[1] Whether an insurance company or an insurance solicitor is obligated to explain important matters of the insurance contract that may identify the characteristics and risks of individual insurance products to a customer when it concludes or solicits an insurance contract with a customer (affirmative), and the method and standard for determining the degree of the duty to explain in such case / In a case where it is difficult to explain important matters of the insurance contract based on the insurance terms and conditions, whether the insurance company or the insurance solicitor should explain them by using additional data,

[2] Whether the insurance company or the insurance solicitor's employee may cancel the insurance contract on the ground of mistake where it is evident that the customer did not understand the important matters of the insurance contract and did not enter into the insurance contract in the absence of mistake, or that at least the same content did not enter into the insurance contract (affirmative)

[3] Whether the victim is entitled to compensation for property damage from the perpetrator, and whether the reason such as the difference in the amount of compensation is a factor in calculating consolation money (affirmative), and where it is not possible to receive compensation due to the impossibility of proving the loss due to the lack of proof, etc., whether such circumstance can be considered as a reason to increase consolation money (affirmative)

[4] The person who bears the burden of proving that the beneficiary of unjust enrichment is a malicious intent (=the party who asserts such intent) / The meaning of “malicious” here, and whether it can be viewed as a “malicious beneficiary” merely with awareness of the fact that it constitutes the requirement for return of unjust enrichment (negative)

[1] An insurance company or insurance solicitation worker is obligated to protect its customers in a reasonable way to determine whether to conclude an insurance contract based on its information by clearly explaining the payment of premiums, grounds for paying insurance proceeds and refunds for termination of insurance contracts and calculation of such amount, and the characteristics and risks of individual insurance products, such as investment mode and structure, in cases of variable insurance contracts. Here, whether an insurance company or insurance solicitation worker is required to provide customers with certain explanation regarding important matters of an insurance contract, the characteristic and risk level of insurance products, the customer’s subscription experience in and understanding ability, etc. should be determined by taking into account the characteristics of the insurance contract and the degree of risks, the insurance company’s insurance coverage and insurance solicitation worker’s ability to understand such important matters as the insurance contract’s insurance policy (amended by Act No. 10394, Jul. 23, 2010; Act No. 42637, Jan. 24, 201).

[2] Where an insurance company or an insurance solicitor’s employee violates his/her duty to explain and enters into an insurance contract in error or error without understanding the important matters of the insurance contract, even if such error is merely a mistake in motive, if it would have not entered into an insurance contract if it would not have entered into or would not enter into an insurance contract with at least the same content, such error constitutes an important part of the content of the insurance contract, and thus, can be cancelled on this ground.

[3] In calculating consolation money, the court shall determine the amount in consideration of the overall circumstances between the injured party and the perpetrator. As such, whether the injured party is entitled to compensation for property damage caused by the pertinent accident, and the compensation amount, as well as the reasons for calculating consolation money, also constitute a reason to consider the amount of consolation money. In addition, in a case where it is impossible to determine the amount of consolation money due to difficult proof, etc. even if it is recognized that there was property damage, such circumstance may be considered as a reason to increase consolation money.

[4] In the case of unjust enrichment, a malicious beneficiary shall compensate for any loss incurred in return with interest added thereto (Article 748(2) of the Civil Code), and as to whether a beneficiary of unjust enrichment is bad faith, the burden of proof is asserted by the party asserting that the beneficiary of unjust enrichment is bad faith. Here, “ bad faith” refers to recognizing that the holding of one’s own interest is without legal cause, aside from the case where the beneficiary is deemed bad faith under Article 749(2) of the Civil Code, and it is insufficient to recognize that the holding of such interest does not have legal cause. In other words, it is insufficient to recognize that there is a fact that constitutes the requirement for the fulfillment of the obligation

