2022.07.19

2021 (O) 555

Minshu Vol. 76, No. 5

Judgment concerning the purport of Article 16, paragraph (3) of the Miyakojima City Ordinance on Water Supply in Water Supply Services (Miyakojima City Ordinance No. 215 of 2005)

Case seeking compensation for loss or damage

Judgment of the Third Petty Bench, quashed and remanded

Fukuoka High Court, Naha Branch, Judgment of January 19, 2021

Article 16, paragraph (3) of the Miyakojima City Ordinance on Water Supply in Water Supply Services (Miyakojima City Ordinance No. 215 of 2005) is a provision that only confirms that the city, which is a water supply service provider, does not assume the liability to compensate for loss or damage on the grounds of non-performance of the obligation to supply water in its relationship with the users of water supply services if the city does not assume the obligation to supply water to these users pursuant to the proviso to Article 15, paragraph (2) of the Water Supply Act (prior to the amendment by Act No. 92 of 2018); and it is not a provision that exempts the city from the liability to compensate for loss or damage on the grounds of non-performance of the obligation to supply water if the city assumes that obligation.

(There is a concurring opinion.)

Article 15, paragraph (2) of the Water Supply Act (prior to the amendment by Act No. 92 of 2018), Article 16, paragraphs (1) and (3) of the Miyakojima City Ordinance on Water Supply in Water Supply Services (Miyakojima City Ordinance No. 215 of 2005)

Water Supply Act
(Obligation to supply water)
Article 15(2) A water supply service provider must supply water on a continuous basis to a person who is to receive water supply from the water supply services; provided, however, that the water supply service provider may suspend water supply with regard to the whole or part of the service area during the relevant period if suspension is unavoidable due to having received a water supply order under the provisions of Article 40, paragraph (1) or due to a disaster or for any other justifiable reasons. In this case, except when there are unavoidable circumstances, the water supply service provider must take measures to inform persons concerned in advance of the area and period for which the water supply service provider intends to suspend water supply.

Miyakojima City Ordinance on Water Supply in Water Supply Services
(Principle of water supply)
Article 16 (1) Water supply is not restricted or suspended except due to an extraordinary disaster, damage to water facilities, public interest or any other unavoidable circumstances, or except where provided by laws and regulations or this Ordinance.
(3) The City is not liable for any loss or damage that may be caused due to the restriction or suspension of water supply under the provisions of paragraph (1).

The judgment in prior instance is quashed.

The case is remanded to the Fukuoka High Court.

Concerning the reasons for a petition for acceptance of final appeal stated by the counsel for final appeal in 2021(Ju)678 and 2021(Ju)679, OBATA Hironori (except for the reasons excluded)

1. In this case, the appellants, who have concluded a water supply contract (hereinafter referred to as the "Water Supply Contract") with the appellee, which is a water supply service provider, seek against the appellee compensation for loss or damage for reasons including non-performance of the obligation under the Water Supply Contract, alleging that they have sustained losses such as the loss of operating income from the lodging facilities operated thereby due to the water outage that occurred in Irabu, Miyakojima City, which is within the service area of the appellee (hereinafter referred to as the "Water Outage").

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

(1) Article 14, paragraph (1) of the Water Supply Act provides that a water supply service provider must establish general supply rules with regard to the rates, categories of sharing of expenses for construction of water supply equipment, and other supply conditions. The appellee has enacted the Miyakojima City Ordinance on Water Supply in Water Supply Services (Miyakojima City Ordinance No. 215 of 2005; hereinafter referred to as the "Ordinance") for the purpose of establishing the abovementioned supply conditions, etc.

(2) The appellants have concluded the Water Supply Contract with the appellee, and use water supply services at the lodging facilities operated thereby according to the supply conditions specified in the Ordinance based on the Water Supply Contract.

(3) On April 27, 2018, the Water Outage occurred, and the appellee became unable to supply water to the abovementioned lodging facilities. Subsequently, the Water Outage was resolved, and it was revealed that the cause of the Water Outage was the breakage of the equipment in the distribution reservoir, which is a water supply service facility established and managed by the appellee (hereinafter referred to as the "Breakage").

(4) Article 16, paragraph (1) of the Ordinance provides that "Water supply is not restricted or suspended except due to an extraordinary disaster, damage to water facilities, public interest or any other unavoidable circumstances, or except where provided by laws and regulations or this Ordinance," and paragraph (3) of the same Article provides that "The City is not liable for any loss or damage that may be caused due to the restriction or suspension of water supply under the provisions of paragraph (1)."

3. Based on the facts mentioned above, the court of prior instance determined as summarized below and dismissed the claim for compensation for loss or damage on the grounds of non-performance of the obligation under the Water Supply Contract.

Article 16, paragraph (3) of the Ordinance is a provision that exempts the appellee from the liability to compensate for loss or damage on the grounds of non-performance of its obligation to supply water except in cases where the damage to the water supply service facility that caused the restriction or suspension of water supply was due to the appellee's intention or gross negligence, for the purpose of maintaining the stable and continuous operation of the water supply services. The provision of that paragraph, as long as it is interpreted as such, is considered to set necessary and unavoidable restrictions for a legitimate purpose and is not in violation of Article 29 of the Constitution. In consideration of the circumstances that led to the Water Outage, the appellee cannot be regarded as having been intentional or having been grossly negligent in causing the Breakage, and therefore, pursuant to Article 16, paragraph (3) of the Ordinance, the appellee is exempt from the liability to compensate for loss or damage on the grounds of non-performance of the obligation to supply water due to the Water Outage.

