Bundesgerichtshof (Third Civil Senate) 30 September 1963, BGHZ 40, 345, with case note.

This case is first published in the German Law Archive courtesy of:

Translated by Mr. Tony Weir, Trinity College, Cambridge

The plaintiff claims damages from the defendant /state on the ground that his car was damaged in an accident negligently caused by one of its traffic wardens in breach of his duty as such. The Landgericht granted the plaintiff's claim in full, and the defendant's appeal was dismissed. Only one issue remains in this further appeal, namely the amount of DM 37.20 plus interest for the plaintiff's loss of use of the car for the three days it took to repair it. It is agreed that the plaintiff, a building contractor's employee, would have used his car for private or business purposes had it not been for the accident, but that he hired no substitute vehicle and suffered no loss of wages or other income by reason of its absence. The parties have further stipulated that the sum in issue is claimed simply as damages for the loss of the possibility of using the car, and not for a proportion of taxes, insurance, garaging or other running costs.

The plaintiff argues that the loss of use for three days constitutes an economic loss compensable in money. The state does not contest the quantum of the claim, but denies liability altogether on the ground that this loss was not an economic one.
The defendant's appeal was unsuccessful.

Reasons

I. The state's liability for the consequences of the traffic accident arises under § 839 BGB in conjunction with art. 34 of the Basic Law.

II.
 
III. The objections raised by the appellant are without substance. The plaintiff may claim monetary compensation for the loss of the facility of using his car even though he did not obtain a substitute for the period during which his own vehicle was unusable owing to the official's breach of duty.

1. Where, as here, compensation is claimed for damage to a motor vehicle, the nature and extent of the liability depend on § 249 ff. BGB, where 'damage' is basically the difference between the economic position of the victim after the damaging event and the economic position he would have enjoyed (leaving any claim for damages out of account) had the event not occurred (BGHZ 27, 181, 183-4 with further references).

Damages are awarded to meet this difference. The two alternatives offered by § 249 BGB (restitution in kind and payment of the sum necessary to reinstate the previous position) are both designed to place the victim who has suffered economic loss back in the same economic position he would have been in had the event calling for compensation not occurred. The aim is not to reproduce the pre-existing situation exactly as it was, but to produce the economic situation which the victim would otherwise have enjoyed. The basic idea of the law of damages is that the award should make the victim neither worse nor better off than before, and this is done by comparing the economic situations before and after the damaging event.
The idea of damage is thus not a purely legal concept, but rather an economic concept embedded in the law. The person liable in damages must restore the victim to the economic position which would have obtained but for the occurrence of the event generating his liability: he must place the victim in the same economic position he would have had but for the accident (BGHZ 30, 29; 32, 280-83; 35, 396, 398).

2. Once the idea of economic harm and the duty of compensation under § 249 ff. BGB are understood in this sense, the considerations which follow show that temporary inability to use a motor vehicle does indeed constitute economic harm even if no substitute is procured during the period when the car is unusable.

When we compare the economic situations before and after the damaging event, here the damage to the motor car, we see the following. Experience shows that temporary unavailability can affect the price of a car: one generally pays less for a car if delivery is to be deferred for some reason, such as having to wait for parts, than for a car which is ready to go. Again, when a car is not available for use, it cannot be let out on hire, as is generally possible even for a private person. Someone whose car has been damaged must normally pay to obtain a substitute or make use of trams, trains or other methods of transport. In such cases it is agreed that the loss is a material one because the difference between the economic position of the victim before and after the harmful event can be measured in money terms: one can render in figures the shortfall in economic value which is to be made good (BGHZ 11, 16, 26; 27, 181; 30, 29).

Economic analysis must also take account of the fact that the reason one incurs the significant costs of procurement, garaging, protection, insurance, motor taxes and so on is precisely in order to have a car constantly available for immediate use, especially to drive. The person who invests in a car today, whether he is in business as a commercial traveller or otherwise, or is an official, manager or workman, does so at least in part for economic reasons: he wants to utilise his time more rationally and in particular to make better, more effective, more productive and less wasteful use of his energies, and a car helps him to get to and from work more quickly and engage in leisure pursuits without being dependent on public transport. It is generally regarded as an economic advantage to have a car immediately available, standing in front of the house or in the garage, and this is so however often or rarely use is actually made of it.

For these reasons the economist sees the owner as suffering a detriment when an accident renders his car unusable for a time. From the economic point of view this is so not just in cases in which the car can only be resold at a lower price by reason of its temporary unavailability or cannot be let out on hire or money has to be spent on procuring a substitute or using other means of transport: the harm consists in the mere fact of its unavailability for use, and temporary loss of use is per se an economic harm which generates a claim for damages.

The principle in the "cruise" case decided by this Senate on 7 May 1956 (NJW 1956, 1234) applies here a fortiori. The convenience of having a car to use generally has to be "bought" by appropriate expenditure. This automatically "commercialises" it, so that the deprivation of that convenience constitutes the loss of the economic equivalent, which that expenditure was designed to procure.

On this view of the concept of damage the victim who does not spend money on either a substitute or other means of transportation must have a claim for damages no less than the person who by reason of the temporary unavailability of the car must accept a lower price for it or is unable to let it out on hire or has to spend money on alternative means of transport. This is in accord with the decision of this Senate of 11 July 1963 (NJW  1963, 2020) to the effect that the owner of a villa whose value was diminished by serious nuisances which could not be enjoined could claim a sum by way of compensation notwithstanding that he continued to live in the villa and neither sold it nor let it at a lower figure.
 
Of course the victim will often resent the lack of the car or feel angry or upset that it is no longer at his disposal while it is being repaired, but while such harmful feelings may well seem to be immaterial, they do not exclude the concurrent existence of the material loss consisting of its unavailability for use.

