ParkingEye Ltd v Beavis

[2015] UKSC 67

Independent editorial summary — not the official judgment. Read the full judgment via the source link.

This page mainly applies to England and Wales. Scotland and Northern Ireland may have different rules — check the jurisdiction before relying on this information.

Ratio Decidendi

A parking charge of £85 for overstaying a two-hour free parking limit was not an unenforceable penalty. The charge was not extravagant or unconscionable, served a legitimate interest in managing the car park, and was prominently displayed.

Facts

Mr Beavis parked in a retail car park managed by ParkingEye. Signs stated parking was free for two hours and that a charge of £85 would be imposed for overstaying. Beavis stayed for nearly three hours and was issued a charge. He argued the charge was an unenforceable penalty clause.

Judgment Summary

The Supreme Court (4-1) held the charge was enforceable. Lords Neuberger and Sumption reformulated the penalty doctrine: a clause is penal only if it imposes a detriment out of all proportion to any legitimate interest of the innocent party. ParkingEye had a legitimate interest in efficient turnover of parking spaces. The £85 charge was not extravagant. Lord Toulson dissented.

Key Quotes

"The penalty rule is an interference with freedom of contract. It undermines the certainty which parties are entitled to expect of the law."
— Lord Neuberger and Lord Sumption at [33](verbatim, verified against the judgment)

Subsequent Treatment

Good law

Reformulated the test for penalty clauses alongside Cavendish Square Holding v Makdessi. The legitimate interest test replaced the Dunlop v New Garage distinction between penalties and liquidated damages.