Gwangju High Court ( Jeju) 2010Nu469 ( October 15, 2011)

Disposition of seizure on the property of a third party who is not a taxpayer shall be null and void as it is impossible to legally realize the contents of such disposition.

The claim of value-added tax does not constitute a "right arising from the conduct of trust affairs" under the proviso of Article 21 (1) of the Trust Act as a claim against the truster, and the disposition of this case where the trust property owned by the trustee is seized on the truster's claim

Article 24 of the National Tax Collection Act

2011Du14975 Nullification of a seizure disposition

XX Trust Corporation

Head of Jeju Tax Office

Gwangju High Court ( Jeju) Decision 2010Nu469 Decided June 15, 2011

April 13, 2012

The appeal is dismissed.

The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

Article 21 (1) of the Trust Act provides that the trust property shall not be subject to compulsory execution or auction: Provided, That this shall not apply to the case of the right arising from the cause before the trust or the right arising from the performance of the trust affairs.

In light of the legislative intent of Article 21(1) of the Trust Act, the trust property under the Trust Act does not belong to the trustee entirely and externally, and the ownership of the trust property is not reserved to the truster in the internal and external relationship with the truster (see, e.g., Supreme Court Decisions 2000Da70460, Apr. 12, 2002; 2007Da54276, Mar. 13, 2008); and Article 21(1) of the Trust Act provides that the trust property may be subject to compulsory execution or auction against the trust property under the proviso of Article 21(1) of the Trust Act shall be included only in cases where the trustee is a debtor, and it does not include cases where the truster is a debtor.

Meanwhile, even if the tax authority seizes and sells a third party’s property as a disposition for arrears to a taxpayer, it does not lose ownership due to such disposition, and it is limited to the taxpayer’s property in any case or the subject of seizure under the provisions of Article 24 of the National Tax Collection Act, which provides for the requirements for seizure as a disposition for arrears. As such, a disposition for seizure against a third party’s property, which is not a taxpayer, may not be legally realized (see, e.g., Supreme Court Decisions 92Nu1217, Apr. 27, 1993; 2005Du15151, Apr. 13, 2006).

In the same purport, the court below is justified in holding that the disposition of this case which seized the trust property owned by the plaintiff on the basis of the value-added tax claim against the non-party company on the ground that the claim against the truster company P (hereinafter referred to as "non-party company") cannot be deemed to fall under the "right arising in the course of performing the trust business" under the proviso of Article 21 (1) of the Trust Act, which is a claim against the truster company. In so doing, the court below did not err by misapprehending the legal principles on the grounds of the proviso of Article 21 (1) of the Trust Act and the grounds

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.