Germany, Federal Court of Justice; Local Court Schorndorf, 14 January 2009

Identification of the case

• Right to an effective remedy and to a fair trial (art. 47 CFREU)

• Paragraph 433, 434, 437, 439 Bürgerliches Gesetzbuch

• Article 3 Directive 1999/44/EC

Summary of the case

Case C-65/09

Mr W. and W. concluded a contract of sale in respect of polished tiles at a price of EUR 1 382,27. After having had about two thirds of the tiles laid in his house, Mr W. noticed that there was shading on the tiles which was visible to the naked eye. It was determined the only remedy available was complete replacement of the tiles, since repair was not possible. The expert estimated the cost of this at EUR 5 830.57.

In the absence of a response to his notice addressed to W., Mr W. brought an action before the Landgericht Kassel (Regional Court, Kassel) against W. for delivery of tiles free of defect and payment of EUR 5 830,57. That court ordered W. to pay Mr W. EUR 273.10, as a reduction of the sales price, and dismissed the action as to the remainder. On appeal against the decision of the Landgericht Kassel by Mr W., the Oberlandesgericht Frankfurt (Higher Regional Court, Frankfurt) ordered W. to deliver a new set of tiles free from defects and to pay Mr W. EUR 2 122,37 for removing and disposing of the defective tiles, and dismissed the action as to the remainder.

W. appealed on a point of law against the judgment of the Oberlandesgericht Frankfurt to the Bundesgerichtshof (Federal Court of Justice), which states that its judgment will depend on whether the appellate court was right to find that Mr W. could seek reimbursement of the cost of removing the defective tiles. Since Mr W. cannot claim such reimbursement under German law, the answer to that question depends on the interpretation of Article 3(2) and the third subparagraph of Article 3(3) of the Directive, in accordance with which Paragraph 439 of the BGB should, if appropriate, be interpreted. In those circumstances, the Bundesgerichtshof decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling.

Case C-87/09

Ms P. and Medianess Electronics concluded a sales contract over the internet for a new dishwasher for the price of EUR 367, plus payment-on-delivery costs of EUR 9.52. The parties agreed on delivery to the door of Ms P.’s house. The delivery of the dishwasher and the payment of the price took place as agreed. After Ms P. had the dishwasher installed in her house, a defect, which was not attributable to the installation of the machine and could not be repaired, became apparent.

The parties then agreed on the replacement of the dishwasher. In this context, Ms P. demanded that Medianess Electronics not only deliver a new dishwasher, but also that it remove the defective machine and install the replacement machine or that it pay the costs of removal and new installation, which Medianess Electronics refused. Since Medianess Electronics failed to respond to the notice which she had addressed to it, Ms P. rescinded the contract of sale. Ms P. thereupon brought proceedings against Medianess Electronics before the Amtsgericht Schorndorf (Local Court, Schorndorf) seeking reimbursement of the purchase price against return of the defective dishwasher.

According to the referring court, the resolution of the present case depends upon whether, under Article 3 of the Directive, Ms P. was entitled to demand that the seller remove the defective machine and install the new machine or bear the costs of those operations. In those circumstances the Amtsgericht Schorndorf decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling.

• Civil judicial enforcement

Ensure the obligation of the seller to bear the costs of removing the defective goods and installing the replacement ones, as to ensure that the consumer is granted “replacement free of charge”. Ensure the possibility for the consumer to contribute to the costs for an appropriate amount, in case of disproportionately high costs of replacement

Case C-65/09

1. Are the provisions of the first and second subparagraphs of Article 3(3) of [the Directive] to be interpreted as precluding a national statutory provision under which, in the event of a lack of conformity of the consumer goods delivered, the seller may refuse the type of remedy required by the consumer when the remedy would result in the seller incurring costs which, compared with the value the consumer goods would have if there were no lack of conformity, and with the significance of the lack of conformity, would be unreasonable (absolutely disproportionate)?

2. If the answer to the first question is in the affirmative: are the provisions of Article 3(2) and the third subparagraph of Article 3(3) of [the Directive] to be interpreted as meaning that, where the goods are brought into conformity by replacement, the seller must bear the cost of removing the consumer goods not in conformity from a thing into which, in a manner consistent with their nature and purpose, the consumer has incorporated them?’

Case C-87/09

1. Are the provisions of Article 3(2) and the third subparagraph of Article 3(3) of [the Directive] to be interpreted as precluding a national statutory provision under which the seller, in the event that he has brought consumer goods into conformity with the contract by way of replacement, does not have to bear the cost of installing the subsequently delivered consumer goods into a thing into which the consumer has, in a manner consistent with their nature and purpose, incorporated the consumer goods not in conformity, if installation was not originally a contractual requirement?

2. Are the provisions of Article 3(2) and the third subparagraph of Article 3(3) of [the Directive] to be interpreted as meaning that the seller, in the event that he has brought consumer goods into conformity with the contract by way of replacement, must bear the costs of removing the consumer goods not in conformity from a thing into which the consumer has, in a manner consistent with their nature and purpose, incorporated them?’

