SECTION B. CASES

. §

Case

BUNDESGERICHTSHOF (SIXTH CIVIL SENATE) NOVEMBER

BGHZ ,

The defendant was the owner of a business running omnibuses. On February he was granted a licence by the competent authority permitting him to operate two omnibuses to be employed for hire or on excursions. The licence stated expressly that the employment of the buses on regular service between specified places was prohibited.

The plaintiffs, the German Federal Railways, alleged that the defendant had regularly conveyed persons between G and L with his buses. They argued that, since most of these persons would otherwise have used the Federal Railways, they had suffered damage as a result of this unlicensed regular traffic. The plaintiffs asked for an account of the number of journeys and passengers and claimed a sum representing part of their damage. The defendant denied that he carried on regular services and contended that the Act on the Carriage of Persons is not a law serving to protect the German Federal Railways. Moreover it violated the Constitution by restricting the commercial activities of transport undertakings.

The District Court rejected the claim, the Court of Appeal of Hamm allowed it. A second appeal was unsuccessful for the following

Reasons

. The Court of Appeal was correct in regarding as a protective law in the meaning of § II BGB in favour of the plaintiffs the provisions of the Act concerning the Transport of Persons on Land which require a licence by the administrative authorities for the operation of regular traffic with land-based vehicles and provide penalties for such operations without a licence. The crucial question is whether the legislature, in providing regulations for public traffic, also wished to protect the special interest of the Federal Railways [reference]. This question must be answered in the affirmative without hesitation. The special position of the German Federal Railways within the legal framework of public passenger transport is shown by the fact that § of the Act on Passenger Transport exempts them from licensing and that § II only requires them to give notice of the intended establishment of a regular route. According to § of the Decree for the Execution of the Act on Passenger Transport, the Federal Railways must be consulted if a dispute arises as to whether a traffic undertaking is subject to the provisions of the Act on Passenger Transport or to which type of traffic the traffic undertaking belongs. § I of the Decree requires the competent regional directorate of the Federal Railways to be heard if an application is submitted for a licence to operate a regular cross-country route. According to § II of the Decree a licence for a regular service is not to be granted if a new enterprise constitutes inequitable competition for an existing traffic undertaking.

Together these provisions show clearly that in the proceedings of consultation the Federal Railways are granted a right to intervene as the guardian of the public interests concerning traffic but that they may also plead any adverse effects upon their own interests. This is the reason why the Federal Railways are accorded the right to start proceedings in the administrative courts if their objections have been overruled [references]. The fact that according to §§ and of the Act on Passenger Transport the administrative authorities also control the price and the conditions of travel is a safeguard against a ruinous competition by undercutting at the expense of the Federal Railways. The importance of the Act on Passenger Transport consists precisely in the fact that it restricts competition between the various transport undertakings because the legislature allots to each branch of transport those tasks which it can fulfil best within the framework of traffic as a whole and of the economy. In so doing, the legislature has attached special significance to the interest of the Federal Railways on the assumption that the maintenance of their efficiency must be assured in the public interest.

. The appellant is wrong in asserting that the provisions of the Act on Passenger Transport which pursue this goal contravene Article of the Constitution (GG). ArticleI of the Constitution guarantees the right to choose an occupation freely but reserves the exercise of an occupation or trade for regulation or statute. It is generally recognised that the legislature is not prohibited in principle from regulating, in particular, the conditions for carrying on a profession or exercising a trade and from requiring a licence by the administrative authorities for commercial activities. It is equally recognized that in establishing the conditions for exercising a profession the legislature is not completely unfettered and that the essence of the fundamental right to carry on a trade must not be touched [reference]. Opinions are divided as to how the limits set for the legislature are to be drawn in detail and as to when, in particular, the essence of the right to carry on an occupation is being fettered. In this controversy the view of the Federal Administrative Court which grants the legislature a considerable measure of discretion is to be contrasted with the very restrictive view of the First Civil Division of the Federal Supreme Court expressed in its references to the Federal Constitutional Court, but these do not bind this Division [references].

The first opinion stresses that all fundamental rights contain their own intrinsic limits and is less concerned with the compelling reasons for these restrictions than with the problem of what remains of the fundamental right, once these restrictions have been recognized.

The restrictive opinion allows fundamental rights to be limited for reasons of urgent necessity only and requires the encroachment to be as small as possible in the light of the circumstances, guided by the desire to leave the fundamental right an extensive scope. Nevertheless, the First Division [references] acknowledges that the legislature may also enact laws in the interest of individual groups if this should be necessary in the public interest and does not arbitrarily detract from the interest deserving protection of other parties. In its decision the First Division also recognizes that the legislature enjoys a measure of discretion in the sphere of Article I of the Constitution and points out that the judicial control of the legislature is limited correspondingly.

It is unnecessary here to discuss in detail the many attempts to determine and to circumscribe the extent of the prohibition expressed by Article II of the Constitution. Even if a statutory restriction of occupational activities is only regarded as constitutional within narrow limits, it cannot be said that the Law on Passenger Transport has infringed

illegally the essence of the fundamental right enshrined in Article I of the Constitution by having made the commercial operation of a regular traffic route of land-based vehicles subject to a licence for the reason, inter alia, in order to save the Federal Railways from inequitable competition by motorized traffic undertakings. In this connection it is important that despite an increase in motorized traffic the Federal Railways deal with the major portion of public transport. The pre-eminent interest of the community in the efficiency of the Federal Railways is expressed in the organization of the Federal Railways by the Act of December concerning the Federal Railways. The act treats the discharge of the functions of the Federal Railways as a public service and requires that in the administration of the Federal Railways the interests of the German economy are safeguarded [references]. For this reason, the operation of the Federal Railways is subject to a number of restrictions which could not be justified from a purely commercial point of view. They cannot in their discretion discontinue routes which are unprofitable and, in particular, they are not free to determine the fares. (Fares must be established, must be equal, serve social needs, and must offer free passes.) Moreover the Federal Railways are burdened with extensive maintenance obligations towards their present and past employees which private traffic operators do not have to carry. The Federal Railways would no longer be able to fulfil their function in the service of the community if private commercial motor transport operators were allowed to exploit the economically profitable routes, which alone are of interest to them, with the result that the Federal Railways would be relegated increasingly to carrying out less profitable transport services. For this reason alone, the legislature must be interested in the maintenance of the efficient operation of traffic by rail, since the service of mass traffic by the railways is indispensable in present conditions and since any interruption in the ability of the railways to function would lead to a crisis. In this connection it is relevant that any shift of public passenger traffic from the railways to motor vehicle traffic is restricted if for no other reason than because the capacity of the German road system is strictly limited. The special character of public transport makes it appear unlikely that the regulating effect alone of offer and demand can achieve a satisfactory solution to the far-reaching problems of public transport which satisfies the needs of the community. This explains why § of the Act against Restrictions of Competition of July [reference] does not apply to the Federal Railways and other public traffic institutions.

The Federal Administrative Court has pointed out rightly that the safeguarding of orderly operations of public traffic is one of the protected legal interests essential for the existence of the community [reference]. It is a primary task of the legislature which is concerned with maintaining and extending an efficient transport system to regulate and to plan public transport by a process of adjustment and balancing [references]. This Division cannot discern in the discharge of this task by the legislature, which must necessarily include the regulation of the competition between rail and road traffic, an act of unconstitutional interference in the freedom of commerce, all the more since public transport had already been regulated by statute at the time when the Constitution was being enacted. Moreover, it does not appear that in enacting the Constitution the intention was to question the validity of this regulation on the ground that freedom of occupation was being restricted or to restrict the legislature and the administration to measures for controlling safety and the proper conduct of trade [references]. If the public interest in an efficient system of passenger transport must be the principal object of the legislation measure for regulating traffic, the legislature was justified for this reason in regarding the protection of the Federal Railways as especially important

where route transport is concerned and in fashioning its traffic regulations accordingly [reference].

The enactment of the Act on Passenger Transport does not constitute a closure of the occupation for private transport enterprises but the control of their commercial activity dictated by the overriding interests of the community. This control does not interfere with the essence of the fundamental right enshrined in Article I; on the contrary, in the opinion of this Division the statutory provisions fall within the framework of the task set for the legislature by Article II inasmuch as, by requiring the consent of the administration, the legislature wishes to ensure that the Federal Railways are protected against inappropriate competition and that every traffic institution is allotted that task which it can best perform in the interest of the common good.

. . . even if the refusal of a transport licence on the sole ground of insufficient need is regarded as illegal, the need for a licence remains justified in the opinion of this Division inasmuch as, apart from other reasons, the just interest of the Federal Railways in averting inequitable competition must be taken into consideration. Consequently there are no objections from the point of view of Article of the Constitution against regarding the penal provision of § I of the Act on Passenger Transport as a valid protective law in the meaning of § II BGB in favour of the Federal Railways by penalising unlicensed route transport (as the dominant practice holds [references]). The view taken by this Division is in keeping with its decision of March [reference] where the comparable provision of the Act concerning Milk and Fats regulating that market were found to protect by an action in tort dairies, the economic activities of which had been interfered with in the absence of a licence [reference]. Finally, the First Civil Division in its judgment [reference] allowed a claim under § II BGB by chemists against drug stores which had contravened the Act on Medicaments.

. . . .

Case

BUNDESGERICHTSHOF (FIRST CIVIL SENATE) NOVEMBER

BGHZ ,

The plaintiff is a registered association founded in . According to § of its statutes its purpose is to protect and to further the professional and economic interests of the Hamburg Bar.

The third defendant is an association founded in as a legal entity. According to § of its statutes its purpose is to better the “tenancy and housing conditions” of the population and, especially, to protect the legitimate interests of its members. According to § (d) and (e) of its statutes this goal is to be achieved by providing free oral advice as well as written advice for a fee for all members of the association; in addition it offers to represent them for a fee in dealings with public authorities, civil and administrative courts. The fees payable to the association are the same as those charged by legal counsellors.

The first and the second defendants are the legal advisors of the third defendant who are entitled, according to § ( ) of the statutes, to represent the members before public authorities and courts. Until October they were paid their own expenses andper cent of the fees after deducting the expenses incurred by the association. The parties disagree as to what fees are paid to them after October .

The plaintiff contends that the first and the second defendants have contravened the Act against Abuses in the Field of Legal Advice and the Unfair Competition Act (UWG) and that the third defendant had enabled them to carry on their illegal activity, and had assisted them.

The plaintiff has asked that the first and second defendants be ordered to desist from advising the members of the third defendants gratuitously or against a fee and from representing them in court and to order the third defendant to desist from according to the first and second defendants the right to give free advice or advice for a fee and to represent it in court.

The defendants have denied that the plaintiff has a legal interest calling for protection. They argue that the first and second defendants do not give legal advice on a commercial or professional basis. Nor did their conduct constitute unfair competition.

The District Court rejected the claim. On appeal, the plaintiff has asked as an alternative to prohibit the third defendant from handling legal matters professionally, especially by charging fees similar to those of procedural representatives or the like, and to prohibit the first and second defendants from collaborating with the third defendant in handling legal matters. The Court of Appeal of Hamburg rejected the entire claim. The plaintiff’s appeal was successful in most respects for the following

Reasons

The plaintiff has based his claim for orders to desist primarily on § II BGB in conjunction with § I of the Act concerning Legal Counsellors. Since this act aims at protecting the citizen against the dangers arising from the employment of unqualified and unreliable persons, but also seeks to protect the Bar against competition by such persons who engage in legal advice who are not subject to the constraints relating to professional etiquette, fees, and the like created in the interest of the administration of justice, it cannot be doubted that it bears the character of a protective act . . .

The appellant is wrong in contending that the third defendant must not demand any “consideration”, for his legal services, not even to reimburse him for his expenses.

The claims of the members of the association to receive assistance in legal matters follows from their membership. The expenses incurred by the association in satisfying this claim must naturally be covered somehow, be it by contributions by all members, or by special payments to those members who ask the association for assistance in legal matters. It is an internal matter to be decided as such by the association as it sees fit. The question as to whether in so doing it exceeds the limits set by § I of the Act concerning Legal Counsellors is not necessarily identical with that as to whether the association may only provide “gratuitous” assistance in legal matters or whether it can do so also for “remuneration”. For, as will be shown later on, even to claim actual expenses only, i.e. to provide assistance in legal proceedings gratuitously in the strict meaning of the word, may be illegal in certain circumstances; e.g. if the association grants the persons who act for it in assisting in legal proceedings a remuneration in accordance with the scale of fees for lawyers or for legal counsellors and then seeks to recover it from the members as actual expenses. The plaintiff contends, in agreement with the literature and practice, that “remuneration” in the meaning of § I of the above-mentioned law consists of any money payment by a member of the association, even if it only represents a reimbursement of expenses and not a genuine remuneration. However, this Division cannot accept his view that the assistance in legal proceedings by the association must be “gratuitous” in this sense.

Contrary to the view of the appellant the wording of § I of the Act concerning Legal Counsellors . . . does not indicate that this exceptional provision is to apply only if the assistance in legal matters is “gratuitous”. In so far as § VII of the Act concerning Legal Counsellors permits the association concerned acting within the limits of their established task to “provide” advice and assistance in legal matters for their members, the word “provide” does compel the conclusion that the legislature only wished to allow a gratuitous activity . . . The Court of Appeal was therefore correct in holding that a comparison of § I and § I does not lead to the conclusion that the advice and assistance must only be gratuitous. . . .

Nevertheless, the objections of the appellant must succeed in so far as they are directed against the assessment of the remuneration in accordance with the official scale of fees. The appellant is right in stating that to allow remuneration to be charged on the scale of charges fixed for legal counsellors (§ (e) of the statutes) is incompatible with the provision of § I of the Act concerning Legal Counsellors and therefore illegal.

§ I of the above-mentioned Act is based on the consideration that voluntary legal assistance is to be judged by different standards than those activities which, in looking after the legal affairs of others, serve a gainful purpose [reference]. An association is only exempt from the need to have a licence if advice and assistance is provided within the framework of its professional duties. Its activity must be strictly limited to these tasks; it becomes illegal if the association, in exceeding the limits set to it, e.g. by the way in which it regulates the remuneration payable by its members, participates in the pursuit of economic gain, which in the case of legal advice is only permitted by the law in strictly fixed circumstances.

According to § I of the above-mentioned Act, not only physical persons but also legal entities and other associations which intend to act for others in legal matters require a licence. In this connection the legislature has established special protective measures for entities which appear in the form of corporations, especially private companies and similar associations of persons. The grant of the licence depends not only on the consideration that the circumstances of the individual case justify the desired legal form for the operation [reference] but it presupposes also that the exercise of the profession is limited to the persons who are designated by name in the licence [reference]. Moreover, like individuals these associations are subject to the supervision by the President of the District Court and are controlled as to the proper conduct of their operations [reference]. The intention of the legislature expressed in these provisions to protect the community against damage and to protect the Bar which is subject to extensive restrictions against competition by an immeasurable number of persons must not be evaded or frustrated. § I of the Act concerning Legal Counsellors must be interpreted in accordance with this purpose of the law. The meaning and the purpose of this Act would be reversed if the associations which have a professional basis were allowed to exercise an activity which, in the main, distinguishes them no longer from the circle of persons who require a licence. If an association with a professional or similar basis looks after the legal affairs of others in a manner which comes near to the activity of an individual or association requiring a licence to such an extent that a member of the association occupies a position in relation to the association which does not differ essentially from that towards a person covered by § I of the above-mentioned Act, that association can no longer claim that its activity is permitted by § I. Such is the case, in particular, if the professional association which looks after the affairs of a member demands a fee which is assessed on the scale of fees for advocates and legal counsellors. Only advocates and, to a certain extent

[reference], legal counsellors [reference] may claim fees on this scale. The reason is that this profession, which is required for the administration of justice, must be guaranteed an adequate remuneration for its service and thus a dignified position in life [reference]. This consideration does not apply, however, to an association formed in accordance with

§I of the above-mentioned Act. It is true that such an association cannot be prohibited from seeking reimbursement for those expenses and costs incurred in the course of safeguarding the legal interests of their members. The association must therefore remain entitled to bill its members—either all of them or only those requiring legal assistance— for the salaries actually paid to its employees and for the compensation paid to an agent as well as for other general office expenses by apportioning them in its discretion without undue need for restrictions. However, the association exceeds the legal limits set for its operations if it provides assistance and support for its members on the basis of a scale of fees which is only permitted in entirely different circumstances to a circle of persons to which admission is by registration or by a licence according to § of the abovementioned Act. It is irrelevant in this connection whether in the end by using this scale of fees the association in fact made a profit by rendering assistance in legal proceedings. It is common experience that a scale of fees of this kind at least encourages the tendency to make a business out of looking after the legal affairs of others. If so, all the dangers facing those seeking advice would be allowed to materialize which persuaded the legislature to require a licence for gainfully engaging in looking after the legal affairs of others. If the professional associations were given dispensation by § I of the above-mentioned Act from the need to apply for a licence the reason was because, and to the extent that, a genuine activity of assistance appeared to exclude these dangers from the outset. This privilege is, however, no longer justified if as a result of the method of determining the remuneration for its activities the association creates the same dangerous situation which the requirement of a licence sought to meet in the case of non-privileged individuals and associations.

By providing in its statutes that its fees are to be those applicable to legal counsellors, the third defendant has therefore contravened § I of the above-mentioned law in conjunction with § II BGB. He is therefore obliged to refrain from doing so in so far as he allows his members to be advised or to be represented in court by the first and second defendant in consideration of fees as they are established for legal counsellors . . . Since it may be assumed without hesitation that the first and second defendants were familiar with the statutes of the third defendant, they are equally liable for having contravened

§II as accomplices or accessories and are therefore equally under the obligation to desist.

Case

BUNDESGERICHTSHOF (SIXTH CIVIL SENATE) DECEMBER

BGHZ ,

The defendant and B, a merchant, were the sole shareholders and directors of a . . . private company [GmbH]. On July , on the application of the company, bankruptcy proceedings were started against it.

The plaintiff, who had supplied raw materials to the company over many years, claimed DM , as a non-privileged creditor. According to the report of the trustees

in bankruptcy, the assets only sufficed to satisfy in part the claims of the privileged creditors.

Claiming only part of the sum registered in the bankruptcy proceedings, the plaintiff sued the defendant personally on the ground that he had neglected in several respects his duties as a director of the company and that the plaintiff had suffered considerable damage as a result. In particular he had failed, in contravention of § of the Act relating to Private Companies [henceforth cited as GmbHG] to initiate bankruptcy proceedings in time, although the company had been insolvent and overburdened with debts for some time.

The District Court rejected the claim; the Court of Appeal of Hamburg allowed it. Upon a further appeal the judgment of the Court of Appeal was quashed and the case referred back for the following

Reasons

I. The managers of a private company are obliged under § I GmbHG to apply for the start of bankruptcy proceedings as soon as the company becomes insolvent or if the annual or an interim balance sheet shows that the debts exceed the assets . . . The Court of Appeal regarded this provision as a law for the protection (§ II BGB) of the creditors of a private company and held that the defendant had culpably violated his duty to initiate bankruptcy proceedings . . .

II. The appellant denies that § I GmbHG is a protective law in the meaning of § II BGB in favour of the creditors of a private company. He contends that this conclusion was ruled out by § II GmbHG which hardly made any sense if § I bore a protective character. This view cannot be accepted. § II GmbHG only establishes the consequence as between the directors and the company if bankruptcy proceedings are begun too late. It provides that the directors must compensate the company in respect of payments made after the company became insolvent or overburdened with debts if these payments cannot be reconciled with the case of a merchant. It does not follow therefore that this provision determines exhaustively the responsibility of the directors for their dereliction of duty and that the creditors of the company are denied protection in their own right. The Act relating to Private Companies does not state whether the directors are liable to the creditors, and this question must therefore be determined in accordance with the general principles of private law [references].

The plaintiff may claim damages based on a violation of § I GmbHG in conjunction with § II BGB if this provision of the Act relating to Private Companies is also intended to protect the creditors of a private company and to afford them the type of protection which the plaintiff claims for himself [references]. Whether this is so must be determined in the light of the substance and the purpose of § GmbHG.

. § I GmbHG provides that the directors must initiate bankruptcy proceedings as soon as the private company becomes insolvent or if the balance sheet discloses that the debts exceed the assets. If the directors fail to initiate these proceedings in time they are liable to imprisonment or a fine in accordance with § I GmbHG. Clearly these provisions are intended to protect the creditors of the company as well. They, in particular, always suffer damage if bankruptcy proceedings are not begun or are not begun in time. It is obvious that the duty to apply to the court laid down by § I GmbHG is also to

protect them. This protection of the creditors is all the more called for as the partner shareholders of a private company are not liable personally for the debts of the company. The Reichsgericht, too, has held in a constant practice that § GmbHG is a law for the protection of the creditors of the company. It has held that, while this provision does not protect everyone, particularly not those persons who are extraneous to the company, it is intended to protect not only the interests of the company but also the creditors [references].

. The appellant argues further that even if § GmbHG bore the character of the protective law, it could only protect the creditors existing at the time when bankruptcy proceedings should have been begun. If, as the Court of Appeal has held, the defendant should have started bankruptcy proceedings in January at the latest, the plaintiff could not, as regards claims arising after this date, be placed in a better position than other subsequent creditors for the reason that other claims of his were of an earlier date. At best he could claim damages in respect of the loss resulting from the fact that the dividend in respect of his claims outstanding in was smaller owing to the delay in starting bankruptcy proceedings than it would have been otherwise. However, the plaintiff had not incurred such a loss for he had admitted himself that his claims arising during the period up to January had been satisfied. As regards goods supplied betweenJanuary and July , which were alone in issue, the plaintiff could not claim any damages against the defendant on the basis of § II BGB, § GmbHG.

The appellant is wrong in believing that § GmbHG only protects those persons who were already creditors of the company when the conditions for the operation of § I GmbHG materialised [reference]. The duty of the directors to start bankruptcy proceedings continues even after this date, as long as the company’s debts exceed the assets or the company is insolvent. No reason exists for restricting this continuous duty to apply to the court to the claims of old creditors, that is to say, creditors whose claims already existed at the time in which the delay occurred in making the application. The duty of a director to initiate bankruptcy proceedings exists also towards a creditor who after this date supplies goods to the company on credit or who becomes its creditor otherwise. As a present creditor of the private company he is protected against subsequent infringements of § I GmbHG in the same way as are old creditors. Therefore, contrary to the appellant, the protection accorded to the plaintiff extends also to claims against the private company which arose after January .

. The question remains as to how far the protection extends which the plaintiff enjoys for this period by virtue of § I GmbHG. The plaintiff seeks as damages the full price of the goods which he supplied after January , i.e. after the date when, in the plaintiff’s opinion, the defendant should have started bankruptcy proceedings at the latest. The plaintiff can claim compensation for this damage on the strength of § II BGB only if the entire damage falls within the range of dangers to protect against which § GmbHG was enacted [reference]. If a statute serves to protect certain persons they can only claim compensation for such damage which occurred within the range of the interests protected by the statute. Therefore, before it is possible to apply § BGB on which the plaintiff relies, it is necessary first to examine the range of protection afforded by § I GmbHG and to determine, first of all, whether this provision is intended to provide that protection which the plaintiff claims in his favour.

In examining the question of the meaning and the purpose of this provision it appears, first of all, that the purpose of the legislature is to secure a prompt initiation of

bankruptcy proceedings in the case where the debts are no longer covered by the assets. Therefore, the legislature in requiring the directors to start bankruptcy proceedings as soon as the annual balance sheet or an interim balance sheet discloses an excess of debts over the assets, clearly aims primarily at preventing that the company assets necessary for satisfying the creditors are not available for this purpose. The intention is to preserve the company assets for the benefit of the creditors so as to allow them to receive payment and to protect them against excessive losses as a result of the bankruptcy. This protection alone, which is clearly the primary purpose of the Act, cannot assist the plaintiff, however, for the plaintiff’s claim for damages is not based primarily on the ground that owing to the delay in initiating bankruptcy proceedings the assets available to the creditors have been diminished and that therefore his claim lost totally or partially. Instead the plaintiff holds the defendant liable in the first place for the fact that the plaintiff still gave a credit to the private company, the debts of which exceeded the assets. According to § II BGB the defendant is only liable to pay damages for loss occasioned thereby if § I GmbHG protects the interests of the creditors also in this respect, i.e. if it seeks to protect them quite generally against the dangers resulting from the continuing operation of a company the debts of which exceed its assets. It is true that the community is in fact protected in this respect as well as by the existence of § GmbHG. This fact alone cannot suffice, however, to attribute to § GmbHG the character of a protective act having such an extensive range. For this purpose not the effect of the law but its substance and aim must be considered, more particularly whether the legislature intended to provide such a farreaching protection or at least accepted it [references]. This cannot be assumed, however. Confidence in the solvency and the creditworthiness of another does not enjoy special protection in trade and commerce. He who makes a mistake and suffers a loss must normally prove that § BGB or § II BGB in conjunction with § of the Criminal Code applies, unless he can rely on contractual claims. The Act does not indicate that a different rule is to apply in relations with private companies and that those dealing with private companies are to be given more extensive protection. Gadow and Weipert [reference] and Bergenroth justify the need for special protection of the public on the ground that public and private companies are legal entities whose shareholders are not liable for the debts of the company with their entire assets. It must be admitted that a need exists for this reason to protect the creditors. The legislative history of the Act concerning Private Companies [GmbHG] shows that the fact that only the assets of a private company are liable for its debts led to the provision that bankruptcy proceedings are to be begun against the company not only if the company is insolvent, but also if its debts exceed its assets [references]. No indications exist that in enacting § I GmbHG the legislature also intended, in addition to the protection mentioned above, to protect the creditors against giving credit to a private company which is overburdened with debts or from entering into business relations with it at all. If they suffer damage in this way such creditors, like creditors of an individual or of a partnership, are therefore restricted to the protection offered by § BGB and by other provisions such as § II BGB in conjunction with § of the Criminal Code, leaving aside any contractual claims.

It follows that the plaintiff can only claim damages against the defendant on the basis of § II BGB in conjunction with § I GmbHG if, and to the extent that, at the time when his claim for the payment of goods sold arose he would have participated in the distribution of the assets. It is not clear whether and to what extent this was the case. Certainly the plaintiff cannot, on this interpretation of the law, contrary to the view of the Court of Appeal, receive the full price of the goods sold, which he claims as damages.

Therefore, the judgment appealed against cannot be maintained, having regard to the reasons given by the Court of Appeal . . .

Notes to Cases –

. In all the systems under comparison a rich case law can be found under the heading of tort liability for breach of statute, but there is no need to give more than a few illustrations. For, as Professor Medicus has said about German law (op. cit., no. ), each case turns on its facts and the construction of the wording of the statute in question. Yet, some basic principles do exist and they have been discussed briefly in chapter , section A (a), above. For English law see Clerk and Lindsell, On Torts ( th edn. chapter ), and the older but seminal article of Glanville Williams, “The Effect of Penal Legislation in the Law of Tort,” MLR . For American law see Prosser, Wade, and Schwartz, ff.

. As we have already noted, German judges are spared the need of discussing whether the legislator intended to allow a civil remedy when a particular statute has been breached—§ II BGB providing, subject to what we said above, a clear positive answer. But the court still has to discover the purpose of the statute: Was the mischief that occurred the one the statute wished to avoid? Was the plaintiff the person the statute wished to protect? (For an illustration see BGHZ , .) Cases– give some idea of how the German courts tackle these problems; but other decisions, reproduced elsewhere, have also discussed this problem. (See, for example, cases and .)

