Czech Republic: Liability For Damage Caused By Construction

The construction of new buildings or the reconstruction of existing buildings, especially in dense urban areas, is almost always connected with the risk of causing damage to third parties. It is therefore important for the builder (contractor or property developer) as well as subjects exposed to potential damages (especially owners and users of adjoining buildings) to know the statutory conditions of liability for damages and related rights and obligations1.

Merits of liability for damages

Sec. 420 of Act No. 40/1964 Coll., the Civil Code (the "CC") defines the merits of general liability for damages, which is one of the pillars of private law. According to this provision every person is liable for damages that they cause by breaching a legal obligation (Sec. 420 par. 1 of the CC), but if they prove that they did not cause the damage, they shall be released from liability (Sec. 420 par. 3 of the CC). Presumptions of general liability for damages pursuant to Sec. 420 CC are (i) breach of legal obligation; (ii) damage establishment; (iii) causal relationship between the breach and damage; and (iv) fault (negligence is presumed). The provision of Sec. 420 of the CC adjusting the liability for damage shall always apply, unless the CC or other legislation does not contain a special amendment. If Sec. 420 of the CC can be applied concurrently with the special amendment, the provision under which to seek recovery of damages2 is at the discretion if the injured party.

In relation to construction activities the provision on strict liability is also relevant for damage caused by operational activities, adjusted in Sec. 420a of the CC. According to this provision, every person is liable for the damage that they cause to another person through their activities (Sec. 420a par. 1 of the CC). The CC provides an exhaustive list of cases in which damage is caused through operating activities (Sec. 420a par. 2 letter a) to c) of the CC), and that if it is caused (i) by an activity of an operating nature or by a thing used in the activity; (ii) by the physical, chemical or biological effects of its operation on the surroundings; or (iii) by the authorised carrying out or securing of work by which damage to the real estate of another is caused or by which another person's use of the real estate is substantially impaired or made impossible. According to Sec. 420a of the CC, any person who causes damage shall be released from liability only if they prove that the damage was caused by an unavoidable event not originating in the operation or in the conduct of the aggrieved party (Sec. 420a par. 3 of the CC). Presumptions of liability for damage caused by operating activities pursuant to Sec. 420a of the CC are (i) the existence of a damaging event caused by operating activities; (ii) the establishment of damage; and (iii) a causal relationship between the damaging event and the damage. The liability for damage is therefore not bound to a breach of obligations or fault.

With respect to the definition of operating activities, the legislation gives a wide space to what can be included under the concept of operating activities according to the mentioned statutory provision. Operating activities pursuant to Sec. 420a of the CC means consistently performed and organised purposeful activity, even if it is carried on in a non-business way3. Construction activities can therefore be subsumed under operating activities within the meaning of Sec. 420a of the CC.

Construction activities and related activities (such as passage of heavy freight machines4) can be under certain circumstances considered as extremely dangerous operations according to Sec. 432 of the CC, which adjust the strict liability for damage caused by extremely dangerous operation. Pursuant to this provision, the operator is liable in the same way as the operator of the means of transport (Sec. 427 et seq. of the CC). The operator may not be released from liability if the damage was caused by circumstances originating in the operations. He shall be released from liability only if he proves that the damage could not have been avoided, even if he had exerted the maximum effort that may reasonably be required (Sec. 428 of the CC). Presumptions of liability for damage caused by extremely dangerous activities pursuant to Sec. 432 are (i) the existence of an event of damage caused by the nature of the extremely dangerous operation; (ii) the establishment of damage; and (iii) a causal relationship between the damaging event and the damage. The liability for damage under Sec. 432 of the CC is therefore not bound to the breach of duty or fault, as with Sec. 420a of the CC. Liability under Sec. 432 of the CC is then special toward the liability under Sec. 420a of the CC. If the damage is not a consequence of extremely dangerous operations, then the liability according to Sec. 420a and Sec. 420 of the CC is applicable.

Liable subjects – wrongdoers

Besides the builder as the owner of real property to which the construction activity is related, and the person entitled to implement the construction works according to Act No. 183/2003 Coll., the Building Act, concerning the construction activities, especially in cases of large building development, also the general contractor and its subcontractors. This can lead to a relatively complicated system of contractual relationships (based on a contract for work between the builder and the general contractor, who concludes further contracts with individual subcontractors for appropriate parts of the work) and also non-contractual relationships regarding liability for damage. The plurality of subjects participating in the construction activities puts in question which of the subjects is liable for damage and under which statutory provision.

