2020.07.09

2018 (Ju) 1856

Minshu Vol. 74, No. 4

Judgment concerning whether lost profits arising from residual disability becomes subject to compensation by periodic payments in the case where the victim of a traffic accident seeks compensation by periodic payments with regard to the lost profits arising from residual disability

Case seeking compensation for loss or damage

Judgment of the First Petty Bench, dismissed

Sapporo High Court, Judgment of June 29, 2018

1. Where the victim of a traffic accident seeks compensation by periodic payments with regard to lost profits arising from residual disability, the same lost profits become subject to compensation by periodic payments if it is found reasonable in light of the purpose and philosophy of the system of compensation for loss or damage based on a tort.

2. When ordering compensation by periodic payments with regard to lost profits arising from residual disability caused by a traffic accident, it is not required to set the time of a victim's death before the time of termination of the potential working period as the time of termination of compensation by periodic payments unless there are special circumstances such as where there was a specific ground causing the victim's death at the time of the accident and the victim's death in the foreseeable future was objectively predicted.

3. Where the victim of a traffic accident seeks compensation by periodic payments with regard to lost profits arising from residual disability, the same lost profits become subject to compensation by periodic payments under the circumstances where the same victim was a four-year-old child as of the accident and lost his/her whole working capacity due to a residual disability called higher brain dysfunction and the same lost profits are to be realized over a long period of time in the future, as held in the judgment.

(There is a concurring opinion concerning 1 and 2.)

(Regarding 1 to 3) Articles 417 and 709 and Article 722, paragraph (1) of the Civil Code and Article 117 of the Code of Civil Procedure

(Regarding 2) Article 416 of the Civil Code



Civil Code

(Scope of Compensation for Loss or Damage)

Article 416

(1) The purpose of the claim for compensation for the loss or damage for failure to perform an obligation is to have the obligor to pay the compensation for loss or damage which would ordinarily arise from the failure.

(2) The obligee may also claim the compensation for damage which has arisen from any special circumstances if the party did foresee, or should have foreseen, the circumstances.

(Method of Compensation for Loss or Damage)

Article 417

Unless a particular intention is manifested, the amount of the compensation for loss or damage is determined with reference to monetary value.

(Compensation for Loss or Damage in Torts)

Article 709

A person that has intentionally or negligently infringed the rights or legally protected interests of another person is liable to compensate for damage resulting in consequence.

(Method of Compensation for Loss or Damage, Deduction of Interim Interest, and Comparative Negligence)

Article 722, paragraph (1)

The provisions of Articles 417 and 417-2 apply mutatis mutandis to compensation for loss or damage caused by tort.



Code of Civil Procedure

(Action to Modify a Final and Binding Judgment Ordering Compensation by Periodic Payments)

Article 117

(1) If, with regard to a final and binding judgment ordering compensation through periodic payments for damage arising prior to the conclusion of oral arguments, any significant change has occurred in terms of the severity of residual disability, wage standards, or any other circumstances that were used as the basis for calculation of the amount of damages after the conclusion of oral arguments, an action may be filed to modify the judgment; provided, however, that this applies only to the part of the judgment involving periodic payments that will become due after the date the action is filed.

(2) An action as referred to in the preceding paragraph is under the exclusive jurisdiction of the court of first instance.

The final appeal is dismissed.

The costs of the final appeal shall be borne by the appellants of final appeal.

Concerning the reasons for a petition for acceptance of final appeal stated by the counsel for final appeal, TAKAHASHI Tatsuro, et al. (except for the reasons excluded)

1. In this case, the appellee who was injured by a traffic accident and had been left with residual disability since then seeks compensation for loss or damage against Appellant Y1, who drove a vehicle that caused the injury, under Article 709 of the Civil Code and against Appellant Nippon White Farm Kabushiki Kaisha, which is the holder of the same vehicle, under Article 3 of the Act on Securing Compensation for Automobile Accidents. In addition, the appellee demands that Appellant Sompo Japan Insurance Inc., which is an insurance company that had concluded a bodily injury liability insurance policy with Appellant Nippon White Farm with regard to the same vehicle, pay the same amount as the amount of the aforementioned compensation for loss or damage based on the same insurance policy on the condition that a judgment on the case between Appellant Y1 or Appellant Nippon White Farm and the appellee becomes final and binding. As the appellee seeks compensation by periodic payments with regard to lost profits arising from residual disability, the parties dispute over issues such as whether the same lost profits become subject to compensation by periodic payments.

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

(1) On February 3, 2007, when crossing a road, the appellee (born in August 2002; four years old at that time) was involved in a traffic accident in which the appellee was hit by a large motor truck driven by Appellant Y1 (hereinafter referred to as the "Accident"). The Appellant Y1's percentage of fault in the Accident was 80% while that of the appellee was 20%.