[1] Article 2 of the Civil Act; Articles 95(1) and 97(1) of the former Insurance Business Act (Amended by Act No. 10394, Jul. 23, 2010); Article 42 of the former Enforcement Decree of the Insurance Business Act (Amended by Presidential Decree No. 22637, Jan. 24, 201) / [2] Article 109(1) of the Civil Act / [3] Article 751 of the Civil Act / [4] Articles 748(2) and 749 of the Civil Act

[1] Supreme Court Decision 2010Da34159 Decided June 13, 2013 / [3] Supreme Court Decision 84Da722 Decided November 13, 1984 (Gong1985, 23) Supreme Court Decision 2005Da5843 Decided June 1, 2007 / [4] Supreme Court Decision 2009Da24187, 24194 Decided January 28, 2010 (Gong2010Sang, 398) Supreme Court Decision 2010Da68237 Decided November 15, 2012

Plaintiff (Appointed Party) (Law Firm Uanan, Attorneys Yu Ha- delivery et al., Counsel for the defendant-appellant)

Hansung Life Insurance Co., Ltd. (Law Firm Doll, Attorneys Yang Tae-hun et al., Counsel for the defendant-appellant

Daejeon High Court (Cheongju) Decision 2015Na11398 decided April 25, 2017

All appeals are dismissed. The costs of appeal are assessed against each party.

The grounds of appeal are examined.

1. As to the Defendant’s ground of appeal

A. Violation of the duty of explanation and cancellation of the contract on the ground of such a mistake

(1) An insurance company or insurance solicitation worker has a duty to protect its customers so that they can reasonably determine whether to enter into an insurance contract based on the relevant information by clearly explaining the payment of premiums, payment of insurance proceeds and refunds for termination of insurance contracts and calculation standard thereof, and the characteristics and risks of each insurance contract, such as investment mode and structure, in cases of variable insurance contracts. Here, whether an insurance company or insurance solicitation worker is required to provide customers with certain explanation regarding important matters of an insurance contract shall be determined by taking into account the characteristics and risk level of insurance products, the customer’s subscription experience in and understanding ability, etc. Provided, That it is difficult for its customers to understand important matters of an insurance contract, such as an insurance company and insurance solicitation worker’s duty provided for in Articles 97(1) and 95(1) of the former Insurance Business Act (amended by Act No. 10394, Jul. 23, 2010; see Article 42 of the former Enforcement Decree of the Insurance Business Act (amended by Presidential Decree No. 22637, Jan. 24, 2011). see, 2014).

Where an insurance company or an insurance solicitor’s employee violates such duty to explain and enters into an insurance contract in error or error without properly understanding the important matters of the insurance contract, even if such error is merely a mistake of motive, if it would have not entered into an insurance contract if it would not enter into or at least have not entered into an insurance contract with the same content, such error constitutes an important part of the content of the insurance contract, and thus, can be cancelled on this ground.

(2) The reasoning of the lower judgment and the evidence duly admitted reveal the following.

(A) The Plaintiff (Appointed Party) and the remaining designated parties (hereinafter collectively referred to as “Plaintiffs”) were on duty in the Defendant Company and retired on April 2009. At the time, there was a temporary special provision on Article 96(1) of the former Restriction of Special Taxation Act (amended by Act No. 11133, Dec. 31, 201; hereinafter the same) stating that “in the event there is retirement income prescribed by the Income Tax Act as of December 31, 2009 and there is retirement income prescribed by the Income Tax Act, the amount equivalent to 30/10 of the calculated amount of the relevant retirement income shall be deducted from the calculated amount.” The Plaintiffs paid the reduced retirement income tax pursuant to the said provision by means of withholding.

(B) According to the relevant statutes, such as the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 22034, Feb. 18, 2010), where an employee who resides in Korea transfers or transfers an amount equivalent to at least 80/100 of his/her retirement income to an individual retirement account (ICR) within 60 days from the date of his/her retirement, the relevant retirement income amount shall not be deemed retirement income before actual payment is made (the so-called “taxation deferred”). In cases where the retirement income tax has already been withheld on the retirement income amount transferred or received, the relevant tax amount may be refunded if the employee submits a tax withholding account return to the employer. Such deferred tax amount may also increase operating income by being assigned to the principal operating principal, and where the employee receives the benefits in a lump sum after the age of 55, not only the operating principal, but also the income tax is imposed on the retirement income if he/she receives the benefits in a lump sum after the age of 55, but also the so-called retirement income tax shall not be imposed on the individual retirement income amount.

