An extract from our legal representation in front of the Austrian Supreme Court (OGH)

OGH 24.01.2019, 9 Ob 96/18k
Sources: immolex LS 2019/27.
Keywords:  Liability of the real estate agent.
Areas of law: Austrian real estate law, real estate agency law, tort law.

Not only because of the curious facts, but also because of the certainty of the statements of the Austrian Supreme Court (OGH), this current decision is remarkable. The scope and significance of this decision can also be seen in a report dealing with it in the newspaper "Die Presse" of April 24, 2019, written by Judith Hecht.

In the foreground of this decision was the legal question to be answered by the Supreme Court as to whether a real estate agent may rely on the seller's statement that the building permits for the object of purchase would exist even though an entire floor was actually built illegally, i.e. without the required building permit. In the present case, the seller's information to the real estate agent was unproven, but there was no reason why this information should not be true.

The Supreme Court considered it a justifiable legal opinion that the real estate agent would not be subject to any investigation obligations in such a case and thus rejected the opposing appeal. Altogether this decision means a sigh of relief for real estate agents in the context of liability law.

OGH 23.01.2017, 5 Ob 179/16h
Fundstellen: immolex 2017/75 (Verweijen) = NZ 2018/80 (Hoyer).
Keywords: expropriation, expropriation notice, compensation payment, confirmation of legal validity, tax clearance certificate.
Areas of law: Austrian general civil law, land register law, general administrative law, administrative procedural law, tax law.

The right to property is secured not only by private law, but also by constitutional law. The subject of the proceedings was an interference with this right of ownership by means of an expropriation notice. However, the present decision is not only important for the concrete individual case (otherwise the case would not have been eligible to be ruled by the Supreme Court), but also answers considerable legal questions in connection with the requirements which an expropriation notice must meet in order to be entered in the land register. Another interesting aspect of this decision is that, although the focus is on a question of land register law (i.e. private law), the Austrian Supreme Court (OGH) also had to deal with general administrative law and administrative procedural law in the course of this proceeding.

In concreto there was an expropriation notice including a note of res judicata, but the name and identity of the authorising party were not recognizable. Rather, the expropriation notice contained only an illegible paraphe. The Supreme Court therefore came to the conclusion that the requirements of § 18 (4) of the Austrian General Administrative Procedure Act (Allgemeines Verwaltungsverfahrensgesetz/AVG), namely the designation of the authority and the indication of the date of the licence and the name of the authorising party, were not fulfilled. In addition, there was also a lack of a tax clearance certificate within the meaning of § 61 (1) of the Austrian Federal Fiscal Code (Bundesabgabenordnung/BAO). Even though this document does not have to be presented in original, there has to be at least a certified copy.

Although these arguments appear to be formalistic, compliance with these necessary procedural requirements is an instrument that ultimately serves to protect those who are subject to the law. For this reason alone, this decision is to be welcomed. However, the 5th Senate goes even further in its decision and requires proof of payment or securing of the compensation amount in the form of a certificate for a constitutive entry in the land register. Above all, this requirement strengthens the legal position of the expropriated person.

OGH 20.03.1997, 6 Ob 45/97d
Sources: ecolex 1997, 661= NZ 1998, 299 = ÖJZ 1997/146 (EvBl) = SZ 70/50.
Keywords: Contribution in kind and pre-emptive rights.
Areas of law: Austrian corporate, company, and general civil law.

The relevance of this decision of the Supreme Court (OGH) is shown not only by the fact that three fundamental legal principles are based on it (see RIS-Justiz RS0107637, RS0107638 and RS0107639), but also by the fact that it is confirmed by the literary treatment (see only Aicher in Rummel/Lukas, ABGB4 § 1078 Rz 1 ff; Feltl/Aicher in Straube/Ratka/Rauter, WK-GmbHG [2018] § 4 Rz 31).

