653

Part  8 The compensation of the damage

I.  Type of compensation

A.Damages

The legal consequence for a tort is, in principle, the award of compensation 7 / 762 ( art 709 CC ).

1.Principle of damages

a.Compensation by lump-sum payment

the victim into spending it wastefully and not utilising it for his further life planning. Thirdly, the damaging party may run into financial difficulties if he has to pay a large sum of money all at once.

b.Compensation by periodic payment

7 / 768 Another possible option is to pay the compensation in regular intervals on an ongoing basis.

(   1  ) Advantages

7 / 769 In general, this method entails the following advantages: firstly, it facilitates a response to future, as yet still undetermined, factors. Secondly, it secures the existence of the victim or bereaved dependents in the long-term. Thirdly, this method is also feasible for a damaging party that does not have the financial means to make a large one-off payment.

(   2  ) Disadvantages

7 / 770 However, this method also involves the following disadvantages: firstly, there is a risk that the payments, which fall due over an extended period of time, ultimately will not be made if the damaging party’s financial situation deteriorates, it is no longer known where he lives or he is no longer willing to pay. Secondly, there may be complications when collecting on the claim if the damaging party moves or there is a case of succession. Thirdly, it may place the parties in a psychologically stressful situation since their relationship to each other is maintained over a long period of time.

c.Court practice

7 / 771 In court practice, the situation is as follows.

(   1  ) Principle of one-off payment

7 / 772 In the vast majority of cases, a one-off lump-sum payment is awarded and only seldom is an annuity awarded213.

(   2  ) Binding submissions by parties

7 / 773 Furthermore, according to the case law, no annuity payment can be awarded if the parties apply for a lump-sum payment214.

213In the decision of the Imperial Court of 16. 9. 1916, Minroku 22, 1796, an annuity was awarded by way of exception.

214Supreme Court of 6. 2. 1987, Hanrei Jihô 1232, 100.

d.Approaches taken in civil procedural law

CC, a court may if so petitioned by the victim order the party who has injured the reputation and honour of another to take suitable measures to restore such reputation and honour, in lieu of compensation in money or in addition to such.

II.  Assessment of damages

A.Assessment method

7 / 780 Two different methods of assessing the damages are conceivable.

1.Cumulation of the individual heads of damage

7 / 781 One method is to determine which heads of damage there are and the extent of the harm sustained under each individual head of damage ( eg costs of treatment, hospital charges, loss of profit ) and to add this up to ascertain the total damage.

2.Comprehensive assessment of damage

7 / 782 Another method is to evaluate all facts of damage comprehensively and thus calculate the total damage.

B.Circumstances to be considered when assessing the damage

1.Actual changes to income and expenditure

7 / 783 Depending on whether the actual changes in the victim’s income and expenditure are taken into account or not, two different approaches to assessing damage may be taken.

a.Concrete assessment of damage

7 / 784 Firstly, the damage can be calculated in accordance with the actual changes that occurred to the victim’s income and expenditure. This conforms with the method of accumulating the individual heads of damage.

b.Abstract assessment of damage

7 / 785 Secondly, on the other hand, it is also possible to extrapolate from the actual changes that ensued to the income and expenditure and to calculate the damage based on the market value.

(   1  ) Comprehensive assessment of damage

7 / 786 When damage is assessed comprehensively, the damage is calculated based on the » market value «, for example, of the values or interests infringed by a bodily injury.

216Nishihara, Jurisuto 381 ( 1967 ) 148.

217Sanchô kyôdô teigen [ Joint Proposal of the 27th Civil Chamber of the District Court Tokyo, the 15th Civil Chamber of the District Court Osaka and the 3rd Civil Chamber of the District Court

III.  Reduction of compensation

A.Mitigation of damages by benefits received ( Vorteilsausgleich )

1.Concept

7 / 795 If the victim also obtains a benefit due to the tort, this benefit must be deducted from the amount of damage; this is referred to as mitigation of damages by benefits received.

2.Rationale

7 / 796 The rationale behind the mitigation of damages by benefits received is controversial.

a.Difference method ( Differenzmethode )

7 / 797 Firstly, mitigation of damages by benefits received can be rationalised based on

the difference method, according to which it is self-evident that the benefit be deducted218.

(   1  ) Grounds

7 / 798 The difference method is based on the idea that when the victim’s assets have been diminished, the damage sustained is regarded as the sum by which they have been diminished. If there are benefits as well as losses to the victim, the actual damage is determined by adding up losses and benefits.