It is no objection to compensation that at the time of judgment this economic loss is over and done with. The harm is not neutralised by the fact that once the repairs were effected the car became fully usable again right up to the time of the court decision, for the loss of use was suffered in the past when the car was being repaired, and the economic loss suffered during that period is for the tortfeasor to make good by the payment of damages. There is nothing unusual in this. Where a vehicle is damaged and the victim buys another car, the courts have held that his claim for the diminution of the value of the old one is not to be reduced in favour of the tortfeasor by the consideration that he decided to keep it (BGHZ 35, 396). Again, an injured victim has been allowed the cost of tonics prescribed by a doctor which he could not afford to pay for himself (NJW 1958, 627). The claim for compensation for the harm consisting of an increased need is a claim which arises directly from the harmful act and is not a claim for reimbursement whose existence and extent depend on the amount of money paid out to meet those greater needs (RGZ 148, 68, 70; 151, 298, 300, 303f.).

It follows from all this that the loss here is an economic one.

3. Although § 249 sent. 1 BGB starts out from the principle of restoration in kind, the plaintiff here is entitled to claim damages right away. The claim before us is not to have the damage to the car itself made good, but for compensation for the distinct harm consisting of the loss of use of the car while that damage was being made good. Such a claim may arise even when there is no physical damage at all, as where an official in breach of his duty temporarily withholds the necessary documents. We need not decide whether the present claim for damages can be based on § 249 sent. 2 BGB, whereunder the creditor may as an alternative to reinstatement claim the money needed to procure a substitute for the damaged thing, or whether this provision is to be narrowly construed as referring only to the sum necessary to cure the immediate physical harm. The claim for money damages can be inferred from § 250 BGB. It is true that under this provision it is a precondition of a monetary claim to cure the harm that the victim have given formal notice to the tortfeasor that unless within a specified period restoration is effected (here by providing a substitute vehicle), it will be refused. But in accordance with the general principle applied in cases of delay, no such notice need be given if it would be fruitless, as where the tortfeasor has made it clear that in no case can he or will he make compensation. This is normally the case in motor accidents, where it is obvious that the substitute is wanted right away and the other party needs time to investigate the legal and factual situation before he can properly respond. The driver covered by a liability policy is forbidden by its very terms to give such an assurance himself and the insurer can only give it after the time needed for further inquiries. In practice it is virtually unknown for a substitute vehicle to be made available during the period when a damaged car is being repaired; it is normally left to the victim to decide how to deal with the loss of use of the car during the repairs, and the requisite sums of money are forthcoming only thereafter. It would fly in the face of the known facts to require notice to be given, for any such notice would be a waste of time and an empty formality. The victim should be treated as if he had sought and been refused a substitute vehicle. This is especially so when the person causing the harm has made a blanket denial of liability, as the defendant has done even in this appeal. Since the defendant would certainly have rejected any demand that it provide a substitute car for the period of repairs, it would have been pointless for the plaintiff to make such a demand.

Accordingly the victim who has lost the use of his vehicle during the period of repairs is entitled to claim damages from the party responsible even if he has not hired a substitute or used other means of transport, and even if he did not put the defendant on notice to provide one.

Another possible reason for denying the need to give notice under § 251 BGB is that it is impossible to restore the original situation since the unusable car cannot be rendered usable ex post facto. But this need not be decided now.

4. There will certainly be cases in which the temporary loss of possession or use of a vehicle is so imperceptible to the victim that the economist would see no harm at all. This might be the case where the owner of the damaged car was away on holiday and would not have used the vehicle or even have allowed anyone else to use it. The same may be true of a person with no driving licence who inherits a vehicle and takes it off the road with the intention of selling it right away or of a person prevented by an administrative error from using the car even if undamaged. This is not one of those cases.

While it is true that liability can be reduced or extinguished under § 254 par. 2 BGB if the victim fails to avoid or lessen the harm, we need not now ask precisely what the victim must do in this regard. A person who could claim the cost if he had hired a car cannot possibly be said to be failing to mitigate the damage just by claiming damages without having hired one. That applies here, for it is uncontested that in the three days it took to repair the car the plaintiff would have used it for business or private purposes and so would have a claim for compensation for the cost of a substitute, had he hired one. We reject the appellant's argument that in the light of common experience the very fact of failure to hire a substitute shows that the plaintiff could without difficulty or disadvantage so organise his activities as to overcome the lack of a usable car; experience shows no such thing. The defendant has not suggested or proved any way in which the plaintiff could reasonably have contributed to diminishing the damage.

5. There should be no difficulty in determining the amount of harm resulting from general expenses, such as the running costs of the car (insurance, taxes, garaging, interest on and amortisation of the capital cost), but the matter need not be investigated now since the parties are agreed on the sums payable and they form no part of the sum under appeal.

The only surviving claim is for the harm resulting from the loss of use of the car over and above the waste of those running costs. A starting point is suggested by the cost of hiring a comparable vehicle. It is true that the loss of a victim who does not hire a car may generally be less than such cost, given that it includes an element of profit for the hire firm, but we need not so hold today, nor lay down in detail the principles for evaluating the harm when no car is hired and other means of transport are not used, since the parties are not in dispute over the amount: it is accepted by the defendant, no doubt in the interests of simplicity in view of the low amount in issue, that quite apart from its liability for a proportion of the so-called general costs, the loss to the plaintiff through not having his car to use for three days was at least the DM 37.50 which he claims.

©1998 University of Oxford. Since 2002: © Translation The University of Oxford and Professor Markesinis 1998. HTML edition © 1998 Gerhard Dannemann.