Federal Court of Justice, 29/03/2017, Ref.: VIII ZR 44/16
According to Section 573 (1) BGB, the landlord can only terminate a tenancy if he has a justified interest in terminating the tenancy. Termination for the purpose of increasing the rent is excluded. When assessing the legitimate interest, the interests of the landlord in terminating the tenancy and the interests of the tenant in continuing the tenancy must first be weighed against each other.
Furthermore, Section 573 (2) of the German Civil Code contains standard examples that typically outweigh the landlord's interests. For example, a legitimate interest is to be assumed if the tenant has culpably breached his contractual obligations to a not inconsiderable extent, the landlord needs the rooms as accommodation for himself, his family members or members of his household or the landlord would be prevented from making appropriate commercial use of the property by continuing the tenancy and would suffer considerable disadvantages as a result; the possibility of achieving a higher rent by letting the property elsewhere as living space is not taken into account; the landlord may also not invoke the fact that he intends to sell the rented premises in connection with the intended creation of residential property or after the property has been transferred to the tenant. If none of the standard examples apply, a balancing of interests must take place, taking into account that both the landlord and the tenant fall under the protection of Art. 14 para. 1 sentence 1 GG.
In the judgement discussed here, the plaintiff is seeking compensation for damages due to a feigned termination for convenience.
Facts of the Case:
Landlord faked cancellation of business needs - tenant wants compensation
The plaintiff is claiming damages from the defendant (his former landlord) for an unjustified termination based on feigned operational requirements.
The plaintiff rented a four-room flat located on the third floor of an apartment building in Koblenz from the defendant's legal predecessor for a monthly rent of EUR 523.09.
In a previous lawsuit, the current defendant had filed a claim against the plaintiff for eviction from the flat. He based his action for eviction on a notice of termination issued by the previous owner on 25 February 2010 and on the fact that he needed the flat for the new caretaker.
In the legal dispute, the parties concluded an eviction settlement on 14 June 2011 at the suggestion of the court of appeal, in which the plaintiff (as the defendant at the time) undertook to vacate the flat within a period of 6 months (by 31 December 2011 at the latest) and to bear the costs of the legal dispute, including the costs of the settlement. Furthermore, he waived protection against eviction in accordance with Section 794a ZPO. It was also agreed that if the tenant moved out early with notice, only the rent would have to be paid up to this date.
On 31 October 2011, the plaintiff moved out of the flat in dispute, but another family moved into the flat instead of the new caretaker.
Compensation includes relocation costs, legal costs, additional costs and higher rent for the new flat
The plaintiff is now claiming compensation for relocation costs (EUR 750), the legal costs of the eviction proceedings (EUR 4,438.15) and the additional costs (EUR 16,691.68 for a period of four years) that he incurred due to the higher rent for the new flat (EUR 850 per month compared to EUR 523.09 previously). In addition, he had now had to travel the distances previously travelled on foot by car or public transport (EUR 3,677.60 for the four-year period).
Lower courts denied the tenant compensation
The action for payment of a total of EUR 25,833.43 plus interest and pre-trial legal fees was unsuccessful in the lower courts. In the appeal judgement of 26 February 2014, it was stated that the parties had wanted to draw a final line under the tenancy agreement with the eviction settlement, which is why the plaintiff was barred from subsequently asserting claims for damages due to feigned personal use.
In its judgement dated 10 June 2015 (VIII ZR 99/14), the Senate annulled the aforementioned appeal judgement and referred the case back to another chamber of the Court of Appeal for a new hearing and decision. This court also dismissed the plaintiff's appeal against the first-instance decision in a judgement dated 22 February 2016.
In response to the plaintiff's appeal against denial of leave to appeal, the Senate again authorised the appeal.
Judgment of the Federal Court of Justice:
The appeal is admissible and partially justified. The Court of Appeal stated in its decision that the plaintiff's appeal was unfounded as he had not proven that the asserted need for accommodation for the caretaker had only been feigned. Although the landlord must in principle implement the claimed intention to use the property after the tenant has moved out and, in the event of non-implementation, explain and prove why no implementation had taken place, the defendant had complied with this requirement. The defendant had explained that the caretaker had informed him at the beginning of November that he would not be moving into the third floor due to knee problems and a hospitalisation.
Tenant did not provide sufficient evidence of the feigned operating requirement and, in some cases, the damage incurred
Since the defendant had met its burden of proof, it was now up to the plaintiff to prove that the defendant had never intended the caretaker to move in. However, he had not provided this evidence.
