In a recent POPLA case Vehicle Control Services Limited quoted extensively from HHJ Moloney's ruling in ParkingEye v Beavis and Wardley in their evidence pack regarding their charges.
However, as this is a small claims verdict, POPLA chose to ignore it. The claim is currently being appealed in the court of appeal, at which point the verdict will become binding on lower courts for similar cases.
Firstly, I do not accept the Operator’s submission that the charge represents a genuine pre-estimate of loss. A detailed breakdown of each head of loss will not always be required, but the Operator must provide some explanation as to how it arrives at its final sum. The Operator has not explained in any detail how the sum of £166.01 is arrived at before it is reduced to £100. The explanation provided by the Operator also appears to include general operational costs and costs which could not possibly be incurred as a direct result of the alleged breach. Accordingly, I am not satisfied that the Operator has shown the charge of £100 is arrived at by a genuine attempt to pre-estimate its loss.
Further, I am not minded to accept that the charge in this case is commercially justified. In each case that I have seen from the higher courts, including those presented here by the Operator, it is made clear that a charge cannot be commercially justified where the dominant purpose of the charge is to deter the other party from breach. This is most clearly stated in Lordsvale Finance Plc v Bank of Zambia  QB 752, quoted approvingly at paragraph 15 in Cine Bes Filmcilik Ve Yapimcilik & Anor v United International Pictures & Ors  EWHC Civ 1669 when Coleman J states a clause should not be struck down as a penalty,“if the increase could in the circumstances be explained as commercially justifiable, provided always that its dominant purpose was not to deter the other party from breach”.
This supports the principle that the aim of damages is to be compensatory, beginning with the idea that the aim is to put the parties in the position they would have been in had the contract been performed. It also seems that courts have been unwilling to allow clauses designed to deter breach as this undermines the binding nature of the initial promise made. Whilst the courts have reasonably moved away from a strict interpretation of what constitutes a genuine pre-estimate of loss, recognising that in complex commercial situations an accurate pre-estimate will not always be possible, nevertheless it remains that a charge for damages must be compensatory in nature rather than punitive.
In this case, it is clear that the dominant purpose of the charge is to deter vehicles from staying beyond the 90 minute limit. Accordingly, I am not satisfied that the charge can be commercially justified.
Given that the charge is not commercially justified, nor has it been shown to be a genuine pre-estimate of loss, I accept on this occasion the Appellant’s submission that it is not enforceable.
Accordingly, I must allow the appeal.
I need not decide any other issues.