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Case:
BGHZ 115, 364 Bundesgerichtshof, VI ZR 314/90 (OLG Karlsruhe)
Date:
15 October 1991
Judges:
Professor Basil Markesinis
Copyright:
Raymond Youngs, Senior Research Fellow at the Institute of Global Law

Summary of facts:

The claimant claims compensation from the defendants in respect of an accident in which his car was seriouslydamaged.

The claimant had his car repaired by his car repair business at a cost (according to expert opinion) of 93,396.30 DM. He claimed 5000 DM for depreciation in value. While his car was out of service he hired a Mercedes 300 E from the 4th August to the 22nd September 1988 at a cost of 20,495.70 DM. The claimant also claimed 1680 DM for a further 12 days for loss of use; and 1508 DM for expert's costs and costs of towing away. (The claimant also made ancillary claims for the loss caused by the accident but unrelated to his car).

The Landgericht awarded 95,204.52 DM plus interest on the basis that the defendants were 80% liable. The Oberlandesgericht awarded 105,084.71 DM plus interest on the basis that the defendants were fully liable. To the extent that the appeal in law has been accepted, the claimant is pursuing by it his claims to compensation for vehicle damage, in so far as they were rejected, as well as for payment of vehicle hire costs and for loss of use. The Bundesgerichtshof allowed these claims for payment of 122,080 DM plus interest.

Reasons:

1. The appeal court has incorrectly assessed the damage to the claimant's vehicle under § 287 (1) of the Civil Procedure Code, on the basis of the necessary expense for providing of a replacement, at only 75,000 DM. The claimant can claim the repair costs of 93,396 DM plus the depreciation in value of 5000 DM to compensate for this damage, as this expense, measured against the costs of providing a replacement vehicle, satisfies the test of economic viability.

a) The victim who himself undertakes restoration of the former state of affairs after damage to an object is entitled under § 249 sentence 2 of the BGB to demand from the tortfeasor the necessary sum of money for this. The tortfeasor can only give him monetary compensation for the loss in value suffered if and in so far as restoration is not possible or is not sufficient for compensation (§ 251 (1) of the BGB) or requires disproportionate expenditure (§ 251 (1) sentence 1 of the BGB). Disproportionality in the case of possible restitution in kind thus forms the limit beyond which the victim's claim to compensation is no longer directed to restoration (restitution in kind) but only to recompense for the loss in value of his assets (monetary compensation). To this extent restitution in kind has priority overcompensation.

b) It cannot admittedly be deduced from this scheme in the law relating to damage that, when someone's motor vehicle is damaged, he may always have it repaired at the tortfeasor's cost if the expenditure is anything less than the limit of disproportionality. The comparison between the costs of restitution and the mere value of the damaged object as an item in the victim's assets is certainly important, under § 251 (2) sentence 1 of the BGB, in ascertaining the ceiling up to which the tortfeasor has to relieve the victim of the costs of restoration (references omitted; see also now the new statutory regime for injured animals in § 251 (2) sentence 2 of the BGB). However to answer the question which matters for the decision in this case (which is whether the victim can have his vehicle repaired at the expense of the tortfeasor, and if so to what level of expenditure, if he can get himself a replacement vehicle of equal value at a lower cost) the issue is not, as will be explained in greater detail below, the boundary between restitution and compensation. Here also, therefore, disproportionality does not form the limit to repair expenditure in the comparison required by § 251 (2) sentence 1 of the BGB; its limit has already been drawn by the aim of restoration in § 249 sentence 1 of the BGB and the concept of necessity in § 249 sentence 2 of the BGB.

aa) The victim who takes the rectification of the harm to his motor vehicle into his own hands has as a rule two methods for this at his disposal: he can have his vehicle repaired or he can obtain a replacement vehicle (of equal value). Even the latter form of elimination of the harm is, as the Senate has repeatedly stated and to which view it continues to adhere, a form of restitution in kind (references omitted). This is because the goal of restitution is not limited to restoration of the damaged object; it consists, according to § 249 sentence 1 of the BGB, of something more comprehensive: restoring the state of affairs which, seen from a business point of view, corresponds to the situation which would have existed without the event causing the harm (referencesomitted).

bb) Where there are several possible types of restitution in kind leading to recompense for the harm, the victim must in principle chose the one which requires the least expenditure. The Senate has stressed this requirement of a businesslike approach on several occasions (references omitted). It finds its statutory expression in the characteristic of necessity in § 249 sentence 2 of the BGB, but arises in the end simply from the concept of harm itself. This is because the victim's loss is, even from the point of view of the interest which is at issue for the purposes of § 249 of the BGB (i.e. the preservation of his assets in their objective composition) not greater than what must be spent in order to transpose the assets in a reasonable manner into a condition which is equal in value in economic terms to the original one -taking into account the damaged component as well.

