Large Gyeong General Construction Co., Ltd. (Law Firm Ham Co., Ltd., Counsel for the plaintiff-appellant)

Jinju Market (Law Firm Geum River, Attorneys Stabilization-hwan et al., Counsel for the plaintiff-appellant)

May 21, 2013

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

The imposition of enforcement fines of KRW 604,907,200 against the Plaintiff on October 15, 2012 shall be revoked.

1. Details of the disposition;

The following facts can be acknowledged by taking into account the following facts: Gap evidence 1-1-3, Gap evidence 4-1-3, Gap evidence 5-1-38, Gap evidence 7-1-41, Eul evidence 3-2 and the whole purport of the arguments.

A. On December 2003, the Defendant announced that four districts, including 152,000 square meters, shall be promoted as a housing site development area according to the increase in housing demand.

B. The Plaintiff, a juristic person engaged in civil engineering and construction business, etc., purchased each real estate listed in the separate sheet No. 1 (hereinafter “instant land”) from the owner of the instant land in the name of Nonparty 1, Nonparty 2, Nonparty 3, and Nonparty 4 (hereinafter “the above four persons”) who are specially related parties, such as the Plaintiff’s director, from March 2004 to September 207, to make a proposal for designating an urban development zone of 96,264 square meters, which is part of 212,157 square meters, among the total area of 141 square meters in Jinju-si and 141 square meters, and to be designated as the implementer. The Plaintiff completed the registration of ownership transfer on the instant land.

C. On May 17, 2010, the Defendant notified the Commissioner of the Gwangju Regional Tax Office of the violation of the Plaintiff’s Act on the Registration of Real Estate under Actual Titleholder’s Name (hereinafter “Real Estate Real Name Act”). On July 27, 2010, the Defendant issued a disposition imposing a penalty surcharge of KRW 1,212,918,40 (i.e., total standard market price 6,064,592,00 x 20%) on the ground that the Plaintiff violated the Plaintiff’s obligation to register a real estate owner under a title trust agreement, and on the ground that “the Plaintiff violated the obligation to register a real estate owner under a title trust agreement,” and on July 27, 2010, imposed a penalty surcharge of KRW 1,212,918,400 (i.e., the standard market price 6,064,592,000 x 20%) on the instant land. However, the Plaintiff’s judgment dismissing the Plaintiff’s claim on April 21, 201,

D. Based on the provisions of Article 6(1) and (2) of the Real Estate Real Name Act, on September 20, 2012, the Defendant issued a disposition imposing enforcement fines of KRW 604,907,200, which is 10/100 of the appraised value of the instant land, on the ground that the Plaintiff did not register the instant land in its own name, even though the Plaintiff was imposed a penalty surcharge on the Plaintiff on September 20, 2012, on the ground that the said land had not been registered within one year from the day when the judgment of revocation of the disposition imposing

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

For the following reasons, the instant disposition that deemed the Plaintiff to have the obligation to real name registration was unlawful.

1) The Plaintiff concluded a contract title trust agreement with Nonparty 1, etc., purchased it from the owners of the instant land, and completed the registration of ownership transfer in the name of Nonparty 1, etc. at the time of the purchase. At the time of the purchase, the seller of the instant land was unaware of the existence of the said contract title trust agreement. Therefore, since the change in the real right to the instant land is valid, the Plaintiff is not obligated to register the instant land in its name pursuant to the proviso

2) Even if the seller was aware of the contractual title trust agreement at the time of the purchase, in such a case, the change in real rights becomes null and void, and the ownership of the instant land remains to the seller. As such, the Plaintiff, the title truster, has no right to seek the registration of ownership transfer concerning the instant land against Nonparty 1, the title trustee, or the seller, and thus,

3) In addition, since the land category of this case is farmland before or after the land category falls under farmland, it is legally impossible for the Plaintiff, not an agricultural corporation, to register the land of this case in its name.

4) Therefore, the Plaintiff’s failure to register the instant land in its own name constitutes “where it falls under the proviso of Article 4(2) of the Real Estate Real Name Act” or “where there is a justifiable reason not to register in its own name” under the proviso of Article 6(1) of the Real Estate Real Name Act, and thus, the Plaintiff is not obligated to register the instant land in its own name.”

B. Relevant statutes

Attached Form 2 shall be as listed in attached Table 2.