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

The main clause of Article 15, paragraph (2) of the Water Supply Act (prior to the amendment by Act No. 92 of 2018; the same applies hereinafter) states that a water supply service provider must supply water on a continuous basis to a person who is to receive water supply from the water supply services, thus providing that the water supply service provider assumes the obligation to supply water on a continuous basis, and the proviso to the same paragraph provides that the water supply service provider may suspend water supply "if suspension is unavoidable due to a disaster or for any other justifiable reasons." Article 16, paragraph (1) of the Ordinance provides that water supply is not restricted or suspended except due to an "extraordinary disaster, damage to water facilities, public interest or any other unavoidable circumstances," etc. In addition to the wording of the provisions mentioned above, considering that Article 15, paragraph (2) is understood as a mandatory provision based on the requirement of protection of users, and that Article 16, paragraph (1) of the Ordinance has been established as general supply rules referred to in Article 14, paragraph (1) of the Water Supply Act, it should be said that Article 16, paragraph (1) of the Ordinance only confirms that water is in principle supplied on a continuous basis to users of water supply services, following Article 15, paragraph (2) of the Water Supply Act that specifies the content of the obligation to supply water that the water supply service provider assumes. Given as such, the case provided in Article 16, paragraph (1) of the Ordinance as an exceptional case where water supply may be suspended is understood as having the same meaning as the case provided in the proviso to Article 15, paragraph (2) of the Water Supply Act, where "suspension is unavoidable due to a disaster or for any other justifiable reasons." Article 16, paragraph (3) of the Ordinance provides that in the case provided in paragraph (1) of the same Article, the appellee is not liable for any loss or damage that users of water supply services may sustain due to the suspension of water supply. In the abovementioned cases, since a water supply service provider does not assume the obligation to supply water pursuant to the proviso to Article 15, paragraph (2) of the Water Supply Act, the suspension of water supply by the appellee, which is a water supply service provider, does not amount to non-performance of the obligation to supply water.

Consequently, it is appropriate to consider that Article 16, paragraph (3) of the Ordinance is a provision that only confirms that the appellee does not assume the liability to compensate for loss or damage on the grounds of non-performance of the obligation to supply water in its relationship with the users of water supply services if the appellee does not assume the obligation to supply water to these users pursuant to the proviso to Article 15, paragraph (2) of the Water Supply Act; and it is not a provision that exempts the appellee from the liability to compensate for loss or damage on the grounds of non-performance of the obligation to supply water if the appellee assumes that obligation.

5. The determination by the court of prior instance that differs from the above contains a violation of laws and regulations that has clearly influenced the judgment. The counsel's arguments are well-grounded as arguments to this effect. Without needing to make a determination on the reasons for final appeal, the judgment in prior instance should inevitably be quashed. Determination as to whether the appellee has the liability to compensate for loss or damage on the grounds of non-performance of the obligation to supply water due to the Water Outage should be made by further examining issues such as whether the Water Outage falls under the case where suspension is unavoidable due to a disaster or for any other justifiable reasons. Therefore, this case is remanded to the court of prior instance.

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

The concurring opinion by Justice HAYASHI Michiharu is as follows.

Upon quashing the judgment in prior instance and remanding the case to the court of prior instance, I would like to give some comments concerning the points that should be considered in the examination of the remanded case.

As pointed out in the court opinion, in the process of determining whether the appellee is found to be liable to compensate for loss or damage on the grounds of non-performance of the obligation to supply water due to the Water Outage, it is first necessary to determine whether the appellee assumes the obligation to supply water to the appellants under the circumstances relevant to the Water Outage. In making determination on this point, it is necessary to examine whether the Water Outage falls under the case provided in the proviso to Article 15, paragraph (2) of the Water Supply Act. This issue was not argued at all by the parties, nor was it argued by the court of first instance or the court of prior instance.

Article 16, paragraph (1) of the Ordinance, which has been established as general supply rules referred to in Article 14, paragraph (1) of the Water Supply Act, provides that water supply may be suspended due to "an extraordinary disaster, damage to water facilities, public interest or any other unavoidable circumstances", etc. The Water Outage was caused by the Breakage, and as a matter of form, it falls under the case of "damage to water facilities." Having said that, since Article 16, paragraph (1) of the Ordinance has been established for the purpose of confirming the principle of continuous water supply following Article 15, paragraph (2) of the Water Supply Act, whether a water supply service provider assumes the obligation to supply water under certain circumstances should be determined depending on whether the relevant circumstances fall under the case provided in the proviso to Article 15, paragraph (2) of the Water Supply Act. Article 15, paragraph (2) of the Water Supply Act provides that a water supply service provider does not assume the obligation to supply water only in the case where "suspension is unavoidable due to a disaster or for any other justifiable reasons." The court of prior instance discussed whether the appellee was intentional or was grossly negligent, but in any case, in order to examine whether the appellee is liable to compensate for loss or damage on the grounds of non-performance of the obligation to supply water due to the Water Outage, it may be necessary to examine the relevance between the issue of whether a water supply service provider is found to be negligent with regard to the damage to the water facilities and the issue of whether the water supply service provider has the obligation to supply water. In the examination of the remanded case, it is necessary to carefully judge whether it can be said that the appellee does not assume the obligation to supply water pursuant to the proviso to Article 15, paragraph (2) of the Water Supply Act, while taking into account the wording and purport of the respective provisions.

Justice HAYASHI Michiharu

Justice UGA Katsuya

Justice NAGAMINE Yasumasa

Justice WATANABE Eriko