[1] The standard time to determine whether the existing title truster, who fails to carry out the real name registration even after the grace period after the enforcement of the Act on the Registration of Real Estate under Actual Titleholder's Name, is "the purpose of evading taxes or avoiding restrictions under the Acts and subordinate statutes" and the burden of proof as to the facts that such act constitutes a case which is not aimed at evading taxes or avoiding restrictions under the Acts and subordinate statutes.

[2] The discretionary power of an administrative agency over the application of the proviso of Article 3-2 of the Enforcement Decree of the Act on the Registration of Real Estate under Actual Titleholder’s Name, which is a discretionary mitigation provision

[1] Articles 5, 11(1), and 12(2) of the Act on the Registration of Real Estate under Actual Titleholder’s Name; Article 3-2 of the Enforcement Decree of the Act on the Registration of Real Estate under Actual Titleholder’s Name / [2] Article 3-2 of the Enforcement Decree of the Act on the Registration of Real Estate under Actual Titleholder’s Name; Article 27 of the

[2] Supreme Court Decision 2005Du3257 decided Sep. 15, 2005 (Gong2005Ha, 1634)

Hansung Tourism Development Co., Ltd. (Law Firm Sejong, Attorneys Yil-il et al., Counsel for the defendant-appellant)

The head of Yeongdeungpo-si Office

Seoul High Court Decision 2011Nu20699 decided November 30, 201

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

The grounds of appeal are examined.

1. The period of suspension of actual name registration, etc.:

Article 11(1) of the Act on the Registration of Real Estate under Actual Titleholder’s Name (hereinafter “Real Estate Real Name Act”) provides that, in principle, the existing title truster shall make the actual name registration within one year from the date of entry into force of the Act ( July 1, 1995). Paragraph (2) shall be deemed to have made the actual name registration under paragraph (1) in certain cases, such as sale, disposal, etc., and Paragraph (3) shall be deemed to have been made the actual name registration under paragraphs (1) and (2), and where it is impossible to make the actual name registration or the sale, etc. under paragraphs (1) and (2) without any cause attributable to the actual right holder, within one year from the date on which such cause ceases to exist. In order to obtain an extension of the grace period under paragraph (3) of the above Article, the actual name registration cannot be made and the sale, etc. shall not be made within the grace period due to any restriction under other Acts, not by any economic loss, but by any change in the title trust at the time of such restriction.

citing the reasoning of the first instance judgment, the lower court determined that the mere fact that the Minister of Construction and Transportation limit the farmland area to be diverted to a golf course site at KRW 7,888 does not mean that the administrative agency allowed the Plaintiff to use the instant land at the time to a golf course site. It cannot be deemed that the Plaintiff was unable to register the actual name because the land category of the instant land was not changed to a sports site due to the Defendant and any other administrative agency’s fault. In so doing, the lower court rejected the Plaintiff’s assertion that the instant land constitutes a violation of Article 11(3) of the Real Estate Real Name Act from the enforcement date of the Real Estate Real Name Registration Act (Article 2 of the Addenda to the Farmland Act, Act No. 4817, Dec. 22, 1994) even after it had already been limited by the same restriction, and thus, it does not constitute a case where the Plaintiff cannot register the actual name or sell the instant land within the period of 19 years pursuant to the provisions of other Acts without any cause attributable to the actual right holder.

Examining the reasoning of the judgment below in light of the relevant legal principles and records, the above determination by the court below is just in accordance with the legal principles as seen earlier, and there is no error of law by misapprehending the interpretation of Article 11(3) of the Real Estate Real Name Act or the legal principles as to the imposition standard

2. As to the exclusion period of the penalty surcharge imposition

Article 11 (2) of the Real Estate Real Name Act applies Article 5 pursuant to Article 12 (2) to a title truster who has failed to register the actual name within the grace period, and thus, a penalty surcharge is imposed within the limit of an amount equivalent to 30/100 of the value of the pertinent real estate. In light of relevant statutes, such as Article 3 (5) of the Enforcement Decree of the Real Estate Real Name Act, which provides that matters necessary for the imposition and collection of the penalty surcharge shall be governed by the example of collecting local taxes, the exclusion period of the imposition of the penalty surcharge shall be five years, and the initial date shall be deemed the time when the registration of title trust is cancelled (see Supreme Court Decision 2004Du2776, Jan. 13, 2006).

citing the reasoning of the judgment of the court of first instance, the court below rejected the Plaintiff’s assertion that the disposition of this case was unlawful since since around 1994, on the ground that when the registration of title trust with respect to the land of this case was cancelled, the registration of title trust was completed on July 19, 2007, when the registration of title trust was completed, and the disposition of this case, which imposed the penalty surcharge, was made on January 18, 2010, within five years thereafter, since the Plaintiff was aware of the fact of title trust, since the Defendant had started to pay the acquisition tax, etc. with respect to the land of this case from

Examining the reasoning of the judgment below in light of the above legal principles and records, the above judgment of the court below is just, and there is no error in the misapprehension of legal principles as to the limitation period of imposition of penalty surcharge.

