"Not genuine pre-estimate of loss" is still a strong argument

Reading the PE vs Beavis judgement, I think it does not apply to pay & display car parks, especially when the operator also owns the car park.

If so then the argument that the charge the operator demands is illegal because it is not a genuine pre-estimate of loss is still a strong one for these car parks?

Is that correct?

Below is a relevant passage from the PE vs Beavis judgement. In it the judge repeatedly stresses the difference between the PE vs Beavis case and ordinary financial and commercial contracts, and it seems to me that the contracts that apply in pay & display car parks are ordinary financial or commercial ones.

If anything I think the PE vs Beavis case goes against the PCNs by operators of pay and display car parks because it shows that £85 cannot be a genuine pre-estimate of loss.

Is that correct, or have I missed something?

All the previous cases shown to us have concerned contracts of a financial or at least an economic nature, where the transaction between the contracting parties can be assessed in monetary terms, as can the effects of a breach of the contract by one party or the other. Sometimes such measurement is difficult because of inherent uncertainties, and in those an agreed liquidated damages provision may be upheld for those reasons. But, however difficult it may be to measure, it is clear that there are economic and commercial effects on the parties.
45. The contract in the present case is entirely different. There is no economic transaction between the car park operator and the driver who uses the car park, if he or she stays no longer than two hours; there is no more than (for that time) a gratuitous licence to use the land. The operator affords the driver a free facility. That facility is, of course, of economic value to the driver, as well as of convenience, in assisting the driver to visit the shops in the shopping centre which the car park serves. It is thus useful to
the driver, being close to the shops, and free. It is also useful to the shopkeepers, in encouraging visitors, and in particular in encouraging a turnover of visitors because of the two hour limit. A car owner cannot simply come to the car park and park there all day. To do that would be to clog up the facility and to prevent those arriving later from using the park for its intended purpose.
46. The terms of use of the car park need, therefore, to provide a disincentive to drivers which will make them tend to comply with the two hour limit. That is afforded by the parking charge of £85. It would not be afforded by a system of imposing a rate per hour according to the time overstayed, unless that rate were also substantial, and well above what might be regarded as a market rate for the elapsed time, even if the market rate were in some way adjusted to take account of the benefit to the driver of the first two hours being free.
47. It seems to me that the principles underlying the doctrine of penalty ought not to strike down a provision of this kind, in relation to a contract such as we are concerned with, merely on the basis that the contractual provision is a disincentive, or deterrent, against overstaying. When the court is considering an ordinary financial or commercial contract, then it is understandable that the law, which lays down its own rules as to the compensation due from a contract breaker to the innocent party, should prohibit terms which require the payment of compensation going far beyond that which the law allows in the absence of any contract provision governing this outcome. The classic and simple case is that referred to by Tindal CJ in Kemble v Farren (1829) 6 Bing. 141 at 148:
―But that a very large sum should become immediately payable, in consequence of the non-payment of a very small sum, and that the former should not be considered a penalty, appears to be a contradiction in terms, the case being precisely that in which courts of equity have always relieved, and against which courts of law have, in modern times, endeavoured to relieve, by directing juries to assess the real damages sustained by the breach of the agreement.‖
48. Lord Dunedin referred to this in his proposition 4(b) in Dunlop v New Garage, at [1915] AC 79, at 87.
In a case such as the present, however, for the law to prohibit a provision such as the overstaying charge, on the basis that it bears no relationship to the loss (if any) suffered by the car park operator would fail to take account of the nature of the contract, with its gratuitous but valuable benefit of two hours’ free parking, and of the entirely legitimate reason for limiting that facility to a two hour period.
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Replies

  • I've not read the full judgment but based on what you have set out, I would agree with your assessment that the CoA judgment only applies to the 2 hour free parking model and that GPEOL still applies in pay and display type car parks.
  • Shell2015Shell2015 Forumite
    48 Posts
    I had a read over it tonight and it certainly seems like they focus on free car parks. However I am not certain if it fully excludes pay and display.


