The administrator and regular employees of the rehabilitation company and the East Asian Construction Industry Corporation (Law Firm Dakelel, Attorneys Kim Tae-tae et al., Counsel for the plaintiff-appellant) who are the trustee and regular employees of the bankruptcy trustee, who are the trustee and full-time employees of the bankrupt company and the bankruptcy trustee.

Defendant 1 and five others (Law Firm Sejong, Attorneys Yellow-tae et al., Counsel for the defendant-appellant)

May 10, 2007

Seoul Central District Court Decision 2004Gahap27735 Decided October 27, 2005

1. Of the judgment of the court of first instance, the part against Defendant 1, 2, 3, 4, and 6 in excess of the amount ordered to be paid under the following order shall be revoked, and all of the plaintiff's claims against the above Defendants shall be dismissed.

The Plaintiff

A. Defendant 1, 3, and 4 jointly and severally with Defendant 1 and with 50,00,000 won and with 20% interest per annum from April 25, 2004; Defendant 3 and 4 from May 16, 2004 to July 19, 2007; and

B. Defendant 1, 2, and 3 shall jointly and severally pay 50,000,000 won and its equivalent amount, Defendant 1, 2 from April 25, 2004, Defendant 3 shall be 5% per annum from May 16, 2004 to July 19, 2007, and 20% per annum from the next day to the day of full payment;

C. Defendants 1 and 6 shall jointly and severally pay 300,000,000 won with 5% per annum from April 25, 2004 to July 19, 2007, and 20% per annum from the next day to the day of full payment.

sub-payment.

2. All remaining appeals by Defendant 1, 2, 3, 4, and 6 and Defendant 5 are dismissed.

3. (a) Among the total costs of litigation;

(1) The portion arising between the Plaintiff and Defendant 1, 3, and 6 shall be ten minutes, and one of which shall be the Plaintiff, and the remainder shall be the Defendants:

(2) The part arising between the Plaintiff and Defendant 2 is divided into eight minutes, and the remaining part is the Plaintiff, and the above Defendant:

(3) The part arising between the Plaintiff and Defendant 4 shall be divided into two parts, and one shall be borne by the Plaintiff, and the remainder by the above Defendant, respectively.

B. The costs of appeal between the plaintiff and the defendant 5 are assessed against the above defendant.

4. In paragraph 2(b) of the order of the first instance judgment, “Defendant 6 shall be corrected to Defendant 5” to Defendant 6.

1. Purport of claim

A. Claim as to Defendant 1, 2, 3, 4, and 6

The Plaintiff

(1) Defendant 1, 2, 3, and 4 are jointly and severally with Co-Defendant 8, 9, and 10 of the first instance trial, 50,000,000 won, and 5% per annum from December 31, 1996 to the service date of a duplicate of the instant complaint, and 20% per annum from the next day to the day of complete payment;

(2) Defendant 1, 2, 3, and 4 shall be jointly and severally with Co-Defendant 7, 8, 9, and 10 of the first instance trial and shall be 50,000,000 won per annum from December 31, 1997 to the service date of a copy of the instant complaint, and 5% per annum from the next day to the day of full payment;

(3) Defendant 1, 2, and 6 shall pay 300,000,000 won jointly and severally with Co-Defendant 7, 8, 9, and 10 of the first instance trial and 5% per annum from December 31, 1998 to the service date of a duplicate of the complaint of this case, and 20% per annum from the next day to the day of complete payment.

B. Claim against Defendant 5

(1) The contract of donation concluded on September 11, 2002 between Defendant 5 and Defendant 6 on real estate indicated in the separate sheet shall be revoked.

(2) Defendant 5 followed the procedure for cancellation registration of ownership transfer registration, which was completed by the Seoul Central District Court Branch of the Seoul Central District Court No. 56958, Sept. 12, 2002, with respect to the above real estate, to Defendant 6.

2. Purport of appeal

A. Defendant 1, 3, 6, and 5: The part against the above Defendants in the judgment of the first instance is revoked, and all of the Plaintiff’s claims against the above Defendants are dismissed.

B. Defendant 2 and 4: The part against the above Defendants among the judgment of the first instance court is revoked, and all of the Plaintiff’s claims against the above Defendants corresponding to the revoked part are dismissed.

1. The scope of the trial of the court on the plaintiff's claim against the defendant 2 and 4;

The plaintiff at the first instance court against the defendant 2, 195, 196, and 197, the non-party 2's unfair dividends and corporate tax due to the settlement of accounts for the fiscal year 1997, the non-party 2 corporation of the East Asia Construction Industry (hereinafter "Dong Construction"), and the defendant 4 claimed compensation for the amount equivalent to the unfair dividends and corporate tax due to the settlement of accounts for the fiscal year 195, 1996, and the amount equivalent to the corporate tax due to the settlement of accounts for the East Asia Construction. The court of the first instance against the defendant 2, the court of the first instance accepted only the amount equivalent to the unfair dividends and corporate tax due to the settlement of accounts for the fiscal year 1996, the amount equivalent to the corporate tax due to the settlement of accounts for the fiscal year 1995, and all other claims against the defendant 4 are dismissed. Since the above defendants are dissatisfied with this judgment, the court's damages claim is limited to the above amount of corporate tax due to the above settlement of accounts and the amount equivalent to 195 fiscal year.

2. Basic facts

The following facts can be acknowledged in full view of the following facts: Gap evidence 1, 2, 4-5, 10, 11-1 through 3, 13-2, 14, Eul evidence 1-7, 5, 7, 14, 13, Eul evidence 2, Eul evidence 36-1, 2, 32-1 of Eul evidence 32, 32-1 of Eul evidence 3, and part of Gap evidence 3.

A. The relationship between the parties

(1) The plaintiff's status

The East Asia Construction was established for the purpose of civil engineering, construction, road packing, etc. and was ordered to commence the company reorganization procedure on November 24, 2000 by the Seoul District Court 2000s. On May 11, 2001, the Seoul District Court declared bankrupt ex officio on May 30, 2001, and was appointed as the bankruptcy trustee on May 30, 200, and the bankruptcy trustee was changed on August 31, 2005 while the court of first instance was pending, and on January 9, 2007, the plaintiff was appointed as the administrator upon receiving the decision to commence the rehabilitation procedure by the Seoul Central District Court 2006hap16.

