Individual Asset Management
[Personal Asset Management] Barun Law Successfully Invalidates a Gift Contract Misaligned with Deceased's Intentions, Leading to Dismissal of Ownership Transfer Claims in KRW 14 Billion Real Estate Dispute
1. Case Overview
In a case where the grandchildren of the deceased filed a lawsuit against the children of the deceased to demand the execution of the ownership transfer registration proceeding, claiming that a deathbed gift contract had been executed before the death of the deceased regarding real estate worth about KRW14 billion after the children of the deceased had inherited the real estate, we represented one of the children of the deceased.
2. Judgment and Legal Basis
The court ruled that it was highly unusual for the deceased to give the real estate solely to the plaintiffs through a deathbed gift contract while excluding the defendants and other descendants, and therefore, there must be special circumstances to justify the claim. The court further emphasized the need for caution in determining the authenticity of the deathbed gift contract.
In light of this, the court found that: 1) it was difficult to believe that the deceased had any sufficient motive to make such an agreement to give the real estate only to the plaintiffs, even at the risk of disputes with the other defendants, or that there was a close relationship between the deceased and the plaintiffs to justify such a gift; and 2) while the court acknowledged the consistency of the signature on the deathbed gift contract, it found numerous circumstances that raised doubts about whether the signature truly reflected the deceased’s intent. Based on these findings, the court dismissed the admissibility of the deathbed gift contract as evidence and denied all claims made by the plaintiffs.
3. Our Argument and Role
We argued that, unlike a testamentary disposition, which requires various mechanisms to ensure the deceased's true intentions, a deathbed gift contract does not require any formalities, leaving room for posthumous fabrication. This, combined with the fact that such contracts are rarely used as a means of inheritance, was explained through an analysis of relevant laws and comparative legal frameworks. Furthermore, we provided a detailed account of the long-standing disputes surrounding the deceased's inheritance, demonstrating that it was implausible for the deceased to have given the real estate to the plaintiffs (his grandchildren). Through thorough legal research and active witness examination regarding the authenticity of the document, we logically disproved the circumstances surrounding the creation of the deathbed gift contract and strongly contested its evidentiary value.
As a result of our aggressive defense, the court rejected the admissibility of the deathbed gift contract as evidence, dismissed all of the plaintiffs' claims. This ruling is expected to benefit the client in related cases, such as the division of inherited property.
- Attorneys involved: Song Bong-Jun, Cho Woong-Kyu and Park Ju-Won
2024. 10. 31
Reconstruction / Redevelopment
[Civil] Barun Law Obtains Provisional Injunction for Access and Copies of Documents from Urban Development Project Association under the Urban Development Act
1. Case Summary
Party Represented by Barun Law: The debtor is an urban development project association (the "Debtor Association") that was established for the purpose of carrying out an urban development project according to Article 13(1) of the Urban Development Act. The creditor, represented by us, purchased part of the urban development project area and completed the registration of ownership transfer, thus becoming a member of the Debtor Association.
(1) Case Background
The creditor proceeded with the construction and sale of multi-family housing on the land it purchased and the buyers moved in it around December 2022. However, since the Debtor Association did not register the completion of construction under the urban development project, the creditor was unable to complete the registration of land rights for the buyers, leading to dissatisfaction from them.
In response, on April 30, 2024, the creditor applied to the Debtor Association for the access and copying of urban development project-related documents, including the minutes of the general meeting or board meeting related to the selection of a project management agency, the minutes related to the selection of a contractor, and the minutes related to the sale of reserved land. However, the Debtor Association did not comply with this request.
(2) Litigation
The creditor applied for a provisional injunction requesting access and copies of the relevant documents based on Articles 72(3) and 72(2) of the Urban Development Act.
2. Court Ruling
The court ruled that the Debtor Association is obligated to allow the creditor to access and copy the following: ① the minutes of the general meeting or board meeting related to the selection of a project management agency, ② the minutes of the general meeting or board meeting related to the selection of a contractor, ③ the minutes of the general meeting or board meeting related to the sale of reserved land from the time the establishment of the Debtor Association was approved until the present, ④ the sales contract for the reserved land (or a reserved land management ledger that verifies the sale details), ⑤ the minutes of the general meeting or board meeting approving the financial statements or budget for each fiscal year since the establishment of the Debtor Association, ⑥ urban development zone designation and development plan, approval of implementation plans, ⑦ approval of land readjustment plans, and ⑧ accounting audit reports since the establishment of the Debtor Association to the present.
