Gwangju District Court Gwangju District Court Decision 2013Gadan71948 ( October 02, 2014)

the transfer of shares in excess of obligations constitutes a fraudulent act.

If a person in excess of his/her obligation transfers his/her share (which results in a change of money easily consumed if it is transferred, and which in itself deepens the shortage of common security), this constitutes a fraudulent act.

Article 406 of the Civil Code, Right of Revocation

2014Na51608 Revocation of Fraudulent Act

Korea

LAA

Gwangju District Court Decision 2013Da71948 Decided May 2, 2014

March 11, 2015

March 25, 2015

1. Revocation of a judgment of the first instance;

2. Of the instant lawsuits, the part demanding the notice of revocation under paragraph (3) below shall be dismissed.

3. The transfer agreement concluded on October 7, 201 between the defendant and the LeeB on 30.02% of the shares of the unlimited partnership company for ○○ Development shall be revoked.

4. One-fifth of the total litigation costs is borne by the Plaintiff, and the remainder is borne by the Defendant, respectively.

The judgment of the first instance is revoked. Paragraph (3) of this Article and the defendant give notice to the general partnership company of ○○ Development (the location: ○○○○○, 228-3, representative member lectureCC) that the transfer contract was revoked.

1. Basic facts

A. As of October 7, 201, the Plaintiff: (a) had tax credits equivalent to KRW 1,351,191,300 against B; (b) thereafter, the Plaintiff did not fully repay the said obligations.

B. As of October 7, 201, thisB had no particular property other than the shares of approximately KRW 85,927,50,000 in Busan ○○○○○○○○○○○○○○○○ 602, approximately KRW 268,812,00 (hereinafter referred to as “○○○○○○○○○○○ Do”) and the deposit claims equivalent to KRW 82,804.

C. AB acquired 30.02% of the shares of ○○ Development Partnership (hereinafter referred to as “instant shares”) on the ground that it invested KRW 93,650,000 on June 25, 2009 (hereinafter referred to as “○○ Development”) and served as a representative member of ○ Development from June 26, 2009 to October 24, 2009.

D. AB transferred the instant shares to the Defendant on October 7, 201, and withdrawn from ○○ Development.

[Ground of recognition] Facts without dispute, entry of Gap evidence 1 through 6 (which include various numbers; hereinafter the same shall apply) and the purport of the whole pleadings

2. The parties' assertion

A. The plaintiff

The transfer of the instant shares to the Defendant on October 7, 201 from the debt excess condition to the Defendant on October 201, 201 constitutes a fraudulent act, and thus, the above share transfer contract should be cancelled, and the Defendant has a duty to notify the ○○ Development of the above cancellation.

B. Defendant

1) The BB (or ○○○○○○○-dong 228-3 land (hereinafter “instant land”) around the beginning of 2009, decided to purchase the instant land and its ground buildings at KRW 3 billion in order to develop ○○-dong 228-3 land (hereinafter “instant land”).

2) However, since the Defendant and his family members all hold the shares of ○ Development, the above sales contract was concluded by the Defendant to transfer the legal entity of ○○ Development to B.

3) B acquired the instant shares after paying the Defendant (or ○○ Development) a part of the purchase price, by June 19, 2009, after which it acquired the instant shares. However, on October 2009, the remaining purchase price cannot be paid, the Defendant revoked the said purchase and sale contract and dismissed the B from the representative member.

4) Inasmuch as the above sales contract was rescinded, B did not return the instant shares to the Defendant, asserting that it should be refunded KRW 850 million out of the sales price already paid, and that it did not return the said shares to the Defendant without receiving any payment on October 7, 2011.

5) As seen above, B acquired the instant shares through a sales contract, and returned the instant shares as a result of the performance of the duty to restore the original status following the cancellation of the sales contract, the said transfer does not constitute a fraudulent act.

6) The fact that B acquired the instant equity interest constitutes a false conspiracy, and thus, the said equity interest was the property of B cannot be deemed as having been the property of B.

7) In addition, in light of the aforementioned developments leading up to the transfer of shares in the instant case, it cannot be said that B and the Defendant had the intent of deception.

3. Determination

(a) Grounds for claims;

1) According to the facts of paragraph 1, the transfer of the instant shares to the Defendant in excess of the debt, which led to deepening the state of excess of the debt (such as the Plaintiff’s assertion, the change of the amount of money easily consumed if it is transferred for consideration, and if it is transferred without consideration as the Defendant’s assertion, the shortage of the joint security itself is deepened). In light of the property status of the BB at the time, it shall be deemed that the transfer constitutes a fraudulent act, barring any special circumstances, and the Defendant has a duty to restore the said shares accordingly.

