[1] Requirements to deny the exercise of rights for reasons of violation of the principle of good faith

[2] In a case where Gap et al. claimed transfer of each real estate within the project implementation district of housing redevelopment improvement project implemented by the Eul association as an occupant of each real estate within the project implementation district of the housing redevelopment project, and Eul et al. requested transfer of each real estate to Gap et al. after the public notice of the management and disposal plan was given, and Eul et al. did not proceed with the procedure for concluding a contract for parcelling-out as stipulated by the articles of association, which is different from the public opinion of the head of the association, so it goes against the principle of good faith to seek transfer of real estate in advance without giving Gap et al. an opportunity to become a cash liquidation agent, the court held that the Eul association's articles of association provides that "if a member of the association is a person who did not apply for parcelling-out or has withdrawn the contract for parcelling-out, it shall be liquidated in cash within 150 days from the date it falls under the case where the association did not have an opportunity to withdraw the contract for parcelling-out within the period of the above management and disposal plan, but it shall not be interpreted that the association's can arbitrarily cancel the contract for parcelling-out.

[1] Article 2 of the Civil Act / [2] Article 2 of the Civil Act, Article 47 of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (Amended by Act No. 14567, Feb. 8, 2017)

[1] Supreme Court Decision 91Da3802 delivered on December 10, 1991 (Gong1992, 467)

Seoul High Court Decision 200Na14488 delivered on May 2, 200

Defendant 1 and four others (Law Firm Definition et al., Counsel for the defendant-appellant)

Cheongju District Court Decision 2018Na5295 decided July 20, 2018

The judgment of the court below is reversed, and the case is remanded to Cheongju District Court.

The grounds of appeal are examined.

1. The reasoning of the lower judgment reveals the following facts.

A. The Plaintiff is a housing redevelopment project partnership with approximately KRW 79,035,200 square meters as a project implementation district in Cheongju-si ( Address omitted). On April 15, 2016, the Plaintiff received an application for parcelling-out from April 20, 2016 to May 20, 2016 when publicly announcing the application for parcelling-out with respect to the housing redevelopment improvement project in the 2nd Dong-dong District (hereinafter “instant rearrangement project”).

B. The Defendants submitted an application for parcelling-out to the Plaintiff within the period of application for parcelling-out as the owner or possessor of each real estate of this case.

C. On January 16, 2017, the Plaintiff received the approval of the management and disposal plan from the Cheongju Mayor, and the Cheongju Mayor announced it by the Cheongju-si Notice No. 2017-30 on January 20, 2017.

2. On the grounds indicated in its reasoning, the lower court: (a) deemed that the Plaintiff did not proceed with the procedures for concluding a contract for sale in lots as stipulated by the articles of association for a considerable period of time from the time of the approval of the management and disposal plan, unlike the Plaintiff’s association’s consent at the residents’ association; and (b) it is not acceptable in light of the concept of justice to request the Defendants to deliver each real estate of this case to the Defendants without giving the Defendants an opportunity to become cash clearing;

3. However, the lower court’s determination is difficult to accept for the following reasons.

A. In order to deny the exercise of rights between the parties to legal relations on the ground that it violates the principle of trust and good faith, it is reasonable that the other party has provided good faith to the other party or had good faith from an objective point of view, and the exercise of rights against such other party’s good faith should be in an irrecoverable state in light of the concept of justice (see, e.g., Supreme Court Decision 91Da3802, Dec. 10, 1991).

B. Review of the reasoning of the lower judgment and the record reveals the following circumstances.

1) Article 44(4) of the Plaintiff’s articles of association provides that, where a partner falls under “a person who fails to file an application for parcelling-out” or “a person who has withdrawn an application for parcelling-out”, the partnership is liquidated in cash for buildings and other rights within 150 days from the date when the partner falls under such case, and Article 44(5) of the Plaintiff’s articles of association provides that, “a partner shall enter into a contract within a period determined by the partnership after the approval of the management and disposal plan

In light of the language and purport of the provisions of the articles of incorporation, "person who has withdrawn an application for parcelling-out" means a person eligible for cash liquidation in the process of establishing a management and disposal plan, as well as a person who has failed to apply for parcelling-out before the expiration of the period of application for parcelling-out, although he/she applied for parcelling-out within the period of application for parcelling-out, and cannot be deemed as falling under the person who voluntarily withdraws the application after the expiration of the period of application for parcelling-out (see Supreme Court Decision 2011Du17936, Dec. 22, 2011).

