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26 November 2015

Change in law on parking penalties

The recent ruling by the Supreme Court in the cases of ParkingEye Ltd v Beavis and Cavendish Square Holding BV v Talil El Makdessi has reformulated the principle of penalties in contract law by adjusting the test that defines a penalty.

In the case of ParkingEye v Beavis, Mr Beavis disputed the need to pay a £85 parking charge on the basis it was an unenforceable penalty and that it was an unfair terms under the Unfair Terms in Consumer Contracts Regulations 1999. In the Cavendish Square Holding BV v Talil El Makdessi case the argument was that particular parts of the agreement (relating to the forfeiture of instalment payments and the relevant price for the transfer of some shares) were unenforceable penalties.

However, what do these cases actually mean in practice for drivers and private car park operators?

Matthew Brandis, head of the litigation and dispute resolution practice, says the short answer is that in the future you should find that drivers respect the rules of private car parks more than they did before (because they will know that parking charges are more likely to be found to be enforceable by the Courts). 

It may take a good few months for the ramifications of the case to be understood fully but the message is now clear; previously, a number of drivers thought that parking charges could be challenged on the basis that they were not a “genuine pre-estimate of loss” and therefore they were an unenforceable “penalty”.

However, the Court has decisively come down in favour of car park operators in deciding that asking whether or not a particular clause in a contract (i.e. the parking charge displayed in car parks) is a genuine pre-estimate of loss is unhelpful.

The test to be used is whether or not the parking charge goes beyond the car park operator’s legitimate interest, and whether or not the parking charge is “unconscionable” or “extravagant”.

The Court’s judgment stated: “The amount of the charge was not exorbitant in comparison to the general level of penalties imposed for parking infractions. Nor is there any reason to think that it was higher than necessary to ensure considerate use by motorists of the available space. And, while we accept … that the £85 charge is broadly comparable to charges levied by local authorities for parking in public car parks is not enough to show that it was levied in good faith, it is nonetheless a factor which assists ParkingEye in that connection. The risk of having to pay it was wholly under the motorist’s control.”

Matthew concluded: “A parking charge of at least £85 is now fully enforceable. However larger car park operators are unlikely to charge any more than £100 as a result of the relevant codes of practice imposed on them by the two accredited trade associations, the British Parking Association and the Independent Parking Committee.”

To speak with Matthew about parking penalties and the change in law, call 01753 279039 or email disputes@bpcollins.co.uk.

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