In a case where most of the previous litigation data cannot be used to hear a new claim, and where it substantially delays the litigation procedures by submitting separate evidence and hearing, whether the court may decide not to permit the change of the claim (affirmative)

Article 1(1) of the Civil Procedure Act provides, “The court shall endeavor to have the litigation procedures progress fairly, rapidly and economically,” and among them, it is necessary to prevent delay in the litigation by the parties in order to realize a prompt and economic ideology. Accordingly, the Plaintiff may alter the purport or cause of the claim until the closure of pleadings to the extent that the basis of the claim is not altered, but is not allowed if the litigation procedures are substantially delayed (Article 262(1) of the Civil Procedure Act). In the event of a change in the claim, the court may decide not to allow the alteration in the case where most of the previous litigation materials cannot be used to hear the new claim, and where it substantially delays the litigation procedures by submitting separate evidence and hearing.

Articles 262(1) and 263 of the Civil Procedure Act

Supreme Court Decision 2014Da89287, 89294 Decided April 23, 2015

Co., Ltd. (Law Firm Han-dong, Attorneys Go Il-young et al., Counsel for the defendant-appellant)

Defendant 1 and three others

Seoul High Court Decision 2016Na2035572 decided January 19, 2017

All appeals are dismissed. The costs of appeal are assessed against the Plaintiff.

The grounds of appeal are examined.

1. Main claim against the Defendants

The Plaintiff, first, asserts that the Defendants conspired to use 1.9 billion won of the down payment 3.5 billion won of the down payment of this case received from the Korea-Pacific International Investment Publication Co., Ltd. and embezzled (hereinafter “instant embezzlement”) at will, instead of deposit to the Plaintiff, and sought payment of KRW 1.9 billion and damages for delay against the Defendants, the joint tortfeasor.

In full view of the relevant evidence of employment, the lower court determined that it is difficult to recognize that Defendant 1 and Defendant 2, who actually operated the Plaintiff with the Nonparty, were aware that he embezzled KRW 1.2 billion out of the down payment of this case, and it was difficult to recognize that Defendant 3 and Defendant 4 conspired with Defendant 1 and Defendant 2, committed a tort of embezzlement of part of the down payment of this case.

Examining the reasoning of the lower judgment in light of the evidence duly admitted by the lower court, the lower court’s determination is justifiable, and it is insufficient to recognize that Defendants 3 and 4 bear joint tort liability with Defendants 1 and 2. In so determining, the lower court did not err by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules, or by misapprehending the legal doctrine on the establishment of joint tort or the

2. Preliminary claim against Defendant 3 and Defendant 4

The plaintiff asserts that the plaintiff first lent KRW 754 billion to the defendant 3, and KRW 1110 million to the defendant 4, and that the plaintiff claimed each of the above loans and the damages for delay against the above defendants.

In full view of the evidence duly admitted, the lower court determined that it is difficult to recognize the fact that the Defendants borrowed the money claimed by the Plaintiff from the Plaintiff.

Examining the reasoning of the lower judgment in light of the evidence duly admitted by the lower court, the lower court’s determination is justifiable. In so determining, the lower court did not err by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules

3. Whether the alteration of claims against the defendant 3 and the defendant 4 is legitimate

A. Article 1(1) of the Civil Procedure Act provides that “The court shall endeavor to have the litigation procedures progress in a fair, speedy, and economic way.” From among them, in order to realize a prompt and economic ideology, it is necessary to prevent delay in the litigation by the parties concerned. Accordingly, the Plaintiff may alter the purport or cause of the claim until the pleadings are concluded to the extent that the grounds of the claim are not altered, but is not allowed if the litigation procedures are substantially delayed (Article 262(1) of the Civil Procedure Act). In a case where a claim is modified, the court may render a decision not to allow the alteration of the previous litigation data if it is impossible to use the previous litigation data to hear a new claim and where it substantially delays the litigation procedures by submitting separate evidence and hearing (see Supreme Court Decision 2014Da89287, 89294, Apr. 23, 2015).

