Punitive Private Car Park Fines Are Ruled Lawful

The Court of Appeal has ruled that parking fines or charges issued in private car parks which are punitive in nature are lawful. This article considers the background to the issue and the judgment of the Court of Appeal in ParkingEye Ltd v Beavis [2015] EWCA Civ 402.

Background

When an individual parks their vehicle in a private car park a contract between the driver of the vehicle and the owner or operator of the car park is formed. Typically, in exchange for paying a price, the driver can leave their vehicle in the car park for a period of time; the car park owner or operator agrees to allow the driver to park their vehicle if the driver agrees to pay the price. More often than not, the greater period of time the driver wishes to stay, the greater the price will be. However, parking will sometimes be free, but subject to a maximum stay: the car park owner or operator agrees that the driver may park for free if the driver agrees not to stay beyond the maximum period of time allowed.

When a driver does not pay the price, or stays beyond the time for which they have paid, or stays beyond the maximum free period of parking, they breach the contract between themselves and the car park owner or operator. A fine or charge is then normally issued to the driver by the car park owner or operator for that breach of contract. Signs in the car park will often specify the level of the fine or charge.

The law does not allow the parties to a contract to impose penalties upon one another for breaching the contract; penalties are unenforceable. The parties are only allowed to agree a sum to be paid by the party in breach of the contract which genuinely pre-estimates the loss the other party has suffered by reason of the breach (known as ‘liquidated damages’). It was formerly thought that any sum required to be paid in excess of the genuine loss would be unenforceable as a penalty. In the case of private car parking charges, this was thought to mean that a charge in excess of in the region of £50 would be regarded as a penalty, since the car park operator would not lose more than that through issuing the fine and through other drivers being unable to park.

So is a car parking charge or fine of £85 lawful? On the face of it, it seems significantly in excess of what a car park owner or operator could be expected to lose by a driver overstaying. That was the issue that arose in ParkingEye Ltd v Beavis [2015] EWCA Civ 402.

ParkingEye Ltd v Beavis

Mr Beavis parked in a car park at a retail park in Chelmsford owned by British Airways Pension Fund. The car park was managed for the Pension Fund by ParkingEye. The car park had numerous signs displaying a maximum stay of two hours free parking. Overstaying could result in a charge of £85. ParkingEye made no money from running the car park apart from parking charges. Mr Bevis overstayed the two hour period by 57 minutes and a charge of £85 was duly issued to Mr Beavis by ParkingEye. When Mr Beavis refused to pay ParkingEye started proceedings to recover the sum.

Mr Beavis contended that the sum was a penalty, and therefore unenforceable. He also contended that the charge was unfair and therefore unenforceable under the Unfair Terms in Consumer Contracts Regulations 1999. Following a trial at the County Court in Chelmsford, it was held that the charge was not a penalty and Mr Beavis could be required to pay it. Mr Beavis appealed the decision to the Court of Appeal.

In the Court of Appeal, Lord Justice Moore-Bick, giving the leading judgment, held as follows:

1. The law had always refused to enforce what are considered to be ‘unconscionable and extravagant’ bargains.

2. Earlier cases had said that the essence of a penalty (which is unconscionable and unenforceable) was a payment stipulated to deter breach of a contract. Meanwhile, a contractual term requiring payment of a pre-estimate of genuine loss resulting from a breach of contract (liquidated damages) was legitimate, since this could be recovered through the courts in the ordinary way if necessary.

3. Earlier cases had said that a sum payable for breach of a contract would be a penalty if the sum was extravagant and unconscionable in amount in comparison with the greatest loss that could conceivably result from the breach of contract. Thus if the sum required to be paid was clearly a deterrent, it was likely to be regarded as extravagant and therefore a penalty. This was the traditional view.

4. However, more recent cases had shown that a simple separation between either liquidated damages or a penalty was not sufficient. In some cases the sum required to be paid for breach could not possibly be regarded as liquidated damages, but had nevertheless been enforceable because it was not extravagant or unconscionable and was justifiable for other reasons, normally commercial reasons. That was to say, a sum which exceeds what could be regarded as genuine damages may not be regarded as penal if it could be commercially justified and its dominant purpose was not to deter breach.

5. If a commercial justification could be a reason to allow recovery of more than actual loss, it was difficult to see why others reasons could not justify such recovery also. The underlying principle was that the court will not enforce a bargain for an extravagant and unconscionable amount.

6. ParkingEye made no money from running the car park apart from parking charges. So it made no loss from Mr Beavis' overstay. But there could be an indirect loss to ParkingEye. It would lose the contract with the car park owner if it failed to make sure that there was free parking available for a limited period for customers of the retail park. That would then be a loss to ParkingEye and would damage its commercial reputation. So ParkingEye did have a commercial interest in people not overstaying the 2 hours free parking.

