Plaintiff (Law Firm Han-chul, Attorneys Hong Hong-soo et al., Counsel for the plaintiff-appellant)
Han Electric Fuel Fuel Co., Ltd. (Attorney Lee Young-young et al., Counsel for the defendant-appellant)
April 8, 2011
Seoul Western District Court Decision 2008Gahap12798 Decided April 22, 2010
1. The judgment of the court of first instance is modified as follows.
(1) The defendant shall pay to the plaintiff 280,157,014 won with 5% interest per annum from April 1, 201 to April 29, 201, and 20% interest per annum from the next day to the day of complete payment.
(2) The plaintiff's remaining claims are dismissed.
2. One-fifth of the total litigation costs is borne by the Plaintiff, and the remainder is borne by the Defendant.
3. The provisional execution under paragraph (1) (1) may be effected.
The defendant shall pay to the plaintiff 36,016,862 won with 5% interest per annum from April 1, 2010 to the day on which a duplicate of the complaint of this case was served, and 20% interest per annum from the next day to the day of complete payment (the plaintiff reduced claims in this court).
The part against the defendant in the judgment of the first instance shall be revoked. The plaintiff's claim corresponding to the revoked part shall be dismissed.
1. Basic facts
[Evidence A1], A2, A3, A5-1, A2, A6, A7-2, A7-1, 2, B-3, B-4, B-5, B-6, B-7, 8, B-1 through 4, B-15-1 through 3, B-1 through 3, 16-1 through 4, B-1, 17-1 through 23, B-29-1, B-29-1, 30, 31-1, 31-4, 36-3, 6-2, 36-3, 20, 46, 47, 37-1, 2-1, 2-2, 53-1, 2-2, 53-1, 2-1, 2-1, 2-4, 1-2, and 2-4 of the witnesses
(a) A party;
(1) The Plaintiff is a person who was appointed as the Defendant’s auditor on March 30, 2007. According to the Defendant’s articles of incorporation, the term of office of the auditor is up to March 31, 2010, which is the closing date of a general shareholders’ meeting regarding the last period for settlement of accounts within three years after the appointment
(2) The Defendant is a corporation for the purpose of designing, manufacturing, and processing nuclear fuel, which is a public corporation and the Korea Electric Power Corporation, holds approximately 96.4% of the Defendant’s equity interest in Korea Electric Power Corporation.
B. The Plaintiff’s audit content
(1) The Plaintiff, as an auditor, shall perform the audit and inspection of business, audit of matters as prescribed by the relevant statutes and the articles of incorporation, and audit of other supervisory agencies, the president or the board of directors.
(2) According to the Defendant’s audit duties rules, the Plaintiff shall conduct an audit fairly in performing the audit, and conduct it based on facts and evidence in accordance with relevant laws and regulations and instructions, and shall not divulge or misappropriate any confidential information which comes to his knowledge in the course of performing his duties without justifiable grounds. When any illegal or unjustifiable fact is discovered as a result of audit, the Plaintiff shall require the president to improve the regulations, systems, or unreasonable matters for the operation of the audit, and shall keep the audit log according to the prescribed form and record the contents of the daily audit (Article 36-
C. The reasons why the plaintiff was dismissed
(1) Use of audit information costs
The Plaintiff used 9,586,289 won in the year 2007 (the amount of KRW 5.1 million in the audit information cost was additionally allocated twice) among the audit information cost (the amount of KRW 3 million in the audit office, KRW 2 million in the audit station, KRW 1.88,476 in the audit information cost, KRW 1.88,476 in the year 2008, to cover expenses incurred in collecting information necessary for self-audit activities.
(2) Use of a corporate card on a holiday, such as Sundays
From April 15, 2007 to March 15, 2008, the Plaintiff executed KRW 20,636,905, in addition to audit information expenses and business consultation expenses. The Plaintiff settled KRW 9,194,309 without proving the purpose of execution, execution object, etc. with a corporate card in the area of Yongsan-gu Seoul, Seoul, where the Plaintiff’s residence is located, not Daejeon, 78 times on the day of holidays, such as Sundays, but the Plaintiff paid KRW 9,194,309 without proving the purpose of execution, execution object, etc.
