Subcontractor is liable to pay for a claim that was received to third parties
A claim for damages directed by a third party against the debtor of the rear joint does not constitute impermissible leaping recourse in respect of the right of the front joint debtor.
Damages based on contracts are also not non-contractual even if there is no direct contractual relationship between a debtor and the acquirer of a claim.
Furthermore, a principal claim does not have to be paid in order for the cover claim to be claimed.
Finally, a transfer ban has no effect against third parties except in exceptional cases.
Bostadsrättsföreningen Korvetten (Korvetten) has entered into contracting contracts with Länna Mark and Exploatering AB (Länna Mark) regarding new construction of condominiums.
Bogi Värm AB (Bogi Värm) is a sub-contractor to Länna Mark and carries out assembly work on the property.
Some time after the completion of the condominiums, an injury arises which it turns out that Bogi Heat caused by carrying out the work recklessly.
This leads to the Corvette receiving a claim for damages against Länna Mark and Länna Mark receiving the corresponding claim against Bogi Vämat.
The claim is regulated by Korvetten’s insurance company, Länsförsäkringar Uppsala (Länsförsäkringar).
Länsförsäkringar then directs a recourse claim against Länna Mark, which instead of paying entrusts its claim against Bogi Varmat to the insurance company.
County insurance claims reimbursement from Bogi Heat.
However, Bogi Varmat refuses to pay whereupon the insurance company litigates in the District Court (TR).
According to Bogi Varmat, the payment requirement from Länsförsäkringar constitutes a so-called unauthorised jumping recourse.
Jumping recourse means that a creditor does not direct payment claims against his direct contracting person, thus the debtor of the front joint, but instead directs the claim directly to the rear.
The effect will be that the creditor makes departures from the so-called chain of contracts.
Furthermore, Bogi Varmat claims that it is non-contractual damages, thus damages not based on a contractual relationship, for pure property damage.
In order for extra-mandatory pure wealth damage to be compensable, according to Chap 2, is required.
Paragraph 2 of the Tort Act, that it arose under special conditions not at hand in the case.
TR states that the main rule of Swedish law is that contractual relationships bind only direct contracting parties and that payment requirements must therefore not be directed against the debtor of the rear joint.
The Court further points out that Länsförsäkringar and Bogi Varmat advocates were their interpretation of the situation.
According to Bogi Varm, Länsförsäkringar for their own part directs claims directly against them, which the court finds is inadmissible under the main rule.
However, county insurance claims that the claim relates to Länna Mark’s right against Bogi Varmat, which was subsequently transferred to the insurance company.
The Court notes that it is the plaintiff’s pleas and grounds that set the framework for the process in civil cases under Chap 17.3 §.
By the fact that Länsförsäkringar has chosen to base the action on the contracting contract between Länna Mark and Bogi Varmat, the claim therefore relates to Länna Mark’s right.
Thus, it is neither a jumping recourse nor a claim for damages for extra-mandatory pure property damage, so the action is not dismissed on any of the grounds.
Bogi Varmat also claims that the coverage claim for which Länsförsäkringar claims payment does not exist because Länna Mark never paid for the main claim.
TR draws management from legal doctrine and comes to the conclusion that the principal claim does not have to be paid for the coverage claim; Bogi Heat therefore wins no success either with that reasoning.
Finally, Bogi Varm claims that the claim could not be transferred due to the fact that the agreement with Länna Mark contains a transfer ban including claims for damages based on the contract.
According to the Court, the main rule under Swedish law is that a transfer ban does not have effect against the acquirer of a claim, but that the Supreme Court (HD) opened up that it can exceptionally be allowed.
In order to see if exceptions can be made in the individual case, a balance of interest shall be made between free circulation and the debtor’s interest.
TR does not consider that Bogi Varmat justified its interest in the failure to transfer the claim clearly enough and therefore considers that the transfer ban is uneffective.
Bogi Varmat thus loses the case and appeals to the Court of Appeal (HoVR).
Court of Appeal
Initially, the HOVR submits that it shares the TR’s judgment that it is neither unauthorised leaping recourse nor extra-mandatory pure property damage.
The next question the court is hearing is whether the coverage claim can be claimed even though the principal claim is not paid.
Because HoVR does not find answers in law or practice, it seeks guidance from legal literature instead.
What appears, according to the court, to be the starting point in the literature is that a cover claim can be claimed only when the main claim is paid.
Exceptions, according to the Court’s interpretation, should only be possible in certain cases.
However, the court sees no reason for waiving the main rule and therefore finds that Länsförsäkringar cannot claim the coverage claim before the main claim is paid by Länna Mark.
In doing so, Bogi Heat wins the case appealed to HD by Länsförsäkringar.
HD notes that, according to practice and legal literature, a claim is not required to be paid in order for it to be transferred to a party that does not have a direct contractual relationship with the debtor.
Furthermore, it does not share the judgment of the Court but concludes that, in the given situation, there is no obstacle to County Insurance to also claim payment for the claim, in any case not because of the transfer itself.
The next question to be tested is whether the transfer ban is a barrier to County Insurance to claim compensation.
HD agrees with TR that claims can, as a rule, be transferred.
The Court develops the reasoning and states that a creditor and debtor can agree on a valid transfer ban between themselves, but as a general rule it does not take effect against third parties acquiring the claim.
However, the court does not see it as excluded that there may be exceptions where a transfer ban can be invoked even against the acquirer.
For example, in the case, exceptions should be made if Bogi Vämta has a legitimate interest in paying to Länna Mark.
However, Bogi Varmat has not presented any facts indicating that this is the case why the Court finds that the transfer ban has no effect against Länsförsäkringar.
In conclusion, HD shares the informities’ judgment that it is not a jumping recourse or extra-mandatory pure wealth damage.
HD’s overall assessment is therefore that there is no obstacle to Länsförsäkringar to make the claim, whereby Bogi Varmat loses the case.