[1] Where it is possible to revoke a beneficial administrative disposition / Where the defect of the beneficial administrative disposition is due to the party’s fact-finding or other fraudulent act, whether the party’s trust interest in the disposition should be considered (negative)

[2] Whether a facts against a criminal trial can be acknowledged in an administrative trial (negative in principle)

[3] The meaning of “when a non-profit corporation commits an act detrimental to the public interest” under Article 38 of the Civil Act, which prescribed the grounds for revocation of permission for establishment of a non-profit corporation, and the requirements to constitute “act detrimental to the public interest

[1] Article 1 of the Administrative Litigation Act / [General Administrative Disposition] Articles 1, 19 of the Act, Article 4 (2) of the Administrative Procedures Act / [2] Articles 8 (2) and 27 of the Administrative Litigation Act / [General Administrative Litigation Decision] Article 202 of the Civil Procedure Act / [3] Articles 38 and 77 (1) of the Civil Act

[1] Supreme Court Decision 2013Du1611 Decided November 27, 2014 (Gong2015Sang, 34) / [2] Supreme Court Decision 2011Du28240 Decided May 24, 2012 / [3] Supreme Court Decision 2011Du25012 Decided January 23, 2014 (Gong2014Sang, 502)

rink Sports Co., Ltd. (Law Firm Sejong, Attorneys Lee Byung-chul et al., Counsel for the plaintiff-appellant)

The Minister of Culture, Sports and Tourism (Law Firm LLC, Attorneys Jeong Jin-ju et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2018Nu60849 decided April 3, 2019

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

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

1. Case summary and key issue

A. According to the reasoning of the lower judgment, the following facts are revealed.

1) The Plaintiff is an incorporated foundation that obtained permission for establishment on January 13, 2016 with respect to the business of discovering and supporting sports human resources as its intended business.

2) The Defendant, on March 20, 2017, revoked the establishment of the instant case based on the legal principles on revocation of administrative disposition ex officio against the Plaintiff, and Article 38 of the Civil Act, on the ground that the Plaintiff’s existence itself is detrimental to the public interest, as large enterprises engaged in criminal acts in the course of the Plaintiff’s establishment voluntarily contributed to capital, there exists an original defect to revoke the Plaintiff’s establishment permission.

B. The key issue of the instant case is whether the Defendant’s ground for disposition was justifiable in the disposition of revocation of permission for establishment of the instant case, i.e., (i) whether ex officio revocation of permission for establishment of the Plaintiff is permissible on the ground of the inherent defect in permission for establishment, and (ii) whether revocation of permission for establishment of the Plaintiff is permissible on the ground of the occurrence of the ground as prescribed in Article 38 of the Civil Act

2. Whether ex officio revocation of permission for establishment is permitted on the grounds of the inherent defect in permission for establishment;

A. 1) If there is a defect in an administrative act, the agency which has conducted an administrative act may revoke it on its own, even without a separate legal basis. However, when cancelling an administrative disposition on its own, it may revoke it only where the necessity of the public interest to revoke it, the right to obtain permission and the protection of trust, and infringement of the stability of legal life, etc. are compared and compared to the disadvantage suffered by the parties to it, and where it is strong enough to justify the disadvantage that the public interest needs to sustain. Furthermore, if the defect of the administrative disposition on the basis of the party’s fact is due to the act of application by concealment or other fraudulent methods, it shall be deemed that the party has anticipated the possibility of cancelling the acquisition of the benefit from the disposition. Thus, it shall not be deemed that the party could not invoke the trust interest in the disposition, and even if the administrative agency did not consider it (see Supreme Court Decision 2013Du11, Nov. 27, 2014, etc.).

2) Even if the administrative trial is not bound by the fact-finding in the criminal trial, the fact that the criminal judgment already finalized on the same factual basis was found guilty is a flexible evidence. Thus, barring special circumstances where it is deemed difficult to adopt a criminal trial’s factual judgment in light of other evidence submitted in the administrative trial, the facts opposed thereto cannot be acknowledged (see, e.g., Supreme Court Decision 2011Du28240, May 24, 2012).

B. The lower court determined as follows.

1) In the process of establishing the Plaintiff, Nonparty 2, the former president of the Republic of Korea, the senior secretary of the economic affairs of the Republic of Korea, and Nonparty 1, etc. who conspired to abuse the authority of the President and forced large enterprises to make contributions totaling KRW 26.9 billion to the Plaintiff’s capital constitutes a legal act that may be revoked as a declaration of intent by coercion.

2) Therefore, even though the Plaintiff failed to meet the requirements for basic financial establishment to conduct the business, it shall be deemed that there was a serious defect in the permission for the establishment that the Defendant did not go against such fact. Since the cancellation of the permission for the establishment of the Plaintiff exceeds the private interest infringement that the public interest needs to remove the result of the exercise of the illegal public authority and recover the legal order, the revocation of the permission for the establishment of the instant case violates the principle of trust protection or the principle of proportionality, etc.

