Supreme Court 15 December 2017: How do you assess damage to a living thing such as a tree?

This judgment is an interesting one for contractors and municipalities. In 2010, while doing excavation work to replace a low-voltage cabinet, Liander damaged a tree belonging to the municipality. The municipality brought in an appraiser, who estimated the damage at €4,968. When preparing this appraisal, the expert referred to the Richtlijnen NVTB 2013 (2013 Guidelines) of the Nederlandse Vereniging van Taxateurs van Bomen (Dutch association of tree appraisers).

What ensued was a lawsuit in which the municipality sought compensation from Liander for the damage caused, and the appraisal fees.

The principles for estimating loss

The basic principle when estimating financial loss within the meaning of Section 6.1.10 of the Dutch Civil Code is that the aggrieved party ‘must, as far as possible, be put in the position they would have been if the event giving rise to the damage had not occurred.’ (Supreme Court 05 December 2008, ECLI:NL:HR:2008:BE9998 (Rijnstate/Reuvers)). To put the aggrieved party in this position, the financial loss must be estimated. According to the Supreme Court, the main rule that applies to this estimate is that ‘the extent of the damages is determined by comparing the actual state with the state that (presumably) would have existed, had the damaging event not occurred.’ See Supreme Court 11 January 2013 (De Groot/Griffioen); Supreme Court 26 March 2010; Supreme Court 08 July 2016; Supreme Court 06 January 2017.

The Court’s judgment

The problem facing the Court was the apparent inadequacy of traditional loss-estimating methods. Unlike most damaged objects, a tree can repair itself. Therefore, the Court relies on the method devised by the Supreme Court for estimating damage due to the loss of ‘non-pecuniary intangible benefit’ (Supreme Court 5 December 2008; in the same vein Supreme Court 28 January 2005, (Dakar Rally); Kamerstukken (parliamentary papers) II 1975-1976, 7729, nos. 6-7, p. 87. The premise is that the damage must be estimated on the basis of expenditure incurred in vain. Applying this premise to this case, the damage must be estimated at the costs necessarily incurred by the municipality in order to maintain the tree.

Supreme Court’s judgment

Liander decided to appeal this ruling. The Supreme Court argued that, whilst the tree was damaged, the damage does not necessitate its replacement. The costs incurred by the municipality to promote the tree’s self-repairing mechanisms, and other specific costs directly associated with the damage, must be reimbursed by Liander. This also applies if those costs exceed the tree’s replacement value.

According to the Supreme Court, the court was wrong to rule that the damage to the tree itself must be estimated based on the premise of ‘non-pecuniary intangible benefit’ (Supreme Court Dakar Rally). The Supreme Court took into consideration the fact that the tree did fulfil its function, until the time at which it was damaged. This is not the same as, say, a person buying a ticket for a concert, then being unable to use the ticket. That is a textbook example of ‘non-pecuniary intangible benefit’ and the damage can be estimated based on ‘expenditure incurred in vain’ (i.e. the price of the ticket).

The court had also ruled that all damage was to be directly reimbursed by Liander. In this regard, Liander complained that the court had failed to acknowledge that a tree can repair itself, thus reducing, or eradicating damage, and that any future ‘failure’ of a tree may be due to a cause other than the damage. Following the court’s line of reasoning, Liander may end up compensating for damage which it did not cause. The Supreme Court concurred with Liander on this. Pursuant to Book 6 Article 105 Dutch Civil Code, the estimation of damage which has not yet revealed itself may be postponed or may be calculated in advance after assessment of all beneficial and unfavourable possibilities. This comparison rests on the court’s reasonable expectations regarding future developments (see Supreme Court 15 May 1998 (Vehof/Helvetia), rov. 3.5.1 and Supreme Court 14 January 2000, (X/Interpolis), rov. 3.4). Given the uncertainty surrounding the tree’s ability to repair itself, contrary to the court’s opinion the damage cannot, as a rule, be estimated in advance.

The upshot is that another court has to take up the case, and this tree is set to cause much head-scratching for a while yet.