C. Determination

1) The following circumstances revealed by the fact that the Plaintiff entered into a title trust agreement with Nonparty 1, etc. on the form of the instant land, namely, the Plaintiff purchased the instant land in order to propose the Defendant to designate the instant project zone and to be designated as an implementer; in this process, the Plaintiff entered into a sales contract with the seller of the instant land in the name of Nonparty 1, etc. who is a related party, such as the Plaintiff, even though the Plaintiff was the actual owner due to the provision on the restriction on farmland ownership under the Farmland Act, and completed the registration of ownership transfer under the name of Nonparty 1, etc., and Nonparty 1, etc., who is a related party, such as the Plaintiff’s director, etc., entered into a sales contract with the seller and completed the registration of ownership transfer under the intention to later transfer the ownership of the instant land, and completed the registration of ownership transfer under the name of Nonparty 1, etc., it is reasonable to deem that the Plaintiff entered into a title trust agreement with Nonparty 1, etc. as the Plaintiff, etc.

2) Next, as evidence that the seller of the instant land knew of the above title trust agreement at the time of sale, there was a fact-finding certificate (No. 6-1 through No. 18) prepared by some of the seller of the instant land as to whether the seller of the instant land knew of the above title trust agreement, but each of the above facts-finding certificates is difficult to believe it as is in light of the time, process and form of preparation, and there is no other evidence to acknowledge it.

Rather, as seen earlier, according to the increase in housing demand on December 2003, the Defendant publicly announced 4 districts including 152,000 square meters as housing site development area: (a) according to the purport of evidence Nos. 5-7 through 13, 17 through 23, evidence Nos. 7-1 through 41, and evidence Nos. 2-1 and 2-2; and (b) pursuant to the purport of the entire pleadings, the land of this case is adjoining to 4,00,00 won; (c) as at the time of the sale of the land of this case, the seller entered the land of this case in the name of the non-party No. 4 in the name of the non-party No. 6, the non-party No. 4, the non-party No. 5, the non-party No. 6, the non-party No. 1, who purchased the land of this case in the name of the non-party No. 3, the non-party No. 4, and the non-party No. 6. 5.

According to the above facts, since the seller of the land of this case was aware that the land of this case can be developed as the housing site from before the conclusion of the sales contract, according to the public notice of the Jin-si, and the plaintiff proposed that most of the land of this case (38 parcels out of 41 parcels) will be purchased in the name of Nonparty 1, the same person after the public notice of Jin-si was made at the time of Jin-si, it is reasonable to view that the above seller could have sufficiently known the purchaser and the purchaser at the time of selling the land of this case to Nonparty 1, etc., and it is reasonable in social norms that Nonparty 1, etc. were related to the plaintiff's director at the time of the conclusion of the above sales contract, etc., and that the plaintiff purchased the land of this case in order to promote the housing site development project. Accordingly, considering all circumstances related to the purchase of the land of this case, it is reasonable to view that at the time of sale as the seller of the land of this case was the purchaser under the name of this case, and that the plaintiff purchased the land of this case.

3) In the case of a contract title trust, the Plaintiff’s assertion that the real estate seller does not bear the obligation to real name registration on the instant land even if the real estate seller knew of the title trust agreement

A) Legislative purpose of the Real Estate Real Name Act

According to Article 1 of the Real Estate Real Name Act promulgated on March 30, 1995 and enforced on July 1, 1995, the purpose of the same Act is to “the contribution to the sound development of the national economy by preventing anti-social acts, such as speculation, evasion of taxes, evasion of laws, etc. which abuse the real estate registration system, and by promoting the normalization of real estate transactions and the stabilization of real estate prices, by having ownership and other real rights to real estate registered under the name of the actual right holder so as to conform to the

B) Purport of the penalty surcharge and enforcement fine system

Article 4(1) and (2) of the Real Estate Real Name Act provides that any change in real rights pursuant to a title trust agreement is null and void in principle, but exceptionally, the change in real rights pursuant to a contract title trust agreement, which is the bona fide of a seller, is valid. According to this, registration made in the name of the remaining title trustee except for the title trust, which is the bona fide of a seller, constitutes a bad-faith registration that does not fit with the substantive relationship. Therefore, the title truster, who caused the disparity between substantive rights and registration, has the obligation to resolve the inconsistency between the substantive rights and the title trustee’s registration by restoring

As above, the Real Estate Real Name Act provides for a system to punish a title truster and impose and collect penalty surcharges on him/her in order to enforce the performance of the obligation of real name registration under the Real Estate Real Name Act. However, even after punishment and imposition and collection of penalty surcharges, where the title truster fails to perform the obligation of real name registration, it may occur if he/she fails to perform the obligation of real name registration. In such a case, if there is no other method to compel a person who fails to perform the obligation of real name registration, and there is no other method to compel him/her to continue to perform the obligation of real name registration, once the person subject to punishment or imposition of penalty surcharges on one occasion, the person subject to a violation of the Act does not intend to perform the obligation in the future. In this case, the performance of the obligation becomes no means to enforce it, and ultimately, the purpose of the Real Estate Real Name