(   2  ) Problem

7 / 799 However, if the assessment is limited to a simple mathematical computation, then the victim would also have to set off benefits that he obtained due to inheritance or donations.

b.Principle of the ban on enrichment

7 / 800 Nowadays, however, it is argued above all that mitigation of damages by benefits received is based on the ban on enrichment. According to this standpoint, the victim should be returned to his earlier state by compensation but not draw any ben-

Nagoya ], see Kôtsû jiko ni yoru menshitsu rieki no santei hôshiki ni tsuite no kyôdo teigen [ Joint Proposal on the method of assessing loss of profit in the case of road traffic accidents ], Hanrei Jihô 1692 ( 2000 ) 162.

218Wagatsuma, Jimu kanri, futô ritoku, fuhô kôi [ Negotiorum gestio, unjust enrichment and tort ] 204; Katô, Fuhô kôi [ Tort ] 245.

efit exceeding such from the tort. Thus, setting off the benefit must be regarded as an offshoot of the ban on enrichment, which in turn is inferred from the delictual law principle of restitution219.

3.Which benefits ?

The debate centres on which benefits are subject to the principle of mitigation of 7 / 801 damages by benefits received.

a.Difference method

219Shinomiya, Fuhô kôi [ Tort ] 601; Yoshimura, Fuhô kôi [ Tort ]4 171; Shiomi, Fuhô kôi-hô [ Law of tort ] 326.

220Cf for instance Wagatsuma, Jimu kanri, futô ritoku, fuhô kôi [ Negotiorum gestio, unjust enrichment and tort ] 204; Katô, Fuhô kôi [ Tort ] 245.

221Sawai, Tekisutobukku jimu kanri, futô ritoku, fuhô kôi [ Textbook on negotiorum gestio, unjust enrichment and tort ]3 248 f; Shinomiya, Fuhô kôi [ Tort ] 602; Yoshimura, Fuhô kôi [ Tort ]4 171 f; Shiomi, Fuhô kôi-hô [ Law of tort ] 327.

(   2  ) Positive interest

7 / 806 If the victim gained income due to the tort and if he would gain a benefit exceeding the restoration of his earlier state if he was compensated without taking this into account, then such benefits must be offset. In this context, it is decisive whether the incomes are aimed at balancing the damage ( joint purpose of indemnification ).

B.Contributory fault

1.Overview

7 / 807 Article 722 para 2 CC stipulates that when determining the amount of compensation, the court may take into account whether the victim is also at fault in respect of the damage.

a.Consideration of fault

(  1   ) Discretion as to whether to consider fault

7 / 808 If there was fault on the part of the victim, it is within the judge’s discretion whether or not to take this contributory fault into consideration and, if so, how much this will reduce the compensation222.

(   2  ) Consideration ex officio

7 / 809 If the court determines on the basis of the documents submitted during the proceeding that there was contributory fault of the victim, it must ex officio take such into account regardless of whether there are submissions in this respect by the party liable to compensate223.

b.Reduction of compensation award

7 / 810 According to art 722 para 2 CC, the judge can merely reduce the amount of compensation but not wholly reject liability. This is clear from the different wording of the provision on failure to perform. Art 418 CC states: » If the obligee is negligent regarding the failure of performance of the obligation, the court shall determine the liability for damages and the amount thereof by taking such elements into

222Imperial Court of 26. 11. 1920, Minroku 26, 1911.

223Imperial Court of 1. 8. 1928, Minshû 7–9, 648; Supreme Court of 21. 6. 1966, Minshû 20–5, 1052.

consideration «. Nonetheless, it is questionable whether there is any objective reason for this differentiation.

2.Significance of the victim’s » fault «

There is controversy as to the exact meaning of negligence in the sense of art 722 7 / 811 para 2 CC. This is closely connected to the basic problem of how contributory fault

is to be classified in relation to how liability arises.

a.Re-shifting of the damage back to the victim

(   2  ) Justification for shifting damage back to victim

The problem is how to rationalise this re-shifting of the damage back to the victim. 7 / 816

(  i  ) True fault

On the one hand, it is argued that the principle of fault is applicable here too and 7 / 817 the victim must be held liable for the damage based on his fault224.

224Wagatsuma, Jimu kanri, futô ritoku, fuhô kôi [ Negotiorum gestio, unjust enrichment and tort ] 209.

aa.Significance of » fault «

7 / 818 » Fault « is understood in the same manner here as the fault that must be found on the part of the damaging party under art 709 CC.

bb.Victim’s capacity to commit delicts

7 / 819 It is a prerequisite that the victim, like the damaging party, has the capacity to commit delicts225.

