2020.03.24

2018 (Ju) 388

Minshu Vol. 74, No. 3

Judgment concerning the starting point of counting the period of exclusion prescribed in the second sentence of Article 724 of the Civil Code with regard to claims for compensation for loss or damage that are based on the fact that the amount of fixed asset tax and another tax, etc. was determined in excess due to an error in the appraisal of a building

Case seeking compensation for loss or damage

Judgment of the Third Petty Bench, partially quashed and remanded, and partially dismissed without prejudice

Tokyo High Court, Judgment of December 5, 2017

With regard to claims for compensation for loss or damage based on the fact that the amount of fixed asset tax and city planning tax for a certain fiscal year was determined in excess due to an error in the appraisal of a building, the period of exclusion prescribed in the second sentence of Article 724 of the Civil Code resumes running at the time when assessment and determination were made for fixed asset tax, etc. for the relevant fiscal year and a written notice of tax payment was delivered to the owner of the building.

Article 1, paragraph (1) of the State Redress Act and Article 724 of the Civil Code



State Redress Act

Article 1, paragraph (1)

When a public officer who exercises the public authority of the State or of a public entity has, in the course of his/her duties, unlawfully inflicted damage on another person intentionally or negligently, the State or public entity shall assume the responsibility to compensate therefor.



Civil Code

(Extinctive Prescription of Claim for Compensation for Loss or Damage Caused by Tort)

Article 724

In the following cases, the claim for compensation for loss or damage caused by tort is extinguished by prescription:

(i) the right is not exercised within three years from the time when the victim or legal representative thereof comes to know the damage and the identity of the perpetrator; or

(ii) the right is not exercised within 20 years from the time of the tortious act.

1. Of the judgment in prior instance, the part regarding fixed asset tax and city planning tax for the period from fiscal 1992 to fiscal 2008 is quashed, and, regarding the same part, the case is remanded to the Tokyo High Court.

2. Other final appeals filed by the appellant of final appeal are dismissed without prejudice.

3. The costs of the final appeal concerning the preceding paragraph shall be borne by the appellant.

Concerning the reasons for a petition for acceptance of final appeal stated by the counsel for final appeal, KISAICHI Daisuke

The provisions of the Local Tax Act and the Appraisal Standards for Fixed Assets (Public Notice of the Ministry of Home Affairs No. 158 of 1963; hereinafter referred to as the "Appraisal Standards") as indicated below are those as of March 2, 2009 (the date of the fourth payment of fixed asset tax, etc. for fiscal 2008) unless otherwise specified. Incidentally, the description of the history of amendments to the same Act and the Appraisal Standards that came into effect for the period from January 1, 1982 to March 2, 2009 is omitted unless the history affects explanations.

1. In this case, the appellant, who owns the building stated in the Item List of Appendix 2 of the judgment in first instance (hereinafter referred to as the "Building") and has paid fixed asset tax and city planning tax (hereinafter referred to as "fixed asset tax, etc.") for the Building, alleges that excess fixed asset tax, etc. were imposed in fiscal years after 1983 due to an error in the appraisal, etc. of the Building conducted at the time of the initial construction of the Building in 1983. Based on this allegation, the appellant seeks the appellee's compensation for loss or damage in the amount equivalent to the amount of fixed asset tax, etc. paid in excess and attorney's fees, etc. under Article 1, paragraph (1) of the State Redress Act. Regarding the aforementioned claims for compensation for loss or damage, the parties dispute over whether the period of exclusion prescribed in Article 4 of the same Act and the second sentence of Article 724 of the Civil Code has passed, specifically concerning the point in time of "time when a tort was committed" that is the starting point of counting said period.

2. The outline of facts determined by the court of prior instance is as follows.

(1) A. Article 349, paragraph (1) of the Local Tax Act provides that the tax base for fixed asset tax for a reference year that is imposed on a building is to be the price of the building on the date of assessment pertaining to the reference year, which has been registered in the building tax ledger or supplemental building tax ledger (hereinafter a price registered in these ledgers is to be referred to as a "registered price"). Article 403, paragraph (1) of the same Act provides that a mayor of a municipality (for special wards, the Governor of the Tokyo Metropolitan Government pursuant to Article 734, paragraph (1) of the same Act; the same applies hereinafter) must determine the price of fixed assets based on the Appraisal Standards for Fixed Assets referred to in Article 388, paragraph (1) of the same Act. Incidentally, the tax base for the second year (year following the reference year) and that for the third year (year following the second year) are, in principle, the registered price in the reference year (Article 349, paragraphs (2) and (3) of the same Act).

