New tools for the recovery of arrears
Starting this year, the tax authorities are not limited by local jurisdiction when recovering tax arrears. At the same time, from 1 July 2025, the customs administration can use a new power in the event of an u…
Legal News [June 2024]: The Supreme Court addressed the duration of pre-emption right
The latest Legal News deals with three topics related to real estate - pre-emption right, the difference between gratuitous bailment and implied consent to the general use of land and grossly negligent conduct of the applicant for the necessary passage. The next area is the so-called covid remuneration and its inclusion in the wages for determining the average earnings of an employee, and the last of our June rulings deals with defects in the filing of a claim in insolvency proceedings.
- The Supreme Court, in its ruling No. 22 Cdo 2431/2022, dealt with the duration of the pre-emption right under Section 1124(1) of the Civil Code, as amended from 1 January 2018 to 30 June 2020, after 1 July 2020. In the case under review, the facts were based on two transfers of real estate for consideration, the first time from two co-owners to Company 1, and subsequently from Company 1 to Company 2. One of the co-owners acted as a proxy holder in both companies. An important aspect among the facts of the case was the timeline of the transfers. The first transfer took place under the existing wording of Article 1124(1) of the Civil Code (establishing the pre-emption right of the co-owners of real estate), whereas the second transfer took place seven days after the new wording of Article 1124(1) of the Civil Code came into effect (limiting the pre-emption right to a period of six months and to the fact of disposition mortis causa or another legal fact which the company could not control from the very beginning). The provision in question was amended by Act No. 163/2020 Coll., with effect from 1 July 2020, according to which the original general obligation to offer a thing to the pre-emptor for purchase shall survive if the seller’s obligation to offer the thing to the pre-emptor for purchase became mature before the amended Act came into effect. This situation meets the circumstances of a defect encumbering the thing pursuant to Article 1107(1) and (2) of the Civil Code. In these proceedings, the Supreme Court concluded that if the pre-emption right in rem became mature before 1 July 2020, this obligation of the purchaser continues after that date. If the purchaser has transferred the real estate to a third party without offering it to the pre-emptor, this obligation passes to the new purchaser. According to the Supreme Court, the mere fact that one of the original co-owners is a proxy holder in both companies is an aggravating circumstance which the Supreme Court did not address.
- The Supreme Court also addressed the question of whether the so-called covid remuneration (paid according to the decision of the Ministry of Health) is included in the gross wage (salary) for determining the average earnings of an employee. In the ruling in question, the Supreme Court measured the consequences of an employee’s remuneration, either (i) under Section 134 of the Labour Code (for the performance of extraordinary or particularly serious work tasks) or (ii) under Section 224(2) of the Labour Code (for a life or work anniversary or for the provision of assistance in the event of an emergency). The remuneration under the first point of the preceding sentence is included in average earnings, whereas the remuneration under the second point does not. According to the Supreme Court, the Court of Appeal’s reasoning on the exceptional nature of the situation or the reference to the wide range of the remuneration in question cannot succeed since both of those provisions expressly take account of the exceptional nature of the situation and the fact of the wide range does not say anything about the reasons for the remuneration award. On the contrary, it is relevant to the ruling in question that the Ministry of Health itself referred in its decision to Article 224(2)(b) of the Labour Code, but at the same time required that the wages paid be supported by documents enabling the work actually carried out to be checked. In such a case, the true nature of the payment is that it is remuneration for the performance of a task, since, if a legal act can be interpreted in several ways, the interpretation most favourable to the employee is applied. The fact that the employer complied with the condition laid down in the decision to grant the one-off non-investment allowance (i.e. to pay remuneration in accordance with Article 224(2)(b) of the Labour Code) does not alter that conclusion. The Supreme Court therefore concluded that the remuneration paid in this way constituted remuneration granted under Section 134 of the Labour Code and should be taken into account when determining the employee’s average earnings.
- In its ruling No. 22 Cdo 1732/2023, the Supreme Court addressed the question of the difference between a gratuitous bailment and implied consent to the general use of land as determined by the Road Traffic Act. The subject matter of the proceedings before the Supreme Court was the applicant’s claim for the establishment of a right-of-way over the defendant’s land due to the lack of access to the applicant’s land. In the second instance proceedings, the Court of Appeal departed from its previous case-law by classifying the corridor (which did not run through the defendant’s land but served the purpose of access to the applicant’s land) in the area of the former collective farm (JZD) as a publicly accessible purpose-built road, and thus found no grounds for establishing the right in question. The conceptual features for the definition of an accessible road are: 1) permanence and visibility of the road in the terrain; 2) a lawful purpose according to Section 7(1) of the Road Traffic Act; 3) consent of the owner to public use; 4) a necessary communication need. The Supreme Court particularly dealt with the owner’s consent to public use, as it is crucial for the definition of a publicly accessible purpose road that the owner’s consent to public use is irrevocable. The difference between a gratuitous bailment, i.e. the owner’s private permission to use the land, which can be revoked at any time, and a dedication for public use, which can no longer be revoked, and the owner is obliged to tolerate such use, lies in the range of persons entitled. The gratuitous bailment is always directed towards a certain group of persons, which may be, for example, an indefinite group of customers who use the road for one purpose or even despite its existence do not use it at all. By contrast, dedication for public use is always directed at an indefinite number of persons. According to the Supreme Court’s conclusion, it is always necessary to properly substantiate when a dedication for public use under the Road Traffic Act is involved, since in such a case there is a restriction of the right of ownership for which the landowner is entitled to appropriate compensation.