(2) Status of the Defendants

① Defendant 1 is a director or representative director of East Asia Construction from October 20, 197 to July 10, 198; ② Co-defendant 8 of the first instance court is a representative director of East Asia Construction from December 8, 1993 to June 5, 1998; ③ Co-defendant 9 of the first instance court is a director in charge of finance of East Asia Construction from December 21, 1995 to May 18, 1998 (Provided, That if a director is appointed as a registration director, from March 20, 1998; from March 12, 1994 to May 18, 1998; from March 12, 1994 to May 18, 198; and from March 19, 1993 to May 13, 197; and from March 19, 193 to May 19, 197, respectively.

(b) Accounting for the fund shortage and accumulated window dressing of the East Asia Construction;

(1) From the beginning of the 1980s, Dong Construction implemented Libya in China with its large numbers, and its revenue structure has deteriorated due to the Gyeonggi-do economy in China, and for the diversification of its business, most of the funds required for the establishment of real estate investment and development companies in Korea and the acquisition and establishment of affiliate companies in the south-do, Australia, and the United States regions have been covered by the loans of financial institutions in around 1995, and the size of the borrowed funds has changed to approximately 2 trillion won in around 1995. Since its size has increased gradually, around 40 billion won in around 1998.

(2) In overseas works such as the First Libya Construction implemented from around 1983 to from around 1989, the financial structure and business performance of Dong Construction began to be poor due to the occurrence of additional expenses, etc. due to exchange loss and defect repair, and the accumulation of deficit, etc. In the mid-190s, while concentrating investment in funds in promoting domestic development projects and redevelopment and reconstruction projects in Korea, but the period of recovery of investment money has rapidly deteriorated due to the prolonged increase in the housing competition.

(3) Meanwhile, since around around around 1988, the management of Dong Construction, including Defendant 1, etc., conducted a false increase in net income equivalent to KRW 100 million by manipulating financial statements every year in order to delete the problems of construction accounting due to the fall of the overseas confidence of Dong Construction, and aggravation of the financing conditions. In particular, the window dressing settlement in a foreign sector was conducted with the settlement of accounts as to the end of the end of the term in the region of Libybya Corporation, and submitted the settlement of accounts and the list to the accounting division of the head office with the settlement of accounts as of January 1 of each year (as for the semi-end settlement, the end of July) and with the settlement of accounts as to the end of the term in the region of Libya Construction, it was sent to the accounting division of the head office within the scope of the remaining construction contract (the decision of the size of profits to be published each fiscal year), and it was sent to the new accounting division within the scope of 97 Gibya Construction, indicating the amount to be adjusted to 1000, or 00.

(4) In such a way, 1.4 billion won for the current 37 fiscal year (198), 1.4 billion won for overseas works, 3.5 billion won for the current 41.6 billion won for the current 1.6 billion won for the current 41.6 billion won for the current 1.4 billion won for the current 1.6 billion won for the current 41.6 billion won for the current 41.6 billion won for the current 1.4 billion won for the current 1.6 billion won for the current 1.6 billion won for the current 1.6 billion won for the current 41.6 billion won for the current 94 billion won for the current 1.6 billion won for the current 1.6 billion won for the current 1.6 billion won for the current 1.6 billion won for the current 1.6 billion won for the current 1.6 billion won for the current 1.6 billion won for the current 1.6 billion won for the current 36.6 billion won for the current 94 billion won for the current 1.

(c) The division of financial statements for the fiscal year 195;

(1) On January 1, 1996, Defendant 1 received from Co-Defendant 8 of the first instance court, an officer in charge of finance, a report from the Co-Defendant 8 of the first instance court to settle the current net income with approximately KRW 32.83 billion as if the current net income had occurred, even though the current net loss was incurred in the fiscal year of Dong Construction in 1995.

D. The co-defendant 8 of the first instance court, who is an accounting officer, ordered the non-party 1 to dispose of the net income amount of 32.8 billion won in the current net income amount of 32.9 billion won in the current fiscal year, notwithstanding the financial statements of 2.8 billion won in the current fiscal year, which are in charge of accounting, and according to the above direction, the non-party 1 shall include the amount of 4.39.17 billion won in the current accounts as of the end of 1995, in excess of 49.6 billion won in the prepaid construction cost of 49.6 billion won in the current fiscal year, and the actual total amount of 3.6 billion won in the current fiscal year, including the prepaid construction cost of 2.8 billion won in the current fiscal year, was 3 billion won in the current net income amount of 3.6 billion won in the current capital account, and shall include the excessive amount of 9.6 billion won in the current net income amount of 3.6 billion won in the capital account, and shall include 9.6 billion won in the total amount of 2.9.6 billion won in the overseas.

(3) On the other hand, Defendant 4 and Defendant 10 of the first instance court of Dong Construction’s auditor were to receive the financial statements for the pertinent fiscal year at least six weeks prior to the regular general meeting of shareholders and closely conduct the accounting audit, and in fact, did not conduct such accounting audit despite the fact that such large-scale accounting should be discovered. The photograph of Dong Construction completed the disclosure procedure of the financial statements on February 28, 1995 after undergoing the accounting audit by an outside auditor of the financial statements prepared in falsity, following the approval of the general meeting of shareholders on March 1, 1996.

(d) Division of financial statements for the fiscal year 196;

(1) From the Codefendant 8 of the first instance court around January 1997, Defendant 1 reported that the net income amount was KRW 20.5 million, despite the occurrence of a large amount of deficit equivalent to KRW 168.66 billion in the fiscal year 1996, Defendant 1 reported that the net income amount was KRW 20.6 million, and ordered that it be carried out as it is.

(2) The co-defendant 8 of the first instance court ordered Defendant 3 and Co-defendant 9 of the first instance court to 20.6 billion won per the current net income to be publicly announced during the current period to Non-party 1. According to the above order, Non-party 1 included an excessive amount of KRW 6,18.5 billion among the current assets as of the end of 1996, an excessive amount of KRW 6,18.5 billion (the outstanding amount of overseas construction + KRW 14.458 billion + the outstanding amount of domestic construction + the excessive amount of KRW 1,04.6 billion), and an excessive amount of KRW 1,60.6 billion among other current assets, an excessive amount of KRW 1,60 billion in the pre-paid construction cost, KRW 3.6 billion in the current net income statement to 3.6 billion in the current net income statement to 3.8 billion in the current net income statement to 3.6 billion in the current net income statement to 3.6 billion in the current net income statement.