3. Basis for the Ruling
Recognizing that the creditor has the right to request access to and copies of the relevant documents, based on our arguments, the court determined that. Articles 72(2) and 72(3) of the Urban Development Act allow members to access and copy documents related to the designation of urban development zones, the establishment and approval of development plans (in Subparagraph 4), and other matters determined by presidential decree concerning the execution of the urban development project (in Subparagraph 5). Additionally, the enforcement decree of the same law (in Article 85-5) allows members to access and copy documents such as reserved land sale details (in Subparagraph 2), audit reports (in Subparagraph 3), and minutes of general meetings or board meetings as provided in by-laws and the articles of incorporation (in Subparagraph 5). Therefore, the documents requested by the creditor were deemed eligible for access and copying, and the creditor's right to preservation was recognized. The court also acknowledged that the Debtor Association had refused the creditor's request for access to and copying of the documents, further justifying the necessity for preservation.
4. Our Argument and Role
We (attorneys in charge: Son Heung-Soo and Jung Ye-Il) argued that the creditor became a member of the Debtor Association from the moment they acquired ownership of the land by purchasing it from another member. Therefore, the creditor, as a "landowner or other interested party" under Articles 72(2) and 72(3) of the Urban Development Act, has the right to request access to and copies of the relevant documents.
Furthermore, we emphasized several points: ① the Debtor Association is obligated to disclose the relevant documents under Article 72(2) of the Urban Development Act but has not done so for over eight years, ② since becoming a member in 2019, the creditor has not received any notice from the Debtor Association regarding general meetings or proxy voting rights, and has therefore been unable to attend any meetings, significantly infringing on the creditor's rights as a member, ③ the Debtor Association has delayed the registration of the construction completion under the urban development project for over 15 years since its approval in 2008, causing damage to the creditor and other members, ④ there are suspicions of breach of trust by the chairman of the Debtor Association, and ⑤ Article 72 of the Urban Development Act aims to ensure transparency and prevent corruption by mandating the disclosure of key project-related information. Based on these grounds, we emphasized the necessity of the creditor’s right to request access to and copies of the documents for the purpose of monitoring the association’s operations.
5. Significance of the Ruling
This case is significant as it highlights our expertise in successfully resolving multiple motions and substantive cases concerning urban development project associations. The decision to grant the creditor's provisional injunction for document access and copying demonstrates the importance of enabling members to accurately understand the association’s operations.
In addition, in contrast to common cases of requests for access to and copies of accounting books under the Commercial Act, there have been few precedents where members of an urban development project association have requested access to related documents. This case is significant as it clarifies the scope of documents that members can request access to and affirms the members' right to access and copy them.
- Attorneys involved: Son Heung-Soo and Jung Yale
2024. 10. 31
Corporate Investigations & White Collar Defense
[Corporate Criminal] Barun Law Obtains Non-Referral Decision Secured for Site Manager of S Construction Company Accused of Occupational Negligence Causing Injury
1. Case Summary
In August 2024, an accident occurred at a construction site managed by S Construction Company, where a worker from a subcontractor (K Company) was injured after falling while climbing a tower crane. The injured worker claimed that site manager A, who was the construction site manager, failed to fulfill his duty of care to prevent the fall and filed a complaint against A for occupational negligence resulting in injury.
2. Our Argument and Role
We closely analyzed the circumstances of the accident and noticed the fact that the injured worker had deviated from the designated movement path and was moving in an abnormal manner when the fall occurred. Based on this, we argued that: ① the site manager A had fulfilled all duties required for ensuring safety by establishing a safe movement path and conducting special safety training for the injured worker, checking its implementation; and ② since the injured worker voluntarily climbed to an area where no work was scheduled and had the accident, there was no causal relationship between the site manager’s alleged breach of duty and the accident. ③ We also successfully refuted the suspicion raised by the police during the investigation by arguing that there was no obligation to install a fall protection net at the accident location according to the Industrial Safety and Health Act.
