In a case where Party A transferred a house and owned an apartment house at the time of the transfer of the said apartment, but Party B acquired Party B’s right to sell a reconstruction apartment pursuant to a joint investment agreement with Party B, and subsequently transferred Party B’s right to sell the reconstruction apartment, and the registration of ownership preservation has been completed under Party B’s name; the tax authority imposed capital gains tax heavy taxation on Party A on the ground that Party A’s transfer of the said house constitutes the transfer of three houses for one household owner, the case holding that the lower court erred by misapprehending the legal doctrine on the grounds that Party B cannot be deemed to own one-fourth share equivalent to Party B’s investment

In a case where Gap transferred his own house and owned the apartment house at the time of the transfer of the above house, but Gap was selected as a new apartment unit member Eul who constitutes one household under the joint investment agreement with Byung, and later acquired the right to sell another apartment unit member Eul's house, and then transferred the right to sell the new apartment unit to Byung under Byung's name, and the tax authority imposed heavy taxation on Gap on Gap on the ground that Eul's transfer of the above house constitutes a transfer of three houses for one household, the case held that the judgment below erred in the misapprehension of legal principles as to the fact that the other party to the sale contract for a new apartment, as the other party to the sale contract for a new apartment, consented to or consented to the change of the name of the purchaser of the new apartment unit as to the sale contract, and the reconstruction association was aware of the title trust agreement on the 1/4 portion of the new apartment which corresponds to the shares of Eul's investment, since Eul acquired the complete ownership of the 1/4 share of the new apartment unit under title trust of Eul, and thus, it did not own any shares.

Article 4(1) and (2) of the former Act on the Registration of Real Estate under Actual Titleholder’s Name (Amended by Act No. 10203, Mar. 31, 2010); Article 104(1)2-3 (see current Article 104(4)1); Article 167-3 of the former Enforcement Decree of the Income Tax Act (Amended by Presidential Decree No. 19507, Jun. 12, 2006);

Plaintiff

The Director of the Pacific District Office

Seoul High Court Decision 2010Nu10671 decided January 26, 201

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

The grounds of appeal are examined.

1. Regarding ground of appeal No. 1

The court below, citing the reasoning of the judgment of the court of first instance, purchased the reconstruction apartment of this case, which was being reconstructed around October 1, 2002 under the joint investment agreement concluded with the non-party 2 and 3. After that, the non-party 1 was selected as the occupant of the new apartment of this case to be constructed in the future and entered into a sales contract for the new apartment of this case on July 25, 2003, and on August 25, 2005, changed the name of the purchaser of the new apartment of this case to the non-party 3 on September 28, 2005. Accordingly, the court below acknowledged the fact that the ownership preservation of the new apartment of this case was completed in the future of the non-party 3 as to the new apartment of this case on December 6, 2005, and determined that the non-party 1 changed the name of the non-party 1's new apartment of this case to the non-party 1's ownership in the title of the new apartment of this case.

Examining the reasoning of the lower judgment in light of the relevant legal doctrine and the evidence duly admitted, the lower court did not err by misapprehending the legal doctrine on the freedom of contract doctrine, contrary to what is alleged in the grounds of appeal.

2. As to the grounds of appeal Nos. 2 and 3

A. Article 4(1) of the former Act on the Registration of Real Estate under Actual Titleholder’s Name (amended by Act No. 10203, Mar. 31, 2010; hereinafter “Real Estate Real Name Act”) provides that “title trust agreement shall be null and void,” and Paragraph (2) of the same Article provides that “any change in the real right to real estate by the registration made under a title trust agreement shall be null and void: Provided, That the same shall not apply where the title trustee becomes a party to a contract for the acquisition of real estate and the other party was unaware of the fact that the title trust agreement exists.” Therefore, where the title truster and the title trustee entered into a so-called contract under a title trust agreement with the owner who were unaware of the fact that the title trustee was a party to the contract and completed the registration of ownership transfer of the relevant real estate in the name of the title trustee, notwithstanding the invalidity of the title trust agreement between the title truster and the title trustee, the title trustee must prove that the title trustee, who is the other party to the contract, was aware of the title trust agreement (see, etc.).

B. Examining the facts acknowledged by the court below in light of the above provisions and legal principles, even if the title trust agreement on 1/4 shares among the new apartments of this case between Nonparty 1 and Nonparty 3 is null and void, unless there is proof by the defendant as to the fact that the reconstruction association consented or consented to the alteration of the name of the purchaser of the new apartment of this case as the counter party to the sales contract of this case, and was aware of the above title trust agreement, the non-party 3, who completed the registration of ownership preservation of the new apartment of this case, shall acquire full ownership on 1/4 shares among the new apartment of this case which the non-party 1 trusted in trust, and thus, it cannot be deemed that the non-party 1 owned

C. Nevertheless, the lower court determined otherwise, as seen earlier, that Nonparty 1 entrusted the title of Nonparty 1’s investment shares in the instant new apartment, which correspond to Nonparty 1’s ownership, but it is merely a formal transfer in which payment, etc. has not been performed, and thus, cannot be deemed as a title trust, and thus, Nonparty 1 owned the said 1/4 shares due to insufficient registration to be deemed as a registration to which the proviso of Article 4(2) of the Real Estate Act applies. In so doing, the lower court determined that the instant disposition of imposition of capital gains tax was lawful, on the premise that the Plaintiff and Nonparty 1 as one household at the time of the instant transfer of the instant new apartment was holding three houses including the instant housing, and that Nonparty 1 owned the said 1/4 shares as the owner of the said 1/4 shares, and thus, applied the tax rate of 60% on the “transfer of housing constituting 3 or more houses for one household.”

Therefore, in so determining, the court below erred by misapprehending the legal principles as to the validity of registration under a title trust agreement and the burden of proof under a title trust agreement in order to acquire a real right to real estate, which affected the conclusion of the judgment. The ground of appeal

3. Conclusion

Therefore, 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 Shin Young-chul (Presiding Justice)