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Courts make mistakes too

Losses caused by human errors should be made up. But there are fields where it is particularly difficult to obtain damages to redress mistakes.

As Polish legal scholars have pointed out, holding the state liable for injury caused in its exercise of public authority takes a long and tortuous path. This remains true despite various changes in the regulations over time. It is still very difficult to obtain damages from the State Treasury—particularly for injury caused by issuance of an erroneous judgment by a court.

There are many reasons for this state of affairs. Trials seeking damages are difficult to pursue and often end in denial of the claim when the court finds that the plaintiff did not prove the loss. The courts scrupulously hold plaintiffs to their burden of proof of liability for damages, which is understandable, but too often parties causing injury to others escape the liability they should justly bear.

The need for a predicate ruling

Undoubtedly, one of the difficulties facing plaintiffs seeking damages for a wrongful judgment is the need to obtain a predicate ruling (prejudykat) from the Supreme Court of Poland finding that the judgment issued in a civil case was contrary to law (Civil Code Art. 4171 §2). Since 2005, when the institution of a complaint seeking a finding of the unlawfulness of a legally final ruling (Civil Procedure Code Art. 424 and following) was introduced into the Polish legal system, just a few more than 50 rulings have been handed down in favour of claimants in such cases.

But it is not necessary to obtain a predicate ruling in every case. There is an exemption from this requirement in situations where a ruling has already been issued by the Supreme Court on a cassation appeal; then the ruling in the cassation appeal takes the place of a predicate ruling (Civil Procedure Code Art. 4241a §2, Art. 39815 §1).

Grounds of dispute

A case where these issues proved relevant was recently considered by the court of appeal. The plaintiff, an agricultural company, acquired agricultural land with the intention of conducting economic activity there, but it turned out that the land had been delivered in tenancy to another company for 20 years. The plaintiff filed a claim seeking to correct the discrepancy between the legal status of the land disclosed in the land and mortgage register and the actual legal status. The plaintiff demanded that the right to tenancy be deleted from the land and mortgage register because it had found documents showing that the tenancy agreement had been terminated by the seller of the property.

The courts considering the case denied the claim, finding that the tenancy agreement had not been effectively terminated because the landlord had failed to give the tenant advance notice of its intention to terminate the tenancy with an additional period for the tenant to pay the overdue rent, as required by Civil Code Art. 703. The courts made this finding even though the plaintiff had submitted a document citing Civil Code Art. 703 signed by the seller of the real estate, with proof of mailing to the tenant. And at one of the hearings, the same document was again served on the tenant’s management board, as noted in the record of the hearing.

The plaintiff refused to accept this resolution and filed a cassation appeal which was upheld by the Supreme Court in its judgment of 17 March 2010 (Case II CSK 454/09). The Supreme Court found that the proof of mailing was adequate evidence of service of the document meeting the requirements of Civil Code Art. 703, and ordered the regional court to reconsider the case. The regional court then upheld the claim and ordered deletion of the tenancy, finding this time that it was effectively terminated.

Erroneous judgment overturned, error corrected, but injury remains

But throughout these proceedings, the real estate remained in the possession of the former tenant. Thus as soon as the plaintiff obtained a legally final confirmation that the tenancy did not exist, it filed an effective claim seeking possession of the property, and obtained possession. But it had lost agricultural income from the real estate for three full growing seasons. The plaintiff calculated its loss on this basis and sued the tenant and the State Treasury, jointly and severally, alleging that the loss resulted from the fact that the judgment issued in the case under Art. 10 of the Act on Land and Mortgage Registers and Mortgages was erroneous.

The regional court awarded judgment against the former tenant for PLN 1.25 million with interest, but denied the claim against the State Treasury with respect to the erroneous previous judgment. The court did not find that the previous judgment was grossly unlawful. But the court failed to address the plaintiff’s argument that under Civil Procedure Code Art. 4241a §2, this issue was no longer open to examination but followed from the judgment of the Supreme Court upholding the plaintiff’s cassation appeal. It also failed to address the allegation that the court had violated standards of proper adjudication by ignoring the fact that a document meeting the requirement of Civil Code Art. 703 had been served at the hearing in the previous case.

Court of appeal: an error may have been made

The court of appeal set aside the judgment of the regional court in large part and remanded the case for reconsideration, upholding the plaintiff’s allegation on appeal that the essence of the case had not been considered at the first instance. The court of appeal required the regional court on rehearing to address Civil Procedure Code Art. 39815 §1 in connection with Art. 415 and Art. 4241a §2, which had been ignored completely before. These are the provisions stating that the ruling pursuant to a cassation appeal takes the place of the predicate ruling required by Art. 4171 §2. The same applied to the failure to assess the relevance in this case of the repeated service at the hearing of a copy of the document providing notice of the intention to terminate the tenancy agreement.

Obviously, the ruling by the court of appeal does not end the dispute. But it should be stressed that the court of appeal very objectively examined the demand asserted by the plaintiff. This is particularly important, as in these types of cases the principle that no one can be a judge in his own case does not apply. This is because cases of this type lie within the exclusive jurisdiction of the regional courts (Civil Procedure Code Art. 17(44)), and in terms of geographical jurisdiction (at least in this case) the same court that issued the original erroneous judgment was still the proper court. Thus the mere fact that it was admitted that the case may have been adjudicated wrongfully and must be reconsidered is noteworthy.

To err is human

Cases of this type should occur rarely if at all. The frequency with which they arise reflects the quality of the rulings issued by the courts. But if a party suffered an evident loss as a result of an erroneous judgment, the loss should be compensated even if it is high. Indeed, when injury is caused by the exercise of public authority it can engender an even greater since of wrong than when it is caused by a private entity.

And not every loss suffered by a party due to an erroneous judgment can be automatically attributed to the broad discretion exercised by the courts in adjudicating cases. There are certain standards that simply must not be crossed when dispensing justice in a democracy governed by the rule of law. These certainly include the principle of deciding cases based on the entirety of the evidence presented. Ignoring an essential document, failing to assess the legal or evidentiary weight of the document, and failing to address the legal consequences flowing from the document in the justification for the judgment, are inconsistent with standards of proper adjudication. Thus the state should redress a loss caused by issuance of a judgment based on improperly determined findings.

Dr Marcin Lemkowski, Disputes Resolution & Arbitration practice, Wardyński & Partners