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Indigo Park Services UK Ltd v Watson
Contract Law (LAW1108)
Middlesex University London
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Indigo Park Services UK Limited, a company incorporated
under the Companies Act company number 02362957 having its
registered office at oak House, Reeds Crescent, Watford, Wd 24
4Qp v Conor Watson, residing at 43 Ullapool Crescent, Dundee
No Substantial Judicial Treatment
Court Sheriff Court (Tayside, Central and Fife) (Dundee)
Judgment Date 6 September 2017
Ref: SG67-
Sheriffdom of Tayside, Central and Fife at Dundee
2017 WL 05999951
Note of Decision by Sheriff Lorna A Drummond QC
Dundee, 6 September 2017
Representation
1 Act: Mr Manson , advocate.
1 Alt: Ms Davies , advocate.
The Sheriff decided:
To grant decree in favour of the Claimant finding the Respondent liable to pay to the Claimant the sum of £1,088 together with the expenses of the cause; and to sanction the cause as suitable for the employment of junior counsel for the preparation for and conduct of the site visit as well as the evidential hearing.
Note of Decision
Sheriff LA Drummond QC
- In this claim, Indigo Park Services UK Ltd, the Claimant, seeks payment from the Respondent in respect of car parking charges and additional costs of enforcement action to recover the charges. The Claimant claims that the Respondent parked
in car parks 5 and 6 at Ninewells Hospital, Dundee (”Ninewells”) on various dates during 2016 and at various times as specified in paragraph 3 of the claim without a valid parking ticket being displayed. The Claimant claims that the terms and conditions of contract between the parties are that if drivers fail to display a valid parking ticket, drivers require to pay a £40 charge within 28 days (or £20 if payment is made within 14 days). The Claimant claims that the terms also provide that any subsequent enforcement action may incur additional costs and that drivers must indemnify the Claimant in respect of such reasonable costs and make payment to them on demand.
- There were a number of matters identified as not being in dispute. Mr Conor Watson admitted that he parked his car in car parks 5 and 6 at Ninewells without displaying a valid parking ticket on the dates and times set out in paragraph 3 of the claim. On the day of the hearing, Ms Davies, representing the Respondent, conceded that the Respondent is liable to pay £40 in respect of each parking charge (subject to a challenge to the Claimant having title to sue which I deal with below). However, the Respondent maintained he was not liable to pay £96 to indemnify the Claimant for costs incurred by way of enforcement action. I attended an accompanied site visit to the car parks at Ninewells on 17 May 2017. I heard evidence on 22 May 2017 and written submissions were lodged by parties in June 2017.
Evidence
The Claimant led evidence from Mr Christopher Singleton, regional and commercial manager of Indigo Park Services Limited. He explained he had worked for Vinci Park Services UK Ltd (”Vinci”) since 2003. Vinci had originally built and operated the car parks at Ninewells Hospital (”Ninewells”). Vinci subsequently changed its name to Indigo Park Services UK Ltd. Vinci had provided the finance to build and operate the car parks and had a lease from the NHS. The company had signed a number of documents with NHS: a lease, a building agreement and a car parking management agreement covering their operations at Dundee, although Mr Singleton was not involved in negotiating any of these agreements. As far as he was aware the NHS is his client and he performs obligations on their behalf. The Claimant is a member of the British Parking Association (”the BPA”). Mr Singleton explained the number and types of car parks at Ninewells, which include a multi story car park and surface car parks. Car parks 5 and 6 are pay and display car parks. Other car parks operate a permit system where staff can apply for a permit and fob to gain access to the car park.
Mr Singleton described where the signs were displayed in car parks 5 and 6. A driver entering the hospital from either end of the public road will pass a large sign as shown in photographs at C1 tab 2. The sign states at the top “Welcome to Ninewells Hospital” and indicates that the land is owned by the Scottish Ministers and operated and managed by Indigo Park Services UK Ltd. For car parks and parking areas it states “please see signs for further details and instructions”. Below that the sign states that failure to adhere to the terms and conditions set out on additional signage may result in a parking charge notice of up to £40 being issued. Towards the bottom of the sign in smaller print, the sign states that certain charges are payable for the parking of vehicles contrary to the above terms and conditions of use.
Mr Singleton next described the signage displayed at car park 5 shown in photographs at C1 tab 6. These photographs show three parking machines located in that car park. Beside each machine is a large sign with the title Pay and Display Car Park which states:
”Terms and conditions of parking apply at all times. Please read the sign carefully. By remaining at this location with or without a vehicle you agree to these conditions. Parking tariff up to four hours £2. Tickets are not transferable. Parking Charge Notice will be issued to offenders.”
main road outside the hospital where there is a mile of on street parking with no restrictions. There is also a bus within the hospital grounds which runs from 8 to 5 to take staff to locations within the hospital site. Ninewells is a large site. The car parks closest to the hospital tend to fill up first but in car parks 8 and 9, which are further away, there are often spaces available throughout the day.
Mr Singleton explained that the enforcement officers enter time and location and vehicle details on the tickets and make notes. They print each ticket off and fix it to the vehicle and take photographs of the vehicle. The penalty charge notice is then uploaded on to the enforcement system through a handheld device. After 28 days, if the charge remains unpaid, the Claimant contacts the DVLA to find out name of the registered keeper of the vehicle. The cost is £2 per enquiry to DVLA. The Claimant then writes to the owner of the vehicle to let them know the penalty has not been paid and demands payment. If there is no response, the Claimant passes enforcement to ZZPS Ltd (”ZZPS”) the company that the Claimant instructs to enforce the penalty charge notices for almost all cases. The costs incurred by ZZPS are passed on to the recipient of the penalty charge notice. If the penalty charge remains unpaid, court action will follow.
In cross-examination Mr Singleton confirmed that there is an agency agreement between the NHS and the Claimant whereby the Claimant is authorised by the NHS to provide car parking services and operate the car parks on behalf of the NHS. The Claimant is authorised to control and maintain the signage and to pursue penalty charges through the courts. He confirmed that the signs at the entrances to the hospital site showed the NHS logo.
