OGH: Right of Recourse under Austrian Insurance Law

Dec 15, 2023 Benn-Ibler Rechtsanwälte

Grossly negligent behaviour is deemed to have occurred if there was an objectively particularly serious failure to act. Such breach of due diligence must also be considered reprehensible from a subjective viewpoint.

The defendant’s grandfather is the sole owner of a house which is insured against fire with the plaintiff company. The defendant entered into an agreement with his grandfather and was allowed to move into an apartment on the upper floor of the house. In the month of May 2020, the house was severely damaged by a fire. The cause of the fire was a cigarette butt which had been disposed of by the defendant in a rubbish bag.

The plaintiff insurance company compensated the grandfather for the damage caused by the fire and then sued for claimed payment of the damage from the defendant. Pursuant to Section 67 (1) of the Austrian Insurance Contract Act (Versicherungsvertragsgesetz, hereinafter VersVG), the grandfather’s claim for damages against the defendant was now transferred to the plaintiff.

The defendant argued that a waiver of recourse against the apartment owner existed in the event of slight negligence.

The first instance court upheld the claim. However, the court of appeal held that the defendant was the owner of the apartment and that the defendant’s conduct was not grossly negligent, so the dismissal of the claim was reversed.

The Austrian Supreme Court (Oberster Gerichtshof, hereinafter OGH) upheld the decision of the court of appeal.

General principles of civil-law contract interpretation are applied to determine who is considered to be the owner of the home. Average reasonable policyholders’ standards and the obvious purpose of the provision must apply. If there is any ambiguity, the burden of proof is always on the drafter of the contract – usually the insurance company.

The OGH concluded that the defendant was correctly regarded as the owner of the home.

General principles of civil law contract interpretation are applied to determine who must be regarded as the owner of the home. Average reasonable policyholder standards and the obvious purpose of the provision must apply. If there is any ambiguity, the burden of proof is always on the drafter of the contract. This is usually the insurance company.

The OGH concluded that the defendant was correctly considered to be the owner of the home.

Someone is grossly negligent if the simplest, most obvious considerations are not made and measures are not taken that should be obvious to everyone. If a person of ordinary prudence would have acted in the same way in the same situation, it is only a case of slight negligence.

In this case, the defendant did not act with gross negligence. Therefore, the waiver of recourse applied and the plaintiff could not claim damages.

7 Ob 153/23k (27 September 2023)