[1] Whether the additional or increased additional dues, which are incurred after the declaration of bankruptcy, based on national taxes or local taxes due to a cause before the declaration of bankruptcy constitutes estate claims (negative)

[2] A taxpayer who is liable to pay a taxation claim falling under a estate claim or bankruptcy claim (=trustee in bankruptcy) and a taxpayer who is liable to pay a taxation claim not falling under a estate claim among the taxation claims that accrue after bankruptcy

[1] Article 38 Subparag. 2 of the former Bankruptcy Act (repealed by Article 2 of the Addenda to the Debtor Rehabilitation and Bankruptcy Act, Act No. 7428, Mar. 31, 2005) stipulates that any cause arising prior to the declaration of bankruptcy among the "claims that can be collected pursuant to the example of the National Tax Collection Act or the collection of national taxes" was all estate claims regardless of whether the cause arising with respect to the bankrupt estate. Therefore, if the principal tax is due to a cause prior to the declaration of bankruptcy, the additional dues and aggravated additional dues added due to the delinquency constitute estate claims, regardless of whether the cause arising prior to the declaration

On the other hand, the main text of Article 473 subparag. 2 of the Debtor Rehabilitation and Bankruptcy Act (hereinafter “ Debtor Rehabilitation Act”) provides that “a claim arising prior to the declaration of bankruptcy among claims that may be collected pursuant to the National Tax Collection Act or the Framework Act on Local Taxes, regardless of whether the bankruptcy had arisen with respect to the bankruptcy estate, shall be deemed as falling under estate claims regardless of whether the claims arising prior to the declaration of bankruptcy have arisen with respect to the bankruptcy estate.” In general, “a claim that may be collected according to the example of collecting a national tax and its collection priority takes precedence over the general bankruptcy claims,

The purport of the foregoing provisions is to stipulate that “a claim that may be collected according to the example of collecting the national tax” takes precedence over the general bankruptcy claims, but it is to exclude the “a claim that may be collected pursuant to the National Tax Collection Act or the Framework Act on Local Taxes” from estate claims, whether “a claim that may be collected according to the example of collecting the national tax and takes precedence over the general bankruptcy claims” or “a claim that may be collected according to the example of collecting the national tax” or “a subordinate bankruptcy claim pursuant to the provisions of Article 446” among them.

In addition, the additional dues and increased additional dues under Article 21 of the National Tax Collection Act have the nature of damages for delay of tax liability.

Meanwhile, Article 473 Subparag. 4 of the Debtor Rehabilitation Act provides for “a claim arising from an act performed by a trustee in bankruptcy with respect to a bankruptcy estate” as an estate claim, and “an act performed by a trustee in bankruptcy with respect to a bankruptcy estate” includes any nonperformance of obligation to be borne by the trustee in bankruptcy in connection with his/her duties. The aforementioned provision aims to fairly and smoothly proceed with bankruptcy proceedings by protecting interested parties by allowing the trustee to frequently repay the other party’s claim arising from the performance of his/her duties based on the right to manage and dispose of the bankruptcy estate. In this regard, Article 473 Subparag. 4 of the Debtor Rehabilitation Act can be deemed as a general provision regarding the other party’s claim arising from the performance of duties based on the right to manage and dispose of the bankruptcy estate. On the other hand, Article 473 Subparag. 2 of the Debtor Rehabilitation Act provides that “a claim that may be collected pursuant to the National Tax Collection Act or the Framework Act on Local Taxes, which takes precedence over the collection order of national taxes.” Furthermore, Article 473 Subparag. 2 of the Debtor Rehabilitation Act does not apply to the additional amount of national taxes or increased.