In addition, Article 702 of the Local Tax Act provides that the tax base for city planning tax that is imposed on a building is to be the price that should serve as the tax base for fixed asset tax pertaining to the building, and Article 702-8, paragraph (1) of the same Act provides that the assessment and collection of city planning tax are to be governed by the assessment and collection of fixed asset tax and are to be conducted in combination with the assessment and collection of fixed asset tax, except for the cases where there are special circumstances.

B. (A) The Appraisal Standards provide that a building is to be appraised by a method in which appraisal points are assigned to each building in accordance with classification into the categories of wooden buildings and buildings other than wooden buildings (hereinafter referred to as "non-wooden building(s)") and the value of each building is obtained by multiplying the assigned appraisal points by the value per appraisal point (Chapter II, Section 1, I) and also provide that the appraisal points of each building are assigned based on the appraisal points for reconstruction costs of the building and are calculated by deducting points based on the conditions of wear of the building from the appraisal points for reconstruction costs (II of the same).

(B) The initial Appraisal Standards, for which public notice was issued in 1963, provided as follows without distinction between non-wooden buildings that newly become subject to taxation in a relevant year and other non-wooden buildings (hereinafter referred to as "existing building(s)"): the appraisal points for reconstruction costs of a non-wooden building should be calculated, for example, by calculating the appraisal points for reconstruction costs of each part of the non-wooden building and totaling the calculated appraisal points of all parts of the non-wooden building (hereinafter referred to as the "part-by-part appraisal method"). However, pursuant to the Notice of the Director-General of the Local Tax Bureau of the Ministry of Home Affairs, it was also considered safe to calculate the appraisal points for reconstruction costs of existing buildings by the multiplying factor-based comparison appraisal method (a method in which (1) existing buildings are classified by structure, use, scale, etc., and for each classification, an existing building that should be used as a standard is set as a standard building, (2) appraisal points for reconstruction costs are assigned to the standard building by the part-by-part appraisal method, and (3) the appraisal points for reconstruction costs of existing buildings other than the standard building which belong to the same classification as the standard building (hereinafter referred to as "comparable buildings") are obtained by obtaining the ratio of the appraisal points for reconstruction costs of the standard building in the reference year obtained in (2) above to the appraisal points for reconstruction costs thereof in the previous year and multiplying the appraisal points for reconstruction costs of the comparable buildings in the previous year by the rate specified by a mayor of a municipality based on said ratio). Based on the aforementioned Notice of the Director-General of the Local Tax Bureau of the Ministry of Home Affairs, the appellee had made it a principle to calculate the appraisal points for reconstruction costs of existing buildings by the multiplying factor-based comparison appraisal method pursuant to the Circular Notice of the Director-General of the Tax Bureau.

The multiplying factor-based comparison appraisal method came to be provided for as a principle appraisal method for existing buildings in the Appraisal Standards applicable to appraisal in fiscal 2000.

Moreover, the Appraisal Standards applicable to appraisal in fiscal 2003 provided the appraisal point correction rate method (a method in which the appraisal points for reconstruction costs of existing buildings are obtained by multiplying the appraisal points for reconstruction costs of the existing buildings in the year before the reference year by the appraisal point correction rate for reconstruction costs that is common to the entire country) as a principle appraisal method for existing buildings. The same went for the Appraisal Standards applicable to appraisal in fiscal 2006.

(2) A. The Building is a non-wooden building newly constructed on September 14, 1982, and the appellant has been the owner of the Building since that time. The person in charge of appraisal of the appellee calculated the appraisal points for reconstruction costs of the Building at the time of the initial construction as 183,400 points based on the Appraisal Standards applicable to appraisal in fiscal 1982. Based on this, the Governor of the Tokyo Metropolitan Government determined the price of the Building on June 30, 1983.

B. The Building was extended on March 31, 1991, and the price of the Building in and after fiscal 1992 has been determined by calculating the value of the part initially constructed in 1982 (hereinafter referred to as the "initially constructed part") and that of the part pertaining to the aforementioned extension, respectively, through separate appraisal and then totaling the calculated values. The appraisal points for reconstruction costs of the initially constructed part in each reference year for the period from fiscal 1985 to fiscal 2006 were calculated in order by the multiplying factor-based comparison appraisal method, and the appraisal point correction rate method, etc. on the basis of the appraisal points for reconstruction costs at the time of the initial construction as mentioned in A. above.

