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Japan: Supreme Court Decides Registered Owner of Car Responsible for Damages Caused by Actual Owner

(Jan. 3, 2019) On December 17, 2018, the Supreme Court of Japan held the registered owner of a car liable for the personal injury caused by the car’s driver, who was the actual owner of the car. ( Sup. Ct., 2018 (ju) 16 (Dec. 17, 2018) (in Japanese, click characters besides PDF icon).)
The Act on Securing Compensation for Automobile Accidents (Act No. 97 of 1955, amended by Act No. 66 of 2015, Japanese Law Translation website) established a system to guarantee compensation for damage in the event of a person’s death or bodily injury due to the operation of an automobile. ( Id. art. 1.) The Act obligates “a person that puts an automobile into operational use for that person’s own benefit” to bear strict liability. Article 3 of the Act states as follows:
A person that puts an automobile into operational use for that person’s own benefit is liable to compensate for damage arising from the operation of the automobile if this results in the death or bodily injury of another person. …
Who the “person that puts an automobile into operational use for that person’s own benefit” is, depends on the situation, and there have been many court decisions in this regard. A 1975 Supreme Court decision is regarded as presenting general standards in cases of persons who lend their names to be registered as owners of cars to others who actually own and use the cars. The decision stated that article 3 of the Act applies to the person who controls and manages the car and is in a position to monitor and supervise the operation of the car to prevent harm through its operation in accordance with social norms. (Takayuki Kitagawa et al., Chikujo Kaisetsu Jidosha Songai Baisho Ho [Article-by-Article Commentary on the Act on Securing Compensation for Automobile Accidents] 38–40 (2017).)
In this case, the registered owner was a younger brother of the driver. When the car was bought, the driver was a welfare recipient. She thought her welfare benefits might be suspended if she bought and owned a car. The Ministry of Health, Labour and Welfare website states that, in principle, in order to receive welfare payments, car owners must sell their cars and use the money for their essential living expenses because a car is an asset. (Ministry of Health, Labour and Welfare, Q & A on the “Welfare System,” Q. 7, Ministry of Health, Labour and Welfare website (in Japanese).) Therefore, she asked her brother to let her use his name as the owner and driver on the car’s registration, and he accepted her request.
At the time in 2014 when the driver bought the car and then had an accident, the brother and sister were not close and mostly did not communicate with each other. They lived separately, and the brother did not financially contribute toward the purchase of the car or pay for its maintenance.  Nor did he ever drive the car or know the car’s location. When the case came before the lower court, the court decided that the brother was not liable because he did not control or manage the operation of the car.
The Supreme Court, however, overturned the lower court decision, stating that the brother’s lending his name for his sister to register the car made her de facto ownership and use of the car possible, and thus contributed to any dangerous situations that might arise when his sister drove the car. The Court stated that the brother could have controlled the use of the car and was in the position to supervise its use to prevent harmful situations from occurring. Accordingly, the Court held that the brother is liable under the Act on Securing Compensation for Automobile Accidents.

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