The perils of parking
Although in ParkingEye the Supreme Court set tests for the recovery of parking penalty charges, subsequent lower-court decisions appear to have significantly widened the rights of parking operators
Consumer disputes are rarely argued in the lower courts, never mind the Supreme Court. This is understandable given the low value of most consumer disputes and the deterrent effect of the potential liability for costs on appeal. ParkingEye Ltd v Beavis  UKSC 67;  AC 1172, therefore, provided a rare opportunity to consider the law from a consumer perspective.
This article considers two recent cases in the lower courts, north and south of the border, which applied ParkingEye. It will be argued that ParkingEye has been extended by those courts to include all terms, including the “small print”, to the significant detriment of the consumer.
The first is Indigo Park Services (UK) Ltd v Dadswell, Booth and Round, Cardiff County Court, 14 July 2017; the second is Indigo Park Services (UK) Ltd v Watson 2017 GWD 40-610. Both involved parking charge notices issued to medical staff at NHS hospitals. Although the primary claim was for payment of the parking charge, the claimants also sought to use ParkingEye to enforce other, less prominent terms of the contract.
Indigo v Dadswell
Dadswell concerned a significant number of cases brought in the county court at Cardiff, relating to alleged parking contraventions at Cardiff’s University Hospital of Wales. The case proceeded to trial against three defendants, but the decision bound 72 other cases. The defendants were not legally represented but were assisted by lay representatives, one of whom was Barry Beavis, the defendant in ParkingEye.
The claim against Dadswell sought parking charges of £80 for four separate parking notices, plus contractual charges of £432. This appears to be the first case since ParkingEye where not just parking charges were sought, but also the charges levied by debt collectors and solicitors before court action was commenced.
Seven issues proceeded to trial: (1) the validity and enforceability of notices to the driver; (2) the validity and enforceability of notices to the registered keeper; (3) the enforceability of the right to recover parking charges by virtue of the agreement between the health board and the claimant; (4) the signage; (5) parking permits; (6) whether a contractual offer was made; (7) the applicability of and compliance with a code of practice.
Ultimately the judge found that the parking charge was enforceable, and the claimant was entitled to recover the enforcement costs as well. The latter appears to have been dealt with under the fourth issue, relating to signage. The judge referred to the defendants’ submissions as “confused” by challenging the prominence of the £20 parking charge (para 40). The defendants do not appear to have expressly challenged the prominence of the clause referring to enforcement costs.
Referring to ParkingEye, the judge stated that it “sets out no test for parking signage”, and it was the “signs, not the words” that must be “large, prominent and legible” (para 41). Although this deals with the parking charge, for which the text was undoubtedly prominent, the judgment does not refer to the enforcement charges, or any legal arguments against them. This contradicts the decision in ParkingEye, where Lords Neuberger and Sumption refer to the fact that the specific term (not the sign) was “prominently displayed in large letters at the entrance to the car park and at frequent intervals within it”, and “could not have been briefer, simpler or more prominently proclaimed” (paras 100, 101).
It could be argued that this omission is a breach of the court’s duty to consider the fairness of a term even if none of the parties have raised it: Consumer Rights Act 2015, s 71(2). Whether it was the correct decision, therefore, remains to be seen. Permission to appeal was sought on eight grounds, all of which were refused by the appeal court on 13 October 2017. It is unclear whether the grounds included a specific challenge to the additional enforcement costs, but reference to s 62 of the 2015 Act, the provision that replaced the Unfair Terms in Consumer Contracts Regulations 1999 referred to in ParkingEye, was made and rejected.
Indigo v Watson
Watson concerned similar claims to those pursued in Dadswell. The claimant sought to recover parking charges and associated pre-court action debt collection and enforcement costs.
Watson was heard on the same day as two other claims, essentially proceeding as a test case although, unlike in Cardiff, the decision did not formally bind the other cases, which had been paused pending the outcome. Both parties were represented at the evidential hearing by counsel. The respondent had been assisted by the Tayside In-court Advice Project, which arranged for Isla Davie, advocate, to represent him via the Faculty of Advocates’ Free Legal Services Unit.
The claimant sought parking charges of £40 together with enforcement costs of £96 for each breach. The respondent did not challenge the validity or enforceability of the charge itself. The main thrust of the arguments related to the additional enforcement costs, and this discussion will not consider the other matters raised.
The term on which the claimant sought to rely in relation to the additional enforcement costs stated: “Any subsequent enforcement action may incur additional costs. You agree to indemnify us in respect of any such reasonable costs and to make payment of them on demand”.
Dealing with the penalty rule, the claimant, relying on Lord Hodge’s judgment in ParkingEye, submitted that the sum sought was neither exorbitant nor unconscionable when considering the claimant’s legitimate interest in “controlling the use of the car park”, and there was “nothing exorbitant or unreasonable about a party agreeing to meet the reasonable costs of enforcement action” (judgment, para 47).
The respondent submitted that the charges amounted to an escalator clause, which increased incrementally, for an undisclosed amount, at the claimant’s discretion, as the breach continued. Accepting that the claimant had a legitimate interest to protect, the additional charges were exorbitant and unconscionable, also under reference to Lord Hodge in ParkingEye. It was submitted that although ample warning of the parking charge was given, this was not the case in relation to the additional enforcement costs, which were contained in a term “listed amongst a plethora of other conditions and... not drawn to the attention of the respondent”; it gave “no indication of the fixed costs”, which were known to the claimant and could, therefore, have been specified (paras 66-69).
In relation to the Consumer Rights Act 2015, the claimant submitted that the additional enforcement costs were “not disproportionately high” and therefore not unfair, asserting that they were neither exorbitant nor unconscionable. Such contracts “regularly carry provisions as to charges” and were “well known” (paras 48, 49).