3. As to whether the grounds for reduction of penalty surcharge constitute grounds for reduction

The proviso of Article 3-2 of the Enforcement Decree of the Real Estate Real Name Act provides that the penalty surcharge may be reduced by 50/100 pursuant to Article 5 of the Real Estate Real Name Act shall also apply to the imposition of a penalty surcharge on a person who fails to carry out a real-name registration, etc. within the grace period after the enforcement of the Real Estate Real Name Act (Article 12(2) of the Real Estate Real Name Act). However, in light of the fact that where the existing title truster carried out a real-name registration, etc. within the grace period, he/she shall not impose a penalty, regardless of the purpose of title trust, if the said grace period has expired, it shall be determined as at the time when the said grace period has lapsed, that is, whether the existing title truster who did not carry out a real-name registration, etc. has the purpose of evading taxes or avoiding restrictions under the relevant Acts and subordinate statutes, and that it constitutes a non-purpose one.

In addition, since the above proviso is a discretionary mitigation provision, even if there are grounds for reduction, it cannot be readily concluded as unlawful in the event that the imposing authority imposed the full amount of the penalty surcharge without considering the grounds for reduction even if there exist grounds for reduction of the penalty surcharge. However, in the event that the imposing authority does not at all engage in the administrative act, or omits any matters to be included in the subject of consideration of the balancing of interests, or where there is a lack of legitimacy and objectivity even though the balancing of interests was conducted, the administrative act is an unlawful disposition that deviates from and abused the discretion (see Supreme Court Decision 2005Du3257, Sept. 15, 2005).

The court below rejected the Plaintiff’s assertion that the penalty surcharge should be mitigated pursuant to the above proviso because the Plaintiff did not evade taxes or avoid restrictions under the laws and regulations. As to the Plaintiff’s assertion that the disposition of this case was unlawful without considering all the grounds for mitigation, the Defendant did not resolve the title trust registration of this case for personal and economic purposes, such as the operation of the instant golf course even after the enforcement of the Real Estate Real Name Act, inasmuch as the Plaintiff did not resolve the title trust registration of this case for the personal and economic purposes of the instant golf course in order to avoid restrictions under the former Farmland Real Name Act, regardless of whether the Plaintiff recognized the instant land as one’s own property and paid the aggregate land tax, the court below rejected the Plaintiff’s assertion on the ground that

However, we cannot accept the judgment of the court below that the plaintiff did not resolve the registration of title trust of this case within the grace period for the purpose of avoiding restrictions under the former Farmland Reform Act, etc. for the following reasons.

According to the facts established by the court below and the evidence admitted by the court below, ① the Plaintiff was established on October 6, 1973 for the purpose of running a golf club business, and purchased land from the time of the purchase for the purpose of opening a golf club. ② The Plaintiff purchased the instant land, the land category of which was farmland at the time, for the purpose of incorporation into the said golf club site. However, the registration of ownership transfer was completed on June 3, 1980 because the Plaintiff cannot obtain certification of farmland sale pursuant to the former Farmland Reform Act. ③ The Plaintiff did not make a decision on the land category of 441,504 square meters of the above revised land including the instant land at around 1981 on the ground that the Plaintiff did not use the said land for the purpose of establishing a golf club on the said 40,644 square meters of total farmland, and the Plaintiff did not use the said land for the purpose of 198 square meters of total farmland, and the Plaintiff did not use the said land for the purpose of 198 square meters of the instant land.

Examining the above facts in light of the legal principles as seen earlier, although at the time of the Plaintiff’s purchase of the instant land, the Plaintiff could have purchased the instant land for the purpose of avoiding restrictions under the former Farmland Reform Act; however, from the beginning, the Plaintiff purchased the instant land for the purpose of converting it into a sports site, and the substantial part of the instant land was able to be converted into a sports site according to the said business plan, and thereafter, the entire land of this case appears to have lost the function of the land actually included in the site of a golf course, namely, farmland, which is actually used for the real cultivation, and thus, at least as of July 1, 1996, it seems difficult to deem that the Plaintiff had the purpose of evading restrictions under the former Farmland Reform Act. In addition, in light of the fact that the Plaintiff paid the acquisition tax on the instant land around 1994 and paid the aggregate land tax, etc. imposed on the Plaintiff, it does not seem that the Plaintiff had the purpose of evading taxes at the time when the said grace period expired. Moreover, in rendering the instant disposition.

Nevertheless, the court below rejected the Plaintiff’s assertion on this portion immediately by determining that the Plaintiff had an intent to avoid restrictions under the laws and regulations solely on the ground that the Plaintiff registered the title trust in this case to avoid restrictions under the former Farmland Reform Act. The court below erred by misapprehending the legal principles on the grounds for reduction of penalty surcharges under the proviso of Article 3-2 of the Enforcement Decree of the Real Estate Real Name Act, thereby failing to exhaust all necessary deliberations, which affected the conclusion of the judgment

4. Conclusion

Therefore, the judgment of the court below is reversed, and the case is remanded to the court below for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices.

Justices Kim Nung-hwan (Presiding Justice)