(3) However, 10 co-defendants of the first instance trial of ASEAN had to conduct an accounting audit after receiving the financial statements for the pertinent fiscal year 6 weeks prior to the regular general meeting of shareholders, and closely examine them, and in fact did not conduct the accounting audit at all despite the fact that such large-scale window dressing accounts have to be discovered. The photograph of ASEAN Construction completed the disclosure procedure by publicly announcing the financial statements on March 15, 1997 through the approval of the general meeting of shareholders on March 14, 1997, after receiving the accounting audit by an outside auditor of ASEAN with respect to the financial statements prepared in falsity.

(4) Meanwhile, in the process of obtaining the approval of the settlement of accounts from Defendant 2 before submitting the result of the settlement of accounts for the fiscal year 1996 to the general meeting of shareholders, Defendant 2 did not take any measures to hear the above explanation while Defendant 2 did not take any measures to resolve the settlement of accounts by appropriating assets, etc. from other accounts in consideration of the difference between the book value and the standard market value of the Kimpo-be land in the fiscal year 1996 and the standard market value.

(e) Division of financial statements for the fiscal year 197;

(1) Around February 2, 1998, Defendant 1 received from Codefendant 8 of the first instance trial a report from the Codefendant 8 of the first instance trial to settle the accounts as if the net income was incurred, even though there was a reasonable amount of KRW 158.979 billion, and instructed Defendant 1 to implement the accounts as they were.

(2) Co-defendant 8 of the first instance trial: “The net income of KRW 8.3 billion for the settlement of accounts of KRW 197; KRW 1.7 billion for the first instance trial; KRW 1.7 billion for the settlement of accounts; KRW 4.7 billion for the first instance trial; KRW 9 billion for the settlement of accounts; KRW 1.7 billion for the settlement of accounts; KRW 7.7 billion for the settlement of accounts; KRW 9 billion for the settlement of accounts; KRW 1.7 billion for the settlement of accounts; KRW 2 billion for the settlement of accounts; KRW 1.7 billion for the settlement of accounts; KRW 8 billion for the settlement of accounts; KRW 6.7 billion for each of the settlement of accounts; KRW 1.6 billion for the settlement of accounts; KRW 1.6 billion for the settlement of accounts; and KRW 1.6 billion for the settlement of accounts for the settlement of accounts; or for the settlement of accounts for the settlement of KRW 7.7 billion for each of the settlement of accounts; and there is no net income for the settlement of accounts;

(3) However, the auditor of the ASEAN Construction and the co-defendant 10 of the first instance court and the defendant 6 completed the disclosure procedure of the financial statements on March 20, 198 following the approval of the regular general meeting of shareholders on the 21st day of the same month, after receiving the financial statements for the pertinent fiscal year at least six weeks prior to the regular general meeting of shareholders, and closely conducting the accounting audit and finding such large-scale window dressing accounts. However, the photograph of the ASEAN Construction completed the disclosure procedure, such as making a public announcement in the tendency newspaper and Seoul newspaper on the 21st day of the same month after receiving the approval of the regular general meeting of shareholders.

(f) Unfair payment of corporate tax and dividends due to settlement of accounts by installments;

(1) In the fiscal year 1994, Dong Construction had a cumulative loss of KRW 39.14 billion, and thereafter, in the fiscal year 1995, KRW 13.62 billion, KRW 168.666 billion, KRW 63 billion in the fiscal year 1996, and KRW 1589.79 billion in the fiscal year 1997, and KRW 60,000 in the financial statements in the fiscal year 1997, but was unable to pay dividends as above, in the same way as the above was paid, the above divided amount was 17.147 billion in the financial statements in the fiscal year 1995, and KRW 19.6 billion in the financial statements in the fiscal year 1996, based on the financial statements in the fiscal year 19.19.96 and the financial statements in the fiscal year 19.6 billion in each amount of KRW 6 billion in the financial statements in the fiscal year 197.

(2) In addition, Dong Construction is obligated to pay only 34,255,617,990 won in the fiscal year 1995, 13.666 billion won in the fiscal year 1996, and 158.979 billion won in the fiscal year 1997, as stated in the corporate tax calculation statement (hereinafter “attached calculation statement”) and 34,255,617,990 won in the fiscal year 1995, and 8,731,414,384 won in the fiscal year 1997. Although it did not have the liability to pay corporate tax during the fiscal year 1997, the Plaintiff did not claim the deduction of the amount of tax reduction and exemption on its own in the fiscal year 1996, and it did not recognize the amount of tax reduction and exemption on the basis of financial statements 17-1, 2920 billion won in the corporate tax amount on the grounds that there were grounds for tax reduction and exemption 9.7 billion won in each fiscal year.

G. Disposition of the property by Defendant 6

(1) On September 11, 2002, Defendant 6 donated real estate indicated in the separate sheet (hereinafter “instant real estate”) owned by Defendant 5, the wife of Defendant 6, to Defendant 5, and completed the registration of ownership transfer in Defendant 5’s name as Seoul Central District Court Branch No. 56958 with respect to the said real estate on September 12, 2002.

(2) Meanwhile, at the time of September 2002, Defendant 6 owned 1207, 141, 199, 367, 449, 349, 47, 397, 47, 394, 47, 97, 47, 309, 47, 49, 39, 47, 394, 47, 39, 47, 49, 47, 39, 47, 47, 49 (number 6 omitted), 393, 893, 893, 494 (number 7 omitted) x 898, 1379, 1379, 194, 194, 194, 194, 379, 479, 379, 194, 194, 379, 194.

3. Determination on the claim for damages due to the settlement of accounts by division - relation to the defendant 1, 2, 3, 4, and 6

(a) Occurrence of liability for damages;

(1) Determination as to the Plaintiff’s cause of claim

(A) Defendant 1, 3

Defendant 1 and 3, as the representative director or director of the East Asia Construction, perform their duties with the care of a good manager, and when preparing financial statements, there is a duty to record and disclose the company's management performance and records according to the corporate accounting standards established by the Securities and Exchange Commission with the approval of the Minister of Finance and Economy. While neglecting such duties, Defendant 1 was aware that each of the losses occurred during the fiscal year 1995 through 1997 of the East Asia Construction, Defendant 3, while being aware that each of the losses occurred during the fiscal year 1995 and 196 of the East Asia Construction, he led the window dressing settlement and announced the window dressing settlement through the approval of the board of directors and the general meeting of shareholders. Accordingly, Defendant 1 was jointly and severally liable to pay corporate taxes that need not need to pay, and Defendant 1 is jointly and severally liable to compensate the above losses incurred during the pertinent fiscal year for the damages incurred to the Defendants during the pertinent 195 through 197 accounting year of the East Asia Construction, and the above losses incurred to the Defendants 1 and the above losses incurred during the same fiscal year.

