[1] Requirements for providing security to a specific creditor as security for a fraudulent act, and whether the offering of real estate to a specific creditor as security is the only real estate owned by the debtor to constitute a fraudulent act (negative)

[2] In cases where a beneficiary or a subsequent purchaser has already received a dividend before a fraudulent act is revoked by a creditor, whether the creditor may claim for the payment of money that the beneficiary or subsequent purchaser received as a dividend by means of equivalent compensation (affirmative)

[3] Whether a lawsuit seeking revocation of a fraudulent act may be filed against only a part of the beneficiary or subsequent purchaser, or against a co-defendant (affirmative), and the burden of proof as to the bad faith of the beneficiary or subsequent purchaser in a lawsuit seeking revocation of a fraudulent act

[1] Article 406 (1) of the Civil Act / [2] Article 406 (1) of the Civil Act / [3] Article 406 (1) of the Civil Act, Article 288 of the Civil Procedure Act

[1] Supreme Court Decision 2005Da47106, 47113, 47120 decided Feb. 14, 2008 (Gong2008Sang, 360) / [2] Supreme Court Decision 2002Da42711 decided Oct. 25, 2002 (Gong2002Ha, 2862) / [3] Supreme Court Decision 2009Da81920 Decided Sept. 29, 201

Doctrine, Inc. specialized in the management of assets

Hyundai Swiss Savings Bank, Inc. (Law Firm Tae & Yang, Attorney Jeong Jong-il, Counsel for the plaintiff-appellant)

Defendant 1 and one other (Law Firm Macro et al., Counsel for the defendant-appellant)

Seoul Central District Court Decision 201Na9784 decided May 18, 2011

All appeals are dismissed. The costs of appeal are assessed against the Defendants, and the costs of appeal incurred by the intervention are assessed against the Intervenor succeeding to the Plaintiff.

1. Judgment on the Defendants’ grounds of appeal

In order to become a fraudulent act of offering security to a certain creditor, it is required that the debtor may reduce the joint security of other general creditors by allowing the debtor to obtain preferential reimbursement from other creditors only in excess of his/her obligation and the creditor. In cases where real estate is offered to a certain creditor as security, it cannot be deemed that a fraudulent act is established only when the security is the only real estate owned by the debtor (see Supreme Court Decision 2005Da47106, 4713, 47120, Feb. 14, 2008).

If a creditor’s revocation of a fraudulent act and a claim for restitution are acknowledged, the beneficiary or subsequent purchaser shall be liable to return the object of the fraudulent act to the debtor as restitution, and if it is impossible or considerably difficult to return originals, the beneficiary or subsequent purchaser shall be liable to compensate for the value equivalent to the value of the object of the fraudulent act as performance of the duty to restore (see Supreme Court Decision 97Da58316, May 15, 1998, etc.). In addition, in cases where the beneficiary or subsequent purchaser has already received dividends before the fraudulent act is revoked by the creditor, the creditor may claim for the payment of money that he or subsequent purchaser received as dividends against the beneficiary or subsequent purchaser by means of restitution method (see Supreme Court Decision 2002Da42711, Oct. 25, 2002). Meanwhile, a lawsuit for revocation of a fraudulent act may be brought against only a beneficiary or subsequent purchaser, or a co-defendant may be brought against the beneficiary and subsequent purchaser as a co-defendant, not with the burden of proving that the beneficiary or subsequent purchaser is malicious.

After finding the facts as indicated in its holding, the court below rejected the Defendant’s assertion that Defendant 1 was a bona fide beneficiary or a subsequent purchaser, on September 4, 2008, since the Nonparty had already been in excess of the obligation at the time of entering into the instant mortgage agreement with Defendant 1 on the instant real estate. Accordingly, it constitutes fraudulent act; Defendant 1 and the subsequent purchaser, the beneficiary; on the other hand, Defendant 1 transferred the instant real estate to Defendant Credit Guarantee Fund, and Defendant 1 was unable to return each original claim due to the extinction of the instant real estate in the auction procedure for the instant real estate. Accordingly, Defendant 1 should compensate the Plaintiff, the obligee, as the obligee, on the ground that the amount of compensation is KRW 98,787,360, which Defendant Credit Guarantee Fund received as a dividend from the instant real estate. The court below revoked the instant mortgage agreement between the Nonparty and Defendant 1, and ordered the Defendants to pay the said amount of compensation for delay as well as compensation for delay.

Examining the records in light of the aforementioned legal principles, the court below is just, and contrary to the allegations in the grounds of appeal, the court below did not err by violating the rules of evidence or by misapprehending the legal principles on compensation for value in a lawsuit seeking revocation of fraudulent act.

2. Determination as to the plaintiff's successor's motion for intervention

According to the records, the plaintiff succeeding intervenor is the successor to the right to acquire all the claims related to the instant case from the plaintiff and makes an application for intervention in the process of the trial. However, such application for intervention is not allowed in the final appeal which is a legal trial (see, e.g., Supreme Court Decisions 98Da5169, Mar. 9, 2001; 2002Da48399, Dec. 10, 2002); and the application for intervention by the plaintiff succeeding intervenor is unlawful.

3. Conclusion

Therefore, all appeals are dismissed. The costs of appeal are assessed against the losing party, and the costs of appeal are assessed against the Plaintiff’s succeeding intervenor. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Poe-young (Presiding Justice)