Parkingeye Ltd v Barry Beavis (Defendant Appellant) The Consumers' Association (Intervener)
| Jurisdiction | England & Wales |
| Judge | Lord Justice Moore-Bick,Lord Justice Patten,Sir Timothy Lloyd |
| Judgment Date | 23 April 2015 |
| Neutral Citation | [2015] EWCA Civ 402 |
| Docket Number | Case No: B2/2014/2010 |
| Court | Court of Appeal (Civil Division) |
| Date | 23 April 2015 |
[2015] EWCA Civ 402
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE COUNTY COURT AT CHELMSFORD
His Honour Judge Moloney Q.C.
Claim No. 3JD05152
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Moore-Bick
Vice-President of the Court of Appeal, Civil Division
Lord Justice Patten
and
Sir Timothy Lloyd
Case No: B2/2014/2010
Mr. Sa'ad Hossain Q.C. (instructed by Harcus Sinclair) for the appellant
Mr. Jonathan Kirk Q.C. and Mr. David Altaras (instructed by Cubism Law) for the respondent
Miss Julia Smith (instructed by The Consumers' Association) for the intervener (written submissions only)
Hearing date: 24 th February 2015
This is an appeal against the order of His Honour Judge Moloney Q.C. giving judgment in favour of the respondent, ParkingEye Ltd, against the appellant, Mr. Barry Beavis, on its claim to recover a charge of £85 for overstaying the permitted period of free parking in the car park at the Riverside Retail Park in Chelmsford.
The circumstances giving rise to the proceedings are set out succinctly in the judgment below. The judge heard two similar claims together, which explains why he referred to two defendants rather than one, but this appeal is concerned only with the case involving Mr. Beavis. The judge made the following findings of fact:
"2.2 The car park in question is located on a retail park owned by British Airways Pension Fund, which leases sites on the retail park to various well-known chains but retains overall control of the site. On 25 August 2011, the landowner entered into a contract with the Claimant in respect of car park management services.
2.3 At all material times since then, the Claimant has displayed about 20 signs at the entrance to the car park and at frequent intervals throughout it. The Defendants do not dispute that the signs are reasonably large, prominent and legible, so that any reasonable user of the car park, including themselves, would be aware of their existence and nature and would have a fair opportunity to read them if they wished.
2.4 The signs are worded as follows (the words I have underlined being especially large and prominent, and the words I have italicised being in small print but still legible if one wished to read them)
Parking Eye car park management
2 hour max stay
…
Failure to comply … will result in Parking Charge of £85
…
Parking Eye Ltd is solely engaged to provide a traffic space maximisation scheme. We are not responsible for the car park surface, other motor vehicles, damage or loss to or from motor vehicles or user's safety. The parking regulations for this car park apply 24 hours a day, all year round, irrespective of the site opening hours. Parking is at the absolute discretion of the site. By parking within the car park, motorists agree to comply with the car park regulations. Should a motorist fail to comply with the car park regulations, the motorist accepts that they are liable to pay a Parking Charge and that their name and address will be requested from the DVLA.
Parking charge Information: A reduction of the Parking Charge is available for a period, as detailed in the Parking Charge Notice. The reduced amount payable will not exceed £75, and the overall amount will not exceed £150 prior to any court action, after which additional costs will be incurred.
This car park is private property."
At 14:29 pm on 15 th April 2013 Mr. Beavis drove into the car park. He did not leave until 17:26 pm and therefore overstayed the two hour limit by nearly an hour. ParkingEye set in motion the procedure for recovering the charge, but Mr. Beavis ignored it and eventually it began proceedings in the county court to recover the sum alleged to be due. A claim of this size would normally have been dealt with by a district judge under the small claims procedure, but it was recognised that the two cases then before the court gave rise to some points of principle which were likely to affect many other similar claims and so directions were given for them to be heard by Judge Moloney Q.C., the Designated Civil Judge for East Anglia.
