Parkingeye Ltd v Beavis

Deterrence does not, by itself, make a contractual charge an unenforceable penalty. The common-law question is whether the charge is extravagant and unconscionable. A sum exceeding the loss recoverable as damages is a strong indication, but the court may consider legitimate commercial, social and practical interests, the nature of the facility and the need for effective enforcement.

A clearly displayed charge for overstaying free parking was neither penal nor unfair under the Unfair Terms in Consumer Contracts Regulations 1999. Good faith requires fair and open dealing, while significant imbalance is assessed in the context of the contract as a whole. The statutory parking regime supported enforceability where charges were clearly notified and not grossly unreasonable.

ParkingEye Ltd claimed £85 from Barry Beavis for overstaying the two-hour free parking period at a retail-park car park. The County Court at Chelmsford, before His Honour Judge Moloney Q.C., held that the charge had the characteristics of a penalty in the conventional sense but was commercially justifiable and not extravagant or unconscionable. It also held that the term was not unfair under the Unfair Terms in Consumer Contracts Regulations 1999.

The appeal concerned whether the charge was unenforceable at common law as a penalty and whether it was unfair under the Regulations.

The appeal was dismissed unanimously. Moore-Bick LJ gave the lead judgment, with which Patten LJ agreed. Sir Timothy Lloyd LJ agreed with the result and added observations on the application of the penalty doctrine to a non-commercial parking arrangement.

1. Penalty doctrine. The rule is grounded in public policy. The court will not enforce a payment for breach which is extravagant and unconscionable, notwithstanding the importance normally attached to freely made contracts. A sum greatly exceeding the loss recoverable as damages is a strong indication, but it is not conclusive. The court may consider commercial, social and practical factors. This approach was consistent with the modern authorities, including Dunlop Pneumatic Tyre Co. Ltd v New Garage and Motor Co. Ltd [1915] A.C. 79 and El Makdessi v Cavendish Square Holdings BV [2013] EWCA Civ 1539.
2. Application to the charge. The charge was principally intended to deter overstaying, and ParkingEye suffered no direct financial loss from an individual overstay. Those matters did not decide the issue. The two-hour facility benefited motorists and retailers, required regular turnover, and could not be effectively managed by modest charges which were uneconomic to enforce. The charge was not extravagant or unconscionable. Its level, reduced for prompt payment, was comparable with charges used in municipal parking schemes. The contractual arrangements between ParkingEye and the landowner did not alter that conclusion.
3. Statutory context. Section 56 and Schedule 4 of the Protection of Freedoms Act 2012, particularly paragraph 4 and the definition and notice provisions in paragraph 2 of Schedule 4, supported the conclusion that clearly notified private parking charges were regarded as recoverable in the public interest.
4. Unfair terms. Under regulations 5(1) and 6(1) of the Unfair Terms in Consumer Contracts Regulations 1999, good faith requires fair and open dealing, and significant imbalance must be assessed by considering the contract as a whole, the nature of the service and the circumstances at conclusion. The signs were prominent, clear and legible. The charge involved no concealed trap or exploitation of consumer weakness and did not create a significant imbalance. Regulation 8(a) therefore did not render the term non-binding.

1. Court of Appeal (Civil Division). The appeal from the County Court at Chelmsford was dismissed on 23 April 2015: [2015] EWCA Civ 402.
2. County Court at Chelmsford. His Honour Judge Moloney Q.C. gave judgment for ParkingEye on its claim to recover the parking charge.