[1] The method of interpreting Article 45 subparagraph 2 of the Enforcement Rule of the former Act on Acquisition of and Compensation for Land, etc. for Public Works Projects for Business Loss Compensation

[2] In a case where the proprietor of a sports facility business was changed by the transfer or lease of business facilities, but the proprietor discontinues or suspends his/her business due to a public project while operating the business without reporting the change, whether the proprietor’s business is illegal to be excluded from the subject of compensation (negative)

[3] Whether Article 45 subparagraph 1 of the former Enforcement Rule of the Act on the Acquisition of Land, etc. for Public Works and the Compensation therefor includes "a case where a person carries on a business for profit with human and material facilities only at a certain season or for a certain period of time every year" (affirmative)

[1] All citizens’ property rights are guaranteed, and due compensation should be paid for expropriation of property rights due to public works (Article 23 of the Constitution of the Republic of Korea). Accordingly, where business facilities, etc. are expropriated due to the necessity for public works, business losses arising from the discontinuance, etc. of such business shall be subject to compensation as a matter of course, and the law also establishes detailed provisions on the standards, etc. for compensation, or delegates details to subordinate statutes (Article 7 of the former Act on Acquisition of and Compensation for Land, etc. for Public Works (amended by Act No. 8665 of Oct. 17, 2007) (hereinafter “former Act”). However, Article 45 of the former Enforcement Rule by delegation of the Public Works Act (amended by Ordinance of the Ministry of Construction and Transportation No. 556 of Apr. 12, 2007) provides that “where business losses are expropriated due to the necessity of public works projects, it shall not be deemed that a report on business losses ought to be made in accordance with the relevant provisions of the Act and its relevant provisions should not be deemed as unlawful.”

[2] In light of the contents and structure of Articles 10 and 22 of the former Installation and Utilization of Sports Facilities Act (amended by Act No. 838 of Apr. 6, 2007; hereinafter “former Sports Facilities Act”), and Article 25 Subparag. 1 and 4 of the former Enforcement Rule of the Installation and Utilization of Sports Facilities Act (amended by Act No. 174 of Nov. 26, 2007), a person who intends to operate a sports facility business by installing a sports facility under his/her own real estate and leasing the sports facility business to a person who operated the sports facility business shall report the change of the operating entity, along with a lease contract. However, even if the former Sports Facilities Act provides detailed provisions on facility standards, it does not mean that a person who wishes to operate the sports facility business should report the change of the operating entity by installing the sports facility business under his/her own real estate and providing compensation for the sports facility business under the former Installation and Utilization Act, even if the reporting entity cannot be viewed as a legitimate business entity due to the change of the operating entity’s business type and the sports facility business.

[3] Article 45 subparagraph 1 of the former Enforcement Rule of the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects (amended by Ordinance of the Ministry of Construction and Transportation No. 556 of Apr. 12, 2007) provides that "any business that has human and physical facilities and continues to be engaged in profit-making activities at a certain place prior to the date of project approval, etc." shall be subject to business loss compensation. It is reasonable to view that such business is also included in cases where a business is operated for profit-making by having human and physical facilities installed only during

[1] Article 45 subparagraph 2 of the former Enforcement Rule of the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects (amended by Ordinance of the Ministry of Construction and Transportation No. 556 of Apr. 12, 2007) / [2] Articles 10, 11, 22 (see current Article 20), and 30 (see current Article 27), Article 25 (see current Article 21) of the former Enforcement Rule of the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects / [3] Article 45 subparagraph 1 of the former Enforcement Rule of the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects (amended by Ordinance of the Ministry of Construction and Transportation No. 838 of Apr. 6, 2007)

Plaintiff (Attorney Lee E-soo et al., Counsel for the plaintiff-appellant)

Gyeonggi-do et al. (Attorney Lee Jae-soo et al., Counsel for defendant-appellant)

Seoul High Court Decision 2009Nu24223 decided May 28, 2010

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

The grounds of appeal are examined.

1. As to the misapprehension of legal principles as to whether to compensate for business loss for sledding room business

A. All citizens’ property rights shall be guaranteed, and due compensation shall be paid for expropriation of property rights necessary for public works (Article 23 of the Constitution of the Republic of Korea). Accordingly, where business facilities, etc. are expropriated due to the necessity for public works, business losses arising from the discontinuance, etc. of such business shall be subject to compensation as a matter of course, and the law also establishes a detailed provision on the standards, etc. for compensation, or delegates details to subordinate statutes (Article 7 of the former Act on Acquisition of and Compensation for Land, etc. for Public Works (amended by Act No. 8665 of Oct. 17, 2007, which applies to this case). However, the former Enforcement Rule by delegation of the Public Works Act (amended by Ordinance No. 556 of Apr. 12, 2007, Article 45 of the former Enforcement Rule of the Public Works Act) provides that, if a report on business losses is not subject to legitimate permission or reporting, it shall not be deemed that the pertinent provision should be applied to the pertinent business losses in light of the purpose and reporting of the Act.

B. Meanwhile, according to the former Installation and Utilization of Sports Facilities Act (amended by Act No. 8338, Apr. 6, 2007; hereinafter “former Sports Facilities Act”), a sports facility business is classified into a registered sports facility business and a reported sports facility business, and sled into a sled sports facility business subject to the said Act (Article 10). The same applies to a person who intends to operate a reported sports facility business, equipped with facilities meeting the facility standards prescribed by the relevant Act, and filed a report with the competent Mayor, etc., and intends to modify the reported matters (Article 22). The reported matters are prescribed by the former Enforcement Rule of the Sports Facilities Act (amended by Ordinance of the Ministry of Culture and Tourism No. 174, Nov. 26, 2007; hereinafter “former Enforcement Rule of the Sports Facilities Act”) (Article 25), and a report on modification, such as a report on modification, where real estate is owned by another person, shall be accompanied by a report on modification (Article 4).

