Nam Wook, a lawyer and private developer of Daejang-dong, lost a first trial lawsuit regarding severance pay against former executives and employees of a real estate development company.
According to the legal community on the 29th, the Seoul Central District Court Civil Division 48 (Presiding Judge Kim Do-gyun) ruled in favor of the plaintiffs, four former employees including Mr. Lee, in the first trial of a monetary claim lawsuit filed against lawyer Nam the previous day. The court stated, "The defendant (lawyer Nam) shall pay the plaintiffs a total of 1.11 billion KRW and delayed damages."
In July 2011, lawyer Nam acquired C7, a real estate development company that initially promoted the private development of Daejang-dong from Mr. Kim, thereby assuming the company's debts. Mr. Lee and others were executives and employees of C7, and the debts included unpaid wages, operating expenses, and severance pay owed to them.
Lawyer Nam agreed to pay the full amount of unpaid wages and operating expenses as of the retirement date, as well as severance pay and retirement consolation money, setting the payment timing to when a bridge loan for the Daejang-dong development project was executed. The intention was to pay the money once the private development of Daejang-dong was successful and funding was secured.
Immediately after this agreement, lawyer Nam paid the employees the unpaid wages and operating expenses.
However, in 2014, Seongnam City changed the project method to a public-private joint development, making private independent development impossible. Mr. Lee's side demanded severance pay, arguing that "the agreement stipulated that the debt would be fulfilled even if the payment condition was not met."
In response, lawyer Nam's side argued that "the obligation to pay arises only if the condition is met," thus denying the payment obligation.
The court ruled in favor of Mr. Lee's side. It judged that if both parties agreed on severance pay, the payment deadline condition (execution of the bridge loan) merely implied a "grace period." In other words, failing to secure the bridge loan does not eliminate the obligation to pay severance.
The court further stated, "When it was confirmed that executing the bridge loan was impossible, the due date for the amount stated in the agreement arrived," and ruled, "The defendant is obligated to pay the plaintiffs severance pay, retirement consolation money, and delayed damages."
The argument from lawyer Nam's side that "even if the payment obligation is recognized, the statute of limitations for the claim has expired" was not accepted.
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