[1] Where the State or a local government, which concluded a loan agreement with regard to general property, stipulated that "if it is required by the State or a local government for the direct use of the object of the loan agreement for official or public use, it may terminate the loan agreement and compensate for damages suffered by the other party, whether it is the purport of compensating for damages in accordance with the legal principles

[2] Where a loan contract is terminated by the State due to the reason that the State or a local government requires the object of the loan contract to be used directly for official or public purposes, the scope of the amount of the land reclamation cost and expected profit to be compensated

[1] Where the State or a local government has concluded a loan agreement with regard to general property, and the State or the local government may terminate the loan agreement if it is necessary for the direct public or public use of the object of the loan agreement, and if so, it can be interpreted that the legal nature of the loan agreement would compensate the other party for the loss incurred by the termination of the loan agreement without following administrative compensation procedures. However, it cannot be readily concluded that the purport of compensating the other party for the loss incurred by the other party according to the legal principles of compensation for damages arising from the non-performance of obligation cannot be determined as having been included in the agreement. Since the termination of the loan agreement is lawful acts pursuant to the former State Property Act (amended by Act No. 10485, Mar. 30, 201; the same applies hereinafter), the legal principles of compensation for damages arising from non-performance of obligation cannot be applied. Thus, the State is obliged to comply with the agreement, barring any special circumstance, to the extent that the State is obliged to compensate for the loss arising from the termination of the loan agreement, as stipulated in the former State Property Act and subordinate statutes.

[2] In cases where the other party to a loan agreement invested expenses necessary to cultivate land as suitable for cultivation according to the purpose of use stipulated in the loan agreement, and “the State or a local government needs to use the object of the loan agreement directly for official or public use,” when the loan agreement was terminated by the State, it is reasonable to view that the above provision should be applied by analogy to the extent that the remaining portion of the land remaining after the loan agreement would be subject to compensation for losses incurred due to the other party’s failure to cultivate the object of the loan due to the termination of the loan agreement and the existence of the loan agreement, in light of the purport of subparagraph 1 of Article 35 of the former Enforcement Decree of the State Property Act (amended by Presidential Decree No. 22815, Apr. 11, 2011; hereinafter the same) to compensate for the facility expenses paid by the other party, etc., unlike the facility expenses, and there is no reasonable ground to exclude the above reclamation expenses from compensation. In addition, in light of the purport of Article 35 of the former Enforcement Decree, the remaining amount of the loan agreement would be lost by applying Article 25 to the former Enforcement Decree.

[1] Article 105 of the Civil Act; Articles 36(2) and (3), and 47 of the former State Property Act; Articles 35 and 51 of the former Enforcement Decree of the State Property Act (Amended by Presidential Decree No. 22815, Apr. 11, 201) / [2] Article 105 of the Civil Act; Article 23 of the Constitution of the Republic of Korea; Articles 36(2), (3), and 47 of the former State Property Act (Amended by Act No. 10485, Mar. 30, 201); Articles 35 and 51 of the former Enforcement Decree of the State Property Act (Amended by Presidential Decree No. 22815, Apr. 11, 2011)

[1] Supreme Court Decision 99Da61675 delivered on February 11, 2000 (Gong2000Sang, 691)

Plaintiff (Law Firm Multiple, Attorneys Cho Yong-sik et al., Counsel for the plaintiff-appellant)

Korea

Korea Land and Housing Corporation (Law Firm Pwun, Attorneys Mayang-tae et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2010Na50450 decided January 19, 2011

All appeals are dismissed. The costs of appeal between the Plaintiff and the Defendant are assessed against each party, and the costs of appeal between the Plaintiff and the Korea Land and Housing Corporation, which is the litigation acceptance system of the Korea Land and Housing Corporation

The grounds of appeal are examined.

1. As to the Plaintiff and Defendant Republic of Korea’s ground of appeal on the scope of damages caused by loss of expected profits

A. Interpretation of a juristic act is clearly binding upon the objective meaning given by the parties to the act of representation. In a case where the objective meaning is not clearly revealed by the language and text expressed by the parties, it shall be reasonably interpreted in accordance with logical and empirical rules and the common sense of social norms and transaction norms, by comprehensively taking into account the contents of the language and text, the motive and background leading up to the juristic act, the purpose and genuine intent to be achieved by the parties through the juristic act, transaction practices, etc. (see, e.g., Supreme Court Decisions 2000Da33607, Jan. 19, 2001; 201Da101483, Jul. 11, 2013).

