[1] The method of calculating the average boarding wage, which serves as the basis for calculating the lump-sum compensation, etc. to be paid to the seafarer suffering from an accident, and in cases where all or part of the wages within the calculation period of average boarding wages retroactively after the disaster occurs, whether the increased amount of wages is included in the total amount of wages that serve

[2] Purport of "the adjustment system of ordinary wages and average on-board wages" under Article 3-4 (1) of the Enforcement Decree of the Seafarers' Act / Where the wages of a seafarer suffering from an occupational accident increases retroactively, whether the allocation of average on-board wages is not allowed and the adjustment of average on-board wages is not allowed under the above provision (negative), and the meaning of "the adjustment rate", which serves as the basis of increase or decrease of average on

[3] Where a shipowner provides a seafarer with money in the name of lump-sum compensation under Article 98 of the Seafarers Act with intent to be paid a full amount of lump-sum compensation in order to be exempted from liability for medical care compensation, injury and disease compensation, or disability compensation, and the seafarer receives it with the knowledge of the name thereof, whether in fact the relevant seafarer may claim for medical care compensation, injury and disease compensation, or disability compensation arising after the date of providing lump-sum compensation against the shipowner on the ground that he/she was paid a part of the legally calculated lump-sum compensation

[1] Article 98 of the Seafarers Act provides, “Where a seafarer receiving compensation pursuant to Articles 94(1) and 96(1) of the Seafarers Act does not recover from an injury or disease even after two years have passed, the shipowner may be exempted from liability for compensation under Article 94(1), 96(1), or 97 by paying the amount equivalent to the first degree disability compensation under the Industrial Accident Compensation Insurance Act by lump sum to the seafarer.” The Industrial Accident Compensation Insurance Act provides that “The amount of lump sum compensation for disability compensation for the first degree of disability shall be equal to the average wage for 1,474 days as set forth in Article 57(2) [Attachment Table 2]. Therefore, where a shipowner intends to pay lump sum compensation under Article 98 of the Seafarers Act, the shipowner shall pay the amount equivalent to the first degree disability compensation for the first degree of disability compensation for the first degree of disability to the seafarer receiving the accident compensation.”

On-board wages shall be calculated by dividing the total amount of wages paid to the seafarer during the period on board (if the period exceeds three months, the period shall be the last three months) before the date on which a cause for calculating and calculating the amount occurs by the total number of days in the period on board, but if the amount is less than the ordinary wages, the ordinary wages shall be deemed the average on-board wages (Article

According to the Seafarers' Act, average on-board wages, which serve as the basis for calculating lump-sum compensation, etc. to be paid to seafarers suffering from an accident, should be calculated by dividing the total amount of wages paid for the last three months by the total number of days in the last three months if the period of boarding exceeds three months before the date of disaster. Even if a labor-management agreement or new rules of employment such as the collective agreement on wage increase after the date of disaster, etc. were to be implemented to raise all or part of the wages within the calculation period of average on-board wages retroactively, the increased wage should not be included in

[2] The ordinary wages or average on-board wages applicable when paying injury-disease compensation, lump-sum compensation, etc. to the seafarers who are receiving medical treatment due to an injury or disease in the course of performing their duties shall be the amount increased or decreased according to the fluctuation rate where the average monthly amount per person (hereinafter “average amount of ordinary wages”) of the ordinary wages paid to the seafarers engaged in the same duties in the workplace they belong to is not less than 105/100 or not more than 95/100 of the average amount of the ordinary wages paid to the seafarers engaged in the same duties in the month which includes the day in which the injury or disease occurs, but the latter shall apply from the month following the month in which the cause of the fluctuation occurs, and the second or latter adjustment for the increase or decrease of ordinary wages and average on-board wages shall be based on the calculation basis of the ordinary wages of the month in which the cause of the preceding change occurred (Article 3-4(1) of the Enforcement Decree of the Seafarers Act). The adjustment system of ordinary wages and average on-board wages intends to provide reasonable compensation for the seafarers to receive compensation from accidents.