The central legal question was whether the contribution of a property encumbered with a pre-emptive right as a contribution in kind to a company triggers the pre-emptive case and whether the payment offer of a common debtor represents an "actual payment". The 6th Senate decided the first part of this legal question in the interest of our client and therefore did not have to deal with the second part of the legal question.

In summary, the Supreme Court stated that the purpose of transferring a contribution in kind to a holding company is not to sell it to a third party, but rather to preserve it in the area of the affiliated company. In addition, the Supreme Court justified its decision by stating that, in the event of a contribution in kind, the participation granted is to be assessed as a compensation and that this participation does not only entail membership rights and property rights but also obligations. Therefore, this consideration cannot be compensated in cash or by an estimated value.

OGH 21.01.1993, 13 Os 67/91-39
Keywords: Principle of reliance in criminal law, "Noricum I".
Areas of law: Austrian criminal law, War Material Act (Kriegsmaterialiengesetz/KMG).

This decision by the supreme court made a significant contribution to ensuring that the practice of the division of labour between several parties, which can be found in business life, was also sufficiently taken into account in criminal law (see also Schwab in Höpfel/Ratz, WK2 KMG § 7 Rz 10).

In these criminal proceedings, the Austrian Supreme Court (OGH) came to the conclusion that a subordinate employee may in general assume that his superior's notification of the existence of the required license under the Austrian War Material Act (Kriegsmaterialiengesetz/KMG) is true. This decision is based on the principle of reliance, which is important not only in road traffic (see § 3 of the Austrian Traffic Regulations Act [Straßenverkehrsordnung/StVO]), but also in economic life based on the division of labour (see also OGH 21.06.1995, 13 Os 189/94).

In concreto, the Supreme Court stated that the concept of objective negligence is limited by the principle of reliance. This is because only the care required under the premise that all other persons concerned act with due care can be demanded. The principle of reliance is only no longer applied if the objective carelessness of the others is already clearly recognizable or specifically indicated.

OGH 10.01.1990, 2 Ob 157/89
Keywords: compensation for disfigurement, benefit adjustment.
Areas of law: Civil law (tort law).

Not every traffic accident raises legal questions of considerable importance, but the one at issue here has easily passed the hurdle to the Austrian Supreme Court (OGH). The basic obligation of the defendant insurance company to pay benefits was undisputed, but two main points remained open: On the one hand, the compensation for disfigurement in the event of an accident-related reduction in mental abilities, and on the other hand the crediting of benefits in the event of increased family allowances.

In its decision regarding both points, the Supreme Court followed the arguments put forward by our law firm and came to the following conclusion: It is true that according to Supreme Court jurisprudence a "disfigurement" within the meaning of § 1326 ABGB is to be understood as a substantial disadvantageous change of the external appearance. These prerequisites are, however, fulfilled in the present case, since the accident-related reduction of the plaintiff's mental abilities is recognizable from the outside, such as the noticeable slowing down, the laborious thinking, the mental stalling, and the otherwise conspicuous behaviour.

On the question of the consideration of the increased family allowance, the 2nd Senate stated that there can be no advantage credited here. For the family allowance is not an income of the plaintiff itself, but of the parents. This legal opinion was justified, amongst others, by the fact that the family allowance does not lead to a reduction in the child's claim to child support.

OGH 10.01.1989, 4 Ob 627/88
Sources: JBl 1989, 440 = ÖBA 1989, 825 = RdW 1989, 126 = SZ 62/2.
Keywords: Right of redemption, prohibition of sale and encumbrance.
Areas of law: Civil law (property law) and execution /foreclosure/enforcement proceedings.

Eight guiding principles are based on this decision of the Austrian Supreme Court (OGH) (see RIS-Justiz RS0010747, RS0010749, RS0011446, RS0011447, RS0011448, RS0011449, RS0032315 and RS0032320). This alone shows its legal significance.

