On the face of it the driver would have a decent argument to make that their contract was frustrated.
However, assuming you are the registered keeper with the V5C in your name and an up-to-date address, you have a far more straightforward appeal. They have not complied with the conditions of Schedule 4 of the Protection of Freedoms Act (there's a link in my signature underneath this post), which would allow them to hold you liable as the keeper of the vehicle. As they haven't done this, they can only hold the driver liable, and they don't know who that is! Therefore, appeal as the keeper, being careful not to tick any boxes etc. that reveal who was driving, with the below:
Dear Sirs,
I have received your Parking Charge Notice (Ref: ________) for vehicle registration mark ____ ___, in which you allege that the driver has incurred a parking charge. I note from your correspondence that you are not seeking to hold me liable as the registered keeper, under Schedule 4 of the Protection of Freedoms Act 2012 ("The Act"). You have chosen not to issue a Notice to Keeper in accordance with The Act, and it is now too late for you to do so.
There is no obligation for me to name the driver and I will not be doing so. I am therefore unable to help you further with this matter, and look forward to your confirmation that the charge has been cancelled. If you choose to decline this appeal, you must issue a POPLA code.
Yours,