According to the provisions and purport of the Enforcement Decree of the Seafarers' Act, where the wage of a seafarer suffering from an accident on duty increases retroactively, it cannot be deemed that the adjustment of average on-board wages stipulated in Article 3-4 of the Enforcement Decree of the Seafarers' Act is not permitted, and whether adjustment of average on-board wages is recognized should be determined separately. Furthermore, the change ratio which serves as the basis of increase or decrease of average on-board wages refers to the change ratio of the average amount of average on-board wages paid to a seafarer engaged in the same duty at the workplace to which the seafarer belongs in the month in which an injury or disease occurred, in comparison with the average amount of ordinary wages paid to the seafarer engaged

[3] Where a shipowner provides a seafarer with money in the name of lump-sum compensation under Article 98 of the Seafarers Act with intent to be exempted from liability for medical care compensation, injury and disease compensation, or disability compensation, and the seafarer receives it with the knowledge of the name thereof, barring any special circumstance, the relevant seafarer may claim against the shipowner for the amount of lump-sum compensation which was lawfully calculated as of the date of providing the lump-sum compensation, and for which the seafarer did not accept the aforementioned payment. However, barring any special circumstance, the shipowner cannot claim for the amount of lump-sum compensation, injury and disease compensation, or disability compensation arising from the date of providing the shipowner’s lump-sum compensation on the ground that a part of the lump-sum compensation was paid. In this context, with the aim of exempting from liability for the rights and duties of the shipowner, only some of the legally calculated lump-sum compensation is objectively reasonable, and the shipowner’s claim for the payment of lump-sum compensation can only be deemed as having been made based on the shipowner’s intent or the principle of trust and good faith.

[1] Article 2 subparagraph 12 of the Seafarers' Act, Article 98 of the Seafarers' Act, Article 57 (2) [Attachment 2] of the Industrial Accident Compensation Insurance Act / [2] Articles 96 and 98 of the Seafarers' Act, Article 3-4 (1) of the Enforcement Decree of the Seafarers' Act / [3] Article 98 of the Seafarers' Act, Article 2 (1) of the Civil Act

[1] [2] Supreme Court Decision 2006Du3568 Decided October 27, 2006 / [1] Supreme Court Decision 80Nu411 Decided December 9, 1980 (Gong1981, 13470)

E.S. Shipping Co., Ltd. (Law Firm Sejong Chang, Attorneys Kim Hyun-hwan et al., Counsel for the plaintiff-appellant)

Defendant-Counterclaim (Law Firm LLC, Attorneys Kim Jin-jin et al., Counsel for the defendant-Counterclaim plaintiff-appellant)

Suwon District Court Decision 2018Na55968, 55975 decided August 23, 2018

The part of the lower judgment pertaining to lump-sum compensation shall be reversed, and that part of the case shall be remanded to the Suwon District Court. The appeal regarding retirement pay, encouragement money, and injury and disease compensation amount of KRW 38,89,030 from September 19, 201 to January 28, 2016 shall be dismissed, and the remainder of the appeal shall be dismissed.

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

1. Ex officio determination on the legitimacy of the appeal

A. Retirement pay and encouragement (Ground of appeal No. 1)

In the first instance court, the Plaintiff (Counterclaim Defendant; hereinafter “Plaintiff”) filed a lawsuit against the Defendant (Counterclaim Plaintiff; hereinafter “Defendant”) seeking confirmation of the absence of the obligation to pay accident compensation (compensation for medical care, injury and disease compensation, lump sum compensation), and retirement allowance against the Plaintiff. The Defendant filed a counterclaim against the Plaintiff for accident compensation, retirement allowance, or encouragement money. The first instance court fully accepted the Plaintiff’s principal claim and dismissed the Defendant’s counterclaim in entirety. Accordingly, the Defendant dismissed the Defendant’s counterclaim from the main claim and counterclaim part of the first instance court’s judgment. Since the Defendant excluded retirement allowance and encouragement money from the scope of the judgment of the lower court, the lower court’s dismissal of the Defendant’s appeal is limited to the accident compensation portion. The Defendant’s appeal is not subject to the Defendant’s appeal on the said retirement allowance and encouragement money, and thus, the Defendant’s appeal cannot be subject to the final appeal on this part cannot be subject to the Defendant’s appeal (see, e.g., Supreme Court Decision 2008Da537285, May 29, 197, 2098).

On the other hand, the termination date of the employment contract between the original defendant is merely a part of the issue as to retirement allowance and encouragement at the first instance court, and it is not related to the accident compensation part decided by the first instance court and the lower court. The ground of appeal purporting that “the termination date of the employment contract shall be deemed the time of the completion of lump-sum compensation, and this shall have a significant impact on the part of the claim for accident compensation” is not a legitimate ground of appeal, as it was newly asserted in the lower court.

