Inntrepreneur faces class action

A new wave of litigation is set to be launched against pub landlord Inntrepreneur following the start this week of a class action by disgruntled tenants.

The action, representing about 20 publicans, opens up a new front in the long-running battle with the company, which was set up in the late 1980s by Grand Metropolitan and Foster's Brewing of Australia and has been locked in dispute more or less ever since with many of its tenants.

The latest assault focuses on an alleged refusal by Inntrepreneur to renew five-year leases that publicans had signed in the mid-1980s with their previous landlord, Courage, the brewing group which was then owned by Foster's. The tenants claim that they were illegally forced by Inntrepreneur staff into signing much more onerous contracts that tied them in for 20 years, at much higher rents and with new obligations to repair and insure their pubs.

Tenants claim they were persuaded to sign the harsher contracts after being told, wrongly, that changes in the law meant the old agreements could not be extended. Many believe they faced a choice between signing the replacement contract or being thrown on to the street.

A combination of the new leases and falling demand for beer in the pubs, due to the onset of recession in the early 1990s, forced many publicans into financial difficulties. It is estimated that 1,500 tenants exchanged the renewable short leases, called five plus five agreements, for the longer Inntrepreneur contracts.

One publican, who is involved in the new action, said he had signed the agreement only to find later that he could have extended his five plus five contract. He estimated the cost to him of a stepped increase in rent, insurance premiums and repairs had amounted to more than pounds 75,000.

Martin Moore, a former publican who has co-ordinated other actions against Inntrepreneur, believes there could be 500 publicans in similar situations who will be encouraged by this case to launch their own attacks. Other estimates put the number at twice as many tenants and believe Inntrepreneur's liability could amount to pounds 70m.

The latest case follows a successful claim 18 months ago from Tiny Little, a publican in Norwich, that he was wrongly denied an extension of his five plus five lease. Inntrepreneur took that case to the House of Lords but failed to have the decision overturned.

This is in addition to other class actions which have been launched on the argument that Inntrepreneur has acted illegally by tying tenants into restrictive contracts that offer them no commercial advantage. Claims have been commenced on this count, which runs counter to the European Union's Treaty of Rome, that may eventually total up to pounds 300m.

A publican near Bristol, who preferred not to be named until writs are served this week, said of the battle with Inntrepreneur: "It has been three years of trauma for my wife and me. I have had to suspend all my pension payments to pay the rent."

For Inntrepreneur, the recent increase in the volume of writs being filed against the company threatens to create financial problems. Dogged by differences between its owners - GrandMet was interested in running a property company while Foster's wanted to boost sales of its Courage subsidiary's beer - Inntrepreneur has never been a commercial success.

With borrowings estimated at pounds 500m, and gearing of 140 per cent, its interest payments only just match operating profits.