The Claimant also led evidence from Ms Christina Kealy, general manager of ZZPS. She explained that the accounts are passed to ZZPS after 28 days and an enquiry is made via an electronic link to the DVLA about the registered keeper. She explained that another enquiry has to be made with the DVLA because it is necessary to check the most up to date keeper of the vehicle as a registered keeper can change from month to month or even day to day and reliance cannot be placed on historical data. The total charge in each case of £136 is made up of a £40 penalty parking charge, £24 to ZZPS as a charge for the DVLA check and issuing a notice to the keeper, £36 for all subsequent debt recovery correspondence and contact, and a £36 charge for all pre-legal work recovery carried out by QDR Solicitors, Wright Hasssall LLP and MMS LLP (see C6 tab 5). She explained that not all the sums demanded by penalty charge notice are recovered. The recovery rate in Scotland is low, at only 2% of penalty charges being recovered whereas in England and Wales it is higher. Some cases take longer to recover than others. If the penalty charge is not paid, ZZPS do not make any money. They therefore need to cover their overall costs by charging a levy in each case. She stated that ZZPS charges are a lot lower than many other agencies rates.
Evidence was also led from Mr Tim Hawker, head of debt recovery, QDR solicitors. He explained that QDR receive instructions from ZZPS to recover penalty charges that ZZPS fail to recover. They send out two letters to the keeper seeking payment. These are standard letters but if a response is received they require to look at that and respond appropriately. The £36 charge inclusive of VAT covers all the work done. The fee is contingent so that if there is no recovery, the solicitors will not be paid. In his view the charge is at the lower end of the market rates.
The Respondent is a student nurse at Ninewells. He accepted that he had been driving his vehicle and had parked his car in the car parks on the dates and at the times claimed by the Claimant. He also accepted that he was aware of the signage at the entrance to the car park. He was aware that if he did not display a ticket he would be charged a £40 penalty. However, his understanding was that he would not be charged any more than that. When taken to the wording on the sign indicating that there was an agreement to indemnify the Claimant for reasonable costs of enforcement, the Respondent explained that he had not read that part of the notice. He did not know what was meant by indemnification. He explained that it was not easy to park outside the hospital site. There could be spaces outside at 8 but unlikely to be spaces any later than that. Similarly, within the car parks at Ninewells it is easier to get a space in the morning but more difficult later in the day. The Respondent was working a shift pattern and had no control over what time he had to arrive for work. He wouldn’t have been able to afford a parking permit. In any event it was an annual permit. He was on placement to a variety
of hospitals and wouldn’t know in advance at the start of the year which hospital he would be placed with.
- In cross-examination, he accepted he could read the content of the sign at the pay machines. He knew the signs would tell him about the terms and conditions and parking controls but had never read them. He went to Ninewells five days a week on placement and never paid any parking ticket any of the times he parked there. He accepted that there were therefore other occasions, not the subject of this action, when he had parked in Ninewells car parks and had not paid for a parking ticket. His position was that he would pay the £40 but that the £96 recovery costs were unreasonable. When asked what might be reasonable enforcement costs, he suggested £20 plus VAT.
Title to Sue
Respondent’s Submissions on Title to Sue
On the day of the hearing, Ms Davies indicated that she wished to argue that the claim should be dismissed as the Claimant has no title to sue. I was not entirely clear what the point was as it did not appear to have been foreshadowed either at the case management discussion or in any subsequent application to amend. The point appeared to be that because the Claimant is an agent for a disclosed principal (NHS Tayside), it has no title to sue upon the contract. Mr Mason objected to the point being raised on the morning of the hearing where it had not been identified in advance as a matter in dispute. Rather than delay matters, I allowed evidence to be led and submissions to be made on the point, reserving my view on whether it had been properly raised.
In support of this submission, the Respondent relied on the Claimant’s acceptance in the Claim that it provides private land parking enforcement on behalf of NHS Tayside at Ninewells. The procedural history is that originally the claim was brought by Indigo Infra Dundee Limited. The Respondent raised the issue of title to sue since he had received correspondence from another company namely Indigo Park Services UK Ltd. At the case management discussion, the Claimant’s agents amended the designation of the company to Indigo Park Services UK Ltd indicating this was the correct designation of the Company providing land parking enforcement. Thereafter the Respondent asked the Claimant for documentation regarding the company’s title to sue. In response, the Claimant lodged the letter at C2, a letter from NHS Tayside dated 4th June 2014. That letter refers to an “Agency agreement” between NHS Tayside and Vinci. There are repeated references in the letter to NHS Tayside requesting and authorising Vinci to act on its behalf (paragraphs 1 and 4). On the face of it, the letter is consistent with the arrangement being one of agency. The Respondent’s agents had directly raised queries with agents for the Claimant regarding the fact that the letter appears to relate to an agency agreement but the Claimant had taken no steps to clarify the position.
The Respondent also relied on the content of the parking ticket which states, under the heading “Parking Charge Notice” in large lettering, and after the details of Indigo Park Services UK Limited, that the ticket is issued “On behalf of: NHS Tayside”. The photos lodged at C1 show that the signage at the main entrances to Ninewells is clearly marked with the logo of NHS Tayside. Mr Singleton stated that his clients required that their logo be displayed on the signage, reflecting the fact that the Claimant acted on behalf of NHS Tayside in providing parking management services. He referred to NHS Tayside having input into the organisation of parking on the site. Mr Singleton described something akin to a PFI project for construction of the car park and stated that the Claimant had a lease to operate the site which he had seen but could not provide details about. He had not had any part in the negotiation or putting in place of any documentation between the parties. He also referred to a Car Parking Management Scheme Contract as being the contract which governed the relationship between the Claimant and NHS Tayside. He could not provide any detail regarding the status of that document nor its effect on the relationship between those parties. Mr Singleton referred to the fact that NHS Tayside would have certain requirements in relation to how parking was organised on the site and that in providing the service the Claimant would take account of and reflect those requirements.
The Respondent submitted that the remedy which the Claimant seeks in this action is a contractual one. Only a party to the contract can sue. Where an agent discloses his principal, the general rule is that the principal alone is the contracting party, and that the agent is under no liability and has no title to sue on the contract. (Gloag and Henderson, The Law of Scotland , 13th Ed, Chapter 18 – Agency, paragraph 18 under reference to Bell, Commentaries , I, 540, Lord McLaren’s
reasons why the logo is there. The simple presence of a logo on a sign cannot bring about a finding that the parties entered into a contract in the mutual knowledge that the Claimant was acting as an agent for the NHS.