. The search for the purpose of the statute only thinly disguises the value judgements that have to be made in each case by the court. Policy thus strongly determines the result, though it is done under the guise of statutory construction. Thus, where more valuable interests are at stake (e.g. life and not just the protection of property) the courts tend to construe the statute in a way that is favourable to the plaintiff (cf. Kornan v. American Dredger Co. US , S. Ct. ( ) with Gorris v. Scott LR Exch. ( )). And where certain types of plaintiffs are involved (e.g. children, workmen etc.) the courts will, again, have their interests very much at heart when “construing” the relevant enactments. (See Prosser, Wade and Schwartz, .)

. Courts often talk of the “purpose” of a statute, but is there any reason why a statute should not have more than one? (See, for example, Hines v. Foreman (Tex. Comm’n. App. ) , SW.) Could it be that looking for “one” aim or purpose makes it easier to limit liability, if that is what the judge wishes to achieve?

. §

Case

BUNDESGERCHTSHOF (THIRD CIVIL SENATE) APRIL

LM § [FG] BGB NO.

Reasons

The defendant asks first for a re-examination of the appeal court’s opinion that the police officers were under an official duty to take action against the members of a gang of thieves, two of whom later committed a break-in at the plaintiff’s residence. The appeal in law refers in this connection to the decision of June [reference omitted]. There is no ground to deviate from the principles set out in this decision. Accordingly, it cannot be doubted that the police officers were under a duty to take action against those members

of the gang who were known to them and who were committing crimes in their area of operation. According to the indisputable facts of the case, it was known to H [one of the police officers] that, among other things, N, who took part in the later break-in at the plaintiff’s residence had committed a burglary with two other people. However, in his examination as a witness in the main proceedings before the Schöffengericht (lay assessors court) because of this theft, he deliberately gave false evidence in order to help N, who was in fact acquitted, as were the other perpetrators, for lack of evidence. Shortly afterwards, K as well as H found out the names of all those involved in the burglary. Both, however, still failed to bring a criminal charge. H and K therefore had definite knowledge of the serious crimes committed by the gang and in particular of the co-perpetrators of the break-in later committed at the plaintiff’s. This left them no room for discretion when deciding whether measures were necessary against the perpetrators known to them. Criminal prosecution of law-breakers and preventing crimes came within the scope of the official tasks of the two officers as police officers. Non-intervention by them in the given situation could not be justified by any sort of objective or policing considerations. Remaining inactive was unambiguously outside the boundary of discretion of “harmfulness”. A situation of danger was present which made action by the police officers an unconditional duty.

The question was raised in the said decision of how the establishment of the boundaries of discretion of “harmfulness” or of “excess” is to be treated in the individual case. Was it a pure issue of law and to be undertaken by the court “in accordance with relevant considerations” [reference omitted]? Or was it a question here of a “pure issue of discretion” to be decided by the appropriate authority, which the judge cannot generally re-examine [reference omitted]? No final position needs to be taken here on this question. Even if the establishment of the boundaries of discretion is in principle regarded as a “pure issue of discretion” which cannot generally be re-examined judicially, the police officers involved were still under a duty to take action. This is because we have a case here in which even a decision based on discretion (which is not in principle subject to judicial re-examination) can still be subjected to such a re-examination. The officer’s failure to act was not based on a weighing-up of the arguments for and against in accordance with objective considerations but was based exclusively on irrelevant and purely personal grounds. They therefore have acted with such a high degree of impropriety that their behaviour—and this needs no further explanation in the given circum- stances—is irreconcilable with the requirements of proper police administration and does not satisfy the needs of proper administration from any possible point of view [references omitted].

. The further question of whether the official duty violated by the police officers by failing to act against the gang also existed against the plaintiff as a “third party” in the sense of § of the BGB was, likewise, correctly answered in the affirmative by the appeal court.

According to the case law of the Reichsgericht [reference omitted], which the Senate followed in [reference omitted], the question of whether an official duty is owed by an official to a third party is to be adjudged taking into consideration the officer’s official area of activity and the type of work which he is carrying out. In this connection the main emphasis is on the purpose which the official duty is to serve. If this is imposed on the officer in the interests of individual persons, everyone whose interests are, according to the special nature of the official business, affected by it will be a third party. But if the purpose of the official duty is only the maintenance of public order or the interest which

the state has in officials carrying out the responsibilities of their office properly, the official owes no duty to third parties, even if there is indirect intrusion into the interests of third parties by the exercise of this duty. The task of preventing crimes is not however owed by the police in the interest of the general public alone, but, as to crimes which also intrude directly into the protected legal sphere of the individual, to the endangered individuals as well. If the police do not properly fulfil this task, this not only violates a duty owed by the police to the general public but also a duty owed by it to the endangered individuals.

The appeal in law refers in this connection to the decision of the Reichsgericht in [reference omitted] in which the duty imposed on the state prosecutor by § ( ) of the Criminal Procedure Code to prosecute for crimes is described as a task serving exclusively the interests of the general public. It then takes the view that in this respect the task of the police could not be regarded in any different way. But it can be left open in this case whether and, if appropriate, how the area of responsibility of the state prosecutor and of the police is to be judged differently in relation to the prosecution of crimes. This is because the issue is not the duty of criminal prosecution incumbent on both authorities but the duty to prevent crimes, which falls on the police as a task arising directly from their duty of protection from danger. For the state prosecutor a general direct responsibility to prevent crimes does not exist; at the most it arises only insofar as the purpose of prosecution for crime is to prevent further crime. In this respect therefore the reference to the decision of the Reichsgericht mentioned above misses the point.

The appeal in law further takes the view, having regard to [references omitted], that the general duty of protection by the police (and therefore also their duty to prevent crimes) is not a duty owed to third parties but only to the general public. This would be so at least as long as no concrete relationship to a definite third party has yet developed and the actual person harmed has not so far stood out from the mass of people who could be harmed. In the present case, no such actual relationship to a particular person harmed has yet been established. The possible crimes which lawbreakers known to police officers might commit could have been directed against simply any inhabitant of the area concerned and therefore against an entirely undetermined circle of people. The duty of the officers was owed only to the general public and not the plaintiff as a member of the general public, which should be protected. That cannot however be agreed. A person who stands out from the mass of people at risk because he was specially at risk is not the only person to be regarded as a third party to whom the police owe a duty to prevent crimes, as was the case with the facts which formed the basis of the decision [reference omitted]. The circle of third parties should be drawn much more widely. Thus the Reichsgericht has, among other things, regarded the fulfilment of the general protective duty of care (subject to the prerequisite that exercise of public power is in question) as among the official duties owed by an official to every third party [reference omitted] and confirmed that the official duty of a teacher supervising a ball game is owed to anyone not participating who could come into the area of the game [reference omitted]. Accordingly, the duty of an official to prevent improper use of service vehicles has also been described by the Senate in the decision [reference omitted] as an official duty which exists against every highway user with whom the vehicle could come in contact while it is being improperly used. Therefore the duty of the police to prevent crimes must also be regarded as an official duty which is owed to anyone whose legal interests are endangered by a violation of this duty.

In the present case the following additional considerations also arise in this connection. All officials entrusted with the exercise of public power have an official duty to

refrain from any misuse of their office. An official can make himself guilty of an improper exercise of office by omitting to act within the framework of the public power entrusted to him. That is always the case when the official duty unambiguously requires such action but the action does not take place because of completely irrelevant, purely personal and reprehensible reasons. It needs no further discussion that the police officers H and K have made themselves guilty in this respect of a misuse of office. However, the duty to refrain from any misuse of office is owed by the officials to anyone who could be harmed by the misuse [references omitted]. It cannot therefore be doubted that the official duty of the police officers to act as police against the gang was also owed to the plaintiff.

Case

BUNDESGERICHTHOF (THIRD CIVIL SENATE) JULY

NJW , = VERSR ,

Facts

The plaintiff demands compensation from the defendant city because of violation of the duty of protective care in relation to highways. On June at about . pm the plaintiff’s wife, who was driving the plaintiff’s car, turned left at a dual carriageway (the A Ring). There was a hedge (which has since been removed) approximately . metres in height on the central reservation. The plaintiff’s wife crossed the lane which led to her right, drove through a gap in the central reservation, tried to turn into the lane leading left and collided with a car approaching from the left. The plaintiff claimed that his wife edged carefully into the lane and could not see the other vehicle in time because the hedge was too high.

Reasons

I. The appeal court found no violation of the defendant’s duty of protective care and in this connection stated that the central reservation did not form part of the highway. It was true that a duty to warn about limitations on visibility, which were not obvious (or to remove them), could also exist for areas outside the street. But here the restriction on visibility caused by the hedge was obvious anyway. The danger was in the end due to the conduct of the plaintiff’s wife, who turned to the left without taking sufficient precautions. A reasonably experienced driver would have been able to cope with the situation in question. Besides this, a claim under § ( ), sentence of the BGB would not arise as the plaintiff has another option for compensation by claiming against his wife.

There are fundamental legal objections to this judgment.

II. . The appeal court’s starting point, that a violation of the duty of protective care in relation to highways by the officers of the defendant is to be assessed in accordance with the provisions on official liability (§ of the BGB, Article of the GG), is certainly correct. According to § , paragraph of the Highways Act of Lower Saxony ofDecember [reference omitted] the building and maintenance of public highways (inclusive of the federal trunk roads) and surveillance of their safety for traffic falls on

the organs and public employees of the body dealing with them, as an official duty in exercise of state activity. This formulation contained in the public law statutes of the state (Land) of the duties of the office holder of a municipality (Gemeinde) in ensuring traffic safety on public highways is—as the Senate has explained in the judgments [references omitted]—permissible in the context of the division of legislative competence between the Federation and the states. Nor are there any other constitutional law objections to it derived from the Basic Law.

. The Senate’s judgment [reference omitted] explains in detail that a body liable for breach of official duty cannot rely on the provisions of § ( ) sentence of the BGB as they contradict the basic principle of the equal treatment of highway users in liability law. These principles also apply, as the Senate has explained in more detail in the judgment [reference omitted] (issued after the publication of the judgment in the appeal) for cases like this one involving surveillance of traffic safety on a public highway, if this duty falls on the office holder as a state responsibility. The official duty to ensure safety of road traffic is closely related to the duties owed by an official as a public highway user. Accordingly the defendant city cannot exonerate itself by reference to the possibility that the plaintiff’s wife is liable for the accident.

. The appeal court’s finding that there was no violation of the duty of protective care in relation to highways cannot be endorsed either.

(a)The official duty formulated in public law to ensure the safety of road traffic corresponds in its content to the general duty of protective care [references omitted]. Its scope is determined by the type and frequency of use of the highway and its importance. It includes the necessary measures for the creation and maintenance of road conditions, which are sufficiently safe for road users. It is true that a road user must in principle adjust to the given road conditions and accept the highway in the form in which it appears to him. A party under a duty of protective care must, in an appropriate and objectively reasonable manner, remove (and if necessary warn about) all those dangers (but no others) which are not visible or not visible in time for a highway user who is exercising the necessary care and to which he cannot adjust or cannot adjust in time.

(b)In applying these principles to the present case, an official duty by the public employees of the defendant must be accepted to keep the hedge at a height which prevents serious obstruction of visibility for road users on turning into the highway from an access. The appeal court interprets the concept of the highway too narrowly when it includes in it, apart from the carriageway, only those surfaces which “also serve traffic in some way or other e.g. for escape in case of emergency . . .”. According to both § II No. Lower Saxony Highways Act and § IV No. Federal Highways Act in October version [reference omitted] separation strips, verges, and marginal and safety strips are also included in public highways [references omitted]. As federal and state law agree here, it has no significance for the outcome of the case whether the A Ring was a federal, state or municipality highway. According to these statutory rules, the duty of protective care extends to the central reservation as a part of the highway. It is therefore not necessary to fall back on the case law cited by the appeal court according to which the duty of protective care extends to things not forming part of the highway insofar as they represent a danger for the use of the highway, as for instance trees and shrubs in front gardens [references omitted]. Nor is it necessary to refer to the duties, which fall on the owner of the hedge as such.

(c)A high hedge created special dangers in a place where there was a gap in the central reservation to enable highway users to turn in and out of it. Drivers turning in could only be sure of seeing the traffic on the other side of the hedge if the hedge was at least, for an appropriate distance from the entrance, kept low enough for it not significantly to conceal moving vehicles behind it. Contrary to the view of the appeal court, this danger did not cease in whole or in part to arise just because the hedge could be seen, and because this was so even in darkness, with the help of street lighting and car headlights. The danger was not the hedge itself, but the hindrance to visibility, which it caused, and this hindrance did not cease to exist just because the hedge was visible.

(d)The defendant city claimed in its submissions that it complied with these principles. According to these submissions, hedges are cut once-yearly, and twice-yearly at traffic focal points, and kept in “shape”. The end sections of a hedge before and after accesses are cut back further than the middle parts of the hedge. Actually, however, the defendant has not kept to these principles in the area of the site of the accident, according to the findings of the appeal court. The shrubs situated on the central reservation had reached a height of about . metres on the day of the accident. The appeal court has described the hindrance to visibility consequently occurring as “obvious” and in another place has spoken of a hedge height “undoubtedly hindering visibility”. But it regarded this as insignificant for the outcome of the case, because every driver could escape the threat of danger which this caused, either by increased attention on turning in or out or by the choice of another driving route. This view is, it should be acknowledged in support of the appeal in law, affected by legal error.

(aa)A driver must certainly in principle accept the highway as it presents itself to him, and therefore make his own investigations as to whether he has sufficient visibility. The hedge height of about . metres could however seriously hinder the necessary visibility even for an attentive driver, and the appeal court has not paid sufficient attention to this. According to the findings of the Landgericht, the height of vision of the plaintiff’s wife in his car used in the accident-. . .-was . metres, and that of an assessor of the Landgericht . metres. Cars of the usual construction, as is revealed by type surveys in the press, are without exception between . and . metres high. Cars of this type protruded, at the most, only marginally above the hedge. The extent to which they were visible depended to a large degree on their type of construction. The defendant city could in any case not act on the basis that drivers would, on turning at the site of the accident, see cars approaching behind the hedge in time in every case. This possible danger which, as the appeal court has pertinently explained, could not be removed by a warning sign, resulted in the hindrance to visibility caused by the . metre high hedge at the site of the accident being dangerous even for an attentive driver. A careful tentative entry—which the appeal court did not even consider to be necessary—into the lane situated on the other side of the hedge could not remove these dangers. This is because a sufficient view could not be obtained of this lane before turning into it. That follows from the finding of the appeal court about the effect which the hedge had in restricting visibility.

(bb)The duty of ensuring traffic safety did not cease to apply, as the appeal court thought it did, just because no driver had to turn in at the place in question. It cannot in principle be held against highway users by a party under a duty of protective care that they should have avoided dangerous places. This would enable the party to shift its responsibility to the driver in an impermissible manner. It is the task of the party

whole capital investment was exhausted. This was concealed from the investors, and the group carried on advertising investment facilities. The state prosecutor took investigatory proceedings against those responsible. The group’s money deposited with a bank was first of all seized, but the Amtsgericht (district court) quashed the seizure and the state prosecutor discontinued the investigatory proceedings. Five months later, the plaintiff made a financial management contract with the A Group. Over a year later the A Group suffered further heavy losses and the investigatory proceedings were recommenced against those responsible which led to their conviction for deceit. The plaintiff, who had lost about three-quarters of his capital, claimed compensation from the defendant state (Land).

Reasons

The case is not of significance on an issue of principle; and the appeal in law has no prospect of success [reference omitted].

. The appeal court denied that the official duty of the state prosecutor to pursue crimes, to carry out investigatory proceedings against the perpetrators and, if necessary, to start a public prosecution is owed to third parties. It stated that this duty was exclusively to serve public interests, namely the fulfilment of the criminal powers of the state. The arguments raised in the appeal in law against this are unsuccessful. The introduction of investigatory proceedings in criminal law, the initiation and execution of a search order, a decision about the starting of a public prosecution and measures in proceedings for fines can represent violations of the official duty owed to the suspect if they are undertaken without justification [references omitted]. But there is no official duty on the part of the state prosecutor to intervene in the interest of a person possibly affected by a crime—in contrast to the position in relation to the police (see Senate, LM § [Fg] BGB No. ). The duty of the state prosecutor to pursue crimes, to arrest an accused, etc., exists only in the public interest. Failure to carry it out cannot therefore, as a rule, violate an official duty against the person harmed by the crime [references omitted]. It can be otherwise if concrete protective duties to the person harmed by a crime are acquired by the state prosecutor in current investigatory proceedings, perhaps to secure stolen property in the interests of the person from whom it has been stolen [references omitted]. The principles set out above also apply to the prevention of crimes, which is the issue in the case of plaintiff.

. As the appeal court further states, the plaintiff did not, in May , come within the category of those who had already paid their money to the A Group. They could not therefore possibly have been protected from harm by the seizure being kept in force and the proceedings against the suspects being pursued on the grounds that those steps would have deprived the suspects of access to further accounts. As the plaintiff first made his investment on June , he was not directly affected by the decision of the state prosecutor to order the quashing of the seizure and to discontinue the proceedings on May[reference omitted]. The harm he has suffered is based on the fact that the accused persons had not been forced to give up their activity. It can however be left undecided whether, if an official duty on the part of the state prosecutor owed to third parties suffering harm could be accepted, this would stand in the way of including the plaintiff within the circle of those protected (see Senate, LM § [Fg] BGB No. ), as the duty is not owed to third parties.

. The appeal court judgment does not reveal any other legal errors, which are significant in the context of the decision and are to the disadvantage of the plaintiff.

Case

BUNDESGERICHTSHOF (THIRD CIVIL SENATE), OCTOBER

NJW , = MDR , = VERSR ,

Facts

The plaintiff was until the end of a member of the board of directors of the KHG AG. On the application of the state prosecutor, the Amtsgericht (district court) ordered the arrest on the th February of the plaintiff and others for suspected breach of trust (Untreue) to the detriment of KHD. He was arrested on the th March in Italy, and brought to Germany. On the th May he was released from custody on conditions. The order for arrest was later revoked and the investigatory proceedings against the plaintiff discontinued. The order for arrest was based effectively on an accusation by B (who himself was in custody awaiting trial). B had claimed that he had arranged with the plaintiff at a hunting event in the Westerwald in to manipulate accounts for wood deliveries to the detriment of KHD (“the hunting hide agreement”); and that the plaintiff had received substantial sums of money for this. This accusation was substantially incorrect. At the time of his arrest the plaintiff was also managing director of the V-GmbH and had a consultancy contract with the P firm, at an annual fee of DM , . This firm terminated the contract on the th May with immediate effect after the press had reported the arrest of the plaintiff. On the th May , the plaintiff and the V-GmbH agreed to cancel the managing director’s contract. The Amtsgericht decided that the plaintiff should be compensated for the harm resulting from the arrest from the th March to the th May in accordance with the Compensation for Measures related to Criminal Prosecution Act. The plaintiff claimed as material harm his loss of earnings with the V GmbH and the P firm and legal and other expenses. The Ministry of Justice of the defendant state (Land) accepted liability for material harm in the sum of DM , . . This sum consisted of part of the legal and other expenses.

In the present claim the plaintiff seeks amongst other things compensation for loss of earnings due to the termination of the consultancy contract with the P firm, further legal costs and a finding that any further harm resulting from the termination of the consultancy contract should be compensated.

Reasons

II. The investigating state prosecutor when examining whether an order for arrest should be made against the plaintiff, stated there was strong suspicion of breach of trust (§ of the Criminal Code and § ( ) sentence of the Criminal Procedure Code). The appeal court regarded this as a culpable violation of official duty on his part. That satisfies legal examination in the end result.

. According to the case law of the Senate certain measures by the state prosecutor, which include application for issue of an order for an arrest are not to be examined in official liability proceedings for their “correctness” but only as to whether they are justifiable [references omitted].

Proceeding from this legal principle, the appeal court held that the assumption by the state prosecutor that there was strong suspicion at that time of breach of trust by the plaintiff was unjustifiable. It interpreted the statements of B, on which the state prosecutor principally based his assessment, as meaning that the plaintiff and B in their conversation of August / September (the hunting hide agreement) had agreed to a future manipulation of accounts. This would mean that the manipulations would only have begun after this point in time. In reality, so the appeal court found, it was already obvious at the point in time of the application for the order for the arrest (on the basis of witness statements and other documents on the investigatory proceedings) that accounting manipulations of this kind had been going on since the nineteen sixties. In these circumstances, the accusation made by B was incredible from the start, and the application for the order for arrest was unjustifiable.

This assessment can only be examined by the court hearing the appeal in law by considering whether the judge of fact misunderstood the concept of justifiability, violated rules of logic or general principles of experience and considered all the circumstances which were of significance for the judgment [references omitted]. The appeal in law does not reveal mistakes of this kind. Insofar as it complains of a violation of rules of logic it puts its own assessment of the facts in place of those of the appeal court in a manner which the rules about appeals in law do not permit. The procedural objections raised by the appeal in law in this connection have been examined by the Senate and not considered to be decisive. No ground was therefore found here either (§ a of the Civil Procedure Code). It accordingly has been established in a binding manner that the assumption of strong suspicion on which the application by the state prosecutor for an order for arrest was based was unjustifiable and making the application for an order for arrest was therefore contrary to official duty.

. The appeal court also, without any legal error, found the investigating state prosecutor to be culpable. In this connection it basically assumes that no blame as a rule attaches to an official if a collegial court with several legal experts sitting on it has regarded the official action as objectively lawful [references omitted]. According to the view of the appeal court, this general principle, from which the Senate has repeatedly permitted exceptions [references omitted], did not apply here. There are no legal grounds for objecting to this in the end result.

(a) The appeal court denied that the principle applied here, even though the civil chamber of the Landgericht regarded the conduct of the state prosecutor as justifiable and therefore as objectively in accordance with his official duties. It considered that the chamber basically proceeded in this assessment from a legally flawed approach. Whether this is correct does not need to be considered, because in any case there is another ground for the said principle not applying here.

The principle is based on the consideration that a better understanding of the law cannot as a rule be expected and demanded from an official than from a collegial court with several legal experts sitting on it [reference omitted]. This justifies a denial of culpability only in those cases in which the collegial court—after careful examination—has affirmed the legality of the official action. If on the other hand the collegial court has merely approved the action on the basis of a yardstick for testing—here the yardstick of justifiability—which is reduced in comparison with the official’s own duty of testing, this does not necessarily mean that the conduct of the official should be assessed as lawful.

Whilst therefore in cases like the present one the official himself has a duty to regulate his conduct entirely by the yardstick of legality, the judicial examination in the official liability proceedings decides merely on the basis of the reduced yardstick of justifiability whether he has acted in accordance with his official duty. In such cases the principle becomes subject to a further exception over and above the group of cases decided by the Senate so far. The defendant state cannot therefore successfully rely in the present case on the first instance judgment for saying that no accusation of culpability can be levelled at the investigating state prosecutor.

(b) The appeal court was also right in not considering itself to be required to apply the general principle by the decision of the th great criminal chamber of the Landgericht in the proceedings concerning the complaint about arrest. This is because a comprehensive and careful examination of the issue of lawfulness which could justify the application of the principle did not, according to the findings of the appeal court, take place in those proceedings. The appeal court explained in this respect, in its assessment as a judge of fact of the circumstances which influenced the proceedings concerning the complaint about arrest, that the criminal chamber had “tested in an extremely summary fashion” the question of strong suspicion “and instead of this, concentrated on the question of the

. . . danger of flight”. It concludes this from the fact that the decision by the chamber was issued on the same day as the decision by the Amtsgericht that there would be no review. In a “fast-track” procedure of this kind, a dependable formation of opinion by the collegial court was not possible in the light of the scope of the documentation. This assessment, the real core of which was not addressed by the appeal in law, is confirmed by the content of the decision about the complaint:

The Amtsgericht in the original order for arrest had suspended its execution. The state prosecution service complaint against this only disputed the exemption from arrest. The attention of the criminal chamber was therefore principally directed to the question of whether the danger of flight was to be assessed as so small that a suspension of execution should be considered. It is true that the criminal chamber was also obliged of its own motion to examine the question of strong suspicion. In this respect however it contented itself, according to the wording of its decision, with referring to the order for arrest and pointing out that this was essentially based on the testimony of the co-accused B, who severely incriminated the plaintiff. This reasoning makes it clear that the assessment of strong suspicion which influenced the order for arrest and formed the basis of the application for the order for arrest, and which the appeal court regarded without any legal error as unjustifiable, has left its mark on the decision by the Landgericht about the complaint.

On the basis of the findings made by the appeal court the starting point must accordingly be that the criminal chamber did not assess the established facts of the case carefully and exhaustively; or it formed its conclusion that there was strong suspicion from facts established on the basis of procedural irregularity. In such cases the general principle does not apply [references omitted].

. The statements of the appeal court about the extent of the claim for official liability awarded to the plaintiff and about the calculation of the period covered by the declaration are not challenged by the appeal in law.

claimed was caused by a culpable violation by the defendant of official duty. The plaintiff’s claim for a declaration in relation to his future harm is accordingly likewise unfounded.

. The prerequisites for the granting of compensation for distress in accordance with

§of the BGB are present. The plaintiff has been deprived of freedom by a tort by the defendant in the sense of § of the BGB in combination with Article of the Basic Law. The medical officer in the service of the defendant, Dr D has violated an official duty owed by him to the plaintiff in that he signed a medical certificate for the instigation of the committal procedure, without making it sufficiently clear that the findings of Dr F which formed the basis of it had been made several days before the submission of the opinion. Therefore a provisional committal of the plaintiff on this basis in accordance with § of the PsychKG ND could not be considered. The opinion which was sent to the administrative section of the defendant on December contains no date. Nor can it be deduced from the text of the opinion when the plaintiff was examined and when the findings which were decisive for the opinion were ascertained.

And yet the opinion form signed by the medical officer gives the impression that it was filled up immediately after the ascertaining of the findings. This is because in the first line (which contains the word “Urgent” in bold) and in the text of the request before the signatures of the doctors (which asks for an immediate decision) it is made clear that the committal procedure could not be postponed and that the medical experts had also taken that into account.

But actually the plaintiff had last spoken with the doctor in attendance, Dr F, on December , as the medical officer indicated in his testimony in the investigatory proceedings. Further contacts after this point in time, for instance on December , indisputably broke down. The medical officer himself did not examine the plaintiff at any time.

The medical officer was under a duty to provide appropriate explanations in his area of work and therefore in particular in the content of the opinion. It was true that it was not part of the responsibility of the medical officer to arrange directly for the committal of the person affected or to apply to the court. It should however have been obvious to him that the competent official in the administrative section of the defendant would rely on the statement by the doctors and because of the urgency of the matter would very probably first of all arrange for a provisional committal in accordance with

§of the PsychKG ND. It was therefore a duty of the medical officer, which he owed to the person affected, to ensure that this foreseeable unlawful provisional committal did not take place.

The violation of duty by the medical officer led with adequate causality to the unlawful deprivation of the plaintiff’s freedom. The responsible officer in the administrative office relied on the statements in the opinion without himself investigating at what point in time the findings were ascertained and he arranged for a provisional committal of the plaintiff in accordance with § of the PsychKG ND.

It is true that the defendant has not expressly issued a formal administrative act in respect of the committal. The plaintiff was however indisputably moved to the state hospital X with the official assistance of the police before the issuing of the judicial committal decision. This amounts to conclusive conduct (schlüssiges Handeln) on the part of the defendant which was made known to the plaintiff when it was carried out. If the point in time when the findings were ascertained had been known to the official of the

administrative office, the provisional committal would not have taken place, since it must be assumed that the authorities would act in accordance with their duties.

It can be left open whether the plaintiff, had the medical officer acted lawfully, would possibly on the December have been examined again, perhaps compulsorily, whether the diagnosis would have been confirmed and whether he then would likewise have been provisionally committed. This is because the defendant cannot rely on the fact that it could have achieved the deprivation of freedom in a lawful manner which would have not formed the basis of a duty to compensate (reliance on lawful alternative action).

