The Supreme Court’s recent decision in ParkingEye Limited v Beavis will bring some clarity to the often controversial issue of hospital car parking charges.
The court found that a parking charge will not be a penalty (and therefore unenforceable) nor unfair under the Unfair Terms in Consumer Contracts Regulations 1999 as long as the charge serves a legitimate business interest and is “not extravagant, exorbitant or unconscionable”. This decision follows the recently updated Department of Health guidance on NHS patient, visitor and staff car parking principles and a Private Member’s Bill, Hospital Parking Charges (Exemption for Carers) to make provision for exempting carers from hospital car parking charges.
Mr Beavis argued the purpose of the charge was a deterrent, it did not reflect actual loss and therefore amounted to a penalty. The point here is that if a clause in a commercial contract is found to be a penalty it is unlikely to be enforceable.
The Supreme Court considered previous authorities and decided that the true test in deciding whether a clause amounts to a penalty is whether:
1. a legitimate business interest had been served and protected by the clause; and if so
2. the provision made for that interest was not extravagant, exorbitant or unconscionable.
The court found that a parking charge will not be a penalty (and therefore unenforceable) nor unfair under the Unfair Terms in Consumer Contracts Regulations 1999 as long as the charge serves a legitimate business interest and is “not extravagant, exorbitant or unconscionable”. This decision follows the recently updated Department of Health guidance on NHS patient, visitor and staff car parking principles and a Private Member’s Bill, Hospital Parking Charges (Exemption for Carers) to make provision for exempting carers from hospital car parking charges.
Case summary
Mr Beavis parked in a private car park owned by ParkingEye which allowed for two hours free car parking. Signs erected inside the car park stipulated that a charge of £85 would be payable if the two hour “free stay” was exceeded. Despite the warnings Mr Beavis overstayed for nearly an hour and was charged £85.Mr Beavis argued the purpose of the charge was a deterrent, it did not reflect actual loss and therefore amounted to a penalty. The point here is that if a clause in a commercial contract is found to be a penalty it is unlikely to be enforceable.
The Supreme Court considered previous authorities and decided that the true test in deciding whether a clause amounts to a penalty is whether:
1. a legitimate business interest had been served and protected by the clause; and if so
2. the provision made for that interest was not extravagant, exorbitant or unconscionable.