Letter of advice assignment 2 PDF

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Ref: SGS1502161

Legal Research Memorandum: Henry Miko – 1502161

15 February 2016

1. Introduction As instructed, the following preliminary advice in this memorandum addresses the issue of a parking ticket issued to our client, Mr. Miko by Parkwest. This memorandum provides authority on whether a contract can be established between our client Mr. Miko and Parkwest. This memorandum also addresses the issue of breach of contract in the case that a contract is established. In which case damages will be discussed, and whether the amount for liquidated damages on the parking ticket is for damages or a penalty.

2. Executive Summary This memorandum aims to evaluate whether our client, Mr. Miko entered into a contract when parking his vehicle on the premises of Parkwest at Miko Road Shopping Centre. Mr. Miko failed to display a valid parking permit and received a parking violation ticket for liquidated damages of $60. This memorandum identifies the contentious issue of liquidated damages disguised as an unenforceable penalty in a parking context.

3. Discussion 1.a Formation of a contract: In order to establish whether our client is required to pay the parking ticket, it is necessary to establish whether he formed a valid contract with Parkwest. In the matter of Director of Consumer Affairs Victoria v Parking Patrols Vic Pty Ltd & Anor it was established that simply entering a car park, the driver or owner of a car had not entered into a contact because, there was no intention to create legal relations, there was no offer, there was no acceptance of an offer and there was no consideration. 1 The driver did not expressly agree to terms and conditions, and the driver may or may not have seen or read such terms. However in the matter of Vico v Care Park Pty Ltd it was established that a contract was formed when Vico parked his car in the car park and left it there.2 It is evident that there are conflicting authorities on whether parking a car in a car park without paying can be considered a breach of contract or if a contract was formed at all. Breaking down the elements of a contract may assist in the process of establishing if there was in fact a contract between our client and Parkwest.

i. Offer or Invitation to Treat Determining whether an offer exists requires establishing if there was an offer and if so whether it is an offer or an invitation to treat.3 In the matter of Carepark v Universal One Communication, driving into a car park was recognized as accepting the offer.4 Thus establishing that a car park operating with signs stipulating prices can be seen as an offer. Offering something of value, i.e. in this matter a permit to occupy 1 Director of Consumer Affairs Victoria v Parking Patrols Vic Pty Ltd & Anor [2012] VSC 137. 2 Vico v Care Park Pty Ltd [2014] VCAT 565. 3 Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153. 4 Care Park Pty Ltd v Universal One Communication Pty Limited & Anor [2009] NSWSC 1405.

a parking space for a specified period of time. ii. Acceptance Two conflicting authorities provide different views on entering a car park being sufficient acceptance. In the matter of Carepark v Universal One Communication it was recognized that by driving into the car park and leaving the vehicle there was acceptance of the terms and conditions and therefore acceptance in the formation of a contract.5 However in the matter of Director of Consumer Affairs Victoria v Parking Patrols Vic Pty Ltd & Anor it was established that in very similar circumstances there were no acceptance and no meeting of the minds. 6 In this matter our client parked his car and acceptance can be established through mutual manifested conduct.7

iii. Consideration It is unlikely that consideration can be established as no exchange of one thing for another thing of value has occurred. Our client never purchased a ticket; therefore there is no exchange. However, executed consideration can be sufficient consideration for parking his car and leaving it there.8

5 Care Park Pty Ltd v Universal One Communication Pty Limited & Anor [2009] NSWSC 1405. 6 Director of Consumer Affairs Victoria v Parking Patrols Vic Pty Ltd & Anor [2012] VSC 137. 7 Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153. 8 Carlill v Carbolic Smoke Ball Co Court of Appeal [1893] 1 QB 256; [1892] EWCA Civ 1.

iv. Conclusion It is highly likely that a court will find that there was a contract due to executed consideration being sufficient. Referring to the matter of Vico, with very similar circumstances as that of our client it was accepted that a contract was formed. The matter was largely based on a point of law issue differentiating between liquidated damages and a penalty disguised as damages.9

1.b Liquidated damages: The sign in the car park could be seen as an agreed damages clause or a penalty.10 It is essential to establish whether it is a penalty, in which case the clause will be invalid and our client will not be required to pay the $60.11 The point of law issue being whether the $60, described as liquidated damages, was in truth a penalty and was therefore unenforceable. In the Dunlop Pneumatic Tyre Co Ltd v New Garage & Motor Co Lts case it was established that even when the wording on a sign or parking ticket may prima facie be seen as a penalty or liquidated damages, it is not always as it appears and the court needs to evaluate whether it is truly a penalty or liquidated damages.12 Contractual terms that are penalties are not enforceable. Parkwest claims that the $60 is damages and for liquidated damages as stipulated on the ticket. In contracts without a liquidated damages clause, demonstrating the actual loss caused by the breach of contract and seeking compensation for that loss could enforce damages. As demonstrating actual loss can be difficult, incorporating a liquidated damages clause into a contract provides for a pre-agreed amount to be paid in the case either party breaches the contract. In order to prevent agreed liquidated damages’ 9 Vico v Care Park Pty Ltd [2014] VCAT 565. 10 Dunlop Pneumatic Tyre Co Ltd v New Garage & Motor Co Lts [1915] AC 79. 11 Vico v Care Park Pty Ltd [2014] VCAT 565. 12 Dunlop Pneumatic Tyre Co Ltd v New Garage & Motor Co Lts [1915] AC 79.

clauses from becoming pseudo-penalties, courts have enforced certain restrictions on such clauses. Lord Dunedin established in the Dunlop case, that “It will be held to be penalty if the sum stipulated for is extravagant and unconscionable in amount in comparison with the greatest loss that could conceivably be proved to have followed from the breach… and It will be held to be a penalty if the breach consists only in not paying a sum of money, and the sum stipulated is a sum greater than the sum which ought to have been paid … and there is a presumption (but no more) that it is penalty when ‘a single lump sum is made payable by way of compensation, on the occurrence of one or more or all of several events…”.13 The $60 could be seen as extravagant and unconscionable in comparison to the amount to be paid for parking for less than an hour. Our client needs to provide more information on the price per ticket and if charged per hour, in order to calculate whether the $60 is more than the greatest loss possible in the event of breach. The $60 is also a single lump sum made payable when a parking ticket is not displayed.

The matter of Vico held “The stipulated sum of $88 when compared to the sum of $15 was “out of all proportion”, it was seen as “extravagant and unconscionable”, it was “in the nature of a punishment” which was not “a genuine pre-estimate of loss”.14 These authorities support that pseudo- penalties such as parking fines deems a liquidated damages clause as invalid and therefore unenforceable. It is unlikely that a court would find that our client is liable in breach of contract, thus our client would not have to pay the $60.

13 Dunlop Pneumatic Tyre Co Ltd v New Garage & Motor Co Lts [1915] AC 79. 14 Vico v Care Park Pty Ltd [2014] VCAT 565.

4. Recommendations As per the Vico matter it could be advised that our client ignores the parking ticket and awaits further communication from Parkwest.15 In which case we would write a letter to Parkwest advising that we represent Mr. Miko and that stipulated damages on the parking ticket has previously been upheld as a penalty rather than a claim for liquidated damages which led to the clause being unenforceable resulting in no compensation, referring to the Vico authority.16 It is highly unlikely that Parkwest will pursue legal action, however a letter from us would cease any further demand letters that will follow.

15 Vico v Care Park Pty Ltd [2014] VCAT 565. 16 Ibid....