In a case where Gap's executive director Eul of Gap's community credit cooperatives was dedicated to the budget set as items such as the initial reserve fund with the approval of the president, and Gap's community credit cooperatives sought damages against Eul, the case holding that the judgment below rejected the above request on the ground that it is erroneous in the misapprehension of legal principles, since it is not permissible to pay Gap's community credit cooperatives' merit promotion subsidy by means of budget diversion unlike other general budget items in light of Gap's general budget items.

Article 750 of the Civil Act

Jindo community credit cooperatives (Attorney Lee Dong-dong et al., Counsel for the defendant-appellant)

Defendant

Seoul High Court Decision 2012Na21234 decided December 7, 2012

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

The grounds of appeal are examined.

1. In full view of the admitted evidence, the lower court acknowledged the following facts: (a) during the period from February 23, 2006 to July 5, 2010, the Plaintiff paid 278,329,040 won, including special bonuses, etc., on 18 occasions, to its executives and employees, in a manner that diverts the budget set out in items, such as the initial reserve fund, welfare expenses, and welfare project expenses, for the purpose of promoting achievements; and (b) the Defendant, as a general manager in charge of the Plaintiff’s business, performed the foregoing budget execution with the approval of the president; and (c) recognized the fact that the Defendant received the Defendant’s share in total

Based on the above, the court below determined that, since the Plaintiff’s relevant provision provides for the cases where budget diversion can be made and the procedure thereof, and the provision on remuneration in the form of “business achievement grant”, the payment of special bonus by diverting the budget for other purposes does not meet the requirements of illegality, but constitutes tort only when it fails to meet the requirements and procedures for budget diversion, and that the evidence submitted by the Plaintiff alone cannot be recognized.

2. However, it is difficult to accept the above determination by the court below for the following reasons.

A. Article 53 of the Plaintiff’s Remuneration Regulations provides that the Plaintiff’s bonus shall be paid as an irregular bonus paid according to the annual budget compilation in accordance with the objective profit established in the previous year and the achievement rate of the total target asset return, which is paid after the approval of the general meeting on the settlement of accounts and the budget of the previous year.

According to the above provisions, the incentive for achievement achievement is a special bonus which is organized in advance in the budget and paid with the approval of the general meeting, and its payment requirements and procedures are strictly limited, unlike the general budget items, it shall not be allowed to pay the incentive for achievement achievement in a way of budget diversion, contrary to the general budget items.

B. Meanwhile, the Plaintiff’s business plan and budget compilation guidelines provide that where the budget of “paragraph” is diverted within the same section of the same account, the resolution of the board of directors shall be required, and where the budget of “paragraph” is diverted within the same clause, the chief director may determine the budget.

Therefore, if the budget of "paragraph" is diverted within the same section of the accounts, it is necessary to obtain a resolution from the board of directors separately from the approval of the president.

C. However, the court below rejected the plaintiff's claim for compensation for damages against the defendant on the premise that even if the court paid the incentive for achievement achievement which was converted to the budget for other purposes and was not formulated in the original budget, it does not meet the requirements for illegality itself, and on the premise that there is insufficient evidence to prove that the requirements and procedures for the diversion of budget prescribed in the relevant provisions were not met. The court below erred by misapprehending the legal principles as to the requirements for the payment of the incentive for achievement achievement, which affected the conclusion of the judgment. The ground of appeal pointing this out

3. Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Poe-dae (Presiding Justice)