Parking Eye vs Beavis: Law on Parking Penalties

Parking Eye vs Beavis is one of the most well-known cases dealing with the legal issues of parking penalties.

Mr Beavis became somewhat of a hero in July 2015 when his case against parking giant ParkingEye Limited reached the Supreme Court, the highest court in the UK.

ParkingEye is the biggest private parking operator in the UK, managing over 3,500 sites. Mr Beavis represented the average British motorist, bravely battling it out against a company allegedly profiteering from innocent mistakes. Unfortunately for Mr Beavis, it did not quite work out as he had hoped.

Mr Beavis was seeking to rely on a centuries-old principle of English law that a penalty clause in a contract will not be enforced by the courts. A penalty clause is a clause which seeks to punish a party if they breach the terms of the contract. If the punishment, or ‘penalty’, is ‘unconscionable’ or ‘extravagant’, or, in more modern language, disproportionate or extreme, then the court will not enforce it. Instead, if the contract is breached then the claimant should only be entitled to a sum of money that will put them back in the same position as if a breach had not occurred.

This principle had meant that motorists had been able to challenge their parking charges in court on the basis that the charge was not a ‘genuine pre-estimate of loss’ on the part of the parking operator.

By the time Mr Beavis’s case reached the county court in East Anglia, the District Judge had decided that it was time for the courts to make a definitive ruling about the status of private parking charges in English contract law. This is indeed what happened and to a considerable extent, the law has been clarified by this case.

Facts of the case

ParkingEye Limited managed the car park at the Riverside Retail Park in Chelmsford on behalf of the owner of the retail park, the British Airways Pension Fund.

On 15 April 2013, Barry Beavis parked his car in the car park. There were about twenty signs in the car park, and the parties agreed that they were large, prominent and legible. The signs stated that parking for the first two hours was free, but that anyone staying longer than that would have to pay a charge of £85. Mr Beavis stayed for nearly three hours.

ParkingEye then sent letters to Mr Beavis notifying him of the charge. Mr Beavis ignored the letters, and the company commenced proceedings against Mr Beavis in the county court to recover the charge.

The Judge found that the charge was commercially justifiable, but he gave leave to Mr Beavis to appeal to the Court of Appeal.

The Court of Appeal dismissed Mr Beavis’s appeal, but allowed Mr Beavis to appeal to the Supreme Court. In the Supreme Court a panel of judges considered the case and decided 6 to 1 in ParkingEye’s favour.

Court decisions

At every stage of the process, Mr Beavis submitted two arguments in defence of his position.

These were:

1. That the charge was unenforceable at common law as it was a penalty; and
2. That the charge was unfair and therefore unenforceable by virtue of the Unfair Terms in Consumer Contracts Regulations 1999.

We’ll consider each defence in turn.

Penalty charges

Traditionally, the law on penalty clauses has distinguished between clauses that are a ‘genuine pre-estimate of loss’ (which are enforceable) and those which are penalty clauses, i.e. that constitute a punishment for breach (which are not enforceable).

The Supreme Court considered two questions in relation to the rule outlined above. The first was when does the rule come into play? It answered this by explaining that the rule only applies to the sanction imposed for a breach, not to the original terms of the contract itself. Therefore, the rule only applies to so-called secondary obligations – where a sanction is imposed for a breach.

The second question was what makes a secondary obligation penal, and therefore unenforceable? The Court cited judgments from over a hundred years ago that still apply today. These refer to the ‘unconscionable’ and ‘extravagant’ penalties which will not be enforced. The Court also concluded that just because a contractual provision is not a genuine pre-estimate of loss does not necessarily mean that it is penal.

Therefore, the test as to whether a so-called penalty clause is enforceable takes into account any commercial justifications for the clause, as well as broader societal and economic reasons. The Court concluded that the true test is whether the ‘penalty clause’:

“is a secondary obligation which imposes a detriment on the contract breaker out of all proportion to any legitimate interests of the innocent party in the enforcement of the primary obligation”.

In other words, the ‘penalty clause’ will be allowed, and enforceable, if the amount claimed is proportionate to the legitimate interests of the party enforcing it, i.e. Parkingeye.

The Court considered that ParkingEye’s legitimate interest was managing the car park in the interests of the owner of the retail park and the public as a whole. it was in the interest of the landowner for ParkingEye to manage the car park efficiently and to deter long-term parking and overstayers. It was therefore acceptable for ParkingEye to seek to influence the behaviour of motorists beyond that which was satisfied by the mere right to recover damages for breach of contract. Even though it could be said that the charge of £85 had a deterrent effect, the amount was set at a proportionate level which reflected the ParkingEye’s costs in managing the car parking scheme.

