The Court of Appeal appears to have put the final nail in the argument over "illegal" parking fines and declared them not to be so.Although the decision is somewhat complex with a long analysis of the role of penalties in contract law the decision is relatively easy precis. The Court accepted the decision of Judge Moloney QC (Designated Civil Judge for East Anglia) that the charges were enforceable since they did not offend the conscience of the court.
Giving the judgement of the Appeal Court Lord Justice Moore-Bick reviewed previous decisions on penalties in contract, specifically those designed to deter non compliance with the contract. The appellant had argued that his parking charge was unlawful because it was, in reality, a penalty clause that sought to deter and was unenforceable in law since it bared no relation to any loss under the contract.
The court dealt with this issue by reviewing previous court authorities and accepted Parking Eye's argument that only penalties that are extravagant and unconscionable are unenforceable. The court agreed that the penalty in this case was not manifestly excessive and so not extravagant and / or unconscionable.
It is interesting that arguments about the contractual relationship between the parties (a common argument discussed in motoring forums) was dealt with only briefly. Lord Justice Moore-Bick stated at paragraph 23
It was common ground before us that a motorist making use of the car park enters into a contract with ParkingEye under which he agrees to leave the car park within a period of two hours. Failure to do so constitutes a breach of contract in respect of which he agrees to a parking charge of £85. For the purposes of the present appeal I am content to assume that that is so,Thus far this is the argument made in my previous blog regarding the Sommerfield Stores decision, that the contractual penalty was in fact agreed at the outset of the contract. The judge continues
but it seems to me that the relationship between the motorist and ParkingEye might be better analysed in terms of a licence to use the car park, subject to certain conditions, coupled with an agreement to pay a parking charge in the stated amount if the terms of the licence are not adhered to. On that basis it could be argued that the parking charge was no more than a conditional payment which the motorist could choose whether to incur or not and that the authorities on penalties for breach of contract were of no relevance.
Although ultimately the distinction was not important to decide the case it is refreshing that the argument as regards this part of the enforceability of the contract has been dealt with. It now seems clear and settled law that there is a contract / license / private law relationship between car park operators and those who park in the location and use the services (providing it is clear of course that this is the case).
The appellants also argued that as ParkingEye suffered no loss (it did not charge to use the car park, it merely gained revenue from those who did not comply through penalty charges) it had nothing to recover in law (contract). The court dealt with this argument by taking into account the wider contract that ParkingEye entered into with the landowner. It held that ParkingEye had a clear commercial interest in providing a managed car park service to the landowner and it would be at risk of losing this business should the car park not be managed appropriately (which would then have led to a loss for the landowner as well).
The final argument for the appellants was that the penalty charge was an unfair contractual term, again this was rejected by the court who held that an unfair term would require evidence of a lack of good faith and a significant imbalance in the parties rights. There was no bad faith found since it was quite clear to the motorist in the case what the consequences were of overstay. The court then held that charges like this were available to local authorities in parking and so did not create an imbalance in any relationship. The court did state that £20 per hour penalty charge when looked at on its own seems excessive (where 2 hours have been provided free) however when all considerations are taken into account (the contract between ParkingEye and the landowner to provide a managed service, the need to make that service effective and to provide incentives (and disincentives) to ensure ParkingEye could provide its services) the charge was not excessive in this case (£85).
Perhaps my favourite argument in the case concerned the intervention of the Consumers Association who argued ParkingEye were not acting in good faith because their business model was to make profit from parking charges. Lord Justice Moore-Bick rejected this argument and quite rightly intimated that the fact that ParkingEye were good at catching those who did not comply with requirements did not mean they were acting in bad faith. They were seen to be providing a service, not just for the landowner, but also for drivers and the local area by providing free parking.
The case then is welcome for clarifying the position of private parking tickets. The question that is now left for motorists and parking operators is what constitutes a manifestly excessive amount so as to make the penalty unconscionable?
This is a difficult question and one that is, as the court would no doubt rule, a question of fact. What is an excessive amount in a small shopping centre in a quite town is going to be different from what is regarded as excessive in central London. Thus each case is fact sensitive, although the court does provide some interesting guidance. It placed reliance on the amounts charged by local authorities as guidance as to what is excessive (para's 26 and 34) thus this can guide private operators as to what may be permissible. It also suggests at para 30 that the charge can take into account the cost of collection in setting the fee
Moreover, in my view these submissions fail to pay sufficient regard to the practicalities of providing a facility of this kind. There are obvious benefits to both consumers and retail businesses in having free or cheap car parking available close to the shops for limited periods. That can be achieved only if there is some mechanism for ensuring that in most cases those who make use of the facilities do not abuse them by overstaying. That would not be achieved by a scale of charges graduated by reference to the length of the overstay unless they were sufficient to act as a deterrent. Moreover, the amount of the charge, however, calculated, would have to be large enough to justify collection.The private parking charge is thus here to stay, it is not illegal unless the charge in question is manifestly excessive and thus unconscionable for the courts to enforce.
Should we be happy with this decision? Certainly, and understandably Mr Beavis isn't but as the court makes clear we do benefit from controlled parking (a benefit we take for granted regularly and only really appreciate when we can't find a parking space). The linking of local authority fees and private fees in this case supports calls that have been made for regulation of the private parking sector standards. Local authority enforcement of parking is heavily regulated and if private parking fees are held justifiable partly on the basis of a comparative relationship with public parking enforcement charges then arguments for some form of regulation seem quite strong. Indeed I believe that responsible operators should welcome some light touch regulation to drive up standards and drive out the less reputable operators.
Orgainsational research has shown that consumers evaluate the trustworthiness and legitimacy of organisations based on the actions of organisations within that sector, not just the actions of the particular company. Put simply bad behaviour by one firm is seen as representative of the business sector as a whole, (as an example the ridiculous use of CCTV enforcement by some local authorities has resulted in a decision to stop all local authorities using CCTV unless in specified circumstances (even where the authority was being reasonable and meeting a pressing social need e.g. zig zag lines near pedestrian crossings). Without some form of regulatory standards the sector is at risk of losing legitimacy (which admittedly (rightly or wrongly) seems already at a very low level).
Thus this case may have resolved the legal argument about the enforceability of these charges and should be welcomed in that regard, the problem of driving up standards and ensuring a fair service are questions that need addressing and constant attention from operators in order to provide an effective, efficient and fair service to customers and consumers.
