Clarification of the manifestly excessive nature of late penalties
The interdepartmental hospital center for child and adolescent psychiatry (CHIPEA) entrusted GBR Ile-de-France with a work mission consisting of the transformation of a medical and psychological center part-time therapeutic home for children and adolescents. The work had been received three years late. As a result, CHIPEA had notified the company GBR Ile-de-France, a general account containing late penalties in the amount of 663.686,66 euros HT The company GBR challenged this count before the Administrative Court of Melun. The latter considered that the delay in the commencement of the project was attributable to the company only as of November 27, 2008 and not October 10, 2007 as supported by CHIPEA but was responsible for all delays execution, he has therefore reduced the amount of the late payment penalties to 308,025.55 euros.
Both parties appealed the decision of the Melun Administrative Court. By a judgment dated June 15, 2015, the Paris Administrative Court of Appeal had initially considered that the balance of the count against the company GBR established by TA MELUN was obviously excessive. The Administrative Court of Appeal had therefore reduced this amount to EUR 66,392.45.
Both parties appealed on points of law.
Rule n ° 1: Late payment penalties are assessed at a flat rate
As a first step, the Council of State specifies that the penalties of delay envisaged in the clauses of a public contract have for object to compensate all the damage which is likely to cause to the contracting authority the non-respect, by the holder contractually agreed deadlines. These penalties are applicable for the sole reason that a delay in the performance of the contract is found, even if the contracting authority has not suffered any damage or the amount of penalties charged to the contract holder that results their application would be greater than the loss suffered.
Rule n ° 2: The judge of the contract has the faculty to modulate the amount of the penalties of delay
Then, the Council of State recalls the terms of its decision OPHLM Puteaux (Council of State, 29 December 2008, No. 296930), by which it was recognized the judge of the contract, exceptionally, the power to moderate or increase the penalties for delay resulting from the contract if they reach an amount which is manifestly excessive or derisory, having regard to the amount of the contract and taking into account the extent of the delay in the performance of the services.
Rule n ° 3: On the limits imposed on the judge of the contract in the modulation of the penalties of delay.
Finally, and this is the main contribution of this decision, the Council of State sets the limits in which the judge of the contract can moderate or increase the penalties of delay due in the context of a market. In this case, the judges of the Royal Palace consider that when the contract judge is seized by the holder of the contract conclusions to that it moderates the penalties of delay put at his charge, it is his responsibility to provide the judges all the factors that can determine the extent to which the penalties are excessive.
In this case, the Administrative Court of Appeal had to mitigate late penalties without checking whether it was consistent with the practices observed for comparable markets or the particular characteristics of the disputed market. Lastly, the Conseil d'Etat states that the Court of Appeal could not reduce the penalties to less than the damage suffered by the contracting authority without first verifying the extent of the damage.
Board of state
N ° 392707
7th - 2nd rooms together
Play of the Wednesday, July 19th, 2017
IN THE NAME OF THE FRENCH PEOPLE
Considering the following procedure:
The company GBR Ile-de-France asked the administrative court of Melun to annul the decision of 20 October 2011 of the interdepartmental psychiatric hospital for children and adolescents rejecting his complaint and to condemn the latter to pay him the sum of 663 686.66 euros including taxes for the balance of a works contract relating to the construction of a medical-psychological center. By a judgment n ° 1203172 of February 12th, 2014, the administrative court of Melun fixed the balance of the market at the sum of 308 025,55 euros all taxes included to the disadvantage of GBR Ile-de-France, condemned this company to pay the said sum to the interdepartmental psychiatric hospital for children and adolescents and rejected the surplus conclusions GBR Ile-de-France.
By a judgment n ° 14PA01703 of June 15, 2015, the Paris Administrative Court of Appeal, on the call of the GBR Ile-de-France company, fixed the balance of the market at the sum of 66,392.45 euros in the disadvantage of the company GBR Ile-de-France, sentenced the company GBR Ile-de-France to pay this sum to the interdepartmental hospital center of the child and adolescent and rejected the surplus of the conclusions of the application of the company GBR Ile-de-France de-France before the administrative court and its appeal findings.
