Korea Asset Management Corporation (Law Firm LLC, Attorneys Credit Guarantee, et al., Counsel for the defendant-appellant)

Defendant (Attorney Na-soo, Counsel for defendant-appellant)

November 29, 2013

Seoul Northern District Court Decision 2011Gahap10666 Decided February 20, 2013

1. The part concerning claim for payment of money in the judgment of the court of first instance shall be revoked, and the plaintiff shall be dismissed.

2. The defendant's remaining appeal is dismissed.

3. One-half of the total costs of litigation shall be borne by the Plaintiff, and the remainder by the Defendant, respectively.

1. Purport of claim

The defendant delivers to the plaintiff each real estate listed in the separate sheet, and pays 259,482,350 won and 198,774,370 won among them with 5% per annum from August 23, 2011 to the service date of a copy of the complaint of this case, and 20% per annum from the following day to the day of full payment.

2. Purport of appeal

The judgment of the first instance is revoked. All the plaintiff's claims are dismissed.

1. Basic facts

A. Pursuant to Articles 8(1) and 42(1) of the State Property Act and Article 38(3) of the Enforcement Decree of the State Property Act, the Plaintiff was entrusted by the Republic of Korea with the management and disposal of the land and buildings listed in the separate sheet, which are general property owned by the Republic of Korea (hereinafter collectively referred to as the “instant real estate”).

B. On February 23, 2007, the Plaintiff concluded a loan agreement with the Defendant on the instant real estate (hereinafter “instant loan agreement”). The main contents of the instant loan agreement are as follows.

Article 2 The loan period shall be from February 23, 2007 to February 22, 2012.

Article 3 Rent shall be KRW 71,00,000 per annum (excluding value-added tax): Provided, That in cases of land, rent shall be determined annually on the basis of the value of property calculated for each year pursuant to Article 26 (2) 1 of the Enforcement Decree of the State Property Act.

Article 4 (Cases of Temporary Payment) The defendant shall pay the rent by February 23, 2007, and where the rent is paid after the deadline for payment expires, the defendant shall pay the rent along with the overdue charge in accordance with Article 44 (3) which applies mutatis mutandis under Article 41 (3) of the Enforcement Decree of the State Property Act.

(In the case of installment payments), the defendant shall pay the rent as shown below, and where the rent is paid after the expiration of the due date for payment, the installment shall be paid in accordance with the provisions of Article 44 (3) which applies mutatis mutandis under Article 41 (3) of the Enforcement Decree of the State Property Act to the installment.

The payment deadline of 135,50,000,550,000 39,050,000,000 on February 23, 2007, 23, 25,500,500 1,056,240,240 3,65,620 40,211,860 on February 23, 2007

Article 8

(1) In any of the following cases, the plaintiff may cancel this contract against the defendant:

5. Where the defendant violates the Acts and subordinate statutes related to State property and the above contract provisions.

▣ 특약사항

Article 2 (Change of Annual Rent) The annual rent after the second year changed at the time of entering into a loan agreement for not less than two years shall be calculated in accordance with the relevant provisions of the State Property Act, and the plaintiff shall notify the defendant thereof.

C. Loan charges concerning the instant real estate from February 23, 2007 to February 22, 2008 are KRW 71,00,000 (excluding value-added tax) as seen earlier. Article 3 of the instant loan contract, Articles 26 and 27 of the former Enforcement Decree of the State Property Act (wholly amended by Presidential Decree No. 21641, Jul. 27, 2009); Article 17(2) of the former Enforcement Decree of the State Property Act (wholly amended by Ordinance of the Ministry of Strategy and Finance No. 93, Jul. 31, 2009); from February 23, 2008 to February 22, 2008; from February 21, 2008 to February 21, 2009; from KRW 201 to KRW 37,57,750; Presidential Decree No. 2151, May 21, 2015>

D. While the Defendant used the instant real estate under the instant loan agreement, during the period from February 23, 2007 to October 18, 2010, paid to the Plaintiff totaling KRW 203,879,920 as the loan charges, installment interest, value-added tax, late payment charges, etc. under the instant loan agreement, the Defendant did not pay the remainder of the loan charges, etc.