B. On the grounds delineated below, the lower court deemed that the Plaintiff’s addition of a new conjunctive cause at the lower court’s trial constitutes a case where a significant delay in litigation procedures may cause a substantial delay, and thus, did not permit the modification of this part of the claim pursuant to Articles 263 and 262(

(1) In the lower judgment, the Plaintiff added the conjunctive claim against Defendants 3 and 4, stating that “In spite of the fact that the Defendants were registered as the Plaintiff’s intra-company director, they entrusted Defendant 1 and 2 with the duties of director and did not perform their duties as a director. This is a director’s breach of the duty of loyalty and the duty of care, and thus, the Plaintiff is liable to compensate for damages pursuant to Article 399 of the Commercial Act.”

(2) A preliminary claim filed by the Plaintiff at the lower court constitutes a case where it is necessary to conduct a new hearing separately from the previous litigation materials, such as examining whether Defendant 3 and Defendant 4 performed their duties as a director to a certain extent, and thereby significantly delaying the litigation procedures.

C. In full view of the following circumstances revealed in the record, it is determined that the Plaintiff could not use most of the previous litigation data in order to examine the new preliminary claim cause added to Defendant 3 and Defendant 4 at the lower court, and submission of separate evidence and deliberation are inevitable.

(1) Before the lower court added a new conjunctive claim, the Plaintiff did not assert that the Defendants were registered as the Plaintiff’s intra-company director, but did not perform the director’s duties at all, and did not submit any particular evidence.

(2) The first instance court acknowledged the fact that the Nonparty, Defendant 1, and Defendant 23 actually jointly operated the Plaintiff, and determined that Defendant 3 and Defendant 4 conspired with Defendant 1 and Defendant 2 to commit a tort of embezzlement of part of the down payment of this case on the sole basis that Defendant 3 and Defendant 4 were listed as the Plaintiff’s shareholder and in-house director. However, in the first instance court, it did not directly examine or decide whether Defendant 3 and Defendant 4 delegated the duties as a director to Defendant 1 and Defendant 2, and did not perform their duties as a director.

(3) Even if Defendant 3 and Defendant 4 neglected to perform their duties as a director, it is necessary to conduct an additional examination as to whether there exists a causal relationship with the occurrence of the instant embezzlement or the loss alleged to have been incurred by the Plaintiff. Furthermore, in order to determine the scope of compensation for damages, it is necessary to examine various circumstances, such as the content and nature of the business, the background and mode of the act of the director, the objective circumstance and degree of the act of the director, the occurrence and expansion of the company’s losses, the degree of contribution to the ordinary director’s company, the degree of contribution to the company, the existence of the company’s corporate structure, the defect of the company’s organization, and the establishment of a risk management system (see, e.g., Supreme Court Decisions 2002Da60467, Jun. 7, 604; 2005Da69638, Oct. 28, 2005).

(4) As to the ancillary cause of the Plaintiff’s addition, Defendant 3 and Defendant 4 are arguing that they carried out the incidental work as a director, and that the instant embezzlement was carried out according to the direction of the Nonparty, which was the representative director of the Plaintiff, and that even if the Defendants carried out his duties as a director, they could not prevent the above instruction, and that there was no causation between their act and the Plaintiff’s damage.

D. Therefore, the lower court’s decision that did not permit the Plaintiff’s preliminary cause for action on the ground that the addition of the Plaintiff’s conjunctive cause constitutes a case where the litigation procedure is substantially delaying is justifiable. In such a case, the Plaintiff’s separate filing of a lawsuit cannot be deemed unfair or contrary to the litigation economy in order to determine the propriety of the said claim that was newly added. In so doing, the lower court did not err by exceeding the bounds of the principle of free evaluation of evidence inconsistent with logical and empirical rules

4. Conclusion

The Plaintiff’s appeal is dismissed as it is without merit, and all 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 Park Poe-young (Presiding Justice)