Tajd Co., Ltd. (Law Firm Mapyeongsung, Attorney Cho Jae-chul, Counsel for the plaintiff-appellant)

The head of Seocheon-si (Law Firm Rate, Attorney Park Ba-young, Counsel for the plaintiff-appellant)

Seoul High Court Decision 200Na14888 delivered on August 1, 200

Incheon District Court Decision 2010Guhap1785 Decided December 16, 2010

October 5, 2011

1. Revocation of a judgment of the first instance;

2. The Defendant’s acceptance and disposition of the report on the amusement facility business as of December 9, 2009 and the acceptance disposition of the report on the sports facility business as of November 17, 2009, all of which are made against Taesung L&W Co., Ltd. shall be revoked.

3. Of the total costs of litigation, the part pertaining to participation by the Defendant is borne by the Intervenor, and the remainder by the Defendant, respectively.

The same shall apply to the order.

1. Details of disposition;

A. The Plaintiff has completed the permission for the general amusement facility business and the report on the sports facility business for the sports center (hereinafter “instant sports center”), such as swimming pools, golf practice centers, physical training training centers, and indoor skiing grounds located in the Kucheon-si, Seocheon-gu, Seocheon-si (Sacheon-gu) 84,526.7 square meters of land for sports, and operated the sports center.

B. The Defendant’s Intervenor (the trade name was Taesung T&W, Inc., and was changed to the current trade name on December 3, 2009; hereinafter “ Intervenor”) acquired ownership of the principal business facilities and equipment of the instant sports center, including the building, its site and physical training training facilities, and the golf practice hall facilities, such as snow removal facilities, and things, where the instant sports center is located through the public sale procedure and the voluntary auction procedure conducted by the Korea Asset Trust Co., Ltd from August 2009 to November 4, 2009.

C. The subsequent intervenor reported to the Defendant on November 5, 2009 the succession to the rights and obligations with respect to the sports facility business reported by the Plaintiff on December 2, 2009, and reported the succession to the rights and obligations with respect to the amusement facility business reported by the Plaintiff on December 2, 2009 (hereinafter collectively referred to as the “instant report”), Article 20 of the Installation and Utilization of Sports Facilities Act (hereinafter referred to as the “Sports Facilities Act”) and Article 21 of the Enforcement Rule of the same Act, the Defendant accepted the report on the sports facility business on November 17, 2009 and accepted the report on December 9, 2009 pursuant to Article 8 of the Tourism Promotion Act and Article 16 of the Enforcement Rule of the same Act (hereinafter referred to as the “acceptance of the instant report”).

D. Meanwhile, around February 17, 2010, the Plaintiff filed an application with the Defendant for the disclosure of information on the documents related to the Intervenor’s instant report and filed the instant lawsuit seeking revocation of the acceptance of the instant report on March 1, 2010.

[Ground of recognition] Facts without dispute, Gap evidence 1, 2, 6, 7 (including each number; hereinafter the same shall apply), Eul evidence 1 and 2, and the purport of the whole pleadings

2. Determination on this safety defense

A. Determination as to whether a case is subject to appeal litigation

The Defendant and the Intervenor asserted that the acceptance of the instant report does not constitute an administrative disposition that directly changes the legal status of the Plaintiff, and thus, cannot be seen as an appeal litigation, since the Intervenor succeeded to the status of the previous business operator without any need to take any particular measures such as acceptance by filing the instant report, and accordingly, the instant acceptance of the instant report is merely an act confirming that the previous business operator succeeded to the status of

According to Articles 3(1)6 and 5(2) of the Tourism Promotion Act, a person who intends to operate an amusement facility business like the Plaintiff is obliged to obtain permission from the competent authority with certain facilities and equipment, and establish facilities and equipment which serve as the basis for such permission. According to Article 8(1), (2) and (4) of the same Act, where the principal facilities are acquired through transfer of business, merger, inheritance, or auction under the Civil Execution Act, the transferee shall succeed to the rights and obligations arising from the transferor’s permission, etc. and report them to the competent authority. Furthermore, according to Articles 10(1)2 and (2), 11, and 20 of the Sports Facility Business Act, a person who intends to operate an amusement facility business as the Plaintiff is equipped with a certain facility and reported to the competent authority, and the standards for such facilities are determined by Ordinance of the Ministry of Culture, Sports and Tourism, and according to Article 27(1), (2) and (4) of the same Act, the transferee shall succeed to the rights and obligations arising from the transferor’s report process.

