[1] In a case where a resident audit is requested pursuant to Article 16(1) of the Local Autonomy Act, whether “the process of the relevant administrative affairs is deemed to be against the statutes or to be significantly detrimental to the public interest” constitutes a legitimate requirement of a resident audit request or a resident lawsuit (negative)

[2] Where a resident audit request satisfies all lawful requirements stipulated in the Local Autonomy Act, but the audit institution makes a decision to dismiss the relevant resident audit request without any further specific investigation and determination as unlawful, whether the resident who made the request for inspection can file a lawsuit against the residents, which is the next stage of remedy procedures stipulated in the Local Autonomy Act, without any need to dispute the illegal rejection request itself as a separate appeal litigation (affirmative)

[1] Article 16(1) of the Local Autonomy Act provides that "where the process of the relevant administrative affairs is deemed to violate Acts and subordinate statutes or to inflict significant harm on the public interest" means the requirements for demanding the relevant institution to take measures, such as demanding the correction of the relevant matters, and the requirements for the relevant court in a lawsuit filed by a resident, and the possibility that the resident may demand the inspection of the relevant administrative affairs or bring a lawsuit by the resident, "it is sufficient that the process of the relevant administrative affairs is deemed to be against Acts and subordinate statutes or significantly detrimental to the public interest," and "the process of the relevant administrative affairs shall be deemed to be against the Acts and subordinate statutes or to be remarkably detrimental to the public interest" shall not be deemed to be a legitimate requirement for the resident inspection request or the lawsuit filed by the auditor or the court of the lawsuit. This is because the matters can be determined only if the specific facts of the relevant administrative affairs are examined and examined. If this is deemed to be a legitimate requirement for the resident inspection request, it will be dealt first with first in the main part of the merits, and it may be recognized that the relevant administrative affairs may seriously interfere with the residents' request.

[2] Article 17(1) of the Local Autonomy Act provides that “the pre-determination of a resident audit request” shall be made by allowing only a resident who has requested a resident audit to file a lawsuit. Thus, whether a resident audit request satisfies the requirements for pre-determination of a resident audit request shall be made ex officio by the court of the lawsuit. In order to determine whether a resident audit request satisfies the requirements for pre-determination of a resident audit request, a resident audit request satisfies all the lawful requirements as prescribed in Article 16 of the Local Autonomy Act, and further falls under the grounds prescribed in each subparagraph of Article 17(1) of the Local Autonomy Act. The “audit result” under Article 17(1)2 of the Local Autonomy Act includes not only cases where an audit institution accepts a resident audit request and makes a decision on the substance of a resident audit request after a specific examination, but also cases where an audit institution makes a decision of rejection by misunderstanding that a resident audit request satisfies all the lawful requirements as prescribed in the Local Autonomy Act, but also cases where an audit institution makes a decision of rejection without any further specific examination and determination of rights.

[1] Articles 16(1) and 17(1) of the Local Autonomy Act / [2] Articles 16, 17(1) and (2) of the Local Autonomy Act, Articles 30(1) and (2) and 38(1) of the Administrative Litigation Act

Plaintiff 1 and four others (Law Firm Lee & Lee, Attorneys Cho Jae-jin et al., Counsel for the plaintiff-appellant)

The Mayor of Incheon Metropolitan City (Law Firm K&P, Attorneys Lee Jong-soo, Counsel for the plaintiff-appellant)

Wangsan Leisure Development Co., Ltd. (Law Firm LLC, Attorneys Kim Il-he et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2018Nu39357 decided December 6, 2018

The judgment below is reversed and the case is remanded to Seoul High Court.

The grounds of appeal are examined.

1. Case summary and key issue

A. Review of the reasoning of the lower judgment and the record reveals the following facts.

(1) The Nonparty is a person who arranges the fifth Incheon Metropolitan City Mayor from July 2010 to June 2014, and the Defendant’s Intervenor (hereinafter “ Intervenor”) is a company established on November 7, 201 for the purpose of operating yachts and resort facilities.

(2) On March 9, 2015, the 396 Incheon citizen, including the plaintiffs, supported the intervenors 16.7 billion won in preparation for the Incheon Asian Games in 2014 at the Non-Party’s market (hereinafter “instant support act”), which is the resident requesting the return of the said subsidy on the ground that “The act constitutes an unfair support act in violation of Article 23(1) and (2) of the Support Act for the 201th Together, the 2013 World Cup, the 2013 World Championships, the 2014 Incheon Asian Games, the 2014 Incheon Asian Games, the 2014 Incheon Asian Games, and Article 13(1) of the Enforcement Decree of the same Act” (hereinafter “instant request for inspection”).

