[1] In a case where an auditor of a corporation has lent only the name without an intention to perform his/her duties so that the director can prepare and use the window dressing financial statements, etc. so that he/she may cause damage to a third party, whether the auditor is liable to compensate for damage as a result of bad faith or gross negligence (affirmative)

[2] Whether Article 450 of the Commercial Act concerning the cancellation of directors' liability applies to the liability of a third party by directors, etc. (negative)

[3] Whether a non-permanent auditor is exempt from liability for breach of fiduciary duty on the ground of non-permanent audit (negative)

[4] Whether a director or manager of a subsidiary company or an auditor of a parent company who was concurrently in office as an employee maintains the status of the parent company's auditor even after Article 411 of the amended Commercial Act prohibiting such concurrent office (Law No. 5053 of Dec. 29, 1995) was enforced (affirmative)

[5] In a case where a creditor who has several damage claims different from the time of occurrence and the cause of occurrence, etc. with respect to the same debtor claims only a part of them, whether the amount of claim shall be specified for each damage claim (affirmative)

[6] Measures to be taken by the court where the purport of the claim is not specified

[1] Article 414 (2) of the Commercial Act / [2] Articles 401 (1), 414 (2), and 450 of the Commercial Act / [3] Articles 1, 382 (2), 414, and 415 of the Commercial Act, Article 681 of the Civil Act / [4] Articles 411 and 414 (2) of the Commercial Act, Article 2 of the Addenda (29, December 29, 195) / [5] Article 216 of the Civil Procedure Act / [6] Articles 249 and 254 of the Civil Procedure Act

[1] Supreme Court Decision 2006Da82601 Decided February 14, 2008 (Gong2008Sang, 370) / [3] Supreme Court Decision 2007Da60080 Decided December 13, 2007 (Gong2008Sang, 25) / [5] Supreme Court Decision 2007Da5069 Decided October 9, 2008 / [5] Supreme Court Decision 2007Da25865 Decided September 20, 2007 (Gong2007Ha, 1632) / [6] Supreme Court Decision 80Da2904 decided September 8, 198 (Gong1981, 14324)

Korean Bank and six others (Law Firm Geosung, Attorneys Hawon-won et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 201Na14488 decided May 1, 2012

Defendant 1 and 2 others (Attorney Gyeong-soo et al., Counsel for the defendant-appellant)

Defendant 4 (Law Firm Gyeong, Attorney Cho Jong-soo, Counsel for defendant-appellant)

Seoul High Court Decision 2006Na4993 decided June 21, 2007

Of the judgment of the court below, the part against Defendant 1 and 2 against the remainder of the plaintiffs except for Kim Jae-gu, Kim Jae-gu, Kim Jae-gu, and the Korea Deposit Insurance Corporation, the litigation taking over the lawsuit of the Korea Deposit Insurance Corporation, is reversed, and this part of the case is remanded to the Seoul High Court. The appeal by Defendants 4, 3, and the appeal by Defendants 1 and 2 against the bankruptcy trustee of the Korea Federation, Kim Jae-gu, Kim Jae-gu, the litigation taking over the lawsuit of the Korea Deposit Insurance Corporation, and against the bankruptcy trustee who is the taking over the lawsuit of the Korea Deposit Insurance Corporation. All appeals by Defendants 4 and 3 are dismissed. The costs of appeal by Defendants 4 and 3 are assessed against the same Defendants, Kim Jae-gu, the bankruptcy trustee of the Korea Federation of the Korea Deposit Insurance Corporation, the taking over the lawsuit of the Korea Deposit Insurance Corporation, Kim Jae-gu, the bankruptcy trustee of the Korea Deposit Insurance Corporation, and the costs of appeal against the Korea Deposit Insurance Corporation, which is the taking over the lawsuit of the Korea Deposit Insurance Corporation, shall be corrected by the plaintiffs.

The grounds of appeal and incidental grounds of appeal are examined.

1. As to the ground of appeal

(a) Whether the settlement of accounts for the fiscal year 195 and 1996 is divisible;

In full view of the selected evidence, the lower court acknowledged the fact that, according to the order of the co-defendant of the first instance trial, Defendant 2, etc., a director of the same company (hereinafter referred to as “Dong Construction”) prepared a false financial statement as if the net income had occurred at the time of settlement of accounts, despite the occurrence of a net loss equivalent to KRW 13.62 billion in the fiscal year 1995 and KRW 32.839 billion in the current net income at the time of settlement of accounts, despite the occurrence of a net loss equivalent to KRW 168.66 billion in the fiscal year 1996, and even if there was a net loss equivalent to KRW 20.6 million in the current net income at the time of settlement of accounts, the lower court prepared a false financial statement as if the net income at the time of settlement of accounts had occurred.

