Korea

Defendant 1 and one other (Law Firm Seom, Attorneys Yang Gyeong-soo et al., Counsel for the defendant-appellant)

October 6, 2016

1. The plaintiff's primary and conjunctive claims against the defendants are all dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

The contract of donation of KRW 701,325,406, which was concluded on August 30, 2010 between Defendant 1 and Nonparty 1, shall be revoked within the limit of KRW 701,325,406, and Defendant 1 shall pay to the Plaintiff 701,325,406 with the interest of KRW 5% per annum from the day following the day when the judgment of this case became final and conclusive to the day of complete payment. Defendant 2 and Nonparty 1 revoked the contract of donation of KRW 100,000,000, which was concluded on August 30, 2010, and Defendant 2 shall pay to the Plaintiff 100,000,000 and the interest of KRW 5% per annum from the day following the day when the judgment of this case was final and conclusive to the day of complete payment.

Preliminaryly, Defendant 1 and Nonparty 1 revoked a deposit share title trust agreement concluded between Defendant 1 and Nonparty 1 on August 30, 2010 within the scope of KRW 701,325,406 with respect to the deposit account account (Account Number: omitted 2) and Defendant 1 paid to the Plaintiff the amount calculated at the annual rate of KRW 5% from the day following the day when the instant judgment became final and conclusive to the day when full payment is complete. Defendant 2 and Nonparty 1 revoked the deposit share trust agreement concluded between Defendant 2 and Nonparty 1 on August 30, 2010 within the scope of KRW 100,000,000, and Defendant 2 paid to the Plaintiff the amount calculated at the rate of KRW 5% per annum from the day following the instant judgment to the day when full payment is complete.

1. Basic facts

A. On March 26, 2010, Nonparty 1, who is Defendant 1’s spouse and Defendant 2’s father, received KRW 1,699 square meters from Nonparty 2, respectively, on the following grounds: (a) on March 26, 2010, Nonparty 1 sold to Nonparty 2 the purchase price of KRW 1,260,000,000 (hereinafter “instant land”) in the Namyang-si, Gyeonggi-do; and (b) on the one’s agricultural bank account (number: omitted 4) on March 26, 2010, Nonparty 1 received KRW 40,000,000 on April 26, 2010; and (c) on May 25, 2010, Nonparty 2 received KRW 340,000,000 from Nonparty 2 as the outstanding check number on June 25, 201 (the check number omitted).

B. Nonparty 1 deposited KRW 577,00,000 among the above transfer proceeds received as a check (number 1 omitted, check number 2 omitted, check number 3 omitted, check number 4 omitted), and deposited in the account of the principal’s national bank (Account Number: 5 omitted). The sum of each check ( check number 5 omitted, check number 6 omitted), which was received on June 25, 2010, deposited KRW 340,000 in the above national bank account. On July 30, 2010, Nonparty 1 transferred KRW 80,000,000 out of the above deposit amount to another national bank account in the name of the principal.

C. On August 30, 2010, Nonparty 1 withdrawn KRW 801,325,406 (Account Number: omitted 1) (i.e., 80,000,000 + interest KRW 1,566,666 + income tax 219,30 - local income tax 21,930) from Defendant 1’s national bank account (Account Number: 2: omitted; hereinafter “Defendant 1 account”) with KRW 100,00,00,000 from Defendant 2’s national bank account (i.e., the account number: 3: omitted; hereinafter “Defendant 2 account”).

D. Nonparty 1 did not report the transfer income tax following the transfer of the instant land as above. Accordingly, on April 1, 2015, the head of the North Mine District Tax Office under the Plaintiff’s control notified Nonparty 1 to pay the transfer income tax (hereinafter “instant transfer income tax”) by April 30, 2015, but Nonparty 1 did not pay it by the date of closing argument of the instant case. As of April 2015, Nonparty 1’s arrears in the said transfer income tax amount in KRW 794,839,090 as indicated in Table 1 below.