E. The loan charges that the Defendant did not pay to the Plaintiff as of August 22, 201 are KRW 198,774,370, and the interest is KRW 2,506,30 in installments under Articles 47(1) and 32(2) of the State Property Act, and Article 30 of the Enforcement Decree of the State Property Act. The amount equivalent to the loan charges and the value-added tax on the interest on installment under Article 3 of the instant loan agreement is KRW 20,128,060, and the overdue interest under Article 73(1) of the State Property Act, Article 72(1) of the Enforcement Decree of the State Property Act is KRW 38,073,620.

F. On August 23, 2011, the Plaintiff notified the Defendant of the termination of the instant loan agreement pursuant to Article 8(1)5 of the instant loan agreement and Article 36 of the State Property Act on the grounds of default of payment, such as the above loan charges. The said notification reached the Defendant around that time.

[Reasons for Recognition] Each entry of Gap evidence Nos. 1 through 6, 9, 10, 12 through 14 (including each number), and the purport of the whole pleadings

2. Whether the part concerning claim for the payment of money among the lawsuits in this case is legitimate

A. The Plaintiff asserts that, as of August 22, 2011, the Defendant is liable to pay the Plaintiff the amount of KRW 198,774,370, interest on installment payments of KRW 2,506,30, value-added tax equivalent to KRW 20,128,060, late 38,073,620, late 259,482,350, and the interest charges of KRW 198,74,370 from August 23, 2011 to the date of full payment. Accordingly, the Defendant asserts that the part of the claim for payment of KRW 20,128,06, late 38,62,350, and the interest charges of KRW 198,774,370, as of August 23, 201, is unlawful.

B. Relevant statutes

[State Property]

Article 73 (Collection of Overdue Charges, etc.)

(1) Where usage fees, rents, proceeds from sale, exchange funds, and indemnities (excluding where collection is deferred or divided) for State property are not paid by the payment deadline, the head of a central government agency, etc. may collect arrears, as prescribed by Presidential Decree. In such cases, the period of arrears subject to the imposition of arrears shall not exceed 60 months from the payment deadline.

(2) Where usage fees for State property, surcharges, loan charges, indemnities, and late fees under paragraph (1) have not been paid by the payment deadline, the head of a central government agency, etc. may collect them by applying mutatis mutandis the provisions of Article 23 of the National Tax Collection Act and this Act concerning the disposition on default according to the following methods:

1. The head of a central government agency (in cases of ordinary property, including a person to whom the duties of administration and disposal are delegated pursuant to Article 42 (1); hereafter the same shall apply in this subparagraph) may directly or by delegation to the head of the competent tax office or local government (hereinafter referred to as "head of the competent tax office, etc.") for collection. In such cases, the head of the competent tax office, etc. shall be supervised by the head of the

2. A person entrusted with the affairs concerning management and disposition pursuant to Article 42 (1) may have the head of the competent tax office, etc. collect them;

C. Determination

1) In principle, the provisions of the private law apply to the lending, etc. of State or public general property by an institution entrusted with the authority to manage or dispose of State or public general property, as it is a contract under the private law conducted by the State or a local government at an equal location with the other party as the private economic entity. However, one of the parties to the contract is the State or a local government, and is subject to the regulation of special Acts, such as the State Property Act, the Public Property and Commodity Management Act, and the Forestry Act, due to the public characteristics of the object of the lease, etc. (see Supreme Court Decision 2011Da1231, May 26, 201).

2) Pursuant to Article 73(2) of the State Property Act, the head of a central government agency, etc. may collect the pertinent real estate as State-owned general property with respect to the lease charges, etc. and late payment charges under the instant loan agreement, applying mutatis mutandis the provisions on the disposition on default under Article 23 of the National Tax Collection

3) As such, since the loan charges, etc. and late payment charges under the instant loan agreement can be realized by the administrative agency through a disposition on default under the National Tax Collection Act, which is a more simple procedure, there is no need to permit the realization of rights pursuant to the method of civil procedure. Therefore, the part concerning the claim for payment of unpaid loan charges, etc. and late payment charges in the instant lawsuit is unlawful as there is no benefit or need to protect the rights (see Supreme Court Decision 2000Da28568, Nov. 24, 200).

4) Accordingly, the defendant's above main defense is justified.

3. Determination as to the claim for extradition of the instant real estate

A. Judgment on the ground of the plaintiff's claim

The Defendant did not pay the Plaintiff rent, etc. under the instant loan agreement from October 18, 2010, and the Plaintiff notified the termination of the instant loan agreement on August 23, 201 on the grounds of default, such as the Defendant’s above loan charges, and that the notice reached the Defendant around that time. As seen earlier, barring any special circumstance, the instant loan agreement was terminated pursuant to Article 8(1)5 of the instant loan agreement and Article 36(1)4 of the State Property Act around the end of August 201, when the notice was delivered to the Defendant, and thus, the Defendant is obligated to deliver the instant real estate to the Plaintiff.