B. The part of the injury and disease compensation amount of KRW 38,89,030 from September 19, 2010 to January 28, 2016 (ground of appeal No. 7)

The Defendant appealed only from the main claim and counterclaim part of the judgment of the court of first instance (the medical treatment compensation, injury-disease compensation compensation, and lump-sum compensation). Of them, the part pertaining to the injury-disease compensation amount is “124,40,815 won incurred from January 29, 2016 to July 11, 2018,” and thus, the subject of adjudication was limited to this part. Therefore, the “the part pertaining to the injury-disease compensation amount of 38,89,030 won” from September 19, 2010 to January 28, 2016 among the injury-disease compensation amount of the judgment of the court of first instance is not the subject of appeal by the Defendant, and thus, the appeal filed as to this part is unlawful.

2. Determination on the relevant argument regarding “total number of days, which is an element for calculating the average boarding wage” (Ground of appeal No. 4)

In calculating the Defendant’s average boarding wage, the lower court deemed the Defendant’s total number of days during the last three months, namely, “from June 15, 2010 to September 14, 2010,” which is the Defendant’s boarding period prior to the instant accident, as “92 days”.

Examining the reasoning of the lower judgment in light of the record, contrary to what is alleged in the grounds of appeal, the lower court did not err by misapprehending the legal doctrine regarding the total number of days, which is an element of calculating average boarding wages, or by failing to exhaust all necessary deliberations, thereby exceeding the bounds of the

3. Determination on the argument regarding “legal calculation of lump-sum compensation” (ground of appeal Nos. 3, 5, and 6)

A. 1) Article 98 of the Seafarers’ Act provides, “Where a seafarer receiving compensation pursuant to Articles 94(1) and 96(1) has not recovered from an injury or disease even after two years have passed, the shipowner may be exempted from liability for compensation pursuant to Article 94(1), 96(1) or 97 by paying the amount equivalent to the first degree disability compensation pursuant to the Industrial Accident Compensation Insurance Act in lump sum to the seafarer.” The Industrial Accident Compensation Insurance Act provides, “The amount of lump sum disability compensation for the first degree of disability shall be determined as the average wage for 1,474 days (attached Table 2). Therefore, where a shipowner intends to pay lump sum compensation pursuant to Article 98 of the Seafarers’ Act, the shipowner shall pay the amount equivalent to the first degree disability compensation for the first degree of disability under the Industrial Accident Compensation Insurance Act to the seafarer receiving the accident compensation.”

On-board wages shall be calculated by dividing the total amount of wages paid to the seafarer during the period on board (if the period exceeds three months, the period shall be the last three months) before the date on which a cause for calculating and calculating the amount occurs by the total number of days in the period on board, but if the amount is less than the ordinary wages, the ordinary wages shall be deemed the average on-board wages (Article

According to the Seafarers Act, average on-board wages, which serve as the basis for calculating lump-sum compensation, etc. to be paid to a seafarer suffering from an accident, shall be calculated by dividing the total amount of wages paid for the last three months by the total number of days in that three months if the period of boarding prior to the date of accident exceeds three months. Even if a labor-management agreement or new rules of employment such as the collective agreement on wage increase after the date of accident, etc. were to be implemented to raise the whole or part of the wages within the calculation period of average on-board wages retroactively, the increased amount of wages shall not be included in the total amount of wages, which serves as the basis for calculating average on-board wages (see Supreme Court Decisions 80Nu411, Dec. 9, 198; 2006Du3568, Oct. 27, 2006).

2) Meanwhile, the ordinary wages or average on-board wages applicable when paying injury-disease compensation, lump-sum compensation, etc. to the seafarer who suffers from an injury or disease in the course of medical treatment to the seafarer who suffers from an injury or disease in the course of performing his/her duties shall be either at least 105/100 of the average amount of the ordinary wages paid to the seafarer engaged in the same duties in the month in which the injury or disease occurs, or at least 95/100 of the average amount of the ordinary wages paid to the seafarer engaged in the same duties in the month which includes the day in which the injury or disease occurs, but shall apply from the month following the month in which the cause of the change occurs, and the second or latter adjustment for the increase or decrease of the ordinary wages and average on-board wages shall be based on the ordinary wages of the month in which the cause of the preceding change occurred (Article 3-4(1) of the Enforcement Decree of the Seafarers Act). The purpose of the adjustment system of ordinary wages and average on-board wages is to be made fairly and unreasonably in compensation for the seafarer’s work.

