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 in England is an interference with freedom of contract. It is a blatant interference. It is, to that extent, anomalous."
— Lord Neuberger and Lord Sumption
Subsequent Treatment
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.