C. In light of the fact that the act of demanding Nonparty 3 and Nonparty 1, etc. to contribute to a large enterprise to establish the Plaintiff in the relevant criminal trial, it is difficult to judge that the act constitutes a threat of harm and injury, which is the constituent element of the crime of coercion (see Supreme Court en banc Decision 2018Do13792, Aug. 29, 2019), the lower court’s determination that the act of contributing by the large enterprise constitutes a declaration of intent by coercion is inappropriate.

However, in light of the fact that Nonparty 2, former president, Nonparty 3, and Nonparty 1 et al. conspired to make a large enterprise contribute a total of KRW 26.9 billion in the process of establishing the Plaintiff in the relevant criminal trial, and that it constitutes a crime of abusing official authority as an act of having a large enterprise commit an act without any obligation by abusing public official’s authority (see the aforementioned en banc Decision 2018Do13792, supra; Supreme Court en banc Decision 2018Do14303, Aug. 29, 2019). In light of the fact that the Defendant was involved in a public official’s crime in the course of establishing the Plaintiff, there is a serious defect in permitting the establishment of the Plaintiff, and thus, it should be deemed that the revocation of the establishment permission of the Plaintiff and the need for public interest to remove the result of the unlawful exercise of public authority and recover the legal order, and thereby, it exceeds the

Therefore, the lower court’s conclusion that the revocation of the instant permission for establishment satisfies the requirements for revocation ex officio of the beneficial administrative disposition is justifiable is acceptable. In so determining, the lower court did not err by misapprehending the legal doctrine on the revocation ex officio of the beneficial administrative disposition and the probative value of the relevant criminal judgment, or by exceeding the bounds of the principle of free evaluation of evidence

c. Whether the revocation of permission for establishment is permitted pursuant to Article 38 of the Civil Act;

A. Article 38 of the Civil Act provides that “When a corporation conducts any business other than the intended purpose or commits any act detrimental to the public interest, the competent authority may cancel the permission thereof.” The term “when a nonprofit corporation commits any act detrimental to the public interest” refers to a case where an institution of a corporation commits any act detrimental to the public interest or its general meeting of members as an execution of its duties, or makes a resolution thereof. Article 38 of the Civil Act provides that “When a corporation commits any act detrimental to the public interest” means the case where the institution of the corporation commits any act detrimental to the public interest or its general meeting of members. In addition, Article 38 of the Civil Act provides that measures to cope with the case where the business intended at the time of the establishment of the corporation was not detrimental to the public interest due to changes in circumstances, the revocation of the corporation’s establishment permission is a disciplinary measure to extinguish the legal personality after dissolution of the corporation (Article 77(1) of the Civil Act). In order to constitute “an act detrimental to the public interest” under Article 38 of the Civil Act, it should be deemed to constitute an unlawful act of 201.

B. The lower court determined as follows.

1) In the process of the Plaintiff’s establishment and operation, Nonparty 1 actually controlled and managed the Plaintiff even though he did not contribute to the Plaintiff’s property, and Nonparty 2’s former president and Nonparty 1 conspired with Nonparty 4, the Secretary-General, Nonparty 5, etc. demanded ○○ Group to provide additional subsidies for the Plaintiff’s business in accordance with Nonparty 1’s order and received KRW 7.5 billion in the name of additional subsidies for the Plaintiff’s business, and demanded △△△△△△ Group to receive KRW 8.9 billion in the name of additional subsidies for the Plaintiff’s business. The act of demanding 8.9 billion in the name of Nonparty 4, etc. rather than the mere personal deviation of Nonparty 4, etc.,

2) In the event that the permission for establishment of the Plaintiff is revoked, even if considering the disadvantage that the Plaintiff and its executives and employees may suffer, it is urgently requested to revoke the permission for establishment of the Plaintiff in order to eliminate the status of violation of public interest and restore the legitimate legal order. Therefore, there is no violation of the legal principles on Article 38 of the Civil Act in the revocation of the permission

C. In light of the fact that the Plaintiff’s executive officers and employees, Nonparty 4, and Nonparty 5 demanded ○○○ Group to receive KRW 7.5 billion as additional subsidies for the Plaintiff’s business and that the act of demanding △△△△△ Group to receive KRW 8.9 billion constitutes a violation of the Act on the Aggravated Punishment, etc. of Specific Crimes (see the aforementioned en banc Decision 2018Do13792, supra) that the former president and Nonparty 1 conspiredd by Nonparty 2, the lower court’s aforementioned determination is acceptable. In so determining, the lower court did not err by misapprehending the legal doctrine on the probative value of the relevant criminal judgment and by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules, or by exceeding the bounds of the principle of free evaluation of evidence.

4. 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.

Justices Noh Jeong-hee (Presiding Justice)