In light of the records, this fact-finding by the court below is just and acceptable, and there is no illegality of misconception of facts due to violation of the rules of evidence as otherwise alleged in the ground of appeal.

(b) Whether it is legitimate to account as an asset for financial expenses for redevelopment or reconstruction projects in the fiscal year 195, 1996;

The lower court rejected Defendant 1 and 2’s assertion that, in light of the aforementioned 95 and 196’s authoritative interpretation of financial statements for each of the above 196 fiscal years, the construction cost of KRW 460,000,000,000 for the fiscal year 196 and KRW 50,000,000,000 for assets acquired from the 196 fiscal year to the 196 fiscal year’s authoritative interpretation of the Act on External Audit of Securities and Exchange (hereinafter “Financial Accounting Standards”). The 9 fiscal year’s 9 fiscal year’s 9 fiscal year’s 9 fiscal year’s 9 fiscal year’s 9 fiscal year’s 9 fiscal year’s 9 fiscal year’s 9 fiscal year’s 9 fiscal year’s 6 fiscal year’s 9 fiscal year’s 9 fiscal year’s 9 fiscal year’s 9 fiscal year’s 6 fiscal year’s 9 fiscal year’s - fiscal year’s - interest rate on the 9 fiscal year’s 9 fiscal year’s 9 fiscal year’s - fiscal year’s -

In light of the records, the court below's measures are just and acceptable, and there is no error of law such as incomplete deliberation, misconception of facts due to violation of laws and regulations on the rules of evidence, misunderstanding of legal principles as to the corporate accounting standards, etc., as otherwise

(c) Whether the actual asset size of East Asia has exceeded its liabilities;

The court below rejected the allegation by the defendant 1 and 2 that "the company's financial status at the time of this case was above 1.2 billion won since the actual asset value, such as the balance sheet of usage fees of the Kucuk Tunnels, Kimpo-be, and 20 real estate, which was paid by the ASEAN Construction from Busan Metropolitan City at the time of settlement of accounts for the fiscal year 195 and 1996, was much more than the amount appropriated in the financial statements, and considering the actual asset value, the company's financial status at the time of this case was more than 1.2 billion won in the asset amount." The company's financial status at the time of this case was evaluated as the attempted profit accrued in the year 1996 in the Chang-dong apartment site and appropriated it as the construction profit and the outstanding amount of sale, which was just the future value, was inconsistent with the corporate accounting standards, and there was no evidence to prove that the total amount of the company's financial status at the time of this case was less than the total market value of the real estate, such as changes in the external market value.

In light of the records, the court below's measures are just and acceptable, and there is no error of law such as misunderstanding of facts, corporate accounting standards, or misunderstanding of legal principles concerning corporate assets and liabilities due to violation of the rules of evidence, as otherwise alleged in the ground of appeal.

D. Whether there exists a proximate causal relationship between the window dressing of East Asia Construction and the plaintiffs' lending of loans

The court below rejected the plaintiffs' assertion that " there is no proximate causal relationship between the window dressing accounting and the plaintiffs' loans or payment guarantee since the plaintiff's offering of loans to East Asia was not merely a large-scale evaluation of financial statements, but because it was evaluated based on comprehensive consideration of the non-financial situation, etc.," according to its adopted evidence, it is recognized that the plaintiffs trusted the window dressing financial statements at the time of the decision to grant loans or guarantee payment to East Asia and used them as important and critical material for the examination, such as loans, etc., and that the window dressing size of East Asia has reached the degree of causing questions about the company's financial soundness and stability, and that it would not be deemed that the plaintiffs would not provide such loans if they had been fully aware of such circumstances at the time of providing loans or guarantee payment, and that there was no significant causal relationship between the company's credit rating institution's financial soundness and the company's financial soundness evaluation as a result of the window dressing accounting, and that it would be reasonable to recognize that it would have reached the most significant causal relationship between the company's credit evaluation institution's financial soundness and the financial soundness of the company's financial statements.

In light of the records, the court below's measures are just and acceptable, and there is no error of law such as incomplete deliberation, misconception of facts due to violation of laws and regulations on the rules of evidence, or misapprehension of legal principles as to causation, as otherwise alleged in the ground of appeal.

E. Whether there exists a proximate causal relationship between the plaintiffs' damages and the window dressing accounting of this case

The court below rejected Defendant 1 and 2's assertion that "If the company's assets were sufficiently capable of repaying their debts, such as loans, etc., but the management appointed by the bond group had an opportunity to get repayment of their debts due to business errors, such as selling the assets of East Asia Construction at a intermittent value, etc., and the company's company reorganization procedure was abolished due to a failure in corporate value assessment, etc., but the company's corporate reorganization procedure was not operated due to a failure in corporate value assessment, and losses were incurred due to neglecting the company's bankruptcy due to the failure to cope with the above circumstances, and thus, there was no proximate causal relation between losses and the company's window dressing accounts." Accordingly, the court below rejected the plaintiffs' claim that was sold by the company management by the bond group because of the lack of sufficient financial capability to meet the total amount of loans, etc., and the possibility and increase in market value of the loans were considerably affected by the external circumstances of the competent administrative agency, such as permission for the change in the size and purpose of use of the land, and it was difficult to recognize that the company's liquidation condition will continue to be recovered.