When a person causes harm by a breach of duty, the question of the extent to which the consequences of his conduct can rightly be assessed as attributable to him is to be answered according to the protective purpose of the violated norm involved [references omitted]. In the present case, there has been a violation of the conditions laid down in § of the PsychKG ND. This provision is the expression of a constitutional guarantee according to which the state is only permitted to limit the freedom of a person on the basis of a formal statute and only if it takes into account the provisos described in it (Articles and of the Basic Law).

The protective purpose of the statute thus lies in permitting a deprivation of freedom only under the conditions prescribed in it. In this particular case it should also be ensured that, up to a point directly before the decision to commit, the state of health of the person concerned has not improved to such an extent that deprivation of freedom is no longer justified. The special urgency of immediate deprivation of freedom must thus be accepted in each case. Unless it is certain that the state of health will continue, the deprivation of freedom must not occur.

It is therefore a question of a fundamental protective norm to guarantee the rights of the citizen, which is not allowed to lose its significance in the context of compensation law just because some form of alternative action would have been lawful [references omitted].

On the same basis the argument of the Landgericht that the Amtsgericht, if it had been in a position to make a decision on the relevant day, would have ordered the committal cannot exonerate the defendant either. Here also the protective purpose of the violated norm excludes appeal to lawful alternative action.

The medical officer has also acted culpably. By using the required care, he could recognise and foresee that the official of the administrative section would see himself as compelled, on the basis of the dangerous situation for the plaintiff and other third parties as certified in the opinion, not only to arrange for a judicial committal but also to order immediately a provisional committal in accordance with § of the PsychKG ND to avert the danger. (Details are given).

The defendant must therefore pay to the plaintiff compensation for distress for the non-material detriments suffered in consequence of the deprivation of freedom. In this connection, when calculating the amount of the damages for distress not only must the length of time of the provisional committal to be taken into account, but also that of the judicial committal. This is because it can be assumed that the court also would have come to another conclusion in its decision in accordance with § of the PsychKG ND if it had known that the last examination of the plaintiff by the medical expert had taken place a week ago.

Taking into account all the circumstances, damages for distress of DM , seem fair but also sufficient to the Senate. The plaintiff was committed from to December. According to his own account he was given leave of absence on December

so that the consequences of the deprivation of freedom did not continue beyond this point in time. At the most the possibility remained of the further detriment of revocation of the leave of absence. This however did not happen. Long term harm to the plaintiff did not therefore occur.

Even if freedom is to be regarded as a legal interest worthy of the highest protection, the plaintiff’s ideas about compensation (DM , ) for distress seem greatly exaggerated. They bear no relationship to the compensation which is payable for unjustified criminal arrest. Admittedly the plaintiff was temporarily arrested by the police in order to implement the committal order, and these circumstances and the fact of committal in his home town have been talked about and have had a disadvantageous effect on his social relationships and his reputation. But even bearing these matters in mind compensation for distress in the approved sum is the most that should be considered.

The claim of the plaintiff is not excluded by § ( ) sentence of the BGB. Firstly Dr D has disregarded the protective provisions of PsychKG ND not merely negligently but (at least) grossly negligently. Besides this the plaintiff has no other option for compensation available.

The issue of whether a possibility exists of obtaining compensation from the state can remain open, as this is also a public law body and the claim would therefore likewise be directed against the public sector; and it is necessary to proceed on the basis of the unity of the public sector [reference omitted]. The plaintiff can also not claim against the other medical expert, Dr F. (Details are given).

II. On the other hand the plaintiff has no claim against the defendant under § of the BGB and Article of the Basic Law to compensation for his loss of earnings nor to a declaration that the defendant is obliged to compensate for future harm. This is because it can neither be established that the defendant has culpably violated an official duty in taking proceedings for withdrawal of the driving licence nor that the alleged harm to the plaintiff arose as a consequence of the measures taken by the defendant.

In the present case no blame, as the Landgericht has already pertinently explained, attaches to the defendant in any case, since in relation to this measure, a collegial court in which three professional judges sat, namely the Verwaltungsgericht, has adjudged its conduct to be objectively justified. The conditions developed in this respect for justifying a denial of the culpability of the office holder are present. The Verwaltungsgericht in its decision used the right facts as a basis, evaluated these carefully and in its assessment of the legal situation neither misjudged clear and unambiguous rules nor blatantly falsely interpreted unambiguous rules.

With reference to the grounds of the court decision of November the Verwaltungsgericht proceeding on the basis of the relevant provisions (§§ ( ) of the Implementation of Punishment Act (StVG) and b ( ) of the Road Traffic Licences Order (StVZO)) looked carefully at the documents which were available about the plaintiff’s psychological condition and came to the conclusion that they justified doubts about the fitness of the plaintiff to drive.

It accepted that this, together with the plaintiff’s lack of preparedness to dispel the doubts by producing a medico-psychological opinion, justifies the conclusion that the plaintiff wanted to conceal defects which made him unfit to drive a vehicle. One must therefore, so it explained, proceed on the basis of his unsuitability to drive vehicles. These considerations of the Verwaltungsgericht do not violate rules of logic. The legal views referred to are at least defensible, taking into consideration the provisions cited.

Beside this it is not evident that the withdrawal of the driving licence was the cause of the harm claimed by the plaintiff. (Details are given).

Case

OBERLANDESGERICHT HAMM, JULY

NJW-RR , = FAMRZ , = VERSR ,

The plaintiff married couple and their adopted son, the former third plaintiff, sought compensation from the defendant town because of violation of official duty in connection with an adoption placement.

Reasons

The appeal of the defendant is permissible, but unsuccessful.

I.

The Landgericht was correct in accepting the plaintiffs’ claims for official liability against the defendant on the basis of § of the BGB in combination with Article of the GG and allowed the demands for payment and a declaration.

. The appropriate officials who were involved in preparing and carrying out an adoption by the plaintiffs have negligently violated their official duties owed to the plaintiffs by not informing them that there was a suspicion that the child N, who was very disturbed, was mentally retarded.

(a) It is necessary to proceed on the basis that the actions of the Youth Welfare Department in the area of adoption placement, even according to the legal situation in the yearsto (which is the relevant period here), are the exercise of public office in the sense of Article of the GG [reference omitted]. Action in exercise of public office occurs if the real objective in the context of which the official is acting is part of the area of sovereign activity of a public body. There must also be an internal and external connection between this objective and the act (or omission) which causes the damage, so that the act (or omission) must also be regarded as belonging to this area of sovereign activity [reference omitted]. Such a connection exists for the actions of the Youth Welfare Department in the framework of adoption placement. According to § ( ) sentence of the Adoption Placement Act in its nd July version [reference omitted] adoption placement is a task for the Youth Welfare Department (and for the State (Land) Youth Welfare Department). Adoption placement is bringing together children under the age of majority and persons who want to adopt a child (adoption applicants) with the object of adopting it as well as providing the evidence of adoption (§ of the Adoption Placement Act). Leaving exceptions aside, the Youth Welfare Departments who have set up an Adoption Placement Office and the State Youth Welfare Departments have a placement monopoly (§§ ( ) sentence and ( ) of the Adoption Placement Act). The actions of the Youth Welfare Department in the area of adoption placement are accordingly a public task, the purpose of which is to find appropriate and suitable parents who are prepared to adopt for a child who does not have the care of its natural parents. These actions are therefore to assist the young.

(b)The employees of the Youth Welfare Department of the defendant acted contrary to their official duty because they neglected to inform the plaintiffs as adoption applicants about the suspicion of mental retardation due to brain damage which was known to them and not dispelled. The content and scope of the official duties of a public employee are determined by the provisions regulating the area of his tasks and duties, whether they are statutes, regulations, administrative provisions or individual directions in the context of employment; and from the kind of tasks to be carried out [reference omitted]. The duty to inform the plaintiffs about the suspicion which existed arose in the present case from the kind of tasks to be carried out by the officials within the framework of the adoption placement.

The Adoption Placement Act itself admittedly contains no express regulations which make it a duty of the Adoption Placement Office to inform the adoption applicants about the state of health of the child to be adopted. However, according to § ( ) sentence of the Adoption Placement Act, the Adoption Placement Office must make without delay the enquiries which are necessary for preparing for a placement, and these must also extend to the state of health of the child. Admittedly the implementation regulations provided for in § ( ) of the Adoption Placement Act have not so far been made. But the Working Group of the State Youth Welfare Departments has worked out guidelines which at that time applied in the version of the rd edition of and which provided in para.. that the physical as well as the mental and psychological state of health of the child was to be ascertained by a doctor experienced in these areas—if possible a paediatrician or a psychiatrist specialising in the young. Further, it says in para. . ( ) that an investigation by a specialist, if necessary even in-patient observation, was to be arranged if inquiries revealed that the child has educational difficulties, suspicion of illness or unexplained abnormalities. Even if these guidelines (which were replaced in the meantime by the “Recommendations of the Federal Working Group of State Youth Welfare Departments and Non-local Education Committees on Adoption Placement”—Version ofNovember ) were merely for practical work assistance, and they therefore did not represent legal or administrative provisions, they nevertheless express what a proper individual adoption placement requires. This is that the adoption applicants should be able to decide to adopt a child in the knowledge of all important facts, so that a successful parent-child relationship which is free from anxiety can come into existence for the welfare of the child. § ( ) of the Adoption Placement Act which makes it a duty of the Adoption Placement Office to give detailed advice and support not only to the child and its natural parents but also to the adopters is in harmony with this. It follows from the duty of inquiry mentioned above (§ ( ) of the Adoption Placement Act) as well as from the duty of advice owed by the Adoption Placement Office (§ ( ) of the Adoption Placement Act) that the adoption applicants have a right to be notified of all the relevant circumstances affecting the child, and especially of suspicion of an illness [reference omitted]. The guidelines of the Working Group of the State Youth Welfare Departments, if and so far as they required that the state of health of the child was to be established by medical examination, therefore corresponded with these requirements. Admittedly the adoption of children with physical or mental peculiarities should also be facilitated. But that can only be considered if the adopters feel they are ready for this in the knowledge of all the circumstances and the consequences of their decision (para. . ( ) of the Guidelines).

(c)The defendant’s officials knew of the suspicion of mental retardation on the basis of brain damage parentally or in early childhood.

That emerges clearly from the memorandum by the witness N dated October , in which the possibility of mental retardation on the basis of inborn brain damage was expressly taken into consideration. Even the official doctor, Dr M, who had examined the child, regarded the mental retardation as so significant that, according to the memorandum of the witness M referred to above, she thought a “very meticulous examination” in a hospital was necessary. Arrangements were consequently made to examine the child in the children’s clinic B; but this did not happen. But the doctors at the children’s clinic at the St V hospital in P, according to their letter of November , of which the defendant’s Youth Welfare Department received a copy, diagnosed not only wildness and behavioural disturbance in the child but also the suspicion of mental retardation, which could have meant that this retardation had its cause in brain damage. The appropriate officials could not regard this suspicion of mental retardation as dispelled by the interim report of the December by the witness T. The only thing which emerged from this report was that a particular positive development had occurred on the basis of psychotherapeutic treatment by the witness T. No grounds for saying that N had been subjected to a detailed specialist examination were revealed by the interim report. T made no comment at all in it on the question of mental retardation based on brain damage. From the outcome of the evidence taken by the Senate, it is not possible to proceed on the basis that the witness T (who in any case was not a neurologist or a psychiatrist, but a psychologist) explained to the witness M (as it says in her memorandum of December ) that the child had a normal intelligence and no mental handicap could be established. The witnesses T and M who were heard on this issue made contradictory statements. The witness T denied having expressed himself in this way to the witness M. But even if T had so expressed himself to the witness M, as she describes, the employees of the defendant cannot reassure themselves by saying that the suspicion of mental retardation was dispelled. This is because the statement by T did not in any case mean anything more than that he—as a psychologist—had not established any such damage.

(d) The employees of the defendant did not tell the plaintiffs about the suspicion which existed of mental retardation.

The witness M has stated that she did not speak about this with the plaintiffs. According to her testimony, the witness Ü had had nothing to do with the adoption placement. The claim by the defendant that the plaintiffs had been advised in detail by the witness T as well as by the Adoption Placement Office is unsubstantiated, as it cannot be deduced from this allegation whether the plaintiffs were also informed about the suspicion which existed of mental handicap. According to the account of the defendant’s representative in the hearing before the Senate of May , nothing was known to the witness B who was summoned to this hearing of the suspicion of mental handicap, so she could not explain about this to the plaintiffs. As the witness M was at least informed by the defendant’s Youth Welfare Department about the suspicion which existed, she would have had to take care that the plaintiffs were correctly, clearly, unequivocally and completely informed about this suspicion. That did not happen.

. This duty to inform was also owed to the plaintiffs as third parties in the sense of § ( ) sentence of the BGB. This follows—for the reasons given more precisely above—from the fact that the adoption applicants should have been able to make their decision to adopt in the knowledge of all the important facts and that this is not ensured if such facts—even if it is only a question of suspicion of a serious illness—are not communicated to them.

. The employees of the defendant culpably, i.e. negligently, did not inform the plaintiffs about the suspicion which existed of the child N being mentally handicapped, although they must have realised that the knowledge of this suspicion was of fundamental importance for the plaintiffs as adoption applicants. They ought not, without arranging a detailed specialist examination to make matters clear, to have proceeded on the basis that the suspicion was dispelled by the interim report of the witness T, a qualified psychologist, or in some other way. Without satisfying themselves in this respect, they ought not to have relied on T informing the plaintiffs about a suspicion of mental retardation. It is true that the employees of the Youth Welfare Department cannot be assumed to have the knowledge of a doctor or a psychologist. But they had medical statements before them about the child N, from which it was to be inferred that there was suspicion of mental retardation. They ought to have informed the plaintiffs about this, so that they could then freely decide whether they wanted nevertheless to adopt the child.

. The violation of official duty was also the cause of the harm which is the subject of the claim.

(a)It has to be asked here what course things would have taken if the official had acted in accordance with his duty and what the financial position of the injured parties would have been if the official had not committed the breach of official duty, but had acted in accordance with it [reference omitted]. This question is to be decided in accordance with

§of the Civil Procedure Code. If—as here—the violation of official duty consists in an omission, then there is only a causal connection with the harm if action according to duty would have prevented the occurrence of the harmful consequences [reference omitted].

(b)If the appropriate officials had informed the plaintiffs about the suspicion which existed, they would not have adopted the child N. This follows from the fact that the plaintiffs had stated with sufficient clarity in the application form that they did not want to adopt a mentally handicapped child. This is not changed by the fact that they had made this declaration subject to limitations which did not affect its essential content.

(c)It would certainly have been possible for the plaintiffs, after receiving information about the suspicion of mental retardation, to have made the adoption dependent on a prior detailed neurological or psychiatric examination. Such an examination could not be expected to have dispelled the suspicion which existed, in the face of the child’s evident behavioural symptoms. Such an examination would either have—as in the case of the later examinations in the children’s hospital O and in the University clinic—revealed the presence of childhood brain damage or would have had an outcome which was admittedly unclear, but which would not have dispelled the suspicion. But even in the latter case, the plaintiffs would have refrained from adopting the child N because of the risk of adopting a mentally handicapped child. As they did not want to adopt such a child, they would also not have taken the risk of possibly having to bear the responsibility and burdens of such a child.

. (a) The plaintiff can claim from the defendant compensation for her loss of earnings in the undisputed sum of DM , . . The plaintiffs have, without being contradicted, argued that the plaintiff giving up her job had been a prerequisite for the adoption placement. According to the testimony of the plaintiff, which likewise remained uncontradicted, when she gave evidence at the Senate hearing of July , she had given up

her job on December , when the plaintiffs took N into their care. The plaintiff would have not have suffered loss of earnings if the defendant’s officials had fulfilled the duty to inform which they owed to the plaintiffs; because then no adoption would have taken place and the plaintiff would not have needed to give up her job for the time being. The defendant, in this respect under a duty of explanation, has not substantiated that the plaintiffs, who certainly wanted to adopt a child, would have had the actual opportunity before the lapse of months—reckoned from December —to adopt another child, and that the loss of earnings would therefore still have arisen in whole or in part.

(b) On the same grounds the court costs and notarial expenses borne by the plaintiff in the undisputed sum of DM . are to be compensated.

. The claim for a declaration by the plaintiffs in relation to the duty of the defendant to compensate for possible future harm is also well founded. The prerequisite for the issue of a declaratory judgment is merely that there is a certain probability that claims have arisen or could arise from the legal relationship which is to be established [reference omitted]. The prerequisite is fulfilled in this case. The future harm exists predominantly in the expenditure on maintenance which the plaintiffs must provide for the handicapped child, possibly for the whole of its life. The duty to compensate for harm is not limited to the additional expenditure on maintenance which arises through the special needs of a mentally handicapped child. The defendant must instead reimburse the plaintiffs for the whole of the expenditure on maintenance. The provision of information about all the important facts and circumstances of the adoption to the adoption applicants which was due from the employees of the Youth Employment Department is not only to protect them from the additional expenditure which they incur for the maintenance of a handicapped or sick child. The fulfilment of the duty to give information is also to ensure freedom of decision by the adoption applicants, and this consists of not adopting a mentally handicapped child at all. If such a child is adopted, the risk of providing full maintenance has been realised, and fulfilment of the duty to provide information should protect the adopters from this. In this respect the legal situation is similar to the one which arises when a doctor advises a pregnant woman during early pregnancy incorrectly or incompletely about the possibilities on early recognition of damage to the foetus which would have provided legal justification for the wish of the mother to terminate the pregnancy. Even in this case, the BGH has not limited the claim of the parents to compensation for harm to the additional expenditure on maintenance, but extended it to the complete maintenance requirement for the child who has been harmed [reference omitted]. In this case, the issue cannot be decided otherwise.

II.

No contributory fault for the origination of the harm can be laid at the door of the plaintiffs in connection with the adoption of the child N (§ ( ) of the BGB).

III.

The appeal is accordingly rejected.

Case

OBERLANDESGERICHT HAMM, NOVEMBER

ZFJ ,

Facts

K was born in February . The plaintiff was her mother and the sole person entitled to look after her.

In November K presented herself at the Youth Welfare Department of the defendant district and told them about recent domestic difficulties with the plaintiff. (K had already been accommodated for a time by the Youth Welfare Department in the children’s home B in M, in early ). She explained to the officer in charge, Me, that she could not stand things at home any more. She refused a mediation interview with the plaintiff. But K and the plaintiff had a conversation of at least one and a half hours on the morning ofNovember . Me was present for part of the time. No settlement was reached.

The Youth Welfare Department applied to the Guardianship Court C, which arranged a hearing on the afternoon of November . K was heard first, and she repeated to the judge her statements contained in the report of the Youth Welfare Department, and said she did not want to go back home. Then the plaintiff was heard. The Guardianship Court tried to arrange a settlement between K and the plaintiff, but failed. It made a temporary order taking away the plaintiff’s right to determine K’s place of residence, and transferring this to the Youth Welfare Department as guardian.

K was then accommodated by the Youth Welfare Department at first in the Youth Protection Centre in D and from December in the children’s home B in M. On September K left the home of her own accord and returned to the plaintiff.

On September the Guardianship Court transferred full custody rights back to the plaintiff. But because of a new argument, the plaintiff finally excluded K from home on November . The two have since lived separately from one another.

The plaintiff lodged a complaint against the decision of the Guardianship Court. This was rejected by the Landgericht M on July because K’s wish not to return home had to be respected.

The plaintiff claimed compensation from the defendant district including damages for distress because the Youth Welfare Department deprived her of K in a manner contrary to their official duty.

The action and the appeal were unsuccessful.

Reasons

The prerequisites for a claim for official liability under §§ and of the BGB in combination with Article of the GG, which is the only for basis a claim to be considered here, are not present.

I. The work and tasks of youth assistance—and along with this the official duties of the Youth Welfare Department—arise from § of the KJHG. This work includes amongst other things educational assistance and supplementary services (§§ ( ) nos. , – ,

and KJHG), and the other tasks include amongst other things taking children and young people into care (§§ ( ) Nos. and KJHG SGB VIII).

On this basis, the Youth Welfare Department of the defendant district has not violated any official duties which could be the cause of the plaintiff’s alleged harm.

. The decision of the Youth Welfare Department to take K into care on Novemberand to seek a decision of the Guardianship Court on November was in accordance with their official duty.

(a)According to § ( ) of the KJHG the Youth Welfare Department is under a duty to take a young person into care if he or she asks for this. It has to inform the person having custody about the taking into care without delay.

These prerequisites are fulfilled in the present case. K asked to be taken into care by the Youth Welfare Department of the defendant district on November as a so-called “voluntary admission”. The duty of the Youth Welfare Department to take into care applies without any limitation, regardless of the grounds on which the young person asks for care and of whether these grounds are convincing; the requirements to be placed on the content of these grounds must not be too high [references omitted].

The plaintiff as the person having custody had unquestionably been notified of the taking into care, and in this connection it does not matter for the purpose of the decision whether this notification was based on her own initiative or on that of the Youth Welfare Department.

(b)According to § ( ) sentence of the KJHG the Youth Welfare Department must, if the person having custody challenges the taking into care, either hand the young person over to the person having custody (option ) or obtain a decision by the Guardianship Court about the necessary measures for the welfare of the young person (option ). These steps must take place without delay.

(aa)Unquestionably, the plaintiff challenged the taking into care in the conversation on the morning of November . She accuses the Youth Welfare Department of not having kept the appointment arranged at o’clock for the continuation of the discussion, but it is not evident that this would have made a difference in the context of the plaintiff’s challenge. On the evidence of the memorandum of the hearing before the Guardianship Court, the plaintiff still stated to the court that she did not agree with the taking into care—at any rate not unconditionally.

(bb)In this situation, the Youth Welfare Department was under a duty to make an “immediate” decision. No objection can be raised to the fact that it chose, out of the two alternatives to be considered, not to hand K over to the plaintiff, but to invoke the Guardianship Court. This was in accordance with their official duty.

In the literature [reference omitted] the view is taken that when a person having custody challenges a taking into care, the Youth Welfare Department is always obliged to bring in the Guardianship Court even if the Department considers there is no danger to the child’s welfare. According to another view [reference omitted] the Youth Welfare Department only needs to obtain a decision of the Guardianship Court (and also must, without there being any discretion) if the welfare of the young person is endangered. Both opinions lead here to the same conclusion.

In making its decision, the Youth Welfare Department could (and had to) take into account that help for K’s upbringing had already been necessary (in January / February

), that there were unquestionably school, alcohol and drug problems and that again K absolutely refused to go back home. As K was at that time already nearly years old, the Youth Welfare Department could take this refusal seriously.

Assuming a danger to the child’s welfare in this situation, and bringing in the Guardianship Court, were not contrary to the Youth Welfare Department’s official duty. It could regard the decisions of the Guardianship Court and of the Landgericht based on §§ and a of the BGB (endangering of child’s welfare) as retrospectively confirming this assumption. The urgency of the measures to be taken by the Youth Welfare Department also did not permit—contrary to the view of the plaintiff—the making of further enquiries, in particular the hearing of the witnesses who were later heard by the Guardianship Court. The necessary elucidation of the matter was ensured because the Guardianship Court was under a duty to investigate of its own motion (§ of the FGG).

. The Youth Welfare Department would certainly have acted contrary to its official duty if it had “wangled” the right to determine K’s accommodation by—as the plaintiff claims—influencing K by insinuation to make untrue statements to the Guardianship Court.

But the plaintiff has not substantiated this sweeping accusation in any greater detail, either in writing or at her examination in accordance with § of the Civil Procedure Code at the Senate’s hearing; so taking evidence did need to be considered here. The plaintiff has merely asserted that the Youth Welfare Department stated to K that she must only stick to her point of view and say that she did not want to return home in any circumstances. The Senate cannot see any improper influencing of K in this.

The decision of the Guardianship Court is based in substance on K’s wish, as stated to it, that she did not want to go back home. This stated wish was not however inconsistent with the truth.

The plaintiff herself admitted on her personal examination before the Senate that K, at the point in time in question, did not in fact want to go back home and that even in the conversation on the morning of November there were no prospects of this. Moreover, K stated this wish approximately eight months later to the Complaints Chamber of the Landgericht. There is no allegation that the facts of the case were presented to the Guardianship Court in some other way which was inconsistent with the truth and based on improper influence by the Youth Welfare Department.

. The Youth Welfare Department has also not violated its official duties by accommodating K after the decision of the Guardianship Court, at first in the Youth Protection Centre Ka in D and afterwards in the children’s home B in M.

(a)On the basis of the decision of the Guardianship Court, the right to determine K’s place of residence was provisionally transferred to the Youth Welfare Department as guardian (§§ ( ), and a of the BGB). The Youth Welfare Department could therefore decide on K’s place of residence without the agreement of the plaintiff [reference omitted]. The right to determine a place of residence also includes the authority to exercise care of the person concerned to the extent necessary for a parent. This includes entrusting the person to a family or—as here—the houseparents in a home. This authority is part of the right to determine the place of residence.

(b)Besides this, the plaintiff shows no alternative to accommodation in a home— which was in any case only provisional for the period of the temporary order—especially as she and K could not agree at the hearing before the Guardianship Court on

accommodation with another appropriate care person. Accommodation with the plaintiff herself was out of the question as a serious alternative after the Guardianship Court had just taken this aspect of guardianship away from her.

. Finally it cannot be established that the Youth Welfare Department violated its official duty just because it did not, following the decision of the Guardianship Court, provide any services—additionally to accommodation in the home—under § ( ) of the KJHG.

(a)In this connection, the Senate can leave open the question of whether the Youth Welfare Department, under the given circumstances of the plaintiff, ought to have offered such services, namely educational assistance (§ of the KJHG) educational advice (§ of the KJHG) or socio-pedagogical family assistance (§ of the KJHG). The Senate can therefore also leave open the question of whether it was due to lack of readiness on the part of the Youth Welfare Department or on the part of the plaintiff that this did not occur; even at the Senate hearing this could not be resolved by examination of the parties on both sides.

(b)But this does not need to be resolved in order to decide the legal dispute; that is why it is not necessary to go into the question of whether the memoranda submitted by the defendant district were—as the plaintiff asserts—made out after the event or not. Because even if the Youth Welfare Department breached its duty in not offering to the plaintiff and K services in accordance with § ( ) of the KJHG, it cannot be established within the framework of the necessary examination of causality that matters would then have taken such a course that the harm which is the subject of the plaintiff’s claim would not have arisen.

(aa)Even according to the plaintiff’s own allegation, no sufficient grounds were present for saying that if services under § ( ) of the KJHG had been obtained the relationship between the plaintiff and K would have improved. The plaintiff herself described K as a “very egocentric girl with a very strongly demanding nature”. K’s behaviour, in so far as this is of importance for the resolution of the legal dispute, confirms the plaintiff’s own assessment. Within the framework of § of the Civil Procedure Code, which is to be applied here, success from services under § ( ) of the KJHG cannot in any case be established or even assumed; demonstrating this is the responsibility of the plaintiff who is under a duty of explanation and proof in respect of causality.

(bb)Even if a different view is taken, there is nothing to indicate within the framework of § of the Civil Procedure Code that services under § ( ) of the KJHG would have succeeded so quickly that the harm which is the subject of the plaintiff’s claim would thereby have been avoided or at least reduced; demonstrating this also falls to the plaintiff who is under a duty of explanation and proof in respect of it.

The harm to her reputation which the plaintiff asserts—and the sale of her house in H associated with this—is based only on the taking into care under § ( ) of the KJHG, the ensuing deprivation of the right to determine the place of residence by the Guardianship Court and the subsequent accommodation of K in the Youth Protection Centre Ka and in the children’s home B. Even the legal costs and the costs of visits and telephone calls arose exclusively in connection with the taking into care, the deprivation of the right of determination of the place of residence and the accommodation. This harm would therefore also not have been avoided by additional services by the Youth Welfare

Department under § ( ) of the KJHG. The same applies to the impairment which the plaintiff claimed occurred to her health. Apart from the fact that, according to the statements of the plaintiff to the expert D, this impairment must for the most part have existed previously, there is nothing to indicate that it would have been avoided or even significantly reduced by services by the Youth Welfare Department under § ( ) of the KJHG.

