Millions of pounds of parking penalties could have been charged illegally, according to the RAC Foundation (“Foundation”).

Penalties for overstays in car parks on private land in England and Wales could in some cases be unenforceable in court, the Foundation said.

So on what grounds could the penalties be deemed illegal?

The Foundation claims the penalties are much more expensive than compensation for a genuine loss incurred by landowners.

The Foundation’s report said parking companies were levying charges on drivers which were disproportionate to the losses suffered by landowners as a result of motorists’ actions.

The report also said European legislation, which requires contracts to be fair, meant so-called “early payment discounts of penalty charges could also be unlawful because they constitute a “price escalation clause”.

So what opposition has there been to the Foundation’s report?

The Independent Parking Committee (“IPC”) claim the penalties are the only protection landowners have against  losses.

John Davies, director of IPC, said that parking charges were now “the only protection that landowners have short of installing expensive barrier equipment and that people who did not accept parking terms set out clearly on signs had “the choice not to park”.

In addition, Patrick Troy of the British Parking Association, which represents private parking companies, said people were already able to appeal to the Parking on Private Land Appeals (POPLA) body to address incidents of perceived unfairness.

So what action is the Foundation calling for?

The Foundation has called for the Government to ensure that extra parking charges are “reasonable and enforceable” and wants to see its argument tested in court so that a binding precedent is set.

So what happens if a binding precedent is set?

Stephen Glaister of the Foundation said: “Millions of drivers could be in line for a refund. We estimate that in 2013 alone drivers might have been overcharged by some 100 million”.