Kye Joung Lee, The Trust for Security over the Golf Facilities and Assumption of Obligation by the Transferee, The Korean Journal of Civil Law, Vol. 89 (2019), p. 119-164.
<Abstract>
The Korean Supreme Court issued an en banc decision (“the Decision at Issue”) declaring that the transferee of the golf facilities by way of public sale of the trust asset pertaining to the trust for security should assume the obligation of the transferor including the obligation to return the deposit to the member(Supreme Court [S. Ct.], 2016Da220143, Oct. 18, 2018(S. Kor.)). The Decision at Issue has significant implications with regard to interpretation on Article 27(2)4 of the Installation and Utilization of Sports Facilities Act(“the Article”) and insolvency protection of the trust for security. This article dealt with the Decision at Issue with a critical eye and the conclusion can be summarized as follows: Firstly, the Article can be considered as the exceptional clause of the legal principle. In principle, the personal right cannot be claimed against the third and should cease to exist after consummation of the civil execution procedure. However, in case the Article is applied, the personal right of the member of the golf club is supposed to survive after consummation of the civil execution procedure and be claimed against the transferee. As such, the Article constitutes the exception of the legal principle, and therefore the interpretation of the Article should be done in a narrow way rather than an extensive way. The majority opinion can be criticized in that it made a conclusion by adopting extensive interpretation on the Article. Secondly, the public sale of the trust asset pertaining to the trust for security is a way of the disposition of the trust asset based on the intention and autonomy of the settlor and the trustee. This contrasts sharply with the forced sale by auction under the supervision of the court and regulated by the law. However, the majority opinion made an error in identifying the public sale of the trust for security with the forced sale by auction. Thirdly, the purpose of the Article can be said to be unreasonable in that a) the membership of the golf club is not a kind of necessities, b) the protection of the membership can lead to substantial harm to the transferee, the mortgagee and the preferential beneficiary of the trust, and c) the method of the publication of the membership has not been devised. Therefore it is desirable to interpret the Article in a strict way. In conclusion, I consent to the dissenting opinion, which can be esteemed highly in that it accords with the principle of the interpretation on the law and the logic of the trust.
<Keywords>
trust for security, interpretation on the law, insolvency protection, public sale, obligation to return the deposit of the member of golf facilities, forced sale by auction
Kye Joung Lee, The Trust for Security over the Golf Facilities and Assumption of Obligation by the Transferee, The Korean Journal of Civil Law, Vol. 89 (2019), p. 119-164.
<Abstract>
The Korean Supreme Court issued an en banc decision (“the Decision at Issue”) declaring that the transferee of the golf facilities by way of public sale of the trust asset pertaining to the trust for security should assume the obligation of the transferor including the obligation to return the deposit to the member(Supreme Court [S. Ct.], 2016Da220143, Oct. 18, 2018(S. Kor.)). The Decision at Issue has significant implications with regard to interpretation on Article 27(2)4 of the Installation and Utilization of Sports Facilities Act(“the Article”) and insolvency protection of the trust for security. This article dealt with the Decision at Issue with a critical eye and the conclusion can be summarized as follows: Firstly, the Article can be considered as the exceptional clause of the legal principle. In principle, the personal right cannot be claimed against the third and should cease to exist after consummation of the civil execution procedure. However, in case the Article is applied, the personal right of the member of the golf club is supposed to survive after consummation of the civil execution procedure and be claimed against the transferee. As such, the Article constitutes the exception of the legal principle, and therefore the interpretation of the Article should be done in a narrow way rather than an extensive way. The majority opinion can be criticized in that it made a conclusion by adopting extensive interpretation on the Article. Secondly, the public sale of the trust asset pertaining to the trust for security is a way of the disposition of the trust asset based on the intention and autonomy of the settlor and the trustee. This contrasts sharply with the forced sale by auction under the supervision of the court and regulated by the law. However, the majority opinion made an error in identifying the public sale of the trust for security with the forced sale by auction. Thirdly, the purpose of the Article can be said to be unreasonable in that a) the membership of the golf club is not a kind of necessities, b) the protection of the membership can lead to substantial harm to the transferee, the mortgagee and the preferential beneficiary of the trust, and c) the method of the publication of the membership has not been devised. Therefore it is desirable to interpret the Article in a strict way. In conclusion, I consent to the dissenting opinion, which can be esteemed highly in that it accords with the principle of the interpretation on the law and the logic of the trust.
<Keywords>
trust for security, interpretation on the law, insolvency protection, public sale, obligation to return the deposit of the member of golf facilities, forced sale by auction