3. Outcome and Significance
The duty of care required of a construction site manager varies depending on the situation of each site. However, if an accident occurs despite the site manager fulfilling these duties, it is important to promptly seek legal expertise to identify the key issues in the case, develop defense strategies, and respond proactively.
By choosing Barun Law, a firm with expertise in industrial and major accidents, the client was able to obtain a police decision not to refer the case to the prosecution, thereby avoiding criminal liability.
- Attorneys involved: Lee Sang-Jin, Kang Tae-Hun, Kim Ji-Hee and Han Min-Guk
2024. 10. 31
Finance and Litigation
[Finance] Barun Law Succeeds in Cancelling Initial Sanction Imposed by the Financial Services Commission for Violation of Cross-Trading Restrictions on Unlisted Stocks Between Collective Investment Schemes
1. Case Overview
(1) Party Represented by Barun Law
The client was a corporation (the "plaintiff company") engaged in specialized private equity collective investment businesses under the Capital Markets Act and its representative director (the "plaintiff representative director").
(2) Case Background
The Financial Supervisory Service (FSS) notified the plaintiffs that they had violated the "restriction on cross-trading between collective investment schemes (funds)" by not trading unlisted stocks of A Airlines at a fair value. As a result, the purchasing fund recognized an unfair loss of about KRW2.4 billion, and the selling fund recognized an equivalent unfair gain. Due to this reason, the FSS issued a prior notice of suspension of duty to the plaintiff representative director.
Later, the FSS Sanction Review Committee revised the suspension disposition against the plaintiff representative director to a reprimand warning. The Financial Services Commission (FSC) deliberation committee further modified the reason for the disposition, claiming that the price of A Airlines' stock was not appropriately reduced but rather applied at an old price. Eventually, the FSC imposed a reprimand warning on the plaintiff representative director.
This sanction was the first case involving a violation of cross-trading restrictions on unlisted stocks, and the plaintiffs filed a lawsuit against the Financial Service Commission (FSC) to cancel the reprimand warning against the plaintiff representative director.
2. Our Argument and Role
We argued that in the case of unlisted stocks, there is no market price formed through multiple transactions, and the plaintiffs had complied with their fiduciary duties under the Capital Markets Act by maintaining consistency in valuation when evaluating the price of A Airlines' stock. Thus, no grounds for the sanction existed. We provided concrete evidence through expert opinions and detailed analysis of the valuation process before and after the cross-trade.
We also argued that the defendants, who issued the administrative sanction, were responsible for proving that there were grounds to reduce the price of A Airlines' stock at the time of the cross-trade. We meticulously analyzed the facts influencing the price determination at the time of the cross-trade, asserting that the factors for price reduction, as claimed by the defendants, were either already reflected or did not need to be reflected.
3. Court's Decision
The court accepted our arguments, ruling that it was difficult to conclude that there were circumstances that required the price of A Airlines' stock to be reduced around the time of the cross-trade. The court also stated that there was no ground justifying that reducing the price of A Airlines' stock around the time of the cross-trade was the only way to ensure consistency in valuation. Furthermore, the court found it difficult to conclude that the plaintiffs had violated their fiduciary duties to the investors in the purchasing fund when evaluating A Airlines' stock. As a result, the reprimand warning imposed on the plaintiff representative director was canceled.
4. Significance of the Judgment
The court explicitly stated that unless there was an intention to make the investors in the purchasing fund bear losses, it could not be concluded that the plaintiffs had violated their fiduciary duties. Moreover, given the nature of unlisted stocks, professional judgment and discretion should be recognized as broader in the fair value evaluation process. The court set a pioneering precedent regarding the restrictions on cross-trading of unlisted stocks under the Capital Markets Act.
This case holds great significance as it ensured the recognition of professional judgment and discretion in the evaluation of fair value during the operation of collective investment assets, particularly for unlisted stocks, by providing a thorough understanding of the procedures and content of cross-trades under the Capital Markets Act.