Case

OBERLANDESGERICHT HAMM, MARCH

AZ: U / (NOT PUBLISHED)

Official liability for refusing to allow a sick child to participate in special tuition. [Headnote: Officials of the Education Office and head teachers can breach their offi-

cial duties as against the mother of a child who is required to attend school but who suffers from school phobia if they do not ensure that the child can take part in special tuition in accordance with SchpflG NW § ( ). The mother can demand in such a case that the costs spent on private tuition are reimbursed in accordance with principles of official liability.]

On the plaintiff’s appeal (Berufung) (in other respects rejected) the judgment of the third civil chamber of the Bochum Landgericht, delivered on April , is amended. The defendant Land is ordered to pay to the plaintiff DM , . with interest atper cent from January . The remainder of the claim is rejected. . . .

Reasons

The appeal of the plaintiff is permissible and is largely successful. It results in judgment against the defendant Land for payment of DM , . with interest.

II.

The plaintiff is entitled in her own right to a claim for damages in the sum of , . DM against the defendant Land under § ( ) of the BGB in combination with Articleof the Basic Law. This is because the employees of the education office for the . . . town and the head teachers of the . . . Grammar School and the . . . Secondary School did not ensure (or did not ensure in time) that the plaintiff’s son was given special education in the form of home tuition.

.

(a) It was a breach of official duty for the competent officials of the Education Office (in particular the educational supervisor, but also the head teacher of the W Grammar School and the head teacher of the . . . Secondary School) not (or not at the right time) to take steps which ensured that the plaintiff’s son was given special tuition. The setting up of special tuition was unreasonably delayed as a result.

It must be assumed that a sick child has a subjective public right to schooling in a special school or to take part in special tuition, which corresponds to his or her duty to attend a special school or to take part in special tuition which is regulated in § ( ) of the SchpflG. But the entitlement following from this provision is limited by the educational standards of primary and secondary schools, so that no breach of official duty falls

to be considered insofar as the Education Office has not enabled the plaintiff’s son to take part in special tuition at grammar school level.

According to § ( ) sentence of the SchpflG, the education authority to be designated by the Minister of Education and the Articles by statutory instrument decides on the special tuition in which children required to attend school have to take part. The competent education authority is the Education Office (§ of the Education Office Competence Regulations in combination with para. of the Appendix). The official duties of the Education Office officials and the head teachers arise from the Circular of the Minister for Education and the Arts of July , amended by the Circular of and Octoberand the Circular of November . Until the amendment of the Circular ofJuly by the Circular of November (with effect from February ) a pupil had a claim to special tuition if he was prevented from attending school on the grounds of illness for longer than eight weeks (six weeks from February ). If it is established from the start that a pupil will have to stay away from school lessons for more than eight weeks, special tuition can be given earlier (para. . of the said Circular). According to para. of the Circular of October , applications for special tuition (home tuition) through the direction of the school so far attended by the pupil are to be directed or referred on to the Education Office. The Education Office then decides on the application in accordance with para. of the Circular and arranges the special tuition (home tuition). Before the decision it has to be established by medical opinion—in cases of doubt by the medical officer—whether the prerequisites for special tuition are present and whether the pupil is in a position to take part in the special tuition (para. of the Circular of July ; but different provision is made in § ( ) sentenceof the SchpflG, in which the obtaining of an opinion of the Public Health Department is essential).

Until the report of the head teacher of the . . . Grammar School of March [reference omitted], the plaintiff’s son had been absent from lessons for about 1/2 years i.e. from September to March . This occurred without the responsible head teacher of the Grammar School and the Education Office having arranged anything to secure the fulfilment of the duty to attend school in accordance with §§ ( ) and ( ) of the SchpflG. The pupil had been ill from the rd September . It is revealed by the report of the head teacher to the Education Office for the town of . . . of March that the plaintiff had submitted to the school a psychological certificate which stated that her son had acute attacks of school anxiety and declared that school attendance was not possible for half a year for this reason. Even at that time the head teacher of the . . .

Grammar School ought, according to the legal and administrative provisions previously mentioned, to have considered the giving of special tuition and arranged for the plaintiff to make an appropriate application. Then the Education Office would also have been immediately involved in the matter. According to the psychological certificate (possibly relating to certification by the qualified psychologist . . . of October ) it was certain from the start that the pupil would have to be absent from school lessons for more than eight weeks. When the certificate had run out and the plaintiff appeared at the school with her son on March , he refused to attend school of any kind. It may admittedly have been proper to refer the plaintiff to an education advice centre. But no-one at the Grammar School and the . . . Secondary School at which the plaintiff’s son was enrolled then troubled any further about the educational fate of this pupil. There was no co-ordi- nation of any kind between the two schools. The Education Office too was not brought in at first, so it became possible for the plaintiff’s son to miss several years of compulsory

schooling. It was true that the persons having the right of upbringing have, according to § ( ) of the SchpflG, to see to it that a child who is under a duty to attend school takes part regularly in lessons and in the other events of the school. But as the pupil had school phobia, which emerges from the certification of the clinics of the state capital D ofNovember and their opinions of December , the plaintiff could not urge her son to take part in lessons at the school.

In this situation, the Education Office had to ensure that the necessary special tuition was given to the plaintiff’s son. In the same way as the persons having the right of upbringing, it has the task of encouraging pupils to fulfil the duties incumbent upon them (§ ( ) sentence of the SchpflG). These include in particular that the pupils should comply with their duty to attend school to the required extent. For this purpose, the Education Office has to ensure that it learns of school absences of long duration in good time, so that it can if necessary take the measures needed to fulfil the duty to attend school. Substantial absences must have occurred here, because a pupil could not otherwise have received no lessons for more than three years. Even after the receipt of the report of the head teacher of the . . . Grammar School of March , it was more than a year until the attempt at setting up special tuition from July was undertaken. As indications of the existence of school anxiety emerged from the report anyway, the Education Office ought immediately to have clarified whether the pupil had a school phobia which made the arrangement of special tuition (home tuition) necessary. It should have done this by obtaining an opinion from the Public Health Office. The lawyer’s letter of Februaryin which it was announced that the pupil would attend a boarding school with immediate effect changed nothing in this respect, because it was immediately overtaken by the further lawyer’s letter of February in which it was stated that the best thing would be to give private tuition to the boy until his psychological condition had been overcome. It was only on the basis of the letter by the plaintiff’s legal representative of Decemberthat private tuition at home was set up, but admittedly only four hours a week initially.

(b)The officials of the defendant Land, in particular the employees of the Education Office, have negligently breached their duties in that they did not arrange and expedite the setting up of the special tuition in a purposeful manner. Even the head teachers involved did not take sufficient steps to ensure compulsory school attendance and thereby likewise negligently breached their official duties. They have violated unambiguous legal and administrative provisions. Every official must possess or acquire the knowledge of law and administration necessary for the conduct of his office.

(c)The defendant Land is liable in accordance with Article of the Basic Law for the breaches of official duty. According to this provision, the liability applies in principle to the body which the official who acts contrary to duty serves. Here that is the Land of NW. The head teachers of the named schools are officials of the defendant Land. The same applies to the employees of the Education Office. Admittedly the Education Office in a town which is an administrative district in its own right (. . . is such a town) consists of the chief executive and the educational supervisor (§ ( ) sentence of the SchVG). It is not however here a question of breaches of the official duty of the chief executive, who is in principle a local official. It can therefore be left undecided whether on breaches of official duty by the chief executive as a member of the Education Office, the town of . . .

or the defendant Land is the body liable in the sense of Article of the Basic Law. The breaches of official duty established in the case in question are to be laid at the door of

the educational supervisor. According to the Circular of the Minister for Education and the Articles of October (para. ) competence for special tuition (home tuition) was to be transferred at the Education Office into the overall charge of an educational supervisor. According to the standing orders for the Education Office—§ ( ) sentenceof the Circular of the Minister for Education and the Articles of December —the arrangement and carrying out of the special lessons is in any case predominantly in the educational service area. The former defendant’s reply to the appeal, which the defendant Land has clearly adopted, also proceeds on this basis. The educational supervisor is however an official of the defendant Land.

.

The official duties which have been breached do not only exist as against the pupil but also as against the plaintiff as the person having the right to bring him up. Whether in the individual case the person harmed belongs to the class of third parties in the sense of § ( ) of the BGB is not to be judged according to whether the official duty—even if not necessarily solely—has the purpose of looking after the interest of the person harmed. It must follow from the provisions which form the basis of the official duty and which outline it, as well as from the nature of the official business, that the person harmed belongs to the group of persons whose interests are to be protected and promoted according to the goal and legal purpose of the official business. Only then will a duty to compensate exist as against him following a culpable breach of duty. On the other hand, no duty to compensate is established as against other persons, even if the breach of official duty has had a more or less disadvantageous effect for them. A special relationship must therefore exist between the official duty breached and the third party harmed (constant case law of the Bundesgerichtshof, see e.g. BGHZ , , with further references). Such a special relationship exists here between the official duties breached and the plaintiff. It arises from the fact that education of her son (who is required to attend school) is incumbent on the plaintiff and she therefore has a paramount interest in his well ordered school education in the same way as the pupil. According to Article ( ) sentence of the Constitution of the Land of NW it is the natural right of parents to determine the instruction and education of children. The defendant Land has taken over the public school system and exercises supervision over it. The competent officials are therefore breaching their official duties as against the parents as the persons having the right of upbringing, if they do not ensure (or do not ensure in time) that a pupil who has a long lasting illness receives that special tuition which is provided for and formulated in the relevant legal and administrative provisions.

.

It cannot be in doubt that substantial deficits in the pupil’s education have occurred through the lengthy delays by the responsible officials. This is also expressly emphasised in the letter of the Institute for Remedial Education and Psychotherapy of the town of

. . . of February . These deficits could not be made up for by the special tuition which was given in the end after a long wait. The expenditure claimed by the plaintiff for the giving of private tuition is therefore adequately caused by the breaches of duty by the officials of the defendant Land. On the basis of the credible testimony of the witness . . .

Sch, it is established that the plaintiff’s expenditure on the private tuition amounted to at least DM , . . The witness stated that in the period from the end of September or the beginning of October to the end of June —with the exception of school holidays—she gave the plaintiff’s son a double hour of private tuition twice each

week for a payment of DM . per hour. Altogether the plaintiff paid her almost DM , . , but at least DM , . . The last named sum is to be taken as a basis for the measurement of the harm. A higher level of harm cannot be established with certainty in the face of the testimony of the witness, especially as receipts are not available.

.

Contributory fault by the plaintiff for the origin of the harm (§ ( ) of the BGB) cannot be established. Contributory fault by the plaintiff could at best be deduced from the fact that in she did not arrange earlier for the Institute for Remedial Education and Psychotherapy of the town of . . . to give an opinion about her son and then make the report available to the Education Office. This first happened with the letter of the rd April by the plaintiff’s legal representative. But then the substantial deficits in education which were caused by the delays on the part of the officials of the defendant Land had already occurred. Also, it was not until the beginning of that the special tuition for the plaintiff’s son was at last arranged.

.

Finally, the plaintiff can also not be blamed for the fact that she omitted to avert the harm by the use of legal redress. The raising of a complaint in the administrative courts for failure to act would not have been able to change anything in relation to the onset of the harm, especially as the plaintiff might fairly have hoped that she could have achieved the arrangement of special tuition without taking legal action in the administrative courts. . . .

.

Case

BUNDESGERICHTSHOF (GREAT CIVIL DIVISION) JULY

BGHZ ,

The Great Civil Senate has answered as follows the question referred to it by the Sixth Civil Senate as to whether in assessing the amount of reasonable compensation in money in accordance with § BGB all the circumstances must be taken into account, including the financial circumstances and the degree of blameworthiness of the person liable to pay damages:

In assessing equitable compensation in money in accordance with § BGB all circumstances of the case can be taken into account, among them the degree of blameworthiness of the person who is liable and the financial circumstances of both parties. In this connection account must also be taken of the extent to which the person who is liable is indemnified by a liability insurance or a claim for redress.

Reasons

According to § BGB “equitable compensation” in money may be claimed in case of injury to the body or to health even in respect of damage which is not pecuniary. The older view, held in particular by the Reichsgericht, was that compensation under § BGB must be “equitable” in respect of all the circumstances which characterise the

damaging event in issue; it therefore took into account not only the extent and the duration of the pain, disfigurement, suffering, and intrusion, which were always matters of primary concern, but also particularly the economic situation of the injured party and of the tortfeasor, the degree of blameworthiness, and the circumstances which led to the damage (e.g. gratuitous transportation). According to a more recent view the compensation must only be “equitable” with reference to the purpose, which is to compensate non-pecuniary damage; it therefore only takes into account the extent and the duration of the pain, disfigurement, suffering, and intrusion as well as the means necessary to compensate for non-pecuniary damage; thus it takes into account only the general circumstances of the injured party. This more recent view was adopted by the Third Civil Senate in its decision of September [reference] to the extent that in assessing the amount of damages for pain and suffering it did not take into account the economic circumstances of the tortfeasor, while leaving open the question as to whether the degree of this blameworthiness should also not be considered.

I. . The modern practice bases its view on the ground that claims for damages for pain and suffering, too, are true claims for damages; it therefore regards as decisive the nonpecuniary damage which the injured party suffered as a result of the tort; as in all cases of claims for damages it seeks to take into account only those consequences which the act giving rise to damages has had for the injured party.

This view assumes correctly that as a result of the treatment of the Civil Code of claims in respect of torts—including those based on non-pecuniary damage—it is impossible to attribute to them a direct penal function. This applies equally to claims for nonpecuniary damage. However, by denying the penal character of claims for non-pecuniary damage no final answer has been given to the question for decision in the present case which is in respect of what circumstances damages to be awarded under § BGB must be “equitable”.

. First of all the provision of § BGB must be considered as part of the system of the Civil Code as a whole, which in the most diverse places determines the extent of a performance in accordance with “equitable discretion” or allows “equitable compensation”. In these cases the Code intends normally that account should be taken of all the circumstances of a case which are relevant according to equitable considerations, and more particularly the situation of all the parties involved.

(a) If a performance is to be fixed in accordance with “equitable discretion”, as §§ ,BGB require, or an act must be carried out in accordance with “equitable discretion”, as §§ , , BGB demand, it means undoubtedly in these cases that not only the economic circumstances of the creditor, but also those of the debtor must be taken into account.

(b) In connection with claims for damages, too, the Civil Code refers not only in § but also in §§ , to equitable compensation or to damages in accordance with the requirements of equity.

When § BGB speaks of equitable considerations, the Code refers expressly to “the circumstances of the parties involved”, and thus the economic circumstances of the parties must also be taken into account. It is true that normally § BGB presupposes that the tortfeasor is to be blamed, while § establishes strict liability. Moreover, according to § both the ground for holding a person liable as well as the extent of his liability are

determined according to the principles of equity, while according to § only the extent of liability is so to be fixed. Nevertheless, it is the express intention of § , also in so far as it determines the extent of the claim for damages in accordance with equity, that the circumstances of those involved should be taken into account, albeit on the basis of detailed particulars. It is not possible either to refer to § in order to further the argument in support of a restrictive interpretation of § , as adopted by the more recent practice, if only for the reason that the Civil Code by requiring that something is to be performed in accordance with the principles of equity intends not only in that case, but regularly, that all circumstances are to be taken into account which may be relevant.

(c) A closer connection than that between § and § BGB exists between the claims arising under § and the claim for defloration under § BGB, in respect of which the law provides also that “equitable compensation” in money is to be granted. It must be admitted that the liability under § arises from the breach of an agreement which forms part of Family Law while that under § is based on a tort. However, in both cases the extent of liability is to be determined in accordance with equity.

This history of § BGB shows that the legislature intended the considerations which had led it to allow “equitable compensation under § ” to apply equally to “equitable compensation in § ”. Thus the proposal to replace the expression “equitable compensation” in what is now § by the term “adequate compensation” was rejected together with the further proposal to grant, instead of “equitable compensation”, “compensation which takes into account the financial circumstances of either party to the engagement to marry as well as the reduced expectation of another marriage”. One of the reasons was that § of the Bill, now § , which was followed by § of the Bill, now § , also referred to equitable compensation and that in the case of a claim for damages under what is now § , which follows closely the claim for damages under what is now § , no danger existed that the previous practice (opposed by the second proposal) in the case of claims for defloration would be continued.

The substantive considerations expressed in respect of § and applicable also to § , as appeared above, emerge from the reasons which accompany the rejection of the proposals referred to above. The first of these proposals was rejected on the ground that “the term ‘equitable’ had a clear established technical meaning”. The second proposal was met by the argument that “it was not just in assessing the damages to take no notice at all of the financial circumstances and the situation in life of the girl, as might be feared, if the proposal were accepted; the best means of ensuring the development of a realistic practice of the Court was not in any way to restrict the judges in assessing damages”. Another proposal to fix the damages under § at a minimum of fifty times the normal local daily wage was “countered by the argument that individual provisions concerning the assessment of damages were not advisable . . .”.

Therefore the preparatory materials for the Civil Code permit the conclusion in respect of § as well that it was the intention of the legislature not to constrain the courts to disregard certain circumstances in assessing damages for non-pecuniary losses. This means that in fixing equitable compensation the courts may, as a matter of principle, take into consideration all the circumstances which may arise.

. Contrary to the modern view the same conclusion follows from the legal purpose of damages for pain and suffering. In law damages for pain and suffering have a dual function. They are meant to provide the injured party with adequate compensation for that kind of damage, for those handicaps which are not of a pecuniary nature. At the

same time they are meant to indicate that the tortfeasor owes the victim satisfaction for what he has done to him.

Of these two functions, that of compensation or redress is prominent. The purpose of the claim is redress for the loss suffered. The latter cannot, however, be assessed arithmetically. The underlying idea may perhaps be formulated as follows: the tortfeasor, who has not only inflicted pecuniary damage upon the injured party but also gravely affected his life, is to help the latter by his payments to alleviate his burden as far as possible. Having regard to this purpose of damages for pain and suffering it must be admitted that considerations of the seriousness, acuteness, and duration of the pain, suffering, and the disfigurement constitute the main basis for assessing equitable damages. The sum required to provide this redress, therefore, depends primarily upon the extent of this damage. It is the merit of the decision of the Third Division of this court [reference] to have shown this, with the result that damages for pain and suffering were treated more seriously than hitherto not only as to their legal significance, but also as to their factual evaluation. Since, however, the Code requires equitable compensation in the meaning set out above (I. ), the purpose of making good cannot determine alone the amount of damages, particularly since this purpose is insufficient alone to fix the amount with something approximating certainty.

Furthermore, even if claims in tort for damages, including damages for non-pecuniary losses, no longer bear any penal character directly, nevertheless something inherent in the purpose of making good is a reminder of its former function as a fine or, to use the apposite term of the corresponding Swiss institution, as satisfaction. Legal history shows that damages for pain and suffering have their origin in criminal law and that in the laws of the German States in modern times different types were fashioned according to the respective stages of development, which still reflect in some respects their antecedents in criminal law. The following is significant: wherever damages for pain and suffering were not excluded altogether, as for instance in § I of the Prussian Allgemeines Landrecht of in respect of the persons other than “peasants or common citizens” or in Articleof the Württemberg Act concerning the effects in private law of crimes and penalties of September [reference], the laws provided expressly that in assessing the amount of damages also certain circumstances were to be taken into account which cannot be reconciled with a limited notion of damages restricted to making good. Such are the degrees of blameworthiness mentioned in §§ , I of the Prussian Allgemeines Landrecht, or the degree of blameworthiness and “the financial circumstances of the tortfeasor” as stated in § of the Baden Act concerning the effects in private law of crimes of March [reference] or if, according to the Saxon decree of August [reference] damages were to be fixed “in the discretion of the judge, having regard to the pain inflicted on the victim”, which latter provision was interpreted to mean that the status and the financial circumstances of the claimant were to be taken into account [reference]. Similar considerations influenced the unanimous view of the practice of the courts and writers up to the thirties of this century in dealing with § BGB to the effect that in assessing damages for pain and suffering all circumstances must be taken into account which colour the individual case.

It is true that the legislature has given the claim for pain and suffering the form of a claim for damages according to private law. However, in substance it does not bear the character of a usual claim of this kind, which is for compensation in respect of pecuniary damage. Its purpose to effect restitution cannot be achieved through restitution in kind, as is the case where the damage is pecuniary. To that extent restitution is impossible. Cer-

tainly an attempt is to be made to make good, but it cannot be done arithmetically. It is impossible to concentrate on the notion of making good, because non-pecuniary damage can never be expressed in terms of money and since the possibility itself of making good by means of money payments is very limited. Contrary to a view to be encountered occasionally, non-pecuniary losses concern “assets not to be valued in money terms”. The amount of money necessary to make good cannot be determined by “so to say balancing pain with those pleasures which are intended to wipe out the victim’s memory of his sufferings”. Even where it is to a certain extent possible to compensate physical and mental suffering by amenities and comforts, widely differing possibilities almost always exist as to how redress is to be effected and the purpose alone of the damages to make good does not provide a sufficient measuring-rod. The purpose of making good alone only provides a very rough standard for assessing damages the greater the non-pecuniary loss. This appears particularly if the non-pecuniary loss is so extensive that it is difficult to conceive of making it good, as for instance when restitution can hardly be achieved because the body of the victim has been extensively destroyed. This becomes particularly clear where the type of non-pecuniary damage cannot be made good at all, as for instance frequently in the case of psychological effects. It is generally recognized that damages for nonpecuniary losses must also be awarded if an assault, false imprisonment, or interference with physical integrity resulted in psychological and not in physical injuries. Especially in the case of psychological disturbances it will frequently be impossible to compensate the feelings of unhappiness since the injured party himself is not conscious of his damage. Nevertheless, damages for pain and suffering have been rightly awarded even in this case. The award of damages under § BGB, it must be admitted, serves to make good nonpecuniary loss; it is not, however, a condition for awarding damages for non-pecuniary loss that this purpose can be achieved. The same would be the case if the injured party is so situated financially that no amount of money could raise a sense of happiness which would make good his non-pecuniary damage.

Precisely in these situations of non-pecuniary damage, the function of making good, which is intimately connected with the legal regulation of damages for non-pecuniary loss, acquires its special significance. The function of making good underlines that the injurious act has created a certain personal relationship between the tortfeasor and the victim—which, by its nature demands that in assessing how much the tortfeasor must pay the victim all the circumstances of the case must be taken into account. This appears also from the special provision that this claim dies with the claimant and cannot be assigned.

II. In accordance with the foregoing observations, the severity and the extent of the reduction in the enjoyment of life must be considered in the first place for the purpose of assessing damages for pain and suffering. This is the preponderant aspect. In addition, other circumstances may, however, be taken into account as well which are salient features of the injurious act.

. One of these is the degree of blameworthiness on the part of the tortfeasor. The degree of blameworthiness is not only relevant, as the more recent interpreters of § BGB would have it, with regard to its effect upon the injured party: the fact that the injury was caused by the reckless or even intentional behaviour of the defendant, may naturally have left the injured party embittered, while he may be more inclined to accept as his fate an injured caused by slight negligence. Leaving aside the reaction of the injured party, it

may accord with equity and the notion of satisfaction in assessing compensation under § BGB if, in the individual case, intention and recklessness count against the tortfeasor, while especially slight negligence counts in his favour. It would be incomprehensible if the trial judge could not award higher damages for pain and suffering in the case of a crime than where the external consequences are the same, but occurred as result of an error in normal human intercourse which might be committed by anybody. For this reason many foreign legal systems, too, have taken, and still take, into account the degree of blameworthiness of the tortfeasor in assessing the amount of damages payable by him. The fact that German law does not offer this opportunity where the damage is pecuniary does not preclude its use where the Code offers it in arriving at the equitable compensation for non-pecuniary loss. On the contrary, this possibility is a great merit of the regulation of damages for non-pecuniary losses.

Apart from the degree of blameworthiness, the cause of injury or of the injurious act may be relevant in certain circumstances. Even if the degree of blameworthiness is the same, different acts may bear very different characteristics (injury in the course of the enjoyment of some pleasure on the one hand, or in connection with the exercise of a profession, the administration of help, or any other necessary activity on the other hand). This is particularly valid in those cases in which the tort was committed on the occasion of an activity which the tortfeasor carried out in order to oblige the injured party and which the latter welcomed—perhaps even gratefully—as, for instance, where the victim suffers an injury on the occasion of a journey as a gratuitous passenger in the car of the tortfeasor as a result of the latter’s negligence who sought to do him a favour. In such a case it may even be inequitable if the victim claims damages for pain and suffering to an amount equal to that which a pedestrian could have claimed who had been run down by the tortfeasor.

. Possibly the economic circumstances of the injured party may also influence the assessment of damages on grounds of equity.

The economic circumstances of the victim may, for instance, affect the notion of making good inasmuch as the function of making good is less significant if, for example, the injured party is so favourably circumstanced economically that sums of money paid by the tortfeasor can hardly make good the non-pecuniary damage suffered to him. In such cases the function of damages as satisfaction assumes primary importance. On the other hand, it is not impossible that in individual cases the higher standard of living to which the victim is accustomed may also lead to increased damages for pain and suffering.

. Finally, the economic circumstances of the tortfeasor may also be taken into account in assessing the damages under § BGB.

(a) Viewed from the angle of equity, i.e. by taking into account the circumstances of both parties, the idea of making good should not normally result in the tortfeasor’s serious and lasting penury. It is true that here, too, the need to offer satisfaction and to make good the damage is preponderant. The fact that the tortfeasor is not well off must be of greater or lesser importance having regard to the cause of the damaging event, and especially to the degree of blameworthiness. Any behaviour of the tortfeasor which is especially reprehensible, such as inconsiderate recklessness or, even more so, acting intentionally, may consign into the background any concern to preserve him from economic distress. On the other hand, if the tortfeasor’s economic situation is particularly

favourable it may appear equitable in the exercise of the court’s discretion to award higher damages. Moreover, the smaller the amount of damages required to make good nonpecuniary losses, the more it will be possible to disregard the economic circumstances, in particular those of the tortfeasor. Equally the economic circumstances of the victim may be relevant in this connection. If the victim is comfortably off, it may appear equitable in assessing the damages to exercise in favour of the tortfeasor the power of discretion inherent in the consideration of the economic circumstances. On the other hand, if the victim is in straitened circumstances it may seem equitable to exercise this discretion in favour of the tortfeasor to a lesser extent than if the victim is well situated financially. However, even if the tortfeasor is penniless considerations of his financial position can never release him from the duty to pay damages for pain and suffering, for the financial position of the tortfeasor constitutes only one aspect among many, and not even the most important, which must be taken into account.

