Table of Contents:
- Request of the Financial Ombudsman
- What position did the Financial Ombudsman present in the request?
- What position did the Supreme Court take in the Resolution of the panel of seven judges III CZP 65/23?
Request of the Financial Ombudsman
On December 12, 2023, the Financial Ombudsman submitted a request to the Supreme Court to issue a resolution in connection with discrepancies in case law regarding the admissibility of determining the amount of compensation based on hypothetical repair costs, in situations where repair after partial damage has become impossible due to the subsequent actions of the injured party.
What position did the Financial Ombudsman present in the request?
The Financial Ombudsman advocated for the view presented in earlier Supreme Court rulings, according to which a claim for compensation arises at the moment the damage is caused, i.e., at the time of a traffic accident and the emergence of further liability conditions on the part of the perpetrator under Article 436 of the Civil Code. According to this view, the right to claim compensation for vehicle repair costs is not affected by subsequent events, such as the sale of the damaged vehicle or its repair before receiving compensation. Any such actions taken by the injured party do not deprive them of the right to compensation corresponding to the hypothetical repair costs.
What position did the Supreme Court take in the Resolution of the panel of seven judges III CZP 65/23?
In the resolution adopted on September 11, 2024, the Supreme Court did not share the position of the Financial Ombudsman and issued a resolution consistent with the newer case law of the Supreme Court.
According to the content of Resolution III CZP 65/23, the Supreme Court indicated that if repair of the vehicle by the injured party becomes impossible, particularly in the event of its sale or repair, it is unjustified to determine the amount of compensation from motor vehicle liability insurance as equivalent to hypothetical repair costs.
The Supreme Court held that, in such situations, the so-called cost estimation method is not justified. If the injured party has already repaired the vehicle before initiating civil proceedings, the amount of damage is essentially known and is reflected in the costs incurred for the repair, along with any potential loss in the market value of the post-repair vehicle. If the vehicle is sold, the damage takes the form of the difference between the price obtained from the sale of the unrepaired vehicle and the vehicle’s value before the accident.
According to the Supreme Court, in these circumstances, the extent of the damage should always be determined using the differential method. When determining the extent of the damage, all consequences of the damaging event for the injured party’s assets must be considered, and the dynamic nature of the damage should be accounted for.
According to the principle of damage compensation, the compensation amount cannot exceed the actual damage, which – due to its dynamic nature – means it cannot surpass the extent of the damage as it existed at the time of its repair. The Supreme Court also noted that accepting a claim for compensation equivalent to the hypothetical cost of repair, in a situation where the repair cannot be carried out, would lead to an unjustified increase in compensation claims and the possibility of the injured party profiting from the damage inflicted upon them.