In full view of the legislative purport of the main sentence of Article 473 subparag. 2 of the Debtor Rehabilitation Act, the legal nature of the surcharge and increased surcharge under the National Tax Collection Act, and the relationship under Article 473 subparag. 2 and 4 of the Debtor Rehabilitation Act, etc., it is reasonable to view that the surcharge and increased surcharge incurred after the declaration of bankruptcy based on the national tax or local tax resulting from the cause prior to the declaration of bankruptcy constituted “amount of damages incurred after the declaration of bankruptcy” under Article 446(1)2 of the Debtor Rehabilitation Act, which are subordinate bankruptcy claims, and thus, it shall

[2] According to the Debtor Rehabilitation and Bankruptcy Act, all domestic and foreign properties held at the time when the debtor is declared bankrupt due to the declaration of bankruptcy constitute the bankruptcy estate (Article 382(1)), and the right to manage and dispose of the bankruptcy estate shall belong exclusively to the bankruptcy trustee (Article 384). The bankruptcy trustee not only implements the realization of the properties belonging to the bankruptcy estate, but also distributes the properties belonging to the bankruptcy estate to the bankruptcy creditors, but also performs the estate claims frequently from the properties belonging to the bankruptcy estate. Therefore, the tax claim obligor

On the other hand, the right to manage and dispose of the property that does not belong to the bankruptcy foundation is owned by the debtor as it is, and this becomes the source for repayment of claims that do not fall under the estate claims among the claims that accrue after the declaration of bankruptcy. Therefore, the taxpayer for taxation claims that do not fall under the estate claims among the tax claims that accrue after the declaration of bankruptcy is the bankrupt debtor

[1] Article 38 subparagraph 2 of the former Bankruptcy Act (repealed by Article 2 of the Addenda to the Debtor Rehabilitation and Bankruptcy Act, Act No. 7428 of March 31, 2005) (see current Article 473 subparagraph 2 of the Debtor Rehabilitation and Bankruptcy Act), Article 446 (1) 2 and Article 473 subparagraph 2 and 4 of the Debtor Rehabilitation and Bankruptcy Act, Article 21 of the National Tax Collection Act / [2] Article 382 (1) and Article 384 of the Debtor Rehabilitation and Bankruptcy Act

[1] Supreme Court en banc Decision 90Nu2833 Decided March 12, 1991 (Gong1991, 1195), Supreme Court Decision 2009Da65539 Decided January 14, 2010, Supreme Court en banc Decision 2013Da64908 Decided November 20, 2014 (Gong2014Ha, 2348)

The Plaintiff in bankruptcy trustee who is a debtor of bankruptcy;

Busan Housing Co., Ltd. (Law Firm Yang Hun-Ga, Attorneys Park Sung-sung et al., Counsel for the plaintiff-appellant)

Korea

Seoul High Court Decision 2014Na2035738 decided April 15, 2015

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

The grounds of appeal are examined.

1. As to the additional dues Nos. 1 and 2

A. The main text of Article 38 Subparag. 2 of the former Bankruptcy Act (amended by Act No. 7428, Mar. 31, 2005; hereinafter the same) stipulates that among “a claim that may be collected pursuant to the National Tax Collection Act or the example of collecting national taxes, any cause arising before the declaration of bankruptcy was defined as a estate claim regardless of whether the cause arising with respect to the bankrupt estate. Therefore, if the principal tax is caused before the declaration of bankruptcy, the additional dues and aggravated additional dues added due to such delinquency constitute a estate claim without regard to whether the cause arising before the declaration of bankruptcy was made or after the bankruptcy was declared (see Supreme Court Decision 2009Da6539, Jan. 14, 2010).

On the other hand, the main text of Article 473 subparag. 2 of the Debtor Rehabilitation and Bankruptcy Act (hereinafter “ Debtor Rehabilitation Act”) provides that “a claim arising prior to the declaration of bankruptcy among claims that may be collected pursuant to the National Tax Collection Act or the Framework Act on Local Taxes, regardless of whether the bankruptcy had arisen with respect to the bankruptcy estate, shall be deemed as falling under estate claims regardless of whether the claims arising prior to the declaration of bankruptcy have arisen with respect to the bankruptcy estate.” In general, “a claim that may be collected according to the example of collecting a national tax and its collection priority takes precedence over the general bankruptcy claims,

The purport of the above provisions is to: (a) a claim that can be collected according to the example of the collection of national taxes takes precedence over the general bankruptcy claims; (b) a claim that can be collected pursuant to the National Tax Collection Act or the Framework Act on Local Taxes; (c) a claim that can be collected according to the example of the collection of national taxes, “the collection priority takes precedence over the general bankruptcy claims; and (d) a subordinate bankruptcy claim pursuant to the provisions of Article 446 among those claims are excluded from estate claims.