The builder as the owner of the real property and holder of the building permit does not need to implement the construction himself and in practice in more complicated cases he does not always do so. The builders often entrust, on basis of a contract for work, the general contractor (property developer) with the implementation of the construction (the work). This certainly does not have to mean that the builder is released from his liability. The Supreme Court of the Czech Republic concluded in its judicial decision that the builder is liable for damage caused by breach of obligations imposed in the building permit according to Sec. 420 of the CC, irrespective of whether he implemented the construction himself or by means of a contractual partner (contractor). The Supreme Court further concluded that there is no statutory reason for exempting one subject from liability for damage just because there another subject is liable5. In other words, there is no reason to exempt the builder from liability according to Sec. 420 of of the CC just because the contractor is also liable for the same damage under Sec. 420a of CC. The person who orders the work within the sense of Sec. 420a of the CC, i.e. the builder, does not implement the construction himself. He is therefore not liable in relation to the injured person under Sec. 420a6 of the CC. As indicated above, however, the builder's liability according to Sec. 420 of the CC is not excluded.

With respect to the liability for damage under Sec. 420a of the CC it is not essential whether the damage was caused by the operator (general contractor) or his employees or subcontractor7. This does not exclude the liability of the person (subcontractor) who caused the damage8. As mentioned above, the Supreme Court adjudicated that it is not possible to exempt one subject from liability just because another subject may be liable for the same damage and therefore their joint and several liability is not excluded9.

As regards the liability for damage according to Sec. 432 of the CC, the Supreme Court concluded, that even the builder may be (as the operator) the person liable for damage caused by extremely dangerous operation, if this operation is connected with the construction activity, and that irrespective of the fact whether he performed the construction works himself or entrusted a contractual partner with the work10.

Damage and subjects entitled to claim damages – injured parties

In general, we can describe damage as harm to property that can be expressed in money. Construction activity can lead to many kinds of damage. Typically this includes damage to adjoining buildings (cracks, landslides, etc.) or damage to movable property located in the building. Damage may also be caused due to reduction of rent, because of the (partial) ineligibility of the leased premises for the contracted purpose, damages caused by restriction of business activity(11) or damages caused by more frequent maintenance of air-conditioning due to increased amounts of dust. As indicated in the introduction, the injured parties are typically the owners of adjoining building or its users (e.g. tenants). The injured parties are entitled to claim damages from liable subjects according to the above principles.

Footnotes

1 Outside this article stay other possibilities of legal defence against immissions caused by construction activity (e.g. dust or noise), especially if one neighbour sues another according to Sec. 127 of the CC.

2 Comp. FIALA, J., KINDL, M., et al. Občanský zákoník. Komentář. I. díl, 1. vyd. Praha : Wolters Kluwer ČR, a.s., 2009, page. 658.

3 Comp. ELIÁ`, K., et al. Občanský zákoník. Velký akademický komentář. 1. Svazek. Praha : LINDE PRAHA, a.s., 2008, page 810. `VESTKA, J., SPÁČIL, J., `KÁROVÁ, M., HULMÁK, M. a kol. Občanský zákoník I. § 1 a~ 459. Komentář, 2. vydání. Praha : C. H. Beck, 2009, page 1219-1220.

4 Comp. e.g. NS 25 Cdo 972/2000 ("Extremely dangerous operations in relation to the building adjoining the road can also include regular and repetitive passage of heavy freight vehicles causing excessive loads on

5 Comp. NS 25 Cdo 2102/2002 or NS 23 Cdo 4379/2008.

6 Comp. FIALA, J., KINDL, M., et al. Občanský zákoník. Komentář. I. díl, 1. vyd. Praha : Wolters Kluwer ČR, a.s., 2009, page. 687.

7 Comp. NS 25 Cdo 1695/98.

8 Comp. `VESTKA, J., SPÁČIL, J., `KÁROVÁ, M., HULMÁK, M. a kol. Občanský zákoník I. § 1 a~ 459. Komentář, 2. vydání. Praha : C. H. Beck, 2009, page. 1219.

9 Comp. NS 25 Cdo 3095/2005, NS 25 Cdo 92/2009 or NS 23 Cdo 4073/2010.

10 Comp. NS 25 Cdo 3095/2005 or NS 25 Cdo 92/2009.

11 Comp. e.g. NS 25 Cdo 1905/2005 ("Despite the fact that according to law the adverse consequences of closures of roads for repair and reconstruction are not compensated, it is necessary to distinguish such closure from making a building adjoining the road inaccessible. If the decision on closure or the building permit contains a duty to guarantee the access to such buildings, then the person who did not fulfil this

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