Furthermore, the plaintiff had not substantiated the damage he had suffered. The plaintiff's arguments disputed by the defendant are limited to inadequate explanations regarding the amount of the relocation costs claimed in detail. Although these were itemised in terms of amount, there was no explanation of their necessity and no submission of invoices to prove that they had been incurred. The questioning of the plaintiff's wife offered was to be regarded as inadmissible evidence. The additional travelling costs for the duration of four years (EUR 919.40 per year; EUR 3,677.60 in total) were also completely unsubstantiated. The reimbursement of the costs of the preliminary proceedings was - apart from the fact that the defendant had undisputedly submitted that these costs had been borne by the plaintiff's legal expenses insurance - excluded as a result of the eviction settlement reached. The differential rental costs claimed as damages were neither proven by the submission of the rental agreements for the previous and the new flat, nor was the comparability of the two flats in terms of living space, type, location and furnishings demonstrated. The hearing offered of the plaintiff's wife as a witness was also irrelevant in this respect as mere evidence of enquiry.
The aforementioned legal judgement of the Court of Appeal would only stand up to review by the Court of Appeal insofar as it rejected the claimed travel costs of EUR 3,677.60 as being too unsubstantiated. The other claims asserted by the plaintiff in the appeal were justified in accordance with Section 280 (1) BGB due to (culpable) unjustified termination of the tenancy.
Contrary to the opinion of the Court of Appeal, the claim is neither inconclusive in this respect due to a lack of substantiation of the other damage items nor can a breach of duty by the defendant giving rise to liability be denied on the grounds given by the Court of Appeal. This is because the Court of Appeal's assessment that the defendant's asserted need for the caretaker to move in actually existed at the time of the termination and only ceased to exist in November 2011, i.e. after the plaintiff had moved out, is based on an incomplete and therefore legally incorrect assessment of the entire substance of the proceedings.
However, the landlord had also not sufficiently met his burden of proof
Furthermore, the Court of Appeal had wrongly assumed that the defendant had met its (secondary) burden of proof regarding the subsequent cessation of the need and that the plaintiff therefore had to prove that this had never been intended.
The landlord is liable in the event of a culpable (materially) unjustified termination, in particular in the event of the pretence of a termination that does not actually exist.
(own) requirements, is liable for damages in accordance with Section 280 (1) BGB if the tenant moves out as a result and suffers financial loss as a result.
The landlord has a secondary burden of proof for the subsequent cancellation if he does not implement the asserted "operational requirement" in accordance with Section 573 (1) BGB. Failure to implement the operational requirement would give rise to the suspicion that this was only a pretence. It was therefore reasonable for the landlord to provide a substantiated and coherent explanation as to why the need put forward in the notice of termination should have subsequently ceased to exist. Strict requirements are to be placed on this requirement, which the Court of Appeal did not fulfil in its reasoning. The defendant's submission regarding the subsequent discontinuation was in no way plausible or consistent. Rather, it was questionable why the defendant had not already concluded a tenancy agreement with the caretaker with an expected move-in date after the conclusion of the eviction settlement. In particular, since the caretaker should also have cancelled his previous flat in compliance with the notice period.
The defendant's argument that the caretaker only informed him in November that he did not want the flat due to knee problems is therefore not plausible.
Termination on demand is to be regarded as an inadmissible early termination
Therefore, in the opinion of the Federal Court of Justice, the defendant's presentation gives rise to the presumption that there was no or at least no concrete and serious, but at best a very vague intention to use the property at the time of the termination and that it was therefore (at best) an (inadmissible) provisional termination, which also constitutes a breach of duty. The defendant had not sufficiently met its burden of proof so that, contrary to the opinion of the Court of Appeal, the plaintiff had no burden of proof with regard to the non-existent need from the outset.
The conviction formed by the Court of Appeal that the need asserted by the defendant in the notice of termination actually existed was also influenced by errors of law and was based in particular on an incomplete assessment of the facts of the case and the result of the taking of evidence (Section 286 (1) ZPO).
The factual assessment of evidence can only be reviewed by the court of appeal to a limited extent, namely as to whether the court of fact, according to the statements in the judgement, has dealt with the subject matter of the proceedings and the results of the evidence comprehensively and without contradiction, whether the assessment is complete and legally possible and does not violate the laws of reasoning and nature (established case law; see BGH, judgement of 16 April 2013 - VI ZR 44/12). However, such errors were made by the court of appeal in the present case.
The Court of Appeal's assessment of the evidence was insufficient
The Court of Appeal had merely relied on the caretaker's testimony, although the plaintiff had already complained in the preliminary proceedings that the caretaker had made a false affidavit stating that he had been present when the plaintiff returned the flat. Furthermore, the Court of Appeal had not dealt in detail with the question of how the alleged change of mind had come about. The plaintiff's complaint that there were vacant flats on the neighbouring property, which also belonged to the defendant, should also have been addressed. In particular, it was not taken into account that the defendant and the caretaker had not yet concluded a tenancy agreement, nor that the caretaker's knee complaints were wear-related restrictions of the musculoskeletal system. The latter do not show why the caretaker only came to the decision not to move to the third floor after the plaintiff had moved out. Especially since the complaints had already existed since April 2011. It is also unclear why the defendant had not yet cancelled his old flat in due time with regard to the new flat.
