"Parking Charge" not a Penalty

Most motorists are no doubt outraged by the high charges car park operators make if you have overstayed your parking time, even by a minute.  Nowadays these charges are enforced by cameras with automatic number plate recognition, so are not easily avoided.  But can you challenge them if the car park operator takes you to court?

We now have a case on the subject.  In Parkingeye Ltd v Beavis [2015] EWCA Civ 402 the Court of Appeal considered an appeal by Mr. Beavis against a “Parking Charge” of £85 made by Parking Eye when he overstayed the 2 hours permitted period of free parking in the car park at the Riverside Retail Park in Chelmsford by nearly an hour.  About 20 signs were prominently displayed at the car park.  According to the judgment “The signs are worded as follows (the words I have underlined being especially large and prominent, and the words I have italicised being in small print but still legible if one wished to read them)

Parking Eye car park management

2 hour max stay

. . .

Failure to comply . . . will result in Parking Charge of £85

. . .

Parking Eye Ltd is solely engaged to provide a traffic space maximisation scheme. We are not responsible for the car park surface, other motor vehicles, damage or loss to or from motor vehicles or user's safety. The parking regulations for this car park apply 24 hours a day, all year round, irrespective of the site opening hours. Parking is at the absolute discretion of the site. By parking within the car park, motorists agree to comply with the car park regulations. Should a motorist fail to comply with the car park regulations, the motorist accepts that they are liable to pay a Parking Charge and that their name and address will be requested from the DVLA.

Parking charge Information: A reduction of the Parking Charge is available for a period, as detailed in the Parking Charge Notice. The reduced amount payable will not exceed £75, and the overall amount will not exceed £150 prior to any court action, after which additional costs will be incurred.

This car park is private property."

It was not disputed that the signs were reasonably large, prominent and legible, so that any reasonable user of the car park would be aware of their existence and nature and would have a fair opportunity to read them if they wished, nor that this gave rise to a contract between Mr. Beavis and Parking Eye.

Mr. Beavis challenged the £85 parking charge as being:

1. unenforceable as a penalty at common law; and
2. unfair and therefore unenforceable by virtue of the Unfair Terms in Consumer Contracts Regulations 1999.

He lost before the judge at first instance, and obviously felt strongly enough about the issue to appeal to the Court of Appeal.  The Consumers’ Association intervened in the case, so must also have felt the issues were of importance to consumers.

At first sight, one would have thought this was obviously a penalty, as it was not a genuine pre-estimate of Parking Eye’s loss (they being simply contracted to manage the free parking facility for the benefit of shoppers) and was clearly intended as a deterrent.  However, the Court of Appeal reviewed the case law on the subject, culminating in the recent case of El Madkessi (which is still under appeal to the Supreme Court) and noted that “The modern approach to penalty clauses suggested that a clause might not be a penalty, even though it did not contain a genuine pre-estimate of loss, if its dominant purpose was not to deter breach and the fact that there was a good commercial justification for it might lead to the conclusion that that was not the case. The clause would be a penalty only if the sum stipulated was extravagant and unconscionable.”

Here the provision of a 2 hour free parking facility for the benefit of shoppers and the need to keep the car park from becoming full, the fact that the charge needed to be sufficient to cover the costs of enforcement and was in line with the charges made by local authorities all amounted to commercial justification.  The Protection of Freedoms Act 2012 also allowed the recovery of parking charges of this nature that had clearly been brought to the attention of motorists.  In these circumstances £85 was not considered extravagant and unconscionable by the Court, and the charge was therefore held not to be a penalty.

The list of potentially unfair terms in the 1999 Regulations includes “terms which have the effect of requiring a consumer who fails to fulfil his obligation to pay a disproportionately high sum in compensation”. The parking charge would have been unfair if Parking Eye had “acted contrary to the requirements of good faith” in imposing it and if “that term caused a significant imbalance in the parties' rights and obligations under the contract to the detriment of the motorist”.  Given that the signs were prominently displayed, the Court held there was no lack of good faith, and the same factors as led to the clause not being a penalty were sufficient for there to be no such significant imbalance.

Mr. Beavis therefore had to pay his £85 parking charge, plus presumably rather more in legal fees.  It would only have cost him £50 if he had taken advantage of the discount for prompt payment.

So we now know that a “parking charge” of about £85 is likely to be recoverable, at least if the notices drawing it to motorists’ attention are sufficiently prominent and clearly worded.  Presumably there must come a point at which such a charge is so clearly in excess of the industry norm (as charged by local authorities and others, and which no doubt will increase over time) as to be “extravagant and unconscionable” but we do not yet know what that point would be and it would take a brave (or really outraged) motorist to test it again before the courts.

Update: on 4 November 2015 the Supreme Court gave judgment in the joined appeals in Cavendish v El Makdessi and ParkingEye v Beavis, deciding that the clauses in both cases were not penalties, and therefore allowing the appeal in the former and dismissing Mr. Beavis' appeal against the Court of Appeal decision discussed above.