Have consumers really lost on penalties, asks Thomas Samuels
On 4 November, the Supreme Court handed down in its decision in the conjoined appeals of Cavendish Square Holdings BV v El Makdessi and Beavis v ParkingEye Ltd [2015] UKSC 67, [2015] All ER (D) 47 (Nov). For the first time in a century the UK’s highest court re-examined from first principles the common law rule against penalties and, in the case of Beavis, the proper approach to the Unfair Terms in Consumer Contracts Regulations 1999 (SI 1999/2083) (now replaced by Pt 2 of the Consumer Rights Act 2015 (CRA 2015)).
Facing facts
Factually-speaking, the appeals in Cavendish and Beavis could not have been more different. The former related to a multi-million dollar default provision and the latter an £85 parking charge. However, the issue in both was the same: were the relevant clauses unenforceable penalties? The court answered the question, in both cases, in the negative. The mere fact that the clauses imposed consequences which went beyond a genuine pre-estimate of the innocent party’s loss did not, of itself, mean that the clauses were penal.