In light of the records, the court below's measures are just and acceptable, and there is no error of law such as misconception of facts against the rules of evidence as alleged in the grounds of appeal.

F. Whether Defendant 1 and 2 breached their duties

(1) After compiling the adopted evidence, the court below found facts as stated in its reasoning, and found that Defendant 2 conspired with the representative director or the director, the director, the co-defendant 2 of the court of first instance, and the co-defendant 2 of the court of first instance, the co-defendant 6 of the court of first instance, who is in charge, ordered the execution of window dressing accounts, thereby making false statements and financial statements for the fiscal year 1995 and the fiscal year 196 public. The court below determined that this constitutes a case where a director neglected his duties by intention or gross negligence.

In light of the records, this fact-finding and judgment of the court below is just and acceptable, and there is no error of law such as misconception of facts against the rules of evidence or misunderstanding of legal principles as to directors' liability to a third party, as otherwise alleged in the ground of appeal.

(2) In a case where an auditor of a stock company, without any intention to perform his duties as an auditor, lends his name to a director in a manner such as leaving his seal to a director without any interference or supervision, makes a false statement on the financial statements, etc., and where the auditor implieds or neglects to cause damage to a third party who is the counterparty, using such detailed financial statements, etc., the auditor constitutes a failure to perform his duties in bad faith or gross negligence, and thereby, is liable to compensate for the damage inflicted on the third party (see Supreme Court Decision 2006Da82601, Feb. 14, 2008, etc.).

In the same purport, the court below is just in holding that Defendant 1 neglected his duties as an auditor by neglecting to prepare and disclose false financial statements in the fiscal year 1995 and fiscal year 1996 due to gross negligence without performing his duties as an auditor of Dong Construction, and there is no error in the misapprehension of legal principles as to the liability of the auditor to a third party as otherwise alleged in the ground of appeal.

(g) Whether or not to release liability under Article 450 of the Commercial Act;

Article 450 of the Commercial Act provides for the liability of directors, etc. to a third party without any other resolution within two years after the general meeting of shareholders approves financial statements, etc., which provides that the company shall be deemed to discharge its liability to directors and auditors.

In the same purport, the court below is just in holding that the above provision cannot be applied to the plaintiffs who are not a company but a third party who is not a company, and that the above provision shall not be applied to the company, and contrary to the allegations in the grounds of appeal, there are no errors in the misapprehension of legal principles as to Article 450 of the Commercial Act.

(h) Existence of commercial customs with respect to non-permanent auditors’ performance of duties;

In our Commercial Act, it does not stipulate that non-permanent auditors shall be mitigated from their duties and responsibilities compared to regular auditors, and it is not recognized that non-permanent auditors have a non-permanent auditor and have a non-permanent auditor in Korea to perform the duties of auditor only. Thus, the assertion that non-permanent auditors are not responsible for the violation of the duty of care as non-permanent auditors is not permissible (see Supreme Court Decision 2007Da60080, Dec. 13, 2007).

In the same purport, the court below is justified in rejecting the above defendant's assertion that "Defendant 1, as a non-permanent auditor of Dong Construction, did not perform his duties as an auditor at the time of settlement of accounts for the fiscal year 1995 and 1996, and therefore is not responsible for compensating for damages arising from the settlement of accounts for each fiscal year," and there is no error in the misapprehension of legal principles as to the existence of commercial customs or non-permanent audit, as alleged in the grounds of appeal

(i) Whether concurrent offices are prohibited pursuant to Article 411 of the Commercial Act;

Article 411 of the Commercial Act (Act No. 5053) which was amended on December 29, 1995 and enforced on October 1, 1996 provides that auditors shall not concurrently perform the duties of directors, managers, or other employees of the company concerned as well as its subsidiaries. Article 2 of the Addenda provides that "This Act shall also apply to matters arising before this Act enters into force except as otherwise provided in this Act: Provided, That this shall not affect the effects arising from the previous provisions, unless otherwise provided in this Act." Thus, prior to the enforcement of the Commercial Act, the status of persons appointed as auditors of the parent company, directors, managers, or other employees of their subsidiaries and concurrently hold both positions shall lose its effect by the proviso of Article 2 of the Addenda of the Commercial Act, and thus, if they have neglected to perform the duties of auditors due to bad faith or gross negligence, they shall be held liable.