Based on this, the information suggests that the defendant's intention to leave the flat to the caretaker, which formed the basis for the termination, and the caretaker's corresponding intention to rent the flat in question, was at best a vague, undefined intention. In this respect, this constituted a (culpably) unjustified (anticipatory) termination, which made the defendant liable for damages. In particular also with regard to the submission that there were vacant flats in the neighbouring building and that the defendant had asserted in the action for eviction that the caretaker should be responsible for this and other properties.
Furthermore, the eviction settlement of 14 June 2011 does not include a waiver of claims for damages due to feigned need (VIII ZR 99/14).
Cancellation due to operational needs requires high standards
Insofar as the Senate pointed out in the aforementioned Senate judgement of 15 June 2014 that the eviction settlement should have removed the question from the dispute as to whether the "operational need" stated by the defendant (namely the desire to leave the flat to an employed caretaker who was to look after this and other buildings of the defendant) met the high requirements to be met by a termination pursuant to Section 573 (1) BGB due to "operational need", this was a different legal aspect. In this respect, the question to be distinguished from the pretence of a need is addressed that, according to the case law of the Senate, a termination due to "operational needs" requires that operational reasons make the use of the terminated flat necessary. Accordingly, the flat must be of essential importance for the operational processes according to the tasks of the person requiring it (judgement of 23 May 2007 - VIII ZR 122/06). This would be the case, for example, with an employee who is assigned the tasks of a "concierge" or whose constant presence is required for other reasons, but not - as in the present case - with a caretaker who is supposed to look after several of the landlord's buildings and already lives near one of the properties anyway.
The plaintiff could therefore not base the asserted claims for damages on the fact that the actually asserted need did not justify the cancellation for legal reasons in accordance with Section 573 (1) BGB, but on the fact that the need situation presented by the defendant did not actually exist.
With regard to the individual damage items, the Court of Appeal stated that, contrary to the opinion of the Court of Appeal, the plaintiff had sufficiently demonstrated the expenses incurred with regard to the removal costs. The plaintiff had listed the costs of finding accommodation (€ 50), for the commissioned company (€ 450), payments to voluntary helpers (€ 100), travelling expenses (€ 50) and Telekom's removal service (€ 60). The Court of Appeal exceeded the substantiation requirements by far by demanding that the plaintiff already submit invoice documents at this level and make further submissions on the necessity of the individual cost items. Thus, the amount of only € 750, which the plaintiff has set as the total amount of the even more detailed itemised removal costs, could also have been taken as a basis without further ado by way of an estimate in accordance with Section 287 ZPO. According to general life experience, the costs for moving the furniture of a four-room flat already exceeded the amount claimed by the plaintiff. In case of doubt, the court of appeal should have taken the witness evidence offered.
The submission was also sufficiently substantiated with regard to the rent difference; it was not necessary to submit the rental agreements. According to the established case law of the Federal Court of Justice, a factual submission is already conclusive and relevant if the party submits facts which, in conjunction with a legal proposition, are suitable and necessary to make the asserted right appear to have arisen in the person of the party. However, it is not necessary to provide further details if these are not relevant to the legal consequences. The court must only be put in a position to decide, on the basis of the party's factual submissions, whether the legal requirements for the existence of the asserted claim are met. The plaintiff had met these requirements. In particular, he had offered witness evidence. A different assessment could also not be made in view of the fact that the plaintiff had not provided any information on the furnishings, location, size and layout of the new flat. The difference in rent could only be refused if an actual higher residential value was established for the new flat.
Among other things, the Court of Appeal had not taken into account that the flat in dispute was a 100 square metre flat with four rooms and two balconies, which only cost EUR 523.09 and was therefore far below the local comparative rent despite its good location. Furthermore, an actual valuation could only be carried out with the help of an expert, so that the Court of Appeal placed far too high substantiation requirements on the plaintiff.
With regard to the legal costs of the previous eviction proceedings, the Court of Appeal had assumed that a claim for damages was excluded in this respect by the eviction settlement concluded. In doing so, it again failed to recognise that the settlement offered no indication that the parties intended to simultaneously settle claims for damages due to feigned need. However, the legal costs of the eviction proceedings were part of the damages incurred in this respect. This did not change even if the submission that the legal expenses insurance had borne the costs was correct, as this would only lead to the transfer of the loss in accordance with § 86 VVG.
The contested appeal judgement could not be upheld insofar as it rejected the plaintiff's claims for damages, with the exception of travel expenses. The judgement should therefore be set aside in this respect (Section 562 (1) ZPO). In all other respects, the proceedings should be referred back to the court of appeal (Section 563 (1) sentence 1 ZPO).
Source: Federal Court of Justice
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