Facts
Parties and proceedings: The City of [A.] (appellant, grantor of the building right) and [B.] (respondent, holder of the building right) dispute the adjustment of the ground rent for the building right. The subject matter is the ground rent for the building right. Challenged is the judgment of the Higher Court of the Canton of Zurich, First Civil Chamber, of 16 September 2019 (LB180034-O/U). The Federal Supreme Court (Second Civil Law Division, judgment 5A_838/2019 of 15 October 2020) decides the civil law appeal.
Contractual basis: By building right agreement of 28 April 1983, the City granted an independent and permanent building right (plot Cadastre No. zzz, 8'201 m2, of which 6'701 m2 fully usable and 1'500 m2 conditionally usable) in favour of [B.] . Clause 5 of the agreement provides that the ground rent corresponds to the interest on the respective base land value at the respective interest rate of Bank [C.] for new first mortgages on residential buildings. The base land value at the conclusion of the contract was CHF 400.-- per m2 (fully usable) or CHF 200.-- per m2 (conditionally usable). It remains fixed for ten years and is brought into line every 10 years with the respective market value of the unencumbered plot. In case of disagreement, two appraisers are to be appointed, and their average applies.
Development: In 1986, the building right holder developed the land with two commercial buildings and a multi-storey car park (logistics and office building), with annual income between CHF 1.6 and 1.8 million. The parties adjusted the ground rent by mutual agreement in 1994 and 2004; the calculation method is unknown. For the adjustment effective 1 January 2014, both parties obtained separate valuations: Bank [C.] determined a land value of CHF 8'497'000.-- (CHF 643.-- per m2) for the undeveloped plot; [D. AG] estimated the value of the developed plot at CHF 6'050'000.--. Based on the Bank's valuation, the City demanded a ground rent of CHF 212'430.-- per year; [B.] refused.
Course of proceedings: On 11 February 2016, the City sued before the District Court of Meilen for a declaration of the ground rent of CHF 212'430.-- and for payment of the arrears. [B.] requested dismissal of the action and, by counterclaim, the preparation of an expert valuation and a declaration that the mortgage reference interest rate applicable to tenancies is decisive. In a partial judgment of 13 June 2018, the District Court declined to rule on the declaratory request, dismissed the action, classified the provision as an agreement on binding expert determination, obliged the City to have a valuation in the developed condition, and declared that the mortgage reference interest rate is decisive. The Higher Court dismissed the appeal on 16 September 2019. The City lodged a civil law appeal with the Federal Supreme Court on 18 October 2019, requesting annulment and remittal or, alternatively, approval of the action.
Procedural questions: The lower court described its decision as a partial judgment; the Federal Supreme Court classified it as a final decision (Art. 90 FSCA). The declination of the declaratory request is final for lack of challenge and is not part of the subject matter of the dispute.
Considerations
Admissibility and scope of review: The appeal is admissible (amount in dispute CHF 611'720.--, Art. 74 para. 1 let. b FSCA). The principal request for annulment and remittal is admissible, since the Federal Supreme Court could not decide itself in the absence of findings of fact (Art. 107 para. 2 FSCA). The complaint of violation of the duty to give reasons (Art. 29 para. 2 Cst., Art. 53 CPC) is rejected, as the lower court's considerations clearly disclose its reasoning and the appellant was able to challenge the decision appropriately.
Relevant land value (interpretation of Clause 5 para. 2 of the agreement): The starting point is the principle of trust, since a matching real common intention of the parties could not be established (Art. 18 CO). The lower courts relied on the current developed condition. The Federal Supreme Court notes that the contract type is the 'traditional building right agreement', in which the ground rent is linked to the development of the land value and the income of the property is not directly taken into account. The base land value at the conclusion of the contract corresponded to the value of the undeveloped land. In accordance with good faith, it must be assumed that the parties wanted the land value to be determined by the same method that applied to the initial rent. The wording is neither unclear nor contradictory. The lower court applied the rules of contract interpretation under the principle of trust in a manner contrary to federal law (Art. 18 CO). For the adjustment, the value of the undeveloped plot is decisive; the obligation to value in the developed condition is contrary to federal law.
Interest rate (contractual gap and reference interest rate): The lower court considered the originally agreed interest rate of Bank [C.] no longer updated and found a contractual gap, which it filled with the mortgage reference interest rate applicable to tenancies. The Federal Supreme Court, in its result, affirms the lower court's interpretation: there is no gap in the…