The obligation on the seller to bear the cost of removing the goods not in conformity and installing replacement goods:

With regard to the second question in Case C-65/09 and the first and second question in Case C-87/09, the Court firstly recalled that, under Article 3 of the Directive, the seller is liable for any lack of conformity in the goods at the time when they are delivered; the consumer has the right to require that the goods be brought into conformity; and the seller must provide repair or replacement of the goods free of charge, unless impossible or disproportionate. Specifically, the “free of charge” element is particularly essential to the effectiveness of the protection afforded to the consumer.

The Court explained how Article 3 of the Directive must be interpreted as meaning that the seller is in fact obliged to bear the cost of removing the goods not in conformity and installing the replacement goods, otherwise the “free of charge” requirement would not be fulfilled, thus undermining the high level of consumer protection intended by the Directive. T

he duty for the seller to pay is also justified by the fact that the seller, by not delivering the goods free of defects, has not fulfilled completely its contractual obligations. That obligation, moreover, exists regardless of whether the seller was obliged to install the consumer goods originally purchased under the contract of sale.

The Court also noted that the seller’s financial interests are still protected, particularly by the “proportionality” requirement imposed by Article 3(3) of the Directive, for which the seller may refuse to replace the goods where that remedy would be disproportionate in that it would impose unreasonable costs on him. This brings the Court to the second point at issue:

The possibility for the seller to refuse to bear the cost of removing defective goods and installing replacement goods where the cost is disproportionate: 

With regard to the first question in Case C-65/09, the Court cited Article 3(3) of the Directive, according to which “a remedy shall be deemed to be disproportionate if it imposes costs on the seller which, in comparison with the alternative remedy, are unreasonable, taking into account the value that the goods would have if there were no lack of conformity, the significance of the lack of conformity, and whether the alternative remedy could be effected without significant inconvenience to the consumer.”

The purpose of Article 3 is generally to strike a fair balance between the interests of the consumer and the seller, while ensuring a high level of protection of the consumer. Consequently, while it must be interpreted as precluding national legislation from granting the seller the right to refuse to replace goods not in conformity as the only remedy possible, it does not preclude the possibility for the seller’s obligation in question to be reduced to a proportionate amount. It is for the national court to assess whether the conditions subsist.

C-65/09:

In light of the CJEU’s decision and the circumstances of the case the referring court established that the seller should be liable to pay only a percentage of the replacement costs, for an amount that the court deemed appropriate. The costs were thus split between the seller and the consumer according to the principle of proportionality.

Role of the Charter and role of the general principles on enforcement

• Effectiveness
• Proportionality

The principle of effectiveness in connected to the fact that Directive 1999/44/EC, and in particular Article 3 have to be interpreted in a way as to guarantee complete and effective protection of the rights of the consumer. Particularly the correct application of the requirement that the repair or replacement of the defective good need to be available to the consumer “free of charge” is essential to the effectiveness of the system of liability.

The principle of proportionality was take into account when determining the extent of the obligation of the seller to pay for the costs related to the replacement of the defective goods. It was established that, were the seller to be obligated to pay a disproportionate amount, taking into account the nature of the defect and the value of the goods, the replacement cost could be proportionality split between the seller and the consumer.

Elements of judicial dialogue

• Direct dialogue between CJEU/ECtHR and National court (out of preliminary reference procedure)

• C-404/06, Quelle AG v Bundesverband der Verbraucherzentralen und Verbraucherverbände
• C-14/83, Sabine von Colson and Elisabeth Kamann v Land Nordrhein-Westfalen.
• Joined cases C-397/01 to C-403/01

Preliminary reference

Conform interpretation with EU law as interpreted by the CJEU

Solve a possible incompatibility between national law and European Union law

Solve a possible incompatibility between national law and European Union law

Additional notes on the decision

Netherlands :

Rechtbank Overijssel, 22 January 2014, ECLI:NL:RBOVE:2014:500. The decision assessed whether non-conformity of goods could be recognized and the consequences in terms of allocation of replacement cost regarding defective swimming pools. The District Court affirmed that the swimming pools were non-conforming as per the contract, taking into account the timely notifications of the consumers about the non-conformity in order to rectify the defect by enabling many attempts to repair the swimming pools. The District court, then in the assessment of the costs, mentioned the CJEU’s decision in W. and P. and decided what should be determined as ‘proportional’ limitation of the reimbursement. Although the reasoning seemed to allocate a very strong responsibility on the seller, the District court decided in the end that the consumer had to contribute 75% of the replacement costs, allocating on the consumer a very high contribution.

Bulgaria:

Supreme Administrative court, 14 December 2012, n. 11172/2012. The case addressed the appeal of a commercial company trading cell phones against the decision of the lower administrative court issuing the obligation to replace a cell phone by a new one or to refund the amount paid by the consumer. The decision, though not mentioning explicitly the CJEU decision in W. and P., consistenly apply the reasoning of the court as regards the interpretation of directive 99/44. The Supreme administrative court affirmed that the request of the consumer to replace the commodity with a new one, after several failed repairs, is not disproportionate in the light os art 112, par. 1 of Bulgarian Consumer Protection Act.

Information retrieved from: Center for Judicial Cooperation Database