The respondent relied on the test set out by Lord Bingham in Director General of Fair Trading v First National Bank plc  UKHL 52;  1 All ER 97 with regard to the requirement of “fair dealing”. Aziz v Caixa d’Estalvis de Catalunya, Tarragona i Manresa (Catalunyacaixa)  All ER (EC) 770 (CJEU) was used to demonstrate that there was a significant imbalance in the parties’ rights and obligations and whether the term in question would have been agreed had it been individually negotiated. Referring to the dissenting judgment of Lord Toulson, and to the ratio of the majority in ParkingEye, it was argued that it was unreasonable to assume that the consumer would have agreed to the term relating to the additional enforcement costs because it was “not a normal feature of a parking contract”; the term was neither “brief, simple [nor] prominently proclaimed”; it was not “drawn to the attention of the respondent”, and simply was part of the small print (paras 71-75).
In a lengthy judgment, the sheriff carefully considers the substantial submissions on both sides, ultimately finding for the claimant on all counts. The decision is perhaps controversial because, like Dadswell, it appears to widen significantly the tests for penalties and unfair terms set out in ParkingEye.
The sheriff decided that the penalty rule was engaged in relation to the term regarding the additional costs (para 96). The term was deemed to be enforceable when considering the claimant’s “legitimate interest in the performance of the contract”, that the “costs term was clearly and legibly displayed within the signs”, that there was “nothing unconscionable about a party agreeing to meet the reasonable costs… incurred in making good a breach of contract”, and that the amount of additional costs was within the respondent’s control and dependent on how long the breach continued (paras 99-100). While it is clear that the term was contained within terms displayed on the prominent sign, this does not consider the requirement for the term itself to be “prominently proclaimed”, as stated in ParkingEye.
Despite the powerful argument presented in relation to the term being unfair under the 2015 Act, the sheriff adopted the majority view in ParkingEye, referring to the legitimate interest of the parking operator to justify the conclusion that the term was not contrary to the requirement of good faith. Applying an objective test, the sheriff decided that it would be reasonable to assume that a reasonable car park user would have agreed to the term (paras 105-106).
In reaching this decision, the sheriff acknowledged that there were “many steps taken to recover the penalty due” to justify the enforcement costs (para 108). The judgment is, however, silent on whether it is reasonable for the parking operator to take many steps before resorting to court action. The steps involved the claimant instructing at least one debt collection agency in England, one firm of solicitors (maybe two) in England, and one firm of solicitors in Scotland before the claim was raised.
Expenses: double recovery?
It can be argued that the additional costs of enforcement should have been included in the calculation of the expenses of the action. Recovery of such expenses is subject to the Act of Sederunt (Fees of Solicitors in the Sheriff Court) (Amendment and Further Provisions) 1993 (as amended). For disputed claims under simple procedure, there is a specific provision in the table of fees which allows the claimant to recover £213 for “all work before the simple procedure case begins, including discussions and correspondence with the other party, exchanges of documentation, etc”.
If the decision that the term does not fall foul of the rules relating to penalties and unfair terms is correct, a successful claim for the costs of the debt recovery company (in this case £24) is perhaps justifiable. But given the fees of solicitors are in any event recoverable and governed by statutory provisions, there is an argument that they should be excluded. The letters by the solicitors to the respondent prior to raising the court action can be considered to have been sent in contemplation of the commencement of proceedings to recover the parking charge. When considering an account of expenses, the auditor “allows a charge as judicial expenses for all work which the auditor is satisfied has reasonably been undertaken in contemplation of, or preparatory to, the commencement of proceedings” (Hennessy, Civil Procedure and Practice (3rd ed), 341, emphasis added). Essentially, therefore, it can be said that this decision allows double recovery for the claimant (and its solicitor).
This double recovery aspect is compounded given that, in reviewing the evidence, the sheriff noted (at para 7) that the claimant admitted that the cost of the parking charge “was calculated by working out the price to enforce the penalty charge notice”. It appears that consideration was not given to the fact that the cost of enforcement was, in any event, included and accounted for in the parking charge notice.
In justifying the parking charge of £85 in ParkingEye as not being a penalty, Lords Neuberger and Sumption make reference (at para 100) to the fact that the charge was “prominently displayed in large letters at the entrance to the car park and at frequent intervals within it”. The decisions in Dadswell and Watson both appear to rely on the signs themselves being large and prominent, not necessarily the text itself. This is not what was decided in ParkingEye. In any event, ParkingEye considered the 1999 Regulations, and it has been noted that the Consumer Rights Act 2015 has an “increased focus on prominence and transparency” of the specific terms (Patient, “The Consumer Rights Act 2015: a new regime for fairness?” (2015) Journal of International Banking Law and Regulation 643).
The decisions expand the tests in ParkingEye without regard to the individual term’s prominence. Lords Neuberger and Sumption commented in ParkingEye that “motorists could hardly avoid reading the notice and were under no pressure to accept its terms” (para 108). It cannot be the case that every term in the small print of a notice or contract is one which consumers could “hardly avoid reading”.
The Indigo cases have received much attention in the press, especially due to the fact that the parking charges were incurred at hospitals, and usually by NHS staff. The decision to allow reliance on terms relating to unquantified enforcement costs (which can be more than double the value of the parking charge) could have unintended consequences. The respondent in Watson commented that the decision may galvanise car parking companies to increase their enforcement costs. Whether an unsuccessful respondent/defendant would be willing to appeal a decision, given the financial risks of appealing, remains to be seen. For now, however, it is clear that consumers should be cautious when challenging unfair terms in the small print of contracts and notices.
Iain Buchanan recently graduated from the University of Dundee with first class honours in Scots and English Law