SFT precedent concerning the recoverability of pre-trial costs

One of the topics covered by the Swiss Federal Tribunal (SFT) judgment 4A_692/2015 dated 1 March 2017, which the SFT published in its official journal of precedents (reference: 143 III 206), is the question to which extent parties can claim damages for pre-trial costs. In this regard, the SFT decided, in the sense of a very brief summary, what follows:

The SFT confirmed that pre-trial costs (ausserprozessuale Parteikosten) qualify, as a matter of principle and subject to certain conditions, as a financial damage for which the parties may claim damages.

The first condition that has to be met that damages can be claimed for pre-trial costs is that the claimant can show that the relevant costs were incurred in connection with the claimant’s efforts to assert his or her rights, and that such costs were necessary and reasonable (see consideration 6.1.2 of the precedent in question). Concerning this condition, the SFT explained that the claimant has to demonstrate in his or her submissions that the relevant costs were indeed necessary and reasonable (Id.).

The second condition that has to be met in the present context is that the relevant costs are not already covered by the compensation for legal costs (Parteientschädigung), which, in Switzerland, is calculated on the basis of cantonal tariffs (Id.).

For illustration purposes, this is a very brief summary of the relevant situation concerning the compensation for legal costs (Parteientschädigung) before the courts in the canton of Zurich: If a party loses the proceedings before a court in Zurich, the other party has a claim for a compensation of his or her legal costs. Such compensation is, as mentioned, calculated pursuant to a cantonal tariff. The main determining factor concerning such compensation is the value or amount in dispute. The higher the amount in dispute, the higher is the compensation at issue.

In a given matter, it can be difficult to distinguish pre-trial costs that are already covered by the above-mentioned compensation for legal costs (vorprozessualer Aufwand) from those pre-trial costs that are not already covered by such compensation and therefore can, subject to the other conditions mentioned above, be claimed as financial damage (ausserprozessualer Aufwand).

In the dispute that led to the new precedent at issue the claimants had claimed, among other things, compensation for pre-trial costs charged by a construction expert that had been retained by the claimants to examine the relevant buildings. In relation to such costs the lower instance did, in essence, consider that the claimants, who are laymen in relation to construction works, needed the assistance of an expert to determine whether or not the relevant buildings were defective (see consideration 6.1.3 of the precedent discussed herein). This assessment has been confirmed by the SFT.

The claimants had also claimed damages for the pre-trial costs deriving from the retention of a lawyer. In this regard, the SFT did not agree with the lower court’s conclusions.

First, the SFT ruled that the lawyer’s out-of-court settlement negotiations with the opposing parties fall under the compensation for legal costs (Parteientschädigung) and can, consequently, not be claimed as separately recoverable pre-trial costs (see consideration 6.2.2 of the precedent at issue).

Second, the SFT pointed out that the lawyer’s relevant invoice(s) contained many unspecific items such as legal research, file study and communication with the clients. The SFT agreed with the defendants that such efforts are to be carried out in view of all court proceedings, wherefore the costs related to such efforts do, subject to special situations that have to be demonstrated by the claimant, normally not qualify as a financial damage for which damages can be claimed. In other words, the SFT concluded that such efforts (legal research, etc.) are in principle (as the efforts related to out-of-court settlement negotiations) already covered by the compensation for legal costs (Id.).

This article has first been published on LinkedIn on 17 March 2017.

PHH, Zurich, 4 January 2018 (www.haberbeck.ch)

The information contained in this post is for general informational purposes only and is not intended to constitute legal advice. Readers of this post should not take any actions or decisions without seeking specific legal advice.

Rechtsgebiete: Allgemeines Vertragsrecht, Haftpflichtrecht