(c) Withdrawal equipment;
(A) From August 30, 2007 to February 29, 2008, the Plaintiff received the highest course of education at the graduate school management of the Seoul National University, and the house was Seoul and the lecture was on a 18-day day by using the Defendant’s business vehicle throughout the 18-day day, and worked on the school on the day of the month. The Plaintiff received the dispatch equipment including the total traffic cost of KRW 1,80,000 and the total accommodation cost of KRW 4.4 million at the Plaintiff’s home located in Seoul.
(B) As between April 5, 2007 and March 14, 2008, the Plaintiff started a business trip from 27 p.m. to 4 p.m. after 4 p.m. on 10 p.m., on 101 a.m. to receive KRW 10,000,000 of the total amount of the travel equipment on 7 occasions including May 22, 2007, or starting a business trip from 27 p.m. to Seoul on 7 p.m. to 4 p.m.
(4) Participating in the conclusion of the contract
On June 2007, the Plaintiff demanded the facility management team, which promoted the ordering of the security service contract, to conclude the contract by means of negotiation rather than a method of general competition. The Plaintiff demanded Nonparty 2 and Nonparty 1, etc. of the purchase team leader, the inspector of the audit room, etc. to limit bidders to three companies in relation to the maximum fixed stay price contract. However, the Plaintiff did not implement the contract as required by the Plaintiff.
(5) Other circumstances
On January 9, 2008, the Plaintiff purchased existing vehicles owned by the Defendant through a public sale on January 21, 2008, and requested Non-Party 3 to repair the above vehicles and repair them as KRW 641,110. The Plaintiff demanded that Non-Party 4 (the Vice Director of the Facility Management Team) expand the toilet of the audit office to change the scope of the auditor’s duty office.
(6) As between March 24, 2008 and April 18, 2008, the Board of Audit and Inspection conducted an audit and inspection of the Korea Electric Power Corporation’s subsidiaries including the Korea Electric Power Corporation and the Defendant, and around July 2008, the Korea Electric Power Corporation demanded personnel measures against the Plaintiff on the grounds of “unfair execution of expenses and private use, etc.” against the Korea Electric Power Corporation. On July 25, 2008, the Korea Electric Power Corporation sent a written request for disposition of audit and inspection results to the Plaintiff by the Board of Audit and Inspection against the Defendant. Accordingly, on August 21, 2008, the Defendant passed a resolution to dismiss the Plaintiff from the position of auditor at the temporary general meeting of shareholders via the board of directors on August 21, 2008.
D. The defendant's executive officers, duty integrity contract management rules, etc.
(1) According to the Defendant’s regulations on the management of the contract for integrity of duties as executive officers (AA-1-1), an executive officer shall not use or benefit from the company’s public property, such as vehicles, ships, and other articles provided for various administrative affairs, movable property, and real estate, etc., for private purposes without justifiable grounds (Article 11). If an executive officer violates his/her duty of integrity, the board of directors may determine the reduction rate and the return rate according to the details of the determination of the punishment and impose sanctions on the reduction or redemption
(2) According to Article 11 of the Defendant’s Travel Expense Regulation, travel expenses shall be paid before departure. In the case of a long-term business trip, it may be paid within the limits of estimated amounts, and the settlement shall be made within seven days after departure. On the early return of a domestic business trip, education, and dispatch worker, the expenses for transportation, accommodation, food, and daily expenses of the remaining number of days in accordance with the Travel Expense Regulation shall be deposited immediately after he/she returns. According to Article 13 of the Travel Expense Regulation, in the case of a domestic business trip, the expenses for transportation, daily expenses, food, and accommodation shall be paid: Provided, That in the case of a domestic business trip, the transportation expenses shall not be paid (Article 36-47).
2. The allegations by the parties and the judgment of this court
A. The nature of damage claim caused by dismissal without any justifiable reason by the plaintiff
The plaintiff asserts that the defendant dismissed the plaintiff before the expiration of the auditor's term of office without justifiable grounds.
[Dissenting of the Defendant]
During the Plaintiff’s tenure of office, the Defendant committed an unlawful act, such as unlawful spending of audit information costs and other expenses, and personal use of them. The Defendant unjustly executed the principal payment with the corporate card, used the company’s public handphone, unfairly distributed education and training expenses for the head of the audit office. The Plaintiff was unfairly allocated the budget for external travel abroad, the Plaintiff was unfairly allocated a company trip, the Plaintiff was subjected to an unfair order to receive a company house and used the company fund in the company house unfairly. The Plaintiff replaced the company fund by unfairly pressure on the company house, and the employees of the relevant company was unfairly threatened, and the Plaintiff took a desire for the employees of the relevant Europe without taking a leave, and was traveling in the East Europe, so there is a justifiable reason to dismiss the Plaintiff from the audit.