(b) Any such consideration of the economic circumstances of the parties involved is not contrary to the intention of positive law—express or implied. It is, however, true that in the case of a debt consisting of fungibles the debtor is always liable, even if he cannot supply them and that therefore in the case of a debt of fungibles, he cannot plead his adverse economic circumstances. The significance of any considerations of the economic circumstances of the tortfeasor, is, however, completely misunderstood by those who argue that, as a result of his adverse economic circumstances damages for non-pecuniary loss which are appropriate “as such” are reduced and that therefore the victim is receiving less than is due to him “as such”. This view assumes that in fixing equitable damages only the extent of the losses is to be taken into account. In reality the amount of damages for pain and suffering is ascertained only when all the circumstances of the individual case have been considered. Taking into account all the financial circumstances of the tortfeasor does not reduce in any way the damages which are appropriate “as such”; instead “equitable damages” are being assessed for the first time in accordance with § BGB by taking into account all circumstances which can be evaluated, including the economic circumstances of the parties involved; without considering all the circumstances, and thus also where appropriate the economic circumstances, no assessment would be possible. For this reason it cannot be contended that such an interpretation amounts to “breaching the principle which governs the entire area of law in the matter, which is that the extent of an obligation is always independent of the ability of the debtor to perform”. This principle applies to pecuniary damages. On the other hand, the Code intends the extent of the damages for non-pecuniary losses envisaged by § BGB to be assessed having regard to all the circumstances of the case. For the same reason it follows that an injured party whose economic circumstances are taken into account in his favour cannot be awarded more than his damage. The decision DR , does not permit the conclusion that the Reichsgericht abandoned its current practice and assumed that there is something like damages for pain and suffering “which are appropriate as such”. If such a complete change of practice had taken place, it would certainly have been accompanied by more detailed arguments; where the Reichsgericht employed the term “damages for pain and suffering which are appropriate as such”, it clearly used an imprecise formulation.

If it is acknowledged that the economic circumstances of the parties involved may be taken into account as one of the possible bases for assessing the amount of pecuniary damages for non-pecuniary losses, this constitutes a facet of the facts before the court, as

are also the extent of the non-pecuniary damages and the possibility of providing an opportunity for making good. It is therefore wrong to say that it is contrary to the principle of equality to take the economic circumstances of the parties into account; for if the same victim suffers non-pecuniary damage inflicted by two tortfeasors whose economic circumstances differ from each other, the two situations are not identical. It is not clear why, as is said occasionally, the consideration of the economic conditions of the parties involved should be regarded as unsocial. Surely the fundamental principles of a social state based on law are not violated if in assessing damages the economic circumstances of the parties involved are balanced against each other.

(c) Considerations of the economic circumstances of the parties do not lead to insoluble difficulties either.

The view that considerations of the economic conditions of a penniless tortfeasor must—in strict logic—lead to a complete denial of damages under § BGB has already been refuted above.

The view is also incorrect that the principle of taking into account the economic conditions is breached in those cases where the Fiscus is the tortfeasor. It must be conceded that in these cases, and also where the tortfeasor is a “charitable institution” of public law, the practice of the courts, especially that of the Reichsgericht, does not take notice of the financial situation of the tortfeasor. The reason is that the assets of the Fiscus serve public purposes and are tied to this extent. The conclusion is drawn therefrom that these assets do not reflect a financial situation in the nature of private enterprise; they cannot therefore be related to the assets of the victim, representing private enterprise, so as to balance them against each other. In the light of this view of the assets of the Fiscus, the financial situation of the Fiscus and that of the injured party are so different as to preclude a comparison. In these cases the tortfeasor (i.e. the Fiscus) lacks a characteristic (i.e. the economic circumstances) which, if existing, would have to be taken into account where engaging in considerations of equity. In the case of the Fiscus “economic” circumstances defy evaluation. They mitigate neither in favour of nor against the Fiscus as a debtor. The Fiscus can never plead straitened economic circumstances, just as the victim cannot point to the particularly favourable circumstances of the Fiscus which is liable to pay damages for pain and suffering.

No objections can be raised against the admissibility of considerations concerning the economic circumstances of the parties on the possible ground that the assessment of damages for non-pecuniary losses, which is difficult in any event, will be “rendered unpredictable and complicated” if the economic circumstances of the parties are taken into account. Apart from the fact—stressed more than once before—that the amount of damages depends primarily on the extent of the damage, the possibility of making good, and the amount of the means necessary to achieve this, none of these conceivable difficulties rules out the admissibility of considering economic circumstances, now that the legislature has abolished the more or less fixed rates for assessing damages to be awarded for non-pecuniary losses. The view that “non-pecuniary damage can be assessed and also that certain maximum and minimum amounts can be laid down as to how objectively ascertainable non-pecuniary losses can be compensated” results of necessity in the readoption of the fixed tariffs which were established by the law of some German States (e.g. §§ , I. of the Prussian Allgemeines Landrecht; § of the Saxon Civil Code) which were abolished by the Civil Code. Not only does the variety of possible nonpecuniary losses preclude the adoption of such “maximum and minimum tariffs”

altogether or the latter would not do justice to the individual character of non-pecuniary damage, but it restricts the opportunity created by the code of reaching a decision based on the discretion of the court.

Moreover, the fact that the adverse economic circumstances of the tortfeasor are taken into account does not make it difficult or inequitable if later on, in the course of execution (by way of a judicial adjustment, a composition with creditors, or of bankruptcy), the tortfeasor seeks to obtain a reduction of his debts and thus also of his liability to pay damages under § BGB which had already been fixed as appropriate in view of his unfavourable economic situation. The conclusion derived therefrom that in these cases the adverse financial position of the tortfeasor leads twice to a reduction of the claims under § BGB is influenced by the incorrect assumption that damages which are appropriate “as such” are being reduced if the economic circumstances of the tortfeasor are taken into account. Here, too, the damages awarded under § BGB are “reduced” only once, i.e. in the course of execution. Moreover, regarded from the economic point of view, the same result is reached not only in § BGB but wherever the amount of the performance owed depends upon the economic circumstances of the debtor, as for instance where the extent of a performance or act is to be determined “in accordance with equitable discretion under §§ , , , , BGB, where a contractual penalty is to be reduced in accordance with § BGB, or where damages for breach of promise under § are in issue”.

(d) Once it is realized that where the claim is for non-pecuniary losses, damages which are appropriate “as such” do not exist and cannot therefore be increased or reduced in view of the economic circumstances of the parties, the case where several tortfeasors acting together have committed a tort resulting in non-pecuniary damage—which is that before this court—can be solved without difficulty. Here, too—if necessary—damages under § BGB must be assessed independently in respect of each tortfeasor. The same task is incumbent upon the courts if, as regards pecuniary damage, one tortfeasor is only liable under § a of the Haftpflichtgesetz (Strict Liability Act), § of the Strassenverkehrsgesetz (Road Traffic Act), or § of the Luftverkehrsgesetz (Air Traffic Act) while the other has incurred more extensive liability under § . The two tortfeasors are only liable as debtors in common to the extent that the amount of their liability is the same; as regards the excess, that tortfeasor is only liable who must pay higher damages.

In taking into account the economic circumstances, the question may arise as to whether in so doing the possibility of compensation between the tortfeasors should be considered. Since the fact that the economic circumstances are taken into account means that economic potential counts and since, on the other hand, economic potential is increased if enforceable claims for redress exist against the co-tortfeasor, it follows naturally that such enforceable claims for redress must be taken into account in determining economic potential. It must be admitted that if several tortfeasors who are liable in common have claims for redress against one another, each is liable in the end to pay only a portion of the total damages. The reason is that even in the presence of several tortfeasors the victim can only demand to be compensated once. This principle is not violated if the damages for non-pecuniary loss are fixed at a higher level because the value of the claims for redress against other tortfeasors is taken into account in determining the economic potential of one of the tortfeasors. In this case, too, the injured party can only recover once the sum of money which was awarded to him in respect of non-pecuniary losses. Therefore, no principle of positive law is being violated in this respect either.

(e) It was much disputed—especially in recent times—whether in considering the economic circumstances of the tortfeasor it is relevant that he is insured against liability.

The view was expressed in particular by the Reichsgericht at an early stage, that the claims of the tortfeasor arising out of liability insurance could not be taken into account since the purpose of liability insurance was to indemnify the insured in respect of payments which the latter was obliged to make because he was liable, and that this must be established first. However, this view concentrates exclusively on the relationship between the tortfeasor and the insurer of his liability; in reality the question must be as to whether and how the fact that the tortfeasor is insured against liability can affect the extent of his liability towards the injured party. For this purpose the following consideration applies quite generally to damages according to § BGB: a tortfeasor who is entitled to be reimbursed by the insurer against liability to the extent of the amount insured is in a more favourable financial position than a tortfeasor who carries himself alone the burden of paying damages. The claim acquired by the payment of premiums to protection by the insurer is a financial asset in so far as any payment of compensation for damage caused is concerned.

Since in taking this financial approach it is only relevant whether the tortfeasor must bear the cost of the damages himself or will be reimbursed—at least in part—on the strength of his liability insurance, it can make no difference whether the insurance against liability is voluntary or compulsory.

Finally, it cannot be concluded that liability insurance must be disregarded because the assets of the insurer against liability constitute a special fund which is dedicated to a special purpose, similar to the assets of the Fiscus, which must be disregarded. This view overlooks that the assets of the Fiscus are not assets in the meaning of private law for the reason that they are not only dedicated to a special purpose, but because the special purpose is a public one. Therefore they cannot be related to the assets of the injured party, which are within the private sector, so as to balance them. The assets of a liability insurer, however, contrary to those of the Fiscus fall within the private sector. For this reason alone the reference to the treatment of Fiscal property is inappropriate. Moreover, in taking into account the existence of liability insurance no “purpose linked special fund” of the insurer is being considered, but the claims of the tortfeasor to be indemnified by the liability insurer.

Consequently it is admissible in assessing damages under § BGB to take into account also that the tortfeasor can demand an indemnity from the insurer—up to the amount of the sum insured.

(f ) In taking into account the economic circumstances of the tortfeasor it may be relevant that the damages for pain and suffering are not being awarded in the form of a lump sum but of periodic payments. Thereby the result can be achieved in some cases that the victim receives damages for pain and suffering which are largely in keeping with their purpose, namely to make good, even if the tortfeasor’s financial circumstances are unfavourable, seeing that such periodic payments do not burden him that heavily for the time being. If damages for pain and suffering are assessed in the form of a right to periodic payments the question arises, however, as to whether a subsequent change in the financial circumstances of the tortfeasor must be taken into account under § of the Code of Civil Procedure [ZPO]. The answer must be in the affirmative. It is true that when the amount of damages for pain and suffering is fixed by a judgment or a compromise, the claim for damages in respect of non-pecuniary loss loses its character as a

claim for damages in money; thus the amount of the claim under § BGB is henceforth fixed for the future, at least in principle. However, just as any consequences of the injurious act which occurred or manifested themselves subsequently, and therefore had not been taken into account in assessing damages under § BGB, may give rise to a supplementary claim under § BGB, so no objections exist in principle against reviewing the periodic payments if the conditions laid down by § ZPO are fulfilled, especially if a fundamental change in economic circumstances has occurred, in particular on the part of the tortfeasor.

. As stated above on several occasions, among the circumstances to be taken into account on grounds of equity, the extent, the severity, and the duration of pain and suffering must always contribute the determining criteria; the non-pecuniary damage inflicted, the adverse effect on life always occupies the first place among the circumstances to be taken into account. For the rest, it is impossible to establish a general order of priorities among the circumstances to be considered, for their extent and importance in assessing equitable compensation emerges only when they coincide in the individual case, as was shown above, especially in II. (a). It is therefore necessary to consider the individual case. The extent to which the circumstances enumerated previously, or any other which may be relevant, affect the assessment of damages for pain and suffering must be determined in accordance with equity. Such an examination may also lead to the conclusion that certain circumstances, as for instance the financial situation, should be disregarded in fixing damages for pain and suffering.

In the light of the foregoing, the question had to be answered in the general terms in which it had been formulated by the Sixth Senate of the court, for only thus the substance of the question could be treated exhaustively. Nevertheless, it seemed appropriate to stress already by the manner in which the answer is formulated that not all the circumstances which have been mentioned must be taken into account in each individual case, but only that they may be considered, having regard to the facts. In order to eliminate doubts it also appeared appropriate to include at this stage the treatment of possible claims of the tortfeasor for an indemnity under a policy of liability insurance or for redress against other tortfeasors.

Case

BUNDESGERICHTSHOF (SIXTH CIVIL SENATE) JANUARY

BGHZ , = NJW , = JZ ,

The plaintiff, a general medical practitioner, was run down by a lorry on Septemberwhile walking in Bad Schönborn. The lorry was insured against accidents by the defendant who admitted liability in principle without reservation. The injuries of the plaintiff consisted in several abrasions, bruises, and haemorrhage; in addition he alleges that he suffered a renewed and more severe attack of tachycardia and palpitations, while the defendant denies that these are the results of the accident.

In the proceedings before the Court of First Instance the plaintiff claimed damages on the ground that between September and October he was not able to attend to his practice and had thus suffered a loss of income.

The District Court of Karlsruhe rejected the claim on the ground that the allegation of the plaintiff in specifying his damages had not been proved. On appeal the plaintiff

pursued his claim to a reduced extent only. He pleaded now—correctly, as the defendant admits—that he had closed down his practice as early as September , when he started his vacation for reasons of health in Bad Schönborn. As a result of the accident he had lost twenty-one days of vacation.

The plaintiff contends that the sum of DM , represents the expenses of a resumed holiday on the basis of the hypothetical cost of a locum tenens and in running expenses for employers and maintenance. He argues that the lost vacation must be compensated according to these principles.

The Court of Appeal of Karlsruhe rejected the appeal to this effect. A further appeal by the plaintiff was unsuccessful for the following.

Reasons

I. The Court of Appeal has held that the plaintiff’s claim for “spoilt holidays”, which admittedly he did not resume, is not justified, even having regard to the practice initiated by the decision of the Federal Supreme Court [reference]. It referred to the criticism of this decision in the literature and is of the opinion that in any case these principles cannot be extended to the sphere of unjustifiable enrichment. In this context, non-economic damages are here in issue which according to § BGB could only be recovered where an express provision so required.

II. The decision under review cannot be faulted, at least in the result.

. The Court of Appeal rightly starts from the premise that the plaintiff cannot claim damages equal to the “value of the vacation” for having suffered the loss of a holiday which was not taken up later on.

(a) In so far as the law of tort is concerned, the damages for the economic consequences to be recovered in the case of injury to the person are mainly restricted to losses of gains and future earnings (§ BGB). The practice of the courts has with good reason interpreted these notions broadly. However, this has not modified the principle that according to the intention of the legislators all loss of enjoyment can only result in damages for pain and suffering (§§ , BGB). Thus a direct “commercialisation” assessment of the vacation is excluded.

Accordingly, the Federal Supreme Court has, for instance, denied damages if, as a result of his injuries, a person could not exercise his licence to hunt which he had acquired for payment [reference]. The Court also denied damages for the loss of use of a damaged motor car if during the period in question he was unable to use it—even if the inability of the plaintiff to use the motor car was the result of a personal injury suffered on the occasion of the same accident [references]. The temporary inability to work, too, does not constitute a recoverable head of damages, unless it results in a loss of income [reference].

Similarly, the Federal Supreme Court has disallowed damages for the “value of a vacation” resulting from damage to an object (a motor car) [reference]. This judgment shows that the Third Civil Senate also shares the opinion that generally a lost period of vacation cannot be treated as an economic loss resulting from the violation of the legal interests mentioned in § I BGB. Normally the same applies in the case of violations of protective laws (§ II BGB). The fact that in an earlier decision [reference] . . . the Third Civil Senate held differently in a case of liability for the violation of official duties (§

BGB) may perhaps be explained by the special connection between the error committed by the customs authorities and the vacation; however, it is unnecessary in this context to discuss this question any further.

(b) This practice is to be maintained in the sphere of torts having regard also to the more recent pronouncements of the Seventh Civil Senate. According to the chain of authorities initiated by the decision [references], it is indeed admissible to claim damages for “lost holidays” as economic loss if breaches of contract are involved concerning the arrangement for or the performance in kind or by means of services connected with the form of the holidays. These efforts of the Seventh Civil Senate to start a new practice have been superseded by the statutory regulation of the travel contract (§ a–k), but its substance has been maintained in essence.

The Seventh Civil Senate clearly intended to create a solution for this (contractual) sphere in particular, which satisfies the interest concerned in the absence of a statutory regulation to this effect. The legislature, too, has restricted to this area the new rule, which may be said to limit to a certain extent the principle expressed in § BGB, which also applies in principle to the law of contract. The Seventh Civil Senate did not regard its practice established before the legislative change as conflicting with the practice regarding the law of tort referred to in (a) above, of which it was aware [references]; the reason was that it did not regard itself as precluded from adhering to this practice because it was only concerned with contractual claims. Moreover, it regards its aim as mainly satisfied by the new regulation in the Civil Code which is limited to the law of contract [reference].

Consequently, the present Senate is not precluded from adhering to its practice pertaining to the law of tort. It is unnecessary to determine whether the above-mentioned decisions of the Seventh Civil Senate and the majority of writers [references] have only sought to find a solution by relying on a notion of economic damage which is devised to be of general validity. Objections might be raised against such an attempt. Less emphasis must be placed on the notion of economic damage, the details of which have given rise to theoretical disputes, and stress should be laid on the question whether, having regard to the purpose of the respective grounds of liability, any deleterious effect is still to be treated as economic damage. (For the attribution of consequential damage in the light of the purpose of liability in general, see the recent decision of this Senate—refer- ence.) Accordingly, it seems entirely appropriate to treat the enjoyment of holidays in commercial terms when—and only when—the enjoyment of holidays has been made directly or indirectly the object of a contractual performance and if this obligation has been breached. To this extent such a close and clear relationship exists between the contractual duty to act and the interest in enjoying the holiday which had, so to say, been entrusted to the other contracting party that it appears justifiable to attribute to the enjoyment of vacations a commercial character based on the contractual agreement. This court finds support for its view in the observations of Stoll [reference] which are shared to a great extent by Lange [reference]; see also Steffen [reference]; Hagen [reference]. The need to relate the commercial qualifications of damages for loss of enjoyment to the purpose of the basis of liability is also underlined by the decision of the Third Civil Senate ofNovember [reference] which—contrary to the above-mentioned judgment of this Senate [reference]—envisaged the possibility of damages in respect of the loss of the pleasure of earning a licence to hunt in a case where this licence to hunt had been frustrated illegally.

If it is correct that the loss of enjoyment (in the present case as regards the period of vacation) can only be taken into consideration if another legally protected interest has been violated (e.g. in the present case by injuring health, but also where an object is damaged, such as a motor car needed for holiday travel), it remains necessary to observe the purpose of the provision of § BGB in the absence of a special statutory rule. This is not only in accordance with the statute, but takes into account the undisputable consideration that otherwise an unpredictable expansion of liability in tort would have to be expected. The practice of the Seventh Civil Senate does not fail to perceive this either [references]. The reason is that the loss of the enjoyment of holidays is only one of many conceivable cases in which the loss of enjoyment, while not directly capable of being assessed in economic terms, can nevertheless be attributed a “commercial” value in certain circumstances. The fact that the area of damage may be incalculable is absent precisely in those cases where the enjoyment of a vacation is directly and clearly connected with the failure to perform contractual duties.

Consequently, this Senate does not believe that its view conflicts with the results of the decisions of the Seventh Civil Senate. The fact that in their reasoning these decisions differ in part from its own considerations is not determining in the view of this Senate, which approves the results reached by those decisions. Therefore they are not opposed to the present decision.

. The foregoing considerations would not, however, exclude the possibility that in assessing the amount of damages for pain and suffering due to the plaintiff account may be taken of the fact that his injuries (which have proved to have been relatively light) have resulted in the loss of three weeks’ vacation . . .

Case

BUNDESGERICHTSHOF (SIXTH CIVIL SENATE) JANUARY

BGHZ , = NJW ,

Facts

The claimant claims compensation for injuries suffered in a road traffic accident onJanuary , from the first defendant as keeper and driver of the motor car involved and the second defendant as insurer of it.

The dispute is not about liability but only about whether the claimant can demand the anticipated costs for removing abdominal scars resulting from an operation to the small intestine which was required by the accident. She cannot yet decide whether to have this operation because of its uncertain outcome, but she claims its cost assessed atDM , on the basis of private report obtained by her. The defendants are prepared to pay for an operation actually undergone by her, but not merely fictitious costs.

The Landgericht and the Oberlandesgericht rejected the claim to payment of DM , . The appeal in law by the claimant was unsuccessful.

Reasons

I. . . .

II. The appeal court correctly assumes in this case that the claim to compensation under § sentence of the BGB for accident injuries suffered also covers, in principle,

expenditure on the cosmetic removal of a scar caused by an accident, even if no further disturbance of functions results or even is merely feared from the scar. As the Senate has already stated in its judgment of December (reference omitted), those means are to be put at the disposal of the victim which are necessary in order, if possible, to restore his physical integrity in this respect. The appeal court is however of the view that the claimant’s claim to payment is not well founded at the present time, for the following reasons. According to § sentence of the BGB, the victim could admittedly demand, instead of restoration, the sum of money necessary for it. In the case of a physical injury, however, this claim would assume a firm and recognisable intention on the part of the victim actually to rectify the injuries inflicted on him and / or their consequences. That was lacking here. On the harming of non-material inter- ests—as with harm to persons—one would have to assume a commitment of the costs of restoration to their purpose if the provisions of § of the BGB were not to be circumvented.

Over against this, the appeal in law takes the view that the victim is completely free in the use of the means placed at his disposal. A sum of money which is paid for a necessary operation would not have to be used by him for this purpose. He could therefore even demand compensation for the costs of a fictitious operation.

The deciding Senate—in agreement with the courts of earlier instance—cannot accept this.

. When a motor vehicle is damaged, the Senate has admittedly approved in principle a claim to compensation for the so-called fictitious costs of repair (references omitted). Contrary to the view of the appeal in law, it has however not so far recognised in principle in the case of harm to persons a claim by the victim to compensation for fictitious costs. The decision of December (reference omitted) expresses no view on this subject . . .

In the published case law of the courts of first instance, the compensatibility of fictitious costs of cure is variously dealt with . . .

In the academic literature opinions are also divided . . .

. The provisions of § sentence of the BGB are the basis of the claim for compensation made by the claimant. According to this sentence, when a person is injured or a thing damaged, the victim can demand, instead of the restoration of the former state of affairs as required under § sentence of the BGB, “the sum of money necessary for this”.

a) The deciding Senate has, since the seminal decision of the rd March (reference omitted), granted this claim to payment of the necessary costs of restoration to a victim when his motor vehicle is damaged in cases where right from the outset he has no intention at all of having the vehicle repaired. He intends to deal with the situation in some other way, perhaps by continuing to use the unrepaired vehicle or, as in that case, by giving it, unrepaired, in exchange on the purchase of a new vehicle. The Senate saw the justification for this awarding of “fictitious” repair costs in the victims’ freedom of disposition, which it previously accepted by reference to the history of the provision’s origin (references omitted). According to this, the victim is in principle free to decide whether he really wants to apply for this purpose the sum necessary for the restoration in accordance with § sentence of the BGB, or whether he wants to use it in some other way. Whether the person suffering harm makes the decision about use of the compensation money for some other purpose only after receipt of the money, or

whether he has already acted accordingly before the payment, makes no difference in this connection.

All the cases in which the Bundesgerichtshof has accepted this freedom of disposition by the victim related to claims to compensation because of damage to objects (references omitted). In cases of this kind, the victim’s decision about how he uses the sum of money (and, associated with this, his total or partial relinquishment of the right to restoration to which this sum of money relates) does not in substance amount to anything more than a disposition of property with a view to a transfer of the loss within his assets. The need for repair of the damaged object finds expression only within the assets of the victim and it remains expressed in these alone, regardless of how he decides to use the sum of money (reference omitted). If he has the object repaired, he will have to bear the necessary costs of this. If he disposes of the object while unrepaired, he will obtain appropriately lower proceeds from the sale. Even if he continues to use the object while unrepaired, his assets will remain burdened in so far as the value of the damaged object is smaller than that of the undamaged object. The state of the victim’s assets is restored again by payment of the necessary repair costs (reference omitted). How the victim then actually structures his assets—whether he repairs the object, buys a new one or makes dispositions of a completely different kind—is his affair, which is, in principle, no concern of the tortfeasor.

b) This freedom of disposition on the part of the victim in relation to the sum of money due from the tortfeasor for restoration purposes cannot be transferred to personal injury. In this case, restitution in kind, for which the victim can demand a sum of money under § sentence of the BGB, is directed to the restoration of physical integrity and therefore to the removal of non-economic loss. To understand a victim’s relinquishment here of a right to restitution as a mere disposition of assets, appropriately valued by the sum of money from § sentence of the BGB, is by the nature of the case out of the question. The decision of the victim not to submit himself to medical treatment— perhaps because of the risks associated with this or the doubtful outcome—and to continue to live with the untreated injury relates to a different plane to a disposition of assets with a sum of money from § sentence of the BGB. The decision is in principle no more commensurable with such a disposition than is the injury itself with which the victim remains burdened. The law grants him monetary compensation for this in the form of damages for pain and suffering. The victim who is relinquishing any kind of treatment can no more claim from the tortfeasor costs of treatment for a form of restitution which he simply does not want, than he can demand from the tortfeasor under § sentence of the BGB the costs of a (dearer) operation when he decides in favour of (cheaper) conservative treatment. If the victim demands the costs of treatment even though he does not want to have the treatment carried out, he is in reality demanding compensation for the continuing impairment of his health. The legal order only grants compensation of this kind to the victim in accordance with § of the BGB subject to the prerequisites of § of the BGB. If the victim were to be granted the fictitious costs of medical treatment which is not carried out, this would lead to evasion of § of the BGB. In the cases in which the prerequisites of § of the BGB are not present for the granting of damages for pain and suffering, the victim would receive such damages when they are not awarded to him under the law. In other cases he would be able to increase damages for pain and suffering awarded to him in accordance with § of the BGB in a manner not provided for by the law. For the reasons explained, in personal injury cases

the victim cannot in principle have any freedom of disposition in relation to the use of the costs of restoration. Instead, the costs of restoration in the personal injuries field are committed to their purpose. Therefore the victim can only demand costs of treatment under § sentence of the BGB if he has the intention of actually having the treatment carried out.

. As a rule this intention will emerge simply from the need for treatment of the injury and the measures taken for its treatment.

In the present case the appeal court has, however, not been able to establish that the claimant will have the removal of the scars carried out . . .

Case

BUNDESGERICHTSHOF (SIXTH CIVIL SENATE) OCTOBER

BGHZ , = NJW ,

Facts

The first claimant (the claimant) claims from the first defendant (the defendant), a consultant at the University women’s clinic at M, damages for pain and suffering for serious damage to her health suffered on her birth on the rd July .

The claimant’s mother (then aged ) had had medical check-ups at the clinic. She was told that her child was in the breech position and she would have to give birth by Caesarean section. She gave written consent for this.

She went to the clinic two weeks early on the rd July because of the onset of contractions. At around pm the defendant took over the treatment and carried out the procedures for a natural birth. He discovered that there was a footling presentation. Because there was no progress after appearance of the child’s feet, the defendant decided to carry out an extraction. Because of complications, the claimant was, at around . pm, born severely harmed.

The Landgericht ordered the defendant to pay as damages for pain and suffering a capital sum of DM , and DM a month. On the defendant’s appeal, the Oberlandesgericht ordered the defendant to pay as such damages a capital sum of DM , and DM a month. In other respects it rejected the claimant’s claim and referred the defendant’s more extensive appeal back. The claimant’s appeal in law led to the quashing of the judgment in so far as it had been decided against her. The defendant’s cross appeal in law was unsuccessful.

Reasons

II. The claimant’s appeal in law.

The claimant’s appeal as to the level of damages for pain and suffering is however successful. The appeal in law correctly argues that the setting of the level of damages for pain and suffering has been influenced by legal errors.

. The appeal court was admittedly correct in linking the assessment of damages for pain and suffering primarily to the serious damage to the claimant’s health . . .

In mental and emotional respects, the claimant’s state of development equates to that of a baby of a few months old. Her capacity for awareness scarcely goes beyond

of capacity for experience is limited to the most simple categories like “pleasant / unpleasant” . . . Her capacity for experience is further limited by the administration of anti-epileptic medication . . .

