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Cavendish Square Holding BV v Talal El Makdessi [2015] UKSC 67

Cavendish Square Holding BV v Talal El Makdessi [2015] UKSC 67


Citation:Cavendish Square Holding BV v Talal El Makdessi [2015] UKSC 67

Link to case on WorldLII.

Rule of thumb:Are parking charges which seem excessive legal or are these unenforceable penalty clauses? Where a parking lot can demonstrate that the charges for coming back late are not penalty clauses and fit in with a reasonable business, then these are enforceable and are not deemed to be penalty clauses.

Background facts:

The facts of this case were that 2 hours of parking were provided for free by Cavendish before an £85 charge was levied Makdessi used the car park but went over the 2 hours meaning that the £85 charge was levied.

Parties argued:

Makdessi refused to pay this charge arguing that it was a penalty clause that was unenforceable. Makdessi showed other profitable car parks where the charges were far less to show that this was grossly unreasonable and a penalty. Cavendish also explained that this system benefited the centre as a whole because there was a high turnover of cars in his car park meaning that people knew if they could queue up and sooner or later they would get a space, rather than people go into the centre and be unable to find a space anywhere and be driving round for hours. Cavendish explained that with the 2 hours of free parking he gave people a risk and effectively a game of chance, as is perfectly acceptable in UK society. He further showed how he ran a business model that was profitable but not extravagant.

Judgment:

The Court upheld the arguments of Cavendish. They accepted that he did provide a benefit to people and the centre, and the charge itself was not extravagant. Makdessi had to pay the £85 charge.

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Ratio-decidendi:

‘109. Objectively, they had every reason to do so. They were being allowed two hours of free parking. In return they had to accept the risk of being charged £85 if they overstayed. Overstaying penalties are, as we have mentioned, both a normal feature of parking contracts on public and on private land, and important for the efficient management of the space in the interests of the general body of users and the neighbouring outlets which they may frequent. They are beneficial not just to ParkingEye, the landowner and the retail outlets, but to the motorists themselves, because they make parking space available to them which might otherwise be clogged up with commuters and other long-stay users. The amount of the charge was not exorbitant in comparison to the general level of penalties imposed for parking infractions. Nor is there any reason to think that it was higher than necessary to ensure considerate use by motorists of the available space. And, while we accept Mr Butcher’s submission that the fact that the £85 charge is broadly comparable to charges levied by local authorities for parking in public car parks is not enough to show that it was levied in good faith, it is nonetheless a factor which assists ParkingEye in that connection. The risk of having to pay it was wholly under the motorist’s own control. All that he needed was a watch. In our opinion, a hypothetical reasonable motorist would have agreed to objectively reasonable terms, and these terms are objectively reasonable’ (Lord Neuberger). ‘316. Mr Beavis’s argument that the clause was a penalty at common law is more questionable, but in the circumstances nothing would be gained by discussing that matter further’, Lord Toulson

'They were being allowed two hours of free parking. In return they had to accept the risk ... they are beneficial ... to.. retail outlets ... motorists ... the amount of the charge was not exorbitant ... these terms are objectively reasonable', Lord Neuberger

Warning: This is not professional legal advice. This is not professional legal education advice. Please obtain professional guidance before embarking on any legal course of action. This is just an interpretation of a Judgment by persons of legal insight & varying levels of legal specialism, experience & expertise. Please read the Judgment yourself and form your own interpretation of it with professional assistance.