Penalty clauses – parking charges in retail car parks

The Supreme Court considered this case at the same time as the Cavendish v Makdessi case.  Mr Beavis objected to being charged £85 for overstaying his visit to a car park by a few hours.  He argued this was such a large sum that it could only be intended to act as a deterrent to prevent people from using retail car parks for convenience.  Parking Eye essentially admitted that this was the case but argued that this was legitimate.  The Supreme Court applied the principles articulated simultaneously in respect of Makdessi to find

(a) the owners of retail car parks have a legitimate interest in deterring motorists from overstaying their welcome and clogging up the facility so that customers find it more difficult to visit the retail outlet; and

(b) further it is neither extravagant or unconscionable to raise a charge of £85 for that deterrent purpose.

Comment

This case shows the flexibility of the new regime which, in the short term at least, is likely to encourage those drafting contracts to use liquidated damages clauses on a wider scale, and to increase the size of the "penalty" for default.

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