Even if NHS Tayside is the Claimant’s principal (which the court cannot determine in any event), the logo is not enough to act as disclosure of that state of affairs. At the highest, the situation might be categorised as an agent acting for an undisclosed principal. In those circumstances, the contract must be viewed as being formed between the agent and the third party initially (since the third party does not know about the principal) with the principal retaining the right to intervene (Macgregor in The Law of Agency in Scotland paragraph 12-32). NHS Tayside have not intimated any intention to intervene. In any event, the particular nature of the relationship between the Claimant and NHS Tayside is of no moment when it comes to the rights and obligations arising from the contractual relationship between the Claimant and the Respondent. The particular legal nature of any relationship the Claimant has with the NHS is res inter alios acta.
The court should determine whether or not the parties to the contract at issue knew that there was a relationship of agency at play and then intended that a particular party to that relationship could seek to enforce certain rights. This is settled as a matter of principle (see Macgregor op at para 12-01 on pp 313-314 and, in particular, the quote from the 10th ed. of Bell’s Principles ). The Respondent has no basis in evidence to contend that the intention of the parties was to contract upon the type of agency relationship which he now seeks to construct.
The Respondent’s position must be that he actually contracted with NHS Tayside who therefore have title to sue him. It is not a position which accords with his intention or understanding at the time when the contract was entered into or indeed any intention subsequently expressed or explained in evidence. The Respondent did not make any mention of that in evidence. All the evidence pointed to him having contracted with the Claimant.
The court should, it was submitted, recall the nature of the test in a case such as this as regards formation of contract: what was the Claimant reasonably entitled to conclude from the Respondent’s conduct? The common sense response to this submission is precisely that which is articulated in ParkingEye at the end of paragraph 99: “The motorist would not know or care what if any interest [the car park operator] has in the land, or what relationship it has with the landowner if it has no interest”. This is, the Claimant submitted, precisely the situation which the court has before it. The Respondent plainly did not apply his mind to these questions. There was no attempt to adduce evidence that he had.
Decision on Title to Sue
I have set out above much of the detail of counsel’s submissions in deference to the careful analysis that they both presented. Ultimately, I preferred the submissions of the Claimant on this point. In my view, this argument should not be allowed to be made at this late stage. It has not been identified as an issue prior to the hearing and, no doubt as a consequence of that, the court is not in a position to satisfactorily address this question on the evidence before it.
This is a case under simple procedure where the matters in dispute were identified at a case management discussion where both parties were present. The Respondent in his Response to the claim questioned the name of the Claimant. The initial Claimant raising the claim was Indigo Infra Dundee Ltd. The Respondent stated in his Response that he had received correspondence from Indigo Park Services Ltd and Indigo Infra Red Dundee Ltd and questioned what the relationship was between the two companies. At the case management discussion, the Claimant was allowed to amend the Claim to substitute Indigo Park Service Ltd as the correct Claimant. No further issued was raised about the Claimant’s title to sue at that stage.
At the case management discussion, the following matters were identified as being in dispute: (i) whether the nature and location of the signage at car parks 5 and 6 at Ninewells was such as to create a contract between the parties which incorporated the terms and conditions relied upon by the Claimant; (ii) whether the terms and conditions were unenforceable at common law or under the Consumer Rights Act 2015 ; (iii) whether the additional costs of £96 were reasonable. A hearing was thereafter fixed to determine those issues. So far as the court was concerned, up to the date of the hearing, the Respondent never raised any challenge to the Claimant’s title to sue on the ground that it was acting as an agent for a disclosed principal. The matter was raised before the court for the first time orally at the hearing when evidence was about to be led.
Having now had the benefit of counsel’s submissions, I take the view that the matter was not properly foreshadowed in
advance of the hearing and that the court is not in a position to satisfactorily determine the matter on the basis of the evidence before it. Although agents for the Respondent may have been making enquiries about the matter through the Claimant’s agents, it was not identified at the case management discussion or at any other time prior to the morning of the hearing that it was to be a matter of dispute to be raised at the hearing. Had it been at issue, the Claimant may well have led further or different evidence, for example by producing contracts and documents to fully explain the nature of the relationship between NHS Tayside and the Claimant. In my view, to determine the point on the basis of one letter would prejudice the Claimant who had no prior notice that the point was to be in dispute and raised at the hearing. Notwithstanding the informal nature of simple procedure, parties must provide fair notice to one another. One of the purposes of the case management discussion is for the court to identify what is and is not in dispute well in advance of any hearing so that fair notice is provided and court resources are properly allocated. Whilst a challenge to title to sue may not be lightly ignored, it seems to me that this particular challenge on title to sue, based on the law of agency, is not one which appears on the face of the Claim. It is not one which has been properly raised nor properly explored in the evidence and the court is not in a position to determine the question.
That said, I am conscious that this claim is one of a number of claims raised by the same Claimant seeking recovery of charges from other individuals for parking at Ninewells. Many of these claims are paused awaiting the outcome of this one. I therefore set out below my views on the merits of the arguments made, should it be of any assistance for those claims or if this claim goes any further, under the caveat that my views are necessarily obiter and based on very limited evidence.
In my view, the evidence points to the Respondent contracting with the Claimant directly and not on behalf of a disclosed principal. The signs at the entrance to Ninewells (C1 Tab 2) contain two logos at the top: “Indigo” and “NHS Tayside”. Thereafter the sign explains that the land is owned by the Scottish Ministers and managed by Indigo Park Services UK Ltd. That sign directs the driver to the individual signs within car parks for further details and instructions. Within the car parks, the numerous signs (C1 Tabs 6 and 7) are all headed “Indigo” without any reference to NHS Tayside whatsoever. In particular, the signs at the pay machines setting out the terms and conditions make no reference to NHS Tayside. Within the terms and conditions, it is clear that payment must be made to the Claimant and it is the Claimant that is to be indemnified. Nothing is said on any of these signs about NHS Tayside having any particular role. There is reference to the landowner but there is no disclosure of who that is. In any event, from the information on the signs at the entrance to Ninewells, the landowner is not NHS Tayside, but the Scottish Ministers.
I accept the Claimant’s submissions that the court should look to what was disclosed before the parties contracted and in the knowledge of which the contract was concluded to determine who it was that contracted. The Respondent parked his car in car parks 5 and 6 without displaying a ticket. He knew there was a parking control system in place and that the signs contained the terms and conditions of use. The signs at the pay machines within the car parks make it clear that the car park is being operated by the Claimant and it is the Claimant to whom the charges are due. Those signs make no mention of NHS Tayside. Nor does the NHS Tayside logo feature on those signs. The Respondent in evidence made no suggestion that he thought he was contracting with NHS Tayside. In my view, the mere presence of the NHS logo on the signs at the entrance to Ninewells does not establish that the parties contracted in the mutual knowledge that the Claimant was acting as an agent for NHS Tayside.