2) It is recognized that the non-party, the president of the Plaintiff’s partnership, made a statement to the effect that “the request for parcelling-out is hot at any time, and that “the withdrawal of the request for parcelling-out can be made before the conclusion of the parcelling-out contract,” at the association conference during the

However, while making a statement as above, the Nonparty explained that “if an application for parcelling-out is filed, it shall be classified as a cash settlement without entering into a contract for parcelling-out.” In addition, it does not mean that the guide for parcelling-out distributed to the members would immediately withdraw the application for parcelling-out or withdraw the application for parcelling-out at any time, and rather, it only stipulates that only the “person who has withdrawn the application for parcelling-out before the expiration of the period for parcelling-out” shall be paid a monetary settlement. It is interpreted that the Nonparty’s statement that “The Nonparty would give an opportunity to withdraw at any time after the expiration of the period for parcelling-out” is against the provisions of Article 47 of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (amended by Act No. 14567, Feb. 8, 2017; hereinafter “Urban Improvement Act”) and Article 44(4) of the Plaintiff’s Articles of Incorporation, and that there is no authority for the Nonparty to grant the Defendants the above opportunity to withdraw the application for parcelling-out.

3) There is no provision to the effect that “a cooperative shall set the period for concluding the sales contract within a certain period after the approval of the management and disposal plan.” Rather, Article 44(5) of the Plaintiff’s Articles of incorporation provides that members shall conclude the sales contract within the “within the period determined by the cooperative” so that the cooperative can set the period for concluding the sales contract at a discretionary discretion. As such, the Plaintiff has the authority to set the period for concluding the sales contract during the period for implementing the project, taking into account all the circumstances, such as the various interests of the union members, project cost anticipated to be required for the improvement project, the degree of resettlement of union members, cash settlement recipients, tenants, etc

4) Since the amount of compensation for the land acquired by a project implementer is determined as an appropriate amount increased or decreased depending on the location, shape, environment, and current use of land on the basis of the officially announced land price with less fluctuations, it seems that there is no high possibility that the association may intentionally delay the procedures for concluding a sales contract in order to reduce the amount of compensation to be paid to the persons subject to cash settlement. Furthermore, there is no circumstance to deem that the Plaintiff may delay the procedures for concluding a sales contract with the same intent.

5) Article 44(5) of the Plaintiff’s articles of incorporation should be viewed as ex post facto and exceptional provisions that intend to give additional opportunities for members to leave the business by means of cash settlement, by failing to conclude a sales contract after the expiration of the period for application for parcelling-out.

Therefore, it is reasonable to interpret the above articles of association to mean that a union requires its members to conclude a contract for sale in cash in violation of its obligations to conclude the contract for sale in lots. In a case where a union does not require its members to conclude the contract for sale in lots due to various circumstances during the course of its business, such circumstance alone does not necessarily mean that its members are subject to cash settlement (see Supreme Court Decision 2010Da7141, May 9, 2012, etc.).

C. Examining these circumstances in light of the legal principles as seen earlier, it is difficult to view that the Plaintiff issued the Defendants an additional opportunity to withdraw the application for parcelling-out through the Nonparty’s remarks by the partnership president, and it is difficult to view that the Plaintiff’s right to seek the delivery of real estate to the Defendants without undergoing the procedures for concluding the parcelling-out contract or granting the Defendants an opportunity to withdraw the additional application for parcelling-out cannot be deemed to

Nevertheless, solely based on its stated reasoning, the lower court accepted the Defendants’ defenses based on the principle of the protection of trust and the principle of good faith and dismissed the Plaintiff’s claims against the Defendants. In so doing, the lower court erred by misapprehending the legal doctrine on the good faith and thereby adversely affecting the conclusion of judgment.

4. Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Sang-ok (Presiding Justice)