[1] Time to determine whether a title truster registered under the name of his/her spouse prior to the enforcement of the Act on the Registration of Real Estate under Actual Titleholder’s Name has the purpose of evading tax evasion, evading compulsory execution, or evading legal restrictions, and the burden of proof thereof

[2] In a case where a penalty surcharge is imposed pursuant to Article 5 of the Act on the Registration of Real Estate under Actual Titleholder’s Name on the ground that an administrative agency violated Article 3 of the Act on the Registration of Real Estate under Actual Titleholder’s Name to Gap who purchased land before the enforcement of the Act on the Registration of Real Estate under Actual Titleholder’s Name and trusted to the spouse, the case holding that the court below erred in the misapprehension of legal principles on the ground that in order to impose a penalty surcharge on Gap on the ground that he did not make a real-name registration within the grace period of one year under Article 11(1) of the Act on the Registration of Real Estate under Actual Titleholder’s Name, it should have judged whether there was an intention to avoid legal restrictions as of the expiration

[1] Articles 3(1), 5, 8 subparag. 2, 11(1), and 12(2) of the Act on the Registration of Real Estate under Actual Titleholder’s Name / [2] Articles 3(1), 5, 8 subparag. 2, 11(1), and 12(2) of the Act on the Registration of Real Estate under Actual Titleholder’s Name

Plaintiff (Law Firm, Attorneys Ojin-hwan et al., Counsel for the plaintiff-appellant)

Head of Sung Sung-si Branch of Branch Office

Seoul High Court Decision 2011Nu13448 decided November 1, 2011

The judgment below is reversed and the case is remanded to Seoul High Court.

The grounds of appeal are examined.

1. According to Articles 11(1) and 12(2) of the Act on the Registration of Real Estate under Actual Titleholder’s Name (hereinafter “Real Estate Real Name Act”), a title truster (hereinafter “existing title truster”) who had any real right to real estate registered or recorded under the name of the title trustee pursuant to a title trust agreement prior to the enforcement of the Real Estate Real Name Act, before the enforcement of the Real Estate Real Name Act (hereinafter “Real Estate Real Name Act”) shall carry out the real name registration, etc. within a period of one year from the enforcement date of the Real Estate Real Name Act (hereinafter “the grace period”), and if the real name registration, etc. is not made within the grace period, a penalty surcharge under Article 5 of the Real Estate Real Name Act shall be imposed corresponding to a violation of the obligation to register the real estate under the name of the actual right holder.

Meanwhile, Article 8 of the Real Estate Real Name Act provides that Article 4 of the Real Estate Real Name Act that a title trust agreement shall be null and void and Article 5 of the Real Estate Real Name Act shall not apply to the imposition of penalty surcharges due to a violation of a duty of registration under the name of the actual right holder, in cases where a real right to a real estate has been registered under the name of the spouse, and such registration does not aim at tax evasion, evasion of compulsory execution, or avoidance of statutory restrictions. Therefore, even if an existing title truster fails to register a real right to a real estate under the name of the spouse with the intention of evading tax evasion, evasion of compulsory execution, or evasion of statutory restrictions

In light of this, the issue of whether an existing title truster registered in the name of his/her spouse has the purpose of evading taxes, evading compulsory execution, or evading legal restrictions should be determined at the time when the grace period of the above one-year grace period expires. In this case, it shall be proved by the claimant that it constitutes a case where it is not for the purpose of evading taxes, evading compulsory execution, or evading legal restrictions.

2. According to the reasoning of the judgment of the court below, the court below, citing the reasoning of the judgment of the court of first instance, acknowledged that the plaintiff acquired each land of this case in title trust on January 28, 198, and completed the registration of transfer of ownership under the name of the non-party 1, his spouse on the 30th of the same month, but the plaintiff did not have a domicile in each land of this case, which is farmland, and as the relation where the plaintiff is running a business separately, it is difficult to obtain a certificate of sale of farmland in his own name due to the relation where the plaintiff does not have a domicile in each land of this case, which is farmland, and since he moved the domicile of the non-party 1, his spouse, to the location of each land of this case for the purpose of avoiding the legal limit on the qualification of acquisition of farmland under the Farmland Reform Act, and thereby, the plaintiff acquired each land of this case in title trust with the non-party 1. Thus, the court below rejected the plaintiff's assertion that the disposition of this case was unlawful.

3. In light of the legal principles as seen earlier, in order to impose a penalty on the Plaintiff on the ground that the existing title truster was not subject to a real-name registration within the one-year grace period, it should be determined as to whether the Plaintiff had an intent to avoid statutory restrictions at the time when the one-year grace period elapsed. It cannot be concluded that the Plaintiff is subject to a penalty surcharge solely on the ground that the Plaintiff had an intent to avoid statutory restrictions at the time of acquiring each of the instant land.

Therefore, the lower court should have deliberated and determined whether the Plaintiff had an intent to avoid statutory restrictions at the time when the one-year grace period prescribed by the Real Estate Real Name Act had lapsed. Nevertheless, the lower court determined that the instant disposition was lawful solely on the ground that the Plaintiff had an intent to avoid statutory restrictions at the time of acquiring each of the instant land, and thereafter the Plaintiff’s purpose was abolished, and that such purpose was not retroactively lost. In so doing, the lower court erred by misapprehending the legal doctrine on the base point of time of determining whether there was a legitimate purpose of avoiding statutory restrictions, thereby adversely affecting the conclusion of the judgment. The allegation in the grounds of appeal assigning this error

4. It is so decided as per Disposition by the assent of all participating Justices on the bench, without examining the remaining grounds of appeal by the plaintiff, and the judgment of the court below is reversed, and the case is remanded to the court below for a new trial and determination.

Justices Ahn Dai-hee (Presiding Justice)