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Penalties law examined by the Supreme Court for the first time since 1915
The UK’s most senior court has reviewed the law on penalties for the first time in 100 years, with its ruling having important implications for many forthcoming cases.
Lord Neuberger, President of the Supreme Court, hoped that the judgment in the combined cases of Cavendish Square Holding BV v Talal El Makdessi and ParkingEye Ltd v Beavis will provide clarity as regards long-standing legal principles.
“The penalty rule in England is an ancient, haphazardly constructed edifice which has not weathered well, and which in the opinion of some should simply be demolished, and in the opinion of others should be reconstructed and extended,” he said.
“For many years, the courts have struggled to apply standard tests formulated more than a century ago for relatively simple transactions to altogether more complex situations.”
The Beavis case concerned an Essex chip shop owner who had been charged £85 for exceeding the time limit in a free parking space.
The Supreme Court ruled that the parking management firm had acted reasonably.
“There is no reason to suppose £85 is out of all proportion to its interests,” said Lord Neuberger.
While consumer watchdog Which? fears the judgment may open the door to a flood of “cowboy parking firms” there are also likely to be wider ramifications.
Stephen Welfare, a partner in Royds’ dispute resolution team, said: “The court has ruled that a ‘penalty’ is enforceable if commercially justified, disregarding decades of contract law about such charges having to be a genuine estimate of loss.”
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