The meaning of Article 3(2) of the Act on Special Cases Concerning the Promotion, etc. of Legal Proceedings (hereinafter “Special Cases Concerning the Promotion, etc.”) where an obligor is admitted in the first instance trial by disputing the existence and scope of the obligation to perform; and whether the application of the interest rate on delay damages as stipulated in Article 3(1) is excluded until the appellate trial is sentenced pursuant to Article 3(2) of the Act on Special Cases Concerning the Promotion, etc. of Legal Proceedings (affirmative)

Article 3(1) and (2) of the Act on Special Cases concerning the Promotion, etc. of Legal Proceedings

Supreme Court en banc Decision 86Meu1876 Decided May 26, 1987 (Gong1987, 1058) Supreme Court Decision 97Da50725 Decided May 8, 1998 (Gong2004Da39092 Decided November 25, 2005) (Gong2006Sang, 18) Supreme Court Decision 2010Da21696 Decided July 8, 2010

Plaintiff

Defendant (Law Firm Jinjin, Attorneys Gyeong-seok et al., Counsel for the defendant-appellant)

Suwon District Court Decision 2012Na4191 decided October 19, 2012

The part of the lower judgment against the Defendant ordering payment of KRW 15 million in excess of the annual rate from February 23, 201 to October 19, 2012, and the annual rate of KRW 20% from the next day to the date of full payment, shall be reversed, and the Plaintiff’s appeal corresponding thereto shall be dismissed. The Defendant’s remaining appeal shall be dismissed. All costs of the lawsuit shall be borne by the Defendant.

1. Judgment on the grounds of appeal

Comprehensively taking account of the adopted evidence, the lower court acknowledged that, at the time of the Plaintiff’s purchase of the instant truck around July 2008, the Plaintiff purchased the instant truck number plate by paying 15 million won as the price for the use of the instant truck number plate (hereinafter “instant number plate”) to the Defendant, and by paying additional 18 million won to the Defendant on November 28, 2009 and November 30 of the same year. The Plaintiff returned the instant number plate to the Defendant on November 10, 2010, while selling the instant truck again on or around November 19, 2010, the Defendant agreed to return the instant number plate to the Plaintiff around November 19, 2010, and determined that the Defendant was liable to pay the Plaintiff the instant number plate 33 million won and delay damages as above.

In light of the records, the judgment of the court below is just, and contrary to what is alleged in the grounds of appeal, there is no error of law by violating logical and empirical rules and exceeding the bounds of free evaluation of evidence.

2. Ex officio determination

Article 3(2) of the Act on Special Cases Concerning Expedition, etc. of Legal Proceedings (hereinafter “Special Cases”) provides that “Where it is deemed reasonable for an obligor to contest the existence or scope of the obligation to perform before the judgment of fact-finding that declares that the obligor has the obligation to perform the obligation to perform the obligation is rendered, paragraph (1) shall not apply to the reasonable extent.” The application of Article 3(1) of the Act on Special Cases Concerning the Calculation of Compensation Amount for Damages Caused by Non-performance of Monetary Obligations may be excluded.” The phrase “where it is deemed reasonable for an obligor to resist the existence or scope of the obligation to perform” as prescribed by Article 3(2) of the Act refers to the case where the obligor’s assertion is deemed reasonable and reasonable in relation to the existence or scope of the obligation to perform the obligation, and the issue of whether the obligor’s claim to perform the obligation is reasonable is related to the fact-finding and evaluation of the court concerning the relevant case (see, e.g., Supreme Court en banc Decision 86Meu186, May 26, 1987).

According to the records, the first instance court ordered the Defendant to pay damages for delay at the rate of 5% per annum prescribed by the Civil Act from February 23, 2011 to January 12, 2012, which is the day following the delivery of a copy of the complaint, and from January 23, 2011, which is the day following the delivery of a copy of the complaint, and 20% per annum prescribed by the Act on Special Cases concerning the Settlement of Accounts from the next day to the day of full payment. The Plaintiff and the Defendant filed an appeal. The lower court, citing the Plaintiff’s appeal, determined the agreed amount to be paid by the Defendant as KRW 33 million. The lower court ordered the Defendant to additionally pay damages for delay at the rate of 15 million and 20% per annum from February 23, 2011 to the day of full payment.

However, as a result of a dispute over the existence or scope of the obligation to perform the Plaintiff’s claim in this case, the claim of the Plaintiff was partially accepted in the first instance court and the claim of the Plaintiff was additionally accepted in the lower court. Thus, the Defendant’s dispute over the amount of KRW 15 million additionally quoted in the lower court’s judgment should be deemed to have reasonable grounds. However, the lower court ordered the payment of damages for delay at the rate of 20% per annum from February 23, 2011 to the date of complete payment, which is the day following the delivery of a copy of the complaint, to order the payment of damages for delay at the rate of KRW 15 million per annum from February 23, 2011 to the date of full payment. It erred

3. Conclusion

Therefore, the part of the judgment below against the defendant ordering additional payment of 15 million won from February 23, 201 to October 19, 2012, which is the day following the delivery of a copy of complaint as to the damages for delay of the judgment below, shall be reversed in excess of 5% per annum under the Civil Act, and 20% per annum under the Act on Special Cases concerning the Payment from the next day to the day of complete payment, which is the day of the decision of the court below, and the part against the defendant ordering additional payment. Since this part is sufficient for the court to directly judge, the plaintiff's appeal corresponding to the above part shall be dismissed, and the remaining appeal by the defendant shall be dismissed, and the total costs of the lawsuit shall be borne by the defendant and it is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Yong-deok (Presiding Justice)