The long running issue of parking charges for overstaying in a free car park has been decided, with judges finding 6-1 in favour of the parking company over the motorist.
Consumer rights laws explicitly address the issue of traders forcing contracts on consumers, and define an example of an unfair term one where the consumer must pay a disproportionately high sum in compensation - which this clearly is, given both the normal cost of parking in the area (£3 all day) and ParkingEye's average cost per ticket issued of under £18. In these situations, Consumer Law asks whether the consumer would have come to the same deal if they were allowed to negotiate the contract.
Lord Neuberger neatly sidestepped that problem by stating:
"The question is not whether Mr Beavis himself would in fact have agreed to the term imposing the £85 charge in a negotiation, but whether a reasonable motorist in his position would have done so. In our view a reasonable motorist would have agreed. In the first place, motorists generally and Mr Beavis in particular did accept it"This is of course a circular argument which could apply to any case of this nature. As this is a Supreme Court judgment it is binding case law and will apply to all cases from now on. If a number of consumers conclude a contract with a trader, than that contract will be deemed to be reasonable because a number of consumers concluded the contract. Thus the protections of the Unfair Terms in Consumer Contract Regulations 1999 and its successor The Consumer Rights Act 2015 are done away with at the stroke of the pen.
Lord Neuberger is no fool and will know the implications of his decision. The message from the judiciary is clear - a contact is a contract, whether business or consumer, and there cannot be any retrospective attempt to point out unfair terms. The consumers only cause of action would be to refuse to enter the contract. If the Government wish to restore consumer rights then they will need to further legislate.
Consumer Rights Act 2015
64 (4) A term is unfair if, contrary to the requirement of good faith, it causes a
significant imbalance in the parties’ rights and obligations to the detriment of
Schedule 2 - 6 A term which has the object or effect of requiring a consumer who fails to
fulfil his obligations under the contract to pay a disproportionately high sum
EU Judgment Aziz v Caixa d'Estalva
In terms of penalties, this new judgment allows a charge to be deemed reasonable even if it greatly exceeds the cost to the trader. The trader is allowed to add an element for deterrence and a further element for a large profit margin. ParkingEye's cost are under £18 per ticket issued, so by allowing a charge of £100 the Supreme Court is setting the bar for all other courts that a profit of over 550% is an acceptable margin for damages for breach of contract. It is quite acceptable to charge a pensioner their entire weeks pension for a one minute overstay.
in order to assess whether the imbalance arises ‘contrary to the requirement of good faith’, it must be determined whether the seller or supplier, dealing fairly and equitably with the consumer, could reasonably assume that the consumer would have agreed to the term concerned in individual contract negotiations.
A further analysis will follow at a later date.