Supreme Court: "If Reappraisal of Planned Redevelopment Site Not Conducted... Breach of Trust Does Not Occur When Loss Risk Is Low"

Supreme Court in Seocho-dong, Seoul. Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Kim Daehyun] The Supreme Court has ruled that even if an employee resigns without taking reappraisal measures for planned land readjustment areas, the crime of breach of trust in business cannot be applied if the risk of loss is not concrete. Land readjustment refers to compensating landowners with other land within the development zone instead of money during urban development projects.

On the 9th, the Supreme Court's 3rd Division (Presiding Justice Kim Jaehyung) announced that it overturned the original sentence of two years imprisonment in the appeal trial of Mr. A, who was indicted for attempted breach of trust in business, and remanded the case to the Uijeongbu District Court.

Previously, Mr. A, who served as the representative of the agency handling the overall affairs of the Siksa District Urban Development Project Association in Goyang City, Gyeonggi Province in 2011, was tried on charges of attempting to cause a loss of 3.47 billion won to the association by resigning without taking reappraisal measures following changes in the project plan.

When the project plan changed and the value of the planned land readjustment area increased, reappraisal and changes to the land readjustment plan should have been made so that the increase would be reflected in the liquidation process. However, Mr. A resigned from his position without carrying out these tasks or handing them over. Mr. A and his acquaintances who purchased the planned land readjustment area stood to benefit by receiving the land back, while the association could have suffered losses by not receiving liquidation payments for the increased value. However, since the association became aware of this later and initiated the change approval process in 2016, actual losses did not occur.

The first trial court acquitted Mr. A, judging that the risk to the association's right to claim liquidation payments was not directly caused by omissions such as failure to conduct reappraisal.

On the other hand, the second trial court sentenced him to two years imprisonment. At that time, the court pointed out, "The defendant recognized that the land readjustment would economically benefit himself, his relatives, and acquaintances who received the land intensively, and cause losses to the victim association, and thus began to execute the crime of breach of trust in business."

However, the Supreme Court ordered a retrial and reconsideration of the case. The court stated, "It cannot be considered that the defendant began to execute the crime of breach of trust in business by omission when the risk of loss to the association had become concrete," and "The lower court erred in its legal interpretation regarding the requirements for recognizing the commencement of execution in breach of trust by omission, which affected the judgment."

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