£85 private parking charge upheld by Supreme Court

An £85 parking charge imposed on a motorist who overstayed the two hour parking allowed at a retail park in England, has been upheld on an appeal to the UK Supreme Court.

By a six to one majority the judges affirmed the Court of Appeal's decision that the ticket issued to Barry Beavis at the Riverside Retail Park in Chelmsford by ParkingEye, the managers of the car park, was valid.

The case was heard along with another appeal alleging that a contractual term was an unenforceable penalty clause, Cavendish v El Makdessi, in which the seller of a controlling stake in a company contested the forfeiture of instalments of the price following his breach of restrictive covenants.

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.

In both cases the court (Lords Neuberger, Mance, Clarke, Sumption, Carnwath, Toulson and Hodge) upheld the validity of the disputed clauses. The judges emphasised that the validity of a clause providing for the consequences of a breach of contract depends on whether the innocent party can be said to have a legitimate interest in the enforcement of the clause.

In Cavendish the provisions were properly described as price adjustment rather than penalty clauses. While, in contrast, the penalty rule was engaged in Mr Beavis's appeal, the £85 charge was not a penalty. 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 practice around the United Kingdom, and taking into account the use of this particular car park and the clear wording of the notices regarding failure to comply with the two hour time limit.

Regarding the 1999 Regulations, although the charge might fall under the description of potentially unfair terms at para 1(e) of sched 2, it did not come within the basic test for unfairness in regs 5 and 6(1), as recently interpreted by the Court of Justice in Luxembourg. Any imbalance in the parties’ rights did not arise ‘contrary to the requirements of good faith’, and the charge was no higher than was necessary to achieve the objective of efficiently managing the car park for the benefit of the generality of users of the retail outlets.

Lord Toulson, dissenting in relation to the regulations, would have allowed the appeal on the grounds that the burden was on the supplier to show that the consumer would have agreed to the terms in individual negotiations on level terms: it was not reasonable to make that assumption in this case, and in any event ParkingEye had not produced sufficient evidence to that effect.

Click here to access the decision.