Chey Tae-won, chairman of SK Group, and Noh So-young, director of Art Center Nabi, had their divorce property partitioning lawsuit of seven years quashed and remanded by the Supreme Court on the 16th, sending the case back to the Seoul High Court.
A key issue in the case was whether former President Roh Tae-woo, the late father of Director Noh, providing 30 billion won in illegal slush funds to SK Group could be considered a "contribution to property" by Noh's side. The appellate court viewed the 30 billion won as a property contribution by Noh's side, but the Supreme Court ruled it could not be seen that way.
The Supreme Court also found that SK Inc. shares Chairman Chey donated to relatives are not subject to property partitioning. As a result, there is an outlook that the amount Chey must pay Noh for property partitioning will decrease from the appellate court's 1.3808 trillion won.
◇ "Roh Tae-woo's 30 billion won slush funds cannot be regarded as a property contribution by Noh So-young's side"
Earlier, the appellate court accepted Noh's claim that "the former president handed 30 billion won in slush funds to former SK Group patriarch Choi Jong-hyun, who was related by marriage." The basis was a "Sunkyung 30 billion" memo by Noh's mother, Kim Ok-suk, and six promissory notes worth 5 billion won each, which Noh disclosed for the first time during the appellate proceedings. On this basis, the court determined that the former president's family contributed to SK Group's establishment and growth, and therefore Chey's SK shares were subject to property partitioning.
The Supreme Court on the day did not decide whether it was true that the former president provided 30 billion won in illegal slush funds to Sunkyung Group. However, it said that even if true, slush funds are bribes, so Noh's contribution to property cannot be recognized. Article 746 of the Civil Act provides that if property is furnished for an unlawful cause, the return of the benefit cannot be claimed.
The Supreme Court said, "Even if it is true that around 1991 the former president provided about 30 billion won to former Chairman Choi Jong-hyun, the father of Chairman Chey, this money appears to be bribes the former president received while in office," adding, "Providing a large amount of money received as bribes to in-laws or to one's child and spouse is an unlawful act, and seeking the return of the resulting benefit is not possible under the Civil Act." It continued, "The 30 billion won should not be viewed as Noh's property contribution in the property division."
◇ "SK Inc. shares donated by Chey Tae-won to relatives are not subject to property division"
The Supreme Court also ruled that SK Inc. shares and other assets that Chey donated to relatives and affiliates between 2012 and 2018 are not subject to property partitioning. This overturned the appellate ruling. Between 2014 and 2018, Chey donated 91,895 shares of SK C&C to the Korea Foundation for Advanced Studies, 200,000 shares of SK Inc. to the Choi Jong-hyun Academy, and 3.29 million shares of SK Inc. to 18 relatives, including his younger brother Choi Jae-won, executive vice chairman of SK Innovation. Chey also disposed of about 92.7 billion won by donating to Vice Chairman Choi Jae-won starting in 2012 and returning compensation to SK Group. He also paid 24.6 billion won in gift tax on behalf of the vice chairman.
According to Supreme Court precedent, if one spouse unilaterally disposes of marital property after the marriage has broken down, that property is subject to property partitioning. Even if it has already been disposed of, it must be given in cash or shares.
The appellate court found that the couple's marriage broke down on Dec. 4, 2019, when Noh filed a countersuit seeking divorce and property partitioning against Chey. Nevertheless, it included the value of shares Chey had transferred to relatives before that date when calculating the property partitioning amount.
The Supreme Court said, "Chey's disposal of assets occurred before the date the couple's marriage broke down," and added, "The appellate court misunderstood the legal principles regarding the timing and scope for calculating property subject to partitioning and did not conduct the necessary review."
The Supreme Court also, for the first time, articulated the principle that "even if one spouse disposes of marital property after the marriage has broken down, if the purpose was to create or maintain the marital property, it cannot be used as the basis for partitioning."
The Supreme Court determined that Chey's stock donations were aimed at smoothly succeeding to and securing control of SK Group, and thus were related to forming and maintaining the couple's marital property. The implication is that even if Chey donated shares to relatives after Dec. 4, 2019, they would not be subject to property partitioning.