Statutory liability of builders

Decennial guarantee – Contractual non-conformance
Cass. 3rd Civ., 20 January 2015, No.13-26.085

A company procured the construction of a building intended for the storage of frozen vegetables and took out a property and casualty insurance policy. After the acceptance of the works, malfunctions were noted at the level of the cold room. After a forensic assessment, the project owner sued the builders and their respective insurers on the basis of the decennial guarantee.

After noting that the works were not in conformance with the contractual specifications, the Rennes Court of Appeals dismissed the action filed by the project owner against the builders on the basis of Articles 1792, 1792-2 et 1792-4 of the French Civil Code, as it found that the project owner failed to prove that the disputed building was affected by damage impairing its solidity or affecting one of its constitutive elements by making it unfit for its intended use.

The Cour de Cassation dismissed the appeal lodged by the project owner, as it found that the fact that a construction was not in conformance with the intended use contractually agreed by the parties did not mean that such construction was per se unfit for its intended use.

Decennial guarantee – Assignment of the action
Cass. 3rd Civ., 4 February 2015, No.13-26.746

Under a concession agreement, a township had entrusted the construction and operation of a parking lot to a company, which had assigned the rights and obligations under the said concession. After acceptance of the parking lot and prior to the transmission of the public service assignments, damage was noted due to a soil settling. Following a forensic assessment, the new operating company instituted proceedings against the builders and their insurers and sought an indemnification on account of the malfunctions.

The Versailles Court of Appeals found that the said action was not admissible, because it was not demonstrated that the action related to the malfunctions existing prior to the transfer of the whole of the contract to the new management company had been assigned, absent an express provision to that end in the related instruments.

The Cour de Cassation quashed the said decision by applying Article 1134 of the French Civil Code, on grounds that, absent any contrary provision, the transfer of the rights and obligations under the concession agreement for the construction and management of the parking lot entailed the transfer of the action pertaining to the decennial guarantee, even as regards malfunctions occurred prior to the said assignment.

Such decision is to be analysed in light of the case law related to the assignment of decennial liability actions to successive buyers of the building, on the basis of the propter rem transmission of actions pertaining to the sold property1.

1 Cass. 2nd Civ., 28 November 1967, Bull. Civ., III, No.348 - Cass. 3rd Civ., 10 July 2013, no.12-21.910

Works related to existing facilities - Notion of ouvrage
Cass. 3rd Civ., 20 January 2015, No.13-21.122 – 14-16.586 et 14-17.872

The Cour de Cassation is frequently asked to give legal consideration to cases involving the implementing terms of the statutory liability of builders as regards works related to existing facilities (Articles 1792 et seq. of the French Civil Code)1. A liability action may be instituted only when works related to existing facilities constitute an ouvrage (comprehensive construction) within the meaning of Article 1792 of the French Civil Code.

The case discussed below provides a further example of this case law.

Renovation works related to existing facilities were entrusted to a contractor. As the co-owners’ syndicate complained about malfunctions, proceedings were brought against the seller of the co-ownership plots, which filed a third-party claim against its insurer and the contractors and their insurers.

The Paris Court of Appeals dismissed the action filed on grounds of the decennial guarantee against the seller of the co-ownership plots, because the works that had been carried out, consisting in a limited fitting and revision of the roofing, did not constitute a property ouvrage covered by the decennial guarantee.

The Cour de Cassation upheld this analysis.

As emphasised by the reviewed decision, the test used by case law in order to define an ouvrage, within the meaning of Article 1792 of the French Civil Code, consists in the importance of the completed works. Accordingly, courts distinguish between minor works and major works. Only major works are deemed to constitute an ouvrage.

1 See in particular our comments in the Construction Letter, July 2013.

Proper functioning guarantee – Implementing terms
Cass. 3rd Civ., 27 January 2015, No.13-25.514

Individuals had entrusted a company with the repair of a terrace, including in particular the laying of tiles around a pool. Tiles became detached within two years from acceptance of the works. The project owners then filed an action in damages against the builder and sought the indemnification of their loss slightly less than three years after the said acceptance.

After noting that the detachment of the tiles around the pool was covered by the biennial guarantee of proper functioning, the Court of Appeals of Bordeaux found that the indemnification action was time-barred, but held that the builder was liable in contract. The builder was not insured against the said liability.

After reviewing an incidental appeal lodged by the project owners, the Cour de Cassation quashed the said decision on grounds that the guarantee of proper functioning did not apply to tiles placed nearby a pool, as such component is separable from the building and is not intended to function in any manner whatsoever. The Court of Appeals should thus have analysed whether the malfunctions affecting the tiles made the terrace unfit for its intended use, in order to enforce, in such event, the decennial guarantee.

Malfunctions affecting items of equipment are covered by the decennial guarantee in two cases:

• If such items of equipment are inseparable from the construction itself - with the separability test being defined by Article 1792-2, paragraph 2 of the French Civil Code – and if the malfunctions affect such items’ solidity;
• Whether or not the defaulting equipment items are separable, if such items make the building itself unfit for its intended use.

On the contrary, malfunctions are covered by the biennial guarantee of proper functioning provided for in Article 1792-3 of the French Civil Code, if the items of equipment are separable from the construction and such malfunctions do not make the construction unfit for its intended use.

The separable equipment items covered by the said guarantee were defined for the first time by the Cour de Cassation in a decision of 11 September 20131. This concept covers items that are intended for functioning, i.e. that are not inert, as confirmed by the discussed decision. This case law thus leads to the exclusion of the biennial guarantee in the case of glued tile, as in the instant case, but also in the case of paving2, and carpeting and hung curtains3. In other words, the proper functioning (and the related guarantee) may only cover an apparatus (boiler, lift, alarm system, etc.) or, in any event, a mobile component (door, window, shutter) as opposed to fixed and inert components.

In conclusion, any defects related to separable equipment items “not intended to be operated”:

• shall be covered by the decennial guarantee under Article 1792 of the French Civil Code if such defects make the construction unfit for its intended use;
• in default, such defects may only be covered by the common liability in contract, and not by the proper functioning guarantee under Article 1792-3 of the French Civil Code.

1 Cass. 3rd Civ., 11 September 2013, no. 12-19.483
2Cass. 3rd Civ., 13 February 2013, no. 12-12.016
3Cass. 3rd Civ., 30 November 2011, no. 09-70.345