Before the judge the defendants raised a number of arguments, of which only two remain for consideration on the appeal, namely, (a) whether the charge is unenforceable at common law because it is a penalty; and (b) whether it is unfair and therefore unenforceable by virtue of the Unfair Terms in Consumer Contracts Regulations 1999 ("the Regulations").
The judge held that a motorist who parks his car in the car park does so on the terms displayed in the notice. As a result, he enters into a contract with ParkingEye to abide by the rules of the car park, which include an obligation to leave within two hours. He also agrees that if he overstays he will pay the parking charge (£85, reduced to £50 for payment within 14 days). The judge accepted that ParkingEye did not suffer any specific financial loss if a motorist overstayed, because, if the space in question had been vacated, it would have either have remained unoccupied or would have been occupied by another car free of charge. He therefore held that the parking charge had the characteristics of a penalty, in the sense in which that expression is conventionally used, but one that was commercially justifiable because it was neither improper in its purpose nor manifestly excessive in its amount. In reaching that conclusion he was influenced by the terms of section 56 and schedule 4 of the Protection of Freedoms Act 2012, which confer on operators of private car parks the right to recover parking charges from the registered keepers of vehicles. (For these purposes a "parking charge" is defined as a sum in the nature of a fee or charge payable under a contract or a sum in the nature of damages for tort.) For similar reasons he held that the undertaking to pay the charge was not an unfair term and was not rendered unenforceable by the Regulations.
The position at common law
Mr. Hossain Q.C. submitted that a contractual term by which a party undertakes to pay a sum of money on breach which exceeds the loss which the other can reasonably be expected to incur as a result of the breach is a penalty and unenforceable in law. Such a term is treated as nothing more than a deterrent designed to encourage the other to perform the contract. The key question, in his submission, therefore was whether the payment was intended to deter. If it was, it was a penalty and therefore unenforceable. In the present case the only purpose of the parking charge was to deter motorists from staying longer than two hours; it had no other function. Although it had been recognised in some recent cases that a stipulation for the payment on breach of a sum larger than could reasonably have been expected to be recovered in damages may be commercially justifiable and therefore not unenforceable as a penalty, such a payment can never be enforceable if its predominant purpose is to deter breach. He accepted that if he was right, the Regulations added little or nothing to his argument.
Mr. Kirk Q.C. accepted that the concept of deterrence has played a large part in the development of the law relating to penalties, but he submitted that the true principles on the basis of which the courts decline to enforce penalties are those of extravagance and unconscionability. He submitted that both the early cases and the modern cases can best be explained by reference to those principles. He submitted that in this case the charge was neither extravagant nor unconscionable and that there were commercial justifications for imposing a deterrent charge on those who failed to comply with the rules of the car park. If ParkingEye were unable to regulate use of the car park effectively, it would risk losing its contract with the landowner and although it was impossible to quantify in money terms the effect of any individual breach of the rules, the cumulative effect of many individual breaches would be significant in economic terms.
Both in the judgment below and in the argument before this court some reliance was placed on the terms of the contract between ParkingEye and British Airways Pension Fund ("the Pension Fund"). There was a lively debate before the judge about whether ParkingEye contracted with Mr. Beavis as a principal or as agent for the Pension Fund. The judge held that it contracted as principal and there is no appeal against that decision. One consequence is that, unlike the Pension Fund, which had a commercial interest in the regular turnover of vehicles using the car park and the consequent availability of parking spaces for its tenants' customers, ParkingEye had no direct interest in the turnover of cars other than the need to satisfy its own customer, the Pension Fund.
The contract between ParkingEye and the Pension Fund specified both the free stay time limit and the parking charge. However, the important features of the contract for present purposes are that ParkingEye agreed to pay the Pension Fund a fixed amount each week during the term of the agreement and was entitled to retain any parking charges that it might collect. (In fact there was evidence before the judge that ParkingEye was able to make a significant profit from its business as a whole, although that is likely to have resulted from the operation of a number of different sites, not necessarily on the same terms in each case.) That enabled Mr. Hossain to argue that ParkingEye made a profit only out of breaches of contract on...
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