Tied public house – Landlord obtaining individual exemption from European Commission – Tenant applying to European Court to have Commission decision set aside – Landlord forfeiting lease for breach of tying covenant and obtaining order for possession – High Court master imposing stay of execution pending outcome of tenant’s application to European Court – Whether power to stay properly exercised – Whether lease in any event covered by block exemption – Landlord’s appeal allowed
The defendant tenant occupied a public house in Brighton under a 20-year lease granted by the claimant (Whitbread) in 1992. In common with other leases granted by the claimant, the lease contained provisions prohibiting, with certain exceptions, the sale of beer that was not supplied by the landlord or its nominees. In 1994 Whitbread notified the European Commission of those provisions. By a decision issued on 24 February 1999 (1999/230/EC), while expressing the view that the provisions did not fall within the block exemption for certain beer supply arrangements, as provided for by Commission regulation EEC 1984/83 (now superseded by regulation EC 2790/1999), the Commission granted Whitbread an individual exemption from Article 85 (now Article 81) of the European Treaty.
In May 1999 the defendant, who at all material times considered the tie to be void, applied to the European Court of First Instance seeking an annulment of the decision to grant an individual exemption. Whitbread took proceedings to forfeit the lease, and, in March 2000, obtained summary judgment for possession at a hearing before a master of the Chancery Division. The defendant did not, at that stage, seek relief, having sought a stay of execution pending the outcome of his application to the European Court. The master granted the stay, reasoning that the defendant might otherwise be evicted for breach of an obligation that might afterwards be declared to be illegal. Whitbread appealed to a judge of the division.
Held: The appeal was allowed.
1. If the defendant had sought a stay or adjournment before judgment was given, the court would have been required to weigh the potential injustice on each side: see Kingcastle Ltd v Owen-Owen The Times 18 March 1999. The position after judgment was different, and the power to stay execution had not been properly exercised. The stay envisaged that the defendant might one day vindicate his right to be free from the tie. However, that could not happen unless and until: (i) he succeeded (possibly only at a higher level) before the European Court; (ii) the Commission decided, in the light of the judgment, that the individual exemption was not available; (iii) (assuming no successful appeal by Whitbread) the defendant obtained permission to appeal the present judgment several years out of time; and (iv) he persuaded the Court of Appeal, or possibly the House of Lords, that the block exemption did not apply to the tie in question.
2. As regards the last issue, the court was bound in the instant case to proceed upon the basis that, notwithstanding the contrary view taken by the Commission, the relevant provisions did fall within the block exemption: see Byrne v Inntrepreneur Beer Supply Co Ltd, considered among the appeals heard by the Court of Appeal in Courage Ltd v Crehan [1999] 2 EGLR 145. There was nothing in the relevant Council regulations that empowered the Commission to give binding rulings upon the applicability of a block exemption.
Nicholas Green QC and James Flynn (instructed by Field Fisher Waterhouse) appeared for the claimant; Tim Kevan (instructed by Maitland Walker, of Minehead) appeared for the defendant.
Alan Cooklin, barrister