The requirement to eliminate harm in a manner which is sensible in business terms does not, it is true, require the victim to economise so as to benefit the tortfeasor or to behave in each case as if he would have to bear the harm himself (references omitted). Nevertheless, the latter point of view can be important for the question of whether the victim has kept the expenditure within sensible limits (references omitted). This is because he can only take from the tortfeasor under § 249 sentence 2 of the BGB those expenses which from the standpoint of a sensible business-minded person in the position of the victim appear appropriate and reasonable for elimination of the harm (references omitted). In examining whether the victim has kept within this framework, consideration must admittedly be given to his special situation, and thus in particular to his individual opportunities to know and act as well as the difficulties which may exist for him alone, because § 249 sentence 2 of the BGB, takes account of restitution being in the hands of the victim. This subject-related examination of the harm does not however mean that unreasonably incurred expenditure would have to be examined only from the point of view of a violation of the duty to mitigate harm under § 254 (2) of the BGB; the duty to compensate for harm exists from the outset only insofar as the expenses are kept within the framework ofbusiness prudence (references omitted).

cc)...

dd) In comparing repair costs with replacement costs, it admittedly has to be borne in mind that if the victim selects, in accordance with appropriate information, the method of elimination of the harm which he presumes will involve less expenditure, the tortfeasor must bear risks associated with the workshop or with the prognosis, unless exceptionally fault (in selection) in this respect can be laid at the door of the victim (references omitted).

ee) Above all it must be considered that repair of the vehicle with which the victim is familiar may as a rule satisfy his interest in preserving the state of his assets ("integrity interest") to a greater degree than a replacement (references omitted). It is therefore in harmony with the principles of the law about damage that costs of repair which exceed the expenditure on a replacement, are, within limits, to be awarded to the victim who decides to effect a repair and demonstrably carries this out. This appears to be justified for the further reason that, even taking fully into account advantageous compensation of "new for old", in particular with older vehicles, repair, according to its costs alone, would not as a rule stand up toa comparison with the costs of obtaining a replacement.

So far as concerns the extent of this area of tolerance, the deciding Senate has repeatedly approved judges of fact in the exercise of their discretion under § 287 (1) of the Civil Procedure Code granting an addition of 30% (references omitted). It is however disputed in the case law of the courts of first instance and in the literature how this tolerance limit is to be calculated: according to one opinion, in making the comparison, the (expected) costs of repair of the vehicle and a possible depreciation in its value are to be set against its replacement value, i.e, the full costs of obtaining a replacement (reference omitted); according to the other view the comparison is undertaken merely with the replacement expenditure, i.e. the replacement value minus the residual value of the damaged vehicle(references omitted).

The deciding Senate has not thus far needed to provide an answer to the issue in dispute, but it has now to be decided. The Senate endorses the view that in cases in which - as here - the victim actually has repairs carried out, in making the comparison with the obtaining of a replacement, the replacement value need not generally be reduced by the residual value. Admittedly it must be recognised that the requirement for business prudence will as a rule cause the victim who faces the alternatives of repair or obtaining a replacement to include the residual value of the accident vehicle in his calculations when he makes his decision. The particular financial burden is the decisive factor and this in concrete terms is principally on the one hand the costs of repair including the possible depreciation in value and on the other hand the expenditure for obtaining a replacement which appears as the difference between the replacement value and the residual value of the damaged vehicle. The consequent significance which attaches to the residual value in reducing the expenditure on replacement does not however, according to the view of the Senate, require this value to be included in the comparison as an independent item in the calculation. This is because the residual value (at any rate in so far as it can be brought into this cost comparison as the price the victim can obtain when he trades in his accident vehicle on the purchase of a replacement vehicle from a responsible used car dealer, depends on the costs of repairs. It is therefore already represented in them: the higher the repair costs are, in the case of a fixed replacement value (because this is independent of the extent of the harm), the lower is the residual value of the damaged vehicle, as a rule, and vice versa...

c) The Senate realises that leaving the residual value out of the cost comparison leads, if an "integrity addition" (not used up by the claimant here) is retained unaltered, to a raising of the "victim limit", up to which the victim may have his damaged vehicle repaired at the cost of the tortfeasor. But this result appears, apart from simplifying the treatment of the damage, justified in order to give better protection to the integrity interest. This is because for vehicles with slight accident damage and high residual value (which for this very reason are particularily worth repairing) deduction of the residual damage from replacement value, which is frequently not substantially higher, often leads, in spite of an addition of 30% to the difference, to the repair costs exceeding the 130% boundary and the victim therefore no longer being allowed to have his vehicle repaired at the cost of the tortfeasor. This would amount to a reduction of interests which is not required by the law about damage. If on the other hand the victim's vehicle no longer has significant residual value after an accident, then according to the view of the Senate, even repair costs of up to 130% of the unreduced replacement value do not, as a rule, exceed the boundary of what can be demanded from the tortfeasor as compensation for the victim's "integrity interest". Besides this, it must always to be borne in mind that the "integrity limit" of 30% is not a rigid limit, but a recommended value, which leads as a rule in the vast majority of cases of motor vehicle damage to a just result, but which, depending on the peculiarities of the individual case can be raised or lowered (reference omitted). In addition, it must always be considered that comparison of repair costs with the replacement value can cease to be meaningful for the victim's entitlement to repair, if the periods of non-availability of the vehicle in the cases of repair and replacement are in gross disproportion to each other. This could have the result that the costs of a hired car claimed by the victim while the repair is carried out are significantly higher than in the case of a replacement and in the comparison of the total costs of both methods of restitution, the 130% limit is exceeded on this ground to a significant extent. In cases of this kind the victim may need on grounds of economic viability to be directed to the cheaper method of obtaining redress, above all when the percentage "victim limit" has already been reached according to the basic assessment, even without the comparison of these bridging costs, because of the discrepancy with the hired car costs. But thatis not the way things are here...

2. The statements of the appeal court on the level of the hired car costs to be refunded to the claimant are also not free from legal error.

a) As the claimant was permitted, as has been explained, to have his vehicle repaired at the cost of the defendants, the costs of hiring a replacement vehicle during the period of repair must also in principle be reimbursed to him in the light of the concept of restitution in kind (§ 249 sentence 2 of the BGB). This is because these costs were necessary to restore of a state ofaffairs of equal economic value to the original one.

b)... Back to top

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