meant equipment the sole purpose of which is to facilitate the safe dispensing of beer and cider of the appropriate quality and it could not be said that a flow monitoring system amounted to this. Again the Judge said the argument was wrong.

The important point appears to be that the express wording included, within the words “dispense equipment”, “flow regulating or monitoring systems”.   The reader may wonder why it took a court case to decide that point.

Unlawful equipment

The tenant also contended that there was an implied term that the right of entry did not allow for equipment which is unlawful and this turned upon the weights and measure legislation (specifically section 7 Weights and Measures Act 1985).  Without boring you with the detail of this, the i-draught system did not amount, in the Judge’s view, to weighing or measuring equipment which was false or unjust so as to be unlawful under that Act.  This is a point which has been considered in the sector press and although the Judge’s decision could not be described as a surprise (bearing in mind that many others had taken the same view) it does at least confirm the point.

Interference with the tenant’s business

Not content with the large number of implied terms which the tenant was seeking to establish, he then went on to argue that terms should be implied which would prevent Unique from exercising its right of entry to install equipment which was not shown to be accurate or which would interfere substantially with the operation of the tenant’s business. 

It is worth bearing in mind that the reservation referred to above concluded with the phrase “as Unique may from time to time consider appropriate or desirable”.  Legal authority shows that a discretion contained in a contract, of this type, must be exercised honestly and in good faith and, not surprisingly, the Judge concluded that there was “nothing” to suggest that Unique was acting other than honestly and in good faith. The mere fact that the tenant had a different view of the i-draught system did not go against that.  There was also no evidence available to suggest that the i-draught system did in fact substantially interfere with the operation of the tenants business (this was thought to be a reference to a Searflo system already installed). 

Conclusion

If anything, it seems surprising that this case ever made it to Court. The tenant’s arguments were extremely weak, so the results did not provide any great revelations for the trade. What operators may take away from this are some points relating to good practice, including:

• You do need a reserved right to install flow monitoring equipment and it is not safe to assume it is included within dispense equipment.
• You should not assume there is an automatic right to draw on an electricity supply.
• This is not authority for the proposition that DMS, i-draught etc are accurate and their evidence will be accepted without question.
• This does not decide that DMS, i-draught etc does not interfere with other systems and evidence could be supplied that they do.
• If reasonable evidence is available that the systems are not reliable or do interfere other systems at the premises the tenant may be able to argue, depending on the words of the clause that they cannot be installed.

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Cases against Enterprise and Unique

Readers may consider that a degree of sympathy should be offered to Enterprise and Unique for the large number of cases brought against them which, appear to have taken legal knowledge little further. 

• In October 2010 the case of Enterprise Inns plc – v – The Forest Hill Tavern Public House Limited dealt with issues relating to pricing and, by implication, discount. Watch out for our review of the points raised on this website, during the Autumn. 
•  This was followed by Enterprise Inns plc – v – Palmerston Associates Limited. 
•  In 2011 Unique Pub Properties – v – Onifas Limited (referred to above) was heard. 
•  As if all of that is not enough, the recent VAT case in the Upper Tribunal (Tax and Chancery Chamber) between Enterprise Inns plc and Unique Pub Properties Limited and the Commissioners for Her Majesty’s Revenue and Customs was heard in May – although in that case Enterprise does not appear to have received the result that it wanted.  This case, again, is referred to HERE.

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