[Attachment 1]

Transfer income tax on the amount of tax in arrears of the first due date of notification of the date the tax liability to revert the tax items included in the main sentence is established, and the amount of tax in arrears of the tax notified due date of due date of notification as of April 30, 2015, April 1, 2015:

E. On August 30, 2010, Nonparty 1’s active and passive property at the time of cancelling the above national bank account (Account Number: omitted 1) on August 30, 2010 is as listed below 2.

[Attachment 2]

(C) The sum of the appraisal values (units: 14,130,442) 14,130,442 1,37,507 ( Note 1) 801,325,406 81,325,406 816,33,355 74,115,90 644,115,990 64,115,990 2)

Note 1) 1,377,507

Note 2) 644,115,990

[Reasons for Recognition] A without dispute, Gap evidence Nos. 1 through 14, Eul evidence Nos. 1 and 2 (including branch numbers), the purport of the whole pleadings

2. The plaintiff's assertion

Nonparty 1 withdrawn KRW 801,325,406 upon cancelling his national bank account (Account Number: omitted 1) on August 30, 2010 (=interest 1,566,660 + Income tax 219,330 - Local income tax 21,930) and then remitted KRW 701,325,406 to Defendant 1’s account, and KRW 100,000,000 to Defendant 2’s account constitutes a gift act against the Defendants or a derivative trust act, and thus, constitutes a fraudulent act that deepens Nonparty 1’s obligation excess. Nonparty 1’s claim against the said Defendants for cancellation of each gift or trust agreement on the said money and payment of the money as a result of restitution to its original state.

3. Determination

A. Determination as to preserved claims

1) In principle, a claim that can be protected by the creditor's right of revocation needs to be protected prior to the occurrence of an act that could be viewed as a fraudulent act, but it is highly probable that the legal relationship has already existed as at the time of the fraudulent act, and that the claim should be established in the near future because it is realized in the near future. The claim may also become a preserved claim of the creditor's right of revocation in the near future. Such legal principle applies to a taxation claim. Such legal principle also applies to a taxation claim, and the transfer income tax claim that is the preserved claim of a fraudulent act includes additional dues and aggravated additional charges arising from the time of closing argument at the trial court after the fraudulent act (see, e.g., Supreme Court Decisions 200Da37821, Mar. 23, 2001; 2006Da66753, Jun. 29, 2007).

2) On August 30, 2010, where the plaintiff asserted that the non-party 1's donation or deposit owner title trust was conducted, the notice of this case's transfer income tax on the non-party 1 was made only on April 1, 2015, which was four years after August 30, 2010. However, the transfer income tax is established on the last day of the month in which the tax base is to be paid by preliminary return and payment (Article 21 (2) 2 of the Framework Act on National Taxes). Accordingly, on June 30, 2010, it is highly probable to establish an abstract tax liability, which serves as the basis for the obligation to pay the transfer income tax of this case, and thereafter, the plaintiff confirmed that the real owner of the real estate of this case was non-party 1 and decided and notified the transfer income tax of this case to the non-party 1, and thus, it is reasonable to view that the plaintiff's claim to preserve the transfer income tax of this case's claim is confirmed specifically.

In addition, the additional dues under Articles 21 and 22 of the National Tax Collection Act are the kind of incidental dues imposed in the meaning of interest in arrears if the national tax is not paid by the due date, and if the national tax is not paid by the due date without the due date of payment by the due date without the due date of payment by the due date, it naturally occurs under Articles 21 and 22 of the National Tax Collection Act (see Supreme Court Decision 2006Da66753, Jun. 29, 2007) and its amount is confirmed (see Supreme Court Decision 2006Da66753, Jun. 29, 2007). Since it is highly probable that the additional dues claims against Non-party 1, including additional dues, will be established in the near future by legal relations. Thus, the plaintiff's transfer income tax claims against Non-party 1

3) Based on Supreme Court Decision 82Nu383 Decided March 27, 1984, the Defendants: (a) based on the date of transfer of each of the instant land by Nonparty 1 received the total amount of transfer proceeds of the instant land on June 25, 2010; (b) the obligation to pay capital gains tax occurred after June 1, 2011; (c) the Plaintiff decided to decide capital gains tax on March 23, 2015 and notified it on April 1, 2015; (d) the capital gains tax to be paid by Nonparty 1 was established after April 1, 2015; and (e) Nonparty 1 did not specifically conclude the Plaintiff’s obligation to pay capital gains tax on August 30, 2010, asserting that Nonparty 1 paid money to the Defendants’ account; (e) however, the Defendants asserted that the Plaintiff’s obligation to pay capital gains tax was not established in the Plaintiff’s account; and (e) the Defendant’s assertion that the Defendants converted from the method of imposition of capital gains tax to 2010.