. These statements are open to serious legal objections. The Senate cannot even approve the starting point of the appeal court’s decision. This was that damages for pain and suffering would largely lose their function because of the substantial limitation of the claimant’s capacity for feeling; and this would have to have the effect of reducing the level of damages for pain and suffering.

It is admittedly correct that the function of damages for pain and suffering is, according to constant case law, to give to the victim compensation for the non-material harm suffered and, further, reparation for the pain inflicted on him (BGHZ , ; other references omitted) . . .

On the other hand, the court treated as a determining factor the absence to a large extent of the functions of damages for pain and suffering and took this into account by reducing the level of the compensation. The appeal court is, however, even in cases in which the personality is almost completely destroyed or, as here, the basis for its development has been taken away by fault on the part of an obstetrician, attaching central significance for the assessment of the damages for pain and suffering to the sensation which the victim experiences of his fate. It is taking this very circumstance (which for the person affected constitutes the special severity of the impairment which is the subject of the compensation) as a cause for a decisive reduction of the damages for pain and suffering. This amounts to a curtailment of the function of damages for pain and suffering . . .

The appeal court can admittedly rely for its view on the case law of the Senate . . .

Although the Senate in such cases considered payment of damages or pain and suffering as necessary, this derived from the consideration that at least symbolic reparation would have to be granted to the victim as a gesture of expiation.

Such a reduction of the damages for pain and suffering to merely symbolic compensation is no longer considered by the Senate, after a fresh examination, to be justified. It does not do justice to the almost complete destruction of the victim’s personality in cases of severe brain damage. In this respect the Senate will no longer adhere to its past case law, as expressed in the above mentioned decisions. Impairments of such an extent, as in the claimant’s case, demand, having regard to the constitutional value decision contained in Art. of the Basic Law, stronger weighting, and preclude a merely symbolic assessment.

From this angle, the concept of expiation (which does not generally hold good for civil liability and compensation law) is less important. For negligent acts it can only play a minor role anyway. There is instead a link with the non-material harm which a person suffers through physical injury or harm to health, and which has to be compensated under § of the BGB by a money payment. Such harm does not only consist in physical or mental suffering and thus in negative sensations and feelings of aversion as a reaction to the bodily injury or the damage to health. Instead, damage to the personality and the loss of personal quality as a consequence of severe brain damage represent in themselves nonmaterial harm which is to be compensated for independently of whether the person affected feels the impairment. That does not mean that non-material harm is generally only manifested in physical impairment. A substantial manifestation of non-material

harm can consist in the victim being conscious of his impairment and therefore suffering from it to a special degree. This point of view can therefore be very important for the assessment of damages for pain and suffering.

Accordingly the compensatory function of damages for pain and suffering is not exhausted in promoting mental well-being by compensating for emotional suffering or other negative mental sensations. The appeal court is not therefore taking the nature of damages for pain and suffering sufficiently into account when it merely considers that the claimant’s life could be made to some extent easier and she could in particular be made happy by loving human attention. Over and above the mere bestowing of comforts, the loss which consists in what is more or less the virtual destruction of the personality, and which in itself represents non-material harm, has to be compensated for by a fair monetary sum. In this sense, the Great Senate for civil cases has in its decision of Julyreferred to the fact that “size, intensity and duration of pain, suffering and disfigurement” form the most significant basis for assessing the compensation (reference omitted). It thus proceeds on the basis that besides pain and suffering, physical impairment as such represents a decisive factor for the assessment of damages for pain and suffering. Anyway, as the Great Senate for civil cases further stresses in this connection, the sum of money to be granted as compensation could not be discovered by—so to speak— balancing sufferings with pleasures by which the victim is to eradicate the recollection of his sufferings. It is precisely in the case of psychological disturbance that compensation for feelings of aversion will frequently not be possible, because the victim has no subjective consciousness of the harm. In spite of this, entitlement to compensation for nonmaterial harm has been correctly recognised even in such cases (reference omitted).

. . . Within the framework of this judgement it is primarily a question here of giving, in assessing loss, appropriate recognition to the fact that the extensive destruction of the basis for the capacity for perception and sensation, for which the tortfeasor is responsible, affects the victim in the core of her being and therefore has a significance for her which is related to her very existence. Harm of this kind constitutes an independent group of cases in which the destruction of the personality by the cessation or denial of the capacity for sensation is the central issue. It must therefore, in assessing compensation under § of the BGB, be given an independent valuation which does justice to the central significance of this loss for the person. In this connection the judge can make gradations according to the extent of each impairment and the degree of capacity for experience and sensation which remains for the victim, to take account of the peculiarities of each individual case of harm. On the other hand, the judge is not allowed to take his bearings from an imaginary picture which is characterised by a undiminished capacity for sensation and suffering and then make reductions having regard to the complete or virtual ending of the capacity for sensation . . .

. . . .

. The appeal in law, however, is unsuccessful in objecting to the appeal court’s failure, having regard to the reparation function of damages for pain and suffering, to express any view on the question of whether the fault on the defendant’s part in relation to the treatment is to be assessed as gross. It is not necessary for this question to be considered, because in cases of the present kind, feelings by the victim on the subject of reparation by payment of damages for pain and suffering (for which the assessment of the fault in treatment as gross could play a role) are absent.

Case

BUNDESGERICHTSHOF (SIXTH CIVIL DIVISION) OCTOBER

BGHZ , = NJW ,

Facts

The claimant demands from the defendants compensation for pain and suffering for injuries which she suffered in a road traffic accident on July . The first defendant (“the defendant”) who was then , turned to the right in his car, which was insured with the second defendant against third party liability. As he did so, he lost control of the vehicle, veered on to the opposite side of the road and struck the claimant, who was thenyears old, who was coming towards him on a bicycle. She suffered severe injuries in the accident to, amongst other things, her head and legs. She was treated in hospital untilSeptember , and was incapable of work until the middle of February . As a result of her injuries she could neither squat nor kneel, her hearing was impaired and her capacity to work was reduced to per cent. She receives incapacity benefit as well as state education grants. Her training course was extended by half a year as a result of the accident. She is at the moment unemployed and intends to pursue an alternative career because of the consequences of the accident. The claimant’s material harm was dealt with under the Road Traffic Act and fully compensated. The defendants have refused payment of compensation for pain and suffering, claiming that the defendant was incapable of committing a tort at the time of the accident.

The lower courts rejected the claim. The claimant’s appeal in law (which is admissible) led to quashing of the decision and reference back.

Reasons

I. The appeal court denies that there is a claim under §§ ( ) and of the BGB because the defendant was, at the time of the accident, in a condition which excluded the free exercise of his will (§ ). In the court’s view, the expert Dr B had convincingly explained that the defendant had gradually developed a convulsive disorder which led for the first time to an epileptic semi-conscious state, over which the defendant had no control when it started to occur, during the journey on July . There were no grounds for saying there was any other cause of the accident. The defendant was also not to blame for the fact that he had not attached any special importance to headaches and disturbances of concentration which had occurred before the accident, after no indications had come to light of a disturbance of the functioning of the brain on an examination by a medical specialist.

According to the appeal court’s view, liability on the grounds of fairness under § of the BGB does not come into consideration. Even though the claimant’s injuries caused by the accident were substantial and were not healed without adverse consequences, the claimant was not harmed by them in such a way as compellingly to require compensation, from the point of view of fairness, for the non-material consequences as well. Her training had merely been extended by half a year; she had received an annuity to compensate for the reduction in her earnings. The defendant had also been harmed in the long term by his illness which had been established on the occasion of the accident. In spite of successful medical treatment, he still had to put up with the uncertainty that cysts

would form again. Because of this, the consequences of the claimant’s accident were not so significant that, simply on the basis of the fate of the two parties, compensation for the non-financial harm was irrefutably necessary in addition to the compensation for the material harm.

There was just as little ground for saying that a comparison of the financial positions of both persons involved in the accident requires compensation. The defendant’s monthly income of DM , gross as an office worker was not so high that a substantial commercial difference arose from this, especially as the cost of living in the region in which the claimant lived compared with that of the defendant was clearly lower and, apart from this, the claimant was seeking more highly qualified employment. The claim to reimbursement on the basis of the existing third party vehicle insurance cannot be regarded as part of the defendant’s assets. In any case, the existing insurance cover alone could not justify liability from the point of view of fairness without the presence of further circumstances.

II. The appeal in law is admissible in its full extent. . . .

III. The appeal is also well founded.

. . . .

. However, the judgment does not stand up to the material legal challenges in the appeal in law. On the ground of the undisputed facts, the appeal court proceeded on the basis—admittedly without any more detailed explanation on this subject—that the defendant had, in an objective sense, behaved in a manner contrary to traffic regulations and had thereby committed an act which obliged him to provide compensation. There are no legal objections to this. But the Senate is not able follow the reasoning by which the appeal court denied a claim on the basis of fairness under § of the BGB. In this respect, the appeal in law is correct in arguing that the appeal court’s statements on the question of whether a comparison of the financial situations of both parties to the accident required the awarding of compensation for pain and suffering from the point of view of fairness are influenced by legal error.

a) The appeal court, in examining fairness, has wrongly left out of consideration the existence of third party insurance on the part of the defendant. It is necessary, at least in the case of compulsory insurance, as here, to recognise the fact that insurance protection exists for the person causing harm in the accident as an important factor in the defendant’s financial position.

aa) Certainly the case law on the question of whether the existence of third party insurance can be considered in connection with the duty to compensate for damage as a factor in favour of a person injured in an accident has not been uniform. The Reichsgericht in , abandoning its previous case law, considered the existence of third party insurance for the first time as capable of being taken into consideration for calculation of the level of compensation for pain and suffering in respect of the duty to indemnify for tortious fault (reference omitted). The Bundesgerichtshof followed this (references omitted). The Senate held this factor to be significant for the level of compensation in respect of the duty to indemnify on the ground of fairness liability under § of the BGB on the basis of corresponding considerations (references omitted). On the other hand it has until this judgment rejected the existence of

insurance protection as a factor worthy of consideration when it forms the basis of a claim ([references omitted]; likewise when considering a contribution to the harm by the victim under § of the BGB, on the mirror image application of § of the BGB to his disadvantage [references omitted]).

In the judgment of December referred to (reference omitted), the Senate abandoned this distinction, when considering third party insurance protection, between the ground and the level of the claim under § of the BGB as unusable. But at the same time it emphasised that a limit must be drawn in considering whether this compensation claim could be made, in order to take account of the purpose of third party insurance which was primarily to protect of the policy holder from liability claims and not to create a basis of liability. In this connection, the Senate, in view of the criticisms made in the academic literature of the case law so far, considered whether a change in the function of third party insurance which had since occurred in the socio-economic structure would in a quite general way permit insurance protection, as a component of the tortfeasor’s wealth, to be included fully within the test of fairness under § of the BGB. It was not able to convince itself of such a change of function, at any rate for the area of voluntary third party insurance and therefore refused to take into account the insurance protection from such a voluntary third party insurance to the extent, in appropriate cases, of the highest amount of cover available. On the other hand, it acknowledged the concept—as employed so far—of considering the insurance merely to correct the level of the sum to be paid.

bb) These limitations cannot, however, contrary to the judgment challenged, be carried over to compulsory vehicle insurance as it existed for the defendant. The purpose of this insurance is primarily related to the protection of the victim. This goal was already served by the Introduction of Compulsory Insurance for Vehicles Act of November . As follows from the official reasons (reference omitted) and as the Reichsgericht (reference omitted) and, following it, the Senate in the judgments ofApril (reference omitted) of June (reference omitted) and of June(reference omitted) have explained, compulsory insurance should, on the basis of this statute, secure for the victims of traffic accidents the compensation for harm which was due to them. A protection which was as free as possible from gaps should be provided for the victims, and especially in those cases in which the tortfeasor is not able to pay. This is reflected above all in § c of the Insurance Contracts Act (VVG) (which was newly formulated at that time) according to which, amongst other things, the duty of the insurer still remains when he is wholly or partially released as against the policy holder. This protection of the traffic accident victim was further strengthened and extended by the Compulsory Insurance Act of April , and its subsequent amendments, with the direct claim against the insurer and the compensation fund (references omitted).

This special determination of the purpose of compulsory insurance in relation to vehicle traffic justifies letting the victim have the benefit of the tortfeasor’s existing insurance protection in deciding whether the claim can be made within the framework of § of the BGB as well. It is no obstacle to this that the separation principle, according to which the insurer’s duty to indemnify follows the claim and not the other way round, is thereby broken. For the special claim under § of the BGB the purpose of the third party vehicle insurance, which is protection of the victim, must prevail over this princi-

ple. The Senate has acknowledged the necessity of breaking this principle (which should as a rule be adhered to) in other cases as well (references omitted).

cc) Consideration of insurance protection under compulsory vehicle insurance by the tortfeasor admittedly does not mean that, simply because of it, the claim on the basis of fairness under § of the BGB should always be allowed. In examining the question of whether fairness requires the injured party to be indemnified, it must instead be borne in mind that liability under § of the BGB, which is independent of fault, forms an exception in the tortious liability system of the BGB. Therefore consequent on the wording of the provision, according to the constant case law of the Senate, a claim to compensation for harm under § of the BGB is not to be granted simply when fairness permits it, but only when all the circumstances of the case really require liability on the part of a blameless tortfeasor on the grounds of fairness (references omitted). This exceptional character of § of the BGB compels the prerequisites under which an indemnification of the victim is to be seen as fair to be set at a high level even in these cases.

In this connection it must further be borne in mind that, in relation to road traffic accidents, the material harm to the accident victim is already covered by strict liability under the Road Traffic Act (StVG) which is independent of fault. Thus the claimant is receiving full compensation for all her material harm, in particular the cost of cure and the loss of income. In this respect, the case in question differs quite substantially from the cases decided in [reference omitted] and in the Senate’s judgments of June andApril (references omitted), in which it was first a question of providing the victim with compensation for material harm with the help of § of the BGB. But if the victim is already receiving full compensation for his material harm, as in this case, then there only remains the question of whether fairness requires him to be given compensation for pain and suffering over and above the compensation for material harm. Within the framework of § of the BGB, there is only room for compensation for pain and suffering on the grounds of fairness in the case of serious injuries, in particular lasting harm. All in all, the granting of compensation for pain and suffering, considering the exceptional character of § of the BGB, accordingly only comes into consideration, if, bearing in mind the fact that in traffic accidents caused without fault, compensation for pain and suffering is not forfeited as a rule, its refusal in the individual case blatantly contradicts feelings of fairness. In this respect the approach for the examination of fairness in § of the BGB is a different one from that in § of the BGB, to which the Senate referred in its judgment of December (reference omitted).

b) The judge of fact must decide whether, under these prerequisites, awarding compensation for pain and suffering is required in the individual case on the grounds of fairness. He has to consider all the circumstances of the case in this connection. Besides the economic relationship of the parties to the accident, the intensity of the invasion of the protected legal interest can be of importance in this connection, as well as—for instance in relation to deliberate acts—the unusual character of the action giving rise to the duty to compensate for harm (references omitted).

In this respect also the remarks of the appeal court give cause for serious doubts. The appeal court compares the claimant’s accident injuries, which had resulted in a lengthening of her original training “by merely half a year”, with the defendant’s illness established on the occasion of the accident, by which he additionally suffered long term harm

receive a fee. Instead, her claim is expressly for pecuniary compensation in respect of noneconomic loss. This is undisputed by the parties. The Court of Appeal, too, proceeds from this assumption.

I. . Contrary to the Court of First Instance, the Court of Appeal has rejected the claim simply because it refuses as a matter of fundamental legal principle to award pecuniary damages in cases of violations of the right to personality as compensation for noneconomic loss. The Court of Appeal acknowledges that in so holding it acts contrary to a constant and well established practice of the Federal Supreme Court.

. As the Federal Supreme Court, and in particular this Senate, has consistently held, a person whose right to his personality has been severely violated in a culpable manner may demand pecuniary compensation for non-economic loss if it is otherwise impossible to compensate satisfactorily for the inflicted harm. The court has felt entitled and also bound in accordance with Article III of the Constitution to grant this extended remedy in order to take into account in the sphere of the protection of personality of the principles expressed in Articles and I of the Constitution. The Federal Supreme Court has responded repeatedly to the attacks directed against this development of the law [references]. The observations in the decision appealed against which reproduce a summary of these opinions and adopt them in the result do not constitute a reason for this Senate to discuss this problem again in detail. Its practice, which has since become well established, will be maintained [references].

Other Senates of the Federal Supreme Court have also followed the same practice in principle [references], as have a considerable number of writers [references].

. In so holding the consideration that an imperative need must exist for granting compensation of this kind is taken into account by two restrictions.

In the first place, the victim of an attack on his right of personality is not to be awarded pecuniary damages unconditionally and in all cases. Instead certain aggravating circumstances must exist if an imperative need is to be recognised for allowing the injured party at least a limited amount of compensation for his non-economic loss by awarding him pecuniary damages. This is only the case if the injury is to be regarded as severe [references].

Further, according to the practice of this Senate the victim of a severe culpable attack upon his right of personality can only demand payment of pecuniary damages by the tortfeasor if the harm which has been inflicted cannot be compensated sufficiently by other means [references]. The grant of a right to pecuniary compensation is based in essence on the idea that otherwise the right of personality would lack sufficient legal protection. In the light of this consideration, the right to pecuniary damages is to be postponed if the injury can be compensated sufficiently by other means; according to the facts of the case the right to demand an order to desist and in particular to retract—rights which have equally been developed by the courts by way of an extension of the law some time ago—may supply an adequate and suitable measure.

In this connection the Court of Appeal is of the opinion that it is sufficient if the victim can redress his injury by means of the other “remedies” (Rechtspositionen) provided by private law, and it refers to the (prevention) injunction. This overlooks that the possibility of applying for an order to desist is directed, according to its purpose and function, against the future infliction of harm but does not affect harm which has already been caused. Moreover—and for this very reason—this possibility fails if there is no danger of repetition. The additional possibility of asking for a retraction is also not suitable in many

cases of violation of the right of personality to provide sufficient compensation [reference]. This applies also when—as in the present case—a retraction cannot be considered having regard to the nature and the manner of the injury (by violation of the right to one’s own likeness).

. In the limited circumstances mentioned above, an award of pecuniary compensation for non-pecuniary damage must also be considered in principle when the violation of the right of personality consists in an infringement of the right to one’s likeness, as is the case here [references].

. For these reasons alone the decision of the Court of Appeal, which relied on the arguments set out above, cannot be upheld. Since additional facts must be considered and ascertained, this Senate cannot pronounce itself a final judgment in this matter.

II. The Court of Appeal, correctly having regard to its point of view, did not examine whether by this conduct the defendant has culpably violated the plaintiff’s right of personality (§ I BGB) by violating the plaintiff’s right to her own likeness (§ of the Act on the Copyright in Works of Art); nor did the Court of Appeal investigate whether according to the principles established by the Federal Supreme Court the existence of non-pecuniary damage suggests a claim to pecuniary damages.

. The Court of First Instance held that the right to one’s own likeness had been violated. The defendant denied this in the proceedings before the District Court but did not argue this point before the Court of Appeal. There are indications that the defendant himself now admits that the plaintiff’s right of personality has been violated at least objectively. At any rate, the facts before this Senate are sufficient to permit the court below so to hold, at least initially.

(a) The court below will have to ascertain as a fact whether the plaintiff could be identified in the advertisement complained of. The circumstance that the partial reproduction was small in size does not exclude that the plaintiff’s features are visible and therefore recognisable [reference]. Even if in the present case the picture was published without appending a name, the features taken from the film and reproduced on the back of the sheet advertising it, which has a wide circulation (Film Kurier), can lead to the identification of the plaintiff. It suffices for a violation of the right of personality if the person represented by the picture has reasonable grounds for believing that, having regard to the manner of the picture, he can be identified [reference]. Thus this Senate has also stated [reference] that the person affected cannot be required to prove who of the many spectators—the reproduction of a picture in a cinema was in issue—had recognized him in the weekly review of events and had gained the impression that he was a murderer.

(b) It is undisputed that the plaintiff did not consent to the reproduction of her picture for the purposes of the defendant (§ of the Act on the Copyright in Works of Art). It cannot either be disputed seriously in law that the reproduction in issue here was not included by the consent given to the producer of the film. This consent did not extend to a publication which merely served to advertise a product which is not connected with the film, moreover in a manner which violated the right of personality in a particularly harmful manner, as will be shown below. For this reason alone the plaintiff has not lost her entitlement to the rights arising out of such a violation, as the defendant has argued before the Court of First Instance, quite apart from the fact that in the present case her

claim for compensation in respect of non-economic loss resulting from an invasion of the right to her personality is in issue.

The publication was also not lawful without her consent (see § of the Act on the Copyright in Works of Art). Even if, as the defendant argued in addition before the Court of First Instance, the plaintiff was to be counted among the personalities of contemporary history—in the meaning of § I, no. , of the Act on the Copyright in Works of Art, which need not be decided here, the publication by the defendant is not covered by this exceptional position. The anonymous picture of the plaintiff was not reproduced in her capacity as a personality of contemporary history, as the manner of the publication shows. The publication served exclusively the business interest of the defendant and not a justifiable need of the public to receive objective pictorial information [references].

Furthermore, § II of the Act on the Copyright in Works of Art would create an obstacle. Even if he is a personality of contemporary history, the person whose picture is published can decide whether he is willing to allow his picture to be used as an advertisement for goods or for commercial services.

. By reproducing the picture of the plaintiff her right of personality was infringed. The infringement is characterized, in particular, by the fact that the defendant used the plaintiff’s picture for the purpose of advertising, particularly in a denigrating manner. The publication in the form of a pictorial supplement to the advertisement for the “Paris love potion” offered by the defendant could lead to the misleading inference that for a consideration the plaintiff had given her consent to an advertisement of this kind.

. The Court of Appeal, correctly having regard to its point of view, has also not considered and determined whether an objective infringement of the plaintiff’s right of personality can be imputed to the defendant as a culpable act in the meaning of § I BGB. When considering this aspect the court below will have to take into account the following:

Having regard to the previous decisions alone, the defendant, acting in accordance with the care required in mutual dealings, could not assume that he was entitled to reproduce the picture of the plaintiff without the latter’s consent [reference]. The main question is, however, whether the defendant has failed in his duty of care by omitting to ascertain that the plaintiff had given her consent before he reproduced the preview of the film. Generally speaking, a person who wishes to publish a picture of another must examine of his own motion the extent of his right to reproduce. Consequently, it can be stated with some certainty that, observing the necessary care in mutual dealings, the defendant should have enquired of the printers that supplied the matrix whether the plaintiff had given her consent [reference]. This would seem to apply even more so in the present case, where a photograph of a woman is employed to advertise an aphrodisiac potion.

However, even if the court below should come to the conclusion that the plaintiff’s right of personality has been infringed culpably and that therefore liability exists according to § I BGB, the plaintiff is not entitled to a pecuniary compensation in respect of non-pecuniary damage as a matter of course and in all circumstances.

. According to the practice of the Federal Supreme Court, and in particular of this Senate, as was pointed out before, the imperative need to grant the injured party at least a certain amount of compensation for non-pecuniary loss by awarding pecuniary damages is to be admitted in special aggravating circumstances. As this Senate has stated on several occasions, it must be examined in each individual case, having regard to the

defendant, whose vehicle was insured with the second defendant. Under the influence of alcohol, the first defendant drove on to a major road at a speed of about to kilometres per hour, ignoring a stop sign. He collided with a car which contained the complainants’ children aged between and . Their death had a very serious physical and psychological effect on the complainants. They claimed, amongst other things, damages for pain and suffering of between DM , and DM , .

After obtaining a number of medical opinions in relation to the first complainant, the Landgericht assessed damages for pain and suffering at DM , for the first complainant, and at DM , for the second complainant. The complainants appealed against this judgment asking for an increase in the damages for pain and suffering to DM , (first complainant) and DM , (second complainant). The Oberlandesgericht rejected the appeal. An appeal in law was not accepted. In their constitutional complaint, the complainants claim violation of Article para. of the Basic Law, of their general right of personality under Article para. in combination with Article para. of the Basic Law, and of Article para. of the Basic Law. The constitutional complaint was unsuccessful.

Reasons

The constitutional complaint has no sufficient prospect of success . . .

. The judgment of the OLG under challenge does not infringe the complainants’ basic rights under Article para. of the Basic Law. The same applies for the decision of the Bundesgerichtshof confirming the judgment. The provisions of § of the BGB on which the OLG has based its decision are not open to objection in constitutional law. For the very reason that it uses the vague legal concept “fair compensation”, it permits differentiations which facilitate application in a manner corresponding to the equality principle . . .

a)Article para. of the Basic Law is violated when a group of people to whom the norm is addressed is treated differently in some substantial respect in comparison to other addressees of the norm, even though no differences exist between the two groups of such kind and weight as to justify the unequal treatment. Such a violation of the basic right is not only present when the legislator treats several groups of persons differently without a sufficient objective ground, but likewise when the courts by way of interpretation of statutory provisions make the kind of differentiation which is forbidden for the legislator . . .

b)The unequal treatment objected to by the complainants, which relates to physical harm to health as compared with violations of the right of personality, in particular within the framework of media related cases, does not infringe their basic rights under Article para. of the Basic Law. Here it must be assumed that the deciding senate of the OLG would, in violations which are of this kind but which involve the right of personality, if need be grant higher damages for pain and suffering than the DM , or DM ,

allowed here, or would consider circumstances to which in the present case no importance has been attached and which would raise the level of damages for pain and suffering. Only on this prerequisite is it possible to assume unequal treatment in the concrete area of the OLG’s competence.

However, there are objectively based differences between these two types of case which could provide justification in constitutional law for the different treatment. In this respect

it must first be considered that the claim to monetary compensation in the case of violations of the right of personality is not (any longer) directly based on an analogy with § of the BGB (reference omitted). Instead granting monetary compensation is based on a right which originates in the protective function of Article and Article para. of the Basic Law and finds its foundation in § ( ) of the BGB in combination with these provisions (references omitted). From a material point of view, granting monetary compensation rests on the idea that without such a claim, violations of the dignity and honour of a person would frequently remain without any sanction, with the consequence that legal protection of the personality would atrophy (reference omitted). (The difference from damages for pain and suffering shows itself, apart from the different legal basis, in divergent terminology). In addition, the determination of the level of compensation partly results from considerations which are different from those used for fixing damages for pain and suffering. Thus, according to the opinion of the BGH, the level of monetary compensation should genuinely inhibit ruthless marketing of the personality when a press undertaking has deliberately broken the law in using violation of the personality as a means of increasing its circulation and thus of pursuing of its own commercial interest. Here the compensation should, by its level as well, form a counterbalance to infringement of personality rights for the obtaining of profit. Admittedly this is not a genuine case of “creaming off the profit”; the attempt to obtain profit is (merely) an assessment factor in the decision about the level of monetary compensation (references omitted). Preventative considerations, which lead, in calculating monetary compensation in personality right cases, to a distinct increase in the compensation allowed, are thus decisive.

Such a consideration is not however operative in physical injury or nervous shock cases in connection with liability for road traffic accidents. Grounds can be cited for the difference in treatment. The violation of the right does not occur intentionally in typical road traffic accidents, nor is it motivated by the pursuit of commercial interests. Since the idea of intentionally obtaining profit plays no role here, the purpose of prevention is not a starting point for similar consideration as a calculation factor for the level of damages for pain and suffering. It is also not as a rule to be expected that a person potentially responsible for an accident will be induced by an appropriate increase in the damages for pain and suffering to observe the requirements of care in road traffic. Another reason why such an effect is scarcely to be expected is because compensation in the end result—in the present case as well—is not born by the tortfeasor himself but by the insurer.

Because of these objective differences, there is no objection in constitutional law from the point of view of the equality principle to the fact that the judgment of the OLG under challenge did not, in the case of the complainants, take into account preventative considerations as a calculation factor to increase the damages for pain and suffering. Whether, when, and in what form the legislator could eliminate the incongruity objected to by the complainants can remain open.

c) . . .