By a summary appeal and a complementary memorandum, registered on 17 August and 18 November 2015 at the litigation secretariat of the State Council, the interdepartmental psychiatric center for children and adolescents asks the Conseil d'Etat:
1 °) to annul this judgment;
2 °) to charge the company GBR Ile-de-France the sum of 4 500 euros under Article L. 761-1 code administrative justice.
Considering the other parts of the file;
- the Civil Code, in particular Article 1152;
- the code of public contracts;
- the code of administrative justice;
After hearing in open session:
- the report of Mrs Charline Nicolas, master of petitions,
- the conclusions of Mr Gilles Pellissier, public rapporteur.
On the appeal's conclusions of the interdepartmental psychiatric center for children and adolescents:
With regard to the claim for annulment of the judgment under appeal in so far as it confirmed the discharge of the late payment penalties for the period from 10 October 2007 to 26 November 2008:
- Considering, in the first place, that it appears from the documents in the file submitted to the judges of the merits that under Article 8.6.1 (a) of the Special Administrative Clauses (CCAP) of the contract in dispute: "The contractor is deemed to have, upon submission of his tender (...) assessed exactly all the conditions of execution of the works and to have fully and fully realized their importance and their particularities "and" checked all indications of tender documents including those given by the CCTP, plans and drawings, to be surrounded by all additional information possible from the supervisor, and after taking any useful information from the public services or public (...) "; that the report of expertise made on July 13, 2011 underlines that "the impossibility of carrying out the project according to the solution of the design office Théta Engineering is proven, but this point should have been detected by the company GBR Ile-de-France France: 1 / during the analysis period of the DCE that the company had to carry out in order to establish its price offer (call for tenders phase in order to draw up its proposal) (...) "; whereas, however, as the same report states on page 66, these inconsistencies were not noted by the consortium or the construction economist who was in charge of drafting the documents for the consultation; that, therefore, considering, by adoption of the reasons of the first judges, that it did not result from the instruction that the errors made by the engineering office Théta Ingénieries could have been noted by the company GBR Ile-de-France France, before the filing of its offer, the Paris Administrative Court of Appeal, which gave sufficient reasons for its judgment on this point, made a sovereign assessment of the documents in the file submitted to it, without distorting them;
- Considering, secondly, that it appears from the documents in the file submitted to the Judges of the merits that under Article 8.1.2 of the same SCC, the plans for the execution of the works had to be drawn up by the undertakings and submitted to the approval of the supervisor and the supervisory board and that this approval only concerned conformity with the provisions of the contract, "the companies remain liable for errors not reported in the basic documents or errors in the execution documents "; that, consequently, after having noted that, by a letter of October 10, 2007, that is to say at the end of the contractually anticipated period of preparation of the building site, GBR Ile-de-France had put forward a certain number of difficulties and uncertainties in the consultation documents due to the insufficient thickness of the metal profiles, the Paris Administrative Court of Appeal, which sufficiently justified its judgment on this point, made a sovereign appreciation of the documents in the file, without to distort them, holding that GBR Ile-de-France was justified in maintaining that the delay in the commencement of the works was not attributable to it;
- Considering, thirdly, that it is apparent from the reasons of the judgment of the Administrative Court of Melun, adopted by the court in its judgment, that the court relied on the fact that GBR Ile-de-France, after the letter of 10 October 2007 in which she had informed the supervisor of the difficulties encountered, had continued to attend the meetings of building sites and had attempted with the representative of the group of project management to find a solution to structural problems, to infer that she had not shown the will to stop the execution of the work and that penalties for delay could not be imputed to her as such; that it is for a reason superabundant that the court noted that it was not the result of the investigation that the company GBR Ile-de-France would not have carried out the studies of execution provided for by the contractual stipulations; that the grounds of appeal directed against this ground adopted by the court are, therefore, inoperative;
As regards the claim for annulment of the contested judgment in so far as it modified the penalties for delay imposed on GBR Ile-de-France:
- Considering that the penalties of delay provided for by clauses of a public contract are intended to compensate on a flat-rate basis for the damage that may be caused to the contracting authority the non-compliance by the contract holder with the contractually scheduled completion deadlines. ; they are applicable solely on the ground that a delay in the performance of the contract is established and even if the contracting authority has not suffered any damage or that the amount of the penalties charged to the holder of the contract resulting from their application would be greater than the injury suffered;
