16 June 2011: ECJ case C-65/09 Gebr. Weber and case C-87/09 Putz
Today the ECJ gave its judgement in two combined cases that both asked for interpretation of the Article 3 of the Directive 1999/44/EC on certain aspects of the sale of consumer goods and associated guarantees. Over a year ago I have discussed on this blog the opinion of the Advocate General in these cases: "Installation at own risk - opinion of AG in ECJ cases C-65/09 Gebr. Weber and C-87/09 Putz".
Since I have previously fully described the facts of these cases, let us focus on the legal problem and the solution thereof by the ECJ. The question referred to the ECJ was whether Article 3 of the Consumer Sales Directive obliges the seller to bear the cost of removing the goods that he had sold and delivered to the consumer, and which turned out to be non-conform only after they had already been installed by the consumer, and additionally whether he has to bear the cost of installing replacement goods. It is clear that the consumer has a right to replacement goods instead of the non-conform goods that he had received, but the problem is who should bear the costs of removing the defective goods and re-installing the new goods. Since the consumer had already paid for installation of the defective goods, he would have to make double installation costs (plus additional removal costs) if this burden is placed on him. On the other hand, if this obligation is placed on the seller - he will be forced to pay for installation (and removal) that was not a part of his original contractual obligations, which could be seen as punitive damages for delivering non-conform goods in the first place. The AG, as mentioned in the previous post, was of the opinion that this is too heavy burden to be placed on the seller:
'the provisions of Article 3(2) and (3) of the Directive are to be interpreted as meaning that where a consumer product, such as the dishwasher at issue, which has been, in a manner consistent with its nature and purpose, installed and connected by the consumer, is brought into conformity by way of replacement, the seller is not required to bear the costs of disconnecting/removing the product not in conformity and of installing/connecting the product free from defects, if under the contract of sale concerned the seller was not obliged to install the purchased product' (Par. 68 in Putz and Par. 67 in Weber)
So what does the ECJ think as a fair solution in this case? The ECJ's judgment does NOT follow the opinion of the Advocate General! The ECJ decides that if the non-conform goods are to be replaced, it is for the seller to pay for the removal of the defective goods and installation of the replacement goods.
The ECJ firstly reminds that the consumer is entitled to require free of charge repair or replacement unless that is impossible or disproportionate (Par. 45). 'Free of charge' aspect of this provision intends to enable consumers to make use of their rights in case of non-conformity, since placing on consumers the risk of financial burdens associated with making such a claim could dissuade them from doing so (Par. 46). For the ECJ the matter is clear: if the consumer has a right to have non-conform goods replaced, but cannot require the seller to pay for removing the already installed goods nor for installing new, replacement goods - that replacement would impose an additional financial burden on the consumer. That burden would not have been there if the seller correctly performed his original contractual obligations to deliver a good free of faults (Par. 47 and 56). If, however, it is for the consumer to bear these additional costs, then obviously the goods would not be replaced free of charge to the consumer (Par. 48 and 49). It does not matter that such costs had not been mentioned specifically among costs listed in Article 3(4) of the Directive since that list is only illustrative (Par. 50). The ECJ further stresses that the interests of the seller are protected by the 2 year time-limit to make a claim set for the consumer in Article 5(1) of the Directive, by the right to refuse replacement if it is a disproportionate remedy as well as by the right of redress to persons liable for non-conformity (Par. 58). What should not matter, according to the ECJ is whether the seller was originally obliged to install the goods delivered, since obligations arising from the rules on consumer protection, especially Art. 3 of the Directive, are independent of the contractual obligations (Par. 59). The ECJ says also that if the seller does not remove the goods and install the replacement goods, the consumer may claim reimbursement of such costs from the seller (Par. 61).
What happens when the replacement is the only remedy available and the costs of removing the defective good and installing the replacement good will be very high? May the seller refuse to replace non-conform goods if he knows that he will have to bear costs of removing the defective goods and installing replacement goods and these costs are disproportionate with regard to the value of the conform goods?
The problem here is: what kind of remedies does the consumer have right to in case of non-conformity and what are the requirements to claim them? Primarily, the consumer has a right to repair or replacement of a non-conform good and the seller may refuse a remedy only if it is disproportionate or demands costs from him that are unreasonable in comparison with the alternative remedy (Art. 3(3) of the Directive). What happens if only one of these two remedies is available? If repair is impossible, may the seller refuse replacement taking into account that it will demand unreasonable costs from him (absolute lack of proportionality)? The ECJ makes it clear that the seller may refuse one of these remedies only if it is disproportionate in relation to the other remedy, which means only in case there is a relative lack of proportionality (and not absolute lack of proportionality) (Par. 68). This view is supported by the recital 11 of the Directive, pursuant to which the costs of a remedy are unreasonable when they are significantly higher than the costs of the other remedy (Par. 69). The ECJ makes it clear:
"If only one of the two remedies is possible, the seller may therefore not refuse the only remedy which allows the goods to be brought into conformity with the contract." (Par. 71)
This choice is explained by the preference that is given in the Directive to the specific performance of contractual obligations over other remedies (Par. 72). This means that:
"Article 3(3) of the Directive consequently precludes national legislation from granting the seller the right to refuse the only possible remedy because of its absolute lack of proportionality." (Par. 73)
However, the ECJ allows for the national courts to help the seller with his financial burden by limiting the consumer's right to reimbursement of costs of removing defective goods and installing replacement goods to the payment by the seller of a proportionate amount. Such limitation is seen as leaving intact consumer's right to seek replacement of goods not in conformity. (Par. 74)
"In considering whether, in the case in the main proceedings, it is appropriate to reduce the consumer’s right to reimbursement of the costs of removing the goods not in conformity and of installing the replacement goods, the referring court will therefore have to bear in mind, first, the value the goods would have if there were no lack of conformity and the significance of the lack of conformity, and secondly, the Directive’s purpose of ensuring a high level of protection for consumers. The possibility of making such a reduction cannot therefore result in the consumer’s right to reimbursement of those costs being effectively rendered devoid of substance, in the event that he had installed in good faith the defective goods, in a manner consistent with their nature and purpose, before the defect became apparent." (Par. 76)
"Finally, in the event that the right to reimbursement of those costs is reduced, the consumer should be able to request, instead of replacement of the goods not in conformity, an appropriate price reduction or rescission of the contract, pursuant to the last indent of Article 3(5) of the Directive, since the fact that a consumer cannot have the defective goods brought into conformity without having to bear part of these costs constitutes significant inconvenience for the consumer." (Par. 77)
This judgement definitely sets new level of protection for consumers, despite that protection having been effectively weakened by the last paragraphs of this decision.