(3) On May 27, 2016, the Deliberative Council on the Request for Inspection, which was held on the Ministry of Culture, Sports and Tourism, deems that the contents of the request for inspection of this case constitute affairs subject to resident inspection and excludes those who have disagreements with their addresses, resident registration numbers, names, etc., the number of petitioners falls under at least 300 and thus meet other lawful requirements for resident inspection request. However, the Minister of Culture and Sports determined that the instant support act did not violate the International Competition Support Act and decided to dismiss the request for inspection of this case. Accordingly, on May 31, 2016, the Minister of Culture and Sports notified Plaintiff 5, a representative requester for resident inspection of the results of such deliberation and resolution (the deliberation and resolution of the Deliberative Council on the Request for Inspection, is an administrative act, and the decision of the Minister of Culture and Sports publicly

(4) On August 26, 2016, the Plaintiffs filed the instant resident lawsuit against the Defendant demanding the Nonparty, who was the market in Incheon Metropolitan City at the time of the instant support act, and the Intervenor who was the other party to the instant support, to file a claim for damages against the Defendant pursuant to Article 17(1)2 and (2)4 of the Local Autonomy Act.

B. The key issue of this case is whether the resident lawsuit of this case can be seen as satisfying the “requirements for the transfer of resident inspection request” under Article 17(1) of the Local Autonomy Act even though the Minister of Culture, Sports and Tourism, who is an auditor, issued the instant decision to dismiss the instant request for inspection.

2. Relevant provisions and legal principles

A. According to the Local Autonomy Act, residents of 19 years of age or older of a local government may request the competent Minister for an audit as to whether the affairs belonging to the local government and the head of the Si/Gun/autonomous Gu violate Acts and subordinate statutes or significantly undermine the public interest within the scope of 500 persons in City/Do, 300 persons in a large city with a population of 50,00 or more, and 200 persons in a City/Do with a joint signature of at least the number of residents of 19 years of age or older as determined by municipal ordinances of the relevant local government (see, e.g., the main sentence of Article 16(1)). Article 16(1) of the Local Autonomy Act provides that the head of the relevant Si/Gun/autonomous Gu may request the competent Minister for an audit as to whether the affairs belonging to the local government and the head of the relevant Si/Gun/autonomous Gu violate Acts and subordinate statutes or significantly undermine the public interest (see, e.g., the head of the relevant local government’s authority to request for audit and inspection).

B. Article 16(1) of the Local Autonomy Act provides that the term “a case where the processing of the relevant administrative affairs is deemed to violate Acts and subordinate statutes or to inflict significant harm on the public interest” means the requirement for the institution subject to audit and inspection to take measures, such as a request for correction against the institution subject to audit and inspection, and the requirement for the court to accept the request within the merits in a lawsuit filed by a resident. It is sufficient that the resident requests an audit or the filing of a lawsuit by the resident may assert “the possibility that the process of the relevant administrative affairs may be recognized to be against Acts and subordinate statutes or to substantially undermine the public interest,” and the term “the process of the relevant administrative affairs shall be deemed to be against the Acts and subordinate statutes or to be remarkably detrimental to the public interest” shall not be deemed to be a legitimate requirement for the resident audit and inspection request or the lawsuit filed by the resident. This is because the determination can only be made on whether the specific facts of the relevant administrative affairs are examined and examined. If it is deemed a legitimate requirement for the resident audit request, the problem in the merits may be first dealt with, and to prove the legitimate performance of the relevant administrative affairs.

C. Article 17(1) of the Local Autonomy Act provides that “the pre-determination of a resident audit request” shall be made by allowing only a resident who has requested a resident audit to file a lawsuit. Thus, whether a resident audit request satisfies the requirements for pre-determination of a resident audit request shall be made ex officio by the court of the lawsuit. In order to determine whether a resident audit request satisfies the requirements for pre-determination of a resident audit request, a resident audit request satisfies all the lawful requirements as prescribed in Article 16 of the Local Autonomy Act, and further falls under the grounds prescribed in each subparagraph of Article 17(1) of the Local Autonomy Act. The “audit result” under Article 17(1)2 of the Local Autonomy Act includes not only cases where an audit institution accepts a resident audit request and makes a decision on the substance of a resident audit request after a specific examination, but also cases where an audit institution makes an illegal decision by misunderstanding that a resident audit request satisfies all lawful requirements as prescribed in the Local Autonomy Act, but also cases where an audit institution makes a decision of rejection without any further specific examination and determination as unlawful.