At best, if the Respondent had read the signs at the pay machines, he would have understood that the Claimant was acting for and behalf of the landowner without any specification on those signs as to who that was. At best, the Respondent would therefore be contracting with the Claimant on behalf of an undisclosed principal. If that is the correct analysis, I agree with the submissions by the Claimant that the Claimant would have title to sue, albeit that the Scottish Ministers as the landowner, would be entitled to intervene.
Contractual Claim for Payment
Claimant’s Submissions
- The Claimant invited the court to make an order for payment by the Respondent to the Claimant in the sum of £1, being £320 in respect of the 8 separate £40 parking charges and £768 in respect of the Claimant’s reasonable recovery costs, (£96 in respect of each ticket). The Claimant also sought an order for the expenses of the action and for sanction of
Penalty Rule
The Claimant submitted that no argument had been made that the £40 charge was a penalty. The rule against penalties was not engaged in relation to the costs term since the amount the Claimant has to pay under the contract is not specified.
However, on the assumption that the rule is engaged, the correct test for ascertaining whether a clause amounts to a penalty is to ask whether or not the sum or remedy stipulated as a consequence of a breach of contract is “exorbitant or unconscionable” when regard is had to the innocent party’s interest in the performance of the contract ( per Lord Hodge in ParkingEye at paragraph 255). A parking charge rendered by a car park operator is not a penalty if it serves a legitimate interest ( per Lords Neuberger & Sumption in ParkingEye at paragraph 99). In circumstances where a car park operator is not the proprietor of the car park and has suffered no loss arising from a motorist’s use of the car park, the following objectives (if ascertained) are to be regarded as reasonable (subject to the application of the rules regarding penalty clauses and consumer law): (i) managing the efficient use of parking space in the interests of users by deterring inconsiderate parking practices and (ii) the provision of an income stream to enable the car park operator to meet the costs of operating the scheme and making a profit from its services ( per Lords Neuberger and Sumption in Parking Eye at para 98).
The Claimant submitted that neither the charge of £40 nor the costs term is struck out by the rule on penalties. The Claimant had a reasonable objective of managing the efficient use of parking spaces at Ninewells and securing an income stream to meet the costs of operating the scheme and profiting. The charges are neither exorbitant nor unconscionable when reference is had to: the Claimant’s legitimate interest in controlling the use of the car park and in managing the car parks in the interests of users and the public at large; the evidence that there was a clear need for parking systems at Ninewells; the BPA Code which makes it clear that the £40 charge is not out of proportion when regard is had to common practice and a suggested maximum of £100 (paragraph 34). Indeed, the £40 charge is much less than the cost of constructing and managing one parking space (around £10,000-£15,000 per space and around £12m to construct a car park). Similarly, the estimated costs of operating the parking systems by way of equipment, systems and personnel was around £80,000 to £100,000 per year. There is nothing exorbitant or unreasonable about a party agreeing to meet the reasonable costs of enforcement action which were incurred in making good a breach of contract by that party. The evidence plainly disclosed that the Respondent was given ample warning of the terms and conditions both by way of the main entry signs and the particular signs located in the car parks. As such, the charges cannot be said to be unconscionable.
The Consumer Rights Act 2015 (”The 2015 Act”)
The Claimant submitted that the £40 penalty and the costs recovered under the costs term are not disproportionately high and are not therefore unfair under paragraph 6 of Part of Schedule 2 to the 2015 Act. Nor are those terms unfair in terms of section 62 of the 2015 Act. The Claimant relied on the same reasoning given for concluding that the charges were not exorbitant or unconscionable when considering the application of the penalty rule.
Looking to the particular factors to which the court is directed by section 62(5) , the nature of the contract is to provide for short term use of a hospital car park. Such contracts regularly carry provisions as to charges which are well known to consumers. The Respondent need only have paid around £2 to avoid any further charges at all. He had a range of choices as to where he parked his car or how he travelled to work. He decided to use the car park which presented him with a stark but reasonable choice: pay a small fee to the Claimant of around £2 or risk a charge of £40 and thereafter further costs being levied. The Respondent was able to drive away at any time but chose to contract by leaving his car knowing that the term now complained of was in place and would likely be relied upon. Those are not circumstances on which one could reasonably conclude that that what happened was unfair.
The Claimant further submitted that the costs term is qualified insofar as the driver agrees to indemnify the Claimant in respect of “any such reasonable costs [of enforcement action]”. That qualification is there to protect the Respondent and points away from unfairness. The BPA Code at paragraph 34 recognises the Claimant’s ability to recover such costs and advises that the position be recorded in the terms and conditions. The Claimant has complied with that requirement which should count against any characterisation of the clause as unfair.
The Claimant submitted that the court should also take notice of the nature of the term which only comes into play upon a breach of contract by the user. There is nothing unfair about parties contracting on the basis that party A is allowed
to recover reasonable costs from party B in the event that party B acts in breach of contract. There is plainly no imbalance in the parties’ rights and obligations. The Respondent was free to park elsewhere or not use the parking facilities at all. Any imbalance which there could be is purified by the “reasonableness” caveat built into the clause. There is also no question of disproportion. The sums sought are nominal and in line with the amount of the principal debt and the rates charged by the market for that type of work.
Reasonableness of the costs claimed
The Claimant submitted that the £96 costs charged fall within the terms of the contract as the reasonable costs of enforcement action. The costs are (i) ZZPS’ charges of £50 net of VAT and (ii) the solicitors’ charges of £30 net of VAT. The obligation is only to indemnify for reasonable costs. The Respondent knew or had the reasonable opportunity to know that the penalty charge would be £40. Each individual recovery cost (£20 and £30 net of VAT) is around the same level as the penalty charge itself. There is no vast disproportion between the two. The contracting parties would understand that there would be some form of cost associated with carrying out work to enforce payment.
The Claimant further submitted that the language of the costs term makes it clear there will likely be costs associated with taking the necessary enforcement steps. Paragraph 34 of the BPA Code indicates that the Claimant has been told to warn drivers such as the Respondent of the likelihood of additional recovery costs. The Code expressly states that the particular costs need not be adverted to.
