As reported yesterday the Osaka District Court ordered the state to pay 670 million yen in compensation to victims of a fraud scam, involving failed mortgage securities firm Daiwa Toshi Kanzai.
Contributory negligence
However, the ruling said that 60 percent of that amount should be disallowed. The ruling stated the reason of reduction why the victims should have been aware of the risk of purchasing mortgage securities with high interest rates.While the incident caused some 111.2 billion yen in losses to 17,000 investors, the victims were mainly people in their 50s and older.
Is it fair?
In my view, it should be impossible for victims as ordinary consumers to evaluate whether the estimation of the mortgaged land value is correct or not, because they have not a specific knowledge or experience. Moreover, it is not blamed for victims to believe the explanation of Daiwa Toshi Kanzai, because the trader showed the certification concerning the land value compiled by real-estate appraiser.The court might say that the victims should be imposed some part of the loss in the view of fair. But it is wrong thought. This is not a negligent case, but a intentional fraudulent case. In the view point of justice, the court should not permit to blame the negligence of the victim. I can not agree to the court conclusion in this point.
Kansai Kogin Case
Kansai Kogin was a medium sized financial association in Osaka region, and it went bankrupt in 2000. Before collapsing, the association solicited his customers to invest their deposit to the capital stock.. The association was established for the small and medium sized Korean business. According to the explanation by the bank officers, the bank needed to enlarge the amount of capital stock to change a bank from a financial association. Many customers believed the explanation of the association and invested their money and deposit. But the financial status of the association was getting worse since 1996, and reached insolvency in 1998 at the latest, because the association loaned huge amount of money to the real estate business and the entrepreneurs went bankrupt or insolvency. After the bankrupt of the association, the victims who invested the association filed lawsuits to the trustee and the representatives to pay damage compensation. I participated the litigation as one of the attorneys of the victims.
Judgement
The Osaka District Court ruled the claim of victims, but 50 percent of that amount should be disallowed in virtue of their contributory negligence. Why? The victims could not the real financial status of the association, because the association said the bank was quite health and disclosed the financial materials as if the association had no financial problem. At the condition, usual customer was impossible to foresee the collapse of the association.The Osaka Appeal Court on May 8th 2007, accepted our argument, and ruled that there could not find any reason in good faith to impose the victims the burden of contributory negligence.
