2017Da254891 Revocation of Fraudulent Act

Promotion Enterprises Corporation

Law Firm Hun-Ga, Counsel for the defendant-appellant

Attorney Kim Jae-soo et al.

Defendant 1 and five others

Law Firm Daeho et al., Counsel for the defendant-appellant

Seoul High Court Decision 2016Na2022330 Decided June 30, 2017

June 10, 2021

All appeals are dismissed.

Defendant 3’s request for correction of a party’s indication is dismissed.

The costs of appeal shall be borne by Defendant 3, and the remainder shall be borne by the Plaintiff.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Regarding ground of appeal No. 1

A. Where a truster has trusted a real estate, the right to benefit under the trust agreement held by the truster with respect to the trust real estate constitutes a property that is held by the truster as joint collateral for the general creditors of the truster (see Supreme Court Decision 2016Da20732, Nov. 25, 2016). In a lawsuit seeking revocation of a fraudulent act, calculating active property to determine whether a debtor’s insolvency is performed, the property that has no real value and cannot serve as joint collateral for the claim should be excluded, barring any special circumstances. If the property is a claim, it should be included in active property only where it is reasonably recognized that it is certain to have been repaid easily (see Supreme Court Decision 2012Da11401, Dec. 12, 2013).

In a case where it is reasonably affirmed that a truster can complete the registration of ownership transfer at any time during the existence of a trust, and the truster can complete the registration of ownership transfer in the future, there is room to regard that the truster’s right to claim the registration of ownership transfer concerning the trusted real estate constitutes a responsible property provided by the truster as joint collateral to the general creditors of the truster. However, barring special circumstances, such as where the truster is determined to obtain the consent of the beneficiary in disposing of the trusted real estate under a trust agreement, the truster is not allowed to terminate the trust and complete the registration of ownership transfer concerning the trusted real estate in the future of the truster, unless there are special circumstances, such as that the truster is entitled to obtain the consent of the beneficiary in relation to the disposal thereof. In such a case, the truster’

B. The reasoning of the lower judgment and the evidence duly admitted by the lower court reveal the following.

1) On March 29, 2010, the Plaintiff entered into a contract on the removal of existing facilities, civil engineering works, and structural works, among the construction works of the instant officetel on the five underground floors and the eleventh floor above ground.

2) On December 28, 2012, U.S. Development entered into a sale management trust agreement under the Act on Sale of Building Units (hereinafter “instant trust agreement”) with respect to the instant officetel, and completed the registration of ownership transfer on the ground of a trust in the Asian trust. According to the instant trust agreement, U.S. priority beneficiary is three Nonparty 1, etc., and the second priority beneficiary is the Plaintiff, and subordinate beneficiary is U.S. development.

In order to terminate the trust contract and restore the trust property to the truster in the future during the existence of the trust, the trust contract of this case requires termination upon agreement by all the truster, trustee and priority beneficiary (the main text of Article 26(1) and Article 29(1)5 of the Trust Contract of this case).

3) On July 10, 2013, U.S. entered into a sales contract for each of the instant real estate (hereinafter “instant sales contract”) on July 12, 2013, with the Defendants, the subcontractors of the instant officetel construction project, and the Defendants, instead of the unpaid construction cost, to pay in lieu of the instant officetels construction cost.

4) On July 19, 2013, under the cooperation of Asian trust without the consent of all beneficiaries, including the Plaintiff, U-dong Development terminated the instant trust contract with respect to each of the instant real estate and restored ownership, and completed the registration of ownership transfer to the Defendants on the same day as the instant sales contract was concluded on the same day.

5) Meanwhile, on December 11, 2015, the Plaintiff filed a lawsuit against Yudong Development, and received a judgment from the court on December 11, 2015, stating that “Ydong Development shall pay to the Plaintiff KRW 5,962,830,213 and damages for delay for part of the said amount,” and the said judgment became final and conclusive as it is.