According to the reasoning of the judgment below, the court below held that the claim seeking exemption from liability for damages arising from the breach of duty cannot be permitted under the principle of good faith, on the ground that Article 411 of the amended Commercial Act, which prohibits a subsidiary director from holding an office concurrently and the parent company's auditor's position was enforced, and that the pertinent auditor is not liable for damages to a third party if he/she fails to perform his/her duties and fails to perform his/her duties at all even when he/she violated the above provision, and that Article 411 of the amended Commercial Act was enforced.

In light of the above legal principles, although there is a somewhat inappropriate aspect in this part of the judgment below's explanation, the judgment of the court below that recognized Defendant 1's liability for damages as an auditor is justified as a result, and there is no error of law that affected the conclusion of the judgment by misunderstanding legal principles as to

2. As to the grounds of incidental appeal

According to the reasoning of the judgment of the court below, the court below acknowledged the facts after compiling the adopted evidence and found that deposit of relative uncertainty is possible on the ground that the party against whom the right to claim the cancellation of the registration of ownership is not known if there is a dispute over the ownership of the land subject to expropriation. In this case, if there is a provisional disposition against the right to claim the cancellation of the registration of ownership due to the cancellation of fraudulent act as a preserved right, the provisional disposition holder is in the position of creditor against the previous owner and does not directly dispute that the ownership belongs to the provisional disposition holder. Furthermore, if the deposited person is not actually paid the dividends due to the provisional disposition prohibiting the creditor collection, the method of restitution following the exercise of the right to claim the payment of deposit acquired by the beneficiary should not be immediately order the beneficiary to pay the dividends to the debtor, but the creditor seeking the cancellation of the right to claim the payment of the deposit should not be deemed to have a position to seek the confirmation of the right to claim the payment of deposit. Accordingly, the court below's rejection of the relative grounds of appeal against the plaintiff Deposit Insurance Corporation's relative.

3. Ex officio determination

Even if a creditor has several damage claims against the same debtor, so long as the damage claims are separate claims that differ from the time when the damage claims accrue and the cause thereof, they constitute separate subject matters of lawsuit, and each of these damage claims may different defenses asserted by the debtor. Thus, the creditor seeking this lawsuit must specify the amount of the claim by each damage claim, and the court should also specify the amount of the claim by each damage claim. This legal principle also applies where the creditor claims only part of several damage claims (see, e.g., Supreme Court Decisions 2007Da25865, Sept. 20, 2007; 2007Da5069, Oct. 9, 2008). In addition, in a civil lawsuit, the purport of the claim should be clearly specified so that the content and scope of the claim can be clearly identified, and where the purport of the claim is not specified, the court shall ex officio order the defendant's objection, regardless of whether it has raised such objection, and the court shall dismiss the lawsuit ex officio.

According to the records, the plaintiffs' claims against each of the plaintiffs 1 and 2, excluding Kim Jae-gu, Kim Jae-gu, and the Korea Deposit Insurance Corporation (hereinafter "the plaintiff's comprehensive financial trustee in bankruptcy"), which is the lawsuit taking over against the plaintiff's bankrupt Kim Jae-gu, Kim Jae-gu, and the Korea Deposit Insurance Corporation (hereinafter "the plaintiff's comprehensive financial trustee in bankruptcy"), for part of the total amount of damages claimed by each of the plaintiffs' damage claims except for the plaintiff's comprehensive financial trustee in bankruptcy, the court below ordered correction to specify specific claims by each of the plaintiffs' damage claims except for the plaintiff's comprehensive financial trustee in bankruptcy, and dismissed the lawsuit if the plaintiff's claims are not complied with. However, without taking such measures, the court below determined the amount of the award without specifying the amount of the award by each damage claim

Therefore, the above measures by the court below are erroneous in the misapprehension of legal principles as to the specification of the purport of the claim, which affected the conclusion of the judgment, and since the illegality of the purport of the claim makes it impossible to render the judgment on the merits of the claim, the above reasons can be determined by the court ex officio, even

4. Conclusion

Therefore, the part of the judgment of the court below against Defendant 1 and 2 is reversed, and that part of the case is remanded to the court below for further proceedings consistent with this Opinion. All of the appeals by Defendants 4, 3, and 1 and 2 against Defendant 1 and 2, the appeals by Defendants 4, 3, the costs of appeal by Defendants 1 and 2 against the National Finance Trustee of the Bankrupt country, the costs of appeal by Defendants 1 and 2, the costs of appeal by Defendants 1 and 2 against the National Finance Trustee of the Bankrupt country, and the costs of appeal by Defendant 4, 3, the costs of appeal by Defendant 1 and 2 against the National Finance Trustee of the Bankrupt country, and the costs of incidental appeal are

Justices Park Si-hwan (Presiding Justice)