Legal Opinion on the Qualifications of Costs Incurred During a Traffic Accident Constituting damage Compensation under Polish Law.

This legal opinion has been elaborated in connection with a car accident that
occurred in Poland and was served as a support for claiming damages for the victims
before a German court at which the following issues and queries had to be analyzed
and answered:

(i) Are the fees of providing an external expert opinion that estimates
the costs of vehicle repair recoverable?
(ii) Are the fees of representing the victims by an attorney at law within
the pre-trial phase recoverable?
(iii) Is the depreciation of the vehicle also recoverable?
(iv) Are the costs of loss of the use of the damaged vehicle recoverable?
(v) Finally is the so called “lump sum” fee ( in German “Kostenpauschale”)

I. Legal Basis

For the purpose of elaborating this opinion we have in particular examined the
following legal regulations:

a. Polish Civil Code (“PCC”)
b. Polish Act on Obligatory Insurance, Guarantee Insurance Fund and Vehicle Insurance from 22.05.2003 (“PAI”)
c. Convention on the Law Applicable to Traffic Accidents from 4.05.1971 concluded at The Hague (“Hague Convention”)

II. Legal Assessment

1.Law Applicable and Concept of Damage

It should be stressed at the beginning that Polish substantive law was applicable to the vehicle accident in question in accordance with Article 3 of the Hague Convention as the accident occurred in Poland. Pursuant to Article 361 of the PCC the person liable for damages shall bear in general accountability for normal consequences resulting from a tort (act or wrongful omission) triggering the damage and the damage compensation encompasses losses as well as benefits that the damaged person could achieve if the event causing the damage had not occurred. In addition, Article 15. 1 of PAI states that an insurance company – within insurance coverage – is obliged to compensate the justified costs related to an accident in order to prevent higher damage. Within this scope any insurance company also has an obligation to assume the necessary costs of defense in criminal or civil proceedings

2. Concept of Damage and its Interpretation

The aforementioned provision of Article 361 of PCC defines a causal link between an act or omission of a person obliged to compensate damages and the occurrence of the damage as a necessary condition for damaged related liability. This link shall be deemed an objective justification for connecting cause and result. According to the concept of an adequate causality all normal consequences of a cause will be regarded as adequate and they do not need to occur immediately after the accident (see the judgement of the Polish Supreme Court dated 26.02.2021, I CSKP 107/21, Judgement of the Court of Appeal in Warsaw dated 04.02.2021, V Aca 461/20). The question of whether a consequence is normal or not normal shall depend on an overall assessment of the circumstances of the given case and principles of life experience. (see Judgement of the Polish Supreme Court dated 02.08.1956, 3 CR 515/56). Article 361 of the PCC states further that the compensation of damages shall be rather a full compensation of suffered losses, however, this compensation cannot result in an unjustified enrichment of the damaged person. In addition, the compensation shall remain within the borderlines determined by a normal causal relation. The casual link has therefore two functions: (i) it determines on one hand whether a person is liable for damages and (ii) it on the other hand draws liability limits (see Judgement of the Polish Supreme Court dated 09.03.2021, Judgment of the Court of Appeal in Szczecin dated 19.11.2020, I Aga 61/20).

The principle of full compensation encompasses a loss suffered by the damaged person (damnum emergens) that may result in the reduction of the value of his/her assets as well as in benefits he/she would have achieved if he/she had not been damaged (lucrum cessans) (see Judgement of the Polish Supreme Court dated 09.03.2021, I NSNc 90/20).It should be emphasized that the concept of damages will be in general widely interpreted.

The aforementioned considerations and principles are also respectively applicable to the same extent to the liability of insurance companies. Thus, the PAI – provisions specify this liability according to which an insurance company is not only obliged to pay out compensation but also to cover any costs associated with the determining of liability and damage liquidation.