2) However, the plaintiff claims that ○○ Development notify the cancellation of the transfer contract by way of restitution (the original adjudication division requested the plaintiff to review the modification of the purport of this part of the claim, but the plaintiff maintained the claim as it is). Restoration following the cancellation of the transfer contract must be made in the way that the defendant returns the shares of this case to B, and it is sufficient to do so, and it is not necessary to give notice of ○○ Development. Thus, this part of the lawsuit cannot be said to have a benefit in protecting rights.

B. Defendant’s assertion

1) First of all, the testimony of the witness KimD of the first instance court is insufficient to recognize that the acquiring of the shares in this case on June 25, 2009 constitutes a false declaration of conspiracy, and there is no other evidence, and even according to the defendant's argument, this B and the defendant are deemed to have agreed between B and B to return the shares to the defendant if B acquired the above shares and did not repay the loan obligations, and it is not a conspiracy between BB and the defendant with the intention to return the shares to the defendant. Therefore, this part of the argument is without merit.

2) In addition, comprehensively taking account of the following facts or circumstances acknowledged or known as a whole by comprehensively taking account of the results of an order to submit financial transaction information to the ○○ Savings Bank as a result of the order to submit each financial transaction information, it is insufficient to recognize the fact that the instant shares were transferred to B to ○○○ Savings Bank as alleged by the Defendant, and there is no other evidence, and there is no reason to assert this part of the allegation.

A) As seen earlier, there is no consistency in the Defendant’s assertion on this part, such as the reversal of the claim that the BB acquired the instant shares by paying the price.

B) It is difficult to readily conclude that the transfer of the instant share was caused by the cancellation of the sales contract, on the grounds that there exists a time gap between the cancellation date of the sales contract and the transfer date of the instant share to the Defendant.

C) The Defendant asserted that B did not return the instant shares by asserting that he did not return his claim and that KimD returned the instant shares without receiving any consideration from the time he tried to develop the instant land. If BB did not return the instant shares for two years or longer in order to secure the Defendant’s claim against the Defendant, it is difficult to accept that B returned the instant shares without preparing other claims securing measures.

D) Since the CCTV company was a CCTV company with ○○○tech (the remaining testimony of the witness KimD in the first instance trial), the argument that this company acquired the instant shares in order to develop the instant land is not highly reliable.

(e)

(1) The Defendant asserted as follows with regard to the specific circumstances in which B acquired the instant shares and taken office as a representative member.

(A) B B had not been actually executed by the Defendant even though the Defendant was the representative member of ○○ Development prior to the acquisition of the instant shares.

(B) However, in order to develop the instant land, loans were granted in the name of ○○ Development, and there was a need for the joint and several guarantee of the representative member’s debt.

(C) However, since the Defendant did not have an intention to assume the joint and several liability, the Defendant acquired the instant shares and had B take the office as a representative member of ○○ Development.

(2) First of all, this shall be the joint and several sureties’s debt obligations on August 6, 2009.

(3) However, on November 25, 2011, ○ Development obtained a loan of KRW 1.2 billion from ○ Savings Bank and repaid the loan obligations under the above Paragraph (2). As to the loan obligations under the above Paragraph (2) on November 25, 201, the Defendant jointly and severally guaranteed the obligation. This is a circumstance contrary to the Defendant’s assertion.

3) Finally, in a lawsuit seeking revocation of a fraudulent act, the beneficiary has the burden of proof against the beneficiary that the beneficiary was unaware of the fraudulent act. In the event that the debtor's act of disposing of the property against a third party constitutes a fraudulent act, the objective and acceptable evidence should be supported in recognizing that the beneficiary was bona fide at the time of the fraudulent act, and only the debtor's unilateral statement or a statement that is merely a third party's explanation, it should not be concluded that the beneficiary was bona fide at the time of the fraudulent act (see Supreme Court Decision 2006Da5710, Apr. 14, 2006). The defendant's assertion in this part is not sufficient to acknowledge that the defendant was a bona fide beneficiary, and there is no other evidence.

4. Conclusion

Therefore, the part of the claim for the notification of the cancellation of the transfer contract in the lawsuit in this case is unlawful, and the remaining claims shall be accepted for the reasons, and the judgment of the court of first instance, which has concluded otherwise, shall be revoked, and the above part of the claim for notification shall be dismissed, and it is so decided as per Disposition by ordering the cancellation of the transfer contract in this case.