Merilampi Attorneys Ltd represented Peab Ltd in the first group complaint tried before the Finnish Consumer Disputes Board. Peab Ltd is one of the leading construction and civil engineering companies in the Nordic Countries, providing employment for around 15.000 employees. The group complaint brought against Peab Ltd concerned the estimates of maintenance costs Pead Ltd provided in connection with sales of new housing. Merilampi Attorneys Ltd successfully defended Peab Ltd, and, on April 17, 2012, the Consumer Disputes Board unanimously dismissed all complaints brought by the Finnish Consumer Ombudsman.
Group complaints were introduced in Finland in 2007. Class actions, which are initiated in court, were also introduced that year. However, no class actions have been filed yet. The group complaint and the class action are both intended for use in cases where several consumers are in a dispute with the same company regarding the same or similar matter. Instead of filing several individual complaints, the Consumer Ombudsman files one application on behalf of the whole group. Unlike class actions, which are tried in court, group complaints are handled by the Finnish Consumer Disputes Board. The Board issues recommendations in disputes involving consumer and housing transactions. The Board's decisions are not binding, but the parties tend to follow the rulings of the Board. The complaint is intended to strengthen the level of consumer protection because it allows the disputes to be solved in a flexible manner and free of any cost risk.
The first group complaint filed in Finland was initiated against Peab Ltd in 2011. The group complaint concerned the information Peab Ltd had provided in the marketing material for new buildings under construction in Raisio, Finland. The complaint alleged that Peab Ltd had included an estimate of townhouse maintenance costs in the financial plan that was clearly too low, in violation of the Housing Transactions Act. Thus, the residents had to pay to the housing company in charge of building maintenance a higher fee than expected based on the information given in the marketing materials.
Peab Ltd rejected all allegations made by the Consumer Ombudsman. In its reply, the company admitted, however, that the actual and realized maintenance costs for year 2008 were somewhat higher than the estimated costs included in the financial plan and used in the marketing. The financial plan was made in June 2006 by using all available information at the time it was prepared.
The company rejected that the calculations would have been made negligently. Due to the small size of the housing company, even a minor and unexpected increase in the maintenance cost prices immediately affects the overall maintenance fee. Moreover, Peab Ltd had prepared a detailed report concerning the maintenance costs and was able to show that the price for water had grown 26,4 percent between 2006 and 2008. During that time the heating costs had also increased significantly. Peab Ltd could not possibly have foreseen such a dramatic increase in water prices or heating costs. As stated by the defendant, it was also clear that there were some exceptional cost items to be seen in the housing company's financial statements suggesting that the housing company may have had been negligent in taking care of some of its duties. Thus, the increase in the maintenance fee was due to unexpected expenses and the housing company's mismanagement.
The Board accepted the reasoning and ruled that the financial plan was only of tentative nature giving an estimate of the costs in the future and could not be considered a fully binding document. The problem arises when the estimate provided is clearly too low and has been prepared negligently, especially if the difference between the estimated and the actual costs continues in the following years. In the present case, however, the maintenance costs had not been following the overall increase in costs. Instead, maintenance costs had decreased a little in 2010.
Given the facts above, the Consumer Disputes Board found that there was no defect pursuant to the Housing Transaction Act in any of the transactions covered by the complaint. In its decision, the Consumer Disputes Board confirmed that the financial plan and the estimates provided in it had been properly and carefully prepared by Peab Ltd. The difference between the estimated maintenance costs and the actual maintenance costs was mostly the result of unforeseeable cost factors that Peab Ltd could not have taken into account. All the complaints were dismissed accordingly, and the Board did not recommend Peab Ltd pay any rebate.
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