The Defendants also claim that the transfer income tax liability arises when the taxable period of income tax ends, and thus, Nonparty 1’s tax liability arises only on December 31, 2010. However, insofar as the transfer income tax is paid by scheduled return and payment, as long as it is obvious that the obligation to pay is established on the last day of the month in which the amount that serves as the tax base under Article 21(2) of the Framework Act on National Taxes accrues, this part of the Defendants

B. Determination on the establishment of fraudulent act

1) Determination as to whether there exists a gift act between Nonparty 1 and the Defendants

A) Relevant legal principles

If a debtor donated his/her own property to another person in excess of his/her obligation, such act becomes a fraudulent act unless there are special circumstances (see Supreme Court Decision 97Da57320, May 12, 1998, etc.). The debtor’s intent to harm is presumed also presumed (see Supreme Court Decision 2012Da30861, Jul. 26, 2012, etc.).

However, in a case where a creditor seeking revocation of a fraudulent act asserts that an act of payment of money to a beneficiary is a gift to the debtor, it shall be proved that the act of payment constitutes a gift. The burden of proof is on the part of claiming a fraudulent act (see Supreme Court Decision 2005Da28686, May 31, 2007). In such a case, in order to constitute a gift, it shall be interpreted that there is an agreement between the parties to the deposit contract between the remitter and the beneficiary to vest the remitted money in the beneficiary ultimately without compensation to the beneficiary. In particular, in a case where the money is transferred to another person’s deposit account, the remittance may be conducted based on various legal causes, and the remittance may be made by a person having a certain personal relationship to escape from taxation authorities, etc., with the knowledge that the money is transferred to his own deposit account, and the account holder cannot be deemed to have been opened under the agreement between the remitter and the account holder, barring special circumstances, to the extent that it is objectively acceptable that the account holder had the right to return of money without compensation between the remitter and the account.

B) Determination

(1) On August 30, 2010, Nonparty 1 cancelled the National Bank Account (Account Number: omitted 1) and withdrawn KRW 801,325,406 out of the said money, and then transferred KRW 701,325,406 out of the said money to Defendant 1 account, KRW 100,000,00 to Defendant 2’s National Bank Account (Account Number: 3,000,000; hereinafter “Defendant 2 Account”); Defendant 1’s spouse, and Defendant 2’s child, as seen earlier.

(2) Based on the above legal doctrine, comprehensively taking account of the Plaintiff’s primary claim against Defendant 1, the Plaintiff’s primary claim as indicated in the Plaintiff’s evidence Nos. 10 through 14 and the overall purport of the pleadings, ① The above Defendant 1’s account from August 30, 2010 to another national bank account (Account Number: 6) with Defendant 1’s name; Sept. 20, 2010; KRW 10 million respectively; Defendant 1’s another national bank account (Account Number: 7, omitted; 8); Defendant 1’s transfer of money to the above account from November 15, 2010 to the above account; Defendant 1’s transfer of money to Nonparty 5,00,000 won to Nonparty 1’s account; Defendant 1’s transfer of money to Nonparty 20,000 won to the above account; Defendant 1’s transfer of money to Nonparty 5,005,201.

(3) Next, insofar as there is no evidence to acknowledge that the Plaintiff transferred the Plaintiff’s primary claim against Defendant 2 to Defendant 2 without compensation, the Plaintiff’s primary claim against Defendant 2 cannot be asserted as to the Plaintiff’s primary claim.

