Costs awarded by the court for intended repairs are an advance payment intended to enable the customer to carry out repairs without having to resort to his own capital and are therefore earmarked for a specific purpose.

After a construction company refused to improve a farmer’s floor due to defective screed and coatings, it was ordered to pay EUR 16,800 to remedy the defect in a trial in 2011.

This construction company subsequently sought repayment of the amount paid as the plaintiff in the present lawsuit on the grounds that the farmer had neither remedied the defects nor intended to do so.

The lower courts dismissed the claim as they were of the opinion that the payment was not to be assessed as an advance payment for the improvement. The award had been made without “ifs and buts”. Accordingly, a reclaim would be excluded.

However, the Supreme Court took a different view and set aside the judgments of the lower courts for a new decision:

In the event of defective performance by a contractor and a subsequent refusal to make improvements, the customer must be paid an advance for the repair. Normally, this is an earmarked advance payment for the repair, for which the recipient must submit an invoice. According to prevailing case law, purely fictitious repair costs cannot be awarded, as this would run counter to the compensatory function of the law on damages. Even if the payment was not literally described as an “advance payment” in the previous decision, it is clear from the overall context that this is nevertheless the case. This means that if no repair is carried out, part of the advance payment must be refunded.

The amount of the difference to be reimbursed still needs to be determined: The payment of cover capital for the future improvement of a defect (or rectification of a defect) as an advance also covers the unconditional claim for compensation for the objective reduction in value (of the defect). If the defect is not remedied, enrichment only occurs to the extent that the advance payment exceeds the objective reduction in value.

_{Source: 1 Ob 105/19a}