[1] The case holding that the causal relationship between the negligence of an external auditor who failed to disclose the large-scale window dressing accounting of the company and the investor's purchase of corporate bills is recognized

[2] In a case where an investor claims compensation for damages caused by a false entry, etc. in an audit report against an auditor based on the provisions of Article 197 of the Securities and Exchange Act, the burden of proving the existence of a causal relationship between a false entry, etc. in an audit report and the loss (i.e., proof of the absence of a causal relationship) and the method and degree

[1] Article 750 of the Civil Act, Articles 2, 7-2, and 17(2) of the Act on External Audit of Stock Companies / [2] Articles 15(2) and 197 of the Securities and Exchange Act (repealed by Article 2(1) of the Addenda to the Financial Investment Services and Capital Markets Act, 17(2) and (5) of the Act on External Audit of Stock Companies

[1] Supreme Court Decision 2005Da28082 Decided January 11, 2007 (Gong2007Sang, 270) / [2] Supreme Court Decision 2006Da81981 Decided September 21, 2007 (Gong2007Ha, 1656) Supreme Court Decision 2006Da16758, 16765 Decided October 25, 2007 (Gong2007Ha, 1806)

Co., Ltd. (Law Firm Hannuri, Attorneys Kim Sang-won et al., Counsel for the plaintiff-appellant)

Bill Accounting Corporation (Attorneys Han Han-soo et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2005Na32069 decided May 3, 2006

The appeal is dismissed. The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

1. Regarding ground of appeal No. 1

Examining the reasoning of the judgment below in light of the records, the court below acknowledged the facts as stated in its judgment after compiling the evidence adopted in its judgment, and rejected the defendant's non-performance defense on the ground that the defendant violated his duty of care as an auditor by failing to take any measures against the external audit of the financial statements during the 33th period (from January 1, 2001 to December 31, 2001) of the Copis Co., Ltd. (hereinafter "Copis") in the course of conducting external audit of the financial statements for the fiscal year (hereinafter referred to as "Copis"), and failing to take any measures against the possibility of the illegality and error in the financial statements, or disregarding the financial statements. The court below did not err in the misapprehension of laws and subordinate statutes as to the rules of evidence or the hearing, etc.

2. Regarding ground of appeal No. 2

According to Article 197 of the Securities and Exchange Act and Article 17(2) of the Act on External Audit of Stock Companies (hereinafter “Act”) in order for a third party to file a claim against an auditor for damages due to false statements, etc., the audit report must be used in trust. However, the financial statements of a company and audit report stating the audit result of an external auditor on such financial statements are the most objective data revealing the company’s accurate financial status through the Stock Exchange, etc., and the report is an important basis for assessing the credit rating of corporate bonds and commercial papers issued by the company and determining whether to provide loans to the financial institution. As a result, the same case is extremely different from the case where, even though the company’s equity capital is aware that the amount of window dressing accounts violating the accounting standards is serious in comparison with the size of the company’s equity capital, providing large-scale loans in accordance with the appraisal of corporate bonds or commercial papers based thereon (see Supreme Court Decision 2005Da2882, Jan. 11, 2007).

According to the reasoning of the judgment below, even though the financial status of the Cul harassment is actually 89.99 billion won including the discount of commercial papers, short-term loans, including the discount of commercial papers, were omitted, and its liabilities were less than 80.85 billion won, 9.93 billion won, and its assets were less than 19.36 billion won, and its assets were less than 14.999.3 billion won, and the net income was divided into financial statements with the method of overappropriating the net income amounting to 14.899.9.939 billion won, and each of the above accounts was not known at the time of the purchase of each of the above corporate bills from the financial statements of this case. In light of such formula, it was reasonable to view that the Plaintiff did not know that each of the above corporate bills was purchased from the financial statements of this case, and that each of the above facts was not disclosed at the time of the purchase of each of the above corporate bills.

Although the reasoning of the lower court is somewhat inappropriate, it is justifiable to have determined that the Plaintiff believed that the audit report of this case was duly prepared and published, and that the Plaintiff purchased each of the instant corporate bills of this case in the CoulNS. The lower court did not err by misapprehending the legal doctrine on the causation between the false audit and the purchase of corporate bills, or by violating the Acts and subordinate statutes as to the deliberation, etc. The grounds for appeal on this part are unacceptable

3. Regarding ground of appeal No. 3

Article 15 of the Securities and Exchange Act shall apply mutatis mutandis to the calculation of the amount of damages in cases where an investor claims compensation for damages caused by a false entry, etc. in an audit report against an auditor based on the provisions of Article 197 of the Securities and Exchange Act. Therefore, a bona fide investor is not required to prove the existence of causation between a false entry, etc. in an audit report and the occurrence of damages pursuant to the provisions of Article 15(2) of the Securities and Exchange Act. In order to

Meanwhile, the method of proving "non-existence of causation with respect to damages" under Article 15 (2) of the Securities and Exchange Act is a method of proving that an illegal act, such as false statements in audit report directly at issue, did not have any influence on the occurrence of damages, or that all or part of damages occurred due to other factors than the illegal act, such as false statements in question or indirectly at issue. However, in light of the fact that the Securities and Exchange Act provides for presumption of damages in order to protect investors, unless the person liable to compensate for damages proves the absence of causation between damages and losses, the investor can, in principle, receive statutory estimated amount of damages, unless the person liable to compensate for damages fails to prove the absence of causation between damages. In light of the fact that the value of corporate bills purchased after the illegal act such as false statements in audit report, etc., caused losses, and it is unclear whether the illegal act, etc. of audit report, which caused the decline in value, was revealed, it cannot be deemed that the presumption of damages is broken (see Supreme Court Decision 2006Da16758, Oct. 25, 2007).

According to the reasoning of the judgment below, Co., Ltd. was established on Jan. 8, 2002 as the subsidiary company in charge of the World Cup emblem business on Jan. 8, 2002 in order to meet the business depression during the above period, and invested or lent approximately KRW 2.5 billion in Co., Ltd. which acquired the business license for the World Cup emblem business, but it was difficult to view that the Plaintiff was unable to recover its funds due to the failure of the World Cup emblem business as of May 2002, as of May 24, 2002, due to the lack of repayment capacity for short-term loans of KRW 136 billion, and it was difficult to prove that the Plaintiff was subject to the order of the commencement of the company reorganization procedure on Aug. 21, 2002 as to the non-performing financial statements of this case and the non-performing financial statements of this case after the commencement of the company reorganization procedure on May 21, 2002.

In the same purport, the court below is just in finding the causation between false entry in the audit report of this case and the plaintiff's loss, and calculating the amount of damages by deducting the present value at the time of closing argument in the purchase price of the CP 2 of this case as stated in its reasoning, and there is no error of law such as misapprehension of legal principles as to causation in damages or scope of damages

4. Conclusion

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

Justices Park Si-hwan (Presiding Justice)