An extraordinary appeal of the Financial Ombudsman in a dispute over car repair costs

8th of April 2021

The Financial Ombudsman brought another extraordinary appeal to the Supreme Court. This time he is fighting for the right to reconsider the dispute between the injured party and the insurer for over 11,000 PLN. The dispute concerns the payment of compensation equal to the cost of repairing the car, calculated by experts. The Financial Ombudsman informs that the aggrieved party has the right to do so even if the damaged car has not been repaired and sold.

– I decided to file an extraordinary appeal, because in this case we are dealing with an incorrect, and grossly, incorrect interpretation of the law. By adopting the approach presented by the District Court, the second instance court would also violate the constitutional principle of equality before the law. Therefore, the revocation of the judgment under appeal is necessary to ensure compliance with the principle of a democratic state ruled by law implementing the principles of social justice. The violations in the complaint are so serious that they order the Supreme Court to interfere with the res judicata by upholding the complaint, setting aside the judgment under appeal and referring the case for reconsideration – says Dr. Mariusz Jerzy Golecki, professor at the University of Łódź, Financial Ombudsman.

The dispute between the injured party and the insurer, in which the Financial Ombudsman filed an extraordinary appeal, concerns the effects of a car collision in April 2013. The insurer of the perpetrator decided that the repair of the victim’s car was not worth it. This means that its costs would exceed the value of the vehicle on the day of the damage, estimated at 20,800 PLN. Therefore, the insurer declared the so-called total loss, estimated the wrecked vehicle at 13,400 PLN and paid out 7,400 PLN in compensation.

The court of first instance agrees with the injured party

The injured party did not agree with this position. He hired an expert, whose calculations confirmed that the repair costs were lower than the value of the car before the accident. The injured party asked for additional compensation covering the calculated repair costs. However, the insurer did not change his mind. The dispute continued and the injured party, unable to wait for the payment of compensation allowing for the repair, sold the damaged car. However, he retained the right to compensation equal to the cost of repairing the car, calculated by an expert. Therefore, he brought the case to court. The expert appointed by the first instance court confirmed that the insurer incorrectly assessed both the repair costs and the value of the vehicle on the date of the damage. According to these calculations, there was therefore no basis for considering the damage to be total. As a result, in March 2018, the court of first instance found that the insurer is obliged to pay an additional amount of almost 9,000 PLN for the cost of repairing the vehicle and the return of 450 PLN paid by the customer for the services of an expert. He also added default interest, so in total over 11,000 PLN were to be transferred to the customer’s account.

– The court of first instance, referring to the well-established line of jurisprudence of the Supreme Court and common courts, rightly pointed out that the compensation owed by the insurer under the compulsory third-party liability insurance of motor vehicle owners in the event of partial damage covers deliberate and economically justified repair costs. The obligation to repair the damage does not depend on the fact of repairing the damaged car, and even less on other subsequent events in the form of its sale. In the case of partial damage to the vehicle, the insurer’s indemnity is reduced to the payment of the amount necessary to restore the vehicle to its previous condition in all material respects – explains Andrzej Kiciński, Deputy Financial Ombudsman.

The second instance court is on the side of the insurer

The insurer fought on, raising the argument that after selling the damaged vehicle, the injured party cannot claim compensation for repair costs. It turned out that he found the understanding of the court of second instance, which in January 2019 changed the judgment and dismissed the injured party’s claim for payment of repair costs. The District Court took the interpretative position that in the case of selling a damaged vehicle, even if the repair costs are not excessive, the obligation to repair the damage is limited to the difference between the market value of the vehicle in an undamaged condition and the value of the accident remnants.

– The analysis of the justification of the judgment shows that the interpretation of the provisions of law made by the court of second instance with regard to the notion of damage and the amount of due compensation is unequivocally assessed in the jurisprudence of the Supreme Court as erroneous, and grossly at that. In our opinion, this justifies the submission of an extraordinary appeal by the Financial Ombudsman – says Andrzej Kiciński.

It is also reminiscent of Supreme Court judgments of 8 March 2018, II CNP 32/17; of April 12, 2018, II CNP 41/17, and of April 12, 2018, II CNP 43/17 (available at the website of the Supreme Court). In cases where, after causing partial damage, the damaged vehicle was sold and where the common courts limited the concept of damage to the difference between the market value of the vehicle in the state before the damage and the price obtained from the sale of the damaged vehicle, the Supreme Court clearly qualified this type of interpretation of the law as gross violation of substantive law (mainly Art. 363 of the Civil Code, Art. 361 of the Civil Code and Art. 822 of the Civil Code) and then found that the judgment was unlawful.