Articles 415 and 385(1) of the Commercial Act provide that a director or auditor may be dismissed at any time by a special resolution of the general meeting of shareholders. In the event that a director or auditor whose term of office has been fixed is removed without any justifiable reason before his/her term of office, he/she may claim damages against the company so as to harmonize the interests of the shareholders, directors, and auditors, such as securing control over the company and stabilizing the management status of the company. In light of the legislative purport of this Act, the term “justifiable cause” in this context is insufficient solely on the fact that the director or auditor has lost subjective fiduciary relationship, such as incombustibility, etc. between the shareholders and the director, and the auditor. In cases where a director or auditor is considerably difficult to perform his/her duties due to his/her failure to establish or implement an important business plan, there is a justifiable reason to dismiss him/her only before his/her term of office has expired (see, e.g., Supreme Court Decision 2004Da25161, Oct. 15, 2004).
In this case, even though the Plaintiff executed part of audit information expenses, business promotion expenses, and withdrawal equipment inappropriate for personal purposes, it is not clear that the Plaintiff suffered substantial damages to the Defendant using audit information expenses, etc. for the Plaintiff’s excessive use of audit information expenses, and there was no hindrance to the Plaintiff’s performance of audit business. Since the Plaintiff performed the company’s business in Seoul, not Daejeon area, which is the Defendant’s seat, it is difficult to view that the Plaintiff used the corporate card for personal purposes on the day of holidays such as Sundays, and even if the Plaintiff combines KRW 425,00,00, which points out that the Plaintiff used for personal purposes, the amount of KRW 127,000, which is unclear, does not exceed two million, and even if the Plaintiff did not use the audit information expenses, etc. for its original purpose, it is difficult to view that the Plaintiff did not perform the audit business for an improper reason, or that the Plaintiff did not request the Plaintiff to perform the audit business in an improper manner or take any measures with regard to it. According to the Defendant’s business travel expenses regulations, the Plaintiff did not request the Plaintiff’s early payment of travel expenses.
In light of these various circumstances, even if there were errors by the Plaintiff, such as inappropriate execution of part of audit and inspection information costs, business promotion expenses, and withdrawal equipment, such reasons alone cannot be deemed to be erroneous to the extent that the Plaintiff could be an obstacle to the performance of its duties as an auditor, and therefore there is no justifiable reason for dismissal.
The plaintiff's above assertion is justified.
B. The Plaintiff’s scope of damages
The Plaintiff asserts that, based on the annual salary of KRW 96,660,000 of the basic annual salary of KRW 154,485,534, piece rate of KRW 80,000,000 on the basis of the auditor’s basic annual salary of KRW 168,657,534, and monthly average remuneration of KRW 12,873,794 for 1 year of his/her term of office, the amount of damages incurred by dismissal is 336,016,862.
[Dissenting of the Defendant]
Since the annual salary of the Defendant’s executives and employees is determined at the end of that year, if the annual salary is determined at the end of that year, the difference between the remuneration already paid on the basis of the annual salary in the previous year and the remuneration calculated on the basis of the annual salary in that year is settled. The annual salary in 2008 is determined at KRW 84,081,00, and the audit performance-based annual salary in the year 2008 is determined at KRW 84,000,000, which is the basic annual salary x 7,006,750 if the amount of the basic annual salary is multiplied by 1/12. On the other hand, the Plaintiff is serving as the auditor from March 27, 2009, and thus the Plaintiff should be deducted from the remuneration.
(1) Damage caused to an auditor by a resolution of the general meeting of shareholders is the amount equivalent to remuneration that can be paid while in office as an auditor if he/she had not been dismissed. Moreover, a company may dismiss an auditor with the reason under Article 415 of the Commercial Act and Article 385(1) of the Commercial Act. The dismissed auditor has no obligation to manage delegated affairs for the company any longer because the delegation relationship between the company and the company is terminated, and the auditor has no obligation to manage the delegated affairs for the company, so even if the auditor received remuneration from another company by the date of the expiration of the term of office, it cannot be deducted from the amount of compensation
(2) The following facts may be acknowledged in full view of the overall purport of the arguments in evidence (A5-2, A5-1, B-1, 41-2, B-42-1 to 3, B-43-1, 2, B-44-1, 2, B-45, B-1, 48-2).
