[1] The standard for determining whether a case constitutes business transfer under Article 30(3) of the former Installation and Utilization of Sports Facilities Act

[2] Whether a person who cannot be deemed to have acquired membership as a collateral, such as being issued membership, constitutes a member who is entitled to the protection of the rights under the existing membership recruitment agreement pursuant to Article 30(3) and (1) of the former Installation and Utilization of Sports Facilities Act (negative)

[3] The case holding that a golf membership membership agreement with respect to the above membership is valid where the amount of the contract price claim is paid in a way substituted for the membership fee and the membership fee is issued in the golf club membership in accordance with an agreement on payment in substitutes

[1] In cases where Article 30(3) of the former Installation and Utilization of Sports Facilities Act (amended by Act No. 6907 of May 29, 2003), the term “transfer of business at the stage of completing the construction of sports facilities” means, in principle, the “transfer of human and material organization organized to register the sports facilities business by completing the construction of sports facilities as a whole” as a whole. In light of the purpose of the Act to encourage the installation and use of sports facilities, whether a business constitutes a business transfer under Article 30 of the Act should not be determined based only on whether the human and material organization has been transferred as a single opportunity, but also on the basis of a single intention to continue a business conducted for the purpose of registering the sports facilities business after completing the construction of sports facilities by obtaining a successful bid in an auction or public sale procedure, and on the other hand, the remaining business transfer is deemed to constitute a joint transfer of assets and business rights, as a whole, by considering that it constitutes a separate business transfer between the previous business operator and the previous business operator under social norms.”

[2] The provisions of Article 30(3) of the former Installation and Utilization of Sports Facilities Act (amended by Act No. 6907 of May 29, 2003) shall be interpreted that a person who obtained approval of a business plan pursuant to Article 12 of the Act shall succeed to the rights, obligations, and status under the approval of a person who obtained approval of a business plan, such as a transferor, an heir, and a corporation after a merger, in cases where a person who obtained approval of a business plan pursuant to Article 30(3) and (1) of the Act is qualified as a member under the existing membership recruitment agreement even in cases of transfer of business concerning a sports facility pursuant to Article 30(3) and (1) of the Act, and thus, a person who cannot be deemed as having obtained a membership, such as a security under Article 19 of the Act, without undergoing the procedure.

[3] The case holding that a golf membership membership agreement with respect to the above membership is valid where the amount of the contract price claim is paid in a way substituted for the membership fee and the membership fee is issued in the golf club membership in accordance with an agreement on payment in substitutes

[1] Article 30 (1) and (3) (see current Article 27 (1) and (3) (see current Article 27 (3)) of the former Installation and Utilization of Sports Facilities Act (amended by Act No. 6907 of May 29, 2003) / [2] Articles 19 (see current Article 17), 30 (1) (see current Article 27 (1)) and (3) (see current Article 27 (3)) of the former Installation and Utilization of Sports Facilities Act (amended by Act No. 6907 of May 29, 2003) / [3] Articles 19 (see current Article 17), 30 (1) and (3) (see current Article 27 (1) and (3)) of the former Installation and Utilization of Sports Facilities Act (amended by Act No. 6907 of May 29, 2003)

[1] [2] Supreme Court Decision 2004Da10213 Decided October 28, 2004 (Gong2004Ha, 1949) / [1] Supreme Court Decision 2000Du4095 Decided June 14, 2002 (Gong2002Ha, 1696), Supreme Court Decision 2005Da5379 Decided November 23, 2006 (Gong2007Sang, 26)

Plaintiff 1 and nine others (Attorneys Song Jae-gu et al., Counsel for the plaintiff-appellant)

Defendant Co., Ltd. (Law Firm Dakel, Attorneys Sog-dam et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2005Na17015 decided July 6, 2007

The appeal is dismissed. The costs of appeal are assessed against the defendant.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. As to grounds of appeal Nos. 3 and 4

Article 30(1) of the former Installation and Utilization of Sports Facilities Act (amended by Act No. 6907, May 29, 2003; hereinafter “the Act”) provides that the rights and obligations under the existing membership recruitment agreement shall be succeeded to a transferee of business in the event of a transfer of a completed sports facility business. Article 30(3) of the Act provides that the above provision shall apply mutatis mutandis to succession of approval of a business plan accompanied by a transfer of business, etc. prior to the completion of a sports facility business. However, transfer of business under the Commercial Act generally refers to a transfer of business assets, which are functional properties as an organic unit organized for a specific business purpose, as a whole, by maintaining its identity and identity (see Supreme Court Decision 96Da826, Apr. 14, 1998, etc.). It is reasonable to view that the transferred business plan constitutes a single sports facility business establishment and a single sports facility business establishment and a single sports facility business establishment and a new business establishment and a new business establishment and a new business establishment and a new business establishment of the same at the same time as the previous business establishment of the sports facility is established for the purpose.