In full view of the contents and structure of relevant provisions, such as the former Sports Facilities Act, the person who installed a sports facility on his/her own real estate and operated the sports facility business by leasing the facility shall report the change of the main body of the sports facility business to the person who installed the sports facility business.

However, upon examining the statutes related to the former Sports Facilities Act in detail, the facility standards, etc. are stipulated in detail as to the facility facility business, while the facility operator is required to report the sports facility business by being equipped with the facility meeting the standards, not to separately restrict the qualification standards for the operating entity, and there is no provision that can examine the operating entity in the reporting procedure. Rather, even in cases where the existing sports facility business operator transfers his/her business or is changed due to a corporate merger, the succession to the sports facility business is only a provision that succeeds to the matters agreed with the business plan or members on the premise that it is naturally recognized (Article 30 of the former Sports Facilities Act). In light of these provisions, even if the operating entity of the sports facility business was changed by transfer or lease of the business facility, it is not an illegal business that is excluded from compensation for the business loss caused by the business loss.

C. According to the reasoning of the judgment below, the court below determined that the sledding business of this case was not subject to business loss compensation on the ground that it did not report to the competent administrative agency or modify the reported matters, on the grounds as stated in its reasoning, on the ground that the sledding business of this case was reported to the competent administrative agency, and that the Plaintiff did not report to the competent administrative agency or modify the reported matters. Thus, the sledding business operated by the Plaintiff constitutes a case where the Plaintiff did not report in accordance with the relevant Acts and subordinate statutes, and that the Plaintiff

However, in light of the above legal principles, the above judgment below erred by misapprehending the legal principles on the eligibility for business loss compensation under Article 45 subparagraph 2 of the former Enforcement Rule of the Public Works Act, thereby affecting the conclusion of the judgment.

2. As to the compensation, etc. for losses from small wind and recreation business

Article 45 subparagraph 1 of the Enforcement Rule of the former Public Works Act provides that "a business that has human and material facilities installed in a certain place prior to the date of project approval and continues to be for profit-making purposes" as the object of business compensation. It is reasonable to view that this includes cases where a business is operated for profit-making purposes with human and material facilities installed only during a certain season or for a certain period

원심이 인용한 제1심판결 이유 및 원심판결의 이유와 기록에 의하면, 원고는 이 사건 원천랜드에 설치된 각종 유기기구 및 눈썰매장, 체험학습장 등을 일괄 임차하여 이 사건 유원시설업을 영위하면서, 유기기구만을 이용하러 온 개인고객을 상대로 하는 영업과 별도로 봄소풍 및 가을소풍이 실시되는 4월 내지 5월, 9월 내지 10월에 주로 유치원생들을 대상으로 이 사건 원천랜드로 소풍을 와서 유기기구도 이용하고 여러 가지 체험학습(동물과 함께, 물레실습, 모종심어가져가기, 유쾌한 율동, 고구마캐기 또는 밤줍기 등)을 하며 레크리에이션에 참가할 수 있도록 하는 단체고객을 위한 영업 프로그램을 운영하였고, 그 프로그램의 판매수익금은 개인고객을 상대로 한 유기기구 영업수입금 및 눈썰매장만을 이용하는 고객으로 발생한 영업수입과 별도 항목의 매출로 구분하여 관리한 사실, 원고는 위 원천랜드의 영업시설 및 토지가 이 사건 사업으로 수용이 되면서 그 영업손실에 대한 보상을 신청하였는데, 중앙토지수용위원회는 이의재결을 통하여 유기기구 중 안전성 검사대상에 해당하는 유기기구는 관할 행정청의 허가를 받아서 운영하여야 하므로 그 허가 없이 이를 임차하여 운영한 것은 보상대상이 될 수 없고, 유치원 학생 등 단체고객을 상대로 한 소풍 및 레크리에이션 영업 부분은 일정한 장소에서 인적·물적 시설을 갖추고 계속적으로 영업을 한 경우에 해당하지 아니 한다는 이유로 보상에서 제외하고 결국 안전성 검사대상이 아닌 유기기구를 이용한 개인고객 상대의 수익만을 기준으로 영업손실을 보상하도록 결정한 사실을 알 수 있다.

Examining these facts in light of the above legal principles, it is legally permissible unless there are special circumstances, such as that the Plaintiff’s running business is not an independent business in itself, but a separate license is required for running an amusement facility business in such a way as to increase sales of amusement facility business. Moreover, the business part due to attracting collective customers, such as small wind and eke, etc., which is a safety object object, includes the remaining business part using the machine, and various field learning and recreation business parts, even if the Plaintiff excluded the part using the machine as a safety object, which should be seen as included in the scope of compensation for business losses for the Plaintiff’s amusement facility business.

Nevertheless, the lower court, solely on the grounds stated in its reasoning, determined otherwise as follows: (a) it is difficult to view that the business of the above small wind and emull was engaged in the business of temporarily using the existing sledding room facilities; and (b) it is difficult to view that the business was continuously engaged in such business with human and physical facilities separately; and (c) this part of the business is not subject to business loss compensation. In so doing, the lower court erred by misapprehending the legal doctrine on whether the business loss compensation under Article 45 subparagraph 1 of the Enforcement Rule of the former Public Works Act is subject to

3. Conclusion

Therefore, the judgment of the court below is reversed and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Chang-suk (Presiding Justice)