Break in talks: expenses incurred may be compensated but not loss of expected profit
December 9, 2016, Société Foncière Europe, n ° 391840
Foncière Europe wanted to acquire land in Grasse to build a business park. The agglomeration community first expressed its wish to participate in the project, then gave up and decided to acquire the property itself. To this end, the municipality exercised its right of pre-emption. Believing that it had been the victim of an abusive breach of negotiations with the agglomeration community and of a fault on the part of the municipality in exercising its right of pre-emption, Foncière Europe brought an action for damages before the Administrative Court. However, the parties reached an amicable agreement and entered into a transactional protocol, which was approved by deliberative deliberations of both communities. An appeal was lodged against these deliberations, which were annulled by the Administrative Court. Foncière Europe filed an appeal, which was rejected by the Administrative Court of Appeal. On an appeal, the Council of State provides interesting details on the responsibility of the administration in case of break of the talks, as well as on the conditions of regularity of a transaction.
Rule n ° 1: The amount of compensation granted in a transaction is assessed globally
The Administrative Court of Appeal held that the transaction was a liberality. For that reason, it had examined, for each of the heads of damage taken separately from each other, whether the compensation was not manifestly disproportionate. The Council of State censures this method. Recalling that "the reciprocal concessions granted by the parties in the context of a transaction must be assessed globally", the Conseil d'Etat considered that the Court made an error of law and therefore quashed its judgment.
Rule # 2: Administration can be held liable for inciting expenses by giving false assurances that a contract will be concluded
The Council of State lays down the principle according to which the unilateral rupture of the negotiations preliminary to the conclusion of a contract, for reasons of general interest, is not likely to engage the responsibility for fault of the administration. However, it provides an exception: this liability may be incurred if, during the negotiations, the public body incites his partner to incur expenses by giving him, wrongly, the assurance that a contract would be signed, provided that this the latter could not legitimately ignore the risk to which he was exposed.
Rule 3: The loss of the expected profit is not compensable
On the other hand, the Council of State considers that, even if the public person would have given the insurance to his partner that a contract would be concluded, there is no right to the conclusion of such a contract. Consequently, the Council of State holds that the loss of the profit that the partner hoped to derive from the transaction can not constitute compensable damage.
Rule 4: A deal with disproportionate concessions is a gift
In this case, the transaction provided for € 750,000 in compensation to Foncière Europe, broken down into € 450,000 for losses incurred and € 300,000 for the expected profit. In return, Foncière Europe undertook to withdraw its appeals. Applying the principle of the global assessment of the indemnities to determine the regularity of a transaction, the Council of State retains that the sum total of 750.000 € is manifestly disproportionate because it includes a compensation for non compensable damage, as well as compensation for compensable damage which does not appear to be undervalued. The Conseil d'Etat therefore considers that the complex includes concessions from the agglomeration community and the municipality disproportionate to those granted by Foncière Europe. Consequently, the Council of State retains that it is a liberality.
Board of state
N ° 391840
ECLI: FR: CECHR: 2016: 391840.20161209
Mentioned in the tables of Lebon collection
7th - 2nd rooms together
Mr Marc Pichon de Vendeuil, rapporteur
Mr Gilles Pellissier, public rapporteur
SCP GASCHIGNARD; SCP FABIANI, LUC-THALER, PINATEL, lawyers
Reading of Friday, December 9, 2016
IN THE NAME OF THE FRENCH PEOPLE
Considering the following procedure:
MA..Euzière has applied to the Administrative Court of Nice for the annulment of the deliberation of the Grasse municipal council of June 26, 2009 approving the transaction protocol concluded between the agglomeration community "Pôle Azur Provence" (CAPAP ), the municipality of Grasse and Foncière Europe. The same applicant also seized that court, with MG..E ..., MD..H ..., MC..F ... and Mrs B ... I ..., of a request to the annulment of the deliberation of June 19th, 2009 of the CAPAP community council approving the same transaction protocol. By two judgments No. 0903233 and No. 0903236 of July 9, 2013, the court quashed these deliberations.