(C) On May 2009, the Plaintiffs entered into a contract with the Defendant, a personal retirement account (hereinafter “instant contract”) with the content as indicated in the lower judgment, which entered into a taxation-free contract (hereinafter “instant contract”) and paid charges on the part of the Defendant.

(D) At the time of entering into the instant contract, the description of the instant product, which was divided by the Defendant to the Plaintiffs, stated as follows: “The instant product is a retirement allowance total device that can secure aging funds and enjoy the effect of taxation deferment by collecting retirement allowances from the time of retirement,” and as a special benefit of the said product, “tax may be saved due to no transfer of retirement income tax until the date of termination, there may be no interest income tax on earnings, and may be withdrawn in a pension or lump-sum, but may be received as pension at the time of maintenance by the age of 55.” In addition, as small as follows, the lower part of the instant contract, stating as follows: “The imposition of tax on retirement income tax (in case of partial termination, interest income tax at the time of termination, in case of partial termination)” and “The Defendant’s employee recommended the Plaintiffs to pay the income tax on retirement income at the first time, and later there is no difference in the amount of income tax on retirement income at the age of 30% prior to the retirement payment.”

(3) We examine these facts in light of the legal principles as seen earlier.

The taxation method of this case differs depending on whether the product of this case is deferred, and accordingly, the amount that can be paid at the time when a policyholder terminates or after the age of 55 differs depending on the type of benefits. This also has characteristics that affect workers’ choice on whether the product of this case is admitted, early termination, and the type of benefits. However, it is practically difficult for workers who do not have knowledge of taxation without detailed explanation on whether the product of this case is deferred or the type of benefits. Nevertheless, the part written in small characters on the back side of the description of the product of this case provides misunderstandings as if they could not receive benefits such as deferred taxation if they do not transfer or transfer the amount of retirement benefits to the individual retirement account, and it is difficult to view such description alone as well. Under such circumstances, the Defendant’s employee emphasizes only the benefit of tax reduction under the former Restriction of Special Taxation Act without a clear explanation on this issue, and recommended taxation deferment. Accordingly, the Plaintiffs were able to enter into the instant pension contract without properly understanding of future tax exemption and the difference in the type of benefits.

In light of the aforementioned circumstances, the Defendant may be deemed to have violated the duty to explain by failing to clearly explain the important matters of the insurance contract that may identify the characteristics of the instant product, such as the existence of deferment of taxation and the difference in the method of taxation depending on the type of benefits, and the change in the amount of benefits received therefrom. Furthermore, if the Plaintiffs did not make any error as above with a sufficient explanation from the Defendant’s employees, it is clear that the Plaintiffs would have excluded the benefits of deferment of taxation as above and did not conclude the instant contract. Therefore, such mistake constitutes an important matter of the content of the contract, and it is reasonable to deem that the Plaintiffs can cancel the instant contract

In the same purport, the lower court was justifiable to have determined that the Plaintiffs, due to the Defendant’s violation of the duty to explain, caused mistake on the important part of the terms of the instant contract, thereby cancelling the instant contract. In so doing, contrary to what is alleged in the grounds of appeal, the lower court did not err by exceeding the bounds of the principle of free evaluation of evidence in violation of logical and empirical rules, misapprehending the legal doctrine on revocation on the ground of mistake, or failing to exhaust all necessary deliberations. The allegation that the Plaintiffs’ mistake was due to gross negligence was newly asserted in the final appeal

B. Damages liability portion due to violation of the duty to explain

In calculating consolation money, the court shall determine the amount by taking into account all the circumstances between the injured party and the perpetrator’s side. As such, whether the injured party is able to receive compensation for the property damage caused by the pertinent accident, and the reasons such as the compensation amount C, etc. also constitute the grounds for considering the computation of consolation money. In addition, if it is impossible to receive compensation due to the impossibility of confirming the amount of damages due to the impossibility of proof, etc. even though the occurrence of property damage is recognized, such circumstance may be considered as the grounds for increasing consolation money (see, e.g., Supreme Court Decisions 84Da722, Nov. 13, 1984; 2005Da5843, Jun. 1, 2007).

