With respect to @H C Andersen, the central issue is whether the 5 minute clause in the contractual sign is enforceable. Whilst the judge and I disagreed on whether it is an unlawful penalty clause or, in their opinion simply a clause that penalises someone if they breach it, may come down to semantics.
The judge considers the facts only. As far as this judge is concerned, if the clause is in the contractual sign, then it is simply a clause. If you were to argue that it is impossible to comply with the clause and the clause is central to the performance of the contract, then the whole contract is void.
As far as this contract is concerned, it is central to the performance of the contract and therefore the whole contracts void. That is how this judge thinks. Other judges (judge bingo) may approach it differently.
The leading case in English law is Cavendish Square Holding BV v Makdessi and ParkingEye Ltd v Beavis [2015] UKSC 67. These cases establish that a clause is not a penalty if it protects a legitimate business interest of the non-breaching party, and is not out of proportion to that legitimate interest.
In ParkingEye v Beavis, the Supreme Court held that a parking charge was not a penalty because it served a legitimate interest (e.g., managing parking spaces) and was proportionate. However, if the charge is excessive, arbitrary, or does not reflect a legitimate interest, it should be considered a penalty and therefore unenforceable.
I would argue that a clause that penalises someone for breaching it can only be a penalty clause. Maybe it's semantics but you must look at whether the clause aims to deter breach or punish the breaching party. If so, it can only be deemed a penalty clause.
The judge's reasoning, to me and many others, appears contradictory and, as far as I'm concerned reflects a misunderstanding of the legal principles surrounding penalty clauses and I intend to argue it further with him when we next meet.
Under English law, a penalty clause is one that imposes a detriment on a party for breaching a contract, where that detriment is not a genuine pre-estimate of loss or is disproportionate to any legitimate interest of the other party. Because the judge stated that the clause "penalises the driver if they breach it", that in itself suggests the clause imposes a "penalty" for non-compliance. If that is the case, how can this clause be considered anything but a penalty clause?
The judge's assertion that the clause "is not a penalty clause" but "penalises the driver" conflates the clause's punitive nature with its enforceability. If the clause's purpose is to penalise rather than compensate for actual loss, it is, by definition, a penalty clause.
In light of Cavendish Square v Makdessi and ParkingEye v Beavis, the clause should be examined as follows:
Does the 5-minute limit serve a legitimate interest of the parking operator (e.g., ensuring turnover of parking spaces)? While there may be some legitimate interest, the clause's effect of penalising non-compliance, particularly given the practical impossibility of compliance, suggests it is disproportionate.
Is the detriment imposed (the £100 parking charge) out of proportion to the legitimate interest? The time limit starting from the ANPR camera entry, combined with the impracticality of complying, suggests that the clause is unreasonable and therefore punitive.
The clause requires actions (finding a space, reading terms, setting up payment etc.) that are impossible to complete within 5 minutes. This undermines the fairness of the clause and its enforceability.
The strict 5-minute timeframe effectively sets up drivers to fail, especially considering the logistical realities of parking and reading extensive contractual terms. There is no way that the operator suffers a tangible loss if the payment is made slightly later or even at the end of the parking session, undermining any argument that the charge represents a genuine pre-estimate of loss.
The clause appears to deter breaches rather than protect a legitimate interest, making it punitive and therefore, unenforceable.
If it were ever to actually get as far as a hearing, you would only need to highlight the practical impossibility of complying with the clause, rendering it inherently unfair. You would also argue that the charge imposed is not a genuine pre-estimate of loss and is disproportionate to any legitimate interest. Reference to the Consumer Rights Act 2015, which requires terms to be fair and transparent mean that an unachievable requirement is neither.
So if a clause penalises a driver for breaching it and does not align with the tests established in Cavendish Square v Makdessi, it can and can only be treated as a penalty clause. My argument with the judge's reasoning is that he conflates the punitive nature of the clause with its enforceability, which is contradictory under established legal principles.