(2) The appellee suffered injuries, such as brain contusion and diffuse axonal injury, due to the Accident and had been left with a residual disability, specifically, higher brain dysfunction (hereinafter referred to as the "Residual Disability"), since then. The Residual Disability falls under item (iii) of Grade 3 of Appended Table No. 2 of the Order for Enforcement of the Act on Securing Compensation for Automobile Accidents, and the appellee lost his/her whole working capacity due to the Residual Disability.

(3) In this case, the appellee seeks the payment of the amount of income that the appellee should obtain during the period from the month following the month in which he/she becomes 18 years old, which is the time of commencement of the potential working period, to the month in which he/she becomes 67 years old, which is the time of termination thereof, by periodic payments as lost profits arising from the Residual Disability.

3. The counsel's arguments are as follows: the lost profits arising from the residual disability occurred as those that have a certain substance at the time of the tort, and compensation by periodic payments should be permitted only for claims for which the period to be compensated terminates upon the death of the victim; therefore, it is denied that the same lost profits become subject to compensation by periodic payments; nevertheless, the court of prior instance affirmed this and also ordered compensation by periodic payments with regard to the amount of income to be obtained by the appellee during the period up to the time of termination of the aforementioned potential working period as lost profits arising from the Residual Disability without setting the time of the victim's death before the time of termination of the same period as the time of termination of compensation by periodic payments although the requirements regarding the necessity and reasonableness of permitting compensation by periodic payments are not fulfilled; such determination of the court of prior instance contains errors in the interpretation and application of laws and regulations.

4.(1) Only one obligation to compensate loss or damage based on a tort arises on the grounds of one bodily injury arising from one accident, and the loss or damage is considered to have occurred at the time of the tort (see 1968 (O) No. 943, the judgment of the First Petty Bench of the Supreme Court of April 5, 1973, Minshu Vol. 27, No. 3, at 419 and 1980 (O) No. 1113, the judgment of the Third Petty Bench of the Supreme Court of September 6, 1983, Minshu Vol. 37, No. 7, at 901, etc.). Therefore, where a victim was bodily injured by an accident and has subsequently been left with residual disability, it is possible to order compensation by lump sum payment by calculating the amount of loss or damage, specifically, the loss of profits to be obtained in the future which will be caused due to the loss of the whole or part of his/her working capacity, while deeming that the relevant loss or damage occurred at the time of the tort. However, the aforementioned loss or damage has the nature of being gradually realized after the passage of a considerable amount of time from the time of the tort, and therefore, the amount thereof must be calculated on the basis of a forecast concerning the future and 'fictions' that are based on probabilities relating to uncertain and undetermined elements. Therefore, a large gap can arise between the amount of loss or damage calculated and the amount of loss or damage realized due to occurrence of a significant change in terms of the severity of the residual disability, wage standards or any other circumstances that were used as the basis for the calculation in the future. The Civil Code does not provide that compensation for loss or damage based on a tort must be made by lump sum payment (see Article 722, paragraph (1) and Article 417). On the other hand, Article 117 of the Code of Civil Procedure provides that an action may be filed to modify a final and binding judgment ordering compensation by periodic payments. The purport of the same Article is considered to exist in the following: on the premise that compensation by periodic payments may be permitted for loss or damage that arises before the conclusion of oral argument but has the nature of being realized depending on the passage of time in the future, in order to realize compensation that goes with the reality, if a significant change occurred after the conclusion of oral argument in terms of the circumstances that were used as the basis for a final and binding judgment ordering such compensation, it would be fair to rectify the aforementioned gap after the fact and make the amount of compensation for loss or damage correspond to the amount of loss or damage realized.

The system of compensation for loss or damage based on a tort is intended to compensate disadvantage suffered by a victim and restore the victim to the state where the tort had not been committed by evaluating loss or damage actually suffered by the victim in terms of money and having the perpetrator compensate the relevant loss or damage. In addition, the philosophy of the system is to aim at the fair sharing of loss or damage. In light of such purpose and philosophy, there should be the cases where it is found reasonable to ensure that regarding loss or damage that is lost profits arising from residual disability caused by a traffic accident, the perpetrator makes a periodic payment corresponding to the lost interest at the corresponding time whenever loss of interest to be obtained in the future is realized, and that if the aforementioned gap arises, the gap is to be rectified pursuant to Article 117 of the Code of Civil Procedure.

For the reasons described above, where the victim of a traffic accident seeks compensation by periodic payments with regard to lost profits arising from residual disability caused by the accident, the same lost profits are considered to be subject to compensation by periodic payments if it is found reasonable to do so in light of the aforementioned purpose and philosophy.