(B) Defendant 2

Defendant 2, as a director of Dong Construction, has a duty to monitor illegal or unreasonable performance of duties of the representative director or other directors and to take appropriate measures to correct the illegal or unjust performance of duties in the information obtained through such surveillance or by other methods. However, in the process of approving the financial statements for the fiscal year 1996, the co-defendant 9 of the first instance court's co-defendant 9 in the process of approving the settlement of accounts in consideration of the difference between the book value of assets and the standard market value of the Kim Jong-hwan's land and other accounts, the above financial statements were approved as they were, and the above financial statements were neglected to give public notice after the approval of the general meeting of shareholders, thereby causing damage to the payment of corporate tax and the unfair distribution of profits. Such act by Defendant 2 is jointly and severally liable for damages arising from the act of failing to perform an investigation or measure even after being aware of the violation of decentralization's account or at least the grounds for suspecting the separate settlement of accounts. The amount equivalent to the above corporate tax and the profits of Defendant 2 paid for the same fiscal year.

(C) Defendant 4, 6

Defendant 4 and 6, as an auditor of the East Asia Construction, audit the directors’ duties, and prepare an audit report at the end of each period for the settlement of accounts, and failed to perform the duties as an auditor at all. Defendant 4 was negligent in failing to perform the duties as an auditor, and Defendant 6 neglected to prepare and publicly announce false financial statements which have been settled in each formula in the fiscal year 1997, and thereby, Dong Construction incurred loss by unfairly paying corporate tax on each fiscal year and paying dividends. Therefore, pursuant to Article 414(1) of the Commercial Act, barring any special circumstance, Defendant 4 is jointly and severally liable with other Defendants who are deemed liable for damages arising from Dong Construction due to the division settlement of accounts for the fiscal year 1995, and Defendant 6 is jointly and severally liable for damages arising from Dong Construction due to the division settlement of accounts for the fiscal year 1997.

(2) Judgment as to the defendants' assertion

(A) Defendant 1, 3, 4, and 6’s assertion

(i) argument that there is no interest in a party’s eligibility or action;

Defendant 3 asserted that, even though the company reorganization procedure was abolished on the basis of the wrong investigation report by Samil Accounting Firm as well as the present bankrupt, and the bankruptcy was declared, the plaintiff is not entitled to be a party, and the plaintiff's filing of the claim for damages of this case against the above defendant is not allowed because it violates the principle of good faith or constitutes abuse of rights, and even if he won the above lawsuit, it does not belong to the interest of the lawsuit, the plaintiff's claim for damages against the above defendant is unlawful.

In light of the facts of recognition of the above 2., Dong Do 2., after being declared bankrupt by the Seoul District Court ex officio on May 11, 2001 and appointed a person who was appointed as a trustee in bankruptcy. On January 9, 2007, the plaintiff was appointed as a trustee on the commencement of the rehabilitation procedure under the Seoul Central District Court 2006 Mahap16, which was pending in the trial, and the rehabilitation procedure is currently in progress, and the lawsuit in this case was instituted with the permission of the court, and is lawful as the lawsuit in this case was instituted by the qualified person. Although Dong 2's construction did not object to the declaration of bankruptcy as alleged by the above defendant, this error does not affect the plaintiff's standing, and it cannot be viewed that the above defendant's claim for damages against the above defendant was against the principle of good faith and good faith or constitutes abuse of rights (Article 238 of the former Bankruptcy Act). Thus, the plaintiff's corporation still did not have any reason to be seen as having been dissolved within the scope of the above 301.

2) The assertion that he did not participate in the window dressing settlement of this case

Defendant 1, as the president of the East Asian Group, was in charge of the activities such as obtaining orders for overseas works only, as the representative director, with respect to the management of the East Asian Construction, he was in charge of the activities such as obtaining orders for overseas works. However, although he was reported by the co-defendant 8 of the first instance court, the representative director of the East Asian Construction in the fiscal year of 1995 and 1996, he was in charge of the settlement of accounts, he was in charge of the settlement of accounts in the first instance court's co-defendant 8, who was the representative director of the East Asian Construction, at the time, the assets of the East Asian Construction exceeded his liabilities, and the realization of continuous profits is anticipated due to the second construction in the number of Libya, etc., and there was no separate problem in the financial structure. The purpose of the settlement of accounts was not only known that the purpose of the settlement of accounts was to receive orders for overseas works only, but not received reports from the co-defendant 8 of the first instance court in the fiscal year of 1995 through 197.

In light of the evidence adopted in the above 2., Defendant 1, as the chairperson of the East Asia Group, delegated detailed business affairs to each affiliate company, but received reports from the representative director or group planning and coordination office with respect to important matters, such as management, finance, etc. of each affiliate company. In particular, Defendant 1 was well aware of the actual financial status of East Asia Construction after receiving reports from the joint Defendant 8 of the first instance court. However, Defendant 8 of the first instance court led the settlement of accounts of this case by way of ordering the joint Defendant 8 of the first instance court to prepare and disclose false financial statements as if he had interests in East Asia Construction in the above fiscal year and to implement them as they were, the above Defendant’s assertion that Defendant 1 did not participate in the settlement of accounts of this case is without merit.

3) The assertion that it is not a window dressing account

A) Defendant 3, 4, and 6, first of all, included about KRW 49.6 billion interest paid for redevelopment or reconstruction project in the financial statements of the fiscal year 1995, in the asset acquisition cost not for non-business expenses, and included about KRW 32.839 billion interest paid for redevelopment or reconstruction project in the pre-paid construction cost (the pre-paid construction cost). In the fiscal year 1996, approximately KRW 50.61 million interest paid for redevelopment or reconstruction project was assetizing the construction cost as an asset cost. The reason for accounting is that Article 93(3) of the corporate accounting standards as at the time of providing only interest paid for tangible fixed assets and there was no express provision on interest disposal, such as redevelopment or reconstruction project, while it was based on the international accounting standards (IAS) that came into effect from January 1, 1995, and that the financial statements of this case should be treated as the cost of borrowed assets, and that the financial statements of this case should be treated as losses per fiscal year under Article 95(2) of the Commercial Act.