By a judgment n ° s 13MA03627, 13MA03628 of May 18, 2015, the Administrative Court of Appeal of Marseilles rejected the appeal of the company Foncière Europe against these judgments and enjoined the parts to proceed to the resolution of the transaction object of the disputed deliberations within four months of the notification of its judgment, or, failing such an agreement, enjoined the "Pôle Azur Provence" agglomeration community to refer the matter to the contract judge for draws the consequences of his judgment.
By a summary appeal and a supplementary memorandum, registered at the litigation secretariat of the Conseil d'Etat on 17 July and 16 October 2015, Foncière Europe asked the Conseil d'Etat to:
1 °) to annul this judgment in so far as it rejects its requests for appeal and upholds the incidental conclusions of Mr. Euzière;
2 °) to charge Mr. Euzière a sum of 5,000 euros under Article L. 761-1 code administrative justice.
Considering the other parts of the file;
- the Civil Code, in particular Article 2044;
- the general code of local authorities;
- the code of administrative justice;
After hearing in open session:
- the report of Marc Pichon de Vendeuil, master of petitions,
- the conclusions of Mr Gilles Pellissier, public rapporteur.
The speech having been given, before and after the conclusions, to SCP Fabiani, Luc-Thaler, Pinatel, lawyer of the company Foncière Europe, and to the SCP Gaschignard, lawyer of the agglomeration community of the Pays de Grasse.
1. Considering that it appears from the documents in the file submitted to the judges of the merits that the company Foncière Europe, which carries on the activity of real estate dealer, manifested in 2007 its intention to acquire from the company Symrise, which he operated a perfume factory, an industrial wasteland located on the territory of the commune of Grasse, with a view to constructing a business park there; that, in this perspective, it has become closer to the agglomeration community "Pôle Azur Provence", since become agglomeration community of the Pays de Grasse; that the agglomeration community expressed its wish to participate in the project, since it was intended primarily for the perfume industry; that, however, the companies of the sector of the perfumery having made known their lack of interest for the envisaged operation, the community of agglomeration finally gave up to join it and decided to acquire the set real estate; that the municipality of Grasse exercised its right of preemption for the benefit of the agglomeration community by an order dated February 15, 2008; that considering having been the victim of an abusive breach of the negotiations entered into with the agglomeration community and of a fault of the municipality of Grasse in the exercise of its right of pre-emption, the company Foncière Europe has appealed compensatory recourse the Administrative Court of Nice; however, the parties having reached an amicable agreement, the deliberative assemblies of the agglomeration community and the municipality of Grasse approved, on 19 and 26 June 2009, a tripartite transactional protocol; that, at the request of Mr. Euzière, municipal councilor of Grasse, and several taxpayers of the commune, the administrative court of Nice canceled these deliberations by a judgment of July 9, 2013; that the company Foncière Europe appeals in cassation against the judgment of the administrative court of appeal of Marseille of May 18, 2015 as it rejects its requests for appeal and enjoins the parties to proceed to the resolution of the transaction approved by the contested deliberations within a period of four months from the notification of its judgment;
2. Considering that, in order to consider that the transaction approved by the contested deliberations constituted a liberality on the part of the public collectivity and was consequently of an unlawful nature, the Marseilles Administrative Court of Appeal examined separately the content of each of the heads of the damage taken into account in the settlement agreement and assessed for each of them, in isolation, whether the negotiated allowances were not manifestly disproportionate; In reasoning thus, while the reciprocal concessions granted by the parties in the context of a transaction must be assessed globally, the court erred in law. that as a result and without it being necessary to examine the other grounds of the appeal, its judgment must be annulled in so far as it rejects the appeals of the company Foncière Europe and gives right to the incidental conclusions of M. Euzière;
3. Considering that it is appropriate, in the circumstances of the case, to settle the case on the merits within the limits of the annulment pronounced, pursuant to the provisions of Article L. 821-2 of the Code de administrative justice;