- The subject matter of the dispute decided by the Supreme Court under case No. 29 Icdo 20/2022 was the assessment of the question whether a claim application in insolvency proceedings is defective if the legal basis for the claim is not stated in the claim application form with complete precision, but the legal basis for the claim is nevertheless clear from the content of the appendices to the application. In the opinion of the appellant, the insolvency court deviated from the established practice of the Supreme Court in resolving this issue (29 Icdo 56/2014 and 29 NSČR 107/2015). The insolvency court dismissed the original claim of the creditor for determination of the amount of the claim secured by a pledge in the insolvency proceedings on the debtor’s insolvency and ordered the creditor to pay the insolvency administrator of the debtor the costs of the proceedings. As a reason for the dismissal, the court stated that the facts on which the claim was based were not defined clearly enough and the insolvency administrator should therefore have acted in accordance with Section 188(2) of the Insolvency Act and invited the creditor to remove the defect in the application. According to the Insolvency Act, these facts must be defined in such a way as to enable their individualisation and not merely their legal qualification. The Supreme Court first added that if the creditor attached other documents to the application which prove the authenticity and correctness of their claim, they contributed to the fulfilment of the purpose of the relevant provisions of the Insolvency Act. According to the Supreme Court’s conclusion, the Court of Appeal, when examining the grounds for the claim in the application, failed to consider that the facts can also be described by reference to the other documents attached. Dismissing a claim as to its authenticity or amount thus cannot be based on the fact that the applicant registering the claim have wrongly qualified the claim in the application in legal terms (e.g. if the fact is referred to as a sales contract instead of a contract on work). At the same time, however, if the security relates to only some of these claims, the insolvency administrator may deny their ranking based on their erroneous legal qualification by the creditor, irrespective of the fact that the claim as such has not previously been denied as to its authenticity and amount.
- In its ruling No. 22 Cdo 2913/2023, the Supreme Court dealt with the issue of gross negligence of the applicant for the necessary passage. The subject matter of the litigation was a dispute concerning the authorisation of a right-of-passage and a right-of-way over the land in question in the cadastral area of Přívoz to the extent determined by a geometric plan. The court of first and second instance decided not to grant that right-of-passage and right-of-way because the Court of Appeal found that the applicant had already been grossly negligent in acquiring the real estate. The applicant knew at the time of non-possession of the property that there had been no public access to it. Under Section 1032(1)(b) of the Civil Code, the court shall not authorise a necessary passage if the lack of access is caused by the gross negligence or intent of the person requesting the necessary passage. The Supreme Court has already reminded of its earlier conclusions where the application of Section 1032(1)(b) is possible: 1) in situations where the owner of real estate had a connection to a public road, which they subsequently lost due to grossly negligent or intentional conduct; 2) in situations where the owner of the real estate, by their construction activity, prevented the connection of their real estate to a public road; 3) in situations where a person acquires the real estate without having a connection to it ensured via a public road, and their conduct can thus be considered grossly negligent or intentional. The Supreme Court also reminded of its earlier conclusion in its ruling No. 22 Cdo 1849/2022. According to that ruling, the dismissal of an action for the authorisation of a necessary passage on the ground that the lack of access was caused by the gross negligence or intent of the person requesting the necessary passage cannot be for its own sake; it is not a kind of “punishment” for that failure. Its purpose is to induce the purchaser of land which is without necessary access to attempt to ensure access by negotiating with the owner and not to proliferate litigation unnecessarily. If it appears in the proceedings for the authorisation of the necessary passage that the defendant would not have granted the applicant the necessary passage across their land in the form of a right or an obligation at the time the applicant became the owner of the land lacking sufficient connection to a public way, and that the fact the applicant’s failure to attempt to ensure access before acquiring the land did not cause their land to lack the necessary connection (there is no causal connection), then in principle the action for the authorisation of the necessary passage cannot be dismissed for gross negligence.