According to the provisions and purport of the Enforcement Decree of the Seafarers' Act, where the wage of a seafarer suffering from an accident on duty increases retroactively, it cannot be deemed that the adjustment of average on-board wages stipulated in Article 3-4 of the Enforcement Decree of the Seafarers' Act is not permitted, and whether adjustment of average on-board wages is recognized should be determined separately. Furthermore, the change ratio which serves as the basis of increase or decrease of average on-board wages refers to the change ratio of the average amount of average on-board wages paid to a seafarer engaged in the same duty at the workplace to which the seafarer belongs in the month in which the injury or disease occurred in comparison with the average amount of the ordinary wages paid to the seafarer engaged in the same duty

B. The record reveals the following facts.

1) On February 3, 2010, the Defendant concluded an employment contract with the Plaintiff to work as the captain on the vessel "(name omitted)" (a vessel chartered by the Plaintiff under the condition that the Plaintiff acquires Korean nationality) of the Republic of Korea, and on board the said vessel. At the time, the monthly salary (including the “basic wage” and “work allowances outside the fixed hours”) was determined as KRW 5,35,00, and the period of employment contract was from February 4, 2010 to October 4, 201 of the same year (Provided, That in the case of leaving the vessel before the expiration of the contract, the date of leaving the contract shall be the date of termination of the contract).

2) On September 15, 2010, the Defendant sustained occupational injury on the instant vessel due to the instant accident, and continued to receive medical treatment after leaving the said vessel on the 18th day of the same month.

3) During that period, the monthly salary of the Plaintiff’s seafarers increased retroactively as of January 1, 201, as of July 1, 2010, and the second increase retroactively from July 1, 2011. Accordingly, the “monthly salary” paid to the “captain” engaged in the same duties as the Defendant was KRW 5,35,000 as of July 1, 201, and the first increase retroactively from July 1, 201, as the first increase thereafter, became KRW 7,09,000 from July 1, 201 to July 1, 2011.

C. We examine the above facts in light of the legal principles as seen earlier.

1) Where the Plaintiff paid a lump-sum compensation under Article 98 of the Seafarers Act to the Defendant, average boarding wages, which serve as the basis for the calculation thereof, shall be calculated by dividing the total amount of wages paid during the boarding period of three months before September 15, 2010 (from June 15, 2010 to September 14, 201), which is the date on which the cause for calculation occurred, by the total number of days during that period, and even if the Plaintiff decided to increase wages retroactively from January 1, 201 according to the first wage increase agreement, the increased amount of wages shall not be included in the total amount of wages, which serves as the basis for the calculation of average boarding wages.

In addition, according to the above increase of wages, if the average amount of the ordinary wages paid to the seafarer engaged in the same duties in the workplace to which the defendant belongs was changed by at least 5/100 compared to the average amount of the ordinary wages paid to the seafarer engaged in the same duties on September 2010, which belongs to the month in which the injury occurred, average boarding wages should have been adjusted by applying such rate

2) Nevertheless, the lower court determined that: (a) the Defendant’s payment on January 6, 201, including the total amount of wages (the total amount of wages paid to the Defendant from June 15, 2010 to September 14, 2010) that served as the basis for the calculation of average on-board wages (the total amount of wages paid to the Defendant from June 15, 2010 to September 14, 2010), calculated average on-board wages as KRW 337,219; (b) did not adjust average on-board wages based on the first wage increase; (c) did not adjust average on-board wages based on the second wage increase based on KRW 337,219; (d) although average on-board wages calculated based on the second wage increase based on the above KRW 35,092 won, 337,219 x 1.053); and (d) applied the adjustment rate to average on-board wages based on such calculation to KRW 3337,24305,2505

3) In so determining, the lower court erred by misapprehending the legal doctrine on the calculation and adjustment of average boarding wages.