In light of the aforementioned legal principles, the Defendants’ act of acquiring and processing securities 1, 2, and 1 to 3, and 36, and the overall purport of pleadings was stated in the Financial Accounting Standards 9-1 and 2: (a) the construction company did not explicitly state the amount of interest on loans related to the funds required for the purchase of the site for the reconstruction and redevelopment project or the relocation of its members until the completion of construction; (b) Article 96 of the Financial Accounting Standards provides for the disposal of financial expenses including interest on loans used for the production, purchase, and construction of new fixed assets as assets for the pertinent fiscal year; and (c) Article 65 subparag. 2 of the above Accounting Standards provides that, in the case of the construction of new assets 9-1 to 9-6 accounting standards, it shall be deemed that there were no reasonable grounds for calculating the amount of interest on loans used for the pertinent fiscal year from 9-1 to 9-6, which would have been in line with the above legal principles regarding the construction of new assets for the current fiscal year.

B) In other words, the Defendants asserted to the effect that: (a) although the construction of East Asia was made up of the deficit in the financial statements in the fiscal year of 1996, the difference of KRW 46.3 billion should be reflected in the financial statements even though the settlement amount of the Kucuk tunnel to be paid by Busan Metropolitan City was up to KRW 6.3 billion; (b) while Kimpo landfill held by East Asia was merely an asset with approximately KRW 1,000,000 on the financial statements, it was established on December 12, 1995 on the aggregate of maximum debt amount of KRW 50,08.5 billion as of May 1998, the collective security was established over KRW 1,999,000,000 in total, the market price at the fiscal year of 1996 should be deemed to have been at least KRW 1,90,000,000,0000,000,000 won, it should be deemed to have been more than KRW 989,0,098,0,00.

However, according to the corporate accounting standards, the value of assets recorded in the balance sheet should be appropriated on the basis of the acquisition cost (ordinary "book") (Article 91 (1) of the corporate accounting standards). However, in a case where a company conducts revaluation of assets pursuant to the Assets Revaluation Act, it should be appropriated on the basis of the revaluated amount (Article 91-2 (1) of the above corporate accounting standards). If financial statements are prepared on the basis of other values than the appraised value of assets (Article 91-2 (1) of the above corporate accounting standards). However, it is difficult to avoid the possibility that the corporate accounting standards are not properly reflected in the actual financial situation of the relevant company. However, the corporate accounting standards are prepared to coordinate various interests and promote the adequacy of accounting, and it is necessary to make a judgment on the basis of data prepared on the basis of the standard and transparent criteria prior to the execution of investment, loan, etc. to the relevant company, the above corporate accounting standards can be deemed as being inappropriate or unreasonable, barring any special circumstance.

In this case, the above defendants' assertion that the above value of the real estate held by Dong Construction was not recorded in the market price higher than that of the above 20 billion won when preparing the above financial statements, but the actual value of the real estate was above that of the above 20 billion won. The above defendants' assertion that the above 20 billion won of the above 40 billion won of the above 40 billion won of the old 40 billion won of the old 200 million won of the old 196 of the old 196 of the old 196 of the old 196 of the old 196 of the old 2000 won of the old 400 won of the old 196 of the old 2000 won of the old 196 of the old 2000 won of the old 196 of the old 196 of the old 200 of the old 196 of the current 2000 won of the old 196 of the current 400 billion won of the old 1.

4) The assertion that inevitable settlement of accounts was made for the benefit of the East Building.

Defendant 3, 4, and 6: (a) it was due to the management judgment in order to prevent the failure of the above corporation to pay off the 3rd share price under the circumstances where the 3rd share of the 3rd share of the 1999 and the 1997 annual financial statements of the 3rd share of the 3rd share of the 3rd share of the 3rd share of the 3rd share of the 3rd share of the 3rd share of the 3rd share of the 3rd share of the 3rd share of the 3rd share of the 3rd share of the 3rd share of the 3rd share of the 1996 and the 1997. The above 4th share of the 3rd share of the 196th share of the 3rd share of the 1997. The 196th share of the 3rd share of the 3rd share of the 196th share of the 3rd share of the 199.

However, when a director commits an act in violation of the law in performing his duties, the act itself constitutes a default on the company, and thus, the company cannot be exempted from liability for damages as long as losses incurred to the company, and there is no room to apply the business judgment rule that can be considered when a director is liable for damages due to a breach of the duty of a good manager in performing his duties (see Supreme Court Decision 2004Da41651, 41668, Nov. 9, 2006, etc.).

Meanwhile, Article 20(2) of the former Act on External Audit of Stock Companies (amended by Act No. 5497 of Jan. 8, 1998 and enforced from Apr. 1, 1998) and Article 635(1) of the Commercial Act provide that when a director or auditor of a stock company prepares and discloses false financial statements in violation of the corporate accounting standards enacted by the Securities and Exchange Commission with the approval of the Minister of Finance and Economy, he/she shall be punished by imprisonment for not more than one year or by a fine not exceeding five million won. As seen above, the above Defendants, who were directors or auditors of the ASEAN, prepare and publicly announce false financial statements or neglect to prepare and publicly announce false financial statements in violation of corporate accounting standards, fall under acts prohibited by the former Act on External Audit of Stock Companies. Thus, the above Defendants are liable to compensate for damages caused by the said violation of the provisions of the Act and there is no room to apply the principle of business judgment. Thus, the above Defendants' assertion is without merit.

5) The argument that the corporate tax unfairly paid is not a loss because it can be refunded.

The defendant 1, 3, 4, and 6 asserts that the corporate tax that was unjustly paid can be refunded, so the portion of the corporate tax that was unjustly paid cannot be considered as damage to the Dong Construction, and that it is not the responsibility of the successor representative director or director who was not responsible for the corporate tax refund after the resignation of the representative director or director of Dong Construction.

On the other hand, as long as corporate tax has already been paid unfairly, the damage has already occurred finally, and the refund is merely an ex post facto compensation of the damage, it cannot be deemed that there is a possibility of compensating for the damage and it does not constitute the damage. Furthermore, the two-year period for claiming for correction under Article 45-2 of the Framework Act on National Taxes has already expired (Article 45-2(1) of the Framework Act on National Taxes), and the five-year extinctive prescription for claiming for repayment under the return of unjust enrichment has not expired, and there is no possibility of refunding the above Defendants’ assertion.