In addition, the additional dues and increased additional dues under Article 21 of the National Tax Collection Act have the nature of damages for delay of tax liability (see Supreme Court Decision 90Nu2833 delivered on March 12, 1991).

Meanwhile, Article 473 Subparag. 4 of the Debtor Rehabilitation Act provides for “a claim arising from an act performed by a trustee in bankruptcy with respect to a bankruptcy estate” as an estate claim. “A trustee with respect to a bankruptcy estate” includes any nonperformance of obligation borne by the trustee in bankruptcy in connection with his/her duties (see Supreme Court en banc Decision 2013Da64908, Nov. 20, 2014). The aforementioned provision aims to ensure fair and smooth bankruptcy proceedings by protecting interested parties by allowing the trustee in bankruptcy to frequently repay the other party’s claim arising from the performance of his/her duties based on the right to manage and dispose of the bankruptcy estate. In this regard, Article 473 Subparag. 4 of the Debtor Rehabilitation Act can be deemed as a general provision regarding the other party’s claim arising from the performance of duties based on the right to manage and dispose of the bankruptcy estate. On the other hand, it is reasonable to deem that Article 473 Subparag. 2 of the Debtor Rehabilitation Act preferentially includes not only the amount of national tax in arrears to be collected under the National Tax Collection Act or the Framework Act.

In full view of the legislative purport of the main sentence of Article 473 subparag. 2 of the Debtor Rehabilitation Act, the legal nature of the surcharge and increased surcharge under the National Tax Collection Act, and the relationship under Article 473 subparag. 2 and 4 of the Debtor Rehabilitation Act, etc., it is reasonable to view that the surcharge and increased surcharge incurred after the declaration of bankruptcy based on the national tax or local tax resulting from the cause prior to the declaration of bankruptcy constituted “amount of damages incurred after the declaration of bankruptcy” under Article 446(1)2 of the Debtor Rehabilitation Act, which are subordinate bankruptcy claims, and thus, it shall

B. The reasoning of the lower judgment and the evidence duly admitted by the lower court reveal the following facts.

1) On September 10, 2010, the Defendant attached a disposition on default on real estate owned by Chang Chang City Development Co., Ltd. (hereinafter “instant attachment”) to the bankrupt debtor’s failure to pay national taxes, including value-added taxes.

2) The Chang City Development was declared bankrupt on November 23, 2010 by the Seoul Central District Court 2010Hahap100 on the same day, and the Plaintiff was appointed as a trustee in bankruptcy on the same day (hereinafter “Plaintiff,” regardless of whether it was before or after the bankruptcy of Chang City Development, without distinguishing the Plaintiff, who is a trustee in bankruptcy, from the development of Chang Chang City and the development of Chang City.

3) On July 2, 2012, the Plaintiff sold the said real estate to the Plaintiff’s Intervenor, and completed the registration of ownership transfer on April 2, 2013. On the same day, the Defendant filed a claim against the Plaintiff for the delivery of the amount of delinquent taxes, and the details of value-added tax among them are as listed below in the list of delinquent taxes.

Serial No. 1201-641, 0102 November 25, 2010 on December 31, 2010, 2010.276, 191, 467, 177, 7902-641,0060 on December 31, 2012, 2006: 610,691,691, 15013, 113, 588, 5003206, 206, 20106, 308, 2006-7-7-41037-410373, 2010, 305, 206, 305, 206, 305, 106, 15, 201-14, 106, 2014;

4) Upon obtaining permission from the bankruptcy court on April 15, 2013, the Plaintiff paid to the Defendant the sum of 15,961,486,950 won for each of the value-added taxes and 3 surcharges in sequence 1 through 4, the date of establishment of the tax liability in the above tax table prior to the date of declaration of bankruptcy.

5) The Plaintiff requested the Defendant to release the instant seizure on the ground that the Plaintiff fully repaid the amount of taxes equivalent to estate claims among the amount of delinquent taxes. However, on April 18, 2013, the Defendant responded that the amount of national taxes in arrears remains, and thus, the release of the instant seizure cannot be made.