(1) According to Article 17(1) of the Local Autonomy Act, a lawsuit filed by a resident against the head of the pertinent local government to seek compensation for an unlawful measure or omission or against the perpetrator who caused damage to the pertinent local government by disputing whether the measures or omissions by the pertinent local government related to the matters requested for inspection are appropriate, or a lawsuit is not brought to dispute the propriety of the audit results conducted by the auditing agency.

(2) A resident audit claim is a system introduced to expand the direct participation of residents in local autonomy under the Local Autonomy Act amended by Act No. 6002 of Aug. 31, 1999. A resident lawsuit is introduced for the purpose of enhancing the accountability of local administration by expanding the participation of residents under the Local Autonomy Act amended by Act No. 7362 of Jan. 27, 2005. The legislative purpose of Article 17(1) of the Local Autonomy Act is to provide for the “requirements for the transfer of resident audit request” so that only the residents requesting the resident audit may file a lawsuit by using their own expertise, giving the audit agency an opportunity to correct the problem in a simple and swift manner, and thereby reducing the court’s burden.

(3) In a case where an audit institution dismisses or rejects a resident audit request due to mistake of facts or misapprehension of legal principles, or where a resident audit request is made to take a corrective measure not adequate to an agency subject to audit while accepting a resident audit request, it shall not be deemed that the resident applicant for audit is subject to separate appeal litigation, but rather, it shall be in line with the legislative intent of the Local Autonomy Act, which provides for one-time and efficient resolution of disputes and the transfer of the resident audit request. Rather, in a case where an audit institution’s request for a separate appeal lawsuit against an illegal decision of rejection is to be lodged, the determination of cancellation or invalidation in the appeal litigation becomes final and conclusive, and then the audit institution notifies the resident of the result of a long-term determination of substantive matters pursuant to Article 30(1) and (2) and Article 38(1) of the Local Autonomy Act, which is a resident’s second and second appeal lawsuit, to allow the resident to file a lawsuit, which is a remedy directly based on such a dispute resolution procedure.

(4) Article 17(1)1 of the Local Autonomy Act provides that “Where an audit institution delays an audit after 60 days from the date the competent Minister or Mayor/Do Governor received the request for audit (referring to the date the period of extension expires if the period of audit has been extended pursuant to the proviso to Article 16(3)), the resident who received the request for audit may file a lawsuit without having to refrain from the audit results.” This means that the legislators do not regard “the institution has made a decision on the substance of the resident audit request” as a legitimate requirement for the resident lawsuit. Therefore, it is difficult to find any special reason to interpret “the result of the audit” as stipulated in Article 17(1)2 of the Local Autonomy Act only where the audit institution makes a decision on the substance of the resident audit request. In addition, it is difficult to objectively interpret that the resident audit request satisfies all legitimate requirements as stipulated in Article 16 of the Local Autonomy Act, and that the resident inspection institution fails to meet the legitimate requirements and thus fails to comply with both of the determination to dismiss the resident audit request.

3. Determination as to the instant case

A. We examine the above facts in light of the above legal principles.

(1) The Minister of Culture, Sports and Tourism, an auditor, made a decision of rejection of this case to the effect that the instant support act did not violate the laws and subordinate statutes or significantly undermine the public interest, on the premise that “the process of the relevant business is deemed to violate the laws and subordinate statutes or significantly undermine the public interest,” as prescribed by Article 16(1) of the Local Autonomy Act, the said decision of rejection was made to the effect that the instant request for inspection was unlawful because it did not meet the lawful requirements of the resident audit request. However, the term “whether the process of the pertinent business is deemed to violate the laws and subordinate statutes or significantly undermine the public interest” is not the lawful requirements of the resident audit request to be reviewed and determined at the pre-draft stage, but rather

(2) Even if the Minister of Culture, Sports and Tourism rendered a decision of rejection of the instant case without making any further specific investigation and determination, the decision of rejection of the instant case constitutes “the result of inspection” as prescribed by Article 17(1)2 of the Local Autonomy Act. Therefore, barring any special circumstance that the request for inspection of the instant case failed to meet other lawful requirements of the resident inspection request and is deemed unlawful, the Plaintiffs may immediately file a resident lawsuit without any need to dispute the illegal rejection of the instant case as a separate appeal.

B. Nevertheless, the lower court determined that the instant dismissal order itself should be contested in a separate appeal litigation even if the instant dismissal order is unlawful, and immediately filing a resident lawsuit is not allowed, by misapprehending the legal doctrine regarding “requirements for the transfer of resident inspection request” as provided by Article 17(1) of the Local Autonomy Act, which affected the conclusion of the judgment.

4. Conclusion

Therefore, the judgment of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Seon-soo (Presiding Justice)