C. We examine the above facts in light of the legal principles as seen earlier.

After concluding the instant sales contract to sell each of the instant real estate to the Defendants, the Defendants completed the registration of ownership transfer in their future with the cooperation of the Asian trust, and completed the registration of ownership transfer in the future of the Defendants. In this process, there is no evidence to deem that the development was attributable to the development of the instant real estate in the future or disposed of to the Defendants, including the Plaintiff, and that it was possible to obtain consent at the time. Therefore, at the time of the instant sales contract, the right to claim the registration of ownership transfer of the instant real estate cannot serve as a joint security for claims because the right to claim the registration of ownership transfer of the instant real estate cannot serve as a joint security for claims because there is no real property value. Accordingly, the said right to claim the registration of ownership transfer or each of the instant real estate cannot be included in the same development. This does not change even if there was a transfer of ownership in the future with respect to each of the instant real estate after the instant sales contract was concluded. This is because the transfer of ownership was made by infringing the rights of senior right holders, including the Plaintiff, and it is unlawful because the value of the right to benefit has

The lower court is justifiable to have determined whether the instant sales contract constituted a fraudulent act on the premise that the right to claim for ownership transfer registration of each of the instant real estate under the current development at the time of the instant sales contract or each of the instant real estate was not included in the responsible property for the current development. In so doing, contrary to what is alleged in the grounds of appeal, the lower

2. Regarding ground of appeal No. 2

A. A truster’s disposal of real estate held by a mortgaged trust constitutes a fraudulent act as an act detrimental to the truster’s general creditors, if the truster’s disposal of real estate held by the trustor as security trust agreement exceeds active property or exceeds liability, by disposing of it to a third party with the consent of the beneficiary and the trustee before the cause for termination of the original trust agreement occurs (see, e.g., Supreme Court Decision 2016Da20732, Nov. 25, 2016). However, if the beneficial interest under the security trust agreement held by the truster is not valuable as active property at the time of disposal, the truster’s sale of the real estate held by the trust agreement as above does not constitute a fraudulent act, and the truster terminates the trust agreement and redeems the real estate to transfer the ownership transfer in the future of the third party.

The same shall also apply where a truster impairs a sale management trust under the Act on Sale of Building Units.

Meanwhile, the value of subordinated beneficial rights to trust property should be assessed by deducting necessary expenses, trust remuneration, etc. from the value of the trust property anticipated at the time when the future trust is terminated, and then at the present price discount after deducting the debts owed to the preferential beneficiary at the time of the fraudulent act. The value of the trust property should not be assessed based on the market value of the trust property at the time of the fraudulent act (see Supreme Court Decision 2012Da1449, Oct. 31, 2013).

B. Based on its stated reasoning, the lower court was justifiable to have determined that the instant sales contract did not constitute a fraudulent act on the grounds that the amount of preferential rights to benefit under the instant trust contract is much higher than the value of each real estate remaining as trust property at the time of the instant sales contract, and therefore, the lower court did not constitute a fraudulent act on the grounds that the amount of preferential rights to benefit under the instant trust contract was much higher than the value of each real estate at the time of the instant sales contract. In so doing

3. Regarding ground of appeal No. 3

Examining the reasoning of the lower judgment in light of the relevant legal principles and records, the lower court did not err in its judgment that rejected the Plaintiff’s assertion of fraudulent act, such as insufficient deliberation due to the non-exercise of right

4. As to the defendant 3's application for correction of the party's indication

On December 26, 2019, the litigation representative of Defendant 3 was pending in the court of final appeal, and Nonparty 2 was regarded as the administrator pursuant to Article 293-6(2) of the Debtor Rehabilitation and Bankruptcy Act (hereinafter “ Debtor Rehabilitation Act”), and filed an application for the correction of the indication of the party.

Although an application for rectification of a party indication may be deemed to have been filed as a request for continuation of a lawsuit under the Debtor Rehabilitation Act, the record reveals the fact that there was a decision to commence a simplified rehabilitation procedure against Defendant 3 on November 21, 2019 after the deadline for filing a statement of grounds for appeal was not timely filed, and when a judgment is rendered without pleading at the same stage, the custodian need not have the custodian take over the proceedings (see Supreme Court Decision 2016Da24228, Jan. 17, 2019).

5. Conclusion

Therefore, all appeals are dismissed, and the application for correction of the indication of parties by Defendant 3 is dismissed. The costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Tae-tae, Counsel for the defendant

Justices Cho Jae-chul

Justices Min You-sook

Justices Lee Dong-won