(A) According to the Defendant’s annual salary rules for officers (amended on December 28, 2007, and from January 1, 2007, effective as of January 1, 2007), the auditor’s basic annual salary is 96,060,000 won, and the performance-based bonus is 96,060,000 won, and the performance-based bonus is 1/1 month, and the retirement allowance is 1/1 month, and the monthly average salary which serves as the basis for the calculation of the retirement allowance is 1/1 month, shall be calculated by dividing the total amount of the basic annual salary paid at the time of his/her service and the performance-based bonus paid or to be paid at the time of his/her office to the relevant officer
(B) According to the Defendant’s annual salary rules for executive officers (amended on December 30, 2008, January 1, 2008, and effective from January 1, 2008), the auditor’s basic annual salary is 84,081,00 won, and the auditor’s piece rates are calculated as the basic annual salary x [minimum score - (minimum score) x 30% + 70% +] according to the result of the Korea Electric Power Corporation’s management performance evaluation of the basic annual salary within the scope of 100%. The rules on the payment of piece rates and the calculation of piece rates are enforced from January 1, 2009, and the audit’s basic annual salary rules are applied from October 28, 2008 to the Korea Electric Power Corporation. The Defendant at the lowest level in management evaluation in 2008.
(3) Scope of damages
(A) The annual salary from August 22, 2008 following the date of dismissal to March 31, 2010, the date on which the term of validity expires.
① From August 22, 2008 to December 30, 2008, based on KRW 96,060,000 of the basic annual salary for 67 days (i.e., KRW 96,060,000 of the basic annual salary for 67 days for which no retroactive application was made in accordance with the annual salary regulations for executive officers as amended from October 27, 2008 (i.e., KRW 96,060,000 x 67/365)
② KRW 119,786,630 based on the basic annual salary of KRW 84,081,00 for 520 days from October 28, 2008 to March 31, 2010, which is retroactively applied in accordance with the annual salary regulations for executive officers as amended on December 30, 208 (=84,081,000 x 520/365)
(3) Total amount: 137,419,561 (=17,632,931 +19,786,630)
(B) Performance rates;
① From August 22, 2008 to December 31, 2008, KRW 28,931,506 (=80,000,000 x 132/365) based on the piece rate of 80,000,000 piece rates in 207 from August 22, 2008 to December 31, 2008
② Since the Defendant’s scores at the lowest in management evaluation in 2008 are zero, basic annual salary x 70% is the performance rate, and accordingly, 73,369,310 (=84,081,000 x 70% x 455/365) won on the basis of the basic annual salary of 84,081,000 won for 455 days from January 1, 2009 to March 31, 2010.
(3) Total amount: 102,300,816 (=28,931,506 +73,369,310)
(C) Retirement pay;
(1) Average monthly remuneration.
The Plaintiff’s basic annual salary that the Plaintiff received for 509 days from April 1, 2007 until August 21, 2008, 133,957,643 (i.e., 96,060,000 x 509/365), bonuses 111,561,643 (=80,000,000 x 509/365) (i.e., 137,419,561), bonuses 102,30,816 (i.e., 485,239,63 (i., 957,643 + 111,643 +47,419,5610 + 50,000,000 x 500 x 509/3638638) of the date on which the Plaintiff was dismissed from office until the expiration of the term of office)
② Since the term of office of the Plaintiff is three years, KRW 40,436,637 (=13,478,879 x 3) equivalent to three months’ portion
(D) Therefore, the Defendant is obligated to pay the Plaintiff damages amounting to KRW 280,157,014 (i.e., basic annual salary 137,419,561 + Performance-based 102,30,816 + Retirement Allowance 40,436,637) and delay damages.
Therefore, the defendant is obligated to pay to the plaintiff damages according to the rate of 5% per annum under the Civil Act from April 1, 2010 to April 29, 201, which is the date of the resolution of dismissal of the damages amounting to 280,157,014 as well as the rate of 20% per annum under the Act on Special Cases Concerning the Promotion, etc. of Legal Proceedings from the next day to the date of full payment, as requested by the plaintiff.
Therefore, the plaintiff's claim is reasonable within the scope of the above recognition, and the remainder is without merit. Since the judgment of the first instance, which concluded otherwise, is unfair, the defendant's appeal is partially accepted, and the judgment of the first instance is modified as per Disposition.
Judges Yu Nam-nam (Presiding Judge)