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ParkingEye wins its case – but what will the judgment mean?

[30 May 2014] We've reported several times on the UK's private-parking scandal, where companies are chasing drivers for hundreds of millions of pounds in parking ‘charges’ that look like penalties. Penalties are not normally allowed in consumer contracts. In April, a judge heard a case on whether a private-parking firm could extract money from drivers who broke its rules. The firm has been raising as many as 1,000  county-court money claims a week. Here we look at the outcome of this hearing and the background to it.

ParkingEye won this case, the judge deciding that the parking charge was commercially justified. One of the defendants has lodged an appeal. If the appeal is rejected, the judgment could lead to other kinds of companies effectively fining their customers for breach of contract.

Judge Moloney gave his decision at Cambridge county court on 19 May. He said his judgment was persuasive rather than precedent-setting and allowed the two motorists hit by ParkingEye’s £85 charge to go to the court of appeal if they wished. One of them has agreed to do so. The defendants did not argue any lack of clarity in the signs at the car park in Chelmsford, which advertised two hours’ free parking and an overstay charge of £85 or £50 if paid within 14 days. Instead, they argued they should not have to pay because ParkingEye, as a mere agent for the landowner, British Airways Pension Fund, had no right to sue and that the £85 charge was a penalty not a genuine estimate of ParkingEye’s loss as in law it is expected to be.  

The judge held that ParkingEye did have a right to sue. He said the £85 charge was indeed a penalty but it was commercially justified because otherwise ParkingEye would not make any money from its contract with the landowner. However, no consumer-based case law was cited on this point. So the judgment, if upheld at appeal, could allow many other businesses to inflict penalties on consumers in ‘take-it-or-leave-it’ contracts – say for failing to cancel a hotel booking in time. [cont]

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