It is not unreasonable for the Claimant to pursue the debt in circumstances where the Claimant considers there to have been a breach of contract. There was nothing unreasonable in the Claimant incurring the cost of engaging an external body to pursue the debt. The rates charged by ZZPS and QDR are representative of the market more generally. The rates are nominal and patently not unreasonable. These parties provided services to the Claimant which have their own costs and overheads attached to it. The rates charged are lower than the rates provided for by way of judicial expenses whether in simple procedure proceedings or on the tables of fees more generally. The court should take no cognisance of the contingency basis upon which the Claimant’s agents have acted. That is a matter between them and of no moment when it comes to the contract between the Claimant and the Respondent. The evidence from ZZPS and QDR clearly disclosed that such arrangements are common in the market. It is not unreasonable for the Claimant to engage services at a cost of £ plus VAT.
Respondent’s Submissions
- The Respondent invited the Court to restrict decree to the amount of £320 to reflect payment of the original eight parking charges in the sum of £40 each. Thereafter the Respondent sought decree of absolvitor in respect of that part of the claim relating to the costs of £96 for each of the eight parking charge notices, on the basis that the costs term did not form part of any contract between the parties. Esto the costs term formed part of the contract, the Respondent sought decree of absolvitor in respect of that part of the claim relating to those costs on the basis that the provision constitutes a penalty and is not enforceable. Esto the provision is not a penalty, the Respondent submitted that the condition is unfair in terms of the 2015 Act and is not binding on the Respondent. Esto the costs term forms part of the contract and is binding or enforceable against the Respondent then the Respondent sought decree of absolvitor in respect that the Claimant has suffered no loss and/or such costs are excessive.
Contractual Liability
The Respondent accepted that signage was displayed at the car parks where the Respondent parked, that the terms on which parties contract may be displayed on a notice and that it is not a defence to the action to prove that the other party had failed to read the terms of a notice. However, the Respondent submitted that what was in issue was whether on the facts of the case, the Claimant had done what was reasonably sufficient to bring the notice to the attention of the Respondent. (McBryde The Law of Contract in Scotland 3rd Ed para 7-16). The Respondent submitted that certain contract conditions require very clear notice to incorporate them in a contract (McBryde supra para 7-10; Interfoto Picture Library Ltd v Stlietto Visual Programmes Ltd [1989] QB 433 ; Thornton v Shoe Lane Parking Ltd [1971] 2 QB 163 and in particular the dicta of Megaw LJ (pp 172-173). The onus of proof in showing that a condition was fairly brought to the
As an unusual and onerous provision, it ought to have been brought to the attention of the Respondent. The Claimant failed to do so and as a result the court should hold either that the condition relating to costs does not form part of the contract (as per Dillon LJ in Interfoto ) or that the Respondent is relieved from liability under the condition (as per Bingham LJ in Interfoto ).
Penalty Rule
The Respondent submitted that the costs term is unenforceable because it falls foul of the rule against penalties. The substance of the contractual agreement is that the charge for breach of contract is in fact an escalator clause. If a party breaches the contract the initial payment is £40, which will increase to £64, then to £100 and finally to £136 in the event that the breach continues. If the terms of the contract are enforceable the Claimant has a right to claim an initial £40 upon immediate breach and thereafter an additional undisclosed amount, at the Claimant’s discretion, where such breach continues.
The Claimant can only recover the stated sums in so far as the contractual provisions do not fall foul of the penalty rule. Following the test as described by Lord Hodge in ParkingEye , (paragraph 255) the Respondent accepted that the contractual provision in this case can be measured against the interest of the Claimant which is protected by the contract. In that context the question for the court is whether the remedy is exorbitant or unconscionable.
The Respondent submitted that the charge of £136 is exorbitant and unconscionable. The charge of £136 exceeds the recommendation of the accredited trade association, the BPA. Its Code of Practice suggests a maximum amount of £100, beyond which special justification is required (paragraph 34). It also exceeds the statutorily authorised amount local authorities in Scotland are entitled to charge. It goes beyond the £85 charge permitted in ParkingEye and the £100 charge upheld in Vehicle Control Services Limited ( supra ).
Lord Hodge in ParkingEye considered that the fact that motorists entering the car park were given ample warning of both the time limit of their licence and the amount of the charge supported the view that the parking charge was not unconscionable (at paragraph 287). However, in this case, only ample warning was given of the £40 element of the charge. The costs term was listed amongst a plethora of other conditions, and was not drawn to the attention of the Respondent. It was framed in vocabulary that was unfamiliar to him and unclear in its terms. A motorist is given no indication of the fixed costs known by the Claimant, nor even a hint of the potential extent of these. The Respondent also distinguished this case from ParkingEye where the parking was being used for recreational purposes and there were a number of other potential car parks for motorists to use if they wished. In this case, the Respondent was only parking at the site for the purposes of work. Depending upon the shift that he was working the extent of available parking at the site was limited. The Respondent had no authority to incur enforcement costs, as the letter from NHS Tayside dated 4th June 2014 only provides authority to pursue the charges through the courts. The Respondent took the decision to engage debt collection agencies in the knowledge that the enforcement will be unsuccessful in 98% of cases. The amount of £136 is exorbitant and cannot be justified by reference to any other regime or practice of parking charges. The condition is also unconscionable as a motorist is given no adequate warning of the potential sanction, nor the amount.
Consumer Rights Act 2015
- The Respondent further submitted that the costs term is unfair under the 2015 Act and not binding on the Respondent. The Respondent relied on section 62 and 63 and Part 1 of Schedule 2 to the 2015 Act. The 2015 Act consolidates previous consumer legislation, including the 1999 Regulations and gives effect to the European Council Directive 93/13/EEC, 5th April 1993 , on unfair terms in consumer contracts. The terms of section 62(4) of the Act reflect the 1999 Regulations and the Directive, although the Directive only applies to contract terms which are not individually negotiated, so that the current UK legislation applies more widely. Prior case law on the Regulations is therefore useful in interpreting the 2015 Act.
