[1] Where an auction court is unable to serve a written notice to a person entitled to provisional registration, whether it is legitimate to send a document by registered mail to his/her address on the registry (affirmative)

[2] Whether a person entitled to a provisional registration for security may receive a distribution where the person entitled to a provisional registration for security has filed a report on a claim with the lapse of the reporting period under Article 16(1) of the Provisional Registration Security Act (negative)

[1] When the auction court sent a written notice to a person entitled to provisional registration to the address on the registry and is unable to serve it, if it sent by registered mail to the address on the registry, it can be deemed that the court given the peremptory notice to “a method deemed reasonable” as stipulated in Article 8(1) of the Civil Execution Rule.

[2] The purpose of Article 16(2) of the Provisional Registration Security Act is not only to determine whether a surplus exists, but also to determine whether a provisional registration is a provisional registration, if there is a decision to commence an auction, etc. on real estate, the provisional registration of which is a provisional registration, because the interests of interested parties are large in the auction procedure that is complicatedly connected, so the provisional registration is determined at the early stage as to whether a provisional registration is a provisional registration for security or a provisional registration for priority preservation, and if not, in order to promote prompt and stability in the auction procedure, the provisional registration is allowed to file a report on a claim within a reasonable time, and if the provisional registration for security is not so, it shall not be allowed to receive a distribution uniformly, even if the person holding the provisional registration for security is the person holding the provisional registration or the actual creditor.

[1] Article 16(1) of the Provisional Registration Security Act, Article 8(1) and (3) of the Civil Execution Rule / [2] Article 16(1) and (2) of the Provisional Registration Security Act

Plaintiff 1 and one other (Attorney Lee Jong-il, Counsel for the plaintiff-appellant)

Defendant 1 and four others (Attorneys Song Jin-jin et al., Counsel for the defendant-appellee)

may 12, 2006

1. The plaintiffs' claims against the defendants are all dismissed.

2. The costs of lawsuit are assessed against the plaintiffs.

Of the dividend table prepared by the above court on August 24, 2005, the amount of KRW 110,000,000 against Defendant 1 among the dividend table prepared by the Seoul Southern District Court 2003taeng 19487 shall be KRW 77,333,306, the amount of dividends to Defendant 2 shall be KRW 90,000,000,000, the amount of dividends to Defendant 3 shall be KRW 24,705,069, the amount of dividends to Defendant Korea, KRW 4,88,510, the amount of dividends to Defendant Korea shall be KRW 0,00,00, KRW 24,705,069, the amount of dividends to Plaintiff 1 shall be corrected to KRW 201,917,808, KRW 141,424,65, respectively.

1. Basic facts

The following facts are not disputed between the parties, or may be acknowledged by taking into account the whole purport of the pleadings in each entry in Gap 3 through 8, Eul 1 through 4:

A. On April 4, 2003, the provisional registration of the Plaintiffs’ right to claim the transfer of ownership was completed on April 3, 2003 with respect to the building owned by Nonparty 1, 1015, 1015.6 square meters (number 1 omitted), the same (number 2 omitted), the same (number 2 omitted), 619.6 square meters, and the above-ground buildings (hereinafter “instant real estate”).

B. On July 14, 2003, the Industrial Bank of Korea, which is the senior mortgagee, applied for a voluntary auction on the instant real estate, and the auction procedure was conducted on the instant real estate at Seoul Southern District Court No. 2003 Ma19487.

C. On July 25, 2003, the auction court may participate in the distribution only by September 29, 2003, which is the completion period for the demand for distribution, and accordingly, sent a peremptory notice stating the purport of reporting the claims to that effect to the address on the register of the plaintiffs. On August 6, 2003, with respect to plaintiffs 2, it was served on August 6, 2003, but as to plaintiffs 1, it was impossible to serve the said peremptory notice by registered mail at the address on the register of plaintiffs 1. The plaintiffs sent the said peremptory notice to the purport that the period for reporting the claims has expired by the registered mail at the address on the register of the plaintiffs 1. The plaintiffs again submitted an application for the demand for distribution from April 3, 2003 to February 7, 2004 to 101,66,600 to 360% of the principal and interest for arrears, and 170% of the total amount of the principal and interest for distribution from February 4, 20006.7.6

D. According to the above auction procedure on June 23, 2004, the real estate of this case was sold to Nonparty 2 in gold 5,503,838,000 won. On August 24, 2005, the aggregate of the above sales price of KRW 5,503,838,000 and interest 17,487,597 won was deducted from the enforcement cost of KRW 18,886,997 and the remaining KRW 5,502,438,60,07 were distributed to creditors. The plaintiffs did not report the claims under Article 16 (1) of the Provisional Registration Security Act until the period during which they demand distribution to Defendant 1,50,000 won were distributed to Defendant 1,50,000 won to Defendant 2,500 won were distributed to Defendant 1,50,000 won to Defendant 2,500 won were distributed to each of the creditors, and the distribution schedule was not reported to Defendant 2,500,000.