(  ii  ) Not true fault

7 / 820 Nowadays, however, the predominant view is that the fault principle is not directly applicable in case of contributory fault; instead, it is considered necessary to adapt it.

aa.Lack of due care

7 / 821 According to prevailing opinion, contributory fault is not about recognising the victim’s liability but about reducing compensation for reasons of fairness. Accordingly, no fault on the part of the victim in the conventional sense is necessary; rather it is sufficient that there is some blameworthiness which makes reducing the damages for fairness considerations appear appropriate226.

aaa. Meaning of » fault «

7 / 822 According to this interpretation, » fault « means no more or less than simple lack of care.

bbb. Victim’s capacity to commit delicts

7 / 823 This does not necessarily mean that the victim must have the capacity to commit delicts, ie have the ability to recognise that his conduct involves liability; it is sufficient that his reasoning ability is such that he would be able to apply the care necessary to avoid the damage ( this corresponds to the reasoning ability of a child of about six years old ).

bb.Duty to mitigate damage

7 / 824 Another view that certainly also holds influence contends that the rule on contributory fault is based on the duty to mitigate damage. While the injuring party may not infringe the rights of another person, the owner of the relevant rights, on the other hand, is not prohibited from injuring his own rights since he may dispose

225Wagatsuma, Jimu kanri, futô ritoku, fuhô kôi [ Negotiorum gestio, unjust enrichment and tort ] 210.

226Katô, Fuhô kôi [ Tort ] 247. Cf also Supreme Court of 24. 6. 1964, Minshû 18–5, 854.

this view, contributory fault means nothing more or less than that not only the injuring party’s conduct but also that of the victim constitutes a partial cause for the

227Cf Kubota, Kashitsu sôsai no hôri [ Legal theory of contributory fault ] 192 ff, in particular 198 f, 205 f. Also Shiomi, Fuhô kôi-hô [ Law of tort ] 305, 310 f, arguing basically this view.

228Kubota, Kashitsu sôsai no hôri [ Legal theory of contributory fault ] 205 f.

229Kubota, Kashitsu sôsai no hôri [ Legal theory of contributory fault ] 201 f.

7 / 830 However, this interpretation of causation gives rise to the following problems231.

aa. Interpretation of causation

7 / 831 Since according to both scientific and popular observation, every result can be traced to myriad causes, legal causation is assessed using the conditio sine qua non formula in most legal systems. However, if the respective share in causation is taken as the basis, this conflicts with precisely such understanding of causation. Besides this, it is also impossible to determine such shares objectively on the basis of evidence submitted.

bb. Legal evaluation

7 / 832 Furthermore, this view leaves it unclear why the scope of legal liability should be determined on the basis of the actual causality.

(   2  ) Rationale based on wrongfulness

7 / 833 Another view seeks to found the limited liability of the injuring party not in causation but on the degree of wrongfulness on the part of the same.

(  i  ) Reduction of wrongfulness

7 / 834 Some see this as a reduction of the wrongfulness of the injuring party’s conduct due to the victim’s » fault «232. When it comes to contributory fault, the issue is the assessment of what the injuring party was under obligation to do given the circumstances created by the victim and to what extent he in fact failed to do it, ie the injuring party’s liability is determined according to the degree of wrongfulness.

(  ii  ) Balancing of both parties’ wrongfulness

7 / 835 Others again, however, see this issue as balancing the wrongfulness of the injuring party against that of the victim, in order to arrive at the scope of the injuring party’s liability233.

230Hamagami, Songai baishô-hô ni okeru » hoshô riron « to » bubunteki inga kankei no riron « [ The theory of compensation and the theory of partial causation in the field of the law of damages ], Minshô-hô Zasshi 66–4 ( 1972 ) 14 ff.

231Hirai, Saiken kakuron II Fuhô kôi [ Law of obligations Particular part II Tort ] 147; Shiomi, Fuhô kôi-hô [ Law of tort ] 309.

232Kawai, Kashitsu sôsai no honshitsu [ The nature of contributory fault ], Hanrei Taimuzu 240 ( 1970 ) 10.

233Hashimoto, Kashitsu sôsai hôri no kôzô to shatei ( 1 )-( 5 ) [ Structure and scope of the principle of contributory fault ( 1 )-( 5 ) ], Hôgaku Ronsô 137–2, 16; 137–4, 1; 137–5, 1; 137–6, 1; 139–3, 1; in particular 137–6, 31.

C.Extension of contributory fault – victim’s predisposition

If physical or psychological characteristics or an illness of the victim constitute 7 / 840 a cause for the occurrence or aggravation of the damage, the question is whether

this should be considered as a ground for reducing the amount of compensation.

1.Affirmation that predispositions of the victim should be considered

According to case law, any predisposition of the victim that has contributed to 7 / 841 the occurrence or aggravation of the damage will be taken into consideration in analogous application of art 722 para 2 CC when determining the compensation, insofar as it must be deemed unfair to impose the full burden of the damage upon

the injuring party236.