- The courts had described the precursor to section 62 as laying down a composite test covering both the making and the substance of the contract, which must be applied bearing in mind the object which the 1999 Regulations are intended to promote. Fair dealing requires that the supplier should not, deliberately or unconsciously, take advantage of the consumer’s necessity, indigence, lack of experience, unfamiliarity with the subject matter of the contract, weak bargaining position or any factor listed in or analogous to those listed in the Schedule to the Act. ( per Lord Bingham, Director of Fair Trading v First National Bank plc [2002] 1 AC 481 , paragraph 17).
- The Respondent relied on Aziz v Caixa d’Estalvis de Cataluyna, Tarragona i Manresa [2013] 2 CMLR 89 where the
Court of Justice of the European Union addressed the interpretation of the Directive. It started from the perspective that the system of protection introduced by the Directive is based on the premise that the consumer is in a weak position vis-a-vis the supplier (at paragraph 44). It was held that the reference to ‘significant imbalance’ in the parties’ rights and obligations required the court to evaluate to what extent the term of the contract places the consumer in a worse position than would have been the situation under the relevant national law in absence of that term. Considering the question of whether any imbalance arising was contrary to the requirement of good faith the court stated that it must be determined whether the supplier, dealing fairly and equitably with the consumer, could reasonably assume that the consumer would have agreed to the term concerned in individual contract negotiations (paragraph 76). 73. In ParkingEye the Supreme Court had considered the precursor to section 62(1) , in regulation 8(1) of the 1999 Regulations. Lords Neuberger and Sumption determined that the clause imposing an £85 charge did not fall to be considered unfair under the regulations (paragraphs 102 onwards). Lord Mance and Lord Hodge agreed with that approach. However, Lord Toulson dissented on this aspect of the case. Following the approach of Lord Bingham in the First National Bank and in Aziz , he concluded that the application of a penalty clause in the contract placed the consumer in a worse position than would have been the case in absence of that term. Accordingly, the £85 charge created a significant imbalance within the meaning of the regulation, because it far exceeded any amount which was otherwise likely to be recoverable as damages for breach of contract or trespass. Lord Toulson considered that it would not be reasonable for the Claimant to reasonably assume that the customer, who was in a position to bargain individually and who was advised by a competent lawyer, would have agreed to pay £85 of parking charges if for example he overstayed for a minute (paragraph 314).
It was in relation to this latter point regarding good faith that Lord Toulson’s decision differed from the majority of the court who held that the charge was not unfair on two grounds. First, the significant imbalance between the parties had to be “contrary to the requirement of good faith” and ParkingEye had a legitimate interest in imposing a liability on Mr Beavis in excess of the damages that would have been recoverable at common law, and the amount of charge at £85 was not higher than required to meet that objective (paragraph 107). Second, it could reasonably be assumed that a consumer would have agreed to the term in individual contract negotiations. They took the view that motorists generally and Mr Beavis in particular did accept the term. Although the terms, like all standard contracts, were presented on a take it or leave it basis, they could not have been briefer, simpler or more prominently proclaimed. Motorists could hardly avoid reading the notice and were under no pressure to accept its terms (at paragraph 108). Their Lordships confirmed once again that the charge of £85 was a normal feature of parking contracts.
The Respondent submitted that following the ratio of the decision of the majority in ParkingEye , it could not be reasonably assumed in the present case that the consumer would agree to the costs term. The Claimant had not shown the term was a normal feature of a parking contract. Nor was the term brief, simple or prominently proclaimed. The term was not drawn to the attention of the Respondent in any way, indeed it was simply one of a number of ‘small print’ conditions. The language used is technical and unclear. The level or scope of the costs was not known referred to within the condition. Employees working at Ninewells were, depending upon their shift pattern, constrained in their choice of car parking because of restrictions on availability. The provision of short term parking was not compatible with shift working. The system of permit parking for staff is only workable for staff working exclusively from Ninewells on a permanent basis, not those, such as the Respondent who will have a short term placement at the site for the purpose of his studies, or those working from more than one hospital site at different times.
So far as the substance of the contract is concerned, the Claimant seeks to recover these costs as a pre-agreed term of the contract between the car park provider and the motorist in addition to the £40 penalty charge. The level of such costs is not specified and is determined by the Claimant. The Claimant proceeds with enforcement action through third parties in the knowledge that in 98% of cases enforcement will be unsuccessful. The additional costs take the charge outwith the scope of any reasonable penalty levied under statutory provision or recommended by the BPA. It is entirely unclear whether there is any usual practice of seeking such costs in addition to a penalty charge. The only information before the court suggests that, to the contrary, such costs are not normally levied.
The Respondent submitted that looking at both the making and substance of the contract as per Lord Bingham’s dicta in First National Bank the object of the 2015 Act to protect a consumer in a weak bargaining position vis a vis the car park management supplier is undermined in this present case. The supplier is taking advantage of the need for those working at the site who require to park their cars and their inability to alter or negotiate the bare terms of the contract.
Without such a condition in the contract the Claimant would be unable, at common law, to recover any such costs from the Respondent (as per Lord Toulson in ParkingEye ). Even if it is accepted that the interests of the parking management company afford it protection under national law (as per the majority of the Court in ParkingEye ), no ample warning is
complex and confusing. The enforcement process is convoluted, lacking in clarity, confusing as to the various names of parties mentioned and the connection with the original parking charge notice, opaque regarding the basis of charges being imposed, at times simply wrong in so far as erroneous dates are inserted in correspondence to identify the relevant parking charge notice. In all of the circumstances the Claimant has failed to discharge the onus to show that the additional costs are reasonable.
Discussion
I took the view that all the witnesses I heard gave their evidence in a straightforward and clear manner. I found them all to be reliable and credible. I accept their evidence in its entirety. I have summarised it above and need not repeat it again. It seemed to me that there were no real disputes of fact of any significance. The outcome of the case is dependent on the view I take on the competing legal arguments presented by the parties as applied to the evidence. The parties’ written submissions were complex and thorough, extending to 70 pages. In deference to the detailed and very careful consideration of the law given by both parties I have set out much of these in detail above in the hope that I may be able to deal with them more shortly below.
The Respondent concedes he is liable to pay the Claimant £320 for the eight penalty charges. As the Claimant submitted, the necessary implication of this concession is that the Respondent must accept that he entered a contract with the Claimant in terms of which he was liable to pay a penalty of £40 for each time he parked in the car park without displaying a valid parking ticket.