E. The Plaintiffs appeared on the aforementioned date of distribution, and raised an objection against the dividend amount to the Defendants, and thereafter filed the instant lawsuit on August 29, 2005.

2. The plaintiffs' assertion

On April 4, 2003, the Plaintiffs leased 170,000,000 won to Nonparty 1 on July 10, 2003 at the due date set at 4% per annum, and on the same day, the Plaintiffs are the persons having the provisional registration for the instant real estate owned by Nonparty 1 for the purpose of securing the above loan claims.

(1) Article 16(1) of the Act on Participation in Real Estate provides, “Where an order is issued to commence an auction, etc. on real estate on which a provisional registration concerning the transfer of ownership has been made, the court shall give a peremptory notice to the person having the right to a provisional registration of the content thereof and the existence, cause, and number of claims (including interest and other incidental claims), if such provisional registration is a provisional registration for security, and to report the content thereof to the court for a reasonable period, if it is not a provisional registration for security, and if it is not a provisional registration for security, the court shall give a peremptory notice to the court.” Article 8(3) of the Civil Execution Rule provides, “if a person to be notified is in a foreign country or is unknown, the peremptory notice shall take effect after the date of the public notice. In this case, the peremptory notice shall take effect after one week from the date of the public notice.” Thus, even if the auction

② The purport of Article 16(1) of the Act on Participation is to determine whether or not a surplus exists in the auction procedure, and in a case where there is no obstacle to the judgment, even if a demand for distribution is made after the completion date of the demand for distribution, the so-called “effective effect” cannot be applied. In this case, in light of the amount of credit indicated in the application for the auction of the Industrial Bank of Korea, which is a senior mortgagee, and the value of real estate, there is no obstacle to determining whether or not a surplus exists in the auction expenses, and in the case of a mortgagee, if a report on a claim is made on the date of distribution by the date of distribution, a provisional registration security right is to receive a

3. Determination

A. Whether the delivery to Plaintiff 1 is lawful

Article 8(1) of the Civil Execution Rule provides that "The service of a peremptory notice and notice in civil execution procedures may be made in such a way as deemed reasonable unless there are special provisions." Since the auction court's delivery of a peremptory notice to plaintiff 1 by registered mail is impossible, it can be deemed that the delivery of a peremptory notice by registered mail to the address on the registry can be deemed to have been made "the method deemed to be reasonable" as provided in the above rule, the delivery of the case is lawful ("the case where the address is unclear" under Article 8(3) of the Civil Execution Rule means the case where the address, residence, place of business, office, or place of business of the person to receive the peremptory notice cannot be deemed to be a case where the address, etc. of the person to receive the peremptory notice cannot be deemed to be a case where it is impossible to identify the address, etc. of the person to receive the peremptory notice, since the delivery of a peremptory notice to the person to receive the peremptory notice is more favorable in view of the possibility of recognition of the delivery of the address, it cannot be deemed unlawful).

B. Whether the forfeiture effect is excluded

Article 16(2) of the Act on Participation in Security provides that “if the right to a provisional registration for security already made prior to the registration for seizure ceases to exist by sale, the creditor may receive the distribution of the proceeds of sale or the repayment thereof only if he/she has filed a report on the claim under paragraph (1).” The purport of Article 16 of the said Act is not only to determine surplus existence, but also to have an complicated interest in the auction procedure, and in the case of junior provisional registration, it has a significant impact on the interested parties in the name where the interests are to be cancelled. Therefore, in cases where a decision to commence an auction, etc. on the real estate whose provisional registration is made is a provisional registration for the preservation of the order of provisional registration or for the preservation of the order of priority, it would be deemed that a provisional registration for security should be made not to receive the distribution uniformly even if it is a de facto creditor, and the right to make a provisional registration for security should not be deemed to have been entitled to receive the distribution by 20 days prior to the completion period for the distribution, excluding the right to demand distribution by 2015 days under the Act.

4. Conclusion

Therefore, the plaintiffs' claims against the defendants are dismissed for all reasons.

Judges Kim Jong-Un (Presiding Justice)