7. It was clear that the charge in this case was a deterrent. But that did not necessarily lead to the conclusion that the charge was extravagant and unconscionable. The traditional approach of comparing the amount required to be paid compared with the maximum possible loss was inappropriate. It was necessary to return to first principles, namely, that the court will not enforce an agreement for payment (in the event of breach of the contract) of an amount which is extravagant and unenforceable. While an amount grossly exceeding the possible loss would normally be a strong indicator or extravagance and unconscionableness, other factors may rob the bargain of that character. Those factors may be commercial or otherwise. In the present case, the charges were justified for commercial and social reasons. There were obvious benefits to consumers and retailers in having free parking for limited periods; but that could only be achieved if there was a mechanism to prevent abuse of free parking. The charge to prevent this would have to be big enough to be deterrent in nature, and economically worth collecting through the courts. Further, there was support from the Protection of Freedoms Act 2012; its terms showed that Parliament considered it is in the public interest that parking charges should be recoverable, provided that they are clearly brought to the attention of motorists. The charges were not grossly unreasonable. Therefore they were not to be regarded as a penalty.

8. As to the argument under the Unfair Terms in Consumer Contract Regulations that the charge was unfair, the issues were whether ParkingEye acted contrary to the requirement of good faith in imposing an £85 fee, and, if so, whether it caused a significant imbalance in the parties’ rights and obligations to the detriment of Mr Beavis. It could not be said that ParkingEye acted contrary to the requirement of good faith because it had clearly displayed the terms on signs. It also could not be said that the charge created a significant imbalance between ParkingEye and Mr Beavis because public authorities successfully managed their carparks with fines and there was no sign that such an approach created an imbalance in the parties' rights and obligations. Therefore the term was not unfair under the regulations.

9. Accordingly, the charge was not a penalty or unfair, and Mr Beavis could be required to pay it. Lord Justice Patten and Sir Timothy Lloyd agreed.

Comment

The decision is somewhat surprising. By departing from the conventional approach to penalties the Court of Appeal has made legitimate charges that were previously thought of as unenforceable. It will be an unwelcome decision for motorists, who will now be liable to pay parking charges that are not ‘unconscionable and extravagant’ in amount. However, that is not the end of the matter. Mr Beavis has been granted permission to appeal the decision to the Supreme Court, so the Court of Appeal’s decision may yet be overturned.

The judgment can be read here.

What are your thoughts on the judgement?

Supreme Court Rules Prince Charles Letters Must be Released

Introduction

It has been widely reported in the media that the Supreme Court has ruled that letters sent by Prince Charles to various government departments expressing ‘particularly frank’ views must be made public.

The so-called ‘black spider memos’ – a reference to Prince Charles’ handwriting – expressed Princes Charles’ own deeply held views and beliefs on particular matters.

This article explores the background to the case, and the decision of the Supreme Court.

Background

The Freedom of Information Act 2000 (‘FOIA 2000’) enables members of the public to see documents held by many public bodies, subject to certain exemptions. The Environmental Information Regulations 2004 (‘EIR 2004’) enable members of the public to see documents containing ‘environmental information’, again subject to certain exemptions.

In April 2005, Rob Evans, a journalist working for the Guardian newspaper, requested release of the letters that passed between Prince Charles and various government departments. Those requests were made under both FOIA 2000 and EIR 2004. However, the government departments refused to release the letters on the ground that they considered the letters were exempt. Mr Evans complained to the Information Commissioner, who upheld the refusals. Mr Evans then appealed to the Information Tribunal, and the matter was transferred to the Upper Tribunal. After a full hearing the Upper Tribunal decided, in September 2012, that many of Prince Charles’ letters (referred to as ‘advocacy correspondence’) had to be released. The government departments did not appeal the decision.

However, in October 2012, the Attorney General, the Government’s senior law officer, issued a certificate under section 53(2) FOIA 2000 and regulation 18(6) EIR 2004 stating that he had, on ‘reasonable grounds’, concluded that the government departments had been entitled to refuse disclosure of the letters, and set out his reasoning. In essence, the Attorney general said the public interest in releasing the letters was outweighed by the public interest in not releasing the letters. In particular, there was a strong public interest that the letters should not be released in order to preserve the following three ‘constitutional conventions’ (informal, but well-respected customs):

1. the monarch should be able to consult, encourage and warn their government – the so-called ‘tripartite convention’;
2. the heir to the throne should be instructed in the business of the government in preparation for their reign – the so-called ‘education convention’; and
3. the monarch is expected to act in accordance with ministerial advice – the so-called ‘cardinal convention’.

In addition to preserving those conventions, the Attorney General also pointed to the private and confidential nature of the letters, and that the content of the letters might jeopardise Prince Charles’ political neutrality. The same reasons had effectively been given by the government departments at the outset and by the Information Commissioner when refusing to order the release of the letters.

If the certificate issued by the Attorney General was valid, its effect would be to override a decision of the Upper Tribunal, a judicial body with the same status as the High Court.

Evans started proceedings to ‘quash’ (or cancel) the certificate on the following grounds:

1. the reasons given by the Attorney General were not capable of constituting ‘reasonable grounds’; and/or
2. in so far as the advocacy correspondence was concerned with environmental issues, the certificate was incompatible with Council Directive 2003/4/EC (“the 2003 Directive”), a European Union (EU) piece of law which overrides English law under the European Communities Act 1972.

