Public procurement: the methods of calculating the indemnity in case of unjustified termination
CE February 10, 2016, Municipality of Bandol req.n ° 387769
In this case, the Conseil d'Etat gives details of how to assess the damage resulting from an unjustified termination and more specifically the calculation of the amount of compensation that may be paid to the contractor in case of sharing responsibility. The judgment must also be noted in that it compensates the commercial loss in case of unjustified termination.
Rule n ° 1:
The counterparty of the administration whose contract is terminated may obtain compensation for damages suffered in the event of unjustified termination. He will not only be able to claim reimbursement for his expenses that were useful to the community to which he had committed himself, but also the loss of earnings, in other words the net profit that he could have hoped to have released if he had been able to execute the contract until its end.
Rule n ° 2:
In the event that the termination of the contract is considered unjustified the administrative judge may take into account the mistakes committed by the contracting party of the administration in assessing the damages suffered.
In this case, the commune of Bandol concluded, on February 17, 2009, with the company Signacité a contract on "the installation and the exploitation of devices intended for the promotion and the arrowing of the businesses, local companies and public equipments ". Believing that the company had committed errors in the execution of the contract, the municipality decided to pronounce the termination of the market to the exclusive wrongs of the company. The Conseil d'Etat considers that the contractual breaches complained of did not justify a termination of the contract, so that the Commune could be ordered to pay the damages suffered. The Council of State nevertheless decides to take into account the faults committed by this company in the evaluation of the damages suffered by limiting the compensation suffered to 50 % of the total amount of sums due.
Rule n ° 3:
In case of unjustified termination, the Council of State also considers that the contracting party of the administration is entitled to claim compensation for commercial loss.
Board of state
N ° 387769
7th / 2nd SSR
Reading of Wednesday, February 10, 2016
IN THE NAME OF THE FRENCH PEOPLE
Considering the following procedure:
The company Signacité asked the administrative court of Toulon to condemn the commune of Bandol to repair the damage suffered by unilateral improper termination of the market which it held. By a judgment n ° 1000274 of May 16th, 2012, the administrative court of Toulon condemned the commune of Bandol to pay the company Signacité the sum of 380 656 euros without tax.
In a judgment n ° 12MA02837 of December 8, 2014, the Administrative Court of Appeal of Marseilles annulled the judgment of the administrative court of Toulon of May 16, 2012, then condemned the commune of Bandol to pay to the company Signacity the sum of 460 444 , 70 euros excluding tax.
By a summary appeal, a supplementary memorial and a reply, registered on 6 February and 26 February 2015 and on 13 January 2016 at the litigation secretariat of the Conseil d'Etat, the Bandol municipality asks the Conseil d'Etat to:
- to annul that judgment;
- settling the case on the merits, to grant his appeal;
- to charge the company Signacity the sum of 3 500 euros under Article L. 761-1 code administrative justice.