In full view of the above provisions, the act of new permission or report by the competent authority on the amusement facility business or the sports facility business is deemed to be an act of establishing legal rights to the above business lawfully in a case where it is determined that the above person satisfies the above criteria after examining whether the facilities and equipment meet the criteria for the facilities and equipment. Furthermore, the act of the competent administrative agency accepting the report on succession to the rights and equipment of the transferee is an act of examining whether the transferee has acquired the essential facilities through the procedure of business transfer, merger, inheritance, or auction under the Civil Execution Act on the premise that the pertinent facilities and equipment have already satisfied the criteria required by the relevant Acts and subordinate statutes, and at the same time, establishing new legal rights to the pertinent business to the transferee, and at the same time establishing new legal effect of the change of the business operator by losing the legal rights to the pertinent business lawfully. The acceptance of the report of this case constitutes an administrative disposition that changes the legal status of the transferor and the transferee, and merely an act of confirming the fact that the transferee succeeded to the status of the business operator from the transferor is not reasonable.

B. Determination as to whether the period for filing a lawsuit expires

The Defendant and the Intervenor asserted that the instant lawsuit filed on April 23, 2010 after the lapse of 90 days from the date of filing the suit is unlawful, in light of the following: (a) the Plaintiff’s written opinion as of November 9, 2009 and the Plaintiff’s attorney-at-law expressed their intent to continuously respond to the instant declaration and acceptance of the instant case through an additional newspaper technician, etc. on January 10, 2010, etc.; and (b) the Plaintiff had been aware of the fact that there was the acceptance of the instant declaration and acceptance of the instant case on January 10, 2010.

The "date when the plaintiff becomes aware of the disposition," which is the starting point of the filing period of the lawsuit under Article 20 (1) of the Administrative Litigation Act, means the date when the party becomes aware of the relevant disposition by means of notification, public announcement or other methods (see, e.g., Supreme Court Decision 2005Du14851, Apr. 28, 2006). In this case, the plaintiff submitted to the defendant on Nov. 9, 2009, which was after the plaintiff reported the sports facility business of this case, a statement that the plaintiff would not accept the report of this case to the defendant on Nov. 9, 2009 (Evidence 6), and thereafter, reported several times from the end of Dec. 209 to January 20, 201, the fact that the report of this case was received through the non-party legal staff member of the law office representing the plaintiff's complaint of this case, and there was no practical reason to view the plaintiff's report of this case to the defendant within 3010 days after receipt of the information of this case.

C. Determination as to the interest in the lawsuit

The defendant and the intervenor asserted that even if the acceptance of the report of this case is revoked, the above sports center business cannot recover legal rights that can be lawfully conducted, and therefore there is no legal interest or legal interest in seeking revocation of the acceptance of the report of this case, since the plaintiff already lost ownership of the essential business facilities of the sports center of this case.

However, even if the Plaintiff lost ownership by transferring the essential business facilities of the instant sports center to the intervenors through the public sale procedure, etc., there is no statutory ground to deem that the permission for the amusement facility business or the report of the sports facility business has been transferred to the intervenors as a matter of course. However, as seen earlier, the Plaintiff at the same time upon acceptance of the report of the instant case, lose the legal rights to legitimate operation of the pertinent business to the Plaintiff, who is the previous business, and at the same time lose the legal rights to legitimate operation of the pertinent business, and the Plaintiff, who is disputing the validity of the report of the instant case, may be equipped with the sports center facilities, etc. by the sale, etc., so it is difficult to completely exclude the Plaintiff from meeting the facility and equipment standards stipulated in the Sports Facility Business Act even after the Plaintiff’s assertion. Thus, it cannot be concluded that the Plaintiff has no legal interest in seeking the revocation of the report of the instant sports facility business. This part of the allegation by the Defendant and the Intervenor is without merit.

3. Judgment on the merits

A. The plaintiff's assertion

The acceptance of the instant report is unlawful for the following reasons.

1) Since an administrative agency’s receipt of a report on succession to the status of a business operator pursuant to relevant statutes, such as the Sports Facility Business Act, is a disposition that restricts the rights and interests of the previous business operator, the previous business operator constitutes a party directly related to the disposition. Therefore, in accepting the instant report, the Defendant, an administrative agency, should have been given prior notice and an opportunity to state opinions in accordance with the Administrative Procedures Act to the Plaintiff, who falls under the party concerned

