No compensation for the Kronenschlösschen

FRANKFURT AM MAIN. The Frankfurt am Main Higher Regional Court has dismissed a claim brought by the Hotel Kronenschlösschen seeking compensation for official liability arising from the search of the owner’s business and private premises. The court stated in mid-June that the initial suspicion underlying the search had been reasonably established.

In 2021, a break-in had taken place in the wine cellar of the hotel and restaurant in Eltville run by the claimant. Wines and champagne of considerable value had been stolen. Initially, the criminal investigation department assumed it was a case of burglary. However, the detective in charge of the investigation then, based on certain circumstances, suspected that the claimant might have staged the break-in in order to claim insurance benefits. At the request of the public prosecutor’s office, the Wiesbaden Magistrates’ Court issued a search warrant. The search yielded no results in relation to the suspected fraud. The true perpetrators were later identified and the preliminary investigation against the claimant was discontinued. The claimant is bringing a claim for official liability against the defendant, the State of Hesse. He considers the preliminary investigation conducted against him, and in particular the search, to have been in breach of official duties and is claiming damages, inter alia for damage to his good reputation and for the adverse effects on his health.

The Wiesbaden Regional Court upheld the claim on its merits, that is to say, it initially found the defendant State liable for breach of official duty without, at that stage, determining the amount of compensation. In the judgment handed down, the First Civil Division of the Higher Regional Court – which has jurisdiction over official liability cases – amended the Regional Court’s judgment on appeal by the defendant State and essentially dismissed the claim.

In proceedings concerning official liability – according to the reasoning – decisions made by public prosecutors and judges during a preliminary investigation are not reviewed for their correctness. Rather, the decisive factor in determining whether there has been a breach of official duty is whether the measures taken appear reasonable when fully weighing up the interest in the effective prosecution and investigation of criminal offences. Admittedly, the initial suspicion required to initiate a pre-trial investigation and issue a search warrant must not be based on mere conjecture. However, it may be based on circumstances which, according to criminal investigation experience, point to a specific course of events. A search of the accused’s premises serves the purpose of uncovering evidence. The accused need not be informed of the suspicion against them prior to a search if this would jeopardise the success of the search.

Applying these criteria, the Senate concluded that the Public Prosecutor’s Office and the Magistrates’ Court had reasonably assumed the existence of a prima facie case. It is reasonable, based on forensic experience, to base the suspicion on external circumstances such as the condition of the crime scene and the signs of forced entry, suggesting that the alleged burglary may have been committed not by a third party but by an insider. For example – contrary to what is typically observed in cases of burglary – the 216 bottles stolen had been selected undamaged and repackaged. Published financial statements of the company also showed an increase in liabilities and the depletion of equity over several years. The public prosecutor’s office was entitled to direct the suspicion that this might not be a case of theft but of insurance fraud against the claimant in a reasonable manner. The fact that the claimant was abroad at the time of the offence was irrelevant. It could reasonably have been assumed that accomplices would be used in an attempt at fraud. Further investigations into the company’s financial situation prior to the search would have jeopardised the purpose of the search.

Nor was the claimant entitled to compensation for pain and suffering on the grounds of personal sacrifice, given the damage to his reputation and the adverse effects on his health, which he attributed to the stress caused by the proceedings. Material damages arising from a search are compensated for under the Act on Compensation for Law Enforcement Measures. Owing to this exhaustive provision, there is no scope for claims for compensation for pain and suffering or for compensation for infringement of personal rights. The decision is not yet final. An application for leave to appeal may be made to the Federal Court of Justice (BGH).

The owner of the Kronenschlösschen, Hans B. Ulrich, reacted critically to the judgement and announced his intention to pursue an appeal. In his view, the judgement contradicts not only common sense but also the law as it stands.

“We were victims and were treated mercilessly by the German state for 19 months as suspected perpetrators. Even after the perpetrators had been identified, there was never an apology. On the contrary, the state authorities stuck together like glue; they fended off every attempt at rehabilitation. During this time, we received around 2,000 emails and phone calls from our guests expressing their outrage at this situation. Our guests encouraged us to stand firm and take legal action against this state arbitrariness. That is what we have done,” a statement reads.

To this day – more than five years after the break-in and three years after it was discovered – the convicted perpetrator has not been charged by the Wiesbaden Public Prosecutor’s Office. In his statement, Ulrich criticises the grounds on which the Higher Regional Court ruled that the search was justifiable: “Although it has been clear for years: the real perpetrator broke into the wine cellar at night without any prior knowledge of the premises (he even found the light switch…). He remained in the cellar for seven hours, from 10.00 pm to 5.00 am. He stole the expensive wines he found – without the inventory list that was allegedly required. It was therefore an outsider who committed the crime, and no insider knowledge was required at all. It was, quite simply, a perfectly ordinary burglary.”