According to Article 36(2) and (3) of the former State Property Act (amended by Act No. 10485, Mar. 30, 2011; hereinafter the same) as applied mutatis mutandis pursuant to Article 47 of the same Act, where the State or a local government requires the State or the local government to directly use the general property under a loan agreement for official or public use, the managing authority of the State property may terminate the loan agreement, and where the other party suffers loss due to the termination of the loan agreement, the agency to use the property shall compensate the other party, as prescribed by Presidential Decree. In addition, according to Article 35 of the former Enforcement Decree of the State Property Act (amended by Presidential Decree No. 22815, Apr. 1, 2011; hereinafter the same shall apply), the scope of compensation for loss may be prescribed for the relocation of facility expenses or facilities (including transplantation of trees; hereinafter the same shall apply in this Article) equivalent to the remaining contract term as at the time of termination of the loan agreement, or for the relocation of new facilities during the period of the loan agreement.

However, when the State or a local government entered into a loan agreement with regard to general property, it may terminate the loan agreement if it is necessary for the State or a local government to directly use the object of the loan agreement for official or public use, and if it is agreed to compensate for the damages suffered by the other party, it can be interpreted to the effect that the other party would compensate for losses incurred by the termination of the loan agreement by civil procedure instead of administrative compensation procedure, in light of the legal nature of the loan agreement under private law (see Supreme Court Decision 9Da61675, Feb. 11, 200). However, it cannot be concluded that the purport of compensating the other party for losses incurred by the other party in accordance with the legal principle of compensation for damages arising

In light of the above, the legal principles on compensation for damages arising from nonperformance cannot be applied as it is the lawful act under the former State Property Act. Since the former State stipulated the amount of losses to be compensated to the other party at the time when a loan contract is terminated due to the above reasons, barring any special circumstance, the State should comply with the aforementioned provisions, and it is difficult to expect that the other party may receive compensation in excess of the amount of compensation under the former State Property Act’s relevant Acts and subordinate statutes, and thus, it is difficult to expect that the State may receive compensation in excess of the amount of compensation. In order to consider that the State’s agreement to compensate for damages as above includes the purport of compensating for damages in accordance with the legal principles on compensation for damages arising from nonperformance, regardless of the amount of compensation under the former State Property Act’s relevant Acts and subordinate statutes, it is reasonable to interpret the amount of compensation under the former State Property Act as meaning compensation in accordance with civil procedure, rather than administrative procedure.

Furthermore, in a case where the other party to a loan agreement included expenses incurred in clearing land, which is the purpose of the loan agreement, in accordance with the purpose of using the land as stipulated in the loan agreement, and where the loan agreement was terminated by the State for the above reasons, in light of the principle of justifiable compensation under Article 23(3) of the Constitution and the purport of Article 35 subparag. 1 of the former Enforcement Decree of the State Property Act, which trusted the existence of the loan agreement, thereby compensating the other party for the facility expenses incurred by the other party, there is no reasonable ground to exclude the above clearing expenses from compensation by treating the above clearing expenses differently from the facility expenses, and thus, it is reasonable to view that the above provision by analogy is subject to compensation

In addition, even if the other party suffers losses due to the other party’s failure to cultivate in the reclaimed land due to the termination of the above loan agreement, it shall be deemed that Article 35 subparag. 2 of the former Enforcement Decree of the State Property Act is subject to compensation by analogy. In light of the purport of Article 35 subparag. 2 of the former Enforcement Decree of the State Property Act, which provides that the compensation for losses incurred by the other party’s failure to conduct business during the period when the loan contract is terminated, if the facilities are relocated or new facilities are installed due to the termination of the loan agreement, it shall not be deemed that the expected profits accrued during the remaining contract period, but shall not be deemed that the remaining contract period is within the remaining contract period, and it shall be deemed that the expected profits accrued during the period until the time when the loan contract is terminated

B. After compiling the adopted evidence, the lower court acknowledged the facts as indicated in its reasoning, and concluded the instant loan agreement with the Plaintiff on April 16, 2008 by setting the contract term of the instant land, five years for the purpose of use, and for the purpose of farming, and determined that Defendant Republic of Korea is liable to compensate the Plaintiff for the damages incurred by the Plaintiff pursuant to the proviso to Article 7 (2) of the instant loan agreement, which provides that the instant land may be cancelled on the ground that it was selected as a site for the “environment-friendly leisure green belt creation project” promoted by the Ministry of Land, Transport and Maritime Affairs, on the ground that the instant land was designated as a site for public, public, or public works.

