Korea Container Control Co., Ltd. (Attorney above-at-Law)

Do Governor of Chungcheongnam-Nam (Attorney Kim Jong-soo, Counsel for the plaintiff-appellant)

October 20, 2005

Daejeon District Court Decision 2001Gu4291 Delivered on August 20, 2003

1. The part concerning the conjunctive claim in the judgment of the first instance shall be revoked;

2. The plaintiff's conjunctive claim is dismissed.

3. All costs of the lawsuit shall be borne by the Plaintiff.

1. Purport of claim

The primary claim: The defendant's rejection of the application for registration of tourism business operator against the plaintiff on October 30, 2001 shall be revoked.

Preliminary Claim: The defendant's refusal of the application for succession to the status of a tourism business operator against the plaintiff on September 24, 2001 shall be revoked.

2. Purport of appeal

It is as set out in paragraphs 1 and 2 of this Decree.

1. Scope of adjudication of this court;

Since the court of first instance has consolidated proceedings of the plaintiff's primary claim and the conjunctive claim, and only the defendant appealed against the judgment dismissing the primary claim and citing only the conjunctive claim, the scope of the court's trial is limited to the legitimacy of the judgment of the first instance which accepted the conjunctive claim

2. Details of the disposition;

The following facts may be acknowledged by adding up the whole purport of the pleadings to the descriptions of evidence Nos. 5, 9-1, and 12 of evidence Nos. 5, 9-1, and 12.

A. On January 13, 200, the Plaintiff entered into the Convention on the Management and Operation of Condo Facilities (hereinafter “instant Convention”) with Korea Condo Co., Ltd. (hereinafter “Korea Condo”) and submitted a petition to the Defendant for succession to the status of a tourism operator on September 17, 2001, to operate resort condominium business in a condominium facility located in the new gender-based 427-12 (hereinafter “Do-do”) in the case of the captain of the ship in Chungcheongnamsan City, Chungcheongnam-do.

B. On September 24, 2001, the Defendant rendered a disposition rejecting a petition for succession to the status of the tourism operator on the ground that the Korea Condo was declared bankrupt by the Busan District Court on September 14, 2001, and the final decision on the property of the Korea Condo was made following the bankruptcy procedure, and the status of the tourism operator can be succeeded (hereinafter “instant disposition”).

3. Whether the disposition is lawful;

A. The plaintiff's assertion

The plaintiff takes over the right to manage and operate the contact facilities from the Korea Condo and is delegated individually by the majority of the right to manage and operate the contact facilities to the Korea Condo and is employed by a majority of the officers and employees who retired from the Korea Condo and work for the plaintiff, etc., and the plaintiff succeeded to the status of the Korea Condo by taking over the Korea Condo tourism business under the Tourism Promotion Act, and the disposition of this case is unlawful.

(b) Fact of recognition;

The following facts may be acknowledged by comprehensively taking into account the following facts: Gap evidence 1, 3, 4, 5, Gap evidence 6-1, 8-1, 10-1 through 3, Gap evidence 17-1, Gap evidence 18-1, Gap evidence 20, Eul evidence 5-5, Eul evidence 6, 10, Eul evidence 8-2 through 4, Eul evidence 11-1, and Eul evidence 11-2.

(1) Korean Condo is a juristic person established for the purpose of tourist accommodation business, collective resort business, etc., and after opening the Korean Condo in 1979, it started to undergo difficulties in the management of the company by collecting taxes of about KRW 20 billion from the reputation-condo case in 1983, while opening and operating resort condominiums in various nationwide areas, such as snow, Do, Jeju, Shipping Team, Southern, Water Security, and Yongp, etc.

(2) After that, due to the economic depression caused by the 1997 foreign exchange crisis, the financial resources have deteriorated due to the decline in the sales performance of condominiums and the decline in the utilization rate of its members, and the National Tax Service’s special tax audit conducted in 1999 to collect approximately KRW 4.2 billion, which led to the aggravation of financial resources, and the further aggravation of financial resources has been caused by the additional collection of approximately KRW 4.2 billion. At the end of 1999, most employees retired, but most employees retired from office, but the retirement pay and approximately KRW 5.2 billion has not been paid.

(3) Accordingly, the Korea Container Operation Advisory Committee, composed of the members of the Korea Condo co-ownership system, demanded the improvement of the management of the Korea Condo and the guarantee of the right to use the condominiums of the members, and discussed about the future disposal of the Korea Condo from the end of October 1999. At that meeting, the operating advisory members and the management of the Korea Condo established a new corporation to avoid seizure and collection of creditors due to default of national taxes, wages, unpaid construction costs, etc., and to utilize the guest rooms secured thereby as business funds, taking into account the fact that the Korea Condo has difficulty in normal management due to excessive debts, etc., the management advisory members and the management of the Korea Condo established the Plaintiff Company by taking over the rights to manage and operate the facilities from the Korea Condo, and accordingly, on December 23, 1999, the Plaintiff Company was established.