6) Claim that liability has been rescinded pursuant to Article 450 of the Commercial Act

Defendant 1, 3, 4, and 6 asserted that the financial statements for the fiscal year from 1995 to 197 were approved at the regular shareholders' meeting for each fiscal year following the following fiscal year, and that the financial statements for the fiscal year from 1998, which contain all the forms of subdivision by the fiscal year from 1997, were approved at the shareholders' meeting for the fiscal year from February 199, and that there was no other resolution to reverse the above approval within 2 years thereafter, the above Defendants' liability was revoked by Article 450 of the Commercial Act.

In addition, Article 450 of the Commercial Act does not apply to cases where a company files a lawsuit against the retired director or auditor (see Supreme Court Decision 77Da295, Jun. 28, 197). The matters for which the responsibility is rescinded are limited to those which are stated in the financial statements or can be identified by the statement of the financial statements (see Supreme Court Decision 68Da305, Jan. 28, 1969, etc.). The financial statements for the fiscal year 195 through 197 of the same ASEAN include the statement of separate accounts or the statement of the above financial statements itself, and it is not possible to know the fact of separate accounts. Furthermore, even if the separate forms of accounts were fully reflected in the financial statements for the fiscal year 1998, the above Defendants' assertion is without merit, since there is no evidence to support that the above Defendants' reasons for liability were stated in the financial statements.

7) Claim for the expiration of extinctive prescription

Defendant 1 had already been aware of the accounting division at the time of July 1998, when the prosecution's investigation against Defendant 1 was conducted, and even if not, the prosecution's announcement that he would not punish him with respect to accounting division should have been aware of the fact at the end of December 1999, which was reported through the media. At least, it is evident that at least it was known that he had been aware of the accounting division on February 14, 2001, when he filed the suit of this case on April 14, 2004, which was later than three years after the plaintiff filed the suit of this case, the plaintiff's right to claim damages against the above Defendant had already expired prior to the institution of this case.

Therefore, the above defendant's defense of extinctive prescription based on the premise that the three-year short-term extinctive prescription under Article 766 (1) of the Civil Act is applied is not a general tort but a non-performance liability due to delegation relationship. Therefore, the period of extinctive prescription is ten years, such as general liability. Thus, the above defendant's defense of extinctive prescription is without merit, which is based on the premise that the three-year short-term extinctive prescription

(B) Determination as to Defendant 2’s assertion

1) Defendant 2 asserted that: (a) Defendant 2 was in charge of general affairs and management affairs; (b) was unrelated to the company’s accounting; (c) was given a formal approval by the accounting department prior to the submission of the financial statement completed until the external audit to the general meeting of shareholders; and (d) in this process, Defendant 9 co-defendant 9 of the first instance court reported that he prepared the financial statement in consideration of the fact that the accounting book was much different from the actual price; (b) Defendant 2 was aware of the normal financial statement and approved it as the normal financial statement; and (b) Company’s profits and losses were ultimately attributed to the shareholders; and thus, even if Defendant 2 paid unfair dividends to the shareholders, they cannot be deemed as company’s losses; and (c) Defendant 2 cannot be deemed as having suffered losses for the fiscal year due to the settlement of accounts, since the amount of economic profits, such as construction revenue, loan, and decrease in interest rate, or the amount of corporate tax payment, which was in excess of the amount of corporate tax payment.

2) As to the assertion that he did not participate in the window dressing settlement and did not know the window dressing settlement (the above assertion ①), it is not because he was involved in the window dressing settlement, but because he neglected to monitor the window dressing settlement conducted by the representative director or other directors. Such surveillance duty is a director's response, and even if he did not approve formally in the middle of the approving person, it is assumed that he did not take any necessary measures. Even if the external audit was completed, if he discovered the window dressing settlement or could have discovered the window dressing settlement, he has a duty to investigate the window dressing and take appropriate measures so that he did not know the window dressing, and even if he did not know the window dressing settlement settlement, he should have sufficient knowledge to the extent that he did not reflect the window dressing 6 through 13, and thus, he should have sufficient knowledge and knowledge to the extent that he did not include the book value that he did not have any other evidence to the extent that he did not include the book value that he did not have any profit. Thus, even if the book value of the company's financial statements, it is not necessary to reflect the book value of the above.

Next, with respect to the assertion that there is no loss (the above argument 2), it cannot be said that there is no loss because it is possible to refund corporate tax, as seen earlier, and the corporate tax paid by the construction for the fiscal year 1996 to the 1996 fiscal year was extinguished, and the interests of the shareholders of the company were not accurately consistent with the interests of the shareholders of the 1996 fiscal year, and there is no evidence to prove that the Ga Construction has obtained economic benefits, such as construction order, loan procurement, interest rate decrease, etc. in excess of the amount of dividend or corporate tax payment through the division settlement of accounts, and further, the above business benefits claimed by the above defendant are dependent on the reputation of the Ga Construction or of the dong construction of the parties to the trade in the present or in the future. If it is found that the division settlement was made later, it is difficult to view that the above division settlement of accounts would result in a loss to the Ga Construction. Therefore, it is also difficult to deem that the above division settlement of accounts actually bring about the Ga Construction.

(C) Defendant 4 and 6’s assertion

1) Claim that an auditor is not an auditor because of a violation of Article 411 of the Commercial Act

According to Article 411 of the Commercial Act, Defendant 6 is unable to concurrently serve as an employee of the parent company or a subsidiary. Defendant 6 has worked as an adviser of Korea Transportation Corporation (hereinafter “Korea Transportation Corporation”) who is a subsidiary of Dong Construction from May 3, 1993 to August 10, 198. Thus, the above act of appointing the auditor is null and void in violation of Article 411 of the Commercial Act, and even if the parent company’s auditor is appointed as a director of the company or subsidiary, or the director of the company or subsidiary is appointed as the auditor of the parent company, it is deemed that the appointment of the auditor was effective under the condition of suspending the appointment of the company’s employee or subsidiary, and that the auditor of the parent company was not a director of the company or subsidiary, or that the auditor of the company was not a director of the company’s employee or subsidiary, with the consent of the parent company’s employee or subsidiary to take office as the auditor of the parent company, and that the defendant was not a full-time auditor or the auditor of Dong Construction Corporation from May 197 to 97.