The court below, after compiling the selected evidence, found the facts as stated in its reasoning. The defendant was established for the purpose of acquiring the golf club of this case; the defendant's participation in the auction procedure of this case; the defendant's acquisition of sports facility business before the decision to permit successful bid; and the acquisition of ownership of the land subject to auction due to the full payment of successful bid price; the participation in the auction procedure to acquire most of the site of this case; and the succession of the contract and the business plan plan of this case to acquire the right to the golf club of this case, etc. to the effect that the succession of the contract and the business plan of this case to acquire the right to the golf club of this case had been carried out as a separate procedure in law, but the defendant succeeded to the business plan of this case from the non-party corporation, it seems that most of the site of the golf club of this case through the above auction procedure were presumed to have been premised on the whole acquisition of the right to the golf club of this case through the above auction procedure; in light of social norms, the defendant, as a whole, shall be deemed to have been transferred the business plan of this case's.

In light of the above legal principles and records, we affirm this fact-finding and judgment of the court below is just.

As asserted in the grounds of appeal, the court below did not err by misapprehending the rules of evidence, misapprehending the legal principles as to the meaning of business transfer under Article 30 (1) of the Act, or violating the precedents.

Supreme Court Decision 2004Da10213 Decided October 28, 2004 cited in the ground of appeal is related to the case where most of the site of a golf course is purchased from the successful bidder after the lapse of four years since most of the site of the golf course was awarded by auction, and the right to operate the golf course is succeeded by the principal contractor who is not the successful bidder, and it is not appropriate to be invoked in the case of this case since it is different from the case of this case.

2. As to the grounds of appeal Nos. 1 and 2

Article 30(3) of the former Installation and Utilization of Sports Facilities Act (amended by Act No. 6907 of May 29, 2003; hereinafter “the Act”) provides that a person who has obtained approval of a business plan pursuant to Article 12 of the Act shall succeed to the status of a person who has obtained approval of a business plan, such as the transferee, heir, and the transferor, etc., pursuant to the rights, obligations, and membership recruitment agreement prior to the completion of the business plan before reporting and registering the establishment of the sports facilities by completing the construction of the sports facilities. In this case, even in the case of transfer of business of the sports facilities pursuant to Article 30(3) and (1) of the Act, a member whose rights under the existing membership recruitment agreement are protected shall be a person who has obtained a membership valid in accordance with the procedures prescribed by Article 19 of the Act and other relevant Acts and subordinate statutes, and thus, a person who cannot be deemed to have obtained membership as a collateral under such procedures, etc.

However, the court below, after compiling the adopted evidence, found the facts as stated in its reasoning. The court below rejected the defendant's assertion that the issuance of each of the instant golf membership to guarantee the payment of the construction price claim, on the other hand, inasmuch as the plaintiffs paid the amount of the construction price claim by the method of substituting the membership fee and received the membership certificate from the non-party stock company in accordance with the agreement on the payment in substitutes with the non-party stock company which obtained approval of the business plan for the operation of the instant golf club, the agreement between the non-party stock company and the plaintiffs on the membership of this case was valid, and on the other hand, there is no sufficient evidence to acknowledge the facts. In light of the above legal principles and the records, the court below's fact-finding and decision

The court below did not err by violating the rules of evidence or by misapprehending the legal principles as asserted in the grounds of appeal.

In addition, the court below reasoned that each of the membership of this case is not legally issued in accordance with the procedure under Article 19 (a) of the Act, and therefore, it cannot be protected under Article 30 (3) and (1) of the Act. As shown in its finding facts, the non-party corporation recruited construction cost creditors who are corporations differently from the contents of the membership recruitment plan reported to the Gangwon-do Governor, and the membership fee was reduced to 70 million won per sheet, and the non-party corporation did not have the membership recruitment status report to the Gangwon-do Governor every quarter. The court below reported that the first time was 3/4th quarter of 199 and reported about the membership recruitment status of 2/4th quarter and did not comply with the above law, but it did not comply with the law, such as correction of the membership recruitment status and reported about the membership recruitment status of 2/4th quarter, but the related provisions of the law including Article 19 of the Act and the Enforcement Decree of the Act did not comply with the law, and thus, did not establish the law and the order of the above sports facility business.

The court below did not err in the misapprehension of legal principles as to the procedure for inviting members under Article 19 of the Act as alleged in the grounds of appeal.

3. Conclusion

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 on the bench.

Justices Yang Chang-soo (Presiding Justice)