4. Considering that under Article 2044 of the Civil Code, the transaction is a contract by which the parties terminate a contestation born or prevent a future dispute; It appears from the documents in the file that the purpose of the Memorandum of Understanding approved by the impugned deliberations of 19 and 26 June 2009 is to put an end, through reciprocal concessions, to the dispute brought before the administrative court. that it appears from the same documents that the agglomeration community has undertaken to compensate the losses suffered by the company Foncière Europe for an amount of 450 000 euros before tax and to guarantee this company of any tax adjustment concerning VAT during the following four years and to guarantee the municipality of Grasse possible convictions likely to proceed from an irregularity of the pre-emption decision and to compensate the company Foncière Europe for its loss of earnings up to 300 000 euros excluding tax; that in return, Foncière Europe and its manager undertook to withdraw their appeals;
5. Considering that if the unilateral termination, by the public corporation, for a reason of general interest, negotiations prior to the conclusion of a contract is not likely to engage its responsibility for misconduct, this responsibility may, however, be called into question when the public person during the negotiations has incited his partner to incur expenses by giving him, wrongly, the assurance that such a contract would be signed, provided that he was not able to to legitimately ignore the risk to which he exposed himself; whereas, on the other hand, even though such insurance has been given, it can not create any right to the conclusion of the contract; that the loss of the benefit which the anticipated partner expected from the operation can not, in this hypothesis, constitute compensable damage; that, in the circumstances of the case, considering the grant to the company Foncière Europe of the sum of 300 000 euros for his loss of earnings, head non-compensable damage, and that, as the documents in the file show, the amount of EUR 450 000 foreseen for the losses suffered is not undervalued, the transaction approved by the disputed deliberations, which provides for the payment of EUR 750 000 to society, must be regarded as involving, as a whole, concessions manifestly disproportionate and therefore as constitutive of a liberality on the part of the agglomeration community "Pôle Azur Provence" and the commune of Grasse; that, as a result, the company Foncière Europe is unfounded to complain that the Administrative Court of Nice has canceled the deliberations of 19 and 26 June 2009 of the agglomeration community "Pôle Azur Provence" and the municipality from Grasse;
6. Considering that the conclusions tending that it is enjoined to the president of the agglomeration community of the Pays de Grasse, coming to the rights of the agglomeration community "Pôle Azur Provence", to terminate the tripartite transaction, which is fully executed, must be regarded as tending to the resolution of it; that the illegality of the deliberations which approved the signing of the transaction justifies, because of its seriousness and without a reason of general interest, that the parties to the agreement should be enjoined to proceed to its resolution amicable and, in the absence of such a resolution within four months of the notification of this decision, that the Agglomeration Community of Pays de Grasse be directed to refer the contract judge for the consequences of this decision; whereas, on the other hand, this decision, which in itself does not have the effect of retroactively eliminating the contract, such a consequence attaching either to the resolution agreed by the parties or to the decision of the contract judge does not imply that Foncière Europe is now required to repay the sums paid to it; it is, moreover, open to the parties to carry out a new negotiation with a view to determining the compensation due to the company; that, consequently, it is necessary to reject the request of Mr. Euzière that the order of the repayment of the sums perceived by the company Foncière Europe is ordered;
7. Considering that the provisions of Article L. 761-1 of the Code of Administrative Justice preclude the payment of an amount to Mr Euzière, who is not, in the present case the losing party; whereas, on the other hand, in the circumstances of this case, the liability of Foncière Europe and, on the other hand, of the agglomeration community of the Pays de Grasse, coming to the rights of the agglomeration community "Pôle Azur Provence", the sum of 1 500 euros to be paid to Mr. Euzière under the same provisions;
Article 1: The judgment of the Administrative Court of Appeal of Marseille of May 18, 2015 is set aside in so far as it rejects the appeals of the company Foncière Europe and grants the incidental conclusions of Mr. Euzière.
Article 2: The appeal requests of the company Foncière Europe are rejected.
Article 3: It is enjoined to the parties to the transaction to proceed to its amicable resolution within four months as from the notification of this decision to its last recipient or, in the absence of such an agreement within the given time, to refer the contract judge for the consequences of this decision.
Article 4: The remainder of Mr. Euzière's appeal appeal is dismissed.
Article 5: The company Foncière Europe and the agglomeration community of Pays de Grasse will each pay the sum of 1 500 euros to Mr. Euzière under the provisions of Article L. 761-1 code administrative justice. The conclusions presented by Foncière Europe under the same provisions are rejected.
Article 6: This decision will be notified to the company Foncière Europe, the agglomeration community of the Pays de Grasse, the municipality of Grasse and MA..Euzière.