It is also impossible to ignore that in 2018 the Supreme Court refused several district courts to answer legal questions regarding the rules for determining compensation in the event of a partial repair of a damaged car or the sale of accident remnants. The Supreme Court in the justification of the decisions refusing to adopt a resolution consistently indicated that the jurisprudence of the Supreme Court is well-established and there are no grounds for making the amount of compensation dependent on the fact of repairing or limiting liability to the difference between the market value of the damaged vehicle and the value of the remnants in the event of the sale of the damaged car. In the case of partial damage to the vehicle, and in the event of the sale of an unrepaired car, the injured party may still claim compensation corresponding to the repair costs, and limiting liability to the difference between the market value of the undamaged vehicle and the wreckage is unjustified.

– This and other cases show that the dispute with the insurer can last for many years. It is difficult to expect victims to refrain from making decisions about the car until the case is settled by the court. If the insurer has not paid enough compensation to repair the vehicle, selling the remnants is often the only option. In this situation, it is difficult to accept the deprivation of the injured party’s right to demand an additional payment covering the full cost of repairing the damage – says Andrzej Kiciński.

He adds that such an approach would also violate Art. 32 of the Polish Constitution, the principle of equality before the law. Those who did not sell the wrecked vehicle would be treated better than those who did, although there is no legal basis for such a gradation of their legal situation.

Possible consequences of an extraordinary appeal

The setting aside of the judgment under appeal and the referral of the case for reconsideration will give the injured party the chance to obtain due compensation. It will also be a clear indication for those who find themselves in a similar situation that they may still pursue their rights, e.g. by submitting a request to the Financial Ombudsman for an extraordinary appeal.

Persons whose dispute on a similar background is currently pending in court have the option of submitting to the Financial Ombudsman a request to present a relevant court for the case.

Those who in the past have refused to pay for repair costs and have not decided to go to court can still pursue their claims against the insurer if they are not time-barred. In most traffic accidents, it will be three years from the receipt of the last decision in a given case from the insurance company. But in cases where the damage was a crime, it could be as long as 20 years. If such a complaint is rejected, the Financial Ombudsman can be asked to intervene.

Remember! The right to demand coverage of the costs of the appraiser service

In this case, there is also a dispute over the return of 450 PLN – the remuneration of the expert hired by the customer. The consequence of an incorrect interpretation in the dispute concerning the surcharge was the rejection of this claim by the court of second instance. In the opinion of the Financial Ombudsman, customers have the right to use professional support in a dispute regarding the extent of the damage or repair costs.

It is worth remembering that the Supreme Court, in a resolution adopted at the request of the Financial Ombudsman, confirmed the right of injured parties and assignees to demand that the costs of the expert’s opinion be covered from the motor third party liability insurance. He also made a reservation that they must be proved necessary for the effective claiming of damages. In practice, this means applying the simple principle “who is wrong, pays”. It follows from the justification that if the expert’s opinion shows that the insurer has underestimated the compensation, the customer should have no problems obtaining a refund of costs. (more in the link below) Therefore, if in the past the injured person hired an appraiser to determine the cost of the repair, he or she can additionally submit a request for coverage of the costs of such a service by the insurer.

An information leak from Facebook can be used by criminals to commit fraud. The Financial Ombudsman’s warning.

8th of April 2021

The personal data of 533 million Facebook users appeared on a hacking forum on the Internet. Among them were data of nearly 2.7 million users from Poland. Leaked names, phone numbers, home addresses as well as locations, previous locations, birth dates, biographies, account creation dates, relationship status, and sometimes email addresses. The Financial Ombudsman warns that such a large information base may be used by criminals for attacks using social engineering techniques or attempts to break into other profiles or accounts, including bank accounts. What steps are worth taking?

According to the Financial Ombudsman, the data leaked a few days ago may be used as a tool for identity theft or breach of other security measures. That is why it is so important to protect personal information and react appropriately to phishing attempts. The Ombudsman already recommends taking appropriate steps and creating a habit of protecting personal data by each of us.