In constitutional law it has merely to be examined whether the damages for pain and suffering actually granted to the complainants in the sums of DM , or DM ,

violate the equality principle. This cannot however be established. The OLG calculated the damages for pain and suffering—not in this respect differently from the case of pure physical harm—chiefly on the basis of the injury to health which occurred according to

excavations were improperly executed and the plaintiff’s house was rendered temporarily unstable. The city issued an evacuation order, prohibiting occupation of the house between August and September . Repairs to the façade and interior of the house cost DM . and DM respectively. In addition to these sums and interest, the plaintiff claimed DM as compensation for the fact that during the validity of the evacuation order she and her husband had had to live in their dormobile nearby.

The Landgericht upheld the claim for repairs of DM . , but dismissed the rest of the claim. The Oberlandesgericht dismissed the plaintiff’s appeal, but allowed the defendant’s appeal on the ground that the plaintiff had received “new for old” and reduced the damages to DM . . With the leave of the Oberlandesgericht the plaintiff appealed only as to the claim for DM for loss of use of the house. The Fifth Civil Senate laid the matter before the Great Senate for Civil Matters.

Reasons

II. As regards the claim in issue the court below found that between August and September the plaintiff and her husband were unable to occupy their house by reason of the local authority’s evacuation order, and had instead lived in their dormobile which was equipped with all proper conveniences. The court held that the temporary loss of use of their dwelling, though complete, did not constitute an economic loss but only a noneconomic loss incapable of compensation.

III. The Fifth Civil Senate was of the same opinion but regarded the question as one of principle and sought a decision from the Great Senate for Civil Matters as being necessary to resolve divergent views in the courts (§ GVG).

IV. There is indeed a divergence of views between five of the senates of the Bundesgerichtshof on the question of damages for loss of use of chattels and realty.

. At the outset we have decisions of the Third and Sixth Civil Senates on the temporary loss of use of a motor vehicle involved in an accident [references].

(a) Decisions of and [references] recognize that the owner of a motor vehicle, including one for private and personal use, which he is unable to use while accident damage is being repaired can claim lump-sum damages for economic loss even when he has not hired a substitute or incurred extra expenditure or lost any income (most recently BGHZ , ( ) = NJW , ).

(b) In order to stem the tide of liability numerous limitations have been introduced, as to the basis and quantum of the claim. Money damages (§ BGB) are awarded only if the loss of use is “actually felt” by the victim (ibid.). No compensatable harm thus arises when a purely abstract possibility of use is frustrated (BGHZ , ( ) = NJW ,) or when a power of disposition is affected (BGHZ , ( ) = NJW , — the hunting rights case); the courts require an ability and an intention to use (BGH NJW, —military ambulance). Compensation has even been refused when the reason the owner could not have used his vehicle while under repair was that he himself had been injured (BGH NJW , ).

Exceptions to these exceptions are made where the vehicle would have been used by members of the owner’s family or even his fiancée (BGH NJW , ).

Damages for loss of use were denied in a case in which the victim could reasonably be expected to use a second car which was not needed for other purposes [references]. In other cases damages for the maintenance cost of a vehicle held in reserve have been allowed (BGHZ , ( ) = NJW , —tram in Bremen; BGHZ , ( ) = NJW , —bus in Bremen; see also BGH NJW , ).

A victim who rents a smaller car cannot add to the actual hire costs a sum representing the difference in use-value of the two vehicles (BGH NJW , ) but instead of claiming the hire for the rented car he may claim a lump sum for the loss of use of his own car (BGH NJW , ).

If purely personal reasons prevent the owner from using his vehicle, for example where his driving licence has not been properly safeguarded, the Third Civil Senate finds no compensatable harm (BGHZ , , ff. = NJW , ), but if there is an invasion affecting the thing itself, the loss of use is in principle compensatable, and the courts find such an invasion even where there is no physical damage but use is prevented by some factual or legal obstacle (see BGHZ , ( , ) = NJW , ; but note that the Fleet case there mentioned (BGHZ , ( ) = NJW , ) was a case of lost profits under § BGB). The Third Civil Senate has occasionally allowed cases where the car’s documents were withheld (BGHZ , ( ) = NJW , ) or a garage entry blocked (BGHZ , ( ) = NJW , ).

(c) The Bundesgerichtshof has also sought to limit the amount of the lump sum payable for loss of use. In order to avoid any element of profit, the Sixth Civil Senate deducts from the gross hire charges for a comparable substitute all the elements of cost which the commercial hirer adds to the ‘true use value’ (BGHZ , , = NJW ,; BGHZ , , ff., = NJW , ), and makes a further deduction for the plaintiff’s savings, taking the notional rental cost of a similar car as merely an “indicator” (see BGH NJW , ). Finally it regarded as sufficient a sum “well in excess of the cost of a car not in use” (BGHZ , ( ff.) = NJW , ). In the end result the daily tariff amounts to – per cent of the hire cost of a comparable vehicle. The details are given in tables prepared for the use of liability-insurers and the courts, and endorsed by the Bundesgerichtshof as legally accurate [references].

. The Eighth Civil Senate has carried these decisions over into the area of contractual liability and extended them to cases where a debtor is in delay in delivering a car or its documents (BGHZ , = NJW , , where the Court of Appeal awarded DM . per day, a total of DM for days’ loss of use).

. In cases involving chattels other than motor cars the Bundesgerichtshof has not yet treated loss of use as a form of economic harm.

In BGHZ , (= NJW , ) the purchaser of a fur coat in a claim for damages for non-performance sought DM because the coat had been unusable for four years while futile alterations were constantly being made, but the Eighth Civil Senate held that this was not economic harm. The same Senate held likewise in the caravan case (BGHZ, ( ) = NJW , ) where a camping site operator who had leased space for the caravan refused access to it for days under the pretext that the rent had not been paid. Here the plaintiff claimed DM ¥ = DM .

In the motor-boat case (BGHZ , = NJW , ) the boat was damaged in a road accident and rendered unavailable for the owner’s holiday and subsequent weekends. He claimed DM as forty days’ loss of use at DM per day (the daily hire cost

for a similar boat being DM ), but the Sixth Civil Senate saw in the temporary loss of use only a “diminution of the individual’s pleasure” and a “non-economic harm”.

. Divergent decisions have also been rendered in cases involving temporary loss of use or deprivation of enjoyment of real property.

(a) In the case decided by the Third Civil Senate on July (NJW , ) the plaintiff property owner had been badly affected by excessive noise and small emanating from an official military clubhouse, but had remained in occupation and had not had to accept a lower price for the house. The Third Civil Senate did not award damages for economic harm, but awarded compensation for the reduction of the “monthly enjoymentvalue of the property”. In BGHZ , ( ) = NJW , the Third Civil Senate awarded “compensation for expropriatory invasion” to the owner-occupier of a dwelling affected by smells emanating from a communal distillery, and approved the quantum awarded by the trial court with reference to the probable reduction in the monthly rent hypothetically obtainable.

(b) When an owner was temporarily unable to use his house owing to malfunction of the heating due to the fault of the outgoing tenant, the Eighth Civil Senate awarded him damages for the abstract loss of use, and said that it was immaterial if the house had been used for purposes other than occupation (NJW , ). Whether the same result would have been reached in tort was left open.

(c) The Fifth Civil Senate has twice denied the existence of economic harm in assessing damages for delay. In BGHZ , = NJW , a person for whom a dwelling was being constructed could not move into it until seven months after the due date, owing to the contractor’s fault, and had to stay in his previous smaller house during that period. The Senate denied that the loss of enjoyment, valued at a monthly rental of DM , constituted economic harm. The decision was the same in BGHZ , = NJW ,, concerning a claim by the purchaser of an apartment yet to be constructed, where the Senate said that neither the servicing of the capital deployed during the eight month delay (for the price had been paid on time) nor the community taxes assessable during that period constituted economic loss.

(d) In the swimming-pool case (BGHZ , = NJW , ) the Seventh Civil Senate hesitated to adopt the view of the Fifth Civil Senate that temporary loss of the chance of using a dwelling or apartment does not constitute economic harm, but found no economic harm when a private swimming pool for a housing complex had been badly designed and was unusable for the eight months it took to put it right. By contrast in a decision on October (NJW , ) the Seventh Civil Senate, applying the law relating to the contract for work and materials, held that economic harm did exist when an underground garage with six parking places to service an apartment block was unusable for twenty-two months because of inadequate corrective measures.

(e) In a tort case of blast-damage (BGHZ , ( ff.) = NJW , ) the Fifth Civil Senate held that there was no economic harm where the use of property had been partially obstructed rather than totally prevented. In that case the authorities had temporarily forbidden the use of a house in danger of collapse, but the owner had nevertheless established a bedroom in the cellar and had continued to occupy half of the ground floor despite the prohibition.

V. This divergence of decisions in the Bundesgerichtshof on the question of damages for loss of use is not calculated to advance legal certainty. The decisions contain no clear criterion to distinguish between economic harm and non-economic harm (§ BGB) or to distinguish the different types of case; nor is it clear whether the question should be treated differently in contract and in tort. The variety and incompatibility of the reasoning offered in support of the decisions reflects itself in different tests for the quantum of recovery.

. . .

VI. . According to the decisions of the Bundesgerichtshof the question whether compensatable economic harm has occurred is to be answered with reference to the theory of difference: one compares the economic situation produced by the occurrence said to involve liability with the situation which would exist had it not occurred [references]

. . .

. According to the theory of difference no economic harm exists in the present case . . .

. There do not seem to be any plausible, let alone compelling, reasons for holding that the mere loss of the benefit of use constitutes economic harm calling for compensation . . .

[The Senate discusses invasion of ‘exclusive rights’ and industrial property rights.]

(bb) To recognise as compensatable the harm consisting of loss of use in these cases would conflict with the principle of the law of liability expressed in § BGB. It is true that § sentence BGB modifies the burden of proof in cases of lost profit (BGH NJW , ) but it permits rebuttal. If the victim intended to profit from the use of the thing (such as a commercial vehicle) during the period it was out of commission he is entitled to the profit presumed by the law unless the defendant proves that that profit would not have been made even if the damage had not occurred. The money damages legally due are payable not for the abstract loss of a possibility of use but because in the particular circumstances the occurrence probably made an economic difference [references]. The loss of the possibility of use is a source of potential harm, not an economic harm in itself [references]. The law allows the defendant to show that the planned used would have been wasteful rather than profitable [references]. Otherwise the law of liability would be preferring consumption to production, and nothing in the positive law justifies such a paradoxical result. Only in certain exceptional cases does the law provide for computation of harm in abstracto in order to facilitate the disposition of certain obligational relationships, usually arising by way of contract (see § II, III HGB).

(ee) In sum, the values implicit in the law afford no basis for saying that in cases of invasion of an absolute right of disposition, damage to use in the abstract should be recognized, let alone at the rate of a hypothetical rental. All the more recent cases avoid adopting such a wide principle which would indeed undermine the effort of all the Senates concerned to restrict the extension of liability for loss of use.

(b) In its decision of July , already cited, the Eighth Civil Senate invoked decisions of the Bundesgerichtshof relating to loss of use of motor vehicles. Even in the special

area of motor accidents the reasoning is open to question, and the desirable tendency of several Senates of the Bundesgerichtshof has been not to generalize this principle but to confine it to that particular area (most hesitant, BGHZ , ( ff.) = NJW , ; ‘The doctrinal basis for decisions concerning the use-potential of motor cars is insufficiently insecure to justify its extension to other areas’).

(aa) The main argument which already figures in BGHZ , ( ) = NJW ,was one of fairness, that it is an ‘unsatisfying result’ to allow the tortfeasor (and his liability insurer) to escape all liability for lost use simply by an unjustified refusal to meet the (temporary) claim for natural restitution in the form of provision of, or payment for the hire of, a substitute vehicle under § sentences and respectively BGB. But this is to ignore the basic distinction drawn by the legislator: whereas the primary remedy of restitution in natura is not limited to the replacement of economic losses and provides certain other advantages, the secondary and subsidiary remedy of money damages (§§ , BGB) expressly excludes compensation for non-economic harm. Such differences as exist between restitution in natura and compensation in money result from the structure deliberately adopted by the legislator.

A further argument of fairness has appeared since BGHZ , ( ) = NJW, , namely that it is unfair that the tortfeasor should benefit from the victim’s decision to forgo the convenience of a substitute vehicle. But this is inconsistent with the legislator’s decision that compensation for mere inconvenience and discomfort can be granted only in the exceptional cases of §§ , BGB (see now § BGB). This argument loses its force where liability is strict, as in the case of the guardian of a motor vehicle under § StVG, and is in any case incompatible with the attempt of the courts to grant only the cost of keeping, not using, the car rather than the full cost of a hypothetical rental: for this too confers a deplorable ‘benefit’ on the tortfeasor and his insurer.

(bb) The so-called “commercialization” idea is not convincing either (leading case: BGH NJW , ; followed in BGHZ , ( ff.) = NJW , ). This holds that a pleasure or convenience, far from being uneconomic, constitutes an independent economic value if it is commonly capable of being obtained for money, that is “bought” or “commercialised”; to diminish such a pleasure is to depreciate its monetary equivalent. Writers have rightly criticised the baselessness of the premise that economic harm arises every time anything “commercialised” is affected [references]. So many pleasures today are to be had for money that this test hardly serves to distinguish economic from non-economic harm, and recent cases, rather sceptical of the ‘commercialisation’ idea, use it as subsidiary, if at all [references]. This Senate shares such reserve [references].

(cc) The prevalent view of the Bundesgerichtshof is that the only valid and decisive touchstone for discerning economic harm as regards compensation for loss of use of vehicles and other things, moveable or not, is ‘public perception’. (The Fifth Civil Senate has stood aloof (BGHZ , ( ) = NJW , ).) The Third Civil Senate [references] and even more the Sixth Civil Senate [references] find it decisive that in the public perception today, the temporary loss of use of a vehicle is seen as economic loss because the availability of a car is apt to save time and effort even outside working hours so that the advantages thereby afforded are regarded as “money” [references].

. . .

As a matter of principle it must be said that “public perception” is not a source of law

. . .

One factual objection is that this “public perception” is not usually ascertained empirically but is simply assumed by the judges in the case. Reference to “public perception” not empirically ascertained may often be a shorthand justification for a solution prompted by the value judgements of the court [references]. This can lead to an unacceptable degree of legal uncertainty, and has actually done so on this very question. Courts that actually wanted to ascertain the relevant “public perception” would be led into an unduly and impractically wide range of related sociological questions.

(ee) In order to limit liability for loss of use several Senates of the Bundesgerichtshof have adopted the test of whether it was “actually felt”. This is inconsistent with positive law.

Thus in BGHZ , ( ) = NJW , the Third Civil Senate said that there were cases “in which the temporary loss of possession or potential use of a vehicle was not felt by the victim and so involved, from the economic point of view, no loss”. The Sixth Civil Senate has adopted this test (BGHZ , ( ) = NJW , ), and both Senates have drawn consequences from it, some of which limit its scope.

These limitations may have been necessary as a matter of policy in order to contain the spread of liability in cases of motor accidents, but this is only a further indication that the original decisions on loss of use of a vehicle went too far. The requirement that an economic loss be “felt” in order to be compensatable is foreign to the law of liability. A millionaire who loses a small profit can claim compensation for that loss by the clear terms and obvious intent of § BGB even if the effect of his failure to increase his wealth is imperceptible to him; at the other end, a person hopelessly burdened with debt can claim compensation for a further liability even if it does not perceptibly worsen his economic plight [references]. To limit compensation for harm to such harm as is “actually felt” runs counter to the legal principle of reparation in full [references].

(c) Finally, it is not really a question whether any standards otherwise recognised by law can be found for the evaluation in money terms of a temporary loss of use [references]. The absence of such standards indeed suggests that loss of use is not a separate economic loss [references], but not vice versa. The value of the use of a thing is not a value separate from and independent of the value of the thing itself, but is indiscernibly involved in its market value. A diminution of the value of the use of a thing usually leads to a drop in its market value, and making up the market value automatically compensates for loss of use-value [references].

As a matter of accounting there is an additional loss related to the duration of the loss of use which is not compensated if the loss is subsequently made good, namely periodic costs not related to actual use, which must be incurred if the thing is to be available for use [references]; in the case of a motor vehicle these would include the vehicle licence fee and the liability insurance premium. These are independent of the individual circumstances of the owner and, unlike purchase price where there is no price control, can be compensated without practical difficulties because they are the same for all and are easily ascertained. Nevertheless, there are serious objections to giving damages even in respect of these items.

These costs are not caused by the occurrence which leads to the loss of use [references], and in principle damages are payable only for harm caused by the occurrence which entails liability [references]. To the extent that the basic cost of keeping a vehicle in reserve in order to forestall harm is treated as compensatable [references] this is because of the close connection between preventing harm and mitigating harm (as required by § BGB; see BGHZ , ( ) = NJW , ); these decisions can also be justified on causal grounds if one regards the deployment of the reserve vehicle as an effect of the tortious occurrence [references].

. . .

One can get round these causal problems by concentrating not on the expenditures themselves but on their “equivalent”, namely the use of the thing so facilitated, and treating the expenditures as a measure of the monetary value of the loss of use [references]. This does not, however, get us any further forward. It is true that a rule limited to these basic costs (tax, insurance) is not open to the usual objection that a thing does not have value simply because money has been spent on procuring it, much less the value of the expenditure [references]. But it is open to the objection that contrary to the principles of the law of liability it leads to a preference for consumption over production (see above VI. (a), (bb)). In the case of a thing put to commercial use, such as an apartment block used for rent, these basic costs reduce the profit and so diminish the damages payable for lost profits, the only compensatable item (§ BGB); thus these costs are at the risk of the owner. It would be inconsistent with this legislative apportionment of risks to make the tortfeasor pay for the “frustrated” basic costs in cases of the loss of consumer use of goods.

. . .

VII. Should the Great Senate decide, on whatever grounds, to hold that damages may be claimed in tort for loss of use of things used by their owner personally, such as an owneroccupied house, there will be the further problem of the quantification of such loss.

. . .

. In the light of the decided cases the position of the Fifth Civil Senate is as follows:

(a) The Sixth Civil Senate is right to hold that the notional rental value of a substitute (or the reduction in rental value in cases where enjoyment is merely impaired) cannot be used directly as a standard of measurement. The enjoyment of a thing by its owner is not profit-orientated but constitutes consumption of investment in future enjoyment, so no loss of profit is involved in the temporary loss or impairment of enjoyment. Since tort law must not result in enrichment, the notional rental must be purged of all elements of profit. Accordingly the notional rental cannot, contrary to the view of the Seventh Civil Senate, be treated as the ‘decisive’ factor in the computation [references].

(b) The best approach is that of the Sixth Civil Senate, namely to do the sums “from the bottom up”, though indeed the basic costs (tax, insurance) are non-compensatable in the light of § BGB, as was shown by the comparison with loss of use of commercial property (above VI. (a), (bb)). But the idea of “modest addition” must be rejected as unsupported by any sound doctrine, despite the attempts by Dunz to support it [references]. For Dunz the “addition” is simply “a rebuttable lump-sum for typical conse-

quential harm” [references]. In relating this “addition” to the extra time and effort spent by the victim on the widespread assumption that “time means money” even outside working hours, Dunz is being inconsistent with positive law (above VI. (b), (dd)). To the extent that he has in mind extra expenses such as tram tickets and gratuities to courtesy drivers, one would have to set against them the petrol costs, maintenance costs, wear and tear and other, probably higher, expenses, involved in using one’s own vehicle. The “modest addition” is unjustified and unnecessary.

Case

BUNDESGERICHTSHOF (GREAT SENATE) JULY

BGHZ , = NJW , = JZ ,

The Fifth Civil Division submitted the following questions to the Great Senate:

( ) If the owner of a thing which he uses himself, such as an owner-occupied house, is temporarily unable to use it by reason of a tortious interference with his ownership, does this represent a compensatable economic loss in the absence of any extra expenditure or lost revenue?

( ) If such a loss of use is compensatable, how is it to be quantified? The Great Senate gave the following answer:

The owner of property which he himself uses, such as an owner-occupied house, who is temporarily deprived of its use as a result of a tort may be able to claim damages therefore as constituting an economic loss, despite the absence of extra expense or lost revenue.

Reasons

. . .

III. The Great Senate is of the view that, leaving aside cases involving cars for personal use, a compensatable economic loss arises when the owner of a thing is temporarily deprived of its use by a tort if ( ) his domestic economy depends on the constant availability of the thing, such as the house he occupies, and ( ) he would actually have used it during the period of deprivation. With this limitation the award of damages is permitted by law and does not imperil legal certainty; indeed, it is necessary to give compensation for such deprivations in order to ensure the full and just compensation of economic losses.

. The BGB does not define the concepts of “patrimony” or “economic harm”, but leaves it to writers and courts to flesh them out. In order to ascertain whether the plaintiff has suffered patrimonial harm, the Bundesgerichtshof generally follows the Reichsgericht in applying the “difference method”, and compares his present economic situation with what it would have been had the harmful occurrence not taken place. The Fifth Civil Division is right to say that the temporary loss of personal use is not reflected in such a computation, which apart from replacement costs discloses only the income lost if the thing would have been used to produce income or the savings made if it would have involved costs and liabilities.

(a) But the Bundesgerichtshof has come to realize that while this accounting operation is value-neutral, the courts must still determine what items are to be included in the account in the light of the protective function of tort liability and the compensatory function of damages.

In this sense the difference method, which is not actually enjoined by the law [references], takes on a normative aspect [references]. While it is true that economic loss will always reflect itself in an increase on the debit side or a decrease on the credit side, it is for the law to decide what items are to be included on the balance sheet for the purposes of compensation.

(b) Such a balance-sheet must take account of the fact that wealth is significant not just in its actuality but also in its potentiality, as enabling its owner to realise his goals in life [references], a function protected by law.

If, looking only to money, the system gave compensation only for loss of the commercial use of property, it would be ignoring the gain that comes from domestic use also, deprivation of which, though not expressed in loss of income, can comparably affect the owner’s economic sphere. Thus a motor vehicle not only often represents the major item in a private person’s property but is commonly the very basis of his domestic economy and lifestyle, especially if he uses it for his profession. Even more clearly, the decision to answer one’s living needs by buying a home is largely based on economic considerations.

The price reflects the market’s valuation of such goods precisely as domestic goods, and recognizes their temporary loss as a devaluation of them. If it puts an evident constraint on the owner’s housekeeping, as when he would otherwise have used the thing, only an approach which dealt exclusively in monetary loss and gain, an approach not required by the notion of ‘patrimony’, would regard this as economically insignificant.

. Nor is § BGB compelling here. Where a thing is put to productive commercial use, loss of use is essentially shown by loss of profit, compensation for which is expressly provided for by § sentence BGB. This provision emphasises the importance attached by the legislator to loss of productive use in goods in commerce, and there is no comparable provision for the domestic use of goods.

But we cannot agree with the Fifth Civil Division that the law has set its face against damages for deprivation of domestic use of goods not resulting in any loss of income. Unlike provisions in earlier codes, § BGB is principally designed to make it clear that damages extend to the whole economic loss regardless of the degree or type of fault which causes it [references]; to this extent the provision follows through the mandate of full compensation implied in § BGB; § sentence BGB fits into this scheme, though hitherto the courts have seen it only as alleviating the burden of proof so as to let the plaintiff obtain proper compensation for harm which is often difficult to prove, an aim also furthered by § ZPO [references]. Though the law is geared to productive use, it can be extended so as to embrace analogous domestic use without putting such a claimant in a better position as regards proof as feared by the Fifth Civil Division provided that damages are not given in abstracto, which the BGB permits only exceptionally (see §§ ,, BGB). For this purpose the courts have added the requirement, in the case of motor vehicles, that the loss of use be ‘actually felt’, that the victim was willing and able to use the vehicle during the period of deprivation and would actually have used it. If this limitation is carried over to other property, the victim’s position as regards proof will be comparable in cases of commercial and domestic use respectively, and it will be easy

enough to relate damages for loss of domestic use to the actual harm affecting the victim’s estate without setting up any tariff for different types of case.

. . .

. Any such extension of the law must certainly be limited to property on whose continuing availability domestic arrangements typically depend. Further extension would go beyond the need to give similar treatment to commercial and domestic property and might lead to granting compensation for non-economic harm, contrary to § BGB; the law might become unpredictable and damages difficult to assess.

(a) In permitting compensation only for economic loss, § seeks to limit damages to cases where objectively measurable harm occurs: when awarding damages the judge should find not on the uncontrollably subjective valuation tendered by the victim but on the valuation generally attributed to that interest by the market. The legislator also wanted to avoid any monetisation of “ideal” interests [references]. If things one uses in private life are rendered unusable, one’s mode of life is inevitably affected, but compensation cannot be given for all such inconvenience without giving damages for purely personal harm, which § definitively renders non-compensatable, in cases of tort at any rate. It may be different on contract cases since the parties may contract out of § just as they may agree that economic interests should have less protection. But so far as goods of vital importance to general daily living are concerned, there is no risk of an undue extension of damages in the non-economic area, for not only does their use in the domestic economy clearly relate to the economic sphere [references] but their prevalence and function make it possible to measure at least their economic core by means of objective standards, eschewing subjective factors peculiar to the victim personally. To this extent, at any rate, the fact that such anfractuosities would not show up in a commercial balance sheet is not a conclusive argument against their compensatability.

. . .

(c) Decisions of the Bundesgerichtshof have staked out the bounds of liability for loss of use of motor vehicles, a situation where the plethora of cases makes it necessary to ignore some of the differences between individuals as regards the importance of the thing.

We need not now determine the range of property, apart from motor cars, whose temporary loss of use calls for compensation on the principles already stated. But the temporary loss of use of a home tortiously affected, as in the case in hand, can clearly constitute an economic loss.

It hardly needs saying that one’s domestic economy and mode of life centre on the home and that its continuing availability for occupation is a central item in daily life and intrinsic to one’s whole wealth. This very instance shows how unfair it would be to limit damages to loss of commercial use, to regard loss of domestic use not as a loss in itself but only as a source of possible loss, and to leave uncompensated the person who forbears to rent alternative accommodation: it would be an unjustifiable preference for investment in production over investment in consumption. It may be justifiable to refuse damages in cases of temporary impairment of use which the victim can reasonably temper by alternative measures he can be expected to adopt, but where the house in which the owner would have lived is rendered wholly uninhabitable even for a time, the principle that economic harm must be paid for in full requires compensation to be made.

IV. It must be for the courts to work out on a case-by-case basis methods for quantifying loss of use which are suited to the kind of property involved and the way it is treated. The only legal constraints are that quantification must satisfy the requirements of compensation, that is, apply objective standards as indicated by § BGB and treat like cases alike.

It would be wrong in principle to grant damages on the basis of what it would have cost the owner to rent a substitute article for the period of deprivation. We are concerned with compensation, not reparation, and compensation is based not on the savings effected by having a thing of one’s own but on the monetary value of having one’s own thing to use. Nor can the owner claim what he might have charged the tortfeasor for the use of the thing. Such a method of computation may be justified in special instances of conflicting interests, but it is inconsistent with the general principles of damages law. Compensation is for the loss of domestic use, not for the loss of profit from a rental contract with a third party which the owner never dreamed of entering.

Nevertheless the rental market may provide a basis for measuring the loss once the rental charge has been carefully purged of all elements related to profit making. So, too, may the basic post-acquisition costs related to the period of loss of use (interest in capital tied up, recurrent costs of keeping the property available, depreciation). And, contrary to the view of the Fifth Civil Division there is nothing wrong in this context with adding a modest supplement to the minimum sum at which the market would put the basic costs of having a thing to use, in order to take account of the fact that the fall-out effects on a person’s economy of the unavailability of such property may be very difficult to track down in detail. The mention of these possible ways of measuring the loss is not, however, intended to exclude other appropriate methods.