Furthermore, the lower court invoked the legal doctrine on compensation for damages arising from general nonperformance, and determined to the effect that the Plaintiff may also terminate the contract in light of the fact that Article 7(1)1 of the instant loan agreement provides for the possibility of cancelling the contract as the Plaintiff may terminate the contract if the instant land is necessary for public use, public use, etc., and that the Plaintiff was unable to cultivate at the instant land upon termination of the instant loan agreement, thereby loss of expected profits. This shall be deemed as included in the scope of damages that the Defendant Republic of Korea is liable to compensate the Plaintiff due to termination of the instant loan agreement. The amount of damages shall be calculated by applying Article 48(1) of the Enforcement Rule of the Act on the Acquisition of Land, etc. for Public Works and the Compensation for Land, etc. for Public Works Projects to the extent that the amount of damages is calculated by applying mutatis mutandis Article 77(4) of the Act on the Acquisition of Land, etc. for Public Works and the Compensation Therefor’s total amount of damages calculated by multiplying the total area of the instant land by the annual average area of 198 square meters.

C. We examine the reasoning of the judgment below in light of the aforementioned legal principles and records.

(1) First, the Defendant Republic of Korea’s ground for termination of the instant loan agreement constitutes grounds for termination under Article 36(2) of the former State Property Act, which is applicable mutatis mutandis by Article 47 of the same Act, and thus, the termination of the instant loan agreement by the Defendant Republic of Korea constitutes lawful acts based on the statutory provisions. No special circumstance is found in the record that the Defendant Republic of Korea’s agreement to compensate for damages pursuant to the proviso to Article 7(2) of the instant loan agreement, which contains the purport of compensating for damages in accordance with the legal principles on compensation for damages due to nonperformance of obligation, regardless of the amount of compensation as provided by the former State Property Act and relevant statutes. Thus, it is reasonable to interpret the amount of compensation for damages as stipulated

Nevertheless, the lower court, contrary to this, invoked the legal doctrine on compensation for damages arising from the termination of the instant loan agreement, and subsequently, it is inappropriate to determine the scope of damages that Defendant Republic is liable for damages to the Plaintiff.

(2) However, the loss of expected profits during the period during which the Plaintiff would be able to cultivate after securing substitute land within the scope of the remaining contract period after the termination of the instant loan agreement falls under the scope of the loss that the Plaintiff would have to receive compensation pursuant to analogical application of Article 35 subparag. 2 of the former Enforcement Decree of the State Property Act. Furthermore, in full view of various circumstances, such as the period required to secure substitute land, the period required to make substitute land available to the Plaintiff, the period required to bring the substitute land into the state suitable for the cultivation of crops, such as camping containers secured by the Plaintiff, etc., and the period adequate for the sale and harvest of crops such as actual camping containers, etc., it is reasonable to view that the period up to the period up to the period until the Plaintiff would be able to cultivate after securing substitute land after the termination of the instant loan agreement to the extent that it

Therefore, we affirm the conclusion of the court below that calculated the Plaintiff’s loss of expectation on the basis of the above one year.

(3) In a case where there is no proof as to the amount of expected profit loss or it is difficult to prove it, it shall be deemed that the amount of loss can be calculated using statistical income, barring special circumstances. Thus, the amount of loss of expected profit due to the termination of the instant loan contract can be calculated based on statistical income under Article 48(1) of the Enforcement Rule of the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects according to delegation under Article 77(4) of the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects. In such a case, if the portion difficult to cultivate in the area of land occupies a considerable area, it is reasonable to calculate the amount of loss of expected profit

Therefore, we accept the conclusion that the lower court also held that the amount calculated by multiplying the annual average of farm household per unit cultivated area per Do based on the above statistical income by the area of 56,198 square meters among the total area of 68,199 square meters of the instant land by the total area of the instant land by the total area of 56,19 square meters is the amount of loss of annual expectation

(4) Ultimately, although the reasoning of the court below is not appropriate, its conclusion is just and acceptable. Thus, the judgment below did not err by misapprehending the legal principles on the scope of damages due to the termination of a loan agreement and the compensation-related provisions under the former State Property Act and the former State Property Act, as otherwise alleged in the grounds of appeal by the plaintiff and the defendant.