2) Determination as to whether the title trust of deposit holders exists between Nonparty 1 and the Defendants

A) Relevant legal principles

(1) Generally, title trust is generally held by a trustee in an external relationship, and ownership is attributed to him/her, but in an internal relationship between the truster and the trustee, the truster holds the ownership and proceeds from the management. Thus, in order for the debtor to have established a title trust agreement with respect to money remitted to another person’s deposit account, there must be an agreement between the debtor and the holder of the deposit account that the debtor holds the ownership of the deposit claim and proceeds from the management (see, e.g., Supreme Court Decision 2014Da232982, Apr. 9, 2015).

(2) In addition, where a title trustee is obligated to transfer the right acquired by a contract with the other party in relation to the title truster to the title truster, and where a deposit principal title trust contract is concluded between the contributor and the deposit owner, the title truster is obligated to transfer the right to return the deposit to the financial institution upon the request of the contributor. Thus, where a deposit principal title trust contract is cancelled as it constitutes a fraudulent act, restitution following the cancellation shall be made by transferring the deposit claim to the truster to the financial institution and ordering the financial institution to notify the transfer to the financial institution, barring any special circumstance, such as where the title truster withdrawss and uses the deposit from the deposit account or terminates the deposit account (see Supreme Court Decision 2014Da212438, Jul. 23, 2015).

B) Determination

(1) In light of the following: (a) whether Nonparty 1 and the Defendants entered into a deposit account title trust agreement with respect to the instant remittance; (b) the aforementioned facts; and (c) the overall purport of the entries and arguments in the evidence Nos. 10 through 14 as to each of the above evidence, there is room to deem that the deposit account title trust agreement was concluded between Nonparty 1 and the Defendants with respect to the instant Defendants’ account.

(2) Meanwhile, comprehensively taking account of the above-mentioned facts, each of the evidence and the purport of the entire pleadings, the remainder of Defendant 1’s account as of May 14, 2016 can be acknowledged as constituting four grounds, and the fact that Defendant 2’s account was terminated on February 28, 2011.

However, even if the above deposit account holder’s title trust is revoked as it constitutes a fraudulent act as alleged by the Plaintiff, insofar as there is no evidence to acknowledge the special circumstance that the Defendants withdrawn and used the deposit from the Defendants’ account, or Defendant 2 terminated the Defendant’s account and thereby gained profit from the said account, it cannot be deemed that the Defendants is liable to return the Defendants’ account (in the case of Defendant 1’s account, unlike the Defendant 2’s account, even though the deposit contract was not yet terminated, the remaining amount is only four won, and thus, it seems that the Defendants were liable to transfer the above deposit claim to Nonparty 1 and to notify the transfer to the National Bank).

(3) Therefore, the Plaintiff’s conjunctive claim on the premise that, in a case where the deposit holder’s title trust act is revoked as a fraudulent act, it is possible to seek a return of money deposited in the trust account due to its restitution, is without merit to further examine whether the act of each deposit holder’s title trust against the Defendants constitutes a fraudulent act.

4. Conclusion

Therefore, the plaintiff's primary and conjunctive claims against the defendants are all dismissed as it is without merit. It is so decided as per Disposition.

Judges Eather (Presiding Judge)

1) The Plaintiff asserted in the Plaintiff’s complaint that the balance of the Plaintiff’s agricultural bank account was KRW 1,604,775 won. However, comprehensively taking account of the Plaintiff’s evidence Nos. 3, Eul’s evidence Nos. 2 and the overall purport of the pleadings and arguments, the remainder of the account was KRW 1,377,507 on June 30, 2010, which is the base point for determining the fraudulent act of this case, and KRW 1,377,507 on August 30, 2010. Thus, the Plaintiff’s agricultural bank account balance as an active property at the time of each gift alleged by the Plaintiff is KRW 1,377,507.

2) In determining whether a debtor’s excess of his/her obligation is established at the time of the fraudulent act, and it is highly probable that the obligation will be established on the basis of the existing legal relations in the near future, and in cases where the debt is actually realized in the near future, the obligation should also be included in the debtor’s passive property (see Supreme Court Decision 2010Da68084, Jan. 13, 201). Therefore, the Plaintiff’s transfer income tax claim against Nonparty 1 against Nonparty 1 should be included in the non-party 1’s small property to determine whether a debt exceeds his/her obligation.