B. Judgment on the defendant's argument

1) The assertion and determination that the State Property Act does not apply to the instant loan agreement

The Defendant asserts that the provision on late payment charges and interest in installments under the State Property Act is not applicable to the instant loan agreement, since the instant loan agreement is a private contract, and thus, the State Property Act does not automatically apply to the instant loan agreement, since the act of lending State-owned general property by an institution entrusted with the authority to dispose of State-owned general property, as in the instant case, is a private contract with the State at an equal location with the other party as a private economic entity. However, if the Plaintiff and the Defendant delays the payment of the loan in the instant loan agreement, they do not apply to the instant loan agreement. However, the Defendant’s assertion that Article 41(3) and Article 44(3) of the former Enforcement Decree of the State Property Act (wholly amended by Presidential Decree No. 21641, Jul. 27, 2009) which was applied at the time of the contract is added to the late payment charges in installments, and the interest in installments shall be paid in addition to a certain amount, and the loan charges after two years from the date of conclusion of the loan agreement shall be calculated in accordance with the relevant provisions of the State Property Act.

2) The assertion and determination that Article 3 of the instant loan agreement is null and void

Article 3 subparag. 2 of the Enforcement Decree of the Housing Lease Protection Act provides that the Defendant shall have no authority to increase the rent every year from 0.1 to 2.0% of the rent per annum. According to the provision of Article 2 subparag. 2 of the former Enforcement Decree of the Housing Lease Protection Act, the Defendant’s provision of Article 3 subparag. 2 of the Housing Lease Protection Act provides that the rent shall not be increased by 10% per annum, 2.5% per annum under the Housing Lease Protection Act and Article 2 of the former Enforcement Decree No. 2 of the Housing Lease Protection Act, and the Defendant’s provision of Article 9 of the former Enforcement Decree No. 2 of the Housing Lease Protection Act provides that the rent shall be reduced by 0% per annum 2 of the rent per annum 10 to 3.5% of the rent per annum 2 of the former Enforcement Decree of the Housing Lease Protection Act. The Defendant’s provision of Article 3 of the former Enforcement Decree of the Housing Lease Protection Act provides that the rent shall be reduced by 10% per annum 26.2 of the annual rent per annum.

3) The assertion and determination of excessive loan charges

Around November 19, 2001, the Defendant concluded a loan agreement with the Plaintiff and the instant real estate from November 19, 2001 to November 19, 2006. If the instant loan agreement is merely an extension of the said loan agreement, the loan agreement after 2007 should be determined within an amount increased by 9% per annum based on the loan fee in 2006 pursuant to subparagraph 2 of Article 31 of the Enforcement Decree of the State Property Act, even though the loan fee after 207 exceeded 9% per annum on the basis of the loan fee in 2006, the loan fee is excessive. In addition, the Defendant’s assertion that the loan agreement was concluded with the Plaintiff and the instant real estate from November 19, 201 to November 19, 2006 without any dispute over the existing loan agreement between the parties to the loan agreement and the previous loan agreement (hereinafter “the previous loan agreement”). However, the Defendant’s assertion that the loan agreement was concluded on the basis of the loan fee in 20.10 months or more per annum.

4) Claims and determination as to payment obligation of value-added tax equivalent to interest payment in installments

The Defendant asserts that there is no interest on the installment of the rent, which is not the price for goods or services, and therefore there is no obligation to pay to the Plaintiff the amount equivalent to the value-added tax. The supply of goods or services subject to the imposition of value-added tax includes the supply of goods or services, which are the main transaction. In light of the fact that the Defendant’s payment of the rent in installments is an essential incidental nature to the rent as a consideration for the benefit of time when the payment in installments is determined, the above installment interest is also an object of value-added tax as the supply of goods or services. The fact that the Defendant agreed to pay the Plaintiff the amount equivalent to the value-added tax on the sum of the interest in installment when the payment in installments is made in installments. Therefore, the Defendant is also liable to pay the Plaintiff the amount equivalent to value-added tax on the interest in installment. Accordingly, the Defendant’s argument is without merit.