(4) The board of directors held on January 6, 200 held that the Korea Condo held on January 6, 200 made excessive debts and employees’ retirement is unable to normally operate. Accordingly, the board of directors passed a resolution to transfer the right to manage the facilities of eight branches of the Plaintiff Company. On January 10, 200, the board of directors held on January 10, 200 consented to the above resolution of the board of directors, and entered into the instant agreement with the Plaintiff on January 13, 200, and the contents are as follows.

1. Korea Condo shall not interfere with the use of facilities and equipment in each condominium for its members from February 1, 200 to February 1, 200 (Article 2).

(2) Korea Container shall ensure that the employee of Korea Container does not interfere with the operation of the contact facilities (Article 3) by the Plaintiff Company.

(3) The management expenses for the ancillary business places owned by the Korea Condo shall be collected by the plaintiff company (Article 4).

④ The Plaintiff Company shall pay 10% of the management fees for guest rooms to be collected from its members twice a year and in February 10 and September 10 each year (Article 5).

⑤ The Korean Condo and the Plaintiff Company shall notify each member of the fact that the Plaintiff Company will manage the contact facilities from February 1, 200 (Article 6).

(5) On February 1, 2000, Korea Condo transferred possession of a high-mixed to the Plaintiff Company according to the instant agreement, and the Plaintiff Company has occupied high-mixed so far since that time and thereafter used the facilities.

(6) In addition to the instant agreement, the Plaintiff was given a written consent that 914 members, among 1,003 members of the co-ownership system, agreed to manage and operate high-mixed facilities individually, and agreed to take charge of the management and operation of high-mixed facilities.

(7) On October 16, 2001, the Plaintiff received a written consent from the non-party Gangwon-gu who was the operator of the store located in the Do-do-do-do-do-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-based-

(8) On September 14, 2001, Korea Condo was declared bankrupt by the Busan District Court and appointed Nonparty Kimju as the bankruptcy trustee. On October 20, 2001, Busan District Court permitted the bankruptcy trustee of Korea Condo to continue to engage in the business of each branch office of Korea Condo. Accordingly, the bankruptcy trustee demanded the Plaintiff Company to issue an order of Korean Condo including Condo, but the Plaintiff Company did not comply with this request. The bankruptcy trustee filed a lawsuit against the Plaintiff Company against the Plaintiff Company on the ground that the instant agreement was terminated by the notice of termination of Korea Condo, and the bankruptcy trustee exercised the avoidance power on the ground that the instant agreement was prejudicial to the bankruptcy trustee. In addition, the bankruptcy trustee exercised the avoidance power on the ground that the instant agreement was prejudicial to the bankruptcy trustee.

C. Determination

(1) According to Article 8 of the former Tourism Promotion Act (amended by Act No. 6633, Jan. 26, 2002; hereinafter the same), a person who acquires a tourism business succeeds to the rights and obligations arising from the registration of or reporting on the tourism business, and accordingly, a person who succeeds to the status of a tourism business operator shall file a report thereon with the head of the competent registration authority within one month from the date of succession. The head of the competent registration authority may determine whether to accept the report in full consideration of the following: (a) whether the transfer of the tourism business was lawful and effective; and (b) whether the transferee has any ground for disqualification (see Articles 8(5) and 7 of the former Tourism Promotion Act). Therefore, the instant disposition constitutes discretionary action; and (c) barring any circumstance to deem that the instant disposition was deviates from or abused by discretionary authority, such as mistake of facts or violation of law

(2) Meanwhile, upon the declaration of bankruptcy, all the assets held by the bankrupt at the time of the declaration of bankruptcy and the right to manage and dispose of the bankrupt estate shall belong to the bankrupt estate, and the right to manage and dispose of the bankrupt estate shall be exclusively attached to the bankruptcy trustee (Articles 6(2) and 7 of the Bankruptcy Act). The bankruptcy trustee’s duty lies in managing the bankrupt estate and distributing it to the bankruptcy creditors. In order to realize the maximum amount of dividends to the bankruptcy creditors, the bankruptcy trustee is granted the right to decide whether to cancel or terminate the executory contract concluded by the bankrupt before the declaration of bankruptcy or to exercise the right to set aside (Articles 50 and 64 of the Bankruptcy Act). Therefore, even if a contract entered into by the bankrupt prior to the declaration of bankruptcy is a contract concluded by the bankrupt prior to the declaration of bankruptcy, there may be cases where the termination or rejection by the bankruptcy

(3) Therefore, we first examine whether the instant agreement constitutes an executory bilateral contract under Article 50 of the Bankruptcy Act and thus, the trustee in bankruptcy is entitled to the right of rescission or termination.

