[1] The starting point for the lapse of the period of violation of duty under the Enforcement Decree of the Act on the Registration of Real Estate under Actual Titleholder's Name

[2] The standard time to determine whether a person entitled to make a registration without applying for a long-term registration of transfer of ownership had the intent to evade taxes or avoid restrictions pursuant to the law, and the burden of proving that the case constitutes such purpose

[1] Article 4-2 [Attachment 2] of the Enforcement Decree of the Act on the Registration of Real Estate under Actual Titleholder’s Name / [2] Article 4-2 of the Enforcement Decree of the Act on the Registration of Real Estate under Actual Titleholder’s Name, Article 26 of

[2] Supreme Court Decision 2005Du3257 decided Sep. 15, 2005 (Gong2005Ha, 1634)

Plaintiff (Law Firm Han, Attorneys Choi Jong-soo et al., Counsel for the plaintiff-appellant)

Hanam Market

Seoul High Court Decision 2010Nu40436 decided April 22, 2011

The judgment below is reversed and the case is remanded to Seoul High Court.

The grounds of appeal are examined.

1. As to the second ground for appeal

According to the main text of Article 10(1) of the former Act on the Registration of Real Estate under Actual Titleholder’s Name (wholly amended by Act No. 10203, Mar. 31, 2010; hereinafter “former Real Estate Real Name Act”), where a party to a contract is subject to the application of Article 2(1) and Article 11 of the Act on Special Measures for the Registration of Real Estate under Actual Titleholder’s Name, and Article 2 of the Addenda of the same Act, bears a quid pro quo obligation, only one of the parties to a contract bears an obligation, a penalty surcharge shall be imposed within the scope of an amount equivalent to 30/100 of the appraised value of the real estate for a person entitled to registration who fails to file an application for the registration of transfer of ownership within 3 years from the date on which the obligation to impose the said penalty surcharge arises due to the lapse of 1 year from the date on which the obligation to impose the penalty surcharge is completed; where one of the two-year period from the date of expiration of the obligation to impose the penalty surcharge [Attachment 2]

According to the reasoning of the judgment below and the records, while rendering the disposition of this case, the defendant imposed a penalty surcharge of KRW 575,812,250 on the ground that the plaintiff violated Article 10 (1) of the Real Estate Real Name Act by completing the registration of ownership transfer on each of the land of this case on July 21, 2008 when three years or more have passed since the date when the judgment of this case became final and conclusive, which was the date when the plaintiff received against the seller, was able to apply for the registration of ownership transfer from August 18, 2004, which was the date when the judgment of this case became final and conclusive. The amount of the penalty surcharge is calculated by applying the imposition rate of penalty surcharge for the period when the plaintiff's breach of duty

According to the above legal principles and the disposition of this case, the period of the plaintiff's violation of duty shall be the period from August 18, 2004 to July 21, 2008 when three years elapsed from August 18, 2007 when the plaintiff applied for the registration of transfer of ownership to each of the land of this case. Thus, the imposition rate of penalty according to the expiration period of the violation of duty shall be calculated by applying 5% to the case where the expiration period of the violation of duty is less than one year. Therefore, the court below determined that the imposition rate of penalty due to the expiration period of the violation of duty is calculated and imposed as 15%, and it is just in accordance with the above legal principles, and there is no violation of law as to the expiration period of the violation of duty.

Meanwhile, the argument that “The period of the Plaintiff’s breach of duty exceeds two years since the above lawsuit was pending after the lapse of one year and four months from the date of payment to the date of filing a lawsuit against the seller is not a legitimate ground for appeal, since the Defendant’s assertion that “the period of the Plaintiff’s breach of duty exceeds two years.”

2. Regarding ground of appeal No. 1

In light of the fact that the former Real Estate Real Name Act provides that no penalty surcharge shall be imposed upon a person entitled to registration who has been able to file an application for the registration of transfer of ownership within three years from the time when he/she had been able to file an application for the registration of transfer of ownership, regardless of the purpose of applying for the registration of transfer of ownership for a long period of time, whether the person entitled to registration is able to evade taxes or avoid restrictions pursuant to Acts and subordinate statutes shall be determined at the time when the grace period of three years expires, but it shall be proved by the claimant (see Supreme Court Decision 2005Du3257, September 15, 2005).

According to the reasoning of the judgment below, after compiling the adopted evidence and recognizing facts as stated in its reasoning, the court below determined that the plaintiff did not have any duty to pay acquisition tax or registration tax on each of the land of this case for a period of one year, considering the following reasons: (a) if the non-party, a seller's creditor, had continued to file a lawsuit seeking nullification of the sales contract of this case against the plaintiff around August 19, 2007 after three years from the date when the judgment became final and conclusive; and (b) where the sales contract of this case was declared null and void due to false conspiracy in the above lawsuit, the plaintiff's failure to pay the acquisition tax or registration tax on each of the land of this case is extinguished; and (c) on July 21, 2008, the plaintiff's withdrawal of the lawsuit filed by the non-party, was an intention to decide whether to complete the registration of ownership transfer of each of the land of this case according to the result of the above lawsuit; and (d) the plaintiff did not have any duty to pay the acquisition tax or registration tax for the above period of this case.

However, we cannot accept the judgment of the court below that the plaintiff did not aim at evading tax or avoiding legal obstacles for the following reasons.

Where a person entitled to registration fails to file an application for registration of ownership transfer for a long period of time, the said person entitled to registration may postpone the acquisition tax and registration tax related to the acquisition of the relevant real estate for that period, and may be exempted from the payment of taxes (property tax, etc.) related to the possession of the relevant real estate during the period of unregistered registration or according to the entry in the tax ledger, barring special circumstances such as where the person entitled to registration pays or bears property tax, etc. imposed on the relevant real estate during the period of unregistered registration, or where there is no special difference between the amount imposed on the person entitled to registration by evading the registration of ownership transfer and the amount imposed on the person entitled to registration has completed the registration, it shall not be readily concluded that the person entitled to registration has

According to the records, there is no evidence to deem that there was no difference between the tax imposed on each land of this case during the period during which the plaintiff did not apply for the registration of ownership transfer, or the tax imposed on the plaintiff by avoiding the registration of ownership transfer, and there is no evidence to deem that there was no intention to evade the tax on the plaintiff only in the above circumstances cited by the court below.

Therefore, the lower court should have determined whether there exist grounds for mitigation under the proviso of Article 4-2 of the Enforcement Decree after examining the following: (a) who received or shared the tax, etc. imposed on each of the instant land during the period for which the Plaintiff was not registered; and (b) whether there exists any difference in the amount imposed on the Plaintiff by avoiding the registration.

Nevertheless, the court below concluded that the plaintiff's long-term unregistered registration was not for the purpose of evading taxes or avoiding legal obstacles on the basis of the above circumstances, and held that the disposition in this case was an unlawful act of deviation from and abusing discretion as to the reduction of penalty surcharge. The court below erred in the misapprehension of empirical and logical rules or by failing to exhaust all necessary deliberations, which affected the conclusion of the judgment.

3. Conclusion

Therefore, the judgment of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Min Il-young (Presiding Justice)