4th Supreme Court decision on the obligation to pay rent during lockdown: Partial payment of the rent is affirmed in the case of partial usability. The intended use agreed upon for the property is especially relevant.


Mark Krenn, Partner

Marko Vladic, Senior Associate

In its fourth decision to date on claims for a reduction in rent in connection with the COVID-19 pandemic (Supreme Court decision of 25/01/2022 in case 8 Ob 131/21d), the Supreme Court has now addressed the question of whether (potentially) offering a takeaway and delivery service from the premises of a catering business during the "second lockdown" (17 November to 6 December 2020) constitutes partial usability of the leased property and therefore whether this also gives rise to an obligation on the part of the tenant to pay (part of) the rent. In line with previous case-law, the Supreme Court ruled that the COVID-19 pandemic must be classed as an "epidemic" and thus as an Act of God within the meaning of Section 1104 of the Civil Code (ABGB), and consequently a ban on entering business premises imposed as a result of this pandemic leads to the premises becoming unusable.

On the question of whether the property in question is (partially) unusable, the Supreme Court paid particular attention to the intended use, as agreed upon for the property. In the case of commercial premises the use of which is characterized by direct business with customers, a ban on entering the premises renders the property completely unusable within the meaning of Section 1104 of the Civil Code. The Supreme Court took the view in its previous decisions regarding a tanning salon (of 21/10/2021 in case 3 Ob 78/21y) and a nail salon (of 25/11/2021 in case 3 Ob 184/21m) that bans on customers entering their premises rendered the respective rental properties completely unusable. However, if contractual use of the property is only possible to a limited extent, the rent must be reduced under Section 1105 of the Civil Code to the same extent that use of the property is impaired, using the relative calculation methodology.

Therefore, the question for the present decision was whether the tenant should have offered takeaways and deliveries, given the contractual purpose of the catering business. As the trade licence for the hospitality industry also allows for the delivery and thus the sale of ready-made cold platters, hot or cold buffets and other hot dishes and set menus without additional services, the object of the "restaurant" business covers all activities that an operator in the hospitality industry is entitled to perform under the Trade Regulation Act, i.e. also providing a takeaway and delivery service for food and beverages.

After an in-depth appraisal of the existing literature, the Supreme Court concluded that whether the property is out of use and unusable – based on the intended use agreed upon – has to be assessed on the basis of an objective standard. It follows that even the abstract possibility of offering takeaways or the delivery of food and beverages leads to at least partial usability of the leased property and thus merely results in a proportional reduction of the rent.

In the view of the Supreme Court, however, the tenant may object on the grounds that it would not have been reasonable to start providing takeaway and delivery services (immediately). In any case, doing this will be unreasonable if – for instance, due to the lack of a customer base – a long-term loss-making business would be expected. However, the tenant bears the burden of proving that the property is unusable.

Consequently, when assessing whether there is at least a partial obligation to pay rent, attention will also have to be paid to the intended use agreed upon in the contract, and in particular to the question of which business activities are covered by it. The Supreme Court thus shares the view we expressed at the beginning of the pandemic.

Link: Miete zahlen oder nicht ? Kurier, 4 April 2020    
Link: Miete zahlen oder nicht? Österreichische Richterzeitung, June 2020, 123 et seq.