After a properly conducted risk assessment, X is licensed by municipal authority Y to store fireworks in a warehouse located in Y's municipal area. A large explosion occurs, the immediate trigger of which is unknown. The licence stipulates that only fireworks suitable for domestic use may be stored in the warehouse, but it later transpires that X breached the terms of its licence and also stored there a quantity of highly explosive fireworks intended for public displays; this greatly increases the size of the blast. The explosion damages neighbouring property, and injures X's employee, Z, and a bystander, W. Z, W and the neighbouring property owners seek damages from Y (and/or the State) on the basis of Y's failure to conduct adequate inspections to ensure only low-explosive fireworks suitable for domestic use were stored in the warehouse, notwithstanding its general obligations relating to public safety within its municipal area and its wide-ranging statutory powers to conduct inspections. X is insolvent and not worth suing. Would it make any difference if Y had received anonymous tip-off s that X was breaking the terms of its licence by storing high-explosive fireworks in the warehouse?

AUSTRIA

Y (presuming it was acting out of its own authority, otherwise at least ultimately the entity whose authority was exercised by Y) will be liable under the condition that the failure to properly inspect the facilities/fireworks was at least negligent under the circumstances. The fact that the alleged cause of the loss was a pure omission does not alter the outcome – passive conduct also suffices to trigger liability under the AHG.

The Supreme Court confirmed this in a case, for example, where a building authority should have required the installation of a handrail on a staircase and verify after ordering such an installation that it was actually applied. The authority was deemed liable to the surviving dependants of the victim who slipped on the staircase (at least in part) due to the lack of a handrail. The facts of another case are closer to the hypothetical inasmuch as it equally involves an explosion, though not of fireworks, but of a boiler which was not inspected properly as required by federal law.