(3) On January 27, 2013, the appellant filed this action. In this action, the appellant alleges as follows: the appraisal points for reconstruction costs of the initially constructed part, which were calculated at the time of the initial construction of the Building, contained an error, which also caused errors in the appraisal points for reconstruction costs in subsequent reference years that were calculated in order based thereon; therefore, excess fixed asset tax, etc. were assessed and determined with regard to the Building, and payment of the excess fixed asset tax, etc. caused loss or damage. Based on this allegation, the appellant seeks the appellee's compensation for loss or damage in the amount equivalent to the amount of fixed asset tax, etc. paid in excess in the fiscal years from fiscal 1992 to fiscal 2008 (hereinafter referred to as the "Fiscal Years") and attorney's fees, etc. under Article 1, paragraph (1) of the State Redress Act.

3. Based on the aforementioned facts, the court of prior instance first determined as follows: the appraisal points for reconstruction costs of the initially constructed part that were calculated at the time of the initial construction of the Building are found to be in excess, and the act of appraisal and the determination of price in 1983 contain illegality in terms of the application of Article 1, paragraph (1) of the State Redress Act, and negligence is also found with regard to these acts; however, negligence is not found with regard to the act of appraisal, etc. in the subsequent reference years. The court of prior instance then determined as summarized below and ruled that the claims for compensation for loss or damage pertaining to the amount equivalent to the amount of fixed asset tax, etc. paid in excess in the Fiscal Years, etc. had already extinguished due to the passage of the period of exclusion and that the appellant's claims should be dismissed with prejudice on the merits.

Although the tort in this case caused by an error in the appraisal points for reconstruction costs calculated in the appraisal at the time of the initial construction of the Building consists of the act of appraisal and the determination of price in 1983 and the acts of assessment and determination in the Fiscal Years, only the act of appraisal and the determination of price in 1983 are illegal acts that involve a public officer's negligence. According to the taxation mechanism mentioned in 2.(1) above, an error in the appraisal points for reconstruction costs calculated in the appraisal in 1983 has created a situation in which errors would naturally arise in the specific acts of taxation in subsequent fiscal years. Then, it is obvious under the Local Tax Act that if price is determined, the determined price is registered, assessment and determination are made based on the registered price, and fixed asset tax, etc. is collected. Therefore, it can be said that there was a continuing situation in which the appellant could dispute over the determinations of price, etc. in 1983 and the subsequent reference years by filing an application for review under the same Act, an action for revocation of administrative disposition or an action to seek the State's compensation.

For the reasons described above, the "time when a tort was committed" that is the starting point of counting the period of exclusion for the tort in this case is the time when the act of appraisal and the determination of price were committed at the time of the initial construction of the Building in 1983, and it is reasonable to consider that said time is the time of the determination of price on June 30, 1983 at the latest.

4. However, the aforementioned determination of the court of prior instance cannot be upheld for the following reasons.

(1) The registered price that serves as the tax base for fixed asset tax, etc. pertaining to a building is determined through the following process: the appraisal points of the building are assigned based on the appraisal points for reconstruction costs of the building, and a mayor of a municipality determines the price of the building based thereon and registers it in the building tax ledger, etc. In addition, in this case, appraisal points for reconstruction costs pertaining to the initially constructed part of the Building in the reference years had been calculated in order by the multiplying factor-based comparison appraisal method, and appraisal point correction rate method, etc. on the basis of the appraisal points for reconstruction costs calculated at the time of the initial construction of the Building in 1983.

Fixed asset tax, etc. pertaining to a building is imposed on the owner of the building, who is the taxpayer, with respect to each fiscal year while setting January 1st of the year to which the first day of the fiscal year belongs as the date of assessment (Articles 343, 359, 702, and 702-6 of the Local Tax Act). Regarding fixed asset tax, etc. for each fiscal year, assessment and determination that determine the amount of fixed asset tax, etc. are in principle made by using the registered price in the relevant reference year as the tax base, and a written notice of tax payment stating the amount of the tax base, tax rate, the amount of tax, due date, etc. is delivered to the owner of the building, which causes the owner to assume a specific obligation to pay tax.

Fixed asset tax, etc. for each fiscal year is imposed after going through such series of procedures. In the case where the amount of fixed asset tax, etc. of a building for a certain fiscal year is determined in excess and the owner of the building incurs loss or damage, if the cause of the loss or damage is sought in an error in any of the acts in the course of procedures (including not only acts pertaining to assessment in the relevant fiscal year but also acts committed in the previous fiscal year that were used as the basis of the assessment), it can be said that the State is liable for compensation for loss or damage caused by the relevant series of procedures as long as it can be proven that the act involving an error has been illegally committed intentionally or with negligence.