    Perhaps one of the regulars with more legal experience would know better such as bargepole since he was involved in the case.
  • bargepolebargepole Forumite
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    Shell2015 wrote: »
    I had a read over it tonight and it certainly seems like they focus on free car parks. However I am not certain if it fully excludes pay and display.


    Perhaps one of the regulars with more legal experience would know better such as bargepole since he was involved in the case.
    The Judgment states, at para. 45, that "There is no economic transaction between the car park operator and the driver who uses the car park, if he or she stays no longer than two hours ..."


    So in a free car park, driver arrives and leaves within 2 hours, no money changes hands.


    In a P&D car park, driver arrives, pays for 2 hours parking, and leaves within 2 hours - an economic transaction has taken place.


    The argument would be that because there is a transaction in the second scenario, any breach of the contract, such as an underpayment, would only create a liability to pay the underpaid hourly rate, and the £100 penalty would be subject to the usual test of genuine pre estimate of loss, therefore Beavis doesn't apply.


    We don't know how POPLA are going to rule on this point until we get some post-Beavis appeals back.


    In Court hearings, I suspect some Judges may accept that argument, others will simply say 'private parking - the Beavis case means I rule for Claimant', and all over in five minutes. As usual, a lottery.

    I have been providing assistance, including Lay Representation at Court hearings (current score: won 55, lost 14), to defendants in parking cases for over 5 years. I have an LLB (Hons) degree, and have a Graduate Diploma in Civil Litigation from CILEx. However, any advice given on these forums by me is NOT formal legal advice, and I accept no liability for its accuracy.
  • The_DeepThe_Deep Forumite
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    I have not read the judgement, but I do not see how a PPC or a landowner suffers any loss when someone parks in their own space contrary to the wishes of the PPC.

    Also, I cannot see the Commercial justification where someone overstays by a few minutes in a P&D, parks in a hospital fails to show their BB, parks in a hotel/gym car park, or transposes their registration number.

    I think that GPOL is still very mush alive.
    You never know how far you can go until you go too far.
  • ManxRedManxRed Forumite
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    Plus, all these PPCs have been bleating on for ages that their charges are based on a Genuine Pre-Estimate of Loss. They produce reams of garbage in support of POPLA appeals trying to prove that little Johnny Stamp-Licker's NI contributions are all a big Genuine Pre-Estimate of Loss.

    Now, following Beavis, all of a sudden, these charges aren't a genuine pre-estimate of loss at all.

    So basically, they all admit they lied through their teeth for the last umpty ump years.

    Reputable industry? You decide.
    Je Suis Cecil.
  • misterbarlowmisterbarlow Forumite
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    I've used GPEOL as a massive section of my ongoing popla appeal (it covers 2 of the 6 pages), as the land in question wasn't even a paid car park but just a private access road, so my argument is how can they even claim any loss in the first place if no charge is ever even made to park there by them to start with!!
    You could park there all week and not incur them a loss as they don't charge anyway, so how can they claim a loss from me!!
  • Shell2015Shell2015 Forumite
    48 Posts
    Firstly thank you bargepole for responding, that was what was going through my head as well.

    Obviously I was wishing it would be more cut an dry on the court side of things, however starting to get used to the fact it never is.

    In our case (I fully expect an IAS rejection within a few day now), I am hoping if they do choose court we can firmly argue it was pay and display so paragraph 47 applies.

