Provisional registration of a builder's lien: arbitrariness and excessive formalism in establishing prima facie evidence of completion of work; remittal to the lower court

Facts

The [A. AG] (appellant, not represented by counsel before the Commercial Court, represented before the Federal Supreme Court by lawyer Nicole Allemann) applied on 12 March 2020 to the Commercial Court of the Canton of Zurich, sole judge, for an immediate and ex parte order directing the Land Registry Office Aussersihl-Zürich to provisionally register in its favour and against the property of [B. AG] (respondent) a builder's lien for a lien amount of CHF 58'466.35 plus interest at 5% from 2 October 2019.

By order of 13 March 2020, the Commercial Court provisionally granted the application without hearing the opposing party and set the respondent a time limit to submit its observations, which lapsed unused.

By judgment of 20 April 2020, the Commercial Court dismissed the application and ordered the full deletion of the provisionally registered builder's lien. It reasoned that the appellant had not made conclusive submissions regarding the time of completion of the work, so that the four-month registration period under Art. 839 para. 2 CC could not be examined and was not established prima facie. The appellant had argued that it had carried out rework on 18 November 2019 without describing it in more detail. The Commercial Court understood the term 'rework' as minor work serving purely to perfect the work and held that the work report could not be taken into account, since no corresponding submissions had been made. The time sheet showed that work was carried out regularly until 26 August 2019, so the Commercial Court considered completion on that date to be probable; the period would then not have been observed by the registration on 13 March 2020.

On 20 May 2020, the appellant filed a civil law appeal with the Federal Supreme Court, requesting that its application be granted or that the provisional registration be confirmed, as well as suspensive effect. The Federal Supreme Court granted suspensive effect by order of 16 June 2020. The respondent did not submit observations, and the Commercial Court waived its response.

Considerations

The Federal Supreme Court notes that an appeal in civil matters is admissible against a decision refusing the provisional registration of a builder's lien (Art. 72 para. 1, Art. 75 para. 2 let. b, Art. 76 para. 1, Art. 90, Art. 100 para. 1 FSCA). Since this concerns a provisional measure within the meaning of Art. 98 FSCA, only the violation of constitutional rights may be complained of. As a matter of law: under Art. 839 para. 2 CC, the lien must actually be registered within four months after completion of the work; this is a forfeiture period, for which provisional registration (annotation) is sufficient to preserve the right (Art. 961 para. 1 no. 1 CC in conjunction with Art. 76 para. 3 LRO). Construction work is considered complete when all services under the contract for work have been performed; indispensable finishing work is assessed qualitatively, not quantitatively.

For the annotation, establishing the claim prima facie (Art. 961 para. 3 CC) in summary proceedings (Art. 249 let. d no. 5 CPC) is sufficient. The requirements are lower than the usual standard of proof. Provisional registration may only be refused if the existence of the lien is excluded or appears highly improbable; in case of doubt, it must be granted and the question left to the ordinary court.

The Federal Supreme Court examines whether the Commercial Court established the facts and assessed the evidence arbitrarily (Art. 9 Cst.), whether it violated the right to be heard (Art. 29 para. 2 Cst.), and whether excessive formalism is present (Art. 29 para. 1 Cst.). Arbitrariness exists where an important, decisive piece of evidence is disregarded without objective reason, where untenable conclusions are drawn, or where a norm is blatantly violated. Excessive formalism exists where overly strict requirements are imposed on written submissions and access to the courts is unduly blocked.

The Federal Supreme Court finds that the Commercial Court acted arbitrarily. It isolated the term 'rework' and gave it excessive weight without interpreting it in the concrete context of the application and its exhibits. The application expressly stated that the work had been definitively handed over and completed on 18 November 2019, which asserts completion. The work report No. 1683810 was expressly referred to in the application;…