(2) On the other hand, it can be said that if an error occurs in relation to the appraisal of a building in the aforementioned procedures, under the taxation mechanism mentioned in 2.(1) above, the error affects not only the determination of price and assessment and determination in the relevant fiscal year but also appraisal, etc. in the following reference year, which causes a risk of resulting in the assessment of excess fixed asset tax, etc. in the future. However, if the error is corrected by a determination, etc. of the taxation authority in subsequent procedures, excess fixed asset tax, etc. is not imposed, and the owner of the building incurs neither loss nor damage. In addition, if the owner of the building changes after the occurrence of such error, the person who incurs loss or damage due to imposition of excess fixed asset tax, etc. also changes. In this manner, it must be said that whether the error actually causes imposition of excess fixed asset tax, etc. and who the person is who will incur loss or damage due to imposition of excess fixed asset tax, etc. are still undetermined at the time of the occurrence of the error. It is only after procedures are carried forward without correction of a relevant error and the assessment and determination are made and a written notice of tax payment is delivered with regard to fixed asset tax, etc. for a certain fiscal year based on those procedures that a person who receives the written notice is determined to assume the obligation to pay tax with regard to the amount of tax set by the relevant assessment and determination.

Based on this, where the State is held liable for compensation regarding the assessment of fixed asset tax, etc. on the grounds that the amount of fixed asset tax, etc. is in excess, the illegal act and loss or damage pertaining thereto should be considered for a series of assessment and determination, etc. that cause the owner to assume a specific obligation to pay tax as a unit, that is, for each fiscal year. Even if fixed asset tax, etc. was imposed in excess in multiple fiscal years due to the same error in the appraisal of a building, the claims for compensation for loss or damage pertaining thereto should be considered to arise with respect to each fiscal year. In relation to the claims for compensation for loss or damage pertaining to fixed asset tax, etc. paid in excess for a certain fiscal year, it is reasonable to consider the time when assessment and determination that cause the owner, who is the victim, to assume a specific obligation to pay tax for the fiscal year became effective: specifically, the time when a written notice of tax payment was delivered, as the "time when a tort was committed" that is the starting point of counting the period of exclusion. The above is not affected even if the owner can dispute the determination of price in the reference year, etc. before the relevant fiscal year or fixed asset tax, etc. imposed based thereon by filing an application for review, an action for revocation of administrative disposition or an action to seek the State's compensation on the grounds of an error in appraisal, etc.

Therefore, it is reasonable to consider that the period of exclusion of the claims for compensation for loss or damage on the grounds that the amount of fixed asset tax, etc. for a certain fiscal year was determined in excess based on an error in the appraisal of a building resumes running at the time when assessment and determination pertaining to fixed asset tax, etc. for the fiscal year were made and a written notice of tax payment was delivered to the owner.

(3) Regarding the appellant's claims for compensation for loss or damage against the appellee on the grounds that the amount of fixed asset tax, etc. for the Fiscal Years was determined in excess based on an error in the appraisal of the initially constructed part of the Building, the period of exclusion is supposed to resume running at the time when a written notice of tax payment for the relevant fiscal year was delivered to the appellant. Although the specific time of the delivery of a written notice of tax payment is not clear with regard to all of the Fiscal Years, 20 years had probably not passed for some of the appellant's claims as of January 27, 2013, the date on which this action was filed.

5. The determination of the court of prior instance contains violation of laws and regulations that obviously affects the judgment in that the court of prior instance determined based on opinions different from those described above that all the appellant's claims for compensation for loss or damage pertaining to the amount equivalent to the amount of fixed asset tax, etc. paid in excess for the Fiscal Years and attorney's fees should be dismissed with prejudice on the merits. The counsel's arguments are well-grounded as arguments to this effect, and of the judgment in prior instance, the part regarding this should inevitably be quashed. Regarding the aforementioned part, this case is remanded to the court of prior instance to be further examined in relation to whether the period of exclusion has passed with respect to the aforementioned claims for compensation for loss or damage, respectively, and the amount of loss or damage, etc. incurred by the appellant in the relevant fiscal years in the case where the period of exclusion has not passed.

The final appeal concerning other claims is dismissed without prejudice as the reasons for a petition for acceptance of final appeal are not stated in the written petition for acceptance of final appeal and the written statement of reasons for a petition for acceptance of final appeal.

Accordingly, the Court unanimously decides as set forth in the main text.

Justice UGA Katsuya

Justice TOKURA Saburo

Justice MIYAZAKI Yuko

Justice HAYASHI Michiharu