OGH: Ruling on Trespass-Fee Collecting Agencies

Oct 25, 2024 Benn-Ibler Rechtsanwälte

According to recent case law of the Austrian Supreme Court (Oberster Gerichtshof, hereinafter OGH), the term ‘legal representative’ in Section 879(2)(2) of the Austrian Civil Code (Allgemeines bürgerliches Gesetzbuch, hereinafter ABGB) is not limited to solicitors. Even the operator of a collection agency acting as a litigation funding company may fall foul of the quota-litis ban if they give legal advice to clients or try to influence litigation through a solicitor.

In the case at hand, the plaintiff runs a law firm in Vienna. In preliminary proceedings (4 Ob 5/24z), she obtained an interim injunction against the second defendant prohibiting his company from running his business by sending demand letters in the name of third parties to (potential) trespassers and demanding payment or offering settlement payments in return for not bringing an action for trespass.

As a result, the first defendant now uses a modified business model by automatically involving ‘partner solicitors’. However, customers are (still) being attracted by the business tagline, ‘We Protect Your Property’ and the promise of ‘quick and unbureaucratic help’ if someone’s property is disturbed by unauthorised parkers. As with the previous business scheme, customers would receive up to EUR 200, would not incur any costs and would also be exempt from costs arising out of legal action against unauthorised parkers. The first claimant would be entitled to a success fee of 50% of the parking offender’s payment.

In her application for interim measures, the plaintiff sought, inter alia, an order prohibiting the first defendant from charging a success or referral fee for referring clients, consisting of a percentage of the payments collected from (potential) trespassers.

The court of appeal granted the interim injunction and confirmed a violation of the prohibition of multiple actions pursuant to Section 879 (2) 2 of the ABGB. The defendant’s offer of legal services is in breach of the prohibition on multiple actions.

The OGH upheld the decision of the court of appeal. It is reasonable to assume that the first defendant provided specific services to clients reserved to solicitors. The fee agreement, under which the first defendant would receive 50% of the sum recovered from offenders, is also in breach of the prohibition under Section 879(2)(2) of the ABGB.

OGH 4 Ob 144/24s (10 September 2024)