[1] The meaning of "other improper means" among "when a person receives subsidies by other improper means" under Article 9 (2) 7 of the Seoul Special Metropolitan City Ordinance on the Financial Support for Private Schools enacted upon delegation of Article 43 (1) of the Private School Act, and the scope of "when the person received subsidies by improper means"

[2] In a case where Party A applied for subsidies for financial deficiencies under the Seoul Special Metropolitan City Ordinance on Financial Support for Private Schools and received subsidies calculated including personnel expenses for the principal in violation of Article 54-3(3) of the Private School Act by including a person who is unable to be appointed as a lineal descendant of the principal of the school in the current number of teachers, the case holding that Party A’s application for subsidies and receipt of subsidies constitutes “when it received subsidies by other improper means” under Article 9(2)7 of the above Ordinance

[1] Article 43 (1) of the Private School Act / [2] Articles 43 (1) and 54-3 (3) of the Private School Act

Academ Private Teaching Institutes (Attorney Kim Young-chul, Counsel for defendant-appellant)

The superintendent of the Office of Education (Law Firm Yang Jae, Attorneys Choi Byung-mo et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2011Nu20903 decided December 2, 2011

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

For the reasons indicated in its holding, the lower court determined that the Plaintiff, a school juristic person, should be deemed to have received the instant subsidy, on the grounds that the Defendant, as a school juristic person, directly supported the principal for efficient support, and directly provided the principal in accordance with the Plaintiff’s application for such support.

Examining the evidence duly admitted the reasoning of the lower judgment and Article 43 of the Private School Act and Article 3 of the Seoul Special Metropolitan City Ordinance on Financial Support for Private Schools (hereinafter “instant Ordinance”), in light of the provisions of relevant statutes and municipal ordinances, the lower court did not err in its judgment by misapprehending the legal doctrine regarding the grant of subsidies to private schools or by exceeding the bounds of the principle of free evaluation of evidence in violation of logical and empirical rules

2. As to the fourth ground for appeal

A. Article 43(1) of the Private School Act provides that, if the State or a local government deems it necessary for the promotion of education, a school juristic person or a private school support organization that has applied for subsidies may grant subsidies or provide other support as prescribed by Presidential Decree or Municipal Ordinance of the relevant local government for the support of private school education. Article 4 of the same Ordinance enacted upon delegation provides for a school juristic person or a private school support organization that has applied for subsidies as one of the projects eligible for subsidies by the superintendent of the relevant office of education, and Article 5 provides that the superintendent of the relevant office of education shall notify the institution eligible for subsidies of each year and submit an application for subsidies, and stipulates that the superintendent of the relevant office of education shall review such application and determine whether to grant subsidies (hereinafter referred to as “subsidies for financial deficiencies”). Article 9(2) of the same Ordinance provides grounds for allowing the superintendent of the relevant office of education to fully or partially return the subsidies to the institution eligible for subsidies, and provides for the “when the school juristic person has received subsidies by other improper means” as one of the reasons.

The term "other improper means" refers to all affirmative and passive acts that are deemed unfair by social norms, even though they are unable to receive subsidies under the Private School Act and the Municipal Ordinance of this case, which may affect the decision-making on the grant of subsidies, and the term "when receiving subsidies by improper means" means not only cases where subsidies are received for affairs or projects which are not subject to the grant of subsidies, but also cases where subsidies are granted in excess of the reasonable amount to be granted for the relevant project due to the receipt of subsidies, including items of expenses that do not meet the purpose of specific support criteria prescribed by statutes and Municipal Ordinance.

Meanwhile, the main text of Article 54-3(3) of the Private School Act provides that the president of a school juristic person and a person who has a relationship falling under any one of the following subparagraphs, i.e., spouse (title 1), lineal ascendants and descendants, and their spouses (title 2) shall not be appointed to the head of a school established and operated by the school juristic person concerned, and the proviso of Article 54-3(3) provides that approval of more than 2/3 of the fixed number of directors and approval of the competent agency (hereinafter “approval of the competent

B. According to the reasoning of the lower judgment and the evidence duly admitted, ① the application for and decision to grant subsidies was made in March every year, and the period of subsidization was set from March 1 of each year to February 28 (or February 29) of the following year; ② the Plaintiff, an educational foundation under the Private School Act, applied for the grant of subsidies to the Defendant from March 2008 to March 2010, and received the subsidies; ③ the Defendant, the Nonparty, his father’s father, was appointed as the principal of a high school established and operated by the Plaintiff as the Plaintiff on March 1, 2008, on the ground that the Nonparty, who was the principal of the high school established and operated by the Plaintiff, was provided with subsidies without approval from the competent authorities, falls under the grounds for restriction on appointment, and thus, constitutes a ground for restriction on appointment, and thus, the Plaintiff did not return the subsidies to the Nonparty’s principal during the period from March 1, 2008 to November 28, 2010.

C. Examining these facts in light of the legal principles as seen earlier, at the time of applying for subsidies during the said period, the Plaintiff applied for subsidies by including the person who is unable to be appointed to the principal as a lineal descendant of the president of a school juristic person in violation of Article 54-3(3) of the Private School Act in the current number of teachers, and accordingly, received subsidies calculated in addition to the personnel expenses for the principal. Accordingly, the Plaintiff may be deemed to have received subsidies including expenses that do not comply with the contents and purpose of the support project and the purpose of the support project prescribed by the Private School Act and the Ordinance of this case, so this constitutes “when the Plaintiff received subsidies by other improper means” as prescribed by Article 9(2)7

Although the reasoning of the court below is insufficient, the court below's determination that receiving labor expenses from the non-party who is not the principal lawfully appointed by the plaintiff constitutes "when receiving subsidies by improper means" as provided by Article 9 (2) 7 of the Ordinance can be seen to the same purport. Contrary to the allegations in the grounds of appeal, the court below did not err by misapprehending the legal principles on the interpretation of the Ordinance concerning the grounds for return of subsidies, thereby affecting the conclusion of the judgment.

3. As to grounds of appeal Nos. 3 and 4

For the reasons indicated in its holding, the lower court determined that (1) the Defendant’s disposition of return of the instant subsidy was unlawful on the ground that (2) the Defendant’s disposition of return of the instant subsidy did not violate the principle of good faith or the principle of trust protection, on the ground that (3) the Plaintiff could not be deemed to have granted the Plaintiff the trust that the Plaintiff would not have obtained approval even without obtaining approval, and (4) the Defendant’s disposition of return of the instant subsidy did not violate the principle of trust and good faith or the principle of trust protection, on the ground that (2) the disposition of return of the instant subsidy has the characteristics of sanctioning the Nonparty’s application based on false facts or unfair means; and (3) the Nonparty’s disposition of return of the instant subsidy cannot be deemed unlawful on the ground that the Plaintiff’s lineal descendant of the president of the educational foundation was aware that he could not be appointed as the principal unless he was approved by the competent authorities, and in light of the various circumstances indicated in the record, including the circumstances where the Plaintiff asserted

Examining the reasoning of the lower judgment in light of the relevant statutes and legal principles as seen earlier and the evidence duly admitted, the lower court did not err in its judgment by misapprehending the legal principles on the protection of trust and good faith in administrative disposition, the principle of prohibition of self-reliance, the principle of appropriation of the cost of duties, and the deviation and abuse of discretion, etc., contrary to what is alleged in the grounds of appeal.

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 on the bench.

Justices Kim So-young (Presiding Justice)