In order for the trustee in bankruptcy to cancel or terminate a bilateral contract pursuant to Article 50 of the Bankruptcy Act, both of the obligations of the parties in the bilateral contract are required to be fulfilled at the time the bankruptcy is declared. However, as seen earlier, the instant agreement is concluded based on the facts acknowledged earlier, that the Plaintiff Company occupies, uses, and manages the facilities and equipment of the condominium managed by the Korea Condo (which includes not only the guest rooms but also the facilities outside the guest rooms), and the Plaintiff Company pays 10% of the management fees for the guest room to the Korea Condo. Accordingly, the obligation of the Korean Condo is transferred to the Korea Condo with the rights and obligations of the Korea Condo to the members of the condominium facility. The Plaintiff’s obligation is paid 10% of the management fees for the guest room, and both obligations are paid in consideration.

Furthermore, it is examined as to whether the Korea Condo and the Plaintiff Company’s obligations under the instant agreement were in the non-performance status at the time the bankruptcy was declared. If the Korea Condo had already performed its obligations before the declaration of bankruptcy, Article 50 of the Bankruptcy Act does not apply, and the bankruptcy trustee cannot rescind or terminate the said provisions.

According to the above facts, although the core contents of the instant agreement appears to have been transferred to the Plaintiff company the right to possess, use, and manage guest rooms, facilities, and fixtures possessed by the Korea Condo, it cannot be said that the Korea Condo has terminated the performance of obligations under the instant agreement on the sole basis of that right. The reasons are as follows.

First of all, even according to the instant agreement, the Plaintiff company did not set the total amount of the remuneration to be paid to the Korea Condo or the completion period for its payment, and the ownership of the ancillary business owned by the Korea Condo is not transferred to the Plaintiff company, but only the collection authority of the management expenses. The content of the said agreement is considerably different from the acquisition by the transferee of all the goods owned by the transferor, setting the price and the completion period for its payment from the business transfer.

In addition, comprehensively taking account of evidence No. 21-1, evidence No. 29-1, and evidence No. 30, a member of the instant container is classified as a co-ownership member with respect to a guest room, and a co-ownership member enters into a contract for the use of the facilities together with a sales contract for the co-ownership of a guest room with a facility management company. According to the contract for the use of the facilities, a third party designated by the member or the third party is entitled to use the facilities other than the guest room within the extent of 28 days per annum and the right to use the facilities other than the guest room in comparison with the other co-ownership of the above 30-year co-ownership. Since the Korea Member entrusted the management of the container facilities with co-ownership for 20 years to the 30-year co-ownership of the co-ownership, it is also possible for the 20-year co-ownership of the above co-ownership share to be entrusted to the 30-year co-ownership.

In addition, since the Korea Condo is an enterprise running a resort condominium business, which is a kind of tourist accommodation business, it is reasonable to deem that the Korea Condo Governor is not the co-ownership holder but the Korea Condo Governor, taking into account the following: (a) it is an enterprise that operates a resort condominium business, which is a type of a tourist accommodation business; (b) it owns facilities other than the co-ownership of guest rooms sold to its members; (c) it is possible to possess, use, and profit from the facilities; and (d) it is possible to possess, use, and profit from the guest rooms, which are the subject of the ownership of the member's share; and (b) it is subject to considerable restrictions on the exercise of rights, such as restrictions on the use and use of the guest rooms, if it violates the provisions and management regulations of the Condo, and the period for which it can be used is limited to 28 days per year; and (b) it is reasonable to deem that the owner of the Korea Condo management and operation right is not the co-ownership holder but the Korea Condo.

Taking account of all such circumstances, the rights and obligations arising from the legal relations similar to the lease held by the Korea Condo in its members under the instant agreement were transferred to the Plaintiff Company, but the Korea Condo has not completely withdrawn from the legal relations under the facility use agreement concluded with its members, namely, the legal relations similar to the sub-lease, can be deemed to have been established.