2. Plaintiff’s remaining grounds of appeal

A. Examining the reasoning of the judgment below in light of the records, since the Plaintiff paid 30,30,000 won as the loan fee for one year under the instant loan agreement to the Plaintiff for the actual use of the instant land for one year, the instant loan agreement cannot be claimed for restitution on the ground that it was terminated by the Defendant’s Republic of Korea. Moreover, since the relevant statutes of the former State Property Act do not stipulate this as the amount of compensation for losses arising from the termination of the loan agreement, it cannot be claimed for damages.

Although the reasoning of the court below is somewhat insufficient, the conclusion of rejecting the Plaintiff’s claim for damages equivalent to the Plaintiff’s one-year loan is justifiable, and there is no error of law by misapprehending the legal principles as to the scope of damages as otherwise alleged in the ground of appeal.

B. Since the Korea Land Corporation entered into the instant loan agreement with the Plaintiff as an agent of Defendant Republic of Korea, it is not a party to the instant loan agreement. In addition, Defendant Republic of Korea may terminate the relevant loan agreement if the State or a local government requires it to use it directly for official or public purposes pursuant to Article 36 (2) which applies mutatis mutandis under Article 47 of the State Property Act, and this is a lawful act based on the provisions of law. As such, Defendant Republic of Korea cooperates with the Korea Land Corporation in determining to use the instant land as the site for the creation of environment-friendly leisure green belt development project and cancelling the instant loan agreement. Even if the Plaintiff did not consult with the Plaintiff or did not reflect the Plaintiff’s intent in the process, the Korea Land Corporation

The decision of the court below to the same purport is just, and there is no error in the misapprehension of legal principles as to damages or in violation of the principle of free evaluation of evidence against logical and empirical rules.

3. As to the remaining grounds of appeal by Defendant Republic of Korea

In full view of the adopted evidence, the court below acknowledged that the Plaintiff performed reclamation work to make the land of this case, which was debrised after the conclusion of the instant loan agreement, necessary for cultivating agricultural crops, such as camping containers, in accordance with the purpose of use stipulated in the loan agreement of this case. To this end, the Plaintiff paid KRW 29,550,000,000,000,000,000,000,000,00 for usual working expenses, 15,55550,000,000,000,000,000,000,000,000,000 won, as a whole. The court below determined that the Defendant Republic of Korea, as compensation for trust interest due to nonperformance under the proviso of Article 7(2) of the loan agreement of this case, was obligated to compensate for the damages equivalent to the above amount of expenses incurred by the Plaintiff, as a result of the loan agreement of this case.

In light of the aforementioned legal principles and records, although it is inappropriate for the court below to apply the legal principles on compensation for damages equivalent to the above costs of clearing, it is reasonable to view that the costs incurred by the plaintiff while reliance on the continuation of the loan agreement of this case shall be subject to compensation for losses by applying the provisions of Article 35 subparagraph 1 of the former Enforcement Decree of the State Property Act by analogy. In addition, the above costs of clearing 29.55 million won shall be deemed expenses necessary to make the land of this case in a state suitable for the purpose of using the loan agreement of this case. Thus, the conclusion that the defendant Republic of Korea is liable to compensate the plaintiff for damages equivalent to the above costs of clearing 29.5

As otherwise alleged in the ground of appeal, the lower court did not err by misapprehending the legal doctrine regarding the scope of damages and the compensation-related provisions of the former State Property Act or by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules.

4. Conclusion

All appeals are dismissed, and the costs of appeal are assessed against each party. The costs of appeal between the Plaintiff and Defendant Korea are assessed against the Plaintiff. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee Sang-hoon (Presiding Justice)