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| TITLE | Supreme Court Decision 2015Da243163 Decided December 15, 2016【Damages (Etc.)】 [full Text] |
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| Summary | |
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[1] Whether an auditor’s liability for damages as prescribed by Article 170(1) of the former Financial Investment Services and Capital Markets Act (hereinafter “former Capital Markets Act”) and Article 17(2) of the former Act on External Audit of Stock Companies (hereinafter “former External Audit Act”) is recognized even in cases where an auditor negligently failed to indicate important matters or made false statements on an audit report (affirmative) [2] Requirements for an investor, etc. to seek compensation from an auditor for damages incurred due to the auditor’s false entry in an audit report, etc. according to Article 170(1) of the former Capital Markets Act and Article 17(2) of the former External Audit Act Whether an investor is deemed to have engaged in stock trading based on the belief that a company’s annual report (including financial statements) and audit report were properly prepared and disclosed and that the company’s share price was subsequently determined therefrom (affirmative) [3] In cases of liability for damages caused by false entries in an annual report or audit report (see Articles 162(1) and 170(1) of the former Capital Markets Act and Article 17(2) of the former External Audit Act), whether a submitter of an annual report and/or an auditor, if able to prove the nonexistence of causation between the entire or partial damages and false entry, can be exempt in whole or in part from liability (affirmative), and in such a case, method and degree of proving the nonexistence of causation [4] In cases where normal share prices are determined after all information revealed to have been falsely indicated in either an annual report or audit report was removed, whether causation exists between share price volatility following the date of share price determination and false entry (affirmative in principle) Method of calculating the amount of damages in the event of selling shares after the date of share price determination or holding onto the shares until the date of closing of oral argument [5] As to lawsuits seeking compensation for damages pursuant to Articles 162 and 170 of the former Capital Markets Act, whether liability can be limited based on comparative negligence or the fairness doctrine (affirmative) |
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