In light of the importance of the audit position, which is a necessary permanent organization of the company, the auditor appointed by the resolution of the general meeting of shareholders and required to register the appointment of the auditor, even though the above defendant was commissioned as an adviser by the resolution of the board of directors of the Dong Construction or the Korea Transportation Agency, which is its subsidiary, prior to the appointment of the auditor, since the above defendant accepted the appointment of the auditor at the time, it cannot be viewed that the appointment of the auditor itself is null and void as a matter of course. Furthermore, even if the above defendant again was commissioned as a counselor by the resolution of the board of directors after the appointment of the auditor, unless there is any evidence to prove that he explicitly expressed his intention to resign from the office of the auditor, the mere fact that he did not perform the audit affairs at all after the appointment of the auditor, cannot be deemed to have resigned from the office of the auditor. Rather, if the above defendant is unable to faithfully perform his duties as the auditor, as alleged in the above defendant, it should not accept or resign the office of the auditor, notwithstanding the fact that the above defendant did not perform the audit affairs at all at all at all.

2) The assertion that it is not a non-permanent auditor is not responsible

Defendant 4 and 6 claimed that Defendant 4 and 6 were listed as non-permanent auditors of the East Asia Construction on the register, but non-permanent auditors are in existence of commercial custom conducting audit only in the public announcement of the standing auditors. When settling accounts for the fiscal year from 1995 to 1997, Defendant 10 co-defendant 10, a standing auditor, performed the audit duties, and thus, Defendant 4 and 6 did not perform the audit duties at all. In particular, Defendant 4 accepted the auditor's position on the condition that he was employed as a director of the East Asia Construction and did not perform his duties as an auditor. Thus, Defendant 4 did not be liable for damages arising from the window dressing settlement of accounts for the fiscal year 1995 and Defendant 6 did not compensate for damages arising from the window dressing settlement of accounts for the fiscal year 197.

On the other hand, since the Commercial Act does not distinguish between the duties and responsibilities of the standing auditor and the non-standing auditor, it cannot be recognized that the existence of the ordinary customs that only the public notice of the standing auditor performs the duties of the auditor. Even if it is non-standing auditor, the reason alone cannot be enough to exempt the auditor from his duty of care under the statutes and the articles of incorporation. Thus, if the auditor was negligent in auditing the settlement of accounts, which can be deemed the most unique duties of the auditor, the auditor should be responsible. Even if Defendant 4 agreed that the auditor will take office only for the purpose of the name audit at the time when he was appointed as the auditor, this means that the type of the auditor whose corporate law is not planned, and thus, it cannot be permitted. Thus, the above assertion is without merit.

3) The assertion that there is no causation

Defendant 4 and 6 held that since the year 1988, Dong Construction operated the window dressing accounting systematically within the company, such window dressing accounting was made on the top floor by Defendant 1 as the president, the director in charge of finance, the director in charge of accounting, and the director in charge of accounting. Furthermore, the agenda accounting corporation in charge of external audit for Dong Construction also participated in the window dressing accounting for Dong Construction systematically, even though the above Defendants knew of Dong Construction's window dressing accounting, there was no possibility to block or block the above Defendants' failure to perform their duties as auditors, and there was no causation between Dong Construction's damage.

As seen above, insofar as it is found that the above Defendants were negligent in performing or neglecting an important audit procedure as seen in the above, and by neglecting or neglecting the duty of audit and inspection, it shall be deemed that Dong Construction incurred damages by unfairly paying corporate tax and paying dividends for each fiscal year as a result of such mistake. Thus, it shall be deemed that the above Defendants’ failure to perform or neglecting the duty of audit and inspection and damages suffered by Dong Construction are reasonable causation between the above Defendants’ failure to pay corporate tax and damages suffered by Dong Construction. Thus, the above Defendants’ assertion is without merit.

B. Extent of damages and limitation of liability

(1) Loss in the East Asian Construction

(A) According to the above facts, damages arising from the Defendants’ violation of law or breach of duty are ① KRW 17.14 billion, which was unfairly distributed in excess of the amount to be actually paid, as stated in the separate sheet of accounts in the separate sheet of accounts, and KRW 44,834,382,010 (Defendant 1, 3, and 4) which was unfairly distributed in excess of the amount to be actually paid, as in the separate sheet of accounts, in the absence of profit to be distributed from the window dressing settlement of accounts for the fiscal year 1995 of the same Asia; ② KRW 19.41,9 billion, which was unreasonably distributed in excess of the amount to be actually paid, and KRW 78,321,585,616 (Defendant 1, 2, and 3) which was unreasonably paid in excess of the amount to be paid, as stated in the separate sheet of accounts, and KRW 16.6 billion,600,000,000,000 for Defendant 197.

(B) The plaintiff, ① Dong Construction has appropriated the outstanding amount of 439.1 billion won in the balance sheet for 1995 fiscal year, ② 4.6 billion won in the interest rate of 49.2 billion won in the reconstruction project and KRW 5.4 billion in advance construction cost, ② 9.7 billion in the aggregate of 17.6 billion in the aggregate of 9 billion in the aggregate of 17.6 billion in the aggregate of 9 billion in the aggregate of 9.9 billion in the income statement, approximately KRW 3.7 billion in the income statement less than KRW 3.7 billion in the income statement, ② 6.9 billion in the income statement for 1996 fiscal year, ② 6.7 billion in the total of 9 billion in the income statement for 19.7 billion in the income statement, ② 3 billion in the income statement for 19.8 billion in total with 6.8 billion in the income statement for 19 billion in total and 1.3 billion in the income statement for 1.6 billion won in total,3 billion won in total.