Remember that if an unknown person is calling you, it may be a scammer. Even if the person provides you your data in order to authenticate the contact, this data may come from a leak. We should also pay more attention to emails and SMS messages we receive from strangers – these may also contain malicious software used for fraud or theft.

Leaking email addresses can allow scammers to impersonate real organizations, including the banks where our accounts are located. The Commissioner for Human Rights draws attention to the significant risk of the theft of funds from bank accounts. In order to minimize the occurrence of this risk, it is worth checking whether the bank uses strong authentication for all possible types of activities.

One of the most common forms of attack is a message to update your confidential data. Another form of fraud is the so-called “surcharge” fraud involving the impersonation of couriers, energy companies, debt collectors, or government offices in order to persuade you to pay by clicking on a link leading to a fake payment gateway. Be vigilant if you receive such a link. It will be much safer to enter the bank’s website address in the browser yourself or to use a tab you created yourself.

The Financial Ombudsman informs that in the event of an unauthorized payment transaction, this fact should be immediately reported to the bank together with the request for a refund, and a parallel notification of the possibility of committing a crime to the nearest police unit should be submitted. In accordance with the current legal status, the bank should return the amount of the unauthorized transaction to the customer’s account no later than by the end of the business day following the finding of the unauthorized transaction or after receiving the notification from the customer. A step that is worth taking preventively today is reviewing the data we share on social media platforms. In the era of increasingly common identity theft scams, it is worth presenting your data on the web with caution. Information that is not necessary for the creation and functioning of social media profiles is best to be left offline.

The court prevented aggrieved farmers from fighting the bank – an extraordinary appeal of the Financial Ombudsman.

1st of April 2021

In 2009, a married couple – farmers from the Podlaskie Voivodeship – took a working capital loan for several dozen thousand zlotys from a bank. In their opinion, the payments made for the repayment of the loan were booked against other liabilities towards the same bank, which – as they declared – they did not incur. The bank, using the regulations in force at that time, issued a bank enforcement order, which the farmers tried to challenge in court. The district court dismissed their claim, and – according to the Financial Ombudsman – the errors of the second instance court closed the court to pursue their rights. The only solution for them is an extraordinary appeal, for which they asked the Financial Ombudsman.

The Financial Ombudsman therefore filed an extraordinary appeal to the Supreme Court dismissing the complaint against the decision rejecting the appeal concerning the deprivation of enforceability of the bank enforcement order issued by the bank in 2010.

The basis for issuing the bank enforcement order by the bank was the agreement for a working capital loan borrowed by the married couple of farmers from the Podlaskie Voivodeship. The bank enforcement order (which was in force in Poland until 2016) made it possible to conduct civil enforcement after the court had given it an enforcement clause. This, however, was actually granted automatically, as the court examined the bank enforcement order only in formal terms. In the present case, the bank appropriated a slurry tanker belonging to the farmers under the bank enforcement order. In 2017, the couple filed a lawsuit for deprivation of enforceability of the bank enforcement order. In it, they alleged, among others, that the claim was met and the bank’s enforcement title itself is time-barred.

In the judgment of November 4, 2019, the district court dismissed the claim of the farmers, finding that the bank enforcement order met all formal conditions, the claim was not time-barred, because the limitation period was interrupted by concluding settlements with the bank and that the debt, contrary to the clients’ claims, was not paid off.

The farmers, as plaintiffs, appealed against the decision of the court of first instance that was

unfavorable for them. The appeal was filed by them in person – without the participation of a professional attorney. Along with the appeal, they also applied for an exemption from the appeal fee. The court acceded to the submitted application for exemption from paying the appeal fee and partially released the clients from the obligation to pay it. The clients were therefore required to pay the remainder of the appeal fee.

However, a copy of the court’s decision on partial exemption from costs was delivered to the farmers’ attorney instead of to them. The court did not summon plaintiffs acting personally to pay the rest of the fee. As a result of a court error, the court did not recognize the appeal, rejecting it as unpaid within the deadline. The court hearing the appeal against the decision to reject the appeal duplicated the error of the court examining the appeal. Both courts found that the lack of a summons to pay the rest of the fee was due to the fact that the clients were represented by a professional attorney who signed a letter supplementing formal deficiencies previously submitted by the clients in person for an exemption from the appeal fee, in terms of declarations on assets and family.