234Hashimoto, Hôgaku Ronsô 137–6, 32 ff.

235Hashimoto, Hôgaku Ronsô 137–6, 36 ff. The principle of responsibility for one’s sphere is thus a rule for the apportionment of the risk depending on which sphere ( of influence or operational responsibility ) the cause ( risk of damage ) lay.

236Supreme Court of 21. 4. 1988, Minshû 42–4, 243.

a.Predispositions to be considered

7 / 842 In this respect, the question is which predispositions of the victim must be considered.

(   1  ) Psychological factors

7 / 843 The consideration of psychological factors has been established237.

(   2  ) Physical factors

7 / 844 With respect to physical factors, the following two cases must be distinguished.

7 / 845 If the victim suffers from an illness, this must be taken into account in line with its type and severity238.

(  ii  ) Unusual physical characteristics

7 / 846 However, when the issue is deviations from average body stature or normal con-

stitution, such as do not amount to any illness, these are to be considered as follows239.

aa.Basic rule

7 / 847 In principle, such factors are not to be taken into account. Body stature and constitution are not the same for all individuals and so it must be seen as a matter of course that there are more unusual manifestations within the bounds of individual differences. It is not possible to reduce the compensation on this basis.

bb.Exception

7 / 848 By way of exception, such may be considered if someone has unusual physical characteristics that depart substantially from the average values for ordinary people, and he has not been more careful than ordinary people despite the risk of a grave injury.

b.Justification for taking this into account

7 / 849 However, it is questionable how taking such predispositions into account leads to fairer distribution of damage. The following two approaches seek to explain it.

237Supreme Court of 21. 4. 1988, Minshû 42–4, 243.

238Supreme Court of 25. 6. 1992, Minshû 46–4, 400; Supreme Court of 27. 3. 2008, Hanrei Jihô 2003, 155.

239Supreme Court of 29. 10. 1996, Minshû 50–9, 2474.

bb.Impossibility of restriction with respect to the characteristic being taken into consideration

240Nomura, Inga kankei no honshitsu [ The nature of causation ], in: Kôtsû jiko funso shori sentâ seiritsu 10 shunen kinen ronbun-shû [ Commemorative publication on the 10th anniversary of the Centre for Settlement of Traffic Accidents Disputes ] ( 1984 ) 62.

241Hashimoto, Hôgaku Ronsô 139–3, 21 ff.

aa.General risk

7 / 858 If a general risk of life manifests, then the injuring party who has caused this by culpable conduct, must bear all consequences.

bb.Special risks

7 / 859 On the other hand, if a risk that must not be expected in social life manifests, the victim must only bear the consequences when such arise from his own legal sphere.

(  iii  ) Problem

7 / 860 Nonetheless, it is difficult to assess what qualifies as a general risk of life242.

2.Negation that predispositions of the victim should be considered

7 / 861 Nonetheless, there is also an influential view to the effect that a predisposition on the part of the victim that has contributed to the occurrence or aggravation of the

damage may not be considered as a ground to reduce the amount of compensation243.

a.Rationale

7 / 862 This is reasoned as follows.

(   1  ) Predisposition took effect due to injuring party’s tort

7 / 863 In the absence of the injuring party’s tort, the predisposition would not have taken effect and the damage would not have occurred in the first place or been aggravated244.

(   2  ) Unjustified that the victim bear the damage

7 / 864 However, it would no longer be relevant whose conduct brought the risk inherent in the predisposition into effect if such is assigned to the victim. This view therefore also takes special grounds as its basis to argue that it is unjust to assign the risk to the victim.

242Hashimoto, Hanhi: Saihan Heisei 8-nen 10-gatsu 29-nichi [ Comment on a Supreme Court judgment of 29. 10. 1996 ], Minshô-hô Zasshi 117–1 ( 1997 ) 100, seeks to base the argument on whether a predisposition goes beyond the scope of simple individual differences.

243Kubota, Kashitsu sôsai no hôri [ Legal theory of contibutory fault ] 70 f; Hirai, Saiken kakuron II Fuhô kôi [ Law of obligations Particular part II Tort ] 159 f; Yoshimura, Fuhô kôi [ Tort ]4 180; Shiomi, Fuhô kôi-hô [ Law of tort ] 322 f.

244This is based on the oft-mentioned idea originating in English law that » a tortfeasor takes his victim as he finds him «.

D. Reduction of the duty to compensate

In Japanese law, there is no provision on reducing the duty to compensate out of 7 / 870 equity considerations. Neither does academic literature or case law refer to neces-

sity for such a provision. This could be because no grave problems arise in this respect since it is possible to be freed from liability under Japanese insolvency law ( art 248 ff Bankruptcy Law )245.