2) The Intervenor acquired the ownership of movable property, such as the instant sports center, its site, and related business facilities, through the public sale procedure conducted by the Korea Assets Trust Co., Ltd., but the said public sale procedure does not fall under the procedures prescribed under Article 8(2)4 of the Tourism Promotion Act and Article 27(2)4 of the Sports Facility Business Act, and does not fall under the acquisition of essential sports facilities and major tourism facilities stipulated under Article 8(2) of the Tourism Promotion Act and Article 27(1) of the Sports Facility Business Act. Therefore, the Intervenor cannot be deemed to have succeeded to the Plaintiff’s rights and obligations arising from the Plaintiff’s report on the existing amusement

3) The Defendant received the said report without closely examining the relevant documents despite any defect, such as omission of the documents submitted in the process of accepting the instant report, etc.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination as to the violation of the Administrative Procedures Act

According to Articles 21(1), 22(3), and 2 subparag. 4 of the Administrative Procedures Act, when an administrative agency imposes obligations on the parties or imposes restrictions on their rights and interests, the administrative agency shall give prior notice to the parties concerned, etc. and give them an opportunity to present their opinions. Here, the parties concerned refer to the persons directly counter-party to the administrative agency’s disposition. On the other hand, as seen earlier, in cases where the successor to the status of the relevant administrative agency reports the acquisition of essential sports facilities, etc. according to the procedure such as public sale and such notification to the relevant administrative agency and accepts it, the notification of the sports facility business to the previous administrative agency becomes invalid. Comprehensively taking into account the above provisions, the administrative agency’s acceptance of the notification of succession to the status of the operator pursuant to the relevant provisions shall be a disposition restricting the rights and interests of the previous business entity. Accordingly, it is reasonable to deem that the former business entity directly becomes the counter-party to the said disposition. In accepting the said report, the administrative agency should conduct the administrative procedure as to the previous business entity (see, e.g., Supreme Court Decision 2015Du14, Feb. 14, 20014.

In light of the above legal principles, the defendant's acceptance of the report on succession to the status of the business operator pursuant to the relevant laws and regulations is a disposition that restricts the rights and interests of the plaintiff, who is the former business operator. However, there is no evidence to acknowledge that the defendant, in accepting the report of this case, notified the plaintiff in advance or provided an opportunity to submit opinions (the above administrative procedure is not in dispute between the parties).

As to this, the defendant and the intervenor asserted that the plaintiff's right to the essential business facilities of the sports center of this case is acknowledged and the related lawsuit is withdrawn through a memorandum of understanding concluded between the plaintiff and the intervenor, etc. Furthermore, according to the relevant Acts and subordinate statutes, the plaintiff's succession to the plaintiff's rights and duties as a matter of course, which is the previous business operator through the public sale procedure, etc., and does not provide for a separate notification obligation to the plaintiff who is the previous business operator. In the case of the acceptance of the report of this case, the report of this case constitutes "any reasonable ground to believe that hearing opinion is clearly unnecessary in light of the nature and effect of the administrative disposition in question" as provided in Articles 21 (4) 3 and 22 (4) of the Administrative Procedures Act and the claim for its revocation is contrary to the principle of good faith. However, considering the nature and effect of the acceptance of the report of this case which loses or limits the rights and interests of the previous business operator, and the circumstances before and after the above acceptance of the report of this case, it does not constitute grounds to acknowledge the acceptance of the report of this case as unlawful.

Furthermore, the Defendant and the Intervenor asserted that the Plaintiff’s claim should be dismissed through a judgment on the circumstances provided by Article 28(1) of the Administrative Litigation Act, since the Plaintiff is in a situation in which the Plaintiff is unable to operate the said sports center any longer because the Plaintiff completely lost ownership of the sports center business facilities, etc. of this case, and even if the acceptance of the report of this case was revoked on the grounds of the lack of administrative procedure, it is difficult to operate the said facilities lawfully. In light of the above, even if there exists a ground for revocation of the acceptance of the report of this case on the grounds of the lack of administrative procedure, the revocation of the report of this case is merely a repeated procedure, and as it causes enormous damages to the bona fide victims, and thus, it would result in a significant inappropriate result for public welfare. However, the Defendant and the Intervenor asserted that the revocation of the acceptance of the report of this case is not sufficient to recognize that the revocation of the acceptance of the report of this case is considerably inappropriate for the public welfare, and there is no other evidence to support this part of the Defendant and the Intervenor.

Ultimately, given that the acceptance of the instant report did not go through the procedure such as prior notice under the Administrative Procedures Act, it is unlawful without examining the remainder of the Plaintiff’s assertion.

4. Conclusion

The judgment of the first instance shall be revoked. The acceptance of the report of this case shall be revoked.

[Attachment Form 5]

Justices Kim Jong-ho (Presiding Justice)