A owns a business providing care and accommodation for old people. T is activity can only be pursued under licence from State agency B. After a site visit, B's official, C, erroneously concludes that A has been physically abusing persons in her care, and exercises his statutory power to revoke A's licence. A unsuccessfully seeks an injunction to keep the home open pending her appeal and consequently has to close her business. Her appeal can only be held four months later, and A's business suffers serious financial damage in the interim as it has to reimburse advance payments by former residents and loses the chance of a lucrative bulk contract with the local city council. The appeal authority finds that A had not been abusing persons in her care and that C was negligent (but not knowingly doing wrong) in forming the contrary opinion. A now seeks damages from B and/or C (and/or the State) for her financial losses. Would it make any difference if C was grossly negligent or reckless or actuated by malice? What if A might have been entitled to an injunction to keep the home pending appeal, but failed to seek one?

AUSTRIA

A can recover damages from B under the AHG for faulty conduct of C if B is a legal entity with own authoritative power. If B instead only executes functions of the federal state, however, A can still sue B, but only on the basis of §1 para 3 AHG which holds the authority that employed C solidarily liable with the entity whose authority B (and, for B, C) exercised. B would then have a recourse claim against the federal state, which would be the ultimate payor under the functional approach incorporated in the AHG.

Direct claims against C are excluded by law (§9 para 5 AHG). However, if B (or another public authority from whom B has the authority) is held liable vis-avis A, B (or the other payor) can seek recourse from C, but only if the latter had acted at least with gross negligence.

As far as the refund for the advance payments is concerned, such loss is recoverable even in the absence of qualified fault.