The focus was on the considerable legal question as to whether a beneficiary is entitled to a right of redemption in accordance with § 462 of the Austrian General Civil Code (Allgemeines Bürgerliches Gesetzbuch/ABGB) on the basis of a prohibition of sale and encumbrance as defined in § 364c ABGB. This question was answered by the 4th Senate in confirmation of the arguments put forward for our client to the effect that a person entitled to prohibit is not personally liable or liable with certain assets for a foreign debt as defined in § 1358 ABGB. Nevertheless, in the opinion of the Supreme Court, the person entitled to the prohibition has an interest worth of protection which justifies the granting of a right of redemption, even against the will of the other parties involved.

This legal opinion was justified by the Supreme Court above all on the grounds that the legal system recognizes a right of redemption going beyond mere material liability in other respects as well. For example, § 462 ABGB protects the economic satisfaction possibility of the pledgee and § 17 of the Austrian Act on Fraudulent Conveyances (Anfechtungsordnung/AnfO) protects the interest in maintaining a contested legal transaction. In the opinion of the Supreme Court, "this right must be granted all the more to the person entitled to prohibit, who would lose the possibility at all of acquiring those rights whose future accrual is to be protected by the incorporated prohibition of sale and encumbrance".

OGH 3 Ob 573/85; 3 Ob 539/85; 8 Ob 632/86

What is taught to law students in the 21st century as one of the cornerstones of consumer protection law was still highly controversial in the mid-1980s – a long time before the introduction of the Austrian Consumer Credit Act (Verbraucherkreditgesetz/VKrG) in 2010. What is meant is the "one-entity-theory" in the context of third-party-financed purchases, i.e. the consideration of the economic unity between sales contract and credit contract in the consumer sector.

In this case, share certificates in a hotel were issued; at the same time, a financing bank offered a loan. The share transaction was therefore financed by a bank which ordered the hotel shares as a pledge and assigned the claims resulting from the participation. When the economic collapse of the hotel threatened, the bank continued to demand payment of the loan instalments. Numerous cases throughout Austria were affected.

While at first there were contradictory judgments on this concrete situation, the Austrian Supreme Court (OGH) finally decided in the interests of our clients that, irrespective of the concrete type of contract, an economic unit within the meaning of § 18 of the Austrian Consumer Act (Konsumentenschutzgesetz/KSchG) (idF BGBl 140/1979) existed between the basic and the financing transactions. Although the two transactions were formally separate, in the opinion of the Supreme Court the close interdependence is evident from an economic point of view.

OGH 25.06.1985, 4 Ob 517/85
Fundstellen: MietSlg 37.227; MietSlg 37.075; MietSlg XXXVII/25.
Keywords: Car parking spaces and tenancy law, supplementary contract interpretation.
Areas of law: Tenancy and condominium law, civil law (general part, contract law).

This decision of the Austrian Supreme Court (OGH) is one of the first on the then new Austrian Tenancy Act 1981 (Mietrechtsgesetz/MRG). The focus was initially on the legal question whether this Act - and the associated protective provisions in favour of tenants - would apply in the case of an independent rental of a car parking space located in a garage. This question was clearly answered in the negative by the 4th Senate, on the grounds that there had been no change in this regard compared to the legal situation under the old Act (Mietengesetz/MG).

The second part of the present decision is particularly interesting not only from the point of view of residential and real estate law, but also from the point of view of general civil law. There the 4th Senate deals with the "supplementary interpretation of the contract", which is to be applied if the parties have not provided a solution for an appearing problem in the contract.

In concreto, the question was whether the operating costs were to be borne by the tenant or the landlord. Taking into account what "honest and reasonable parties" would have agreed (keyword: hypothetical party will), the Supreme Court came to the conclusion - favourable for our client - that in the case at hand the operating costs were to be paid by the tenants. The Supreme Court included the duration and amount of the rent in these considerations. Taking into account the long rental period and the low rent, the tenant could not reasonably assume that the operating costs would be borne by the landlord.