4. Determination on the assertion regarding “unpaid injury and disease compensation and compensation for medical treatment” (ground of appeal No. 7 excluding the aforementioned portion of the final appeal)

A. Where a shipowner provides a seafarer with money in the name of lump-sum compensation under Article 98 of the Seafarers Act to be exempted from liability for medical care compensation, injury-disease compensation, or disability compensation, and the seafarer receives it with the knowledge of the name thereof, barring any special circumstance, the relevant seafarer may claim against the shipowner for the amount of lump-sum compensation which was lawfully calculated as of the date of providing the lump-sum compensation, and for which the seafarer did not accept the aforementioned payment. However, barring any special circumstance, the shipowner cannot claim for the amount of lump-sum compensation, injury-disease compensation, or disability compensation arising from the date of providing the aforementioned lump-sum compensation to the shipowner on the ground that a part of the lump-sum compensation was paid. In this context, with the aim of avoiding liability for the rights and duties of the shipowner, only some of the legally calculated lump-sum compensation would be objectively reasonable in light of social norms, and only the shipowner’s intent to provide the lump-sum compensation with the entire amount of lump-sum compensation or the entire amount of lump-sum compensation, which would be contrary to the principle of trust and good faith.

B. The record reveals the following facts.

1) On April 17, 2015, the Plaintiff deposited the deposited person under the name of lump-sum compensation under Article 98 of the Seafarers Act as the Defendant, with the repayment deposit of KRW 519,545,693 on April 17, 2015 (on the basis of payment date; hereinafter the same shall apply), and paid KRW 5,227,787 on May 4, 2015 on the ground of an error in the calculation, etc. thereafter, and additionally repaid KRW 10,263,520 on January 28, 2016. The aggregate amount is KRW 535,037,00.

2) Meanwhile, the Plaintiff paid to the Defendant totaling KRW 282,172,515 as compensation for medical care in relation to the Defendant’s operating expenses, hospitalization expenses, and medical expenses incurred from the date of the instant accident until January 27, 2016, and paid KRW 276,075,931 as compensation for injury and disease accrued from January 28, 2016.

3) On January 28, 2016, the Plaintiff filed the instant principal suit against the Defendant, and paid lump-sum compensation to the Defendant as of January 28, 2016, and paid both the medical care compensation and the injury and disease compensation payment incurred prior to the said base date. As such, the Plaintiff asserted that there was no obligation to pay lump-sum compensation, the medical care compensation, and the injury

4) As to this, the Defendant reserved an objection and received each of the above deposits, and the Plaintiff’s deposit KRW 535,037,00 is merely part of the lump-sum compensation legally calculated, and the Plaintiff is obligated to pay not only the amount of lump-sum compensation but also the amount of medical care compensation and injury and disease compensation arising after January 29, 2016.

C. We examine these facts in light of the legal principles as seen earlier. Since there seems to be no special circumstance that the Plaintiff used the lump-sum compensation system contrary to the principle of good faith differently from its original purpose or purpose, even if the total sum of the Plaintiff’s above deposits falls short of the amount of lump-sum compensation lawfully calculated based on January 28, 2016, the date of the final deposit, the Defendant is entitled to claim for the unpaid portion of the lump-sum compensation lawfully calculated as of January 28, 2016 and the delayed payment thereof, and cannot claim for medical care compensation and compensation for injury and disease.

The lower court erred by misapprehending the legal doctrine on the calculation of average boarding wages and the adjustment thereof, etc. as seen in the above 3., thereby adversely calculating the adjustment amount of average boarding wages as KRW 35,092, and the amount of lump-sum compensation as KRW 523,405,028, respectively. On this premise, it is inappropriate for the lower court to state that the Plaintiff paid lump-sum compensation in full as long as the Plaintiff deposited the aforementioned KRW 535,037,000. However, the lower court’s conclusion denying the Defendant’s assertion on the medical care compensation compensation and the claim for compensation for injury and disease and disease, which occurred after January 29, 2016,

5. Conclusion

Therefore, without further proceeding to decide on the remaining grounds of appeal, the part concerning lump-sum compensation among the judgment below is reversed, and that part of the case is remanded to the court below for further proceedings consistent with this Opinion. The appeal regarding retirement pay, encouragement money, and injury-disease compensation amount of KRW 38,89,030 from September 19, 2010 to January 28, 2016 is dismissed as it is unlawful, and the remaining appeal is dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee Ki-taik (Presiding Justice)