Below is a link to an interesting Freedom of Information request to the Office of Fair Trading on parking charges. The request was made to the OFT to understand what guidance they provided to the British Parking Association Ltd on the level of private parking charges. In particular it describes the Government’s view of what constitutes a genuine pre-estimate of loss. Presumably the BPA Ltd used this to shape their Code of Practice. The key points from the document are as follows:
Authorisation from the landowner
The OFT’s view was that what can be charged to the consumer for trespass/breach of contract will depend on the circumstances and with whom the consumer contracts. A parking management company will need to have the proper legal authorisation to contract with the consumer on the landowner’s behalf and enforce for breach of contract. What and whose costs apply stem from this. To claim direct losses for trespass or breach of contract, the company or landowner must prove what the actual losses that were caused by that individual’s breach were. However, if the claim is for liquidated damages, the OFT’s view is that the liquidated damages that can be recovered are a genuine pre estimate of loss. This is not the same as having to prove, in every case, the actual loss caused by the actual breach.
Genuine pre-estimate of loss
The OFT expressed the view to the BPA that when claiming liquidated damages, they must meet the requirement of being a genuine pre estimate of loss. If back office functions are claimed, these must be directly caused by the breaches of contract. The OFT’s view was that if you have an office anyway and have to pay rent, rates, insurance, etc., this cannot be attributed to the breach and claimed as costs, as these are the costs of running a parking management company. To be recoverable, all costs, whether in contract or tort, must be caused by the breach.
Penalties and the Unfair Terms in Consumer Contracts Regulations 1999
Further the OFT expressed the view that a parking charge will not automatically be recoverable, simply because it is stated to be a parking charge. It cannot be used to create a loss where none exists. It will not be recoverable if the court finds that it is being imposed as a penalty. If a parking charge is imposed for parking beyond hours permitted under a contract, in order for it to be recoverable as liquidated damages, the court will need to be satisfied of a number of matters, including that it represents a genuine pre-estimate of the loss incurred and that it meets the requirements of applicable consumer protection legislation, for example the Unfair Terms in Consumer Contracts Regulations 1999. The OFT also expressed the view that the court will also need to be satisfied about who the consumer was contracting with and that this is the party bringing proceedings.
This information should be used in parking charge appeals where the charge is being enforced on the basis of loss or breach of contract. Quite simply, parking companies cannot justify how £60 – £150 charges are a genuine pre-estimate of loss. We have seen appeal evidence from companies such as Parking Eye quoting their costs as:
- Erection and maintenance of the site signage.
- Installation, monitoring and maintenance of the Automatic Number Plate Recognition Systems.
- Employment of office-based administrative staff.
- Membership and other fees required to manage the business effectively including those paid to the BPA, DVLA and ICO.
- General costs including stationary, postage etc.
Quite clearly, there are items here which are the costs of running are parking company (1, 2, 3, 4 except for getting keeper data from DVLA), as opposed to costs directly related to the motorists actions (getting keeper data, partially 5). As a result, if the appeal assessor was to follow this guidance, then the parking company would not have proven their case.
For an appeal to POPLA, this evidence should be persuasive. However, if the case were to go to court, then, as the OFT say, ultimately it would be for the court to decide what is and isn’t recoverable by a parking company.
Download the original document here