- Attorneys involved: Ryu Jong-Myoung, Ma Seong-Han and Chae Na-Ye
2024. 10. 31
Response to Serious Accidents
[Serious Accident Response] Barun Law Obtains Suspended Sentences for Primary Contractor Fined and Site Employees, Including Manager, Who Were Charged for Fatal Industrial Accident at Construction Site
1. Case Overview
During concrete pouring work at a new logistics warehouse construction site, a two-tiered jack support buckled, and the concrete was poured using a push method, which led to an eccentric load on the structure without proper load distribution. Consequently, the deck plates collapsed, causing workers of a subcontractor engaged in the concrete pouring to fall, resulting in the death of three workers and serious injuries to two others.
The prosecutor charged a total of 18 individuals, including the contractor company, the site manager, and employees, as well as supervisors, subcontractors, and their employees, with violations of the Occupational Safety and Health Act, negligent manslaughter, and other charges. We represented the contractor company A (the "Contractor Company"), and its employees, site manager B, construction manager C, and safety manager D, from the investigation stage through the first trial. The subcontractors confessed during the investigation stage while shifting all responsibility onto Company A, seeking leniency, with a substantial risk that Defendant B, the site manager, could face imprisonment based on precedents.
2. Court's Decision [Pyeongtaek Branch of the Suwon District Court Decision 2023Godan 613, 1452 (Consolidated), dated September 24, 2024]
The court sentenced the Contractor Company to a fine of KRW15 million. Defendant B, the site manager of the Contractor Company, received one-year and six-month imprisonment with labor and a 3-year suspension; Defendant C, the construction manager, received one-year imprisonment with a two-year suspension; and Defendant D, the safety manager, received eight-month imprisonment with a two-year suspension.
3. Our Argument and Role
Throughout the investigation and first trial, all other defendants, excluding Defendants A, B, C, and D, admitted to their actions while requesting leniency, attempting to shift all responsibility onto the contractor.
We argued that, according to Article 63 of the Occupational Safety and Health Act, it was unreasonable to impose the same specific and direct safety and health obligations on the Construction Company and its employees B, C, and D as on the subcontractors. We also argued that the jack support installed in the accident area did not qualify as a "temporary support" under the Occupational Safety and Health regulations, making it impossible to establish a violation of safety obligations on this basis. Furthermore, We asserted that the primary cause of the accident was due to the subcontractors’ and their employees' negligence, and it was difficult to prove beyond reasonable doubt a causal relationship between the contractor’s negligence and the death or injury of the workers.
In response, the court accepted most of the charges against the defendants but ruled that: ① interpreting Article 332.7 of the old Safety and Health Regulations that was applied to "steel pipes used as temporary supports (excluding pipe supports)" as extending to jack supports without a specific legal basis constitutes an overly broad or analogical interpretation, which is inconsistent with the principle of legality, and ② since the accident area was not inherently a place with a risk of falling, it was not legally mandatory for the workers performing concrete pouring in that area to wear safety harnesses or take other fall-prevention measures.
Furthermore, we tried to emphasize in the first trial that the subcontractors' negligence significantly contributed to the accident. Subcontractor E and its employees disregarded the contractor's instructions by using the "push" method for concrete pouring, and subcontractor F and its employees connected and installed jack supports in two tiers without structural review, which was a major contributing factor to the accident. Through rigorous cross-examinations, we highlighted that the subcontractors' negligence played a significant role in the accident.
As a result, the court found not only the contractor but also the subcontractors significantly responsible for the accident. Notably, subcontractor F's executive G, who held final decision-making authority over the jack support installation, received one-year and six-month imprisonment with a three-year suspension, reflecting the same level of criminal liability as the Contractor Company's site manager B.
- Attorneys involved: Park Sung-Ho, Kim Ji-Hee, Lee Chan-Woong, Lee Yun-Sang, Sim Hyuna, and Choi Young-Su
2024. 10. 31
HR and Labor Affairs
[Human Resources & Labor] Case Determining That Employment Rules for Permanent Care Teachers Do Not Directly Apply to Outsourced After-School Care Teachers, Even if Employment Dispatch Relationship with Education Authority is Recognized (Case Remanded)
1. Case Overview
① Party Represented by Barun Law (attorneys in charge: Moon Ki-Joo, Lee Kyung-Jin, Lee Jong-Hwa): We represented a regional government of education (the "defendant")
② Background of the Case: A regional employment and labor office (the "Labor Office") determined that "although the outsourced after-school care teachers' work is in the form of an outsourcing contract, in essence, it qualifies as a dispatched worker relationship. Therefore, it is illegal for the outsourcing companies to provide the services of dispatched workers without obtaining a dispatch permit." Based on this, the Labor Office instructed the defendant to directly employ the outsourced after-school care teachers. Consequently, the defendant signed an employment contract with these outsourced care teachers, hiring them as permanent contract care teachers with a working time of 5 hours per day.
