[2] Whether the time when damages for delay incurred under Article 125(1) of the former Financial Investment Services and Capital Markets Act is the same as the time when damages for delay occurred under the Civil Act’s tort liability (affirmative)

[2] Article 125(1) of the former Financial Investment Services and Capital Markets Act (amended by Act No. 11845, May 28, 2013; hereinafter “Capital Markets Act”) provides that a purchaser of securities shall be liable for damages if the purchaser of the securities sustains damages due to a false description or representation of a material fact or an omission of a description or representation of a material fact in a registration statement and an investment prospectus. Article 126(1) of the said Act provides for presumption of damages. The liability for damages under Article 125(1) of the said Act is a statutory liability that is separate from the tort liability under the Civil Act, but the substance is not different from the tort liability under the Civil Act, and Article 126(1) of the said Act merely provides for the presumption of damages suffered by the purchaser of the securities. As such, the time when the liability for damages under Article 125(1) of the said Act arose does not change from the case of damages liability under the Civil Act.

The defendant did not submit the appellate brief within the statutory period, and did not state the grounds for appeal in the petition of appeal.

2. The plaintiff's grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

A. As to the ground of appeal on the revocation of an expression of intent by fraud

(1) The lower court, based on its adopted evidence, found the facts as indicated in its reasoning. 1) The lower court determined that: (a) the main contents of the instant subordinated bonds are to pay interest at 8.5% per annum to repay the principal in full on January 22, 2015; (b) the “risk factors arising from the acquisition of securities” stated in the registration statement and the investment prospectus are merely to make it prepared and publicly announced for the purpose of protecting investors; and (c) subordinate bonds guarantees a high yield of 8 to 9% per annum, but if the issuing company goes bankrupt, there is a high risk that the principal cannot be returned according to the special agreement; (d) investors need to make a decision on whether to make an investment under their responsibility by comprehensively taking into account not only the BISD ratio stated in the registration statement and the investment prospectus presented by the issuing company, but also the stability of financial situation and profit, possibility of continuing as a company, and future profitability; and (c) in light of the purport that the overall asset soundness of the business industry related to the investment risk factors of the instant subordinated bonds still weak, and the Plaintiff’s investment prospectus (hereinafter “instant savings”).

Examining the reasoning of the judgment below in light of the relevant legal principles and records, the judgment of the court below is just and acceptable, and contrary to the allegations in the grounds of appeal, there were no errors in the misapprehension of legal principles as to the cancellation of declaration

(2) The ground of appeal disputing the judgment of the court below that the Defendant, a trustee in bankruptcy, constitutes a third party acting in good faith, is based on the premise that the subordinate bond contract of this case can be revoked as it constitutes an expression of intent by fraud under Article 110 of the Civil Code, and thus, it cannot be accepted without further review

B. As to the ground of appeal on the scope of damages

(1) In a case where a tort claim is filed based on the Civil Act on the ground that the appraisal of corporate bonds was caused by the purchase of corporate bonds due to a false description of the material fact in the registration statement and the investment prospectus, the amount of damages shall be calculated based on the purchase price of corporate bonds, namely, the amount obtained by deducting the value of corporate bonds that would have been formed if there had not been any false description of the material fact in the registration statement and the investment prospectus, as a matter of principle, at the time of purchase of corporate bonds (see, e.g., Supreme Court Decisions 2007Da90647, Jun. 26, 2008; 2009Da91828, Apr. 29, 2010). In addition, with respect to the liability for damages arising from a tort, in principle, the liability for damages shall be established as a tort in light of the concept of fairness, even if there was no separate peremptory notice for performance, and damages for delay shall also be deemed as having occurred (see Supreme Court Decision 2009Da103950, Jan. 13).

Meanwhile, Article 125(1) of the former Financial Investment Services and Capital Markets Act (amended by Act No. 11845, May 28, 2013; hereinafter “Capital Markets Act”) provides that if a purchaser of securities suffers damage due to a false description or representation of a material fact or an omission of a description or representation of a material fact in a registration statement and an investment prospectus, compensation shall be made for such damage. Article 126(1) of the said Act provides for presumption of the amount of damages. Such liability for damages under Article 125(1) of the said Act is a statutory liability that is separate from tort liability under the Civil Act (see, e.g., Supreme Court Decision 97Da32215, Apr. 24, 1998). However, Article 126(1) of the said Act merely provides for presumption of the amount of damage suffered by the purchaser of securities, the same does not apply to damages liability arising from delay liability under the Civil Act.

According to the reasoning of the judgment below, the Japanese Savings Bank prepared financial statements by falsely classifying its assets in a way that pretends to the fixed and outstanding loan claims with normal bonds, and the registration statement of the subordinated bonds in this case can identify the fact that the BISD ratio and asset soundness were false based on these financial statements. In light of the aforementioned legal provisions and legal principles, the financial statements and BISD ratio constitute an important matter that may have a significant impact on investors' reasonable judgment on investment in purchasing subordinated bonds of mutual savings banks that have not been actually repaid upon commencement of bankruptcy proceedings. Thus, barring any special circumstance, the Japanese Savings Bank is liable to compensate the Plaintiff for damages incurred by the Plaintiff who acquired the subordinated bonds in this case by believing the registration statement in accordance with Article 125(1) of the Financial Investment Services and Capital Markets Act, barring any special circumstance. The Plaintiff’s losses incurred immediately after October 22, 2009 on the date on which the Plaintiff acquired the subordinated bonds in this case and paid the acquisition price, and further, damages for delay shall also occur at this time.

Nevertheless, the lower court determined that the Plaintiff’s damage incurred on September 7, 2012, which was declared bankrupt against the Il Savings Bank, and the delay damages for the claim for damages accrued from this time. In so doing, the lower court erred by misapprehending the legal doctrine on the time of occurrence of damages and the starting point of calculating damages for delay pursuant to Article 125(1) of the Capital Markets Act, thereby adversely affecting the conclusion of the judgment. The allegation in the grounds of appeal assigning this error is with merit.

(2) Furthermore, in calculating the amount of damages sustained by the Plaintiff, the Plaintiff’s assertion in the grounds of appeal that ordinary damages include statutory interest calculated at the rate of 5% per annum on the acquisition price of the subordinated bonds of this case, and that special damages include interest income accrued from investment in a stable financial product with at least 24.1 million won per annum of at least 5% per annum on the acquisition price of the subordinated bonds of this case shall also be included, as long as the Plaintiff’s damage is deemed immediately incurred when acquiring the subordinated bonds of this case and paying KRW 24.1 million per annum, it cannot be accepted, since there is no room for the Plaintiff to obtain legal interest or interest income on the acquisition price until the damage occurs.

C. As to the grounds of appeal on the subject matter of a lawsuit for confirmation of bankruptcy claim

The court below is just in determining the amount of the plaintiff's general bankruptcy claims by deducting KRW 4,498,506 from the amount of damages claim against the plaintiff's Japanese savings bank due to the fraudulent or defective description in the registration statement of the Japanese savings bank, and there is no error in the misapprehension of legal principles as to the subject matter of lawsuit and the method of displaying the order in the bankruptcy claim confirmation lawsuit, contrary to what is alleged in the grounds of appeal

3. Conclusion

Therefore, the part of the lower judgment against the Plaintiff is reversed, and that part of the case is remanded to the lower court for further proceedings consistent with this Opinion. The Defendant’s appeal is dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Jo Hee-de (Presiding Justice)