Unfair terms

The Unfair Terms in Consumer Contracts Regulations cover contractual terms that have been drafted in advance where the consumer has not had a chance to influence those terms. Regulation 5 states that a term in a contract shall be regarded as unfair if, contrary to the requirements of good faith, it “causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer.”

The Regulations state that if a term of a consumer contract is unfair then it cannot be enforced. An example of a potentially unfair provision would be one where the consumer has to pay a disproportionately high sum in compensation.

However, the Supreme Court found that Regulation 5 was not engaged because there was the requirement of good faith was not breached. The Court stated:

“ParkingEye had an interest in inducing him [Mr Beavis] to observe the two-hour limit in order to enable customers of the retail outlets and other members of the public to use the available parking space…charging overstayers £85 underpinned a business model which enabled members of the public to park free of charge for two hours. This was fundamental to the contractual relationship created by Mr Beavis’s acceptance of the terms of the notice, whose whole object was the efficient management of the car park. ..There is no reason to regard the amount of the charge as any higher than was necessary to achieve that objective.”

In the Court’s view, Mr Beavis, and motorists generally, were under no pressure to accept Parkingeye’s terms. In addition, many motorists did accept the terms and use the car park. The Court considered that a hypothetical ‘reasonable’ motorist would agree to objectively reasonable terms, and that the opportunity to park for free, and pay £85 for overstaying, were objectively reasonable terms.

The Beavis decision & the law on parking penalties

Prior to this decision, some motorists had succeeded in having their parking tickets overturned on the basis that the charge was a secondary obligation that was unenforceable because it was not a genuine pre-estimate of loss.

This is no longer possible since Beavis. The Supreme Court’s new test as to whether a penalty clause is enforceable takes into account commercial justifications. Accordingly, for these legitimate commercial reasons, some deterrence is permitted.

The Court was influenced in its decision by the Protection of Freedoms Act 2012 by which Parliament allowed parking companies, in regulated circumstances, to access the DVLA database in order to obtain the details of a vehicle’s registered keeper. This in turn enables the companies to impose their parking charges.

The number of requests made by parking companies to the DVLA has increased exponentially in recent years, perhaps as many companies saw the result of the Beavis case as a green light to proceed with what is proving for ParkingEye to be a successful business model.

Motorists have continued to express their discontent over aggressive debt collection tactics by parking companies to the extent that a government consultation on the contents of a new Code of Practice for private parking companies has just ended. However, the Code of Practice, when it is published, is principally designed to prevent unregulated ‘cowboy’ companies from operating in the sector. It is not anticipated that the imposition of penalties themselves or the amounts of those penalties will be reviewed.

in Beavis, the Court held that the sum of £85 was not ‘extravagant’ or ‘unconscionable’ when compared with similar charges in the rest of the UK and was not out of all proportion to ParkingEye’s legitimate interests. The Court did not give an example of a sum of money that would, in such a case, count as disproportionate.

Therefore, this is not necessarily the end of the story. Some motorists’ groups consider that £85 is not the norm the Supreme Court considers it to be. Therefore it is possible that a future case will clarify an upper limit for parking charges and/or differentiate geographically between areas of the UK and different types of car park.

Motorists should also take heart from a decision of the Wrexham County Court in 2014 in which the Defendant driver, Mr Cargius, was not only successful in overturning the parking charge, but was also awarded £165 in loss of earnings for attending the two day hearing. Although the Beavis case had not yet reached the Supreme Court, the decision of the East Anglia county court, in which the judge had found for ParkingEye on the basis of legitimate commercial justification, was available.

Crucially, the facts in the Cargius case were different to that in Beavis. Whereas Mr Beavis enjoyed free parking for two hours, Mr Cargius had actually paid to park in the car park and simply overstayed. The judge stated that in this case, where payment was made, ParkingEye’s charge of £100 was disproportionate to its loss. Instead, according to the Judge, the amount claimed by ParkingEye far exceeded its actual loss and it would and should have been satisfied if Mr Cargius had paid the further £2.00 he owed for the hours in question.

This case illustrates the flexibility within the legal system to come to different judgments based on a different set of facts. Therefore, Beavis did not rule out successful legal challenges by motorists, but it closed one avenue of legal argument and gave unequivocal backing to the enforceability of parking tickets generally.

In relation to the Unfair Terms Regulations, there remains a question mark over individual consumer’s freedom to contract. Motorists who wish to visit the main shopping centre in their town, or visit a family member in hospital, do not necessarily have the freedom to park elsewhere. To a certain extent, they are a captive audience and cannot simply turn away and choose to park elsewhere. It is yet to be seen whether this argument will win out in a future dispute.

Legal disclaimer

The matters contained in this article are intended to be for general information purposes only. This article does not constitute legal advice, nor is it a complete or authoritative statement of the law, and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its accuracy and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should be sought.

Parking Eye vs Beavis: Law on Parking Penalties 2
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