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Private Parking – Court of Appeal Upholds Penalty

08 July 2015 #Real Estate


The balance between private landowners and motorists in the parking arena has shifted in recent years.  The Protection of Freedoms Act 2012 (the 2002 Act) brought in by the Coalition government outlawed private clamping but permitted landowners to obtain the details of the registered keepers of vehicles from the DVLA.  This has made it possible for them to pursue motorists for private fines.

A recent case has tested the underlying legal principles by which such fines can be levied and considered what level of fine may be appropriate.

The basic legal principles behind this are contractual; the motorist parks in the car park – possibly for a fixed period which is free – and then is subject to a penalty in the event of an overstay.  Contract law provides that there is a contract between the motorist and the car park operator based upon the signage in the car park – the car park operator will provide parking for a fixed period in exchange for the motorist leaving within that period.  If the motorist overstays, there is a breach of contract and the motorist is subject to a fixed penalty charge.

In the case of Parkingeye Ltd v Beavis [2015] EWCA Civ 402, the penalty charge was £85 (reduced to £50 if paid promptly).  The motorist refused to pay, arguing on two counts:

  • First, that the penalty was unenforceable under the rule that penalty clauses in contracts, intended to have a ‘deterrent effect’ are generally unenforceable. Any ‘penalty’ for breach has to be linked to a genuine estimate of liquidated damages caused by the breach.  In this case, the landowner had suffered no loss.
  • Second, that the penalty charge was unfair and unenforceable under the Unfair Terms in Consumer Contracts Regulations 1999 (the 1999 Regulations).

The Court of Appeal upheld the penalty levied by Parkingeye.  The £85 charge was found to be “not extravagant or unconscionable.”

In relation to the penalty clause argument, the Court held that the charge was justified on several grounds.  It found that it had to be in Parliament’s contemplation that, by allowing parking operators to access vehicle keeper details under the 2012 Act, the parking operators should be able to use that information to enforce parking overstay charges where these were advertised to motorists and were not grossly unreasonable.

Additionally, the collection of parking charges in instances such as these had to be economic – it is not worthwhile collecting the fines in the event that the parking penalty charge can be only a nominal sum.  Also, the car parking operator would, itself, have been in breach of its operator contract if it had failed to ensure that cars moved on frequently enough.

With regard to the 1999 Regulations, the Court found that “the everyday experience of the use of charges of this kind by local councils to manage the use of a scarce resource tends to show that, provided the charge is not set excessively high, it does not create a significant imbalance in the parties' rights and obligations.”  The charge was therefore not found to be unfair and unenforceable under the 1999 Regulations.

This decision has been appealed to the Supreme Court and this is not, therefore, the end of the story.  Meanwhile, it is good news for car park operators and owners, although care still needs to be taken to ensure that the level of penalty charge is not excessive.

Clarkslegal, specialist Real Estate lawyers in London, Reading and throughout the Thames Valley.
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Richard Higgs

Richard Higgs
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