3. Fees for Elaborating an Expert opinion

The above initial consideration allows the conclusion that fees of an external expert for elaborating an opinion subject to analysis of the circumstances leading to damages and stipulation of the amount of compensation (including the estimated costs for vehicle repair) shall be deemed recoverable for three main reasons:

Firstly, there is no doubt that fees of an external expert opinion pre-paid by the damaged person constitute a loss to his/her valuable assets. Secondly, the damaged person does not have any know-how (special knowledge) in order to determine the amount of fair compensation. In the event of a vehicle accident, it is important to estimate costs of the vehicle repair, costs of medical treatment and rehabilitation (damnum emergens). The damaged person is also not in a position to identify costs of losses of any benefits (lucrum cessans). Thirdly, the bearing of such expenditure is adequate to the circumstances that caused the loss and shall be considered as its normal consequence. This opinion was also confirmed in many court cases (see resolution of the Polish Supreme Court dated 02.09.2019, III CZP 99 / 18, Judgement of the Court of Appeal dated 19.09.2019, I Aca 1027/18).

4. Fees for Representing a Damaged Person by an Attorney at Law within Pre-Trail Phase

It should be emphasized at the outset that Polish legal scholars consequently were of the opinion that the fees of an attorney at law incurred during the pre – trial phase shall be recovered by the wrongdoer or his/her insurance company because they constitute a real loss related to the assets of the damaged party (damnus emergens). (see e.g. M. Serwach (in:) D. Fuchs, D. Masniak, J. Nawracala, M. Serwach, Commentary. Explanatory note to Article 15, E. Kowalewski, Commentary to the Judgment of the Polish Supreme Court dated 11. 06.2001, V CKN 266/00, OSP 2002, Nr. 3, Pos. 40). On the contrary, courts in Poland tended rather to deny this opinion with reference to the lack of normal causal relation between the tort (act or omission) of the wrongdoer and damage – causing traffic accident (see e.g. judgement of the Polish Supreme Court) The above dispute has lost its topicality due to changes to the legal situation and this dispute was merely based on statutory provisions that were set aside (see Judgment of the court of appeal in Kraków dated 19.09.2019, I Aca 1027/18). However, there are still cases in which insurance companies refer to old case precedents and refuse the compensation of legal fees within the pre-trial phase. The Chamber of the Polish Supreme Court, comprising of 7 judges, passed a resolution on 13.03.2021 (see III CZP75/11) stating clearly that justified and necessary fees of an attorney at law that were paid by the damaged person within the pre-trial phase conducted before an insurance company are refundable by the insurance company within the framework of third party civil liability (see also judgement of the court of appeal in Kraków dated 19.09.2019, I Aca 1027/18).

As a consequence, it is legitimate to include fees of an attorney at law occurred within damage liquidation proceedings in the amount of compensation. The compensation of such fees (costs) is advisable especially on cross- border cases for the following two reasons: (i) language barriers of the damaged person and (ii) necessity of handling the case by a local counsel who knows the local (domestic) law and the course of out of court damage liquidation proceedings.

5. Depreciation of a vehicle and the loss of the use of the damaged vehicle due to a traffic accident

It is acknowledged that both cost items: depreciation of the value of a damaged vehicle and loss of the use of the damaged vehicle can be recovered within out of court damage liquidation proceedings and this view has been confirmed in many established legal precedents (see e.g. resolution of the Polish Supreme Court dated 22.11.2013, III CZP 76/13, judgement of the Polish Supreme Court dated 05.11.2004, II CSK 494/03, judgement of the Polish Supreme Court dated 08.09.2004, IV CSK 672/03). In addition the same legal stance on this issue has also been taken by many legal scholars (see e.g. T. Szczurowski, commentary on the resolution of the Polish Supreme Court dated 17.11.2011). 6. “

6. “Lump Sum” Fee

The cost item referred to as the “lump sum fee” is not recoverable in accordance with the Polish law of tort as it stands in no relation to the real damage occurred.

III. In Summary

As result of our analysis, it should be noted that fees of providing an external expert opinion, fees of representing of victims by an attorney at law, depreciation of a vehicle and loss of its use occurred within the pre-trial phase are in general recoverable in accordance with the Polish law of tort, However, the so -called “lump sum fee” is not a reimbursable cost position.

Contributing Advisors