Drivers received bad news this week in a Supreme Court judgment on a point of law not addressed by a high-level court for a century.
In the joined cases of Cavendish Square Holding BV v Talal El Makdessi and ParkingEye Ltd v Beavis, the Justices looked at the status of penalty clauses in commercial and consumer contracts.
Beavis concerned a motorist, Barry Beavis, who challenged an £85 charge for overstaying a two-hour parking limit in a retail park on private land in Chelmsford. Beavis claimed the charge was “unfair and disproportionate”.
Dismissing the appeal, however, Lord Neuberger and Lord Sumption said ParkingEye “could not charge a sum which would be out of all proportion to its interest or that of the landowner for whom it is providing the service. But there is no reason to suppose £85 is out of all proportion to its interests".
Derek Millard Smith, partner at JMW Solicitors, who acted for ParkingEye, says: “Had the Supreme Court result been in Mr Beavis’ favour, it is quite conceivable that land owners would have charged for all parking in an effort to limit abuse.
“Rather than empowering parking firms to do as they please, the judgment adds clarity for an industry which has made great strides in recent years to eradicate instances in which drivers have been treated unfairly, further defining their relationship with the motorist.”
John de Waal QC of Hardwicke chambers, who acted for Barry Beavis, says: “Until [this judgment], charges which had been agreed in advance payable on breach of contract were disallowed as unlawful penalties unless they could be justified as a genuine pre-estimate of loss.
“[This] judgment sweeps away that rule and says that deterrent charges will be allowed if there is some commercial justification for them. The Supreme Court reviewed the law last considered at this level exactly 100 years ago in 1915.
“It has now set a new test which will impact the enforceability of such ‘secondary provisions’ in all commercial contracts as well as ‘take it or leave it’ consumer contracts such as that made by Mr Beavis with ParkingEye.”
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