The court below calculated the amount of damages to be paid by the plaintiffs due to the violation of the defendant's duty of explanation on the ground that the damages for the properties suffered by the plaintiffs due to the violation of the defendant's duty of explanation is the difference between the property status that existed as well as the property status caused by the illegal act if there was no such illegal act.

Examining the reasoning of the lower judgment in light of the aforementioned legal principles and records, the lower judgment did not err by misapprehending the legal doctrine on tort liability, as alleged in the grounds of appeal.

2. As to the ground of appeal by the Plaintiff (Appointed Party)

A. Whether he/she is a malicious beneficiary

(1) In the case of unjust enrichment, a malicious beneficiary shall compensate for any loss incurred in return with interest added thereto (Article 748(2) of the Civil Act). A beneficiary of unjust enrichment shall bear the burden of proof on the part of the claimant’s assertion that the beneficiary of unjust enrichment is bad faith. Here, “ bad faith” refers to recognizing that holding of one’s own interest is not a legal cause, aside from cases where the beneficiary is in bad faith under Article 749(2) of the Civil Act, and holding of that interest does not have any legal cause. That is, it is insufficient to recognize the existence of the elements for the obligation to return unjust enrichment (see, e.g., Supreme Court Decisions 2009Da24187, 24194, Jan. 28, 2010; 2010Da68237, Nov. 15, 2012).

(2) Based on its stated reasoning, the lower court rejected the Plaintiff’s assertion that the Defendant is insufficient to recognize that the Defendant was a malicious beneficiary with respect to the charges paid by the Plaintiffs, and ordered the payment of legal interest accrued after the date of the instant lawsuit, which is considered malicious pursuant to Article 749(2) of the Civil Act.

(3) The allegation in the grounds of appeal purporting to the effect that the above Supreme Court precedents should be modified is merely an independent opinion and cannot be accepted. The remaining grounds of appeal purporting to dispute the fact-finding that led to the above judgment of the court of fact-finding is merely an error of the selection of evidence and the determination of the value of evidence belonging to the free evaluation of fact-finding court, and thus, cannot be accepted. In addition, even if examining the reasoning of the judgment below in light of the above legal principles and the evidence duly admitted, the court below did not err by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules or by failing to exhaust all necessary deliberations, contrary to what is alleged in the grounds

B. Whether the termination is revoked after termination

On December 28, 2012, which was before the filing of the instant lawsuit, the Plaintiff (Appointed Party) terminated the part of KRW 200 million (securities number omitted) of the instant contract and received KRW 223,850,766 of the termination refund money. However, the Plaintiff (Appointed Party) cancelled the entire contract of this case on the ground of mistake after the filing of the instant lawsuit, and on the premise that the Defendant is liable to pay the above KRW 200 million as the beneficiary in bad faith with interest accrued until October 6, 2014 (the difference between the refund money and KRW 23,850,766, which was before the filing of the instant lawsuit) from the above legal interest, under the premise that the Defendant is liable to pay the above KRW 23,850,766 (the difference between the refund money and KRW 200,000). However, as seen earlier, the Defendant’s obligation to pay only the legal interest accrued after the filing of the instant lawsuit is insufficient to acknowledge that the Defendant is a malicious beneficiary.

3. Conclusion

Therefore, all appeals are dismissed, and the costs of appeal are assessed against each party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

[Attachment] List of Appointeds: Omitted

Justices Kwon Soon-il (Presiding Justice)