However, the plaintiff's assertion that Dong Construction paid corporate tax in excess of the amount of damages recognized in the above fiscal year of the above fiscal year of the above fiscal year of 1995 and 196 on the fact that Dong Construction completed the window dressing settlement in excess of the window dressing size as recognized in the above 2.3, Gap evidence Nos. 15-1 through 10, and Gap evidence No. 16-1 through 3 is insufficient to recognize it, and there is no sufficient evidence to acknowledge it otherwise. Thus, the plaintiff's assertion that Dong Construction paid corporate tax in excess of the amount of damages recognized in the above fiscal year of the above fiscal

(2) Limitation of liability

(A) In a case where a director or auditor is liable for compensating the company for damages by committing an act in violation of Acts and subordinate statutes or the articles of incorporation or neglecting his duties, the scope of the damages can be limited in light of the principle of fair compensation system, taking into account all the circumstances such as the content and nature of the pertinent business, the background leading up to the pertinent director or auditor’s breach of duties and the manner leading up to the pertinent violation of duties, the objective circumstances or degree involved in the occurrence and expansion of company damages, the pertinent director or auditor’s contribution to the company, the pertinent director or auditor’s profit from the pertinent violation, the pertinent director or auditor’s profit from the pertinent violation

(B) Regarding the instant case, as seen above, Defendant 1, 2, 3, 4, and 6’s tenure of office, position and specific attitude of work execution, degree of involvement in the instant window dressing accounting act, the Defendants appears to have committed each act of breach of their duties in the intent to secure the company’s interest, and the company’s director or officer’s act of breach of duties seems to have been committed in the intent to restrain the company’s active management and corporate activities. The Defendants, except Defendant 1 who received part of the amount of dividends in the shareholder’s position, did not gain profits due to the act of breach of their duties. Considering all other circumstances revealed in the instant argument, it is reasonable to view that the Plaintiff’s responsibility for the Plaintiff is 50% of the amount of damages recognized in the foregoing Paragraph (a) in the case of Defendant 1, Defendant 2, and Defendant 3, Defendant 4, and Defendant 6’s share of damages as 3% of the amount of damages recognized in each of the above Paragraph (a).

C. Sub-decision

Therefore, as indicated in the separate sheet by Defendant 1, the amount of damages that Defendant 1 is liable to compensate for to the Plaintiff as indicated in the separate sheet by Defendant 1 is the total amount of KRW 30,99,691,05 won for the fiscal year 1995, and the total of KRW 48,870,292,808 won for the fiscal year 1996, and the total of KRW 34,136,00,000 for the fiscal year 197, and the total amount of damages that Defendant 2 is liable to compensate for, as indicated in the separate sheet by Defendant 1, for the total of KRW 9,74,058,562 for the fiscal year 196, the total amount of damages that Defendant 3 is liable to compensate for is the total of KRW 6,198,138,201,201, 1996 for the fiscal year - - - - - - - - - - - - - ------------- ------------------------

4. Judgment on the claim for revocation of fraudulent act - Defendant 5

(a) The revocation of the fraudulent act and the obligation to cancel the registration of ownership transfer to Defendant 5;

Defendant 6 is liable for damages of KRW 2,048,160,00 with respect to the settlement of accounts for the fiscal year 1997 of East Asia Construction with respect to the Plaintiff (Dongdong Construction). Accordingly, the Plaintiff’s damage compensation liability for this is terminated at the latest, and the corporate tax was paid and paid dividends was already generated on or around March 15, 2001. According to the facts acknowledged under the above paragraph 2, Defendant 6, as seen above, on September 2, 2002, donated the instant real estate to Defendant 5, who is his wife, and transferred the ownership transfer following the completion of the registration of transfer of ownership, thereby deepening the above excess of the obligation. The Plaintiff’s damage compensation liability should be revoked in light of the following facts: (a) Defendant 6’s positive property exceeded KRW 2 billion; and (b) Defendant 6, as a result, was aware that the investigator was permanently permanently stationed in East Asia Construction from August 200 to Dong Construction; and (c) Defendant 26, as well as an auditor’s liability for restitution.

B. Determination as to Defendant 5’s assertion

Defendant 5 asserted that Defendant 5’s good faith is recognized in light of this point, since Defendant 6 married with Defendant 5, who was a elementary school student, in 17 years after the former wife’s death, and got married to Defendant 5, in order to adjust his life, he donated the instant real estate to Defendant 5 on September 2002, and the real estate located in Chungcheongnambuk-gun was not disposed of at the time, and the said real estate was not disposed of by the Plaintiff, and thus, Defendant 5’s good faith is recognized.

According to the statement of Gai, Eul's 11 to 18, the defendant 6, who was born on May 193, 193, was married with the defendant 5 who was born on May 1, 1982 and was born on May 17, 1985, and was married with the defendant 5, who was born on January 1992. As seen above, the defendant 6 owned 7 lots of land in the Chungcheongnam-do, Chungcheongnam-gun, Chungcheongnam-gun, the real estate of this case, and the above lands continued to be owned by the plaintiff on July 11, 200. However, it is difficult to recognize the good faith of the defendant 5 on the sole basis of the above facts of recognition, and there is no evidence to acknowledge it differently, and there is no reason to acknowledge it in each of the above defendant's assertion.

5. Conclusion

As such, ① Defendant 1, 3, and 4 jointly and severally demand the Plaintiff to pay 50 million won among damages arising from the settlement of accounts for the 1995 fiscal year, and Defendant 1, who is the day following the delivery of a copy of the complaint of this case, to the Plaintiff 2, from April 25, 2004 to May 16, 204, to the extent of the existence and scope of the above Defendants’ obligation to pay 5% per annum under the Civil Act until July 19, 207, and 200% per annum from the following day to the day of complete performance of the obligation to pay damages to the Plaintiff 1, 50% per annum from the day after the date of the above decision, to the day of complete performance of the obligation to pay damages to the Plaintiff 1, 50% per annum from the day after the date of the above decision, to the day of complete performance of the obligation to pay damages to the Plaintiff 2, 50% per annum 1, 2005.

After all, the plaintiff's claims against the defendant 1, 2, 3, 4, and 6 against the defendant 1, 2, 3, 4, and 6 are accepted within the above scope of recognition as reasonable, and the remaining claims against the defendant 5 are dismissed as groundless. Since the part against the defendant 1, 2, 3, 4, and 6 which ordered payment in excess of the above recognition amount is unfair in some different conclusions from the judgment of the court of first instance, they are revoked, and all of the plaintiff's claims against the above defendants are dismissed. The remaining appeals by the above defendants and appeals by the defendant 5 are dismissed as all of the grounds for appeal. The "Defendant 6" in subparagraph 2 (b) of the judgment of the court of first instance is obvious that "the defendant 5 is the defendant 6's error", and thus, it is so decided as per Disposition.

[Attachment List omitted]

Judges Lee Young-gu (Presiding Judge)