Austrian OGH: No Recoverability of Non-Use Lease Payments

May 30, 2025 Benn-Ibler Rechtsanwälte

Frustrated expenses are only those expenses that were not caused by the loss event itself, but have become useless as a result of it

In 2021 in the case at hand, the plaintiff had purchased a car from the defendant. The purchase price was financed by a lease agreement with a bank. The plaintiff thereby became the lessee of the vehicle. In 2022, the defendant carried out faulty repairs to the vehicle, resulting in engine damage in 2023. The plaintiff had the vehicle repaired by a third party in 2024. During that time the vehicle was neither used in its damaged condition nor was it replaced. No loss of earnings was claimed.

The plaintiff sought compensation from the defendant for the lease payments that were made during the repair period, as these were futile to him.

The court of first instance dismissed the claim. It ruled that, due to their purchase price character, leasing costs do not constitute futile expenses, as they affect periods after the end of the lease (upon purchase or return of the vehicle).

The court of appeal overturned this decision and awarded the plaintiff the unrealised leasing costs they had claimed.

However, the Austrian Supreme Court (Oberster Gerichtshof, hereinafter OGH) upheld the defendant’s appeal.

The OGH clarified that, as the party directly affected, a lessee is generally entitled to compensation in the event of damage to the leased asset. They can claim not only for damage to the asset itself, but also for loss of use, such as loss of earnings or rental costs for a replacement vehicle. However, futile expenses are only recoverable if they are directly related to the damage.

Leasing instalments, which essentially constitute a purchase price in the case of finance leases, are not considered to be futile costs. According to the general principle of tort law, no compensation is payable for the mere loss of the possibility of use, so an obligation to pay compensation would be contradictory. Just as the buyer is not entitled to a pro rata refund of the purchase price for the period of non-use, so too is the lessee not entitled to compensation for the lease payments.

Therefore, the lease payments claimed by the plaintiff do not constitute compensable damage caused by loss of use.

OGH 4 Ob 50/25v (11 April 2025)