Permissibility of Reclaiming an Excessive Advance on Costs and Claiming Additional Uncovered Costs in the Accounting Process

Facts

A. and B. (Plaintiffs, Appellants) concluded a contract for work with C. AG (Defendant, Respondent) for the construction of a multi-family residential building. After moving into the residential building, the Plaintiffs complained about various defects. With a judgment dated March 15, 2011 (Advance on Costs Judgment), the Commercial Court of the Canton of Zurich ordered the Defendant to pay the Plaintiffs an advance of CHF 242,740 towards the estimated costs of remedying the defects. After the remediation was carried out, the Plaintiffs additionally claimed CHF 40,344.35 plus interest before the Commercial Court, as the actual costs of the performed substitute performance to remedy the defects had exceeded the advance on costs by this amount. The Commercial Court dismissed the claim on November 12, 2014.

The Federal Supreme Court dismisses the appeal filed by the Appellants against the judgment of the Commercial Court of November 12, 2014.

Considerations

The Federal Supreme Court states that the Advance on Costs Judgment in the accounting process does not preclude the contractor from reclaiming an excessive advance on costs or the client from claiming additional uncovered costs. The amount of the actual costs, which had not yet been incurred at the time of the Advance on Costs Judgment, does not have the effect of res judicata. Advances are on-account payments made subject to the final settlement of costs.

Contrary to the lower…