③ Details of Litigation: The outsourced care teachers filed a lawsuit against the defendant, claiming that the defendant "should compensate them for the period during which it failed to fulfill its obligation to directly employ them, and even upon fulfilling this obligation, it should bear the obligation to compensate for any parts that fall short of the standards set by Article 6(3) of the Dispatch Act." They argued that the defendant's decision to set their working hours to 5 hours a day when signing the employment contract contradicted the employment rules and relevant laws applicable to regular contract care teachers, and therefore, they should be paid wages based on an 8-hour workday. The lower court found that there was the employment dispatch relationship between the outsourced care teachers and the defendant and ruled in favor of most of their claims, stating that the compensation should be calculated based on an 8-hour working day in accordance with Article 6(2) of the Dispatch Act.
2. Court Ruling
The Supreme Court's 1st Division on September 12, 2024, upheld the lower court's recognition of an employment dispatch relationship between the outsourced care teachers and the defendant, but stated that: (1) instead of assuming that the outsourced care teachers are naturally entitled to an 8-hour workday, 40-hour workweek, it should be considered that if they were directly employed, the contract could have been established as part-time educational public employees; (2) given the government's policy to expand after-school care services, it may not be necessary to fix the working hours of after-school care teachers to an 8-hour day, 40-hour week; (3) as of April 30, 2018, approximately 82% of permanent contract after-school care teachers nationwide worked less than 40 hours per week, six provinces or cities operated after-school care classes without any teachers working 40 hours per week, the actual working hours for the outsourced care teachers relevant to this case were 5 hours per day during school terms and 8 hours during vacations and when the defendant directly hired them on October 1, 2018, the daily working hours were set to 5 hours; and (4) the working hours of after-school care teachers need to be flexibly determined based on the operational format and demand of after-school care programs, and therefore, it may be possible for the defendant to exercise discretion in hiring care teachers with different working hours. Taking these factors into consideration, the Supreme Court found fault in the lower court's misinterpretation of legal principles regarding the calculation of compensation and remanded the case for further examination on the aspects where the defendant had lost.
3. Our Argument and Role
Leveraging its extensive experience in handling multiple lawsuits concerning the recognition of compensation liability under employment dispatch relationships, we actively argued for the defendant at the appellate stage.
Specifically, (1) even if unlimited contract after-school care teachers and outsourced care teachers perform similar duties, it is not mandatory for their employment conditions to be uniform; (2) the working arrangement of outsourced care teachers was not intended to undermine the purpose of the Dispatch Act but was based on the need for flexible workforce allocation considering the circumstances of each local government; (3) even among unlimited contract after-school care teachers, there exist 5-hour daily work patterns; (4) the working hours for after-school care teachers vary significantly by local government; (5) differences exist in job scope, authority, and responsibilities between outsourced care teachers and unlimited contract care teachers; and (6) the direct employment contracts with outsourced care teachers were made through mutual agreement. We emphasized that the lower court had misinterpreted legal principles regarding the calculation of compensation under employment dispatch relationships.
4. Significance of the Ruling
Today, the forms of labor provision are becoming increasingly complex and diverse. Despite entering into contracts such as service contracts or delegation contracts, there are numerous cases where these relationships are recognized as employee dispatch relationships. Especially, even in a situation where the existence of a dispatch employment relationship is found, disputes often arise between parties over setting new employment conditions when fulfilling the direct employment obligation. This ruling not only provides guidelines on factors to consider when calculating compensation in cases where a dispatch employment relationship is recognized but also serves as an important benchmark in the process of setting new employment conditions.
- Attorneys involved: Moon Ki-Joo, Lee Kyung-Jin, Lee Jong-Hwa
2024. 10. 31