5) The Plaintiff’s assertion and determination that the value-added tax payment obligor is not the Plaintiff

Even if the Plaintiff and the Defendant agreed to pay an amount equivalent to the value-added tax, the Defendant loaned real estate owned by the Republic of Korea, and since the Republic of Korea did not impose value-added tax even upon the payment of rent, etc., the Defendant asserts that there is no obligation to pay the amount equivalent to the value-added tax to the Plaintiff. The Defendant’s assertion is without merit under Article 12 subparag. 18 of the former Value-Added Tax Act (amended by Act No. 10409, Dec. 27, 2010) and Article 38 subparag. 3 of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 19892, Feb. 28, 2007). Accordingly, if the State or a local government supplies goods or services through real estate leasing business, it is not exempt from value-added tax.

6) The assertion and determination that there is no obligation to pay the portion exceeding 60 months from the due date of the arrears

According to the State Property Act, the defendant asserts that there is no obligation to pay the late payment charge on the ground that there is no overdue charge for more than 60 months from the due date. According to Article 73 of the State Property Act, the overdue charge shall not exceed 60 months from the due date. However, although the overdue charge subject to the overdue charge shall not exceed 60 months from the due date, it is clear that the overdue charge on the loan of this case is the overdue charge for the year 2009 as of August 22, 201, the overdue charge for the year 2010, the overdue charge for the year 201, and the overdue charge for the year 201, for which 60 months have not elapsed from the due date. Accordingly, the defendant

7) The assertion and determination as to the reimbursement of necessary and beneficial expenses

Since the Defendant, around December 2, 2002, around December 2, 2002, formed a right to demand reimbursement of necessary and beneficial expenses at the time of the termination of the above loan agreement, the Defendant asserts that the Plaintiff shall exercise the right to demand reimbursement of the necessary and beneficial expenses against the Plaintiff, as well as the expenses incurred at the time of the termination of the previous loan agreement. Since the previous loan agreement was agreed to allow the Plaintiff to use and profit from the subject matter and receive a difference for it, Article 626 of the Civil Act is applicable as it constitutes a lease agreement under the Civil Act. However, in full view of the overall purport of the arguments as stated in the evidence No. 11 and evidence No. 12-1 and No. 2 of the Civil Act, the Plaintiff and the Defendant may recognize the fact that the Plaintiff and the Defendant agreed to waive the right to demand reimbursement of necessary and beneficial expenses pursuant to Article 5 of the previous loan agreement under Article 626 of the Civil Act without any justifiable reason.

8) Claims and determination as to the right to purchase accessories

The defendant claimed that the plaintiff shall exercise his right to purchase the attached article in the case of this case with the consent of the plaintiff on September 5, 2003 during the previous loan agreement period. Thus, the defendant claimed that the plaintiff shall exercise his right to purchase the attached article. Since the previous loan agreement constitutes a lease agreement under the Civil Act, the provisions on the right to purchase the attached article in Article 646 of the Civil Act shall apply. As a result of the verification by the court of first instance, in full view of the purport of the arguments by the non-party's appraisal of the court of first instance, the defendant was found to have attached the real property of this case during the previous loan agreement period, such as temporary buildings, tent roof, light straws, light straws, light straws, light straws, straws, carp, carp, booms, and bridges, etc., but there is no evidence to recognize that the defendant obtained the plaintiff's consent on the attachment of the attached article as above.

9) Claim of set-off and judgment against damage claim

The Defendant asserts that the Defendant is liable for damages to the Defendant, since the Plaintiff committed a tort for which the Plaintiff did not issue a tax invoice even when receiving rent, etc. from the Defendant, and the amount equivalent to the value-added tax that the Defendant paid to the Plaintiff was not refundable from the tax authority, and thus, the Plaintiff is liable for compensating the Defendant for the damages. The Defendant’s assertion is without merit, as there is no evidence supporting the Defendant’s assertion.

4. Conclusion

Therefore, the part concerning the claim for the payment of the amount of the lawsuit in this case is unlawful and dismissed, and the claim for the payment of the real estate in this case is accepted with merit. Since the part concerning the claim for payment in the judgment of the court of first instance is unfair with different conclusions, it is revoked and the plaintiff's lawsuit corresponding to the revoked part is dismissed. The part concerning the claim for delivery of real estate in this case among the judgment of the court of

[Attachment List omitted]

Judges Kim Jong-tae (Presiding Judge)