Case

BUNDESGERICHTSHOF (SIXTH CIVIL SENATE) OCTOBER

BGHZ , = NJW ,

Facts

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

The claimant had his car repaired by his car repair business at a cost (according to expert opinion) of DM , . . He claimed DM for depreciation in value. While his car was out of service he hired a Mercedes E from the August toSeptember at a cost of DM , . . The claimant also claimed DM for a further days for loss of use; and 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 DM , . plus interest on the basis that the defendants were % liable. The Oberlandesgericht awarded 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 DM , plus interest.

Reasons

. The appeal court has incorrectly assessed the damage to the claimant’s vehicle under § ( ) of the Civil Procedure Code, on the basis of the necessary expense for providing of a replacement, at only DM , . The claimant can claim the repair costs of DM , plus the depreciation in value of 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 § sentence 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 (§ ( ) of the BGB) or requires disproportionate expenditure (§ ( ) sentence 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 over compensation.

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 § ( ) sentence 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 § ( ) sentence 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 § ( ) sentence of the BGB; its limit has already been drawn by the aim of restoration in § sentence of the BGB and the concept of necessity in § sentence 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 § sentence 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 (references omitted).

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

Procedure Code granting an addition of % (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 particularly worth repairing) deduction of the residual damage from replacement value, which is frequently not substantially higher, often leads, in spite of an addition of per cent to the difference, to the repair costs exceeding the per cent 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 of damages. 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 per cent 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 per cent 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 % 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 that is not the way things are here. . .

. 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 (§ sentence of the BGB). This is because these costs were necessary to restore of a state of affairs of equal economic value to the original one. . .

Case

BUNDESGERICHTSHOF (SIXTH CIVIL SENATE) OCTOBER

NJW , = VERSR , = MDR ,

Facts

The plaintiff hires out vehicles that can be used as taxis. [In this action] he seeks compensation on the basis of an assigned right for vehicle hire costs arising from an accident that occurred on December in which the taxi business proprietor L and the driver of a car insured with the defendants were involved. In this accident L’s Mercedes Benz D was—according to the plaintiff’s assertion the only taxi used by him at the time— substantially damaged. The duty of the defendant to make good in full [the damage inflicted on the plaintiff] is, in principle, beyond dispute. The damaged vehicle was being repaired during the period December until January . By a contract of theDecember L hired a replacement taxi from the plaintiff in which he assigned to insurers his claim for compensation against the defendant in relation to the vehicle hire costs. Until January L travelled , km with the hired taxi for business purposes. Between and December he thereby earned a total of DM , . . His income during the early days of January has not been supplied. The plaintiff charged L vehicle hire costs for the total hiring period in the sum of DM , . (without VAT). In the present legal action the plaintiff at first claimed the full vehicle hire costs against the defendant.

The Landgericht rejected the claim. In the appeal proceedings the plaintiff limited its money claim to a sum of DM , . taking into account the expenditure saved by L by the non-use of his own vehicle of an estimated per cent of the vehicle hire costs.

The Court of Appeal—rejecting the remainder of the plaintiff’s appeal—gave judgment against the defendant in the sum of DM , . with interest. The plaintiff’s appeal on a matter of law was successful for the following.

Reasons

. The Court of Appeal is of the view that L’s claim for compensation assigned to the plaintiff does not justify claiming from the defendant the cost of hiring the replacement taxi.

It was true that a taxi proprietor could, in principle, when his vehicle was damaged, claim for harm he suffered by asking for reimbursement of the costs of a hired replacement taxi. A claim of this kind would, however, be denied to the taxi proprietor if the boundary set by § II BGB were overstepped because the expenditure were disproportionately high. This would be so if the claiming of a hired vehicle by a business-minded plaintiff, as he would have seen it at the time, were simply indefensible. That was the case here. In this respect, the vehicle hire costs (subject to deduction of his own expenditure thereby saved) were to be set against the loss of earnings, which the taxi proprietor would have suffered without the hiring of the replacement vehicle. For this expected loss of earnings, the takings actually obtained with the hired vehicle were to be taken into account. One should start with L’s income between and December (DM , . ). To this one should add the takings for the period from to January . Because of the lack of more exact information, these could [only] be assessed from an average calculation on the basis of the months of October and November at DM . daily. Thus the gross income, resulting for the above hire period, was DM , . altogether. Value added tax, saved overheads which could be estimated at per cent of the takings for diesel vehicles, as well as expenditure which L had effected in the hiring period for assistant drivers, were to be deducted from this. There then remained a fictitious profit yield of DM , . which was to be compared with the reckonable vehicle hire costs in the sum of DM , . . This led to a ratio of : . . The limit of disproportionate expenditure in the sense of § II BGB was thereby exceeded.

The Court of Appeal was of the view that in general one should proceed on the basis of expenditure being disproportionate if the vehicle hire costs amounted to more than double the loss of earnings to avoid which the replacement vehicle was hired. By this limit, the interest of the taxi undertaking in the maintenance of its business was sufficiently taken into account. Otherwise there would be the threat of a violation of the principle that the plaintiff should not profit from the damage-causing event. To be sure, special circumstances could lead to an approval of proportionately higher vehicle hire costs. This could, for instance, happen where a taxi proprietor was particularly dependent in his business on a regular clientele and, as a result of a temporary loss of his vehicle (and the suspension of his activities), the existence of his business was seriously under threat. Such a state of affairs was, however, not present in this case. Instead, it had been foreseeable here that the hiring of the replacement taxi would be completely uneconomical. Thus L should not have done this and, instead, should have calculated his harm on the basis of his lost earnings. This was because he was, as a plaintiff, obliged to choose from amongst several possibilities leading to compensation for the harm the one that required the least expenditure. In these circumstances it was also not justified to allow the plaintiff a part (within the limits of § II BGB) of the vehicle hire costs as compensation for the harm. On the other hand, the claim was not completely unfounded as the plaintiff had a claim to

compensation on the basis of the fictional loss of earnings that was to be assumed to be

. DM.

II. The judgment appealed against does not stand up to legal scrutiny insofar as the remainder of the plaintiff’s appeal has been rejected and the claim to compensation for the vehicle hire costs denied.

. The appeal court proceeded correctly in law from the principles laid down in the judgment of the Senate of December [references omitted] on restitution in kind on the loss of a motor vehicle used exclusively for business purposes by the hiring of a replacement vehicle:

§ S. BGB requires the restoration of the status quo as it existed before the event causing the harm. In the case of damage causing the loss of a motor vehicle, whether this is used privately or for business, restoration is usually best achieved by the plaintiff hiring a replacement vehicle for which the defendant has to pay: (§ S. BGB). In such cases the limit to which restitution in kind (through the hiring of a replacement vehicle) can be asked for, is determined by § II BGB. According to this, monetary compensation (here allocating to the plaintiff compensation for the gain he did not obtain) will only take the place of restoration if the latter is possible only with disproportionate expenditure. In assessing whether to proceed on the basis of such disproportionality, it is important to compare the cost of hiring a replacement vehicle and the threatened loss of earnings if the hiring does not proceed. But this is only one of a number of aspects within the global consideration to be undertaken of the interests of the plaintiff in the undisturbed continuance of his business. This is because his other interests that are worthy of protection must also be considered. [This means] for instance [taking into account] his desire not to endanger the good reputation of his business, to have at his disposal a full fleet of vehicles, and not to have to place excessive demands on the capacity of the remaining vehicles etc. The boundary of § II BGB is not overstepped simply because the costs for the obtaining of a hired vehicle exceed (even significantly) the loss of profit which is otherwise threatened. But it is [exceeded] if the hiring of the replacement taxi is simply indefensible from an entrepreneurial point of view for a business-minded plaintiff . . .

[but] this will only exceptionally be the case.

. The observations which led the Court of Appeal to find that in the instant case the proportionality boundary of § II BGB had been overstepped do not meet these principles in the required manner.

a)A decision as to whether the prerequisites of § II BGB are present is primarily a matter for assessment by the judge of fact when applying § I ZPO. However, this appeal may examine whether the relevant circumstances and standards, especially all the essential calculation factors, have been considered in the required manner [references omitted].

b)This appeal unsuccessfully challenges the calculations of the Court of Appeal on expected lost profit in the case where no replacement vehicle is hired.

aa)The judge of fact is not prevented in this respect from putting the net vehicle hire costs (reduced by the expenditure which the taxi proprietor has saved) against the profit which he has in fact made by use of the hired vehicle [reference omitted]. The figures relating to the turnover here which L made with the replacement taxi in the

greater part of the hiring period namely between and December were available to the Court of Appeal. An average turnover, applying § ZPO, had to be estimated for only a few days ( to January ) on the basis of the turnover figures of the previous months. The Court of Appeal’s method of proceeding here is not open to objection. Even a differently attempted calculation of the turnover, which proceeded on the basis of the total of , kilometres travelled with the hired vehicle and which charged a turnover of DM . for every kilometre travelled (which was, all along, regarded by the plaintiff as realistic), would still produce a total turnover which is not significantly higher. (DM , as against the sum reached by the Court of Appeal of DM , . ).

bb)There are no legal objections to the fact that the Court of Appeal deducted from the gross turnover an estimated per cent for value added tax and saved overheads. (This is not challenged by the appeal in law). Contrary to the appellants’ view, the Court of Appeal correctly deducted from the net turnover a further sum of DM as payment for assistant drivers. Payments to drivers of taxis only have to be left out of consideration if they are fixed costs independent of performance which would have had to be paid by the taxi proprietor even if he had not hired a vehicle [references omitted]. But such costs are not involved when paying assistant drivers who are not in a fixed employment relationship but are called upon for work from case to case at irregular intervals. The Court of Appeal could, on the basis of the party’s submissions and without violating the law, come to the conclusion that the expenditure here for assistant drivers would not have arisen for the taxi proprietor L if he had not hired the replacement taxi and therefore had not used any assistant drivers.

c)The appeal, however, correctly objects to the standards on the basis of which the vehicle hire costs which have arisen were considered by the Court of Appeal to be disproportionate expenditure, in the sense of § II BGB, by comparison with the threatened loss of profit. In particular the considerations on which the appeal court might always regard the boundary of disproportionality of the vehicle hire costs as exceeded if the latter amounted to more than double the loss of earnings give cause for serious doubts.

aa)By indicating that the taxi proprietor L was, as plaintiff, under a duty to choose from several possibilities leading to compensation the one which required the least expenditure—in this case the calculation of the loss of earnings—the Court of Appeal calls upon a principle of liability law which is not suited to the making of an assessment within the framework of § II BGB. The plaintiff has to choose the most economical alternative from several possibilities of remedying harm only if they are equivalent in outcome (for instance between two alternatives which both lead to restitution in kind [references omitted]). But here it is not a question of choice between two equivalent alternatives. Instead, only the hiring of a replacement vehicle represents restitution in kind for the taxi proprietor, and he can ask for this up to the limit of disproportionate expenditure determined in § II BGB. It is true that this provision also, like liability law in general, is subject to the postulate that the remedying of the damage be economical. But the legislator has, by drawing the limit of disproportionate expenditure, emphasised that restoration in kind has priority over monetary compensation and this does not have to be given up simply because monetary compensation requires a lesser expenditure for the defendant.

bb)The observation in the judgment appealed against, that exceeding of the loss of earnings by the vehicle hire costs by per cent—which was barely acceptable—could only be justified if the taxi proprietor was to be allowed a special interest in the maintenance of his business and the retaining of a regular clientele, also shows that the Court of Appeal has not adequately satisfied the standards to be applied within the framework of § II BGB. The taxi proprietor, suffering harm, has as a rule a claim to restitution in kind on the basis of § S. and S. BGB. This in principle needs no special justification even if he requires expenditure which exceeds—if necessary, even sub- stantially—a compensation interest of the plaintiff (consisting here of the lost profit if no step was taken to cover for the loss of the accident vehicle). On the other hand the denial of restitution under the prerequisites of § II BGB according to the state of the law represents the exception, which the defendant needs to show and provide a basis for, to the rule in § BGB. This rule-exception relationship has not been taken into account in an appropriate way in the considerations of the Court of Appeal.

cc)The Court of Appeal also seeks to justify the “ per cent limit” which it considered to be correct because otherwise there is no longer any conformity with the principle that the plaintiff should not make a profit out of the damage-causing event. However, the taxi owner suffering damage, who has hired a replacement vehicle (and has to pay for this), does not gain from the event causing the harm, regardless of whether the vehicle hire expenditure is kept within the framework of the proportionality limit of § II BGB or not. This is because the compensation by the defendant for the vehicle hire costs does not remain with the plaintiff, increasing his own assets; but passes to the person hiring out the replacement vehicle.

d)The argument of the Court of Appeal in favour of establishing a “boundary rule” of double the loss of earnings for the compensability of the vehicle hire costs of the taxi owner is not only legally inappropriate. Such a “boundary rule”, also favoured by the st German Verkehrsgerichtstag [reference omitted], is also unjustified in this case. This is because the delimitation of the exceptional case envisaged by § II BGB is a matter of fact that depends on all the surrounding circumstances of each case and should not be made to turn on the existence of a general threshold, whether this is fixed by reference to double the lost profit or on any another proportion.

aa)The assessment of the disproportionality of the expenditure in the sense which is relevant here depends on a variety of factual issues which cannot be assessed by a set figure. Importance attaches to circumstances that relate to the taxi undertaking of the person suffering harm and its place in the market as well as to those which concern the accident itself and its consequences. For instance, the following points can be relevant and therefore are to be taken into overall consideration. They include: size and development of turnover of the undertaking; period of existence so far and intensity of penetration of the market; number of taxis available and used in the undertaking; degree of utilisation of the vehicles and the drivers; personnel and cost structure of the undertaking (for instance drivers in permanent employment, assistant drivers etc), composition of its clientele (regular customers, one-off journeys); structure of the market (e.g. in a large city or in a rural area); competition situation; conditions of connection to the radio centre; possibilities of co-operation with other taxi businesses; extent of and period for repair of the accident vehicle; business prospects for taxis during the repair period (“high season” because of holidays, congresses or the like).

This wealth of individual aspects which characterise the overall picture to be obtained within the framework of § II BGB, forbids the determination of the exceptional case (in which there must be a deviation from the principle of restitution in kind) in a normative way from a “rule boundary”.

bb)In the face of the given price situation, the costs of a hired vehicle will as a rule exceed the predictable loss of earnings of a taxi proprietor. The hiring of a replacement taxi can however only be rated as disproportionate if it is indefensible for a business minded plaintiff and was thus from the point of view of a sensible businessman simply a question of a stupid decision. Such a judgement cannot automatically be made when the vehicle hire costs are more than per cent or some other percentage in excess of a predictable loss of profit. This is because it is part of the nature of entrepreneurial organisation and the freedom to make business arrangements to put up with short term losses, even if these are considerable, for the sake of longer term advantages, at least for a foreseeable period of time. For this reason, it will seldom appear indefensible from the viewpoint of a sensible businessman to accept hire costs for several weeks that will probably substantially exceed the output to be obtained from the thing hired. This will be the case if he can thereby maintain his business undisturbed, secure the entrepreneurial “goodwill”, keep his regular clientele, remain present in the market and in the organisation of the radio centre and so on. Accordingly, the compensability of the hiring costs has been accepted in the case law of the courts of first instance even in cases in which this was distinctly more than % in excess of the loss of earnings [references omitted].

cc)In the “normal” case, therefore, in which a replacement taxi, the full utilisation of which is within a framework consistent with business practice, is hired for an average repair period, there will be no cause, having regard to § II BGB, to deny reimbursement of vehicle hire costs which are in line with the market price. The plaintiff can only be confined to monetary compensation for the amount of his loss of earnings if consideration in business terms of the circumstances of the individual case as a whole leads to the conclusion that exceptionally the business decision to hire a replacement vehicle is no longer defensible. In this framework, besides all those interests of the plaintiff worthy of protection, comparison will have to be made between the hire costs and the probable loss of profit of the taxi undertaking and also the level of the hiring charge as such can play a significant role.

. Bearing these principles in mind, the limit to the proportionality of the hiring expenses in the sense of § II BGB cannot in the present case be regarded as yet exceeded. This is so, even though the hiring charge for the replacement taxi may lie in the upper regions of what is defensible in business terms. The Senate can make this decision finally itself as no more findings need to be made by the judge of fact which are important for the decision. The Court of Appeal has not given the legally required status to the relevant circumstances here.

a) If, as the plaintiff has claimed, the taxi proprietor L had at the time of the accident only one taxi in operation—the accident vehicle—he would have been obliged, had he not hired a substitute, to shut down his taxi business for the entire period of the repair. Thus, he would neither have been able to serve his regular clientele nor would he have been available to the radio centre for the providing of occasional journeys.

If a taxi proprietor, who has several taxis, loses one as a result of an accident he has a legitimate interest to secure the undisturbed continuance of his business by hiring a replacement vehicle so as to continue working with a complete fleet of vehicles [references omitted]. The interest of the “one-taxi proprietor” in not having temporarily to shut down his business on the loss of his single vehicle must, if anything, be rated much higher. This is because the compulsion for temporary suspension of independent vocational activity means a very severe interference for the person affected even if financial harm arising from this can be compensated for in a sufficient manner. It cannot therefore, in principle, be [an economically] indefensible practice for a taxi proprietor, in order to avoid the temporary closing of the business with all the resulting loss, to hire a replacement taxi for a foreseeable repair period, . . . even if this involves expenditure which significantly exceeds the profit expected from its use.

b) But even if L had not been a “one taxi proprietor”, but at the time of the accident used further vehicles, the expense of the hiring—which here certainly appears high— could, according to the principle for the “normal case” explained above, still not be assessed as disproportionate in the sense of § II BGB. One must also note the fact that the enforced temporary interference with the business, even through the loss of only one of several taxis, would have affected the pre-Christmas, Christmas and New Year’s Eve trade. This is a period in which—according to the findings of the Court of Appeal also— the need for taxis is especially great and the opportunities for custom and earning money are especially favourable. In this period, an undisturbed maintenance of business by means of a hired replacement taxi—even accepting a higher expenditure—could appear to a sensible business minded taxi proprietor more the obvious thing to do than at any other time. The other circumstances, as they are to be deduced from the established facts of the case and the party’s submissions, give no cause to find here an exceptional case in which L would have had to give up restitution in kind.

III. The judgment of the Court of Appeal must, therefore, be quashed insofar as the appeal of the plaintiff was rejected. As further elucidation of the case is no longer needed, the plaintiff’s appeal is to be allowed according to his appeal application in accordance with § III no. ZPO.

Case

BUNDESGERICHTSHOF (SIXTH CVIL DIVISION) MAY

BGHZ , = NJW , = JZ ,

Facts

The claimant seeks compensation in respect of a road accident. His car (a BMW i) was damaged when the first defendant ran into it with her car on February . The first defendant and the second defendant (who is liable to indemnify her) are unquestionably fully liable for the claimant’s loss. After the accident, the claimant’s car was towed to a garage at T, where the claimant lived. By arrangement with the garage, the claimant hired a BMW i on the afternoon of the day of the accident (a Friday) from the K car hire business at a daily rate of DM . His damaged car was looked at by an expert onFebruary . As the expert calculated that the repair costs would be considerable, and the repairs were expected to last for – working days, the claimant did not carry

out the repairs, and obtained another car. Before this was authorised, he gave back the hired car on February . The parties are only in dispute about the car hire costs. The Landgericht only allowed the claimant DM , . of the DM , . charged by the K firm. The Oberlandesgericht allowed him a further , . DM. By the appeal in law the claimant sought reimbursement of the remainder of the car hire costs of DM , . . The defendants cross-appealed against the award of DM , . by the appeal court. The appeal in law led to the quashing of the judgment and reference back. The cross appeal in law was rejected.

Reasons

I.–II. . The appeal court correctly proceeds on the basis that the claimant (who—as is no longer in dispute—was allowed to hire a BMW i for days) can demand compensation from the defendant for the hire costs which were objectively necessary under § sentence of the BGB as restoration expenses (references omitted). According to the constant case law of the Senate, those expenses which a sensible business-minded person would make in the position of the victim are to be regarded as necessary (references omitted). If the victim can influence the level of the costs to be spent to eliminate his loss, he must, in view of the duty to mitigate loss, choose the more economical way of rectifying the loss, within the scope of what can be reasonably expected of him (references omitted). This follows from the concept of loss and purpose of compensation for it and from the legal concept in § II BGB, which in the end derives from § BGB. The requirement that rectification of loss shall be sensible from an economic point of view does not, however, as the Senate has already explained, call for the victim to economise for the benefit of the tortfeasor or to behave in every case as if he had to bear the loss himself (references omitted). This is because in the latter case the victim will often make sacrifices or efforts which, in his relationship with the tortfeasor, are over and above his obligations and which the tortfeasor cannot therefore demand from him. In the effort to objectify the need for restitution within the framework of sentence of § BGB in an economically sensible way, the basic concern in this provision must not be lost sight of, i.e. that if the tortfeasor is fully liable the victim should receive compensation for loss which is complete as possible (references omitted). Therefore, in examining whether the victim has kept the expenditure on rectifying loss within sensible limits, the loss must be considered in the context of the actual circumstances i.e. account must be taken of the special situation of the victim, especially of his individual opportunities for knowledge and influence as well as the difficulties which he may possible have (references omitted). In this respect, the position for the victim who hires a replacement vehicle with a well known car hire undertaking on the conditions offered him there appears similar to the trading in of a vehicle damaged in an accident to a respected used car dealer (reference omitted). Just as with the latter type of rectification of loss, the victim only needs, when hiring of a replacement vehicle, to go to the market which is open to him in his situation.

. The considerations on which the appeal court arrived at a reduction of the car hire costs claimed by the claimant here cannot be reconciled with this understanding of the content of the authority to compensate in § sentence BGB, even within the framework of the freer scope which the judge of fact has to measure the loss under § I of the Civil Procedure Code.

a)The appeal court leaves undecided the question of whether the K firm’s hire price list was shown to the claimant, as he asserts, before the hiring of the replacement vehicle. That is not a decisive issue. This is because this list indisputably included ten further well known hire firms, also active nationwide, who were all dearer than the K firm. The appeal court has not established that the prices given for those undertakings were possibly incorrect; instead that court itself explains in another context that the list would have correctly reproduced the accident replacement tariffs named in it. Even the reply to the appeal in law does not claim anything different. Accordingly, the claimant has, in hiring the replacement vehicle, kept to the lower margin of the prices demanded by respected hire firms with their accident replacement tariffs.

b)The appeal court’s view that the claimant had violated the requirement of economy by the very hiring of the replacement vehicle at the accident replacement tariff cannot be followed by the Senate.

aa)The appeal court’s accusation in this connection that the claimant did not obtain any comparative offers before hiring the replacement vehicle has no effect with reference to the accident replacement tariffs demanded by the vehicle hire firms, for the simple reason that the tariff of the K firm was, as has been explained, at the lower margin in the context of the accident car replacement business. If the claimant was therefore justified in hiring a vehicle according to such a tariff (which is yet to be discussed below), his possible violation of a duty to inquire has had no effect. Therefore it can remain open here whether the duty of the victim to obtain at least one or two competitive offers (which the Senate has stated to apply before the use of a hired car for a holiday journey of three weeks or longer (references omitted)) also exists in principle when—as in the present case—the replacement vehicle is expected to be needed for only one to two weeks.

bb)The decisive issue in the legal dispute is therefore whether the victim of an accident, like the claimant in this case, is allowed to hire a vehicle in accordance with the accident replacement tariff. This question, which is disputed in the case law of the courts of first instance, is in principle to be answered in the affirmative, according to the view of the Senate.

(a)According to the constant case law of the Bundesgerichtshof (and the appeal court also proceeded on the basis of this), the victim does not first need to conduct a kind of market investigation before hiring a replacement vehicle, in order to find the vehicle hire undertaking with the most favourable price (references omitted). If the tariff at which he hires a replacement vehicle is within the framework of what is usual, the costs expended are to be refunded to him by the tortfeasor; it is only when the victim can easily recognise that the undertaking chosen by him demands car hire charges which are outside what is usual that he will not be allowed to conclude a hire contract on such conditions at the cost of the tortfeasor (reference omitted).

(b)According to the claimant’s argument, only the replacement tariff is offered by car hire undertakings to road traffic accident victims. The appeal court also proceeds on the basis that the claimant, if he answered the relevant question truthfully, would likewise only have been able to obtain a vehicle after an accident from some other hire firm at the accident replacement tariff (references omitted). In view of this market practice, the car hire charges demanded by the K firm were not outside what was usual in such cases.

(c)The fact that the claimant could, as is the view of the appeal court, have found car hire undertakings on appropriate inquiry which would have granted him a special tariff which was more favourable than the accident replacement tariff does not, contrary to the view of the appeal court, cause the hire price demanded by the K firm to fall outside the scope of “necessary expense” in the sense of § sentence BGB. This is because the claimant had no obligation to the defendant to make such a search for a more favourable special tariff (references omitted). As the appeal court explains, hire firms offer a number of other tariffs besides the accident replacement tariff, which they describe as, amongst other things, leisure, flat rate, basic, weekly, monthly, weekend, economy, credit card or special tariff. It is not generally possible to proceed on the basis that an accident victim knows of such tariffs and that he knows of their differences from the accident replacement tariff which is offered to him as suitable for his circumstances (reference omitted). The appeal court has not established that the claimant might have had such knowledge. The circumstances in which he would be expected to try to obtain another tariff if he had such knowledge can therefore remain undecided.

It also emerges from the tariff descriptions mentioned above that numerous distinctions exist between the individual conditions. The complex tariff network of car hire firms cannot, contrary to the view of the appeal court, easily be understood by a victim. The appeal court reaches a different view on the ground that the K firm’s hire price list showed that a comparison was perfectly possible. But this argument is mistaken, because that list only cites the respective accident replacement tariffs of the car hire undertakings and says nothing about the peculiarities of the other tariffs. Besides this, the accident replacement tariffs do not at all appear to be always the dearer tariffs as the appeal court thinks they are. The judgment of the Bundesgerichtshof of April (reference omitted), amongst others, shows that the opposite also occurs.

(d)The claimant, sustaining an accident at midday on Friday, was allowed, according to the principles explained at the start in relation to the authority to compensate in § sentence BGB, to hire a replacement car on the general market accessible to him and within reach of T, the country town where he lived, at the time of the accident (and therefore specifically from a well known undertaking in the car hire sector which was active nationwide) in accordance with the tariff mentioned to him as appropriate for his purposes. He was also allowed in this connection to answer truthfully the question by the hire firm as to whether he had had an accident. If the tariff which was thereupon offered to him was within the scope of what was usual in such cases for comparable car hire suppliers, as was the case here with the accident replacement tariff of the K firm, the costs of the hire vehicle count as necessary restoration expenses in the sense of § sentence BGB.

(e)The question of whether up to per cent higher costs are justified in the accident replacement vehicle business in comparison with the so-called free or cash business (which the appeal court denies in spite of its reference to the higher risk of non-payment in that business) has no effect on the relationships of the parties in the law on loss calculation (reference omitted). This is because even if the hire firms, by omitting to refer to a more beneficial inclusive tariff and demanding a higher accident replacement tariff, made themselves liable to compensation to their hirers for loss, as the appeal court considers, these market practices in the hiring sector cannot work to the victim’s disadvantage in the relationship between the tortfeasor and the victim (references omitted). The tortfeasor’s liability insurer may in such a case take a transfer from the victim, if he

reimbursed him for the car hire costs expended as being necessary in his situation, of possible claims to compensation for loss against the hire firm in application of the legal concept in § BGB (references omitted).

c) In the present case, the car hire costs must therefore be reimbursed to the claimant on the basis of the agreements made by him with the K firm, as necessary expenditure. [Details are given].