What remains at issue can be reduced to the following four questions: (1) Did the costs term requiring the Respondent to indemnify the Claimant for the reasonable costs of enforcing the penalty charge notice, form part of a contract between the parties? (2) Is the costs term unenforceable as it is a penalty? (3) Is it not binding on the Respondent under the Consumer Rights Act 2015? (4) Are the costs claimed reasonable? I deal with each of these questions in turn below.
(1) Did the Costs Term for Part of the Parties’ Contract?
- There is no dispute between the parties that the Respondent parked his car without purchasing a parking ticket or displaying a ticket on his windscreen. The Respondent accepted that he knew there was a notice displayed in the car park which contained terms and conditions of use of the car park. The parties seemed to agree in principle that the terms on which parties contract may be displayed by way of notice and that it may be sufficient to display the notice prominently so that it can be easily seen at the time of making the contract. Both parties also appeared to accept that it is a question on the facts of a case whether what was done was reasonably sufficient to bring the notice to the attention of contracting parties. (McBryde The Law of Contract in Scotland 3rd Ed paragraph 7-16). The dispute between the parties is whether, on the facts of this case, the Claimant had done what was reasonably sufficient to bring the costs term to the attention of the Respondent.
- My view is that on the facts of this case the Claimant has done enough to fairly draw all the terms and conditions of the contract, including the costs term, to the attention of the Respondent. There are large signs at the entrances to Ninewells indicating that terms and conditions apply within the car parks and directing drivers to the signs for further details and instructions. There are reminder signs in the car parks to remind users to pay at the pay machines where the terms and conditions are displayed. The signs at the pay machines within car parks 5 and 6 are prominent, large and legible. They are displayed at about a 1 height with large text and bright colours. It is true that the text indicating that unauthorised vehicles may be issued with a Parking Charge Notice of £40 is more prominent than the costs term and appears higher on the sign. However the sign states in large white text against a blue background that the following charges are payable for parking vehicles contrary to the terms and conditions and below that sets out the costs term in legible and plain text. The sign alerts the driver to the fact that there are certain charges to be paid for breach of the terms and conditions. The evidence showed that the Respondent was capable of reading the costs term on a much reduced A4 copy of the sign. Within the car park these signs are far larger and the text of the costs term much more visible. The fact that some of the text may not be at eye level does not in my view mean that they are not prominent or plainly visible and legible. The
Respondent accepted in cross-examination that he had a fair opportunity to read the signs. The fact that he chose not to take up that opportunity (despite knowing it was being presented to him) is a matter for him and, as he accepts, is not a defence to this action. 91. I do not find much assistance in the case of Interfoto relied upon by the Respondent or the passage in MacBryde at paragraph 7-10. Both these authorities are concerned with circumstances where a party has attempted to incorporate collateral terms into a contract by reference to some other document. In Interfoto the term complained about was within a delivery note delivered after the contract had been entered into. In this case the terms and conditions were all contained on one sign within the car park and no question of post contractual incorporation arises. I do not therefore agree with the Respondent’s submission that there is any onus on the Claimant to show that the term is usual or onerous.
In any event I heard very little evidence about how usual the costs term is in parking contracts, perhaps as a consequence of the fact that this was never put in issue by the Respondent in his response to the claim nor in any questioning of the witnesses. The parties referred to the BPA Approved Operator Scheme Code at C7. At paragraph 34. under the heading “Parking charges” car park operators are advised that they should warn drivers that if they delay payment and debt recovery action is required, there may be extra recovery charges for the debt recovery action. The advice given is that the car park operator need not stipulate these charges in advance. The Code is not part of any contract between the parties, but it does give some indication of the sorts of provisions for parking charges that car park operators are advised they might ordinarily include in their terms and conditions. On balance of probabilities, given that it is something that the Code envisages, had I thought it relevant, I would have been inclined to the view on the limited evidence available, that the costs term is not unusual.
Nor would I have taken the view that the costs term is onerous in the way described in Interfoto. It requires a user to pay an additional amount for the reasonable costs of enforcement. It is difficult to describe such a provision as unreasonable or extortionate when only “reasonable” costs are payable. By definition the Respondent is protected from being charged anything unreasonable or extortionate. It does not seem to me to be onerous to contract on the basis that a party who acts in breach of contract has to meet the costs associated with making good that breach so long as those costs are reasonable.
Assuming I am wrong about that, and the costs term is onerous and unusual, the question is still whether the Claimant has done enough in the circumstances to fairly bring that particular term to the attention of the Respondent. For the reasons already given, my view is that the Claimant has very clearly and deliberately brought the costs term to the Respondent’s attention. All of the conditions on the signs at the pay machines were visible, legible and prominently displayed for the Respondent to read before purchasing a ticket and before deciding whether to leave his car in the car park subject to those terms and conditions. Although the costs term was in smaller text and lower down on the sign, the Respondent’s attention was sufficiently drawn to it. In my view the Claimant was entitled to conclude that the Respondent’s conduct signalled that he had accepted the terms and conditions of car park use including the costs term. The Claimant has in my view done enough to draw the cost terms to the attention of the Respondent.
(2) Is the Costs Term Unenforceable as it is a Penalty?
- The rule against penalties was discussed in some detail by the Supreme Court in ParkingEye. Lord Hodge stated that the rule against penalties is a rule of contract law based on public policy It is a question of construction of the parties’ contract judged by reference to the time of contracting; the public policy is that the courts will not enforce a stipulation for punishment for breach of contract (at paragraph 243. At paragraph 255, he encapsulates the correct test as being:
”I therefore conclude that the correct test for a penalty is whether the sum or remedy stipulated as a consequence of a breach of contract is exorbitant or unconscionable when regard is had to the innocent party’s interest in the performance of the contract. Where the test is to be applied to a clause fixing the level of damages to be paid on breach, an extravagant disproportion between the stipulated sum and the highest level of damages that could possibly arise from the breach would amount to a penalty and thus be unenforceable. In other circumstances the contractual provision that applies on breach is measured against the interest of the innocent party which is protected by the contract and the court asks whether the remedy is exorbitant or unconscionable “.
(5) whether a term is fair is to be determined –
(a) taking into account the nature of the subject matter of the contract, and
(b) by reference to all the circumstances existing when the term was agreed and to all of the other terms of the contract or of any other contract on which it depends.”
- As provided in section 63(1) , Part 1 of Schedule 2 to the Act contains an indicative and non-exhaustive list of terms of consumer contracts that may be regarded as unfair which list includes the following provision:
”(6) A term which has the object or effect of requiring a consumer who fails to fulfil his obligations under the contract to pay a disproportionately high sum in compensation.”
