A court ruled that the Navy's termination of a wedding hall contract at the Navy Hotel in Yeongdeungpo District, Seoul, is invalid because there was no legitimate reason.
The Seoul Administrative Court's Administrative Division 3 (Presiding Judge Ho Seong-ho, Director General judge) on July 16 ruled in a lawsuit filed by A, the operator of "Navy Hotel W Wedding Hall," seeking confirmation of the invalidity of the termination notice against the state (Navy), that "the Navy's termination of the renewal of the Navy Hotel wedding and banquet management consignment contract with A is invalid."
Since 2013, A has run the wedding hall inside the Navy Hotel in Yeongdeungpo District, Seoul, under a private contract with the Navy. After a regular audit last year, the Defense Facilities Headquarters notified A of termination, saying the requirements for immediate termination had been met, and requested eviction.
The Navy cited three reasons for termination: A spent part of the business operating funds on purposes unrelated to business, billed expenses without deducting supplier discounts, and allowed a partner company to operate without authorization. A filed suit, saying the acts were not intentional violations, so immediate termination was unjust and an abuse of authority.
The bench held that "intentional misconduct" and "serious defects such as embezzlement or misappropriation," which are grounds for immediate termination of the wedding hall consignment operation contract, must be interpreted strictly. It further found that although A used some business operating funds for personal purposes, A did not engage in active fraudulent conduct to conceal the actual nature of the expenditures, such as submitting fake receipts.
When paying suppliers, A reduced amounts under 100,000 won but billed the Navy for the original expense and was paid. The bench said, "After the issue was raised, A, at the Navy's request, returned the full amount of the deductions to the suppliers," adding, "It is closer to a matter to be corrected and improved through an audit."
The bench also said regarding A allowing a dress or beauty company to set up shop and operate in the Navy Hotel that it "was done within the scope necessary to perform the entrusted duties of the wedding hall."