The construction of new buildings or the reconstruction of existing buildings, espe-cially 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 le-gal 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). Pre-sumptions 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. Ac-cording 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 pro-vides an exhaustive list of cases in which damage is caused through operating activ-ities (Sec. 420a par. 2 letter a) to c) of the CC), and that if it is caused (i) by an ac-tivity 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 au-thorised carrying out or securing of work by which damage to the real estate of an-other 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 con-duct 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 establish-ment 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 obliga-tions 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 op-erations 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 li-ability 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 na-ture 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, es-pecially in cases of large building development, also the general contractor and its subcontractors. This can lead to a relatively complicated system of contractual rela-tionships (based on a contract for work between the builder and the general con-tractor, who concludes further contracts with individual subcontractors for appropri-ate 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 statuto-ry 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 un-der Sec. 420a6 of the CC. As indicated above, however, the builder’s liability ac-cording 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 em-ployees or subcontractor7. This does not exclude the liability of the person (subcon-tractor) who caused the damage8. As mentioned above, the Supreme Court adjudi-cated that it is not possible to exempt one subject from liability just because anoth-er 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 per-formed 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 in-cludes damage to adjoining buildings (cracks, landslides, etc.) or damage to mova-ble 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 activity11 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 adjoin-ing building or its users (e.g. tenants). The injured parties are entitled to claim damages from liable subjects according to the above principles.