(2) In addition, in calculating the amount of lost profits arising from residual disability caused by a traffic accident in the case where the victim of the traffic accident seeks compensation by periodic payments, even if the victim dies thereafter, it is reasonable to consider that the fact of the death should not be taken into account in calculating the potential working period unless there are special circumstances such as where there was a specific ground causing the victim's death at the time of the traffic accident and the victim's death in the foreseeable future had been objectively predicted (see 1993 (O) No. 527, the judgment of the First Petty Bench of the Supreme Court of April 25, 1996, Minshu Vol. 50, No. 5, at 1221 and 1993 (O) No. 1958, the judgment of the Second Petty Bench of the Supreme Court of May 31, 1996, Minshu Vol. 50, No. 6, at 1323). Even where the aforementioned lost profits arising from residual disability are compensated by the method of periodic payments, the compensation is based on a single claim for compensation for loss or damage that arose at the time of the traffic accident, and the subject of the compensation is the same loss or damage as that subject to compensation by lump sum payment. If a person who assumes the obligation to compensate loss or damage is absolved of the whole or part of the obligation due to the death of the victim of a traffic accident and the victim or his/her bereaved family becomes unable to receive compensation for loss or damage caused by the accident though the aforementioned special circumstances do not exist, it should be considered to go against the philosophy of equity, irrespective of whether the compensation is made by lump sum payment or periodic payments. Therefore, where compensation by periodic payments is ordered with regard to the aforementioned lost profits arising from residual disability, even if the victim dies before the time of termination of the potential working period, the time of victim's death should not be considered as the time of termination of the potential working period unless there are special circumstances as mentioned above.

Based on these, it is reasonable to consider that when ordering compensation by periodic payments with regard to the aforementioned lost profits arising from residual disability, it is not required to set the time of the victim's death before the time of termination of the potential working period as the time of termination of the compensation by periodic payments unless there are special circumstances such as where there was a specific ground causing the victim's death at the time of the traffic accident and the victim's death in the foreseeable future had been objectively predicted.

(3) When the aforementioned determination is applied to this case, the appellee seeks compensation by periodic payments with regard to the lost profits arising from the Residual Disability and argues that the appellee was a four-year-old child as of the Accident and lost his/her whole working capacity due to the Residual Disability called higher brain dysfunction. Therefore, the same lost profits can be considered to be gradually realized over a long period of time in the future. Comprehensively considering these circumstances, etc., it should be said that making lost profits arising from the Residual Disability subject to compensation by periodic payments is found reasonable in light of the purpose and philosophy of the aforementioned system of compensation for loss or damage.

In addition, when ordering compensation by periodic payments with regard to lost profits arising from the Residual Disability, there are no special circumstances as mentioned above with regard to the appellee.

5. For the reasons described above, the determination of the court of prior instance concerning the points argued by the counsel can be accepted. The arguments made by the counsel are not acceptable.

Accordingly, the Court unanimously decides as set forth in the main text of the judgment. There is a concurring opinion of Justice KOIKE Hiroshi.

The concurring opinion of Justice KOIKE Hiroshi is as follows.

I agree to the court's opinions, but I would like to express my opinion to supplement them.

1. Where compensation by periodic payments is ordered with regard to lost profits arising from residual disability caused by an accident, if the time of termination of the potential working period of the victim of the accident is not the time of the victim's death even if the victim subsequently dies before the time of termination of the potential working period, the obligation to pay compensation by periodic payments to the victim's bereaved family continues even after the victim's death. This point may be pointed out as causing a feeling of strangeness. However, in such case, the loss of the possibility of a change in the residual disability, etc. for the subsequent period due to the victim's death can be considered as the occurrence of a significant change in terms of the circumstances related to the basis for the calculation of the amount of loss or damage. Therefore, the following method also seems to be worthy of consideration: after the aforementioned death, a person who assumes the obligation to pay files an action to change compensation by periodic payments for the period up to the time of termination of the potential working period into compensation by lump sum payment of the amount calculated by revising the value to the present value at the time of the filing of the action to modify a judgment through application or application by analogy of Article 117 of the Code of Civil Procedure. I think that it is possible to dissolve the obligation of continuous compensation by periodic payments by this method.

2. As there is no substantive provision concerning compensation by periodic payments, in what cases and in consideration of what circumstances loss or damage is considered to be subject to compensation by periodic payments (determination concerning reasonableness) is left to interpretation. This point should be examined in consideration of the purport of the system of compensation by periodic payments and relationship to the requirements for filing an action to modify a judgment that are provisions on procedures, etc. in light of the purpose and philosophy of the system of compensation for loss or damage based on a tort. It seems unreasonable to put emphasis on the burden of claim management associated with compensation by periodic payments, etc. and interests related to deduction of interim interest, which is a fictitious method for keeping the equivalence of the amount of compensation for loss or damage, as elements to be considered.

Justice KOIKE Hiroshi

Justice IKEGAMI Masayuki

Justice KIZAWA Katsuyuki

Justice YAMAGUCHI Atsushi

Justice MIYAMA Takuya