Accordingly, the Real Estate Real Name Act provides the imposition system of non-performance penalty, separate from the penalty surcharge system, in order to enforce the obligation of real-name registration, except in the case of a bona fide contract title trust, the registration of which is consistent with the substantive legal relationship, and the case of a statutory or de facto justifiable reason that cannot perform the obligation of real-name registration

C) Feasibility of imposing enforcement fines on title trust under a seller’s bad faith

Therefore, inasmuch as a registration has been made under the name of a title trustee under a contract title trust by the seller’s bad faith, as long as such registration is inconsistent with the substantive rights as to real estate, the title truster bears the obligation of real name registration as in other title trust in principle. However, only if there exist justifiable grounds as seen earlier, the obligation of real name registration is exempted. In addition, in light of the purpose of the Real Estate Real Name Act, penalty surcharge, and the purport of the enforcement fine system, the title truster’s obligation of real name registration, which caused the said bad registration, is not necessarily presumed to be premised on the possession of the right to claim the registration concerning the relevant real estate. In reality, if the registration is possible under the name of the title truster, it is

D) Whether the Plaintiff’s actual name registration obligation exists

As seen earlier, the title trust on the land of this case constitutes a contract title trust with the seller's bad will, but it is difficult to see that the enforcement fine is exempted solely by such fact, and there is no other evidence to prove that there is any justifiable reason to exempt the enforcement fine (the plaintiff is not an agricultural corporation, as it is not a farmland corporation, and the registration of transfer of the land of this case is impossible, and this is argued that it constitutes a justifiable reason for not being able to perform the obligation of actual name registration, and it is judged in the following paragraph

Rather, as seen earlier, since the seller of the instant land sold the instant land to Nonparty 1 and the title trustee, and received the sales proceeds therefrom, the purpose of the sales contract has been achieved, the possibility of asserting that the registration of the instant land should be made in his name or asserting that the registration of the instant land should be cancelled under the name of the title trustee is rare (or that majority among them present a cooperative attitude toward the Plaintiff by preparing and delivering a confirmation document to the Plaintiff). In light of the fact that the title trustee of the instant land serves as the Plaintiff’s internal director, representative director, and auditor as of October 22, 2012 and the trust relationship with the Plaintiff is maintained, it is reasonable to deem that, even if the ownership of the instant land was recovered to the seller in accordance with the legal principles of contract title trust, the said seller and Nonparty 1, the title trustee, etc., cooperate with the registration of transfer to fulfill the Plaintiff’s real-name registration obligation, barring special circumstances.

Therefore, this part of the Plaintiff’s assertion is without merit, since it is difficult for the seller to be exempted from the obligation to real name registration of the Plaintiff’s land of this case merely because it was maliciously about the title trust of this case

4) Whether there exists any other justifiable ground for not being able to register the instant land in its own name

Article 6(1) proviso of the Act on the Registration of Real Estate under Actual Name (hereinafter “justifiable cause”) refers to cases where it is unreasonable to expect that he/she will perform the obligation to apply for registration due to a statutory or de facto disability not attributable to him/her (see Supreme Court Decision 2004Du14427, Jul. 12, 2007).

As asserted by the Plaintiff in this case, since the Plaintiff is not an agricultural corporation, the Plaintiff is unable to register the ownership of the instant land under the name of the Plaintiff constitutes a legal obstacle. However, at the time of the Plaintiff’s purchase of the instant land, there had already been restrictions on acquiring farmland pursuant to the Farmland Act, and as long as the Plaintiff knew it and let a title trustee purchase it through a contract title trust, the occurrence of a disability under the aforementioned Act is bound to be attributable to

In addition, the Plaintiff asserts that the Defendant’s repeated disposition of the designated project zone, construction competition decline, excessive contribution acceptance conditions under the development plan, etc. cannot normally proceed with the housing area development project. Since the Plaintiff failed to dispose of the instant land due to the Plaintiff’s failure to appear on the part of the purchaser who was extremely chilled real estate market and construction competition, it is not reasonable to register the instant land in its name. However, the Plaintiff’s assertion that there is a justifiable reason for not being able to perform the duty of real name registration on the instant land is difficult.

Therefore, this part of the Plaintiff’s assertion is without merit, since the Plaintiff cannot register the land of this case under his own name.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.

[Attachment]

Judges Kim Maritime Shelf (Presiding Judge)