[1] The case where a “justifiable cause” under Articles 415 and 385(1) of the Commercial Act is acknowledged as to the dismissal of an auditor before the expiration of the term of office

[2] In a case where an auditor who was dismissed before the expiration of his/her term of office without justifiable grounds claims the company as the amount of remuneration due to dismissal under Articles 415 and 385(1) of the Commercial Act, whether the benefits accrued to another workplace during the remaining term of office should be deducted from the amount of compensation for damages (affirmative with qualification)

[1] “Justifiable reason” as stipulated in Articles 415 and 385(1) of the Commercial Act is insufficient solely for the fact that there is no subjective trust relationship between a shareholder and an auditor. In a case where an auditor committed an act in violation of statutes or the articles of incorporation in connection with his/her duties, or where it is considerably difficult for him/her to perform his/her duties as a mental or physical auditor, there is justifiable reason to dismiss him/her before his/her term of office, such as in a case where he/she loses fundamental trust relationship with the auditor in performing his/her duties, etc.

[2] In a case where a creditor or a victim who suffered losses due to a default or tort obtains profits from the same cause, such profits must be deducted in calculating the amount of damages. In calculating the amount of damages, in order to allow a offsetting of losses, there must be a proximate causal link between the act causing the damage compensation and the act causing the profit and the damage compensation. In a case where an auditor whose term of office has been fixed claims the amount of remuneration that could have been gained at the end of his remaining term or the expiration of the term of office against the company under Articles 415 and 385(1) of the Commercial Act due to the dismissal of the special resolution of the general meeting of shareholders without justifiable reasons, the pertinent auditor must deduct in calculating the amount of damages due to the removal if there is a proximate causal relationship between the removal and the removal.

[1] Articles 385(1) and 415 of the Commercial Act / [2] Articles 385(1) and 415 of the Commercial Act, Articles 393 and 763 of the Civil Act

[1] Supreme Court Decision 2004Da25611 Decided October 15, 2004 (Gong2004Ha, 1827) Supreme Court Decision 2009Da31260 Decided September 8, 201 / [2] Supreme Court Decision 92Da31361 Decided December 22, 1992 (Gong193Sang, 576)

Plaintiff (Law Firm Han-chul, Attorneys Hong Hong-soo et al., Counsel for the plaintiff-appellant)

Han Electric Fuel Fuel Co., Ltd. (Attorney Kim Sang-soo et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2010Na46123 decided April 29, 2011

The part of the lower judgment against the Defendant is reversed, and that part of the case is remanded to the Seoul High Court.

The grounds of appeal are examined.

1. As to the grounds of appeal Nos. 1 and 2

“Justifiable reason” under Articles 415 and 385(1) of the Commercial Act is insufficient solely by the fact that there is no subjective trust relationship between shareholders and auditors, such as infertility. In the event that an auditor has committed an act in violation of statutes or the articles of incorporation in connection with his/her duties, or where it is considerably difficult for the auditor to perform his/her duties as a mental or physical auditor, there is a justifiable reason to dismiss him/her before his/her term of office arises only when an objective situation that would hinder the auditor in performing his/her duties, such as where the auditor’s fundamental trust relationship is lost with respect to his/her duties (see Supreme Court Decision 2004Da25611, Oct. 15, 2004).

According to the reasoning of the judgment below, the court below acknowledged facts as stated in its holding, and determined that the dismissal of this case did not have a legitimate reason for dismissal, on the ground that even if there were errors by the plaintiff, such as inappropriate execution of some of audit information expenses, business promotion expenses, and equipment distribution expenses, such reasons alone cannot be deemed as having caused an objective situation that could hinder the plaintiff in carrying out his duties as an auditor.

In light of the above legal principles and records, the fact-finding and judgment of the court below are just, and there are no errors in the misapprehension of the legal principles as to the auditor's duty's duty and the burden of proof under Article 385 (1) of the Commercial Act, or there are no errors in the misapprehension of legal principles as to the auditor's duty's duty's duty's degree

2. As to the third ground for appeal

In a case where a creditor or a victim, etc. who has suffered loss due to a default or tort, obtains profits from the same cause, such profits shall be deducted in calculating the amount of damages. In order to allow a offsetting of profits and losses in calculating the amount of damages, there should be a proximate causal link between the act causing the damages (see Supreme Court Decision 92Da31361, Dec. 22, 1992, etc.). If an auditor whose term of office has been fixed claims the amount of remuneration that the company could have obtained at the time of the remaining term of office or the expiration of the term of office pursuant to Articles 415 and 385(1) of the Commercial Act due to a special resolution of the general meeting of shareholders for the reason that the auditor was dismissed before the expiration of the term of office without justifiable reasons, if the pertinent auditor claims the amount of compensation for the remaining term of office for the company or the amount equivalent to the remuneration that the company could have obtained at the time of the expiration of the term of office and the profits earned from another workplace due to the use of his work hours and efforts for the company.

According to the reasoning of the judgment below, the court below rejected the defendant's assertion that the auditor's damages incurred by the dismissal before the expiration of the term of office is equivalent to the amount of remuneration that the auditor can receive while holding office for the remaining term of office, and the company can dismiss the auditor under the provisions of Articles 415 and 385 (1) of the Commercial Act. The dismissed auditor is not obligated to manage the delegated affairs for the company any longer since the delegation relation between the company and the company is terminated, and the auditor is no longer obligated to manage the delegated affairs for the company. Thus, even if the auditor receives remuneration from another company by the date of the expiration of the term of office after the dismissal, it cannot

However, such determination by the court below is difficult to accept for the following reasons.

According to the evidence duly admitted by the court below, the plaintiff, who is the defendant's standing auditor, from March 27, 2009, after the dismissal of this case, could have known the fact that he was paid the remuneration when he was employed as a full-time auditor from Cocoen Ltd., Ltd....

Nevertheless, without examining the above points, the court below's decision that did not fully deduct the above remuneration when calculating the amount of damages caused by dismissal was erroneous in the misapprehension of legal principles as to offsetting profit and loss, which affected the conclusion of the judgment, and it is clear that this error affected the judgment. Thus, the defendant's ground of appeal

3. Conclusion

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

Justices Lee Sang-hoon (Presiding Justice)