Considering the other parts of the file;
- the code of public contracts;
- the code of administrative justice;
After hearing in open session:
- the report of Mr. Vincent Montrieux, master of requests in extraordinary service,
- the conclusions of Olivier Henrard, public rapporteur;
The word having been given, before and after the conclusions, to the SCP Coutard, Munier-Apaire, lawyer of the commune of Bandol and to SCP Garreau, Bauer-Violas, Feschotte-Desbois, lawyer of the company Signacite;
Considering the note under advisement, registered on January 21st, 2016, presented by the company Signacité;
1. Considering that it appears from the documents in the file submitted to the judges of the merits that the commune of Bandol concluded, on February 17, 2009, with the company Signacité a market on "the installation and the exploitation of devices intended for the promotion and signage of businesses, local businesses and public facilities "; that considering the company Signacity had committed errors in the execution of the contract, the commune of Bandol has, by decision of September 18, 2009, pronounced the termination of the market to the exclusive wrongs of the company; that by the judgment attacked, the administrative court of appeal of Marseilles, after canceling the judgment of May 16, 2012 of the administrative court of Toulon and evoked the affair, condemned the commune to pay the company Signacité the sum of 460 444, 70 euros in compensation for the damage resulting from this termination;
2. Considering that after having considered supremely, without distorting the facts, that the company Signacité had not formally been put in default to execute the market by the letter sent on July 20, 2009 and had complied with the implementation remains addressed by the municipality on August 13, 2009, regarding the dismantling of the panels whose location did not, in accordance with the stipulations of the contract, been validated by the mayor, as well as the restoration of the places, the court did not give these facts an erroneous legal classification in holding that the decision to terminate the contract, pronounced on 18 September following the exclusive wrongs of the company Signacity, was disproportionate and unjustified, even though it had noted the existence of a fault of the company resulting from the fact that it had not submitted to the formal procedure of validation of the places intended for the implementation of the dis positive benefits provided by the contract; that, however, it could not without error of law both at the same time point out the existence of this fault and condemn the commune of Bandol to repair the entirety of the injury suffered by the society without leaving to the load of the latter the part of his responsibility; that his judgment must, therefore, be annulled in so far as he condemned the commune of Bandol to compensate the society Signacity of all the damage suffered;
3. Considering that in the circumstances of this case it is necessary to settle, within the limits of the annulment specified in paragraph 2, the case on the merits pursuant to the provisions of Article L. 821- 2 of the Administrative Justice Code;
On the sharing of responsibility:
4. Considering that by not subjecting to the procedure stipulated by the contractual stipulations the choice of the places of implantation of the advertising devices on the public domain and delaying to make the modifications requested by the mayor, the company Signacity has made a mistake which must be taken into account in the assessment of the damage resulting from the unjustified termination by the application; that this responsibility will be fairly assessed by limiting the compensation for the injury suffered to 50% of the total amount of the damages;
On the assessment of loss resulting from the shortfall due to early termination:
5. Considering that, if the company Signacité claims to be compensated for its operating losses over the total duration of the contract, namely eight years, its loss of profit can not, in this case and even supposing that such a period not be excessive in relation to the subject of the contract and the nature of the services requested, be regarded as certain beyond the three-year duration of the rental agreements for the advertising devices concluded by the company with the advertisers, including the Renewal rate does not appear in the documents on file;
6. Considering, therefore, that the net margin of which the company Signacité was deprived as a result of the decision of termination, which was evaluated by reference to the type of furniture provided, the conditions of lease of this furniture and in view of the balance sheet accountant as of June 30, 2009, without these elements of evaluation being seriously contested by the commune of Bandol, must be limited to three years of operation, ie a sum excluding tax of 170 100 euros;
On the other counts of harm:
7. Considering that the company Signacity produces a statement of the expenses incurred for the manufacture, installation and removal of the furniture, the amount of which is not seriously contested by the commune of Bandol; it must therefore be stopped at the amount requested, or 28,227.27 euros excluding tax;
8. Considering that the wrongful termination of the market by the municipality of Bandol has caused a commercial damage to the company Signacité; that the damage will be judged correctly by stopping it at the sum of 5 000 euros;
On the total amount of compensation:
9. Considering that it follows from the sharing defined in point 4 and the amounts determined in points 6 to 8 that the total amount of compensation to which the company Signacité is entitled must be set at 101,664 euros before tax;
10. Considering that it is not necessary, in the circumstances of the case, to grant the conclusions presented by the company Signacité as by the commune of Bandol under Article L. 761-1 code administrative justice;
Article 1: Article 2 of the judgment of the Administrative Court of Appeal of Marseille of 8 December 2014 is canceled.
Article 2: The commune of Bandol is condemned to pay the sum of 101,664 euros before tax to the company Signacité.
Article 3: The conclusions of the company Signacité presented under the provisions of Article L. 761-1 code administrative justice are rejected.
Article 4: The conclusions of the commune of Bandol presented under the provisions of Article L. 761-1 code administrative justice are rejected.
Article 5: This decision will be notified to the municipality of Bandol and the company Signacité.