Supreme Court rules that parking penalty charges do not breach the Unfair Terms in Consumer Contracts Regulations (1999)

If you were unlucky enough to receive a parking ticket on a private car park this Bank Holiday weekend after overstaying the time limit, or overstayed your welcome on a hospital car park whilst visiting a sick relative; you’ll probably feel suitably aggrieved. After all, you did buy a parking ticket: you just went over the limit. If you hadn’t bought a ticket at all, then perhaps a fine would be understandable.

The question is are hospitals and private car parks allowed to do this? Can they charge what many of us feel are excessive fees? Well, the answer is providing the parking authority follows all the rules and regulations and provides clear signage about potential penalty charges, it is perfectly entitled to charge for overstaying. The precedent for that was set recently by the Supreme Court in the case of ParkingEye v Beavis (November, 2015).

ParkingEye v Beavis

ParkingEye Ltd agreed with the owners of the Riverside Retail Park to manage the car park at the site. ParkingEye displayed numerous notices throughout the car park, saying that a failure to comply with a two hour time limit would “result in a Parking Charge of £85”. On 15 April 2013, Mr Beavis parked in the car park, but overstayed the two hour limit by almost an hour. ParkingEye demanded payment of the £85 charge. Mr Beavis argued that the £85 charge was unenforceable at common law as a penalty, and/or that it was unfair and unenforceable by virtue of the Unfair Terms in Consumer Contracts Regulations 1999. The judge found in favour of ParkingEye, but Mr Beavis appealed.

The Court of Appeal did not rule on the question of commercial justification, but ruled that ParkingEye’s charges should not be treated as penalties because they thought the level of charge (£85 in the Beavis case) was not ‘extravagant and unconscionable’ – the true test of whether a clause is a ‘penalty’ in the Court’s opinion. The Court rejected Mr Beavis’ arguments, and ruled in favour of ParkingEye. It did, however, grant permission to appeal at the Supreme Court.

The Supreme Court decided that a clause which justified charging £85 for overstaying should not be regarded as a penalty if it ‘serves a legitimate purpose’ and is not ‘manifestly excessive’ – a decision which ran contrary to the historic precedent set in Dunlop Pneumatic Tyre Co Ltd v New Garage & Motor Co Ltd – a case which was previously the leading authority on penalties.

The Court argued that both ParkingEye and the landowners had a legitimate interest in charging overstaying motorists, which extended beyond the recovery of any loss. The interest of the landowners was the provision and efficient management of customer parking for the retail outlets: the interest of ParkingEye was in income from the charge, which met the running costs of a legitimate scheme plus a profit margin. Further, the charge was neither ‘extravagant nor unconscionable’, having regard to practices around the United Kingdom, and taking into account the use of this particular car park and the clear wording of the notices.

The Court decided that although the charge may fall under the description of potentially unfair terms at para. 1(e) of Schedule 2, it did not come within the basic test for unfairness in Regulations 5 and 6(1), as that test has been recently interpreted by the Court of Justice in Luxembourg [102-106]. Any imbalance in the parties’ rights did not arise ‘contrary to the requirements of good faith’, because ParkingEye and the owners had a legitimate interest in inducing Mr Beavis not to overstay in order to efficiently manage the car park for the benefit of the generality of users of the retail outlets. The charge was no higher than was necessary to achieve that objective. Objectively, the reasonable motorist would have, and often did, agree to the charge

Leave a Reply

XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>