- Considering that if, when a dispute arises between the parties to a public contract, the judge of the contract must, in principle, apply the clauses relating to the penalties agreed upon by the parties by signing the contract, he may, exception, with such findings made by a party, to moderate or increase the penalties for delay resulting from the contract if they reach an amount which is manifestly excessive or derisory, having regard to the amount of the contract and taking into account the extent of the delay performance of services;
- Whereas it follows from what has been said in paragraph 4 that where the holder of the contract submits to the court of claim that he should moderate the penalties charged to him, he can not usefully argue that the contracting authority does not has suffered no prejudice or that the damage he has suffered is less than the amount of the penalties charged to him; that it is his responsibility to provide the judges with all elements relating, in particular, to the practices observed for comparable markets or to the particular characteristics of the contract in dispute, such as to establish to what extent, according to him, these penalties are manifestly excessive; that considering the arguments of the parties, it is incumbent on the judge either to reject the conclusions before it by applying the clauses of the contract relating to the penalties, or to rectify the amount of the penalties charged to the holder of the contract only to the extent required by the correction of their manifestly excessive character;
- Considering that it follows from the foregoing that the Paris Administrative Court of Appeal committed an error of law in reducing the amount of the penalties charged to GBR Ile-de-France without ascertaining the manifestly excessive character penalties, in particular as regards practices observed for comparable markets or particular characteristics of the disputed market; that it also erred in law by reducing the penalties to an amount which could not, in any case, be regarded as correcting their obviously excessive as soon as it was supported, which it was his responsibility to verify that this amount was less than the loss suffered; that as a result and without it being necessary to examine the grounds of insufficient statement of reasons raised against this part of the judgment, the judgment of the court must be annulled in so far as it is pronounced on the modulation of late penalties;
The conclusions of the cross-appeal of GBR Ile-de-France:
With regard to the claim for annulment of the judgment in so far as it dismissed the claim for discharge of late payment penalties for the period from 27 November 2008 to 24 December 2009:
- Considering that in considering, by adoption of the reasons of the judgment of the administrative court, that the company did not justify having been unable to carry out the work prescribed by the order of service n ° 4 and that the judicial liquidation of the cabinet Léothaud architecture, agent of the group of control of work, intervened later, could not justify its delay, the administrative Court of appeal gave a sovereign appreciation of the parts of the file, which is not tainted of denaturation; the findings of the cross-appeal on this point must be dismissed;
With regard to the other conclusions of the cross-appeal:
- Considering that this decision cancels the part of the judgment of the court relating to the modulation of late penalties; that the conclusions of GBR Ile-de-France's cross-appeal concerning this modulation have become moot and there is therefore no longer any need to rule on it;
- Whereas, since this Decision rejects its claim for the annulment of the judgment in so far as it concerns the correctness of the delay penalties imposed on GBR Ile-de-France, the cross-appeal seeking annulment of the judgment in so far as it rules on the burden of the costs of the expert's report can only be dismissed;
- Considering that it is not necessary, in the circumstances of the case, to accede to the conclusions presented by the interdepartmental psychiatric center for children and adolescents and to those presented by GBR Ile -de-France under Article L. 761-1 of the Code of Administrative Justice;
Article 1: The judgment of the Administrative Court of Appeal of Paris of June 15, 2015 is canceled in so far as it pronounces on the modulation of the penalties of delay.
Article 2: The case is referred, to this extent, to the Paris Administrative Court of Appeal.
Article 3: There is no need to rule on the conclusions of the cross-appeal of the GBR Ile-de-France company seeking annulment of the judgment of the Paris Administrative Court of Appeal of 15 June 2015 in as long as it decides on the modulation of late penalties.
Article 4: The remaining pleadings of the appeal of the interdepartmental psychiatric center of the child and adolescent and the rest of the conclusions of the cross-appeal of GBR Ile-de-France are rejected, as well as the conclusions of the parties for the application of Article L. 761-1 of the Code of Administrative Justice.
Article 5: This decision will be notified to the interdepartmental psychiatric hospital for children and adolescents and GBR Ile-de-France.