The Divisional Court dismissed his claim. However, the Court of Appeal allowed Evans’ appeal on both grounds. The Attorney General appealed to the Supreme Court. The issue before the Supreme Court was therefore whether the certificate was valid, and in particular:

1. whether the Attorney General was entitled to issue a certificate under section 53 FOIA 2000 that he had ‘on reasonable grounds’ formed the opinion that the government departments had been entitled to refuse to release the letters;
2. whether, in any event, regulation 18(6) EIR 2004 complied with the relevant provisions of EU law; and
3. if it did not, whether the certificate could stand even in relation to the non-environmental information.  

It is worth noting that the Supreme Court had not seen the advocacy correspondence and did not need to in order to determine the issues.

The Judgment of the Supreme Court

The case was heard by seven Justices of the Supreme Court. In summary, the Supreme Court dismissed the Attorney General’s appeal. By a majority of 5:2 the Court held that the Attorney General was not entitled to issue a certificate under section 53 FOIA 2000 in the manner that he did and therefore that the certificate was invalid.

By a majority of 6:1 the Court held that regulation 18(6) was incompatible with the 2003 Directive and must be treated as invalid, and therefore that the certificate would in any event have been invalid to the extent it related to environmental information.

The judgement, known as R (Evans) v Attorney General [2015] UKSC 21, can be read here.

Reasons for the Decision: FOIA 2000

In relation to the appeal concerning FOIA 2000, Lord Neuberger (with whom Lord Kerr and Lord Reed agreed) concluded that section 53 FOIA 2000 did not permit the Attorney General to override a decision of a judicial tribunal or court by issuing a certificate merely because he, a member of the Government, took a different view after considering the same facts and arguments. To allow that would be unique in the laws of the United Kingdom and would cut across two constitutional principles which are fundamental components of the rule of law, namely that a decision of a court is binding between the parties and cannot be set aside, and that decisions and actions of the Government are reviewable by the courts, and not vice versa (paragraph [52] of the judgment). Clear words had to be used if the Act was to have that effect, and section 53 was a very long way from being clear enough (paragraphs [58]-[59]).

Lord Mance (with whom Lady Hale agreed) reached the same conclusion as Lord Neuberger but for different reasons. He said that it would be open to the Attorney General to issue a certificate under section 53 if he disagreed with the decision of the Upper Tribunal. But, disagreement with findings of fact or rulings of law in a fully reasoned decision would require the clearest possible justification, while disagreement as to the weight to be attached to competing public interests would require properly explained and solid reasons [130-131]. In this case the Attorney General unjustifiably undertook his own redetermination of the relevant factual background, which he was not entitled to do. The Attorney General’s certificate did not engage with the closely reasoned analysis of the Upper Tribunal and proceeded on the basis of findings which differed radically from those made by the Upper Tribunal without real or adequate explanation. This could not be regarded as satisfying the test for issue of a certificate (paragraphs [142], [145]).

Lord Wilson and Lord Hughes each gave judgments disagreeing with the majority. They concluded that the Attorney General was entitled to issue the certificate under section 53 for the reasons he did.

Reasons for the Decision: Environmental Information Under the 2003 Directive

On the issue of environmental information, Lord Neuberger and Lord Mance (with whom Lady Hale, Lord Kerr, Lord Reed and Lord Hughes agreed) noted that article 6.1 of the 2003 Directive requires that, following a refusal by a public authority of a request for environmental information, the refusal must be reconsidered or reviewed administratively. They also noted that under article 6.2 the person seeking the information must have access, after the administrative review, to a review procedure before a court of law or similar body whose decisions may become final. Finally they noted that article 6.3 requires that the final decisions of the court should be binding on a public body holding environmental information (paragraph [100]). In light of these provisions, they held that it would be impermissible for the government to have another attempt at preventing the release of the letters, and therefore regulation 18(6) EIR 2004 was incompatible with article 6 of the 2003 Directive (paragraph [103]). However, that conclusion only applied to the environmental information (paragraph [111]).

Lord Wilson disagreed on this issue, holding that making a section 53 certificate in relation to environmental information whose release had been ordered by a court or judicial tribunal was not incompatible with the provisions of the 2003 Directive.

Conclusion

The Supreme Court’s decision means that the letters will now have to be released and made public. This will undoubtedly be a disappointment to Prince Charles, who values his privacy and wrote the letters on the understanding that they would remain private.

The Guardian’s decision to pursue the release of the letters is, perhaps, a curious one. It appears to have been premised on the belief that the letters will show Prince Charles to be a political figure, whose actions have to be scrutinised as part of democracy. However, basic constitutional theory dictates that a monarch, or future monarch, has no influence on the government. Indeed it is the monarch who must follow ministerial advice. The government makes policy and is accountable for it. A monarch, with their wealth of knowledge on state affairs, is entitled to consult, encourage and warn their government in the interests of the nation. But a monarch can have no influence on policy. So is there a need to see their communications to government, when the views contained within may show a political persuasion and compromise the public political neutrality which is so important for every monarch, who remains head of state whatever the political position of the government of the day?

What are your thoughts?