Therefore, even after transferring the possession of the instant contact to the Plaintiff Company under the instant agreement, the Korea Condo bears the obligation to continue to use and make profits from the instant contact with the Plaintiff Company until the termination of the instant agreement, and this obligation is not completed before September 14, 2001, which was declared bankrupt with respect to the Korea Condo, and the obligation to pay 10% of the passenger room fee of the Plaintiff Company, which is in a quid pro quo relationship with the said obligation, has not been completed, and the obligation to pay 10% of the passenger room fee of the Plaintiff Company has not been completed, and it is reasonable to view that there has been a situation in which both parties have to continue to perform the instant agreement. Accordingly, the bankruptcy trustee of Korea may choose whether to continue to terminate the instant agreement under Article 50 of the Bankruptcy

(4) Next, we examine whether the instant agreement can be subject to the exercise of the avoidance power. The bankruptcy trustee may deny any act that the bankrupt knows that it would prejudice any bankruptcy creditor (Article 64 Subparag. 1 of the Bankruptcy Act), the avoidance power may be exercised as a lawsuit or defense (Article 68(1) of the Bankruptcy Act), and if the avoidance power is exercised, the bankruptcy estate shall be restored to its original state (Article 69(1) of the Bankruptcy Act).

However, according to the above facts, as the Korea Condo has come to be unable to manage normally due to excessive debts of the Korea Condo around the end of 1999, there is sufficient room to regard the management and operation right of the Korea Condo as an act detrimental to bankruptcy creditors and an act detrimental to the bankruptcy trustee as being denied by the trustee in bankruptcy in order to avoid the creditor collection of national taxes, wages, etc. and to use the guest use fee, etc. as business funds.

(5) In addition, regardless of whether the agreement of this case can be terminated or denied by the trustee in bankruptcy, there was a dispute as to whether the agreement of this case has already been terminated or not prior to the disposition of this case. In other words, in full view of the overall purport of the pleadings as stated in the evidence Nos. 31 and No. 5-1 of the evidence Nos. 31 and No. 5-1 of this case, the plaintiff company on August 9, 2001, prior to the declaration of bankruptcy, sent a notice to the plaintiff that the agreement of this case will be terminated on the ground that the plaintiff company collected the cost of facilities management of containers from its members in violation of the agreement of this case, entered into the guest room sales entrustment contract, and did not pay the amount equivalent to 10% of the guest room management fee. Accordingly, the plaintiff transferred the right of operation of the contact in accordance with the agreement of this case to the plaintiff company, and thus, the agreement of this case cannot be terminated, and even before the declaration of bankruptcy and the validity of the agreement of this case.

(6) Meanwhile, the majority of the co-ownership owners of high-containers agreed on the management of the container facilities as seen earlier. However, as seen above, the management and operation rights of high-containers cannot be deemed completely lost pursuant to the instant agreement, and since the management and operation rights of high-containers are not co-ownership rights holders but Korea, the management and operation rights of high-containers cannot be deemed excluded because the majority of the co-ownership rights holders of high-containers agreed to the instant agreement. Other circumstances asserted by the Plaintiff, namely, the Plaintiff’s continued use of the store and swimming pool, i.e., the Plaintiff’s employees, who were employed in the Plaintiff company, and most of the officers and employees retired from the Korea Condo, were employed in the Plaintiff company, and the legal condo’s guest room is prohibited from being operated by another person. However, if the instant agreement is terminated or denied, it would no longer be meaningful to deem that the instant agreement had been terminated or terminated, and it would not be impossible to terminate or terminate the instant agreement.

(7) As such, in light of the situation where a dispute over the validity of the instant agreement exists between the trustee in bankruptcy and the plaintiff company after the bankruptcy is declared, the instant agreement only has a dispute over the nature and validity of the instant agreement prior to the declaration of bankruptcy on the Korea Container, and the declaration of bankruptcy has been made on the Korea Condo, and thus, the effect of the instant agreement may be affected by the trustee in bankruptcy pursuant to the provisions of the Bankruptcy Act. In fact, in light of the situation where the dispute over the validity of the instant agreement continues to exist between the trustee in bankruptcy and the plaintiff company after the declaration of bankruptcy, the Defendant’s disposition of this case on the ground of the declaration of bankruptcy of the Korea Condo was made by the trustee in bankruptcy on the ground of the instant agreement, even the Korea Condo did not have a final decision as to the instant agreement, rather than by receiving a report on the succession of the trustee in bankruptcy according to the flexible contractual relationship, and there is a reasonable reason to deem that the instant disposition was unlawful by deviating from and abusing discretionary authority. Therefore, the instant disposition is lawful.

4. Conclusion

Therefore, the plaintiff's conjunctive claim of this case is dismissed as it is without merit, and the judgment of the court of first instance is unfair and the defendant's appeal is justified. Thus, the part concerning the conjunctive claim of this case among the judgment of the court of first instance is revoked and the plaintiff's conjunctive claim is dismissed. It is so decided as per Disposition

Judges Cho So-young(Presiding Judge)(Presiding Judge)