In the opinion of the Ombudsman, the court acted incorrectly by not calling the clients to pay the missing fee, but only by sending the decision on partial exemption from it to the attorney who did not appeal.

The court did not make a subjective distinction between bringing an appeal together with an application for exemption from court costs personally by the clients and their representation in the proceedings by a professional attorney, which resulted in the irreversible effect of closing the clients’ way to control the judgment issued in the first instance.

Using the assistance of an attorney by clients in the first instance does not exclude the possibility of submitting an appeal by clients themselves. This was the case in the present state of facts. In such a situation, in the event of formal deficiencies, the court should instruct the clients to supplement them as if the clients had acted independently. However, this was not the case.

In the appeal, the clients raised the objection that the court did not recognize the essence of the case, the limitation of claims, erroneous recognition by the court that in the case there was an interruption of the limitation period for receivables resulting from the bank enforcement title and incorrect accounting of the amounts paid to the technical account, indicating

that, according to them, the loan in question had long since been paid off, while the amounts were posted for loans which the plaintiffs, they say, had never taken. For these reasons, they cannot be prevented from verifying the judgment of the court of first instance.

The Financial Ombudsman considered it necessary to take action and submit an extraordinary appeal in this case in order to open the way for clients to substantive examination of their case by a court of second instance. The issued decision unreasonably deprived the clients of the right to substantive review of the judgment of the court of first instance. The intervention of the Financial Ombudsman may cause the court of second instance to consider the appeal filed by the clients and to substantially refer to all the allegations raised in it.

A warning from the Financial Ombudsman – watch out for cryptocurrency loans

19th of March 2021

The Financial Ombudsman’s office receives client complaints about entities that require prepayment in exchange for a loan promise. Recently, they concern a company that promised a loan using cryptocurrencies.

In the past few weeks, the Financial Ombudsman has received over a dozen requests from clients complaining about the activities of one of the loan companies. It makes granting a loan dependent on the client’s payment of certain funds. They are to be used to cover the costs of the loan-related fees. Most often, these are amounts of about 1,000 PLN, but one of the persons paid as much as 19,000 PLN. Additionally, the company requires the establishment of collateral, e.g. in the form of a promissory note. Despite the fulfillment of these conditions, the money does not go to clients, and contact with its representatives is difficult.

– The case is particularly worrying because in many cases it can be people who are in a poor financial situation, often already excessively indebted and with an unfavorable credit history. These people are particularly vulnerable to unfair practices of lenders, because they often operate under pressure and do not have sufficient knowledge to analyze the concluded contract. After reviewing the clients’ explanations and the documents provided, we can see that the company’s actions can be considered unfair or even fraudulent. Therefore, we informed the relevant state authorities – says dr. hab. Jakub Szczerbowski, director of the Banking and Capital Market Customer Department in the office of the Financial Ombudsman.

The contracts analyzed by the experts of the Financial Ombudsman contain a number of questionable provisions regarding activities preceding the granting of the loan. The mechanism of transferring funds to the clients is also surprising.

– The borrower is allegedly reserving funds in the Bitcoin cryptocurrency. Bitcoins are converted into US dollars. Then the US dollars are converted into Polish zlotys. Funds in Polish zlotys – in accordance with the provisions of the contract – should be made available to the borrower via a prepaid payment card – describes Paulina Tronowska, legal advisor at the office of the Financial Ombudsman.

In its view, this method of performance has no economic justification. It may in fact provide a facade for the actual actions of the subject, obscure the true picture of the situation and distract the consumer, preventing him or her from making a rational decision.

– If anything raises your doubts, you should refrain from signing such an agreement. You have the right to obtain an information form to read the terms and conditions. It is also worth searching the Internet for information about the company and the way it operates. If you have already decided to conclude such an agreement and during its implementation you have doubts as to the fairness and lawfulness of its provisions, a complaint should be submitted to the financial market entity. If it is not examined in accordance with our expectations, you can ask the Financial Ombudsman for and intervention or an amicable settlement. When you suspect that you have fallen victim to fraud, you should contact the Police or the Prosecutor’s Office as soon as possible – says Paulina Tronowska.

It encourages immediate action by people who feel disadvantaged by the actions of financial market entities or other entities offering financial services.

– This will allow the competent authorities to react quickly to possible irregularities in the financial market. It can also help protect other market participants from unfavorable disposal of their savings – says Paulina Tronowska.