On 12 January 2022, German the Federal Supreme Court (BGH) commented on the decision of the Higher Regional Court (OLG) of Dresden of 24 February 2021 on the Corona-related rent reduction, which I discussed here, and ruled that the more or less sweeping reduction by half opted for by the OLG Dresden in the case at issue was not permissible in this way. The BGH’s judgement is more differentiated. Reason enough to take a closer look at this decision, which is also important for companies’ liquidity planning.
Only at the end (from para. 61 onwards) of its 31-page very detailed reasoned judgment does the BGH finally, but succinctly, lets the proverbial cat out of the bag:
“In this context, it is in principle incumbent on the contracting party invoking a disturbance of the basis of the contract to prove that it would be unreasonable for it to adhere to the unchanged contract […]. In the case of a business closure due to a pandemic, the tenant must therefore state and, if necessary, prove which disadvantages he has suffered from the business closure that make it unreasonable for him to pay the rent in full for this period […] and which reasonable efforts he has made to compensate for impending losses. If the tenant claims not to have received any state assistance benefits, he must explain and, if necessary, prove that he has tried in vain to obtain possible assistance benefits. If he does not succeed in doing so, he must allow himself to be treated as if he had received the state benefits […]. If, on the other hand, the landlord objects that the losses claimed by the tenant are not due to the COVID 19 pandemic, the burden of presentation and proof lies with him.”
With regard to the evidence now required, however, “state support measures that were only granted on the basis of a loan […] are to be disregarded“, “because the tenant does not achieve any final compensation for the loss of turnover suffered through them“. Also, an actual threat to the economic existence of the tenant shall not be required (para. 59). The BGH – and it also writes this in para. 64 – requires findings on the “concrete economic effects” of the respective (pandemic-related) shop closure. Ultimately, according to the BGH (also para. 64 a.E.), the OLG Dresden as court of appeal would have had to ask itself whether the drop in turnover caused by the shop closure was actually so significant that the defendant could not reasonably be expected to pay the rent in full for the period in question.
In view of the “diversity of reasoning” in this decision, the practitioner is not only confronted with the question of how to prove (now in retrospect) that the tenant was not eligible for state Corona aid when the tenant had perhaps only received a brief “no” by telephone from his tax advisor in the situation at the time. For one must not forget that the tax advisors carried out such checks in the dozen each day, especially at the beginning of the pandemic. The scope for interpretation is also wide open if, on the one hand, the “concrete economic effects” of the pandemic-related business closure do not have to go so far as to threaten the existence of the business, but, on the other hand, (full) payment of the rent is supposed to have been unreasonable. What is “unreasonable” but below a threat to existence?
Conclusion: The BGH decision has undoubtedly revealed the shortcoming of the lower court’s decision, which obviously did not deal enough with possible state compensation payments in favour of the tenant. However, the more far-reaching requirements for the obligation to provide evidence – especially in view of the special situation of the pandemic – are likely to go far beyond the scope of the case. It remains to be seen whether, due to the pandemic’s infirmity of the retail sector, which threatens a large vacancy rate, there will actually be another wave of litigation in this context. But the BGH has not done legal practice any favours with this decision. Accordingly, one can be curious about possible follow-up rulings by the BGH, which could then (as is quite often the case) say something like: “There shall not be any exagerated requests as to the proof of unreasonableness”.
Irrespective of such inadequacies, business managers of retail companies should, in the case of still pending lawsuits in this area, become clear as soon as possible about the prospects of success of their previous rent reduction demand against the background of this decision and adjust their business planning accordingly, if necessary.
BGH, Urt. v. 12.01.2022 – XII ZR 8/21 (in German)