    47. It seems to me that the principles underlying the doctrine of penalty ought not to strike down a provision of this kind, in relation to a contract such as we are concerned with, merely on the basis that the contractual provision is a disincentive, or deterrent, against overstaying. When the court is considering an ordinary financial or commercial contract, then it is understandable that the law, which lays down its own rules as to the compensation due from a contract breaker to the innocent party, should prohibit terms which require the payment of compensation going far beyond that which the law allows in the absence of any contract provision governing this outcome. The classic and simple case is that referred to by Tindal CJ in Kemble v Farren (1829) 6 Bing. 141 at 148:
    ―But that a very large sum should become immediately payable, in consequence of the non-payment of a very small sum, and that the former should not be considered a penalty, appears to be a contradiction in terms, the case being precisely that in which courts of equity have always relieved, and against which courts of law have, in modern times, endeavoured to relieve, by directing juries to assess the real damages sustained by the breach of the agreement.‖


    The PPC in our situation failed to advise any time frame for parking, at the site 30 minutes are free then there is a scaled system up to £3 for 24 hours. So hopefully we can argue the maximum loss was £3 and that a charge of £100 is clearly "a very large sum becoming immediatly payable".

    I don't see why GEPOL would not still apply in these situations, regardless of Beavis going to the SC or not.
  • edited 2 May 2015 at 10:34AM
    TDATDA Forumite
    268 Posts
    edited 2 May 2015 at 10:34AM
    bargepole wrote: »
    The Judgment states, at para. 45, that "There is no economic transaction between the car park operator and the driver who uses the car park, if he or she stays no longer than two hours ..."


    So in a free car park, driver arrives and leaves within 2 hours, no money changes hands.


    In a P&D car park, driver arrives, pays for 2 hours parking, and leaves within 2 hours - an economic transaction has taken place.


    The argument would be that because there is a transaction in the second scenario, any breach of the contract, such as an underpayment, would only create a liability to pay the underpaid hourly rate, and the £100 penalty would be subject to the usual test of genuine pre estimate of loss, therefore Beavis doesn't apply.


    We don't know how POPLA are going to rule on this point until we get some post-Beavis appeals back.


    In Court hearings, I suspect some Judges may accept that argument, others will simply say 'private parking - the Beavis case means I rule for Claimant', and all over in five minutes. As usual, a lottery.

    My reading of the judgment is that the courts have framed the test of a penalty as whether it is extravagant and unconscionable and basically said that in the context of parking it's not. Whether the charge is a genuine pre-estimate of loss is indicative (more so in the usual commercial context) but it is not decisive. It is one factor to be considered among others such as, in this case, public policy considerations.

    I'd accept that there may be an argument that it doesn't apply to P&D car parks, but if £85 is not extravagant and unconscionable even where the courts have accepted there was no direct loss whatsoever, how can anyone hope to successfully argue that it is extravagant and unconscionable where there is a direct loss. Similar public policy considerations apply as for any other contravention of parking regulations.

    Crucially, non-payment of £3 is precisely an example of a figure that, where recovery to be limited to that loss alone, which would not be financially worth pursuing in the courts. This reflects the judges view that, in the context, the amount charged would need to be a figure worth pursuing.

    To be honest, it makes sense. If all you can claim for parking from those who don't buy a ticket is the amount they should have paid no one would ever buy a pay & display ticket ever again. Why bother? Odds are you'll get away with it (and thus have free parking) and if you don't, all you'd have to pay is what was due in the first place.
  • The_DeepThe_Deep Forumite
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    how can they even claim any loss in the first place if no charge is ever even made to park there by them to start with!!

    They are not claiming for a loss, GPEOL has gone out of the window, They are claiming for a commercially justified penalty for being there when you should not be, (trespass)?
    You never know how far you can go until you go too far.
  • TDATDA Forumite
    268 Posts
    The_Deep wrote: »
    how can they even claim any loss in the first place if no charge is ever even made to park there by them to start with!!

    They are not claiming for a loss, GPEOL has gone out of the window, They are claiming for a commercially justified penalty for being there when you should not be, (trespass)?

    Not quite.

    The judgment sidestepped the issue of commercial justification. It stated that the proper test for a penalty is whether it is extravagant and unconscionable, and found that in the context it was not. In other words they are stating that such charges are not penalties.
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