OGH: Official liability for costs of unnecessary proceedings

May 26, 2021 Benn-Ibler Rechtsanwälte

The Austrian Supreme Court (Oberster Gerichtshof, OGH) has decided that a claim for official liability exists if the court interprets legal provisions in an unwarranted manner and as a result takes or initiates evidently unnecessary procedural steps that lead to avoidable additional costs for a party.

In the present case, execution was levied against the plaintiffs because they did not pay the purchase price of a property in full. The plaintiffs tried to defend themselves against the execution by means of an opposition action. As grounds for opposition, they cited hidden defects that had been fraudulently concealed by the seller and had only gradually become apparent. These would justify a price reduction, according to the plaintiffs.

The district court responsible for the opposition action then conducted an evidentiary hearing to establish the existence of defects. Only after two years did the judge point out that a right to a price reduction could not constitute a viable ground for opposition. He had only recently learned of this (established) case law – which, incidentally, has been available in the Legal Information System (Rechtsinformationssystem, RIS) since 1997 – at a seminar. Thereupon, he dismissed the opposition action.

The plaintiffs now claimed damages for the costs of the proceedings. They argued that the court had not met its duty to provide guidance and that it should have dismissed the opposition action at the first hearing. Instead, the court had conducted an elaborate, costly and, from the outset, futile evidentiary hearing.

The court of first instance awarded damages, while the court of appeal did not consider the tortious connection to be given.

The OGH ultimately restored the first judgment.

According to the OGH, Section 180 (3) of the Code of Civil Procedure (ZPO) also protects the unsuccessful party from additional costs arising from evidently unnecessary procedural steps due to an unjustifiable interpretation of the law. Since the unsuccessful party has to reimburse the costs of the prevailing opposing party and to bear its own costs definitely, the tortious connection was affirmed.

However, according to the OGH, the plaintiffs who were represented by lawyers are partially at fault. Due to improper representation in the opposition proceedings, they were not obliged to pay their own lawyer’s fees. Therefore, the amount of compensation proved to be lower.

OGH 1 Ob 204/20m (02.03.2021)