- Many of the submissions under this heading overlapped with those made under the penalty rule and in my view, the same considerations that led me to conclude that the costs term is not a penalty, also establish that it is not unfair under the 2015 Act either. I note that a similar approach to these two issues was taken in ParkingEye by Lords Neuberger and Sumption at paragraphs 104, 107 and Lord Hodge at paragraph 289).
- Following the reasoning of the Supreme Court (in relation to the 1999 Regulations) in ParkingEye , it seems to me that it can fairly be said that the £40 charge and the additional costs are charges that the Respondent would not have been liable to the Claimant for in the absence of an agreement. Absent any contract, the Respondent might have been liable to the landowner for the occupation value of the car parking space, but not to the Claimant. To that extent I acknowledge there is an imbalance in the parties’ rights and obligations.
- However, under section 62 , for the costs term to be unfair, that imbalance must arise contrary to the requirement of good faith. I respectfully adopt the reasoning of the majority in ParkingEye (at paragraphs 102 to 114 (in relation to the 1999 Regulations) and under reference to the case of Aziz ) and take the view that the costs term in this case is not one contrary to the requirement of good faith because the Claimant had a legitimate interest in imposing liability on the Respondent, beyond what would have been recoverable at common law, namely in the efficient management of the car park.
- Furthermore, in my view, the costs term is one which it would be reasonable to assume that the consumer would agree to if individually negotiating terms (per Advocate General Kokott Aziz at AG74). The test is an objective one. It is not whether the Respondent would in fact have agreed to the term but whether a reasonable car park user would have agreed. As I have already concluded, the penalty charges in this case are relatively low: £20 if paid in 14 days and £40 if paid within 28 days. Those charges are far less than the penalty charge of £85 in ParkingEye and within the £100 limit posed by the BPA. (I heard no evidence about the costs charged by local authorities and do not place any weight on the submissions made by the Respondent in that respect.) Thereafter the consumer is required to pay the reasonable costs of enforcement where he continues to fail to pay the penalty of £40 under the contract. There is an objective reason for those charges: that it costs money to enforce payment of the penalty charges. Furthermore, the consumer is not left without protection since there is the caveat that only reasonable costs are payable. Moreover the risk of having to pay £20, £40 or additional costs beyond that is entirely within the consumer’s control. He could choose to display a parking ticket and avoid any further payment, or pay £20 within 14 days or £40 thereafter. He is given many opportunities to avoid paying the additional enforcement costs. Given these factors, a car park provider could in my view reasonably assume that the reasonable car park user would have agreed to the costs term concerned in individual contract negotiations.
- I do not consider that the costs term allows the Claimant to deliberately or unconsciously take advantage of the Respondent’s necessity, indigence, lack of experience, unfamiliarity with the subject matter of the contract, weak bargaining position or any other factor listed in the Schedule to the 2015 Act. The circumstances of this case differ from
ParkingEye insofar as the car park is not for recreational purposes and the Respondent was using the car park to park his car whilst he was working a shift pattern. However, there are plenty other places for the Respondent to park his car outside Ninewells. Alternatively he may take public transport or use the bus service within Ninewells provided by the Claimant. Although the terms are set out on a take it or leave it basis, they are clearly brought to the attention of users and generally accepted by users. The costs involved increase only so long as the user chooses to continue to fail to pay in terms of the contract. In my view, there is nothing unfair in these contractual terms in those circumstances. 108. A term may be unfair under section 63(1) and Part 1 of Schedule 2 to the 2015 Act, if it has the object or effect of requiring a consumer who fails to fulfil his obligations under the contract to pay a disproportionately high sum in compensation. I have already concluded that the charges are neither exorbitant nor unconscionable. In my view, the costs term does not have the effect or object of requiring the consumer who fails to fulfil his obligations under the contract to pay a disproportionately high sum in compensation either. It is up to the user whether he pays any sum at all. The costs escalate as long as the user continues to fail to display a valid parking ticket and to pay the sums due under the contract. They do so each time at a rate of £20 to £36. The Respondent himself in evidence accepted that £20 plus VAT was a reasonable amount to charge for enforcement. Even at the height of £96, following a failure to pay after numerous reminder letters have been sent, the costs do not, in my view, result in a disproportionately high sum being due. These costs are in line with market charges and are proportionate to the many steps taken to recover the penalty due.
How the recovery costs are calculated and whether or not the Claimant chooses to delegate the recovery of the charges to an agent is in my view a matter between the Claimant and the third party, subject to the overall contractual provision that the costs must be reasonable. The terms and conditions provide that reference to the Claimant includes a reference to its agents. It is, in my view, reasonable for the Claimant to delegate recovery of the parking charges to third parties. There was no evidence to suggest that the costs would be different if the Claimant chose to pursue recovery itself. They are in line with what would be charged by others in the marketplace, all of whom are calculating costs in light of recovery rates and overheads in order to run profitable businesses. I do not consider that there is anything unfair in the Claimant seeking to recover costs of enforcement from the Respondent in circumstances where the Respondent persistently fails to make good his breach of contract.
So far as the Respondent claimed that the costs term was not transparent in terms of section 68 of the 2015 Act, I do not accept that use of the word “indemnify” in the clause renders it unintelligible. It seems plain what the term means in the context of the sign. The sign states:
”Any subsequent enforcement action may incur additional costs. You [the user] agree to indemnify us [the Claimant] in respect of any such reasonable costs and to make payment of them on demand.”
The wording makes it plain that subsequent enforcement will incur additional costs. Even if “indemnity” is not understood, it is plain that payment of those additional costs are payable on demand. Whilst the Respondent told the court that he did not understand the meaning of the word “indemnity” he also stated that he understood that the costs term meant that the Claimant would seek to recover costs from him in the event that they incurred those in pursuing the parking charge. The clause is expressed in plain and intelligible language and is legible.
(4) Are the Costs Claimed Reasonable?
- I do not accept the submissions made by the Respondent that the Claimant has no authority to pursue the costs otherwise than through the courts. This was never put in issue in the response form and I am not satisfied that the point was properly focused in evidence. The letter of 4 June 2014 states that the Claimant has authority to pursue the matter in
Indigo Park Services UK Ltd v Watson
Module: Contract Law (LAW1108)
University: Middlesex University London
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