Cavendish Square Holding BV (Appellant) v Talal El Makdessi (Respondent);
ParkingEye Limited (Respondent) v Beavis (Appellant)  UKSC 67
On appeal from  EWCA Civ 3852 Comm,  EWCA Civ 1539 and  EWCA Civ 402
JUSTICES: Lord Neuberger (President)
PARKINGEYE LTD v BEAVIS
On 15th April 2013, Mr Barry Beavis parked his car in a private car park adjacent to a retail park in the centre of Chelmsford. The landowner was British Airways Pension Trust Limited: ParkingEye was the car park manager. There were at least twenty highly visible signs around the car park indicating that parking was free, but limited to 2 hours. Anyone who overstayed would be subject to a parking charge of £85, reduced to £50, if paid within two weeks. Mr Beavis overstayed by almost one hour. He refused the pay the parking charge. ParkingEye brought proceedings against him in the small claims’ court. (In fact the claim was heard by the resident civil judge, Judge Moloney QC, because of the plethora of similar claims). Mr Beavis defended the action arguing, amongst other grounds, that the charge was a contractual penalty and therefore unenforceable, and was an unfair contract term within the meaning of the Unfair Terms in Consumer Contracts Regulations 1999. Judge Moloney, the Court of Appeal and the Supreme Court all found against Mr Beavis. All judges unanimously rejected the argument that the parking charge was a contractual penalty and all (except Lord Toulson) rejected the argument that it was an unfair term.
On its face, Mr Beavis has a good arguable case. First, ParkingEye admitted that the primary purpose of the charge was deterrence. Its case was that a properly managed car park should aim to achieve a sufficient turn-over of car-born customers to satisfy the demands of those using, or wishing to use, the retail centre. In order to achieve such a turn-over, it was decided that a period of 2 hours free car parking was reasonable. Were there to be no parking charges imposed for overrunning, such a turn-over might well not be achieved as a result of overstaying. In those circumstances, car parking would, or might, not be available for those genuinely wishing to use the retail facilities, to the detriment of the shoppers, the retailers and the landowner. Second, it was accepted by ParkingEye that any quantifiable damage suffered by it was minimal, and certainly did not amount to £85. Indeed, ParkingEye did not seek to justify the charge on the basis that it represented its estimated damages.
For over a century, a test said to derive from Dunlop Pneumatic Tyre Company v New Garage and Motor Company Ltd  AC 79 was universally applied in the English courts as well as those of most Common Law countries. If the term was a genuine pre-estimate of loss made by the parties at the time of entering into the contract, it was held not to be a penalty. Otherwise, it was imposed to deter breach and was therefore a penalty. On the basis of that dichotomy, the parking charge could be viewed as a penalty.
The Supreme Court held that the Dunlop dichotomy was not the appropriate test. It held that the appropriate test was to ask whether the contractual term was proportionate having regard to the legitimate interests that the innocent party was seeking to protect. Terms such as “extravagant” and “unconscionable” are also to be found in the speeches of the Supreme Court Justices, echoing judgments of some antiquity. In the Beavis case, the Court found that ParkingEye had a legitimate interest in ensuring a proper turnover of cars in order to achieve sufficient parking spaces for potential users of the retail park. The fact that ParkingEye’s operating profit was derived from the parking charges was a main plank of Mr Beavis’ argument, but the Supreme Court held that financing the proper management of the car park was another legitimate interest justifying the charge. The charge itself was neither excessive nor extravagant. A parking charge imposed for overstaying a free parking period was commonplace. Any reasonable motorist would expect to have to pay a sum, similar to that charged, in the event of his overstaying. There were very few car parks in urban areas which provided unlimited free parking. Moreover, that sum was similar to charges made by local authorities.
For much the same reasons, the Supreme Court held that the parking charge was not an unfair contract term.
Click here for PDF Judgment