6) On November 14, 2013, the Plaintiff notified the Defendant that the remaining tax claims in arrears fall under subordinate bankruptcy claims or tax claims other than bankruptcy claims, but the Plaintiff is scheduled to pay the remaining taxes in arrears for the Plaintiff’s Intervenor, who is the buyer, and may file a lawsuit, such as a claim for return of unjust enrichment, against the Defendant.

7) On December 5, 2013, the Plaintiff paid the total sum of the additional taxes and the additional taxes in sequence 1, 2, and 4, and 5, 3,747,273,290 (including the additional charges increased after April 2, 2013), and the Defendant released the instant attachment.

C. We examine these facts in light of the legal principles as seen earlier.

The additional claims Nos. 1 and 2 refer to the additional claims arising from the value-added tax arising from the cause arising before the declaration of bankruptcy. Therefore, this constitutes “amount of damages incurred due to nonperformance after the declaration of bankruptcy” under Article 446(1)2 of the Debtor Rehabilitation Act, which is subordinate bankruptcy claims, and thus, is excluded from the estate claim pursuant to the provisions under the main sentence of Article 473 subparag. 2 of the Debtor Rehabilitation Act.

Nevertheless, the lower court determined that the additional claim Nos. 1 and 2 constituted “a claim arising from an act performed by a trustee in bankruptcy with respect to a bankrupt estate” as prescribed by Article 473 subparag. 4 of the Debtor Rehabilitation Act, which is an estate claim. In so determining, the lower court erred by misapprehending the legal doctrine on the scope of estate claims

2. As to the principal tax and additional dues for the sequence of tax in arrears 5

A. The lower court determined that, although the value-added tax and additional dues No. 5 arising after the date of declaration of bankruptcy cannot be deemed as an estate claim, the Plaintiff constitutes a debtor who bears the obligation to pay delinquent taxes and additional dues therefor, it cannot be deemed that the Defendant received the above value-added tax and additional dues from the Plaintiff, who is a tax obligor, without any legal grounds.

B. However, the lower court’s determination is difficult to accept for the following reasons.

1) According to the Debtor Rehabilitation Act, all domestic and foreign assets held by the debtor at the time that the debtor is declared bankrupt shall constitute the bankruptcy estate (Article 382(1)), and the right to manage and dispose of the bankruptcy estate shall belong exclusively to the trustee in bankruptcy (Article 384). The trustee in bankruptcy shall not only liquidate the assets belonging to the bankruptcy estate and distribute the assets to the bankruptcy creditors, but also reimburse the estate claims from the assets belonging to the bankruptcy estate at any time. Accordingly, the person liable to pay the tax claim corresponding to the

On the other hand, the right to manage and dispose of the property that does not belong to the bankruptcy foundation is owned by the debtor, and this is the financial resources for repayment of claims that do not fall under the estate claims among the claims that accrue after the declaration of bankruptcy is declared. Therefore, the taxpayer for taxation claims that do not fall under the estate claims among the tax claims that accrue after the declaration of bankruptcy is deemed the bankrupt debtor rather

2) We examine the reasoning of the lower judgment in light of such legal doctrine.

If a claim for value-added tax and additional dues 5-value-added tax and a claim arising after the declaration of bankruptcy do not constitute estate claims, this constitutes “a claim, not a bankruptcy claim, but a claim that is not a estate claim,” and thus, the taxpayer of the above claim is not a trustee in bankruptcy but a debtor, the debtor of bankruptcy. Therefore, it should be deemed that the Defendant’s repayment of the above value-added tax and additional dues by the Plaintiff

C. Nevertheless, the lower court determined otherwise that the Plaintiff’s liability for the value-added tax and additional dues No. 5 constituted a taxpayer, and rejected the Plaintiff’s claim for return of unjust enrichment. In so doing, it erred by misapprehending the legal doctrine on unjust enrichment, contrary to what is alleged in the

3. Conclusion

Therefore, without further proceeding to decide on the remaining grounds of appeal, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Jung-hwa (Presiding Justice)