Dismissal of appeal against rent increases and rent determinations

Facts

Parties and procedural participants:

The appellants are five tenants ([A.] , [B.] , [C.] , [D.] /[E.] , [F.F.] /[G.F.] ) of apartments in the properties [X.] 17/19 and 27 in [U.] . The respondent is [G.] Vorsorge (formerly [H.] Vorsorgestiftung), represented by Attorney-at-Law Michael Lauper. The tenants are represented by Attorney-at-Law Patrik Gruber.

Facts of the case:

The [H.] Vorsorgestiftung was the owner of the properties and transferred its assets and liabilities pursuant to the merger agreement of 30 May 2017 to [G.] Vorsorge. The tenants had been renting the properties under various lease agreements since 1989 ([A.] ), 1994 ([B.] ), 2007 ([C.] ) and 2010 ([D.] /[E.] and [F.F.] /[G.F.] ).

On 7 June 2011, the landlord (then still [H.] Vorsorgestiftung) notified all tenants of a rent increase effective from 1 October 2011. The tenants contested this increase, and the conciliation hearing on 5 September 2011 was unsuccessful. The landlord then filed a claim with the Rent Court of the Sense and Seebezirk District. The Rent Court admitted the claim and dismissed the tenants' applications. The tenants appealed against this interlocutory decision, which the Fribourg Cantonal Court dismissed on 10 July 2012. An appeal in civil matters filed against this was not considered by the Federal Supreme Court (judgment 4A_523/2012 of 3 October 2012).

Following further procedural developments, the tenants filed a counterclaim for rent reduction and determination of the initial rent on 16 October 2017. The Rent Court issued a judgment on 6 September 2021, which was partially in favour of the landlord and partially in favour of the tenants. Both parties appealed against this judgment. The Fribourg Cantonal Court partially granted both appeals on 16 August 2022. It confirmed the lawfulness of the rent increases of 7 June 2011, determined the net rents as of 1 October 2011 for the individual tenants and set the rents for later dates. It also rescinded the Rent Court's orders on the determination of the initial rent for some tenants without replacement.

The tenants then filed an appeal in civil matters with the Federal Supreme Court and requested the annulment of the cantonal court judgments, the dismissal of the landlord's claim and the granting of their counterclaims. They also requested the refund of overpaid rents and the determination of the initial rent. The landlord requested the dismissal of the appeal with costs.

Considerations

1. Admissibility of the appeal:

The Federal Supreme Court examines the admissibility of the appeal ex officio. The appeal is admissible since the amount in dispute pursuant to Art. 74 para. 1 lit. a FSCA exceeds the minimum threshold of CHF 15,000.-- per appellant. Furthermore, the appellants' applications are sufficiently quantified, so that the formal requirements for an appeal are met. The appeal is sufficiently substantiated and addresses the considerations of the lower court, thus meeting the content requirements of Art. 42 FSCA.

2. Right to a lawful judge (Art. 30 para. 1 Cst., Art. 6 para. 1 ECHR):

The appellants allege that the participation of the part-time substitute judge [K.] in the lower court judgment of 16 August 2022 violated their right to a lawful judge. The Federal Supreme Court notes that an appearance of bias only exists if there is a mandate relationship with the opposing party CO a concrete prejudice regarding the subject matter of the dispute. The mere fact that [K.] acted as an attorney for landlords in other proceedings does not give rise to an appearance of bias. Moreover, the appellants have not presented any concrete circumstances that would suggest a lack of distance CO neutrality on the part of the judge. The objection is therefore unfounded.

3. Timeliness of the claim (Art. 209 para. 4 CPC):

The appellants complain that the landlord's claim of 7 October 2011 was not filed in a timely manner. The Cantonal Court held that the [H.] Vorsorgestiftung was neither personally present nor properly represented at the conciliation hearing on 5 September 2011. The claim period therefore began at the earliest with the service of the conciliation protocol on 12 September 2011 and ended on 7 October 2011. The claim was thus filed in a timely manner. The objection is unfounded.

4. Unquantified applications for determination of the initial rent:

Some appellants complain that the Cantonal Court did not rule on their unquantified applications for determination of the initial rent. The Federal Supreme Court confirms that the applications were unquantified and that no sufficient justification was provided for the impossibility CO unreasonableness of quantification. Moreover, the applications should have been quantified at the latest after the conclusion of the taking of evidence. The lower court was therefore justified in not ruling on the applications. The objection is unfounded.

5. Formal invalidity of the rent increases (Art. 269d para. 2 lit. a CO, Art. 19 RRBPO):

The appellants allege that the landlord used outdated forms that did not comply with the legal requirements. The Cantonal Court held that although the forms were outdated, the appellants had filed their conciliation requests with the competent conciliation commission in a timely manner. Moreover, they had only raised the formal defect in the appeal proceedings, although they could have recognised it earlier. The appellants' conduct was therefore deemed to be abusive. The Federal Supreme Court confirms this assessment, as the objection of formal invalidity was raised only after a long…