Korea Land and Housing Corporation (Attorney Ansan-soo et al., Counsel for the plaintiff-appellant)

Masung Market (Attorney Park Jong-soo, Counsel for the plaintiff-appellant)

July 22, 2010

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

The Defendant’s disposition of imposition of development charges of KRW 1,410,330,610 imposed on the Plaintiff on February 11, 2009 (the date on which the notice is written shall be deemed the date of disposition, and on February 12, 2009, the disposition of imposition of KRW 1,410,3

1. Details of disposition;

A. On June 14, 2002, the Defendant: (a) on June 14, 2002, on 774,453,00 square meters of Dobong-do, Yindo; (b) on June 24, 2008, on the alteration of the housing site development plan and the approval of the development plan, the alteration of the housing site development plan and the alteration of the implementation plan (the initial 774,618 square meters, the alteration of the housing site development plan, and 772,234.6 square meters; hereinafter “instant land”); and (c) on June 30, 2008, the Plaintiff, a project executor, was subject to a completion inspection following the completion of the housing site development project of the instant land.

B. Around August 2008, the Plaintiff submitted a report that there was no development charges to be borne by the Defendant on the grounds that there was no development gains. However, on February 11, 2009, the Defendant did not recognize some of the development charges reported to the Plaintiff, but imposed and notified development charges of KRW 1,410,330,610 (hereinafter “instant disposition”).

Based on the calculation of the calculation amount of the table classification included in the main text, ① (2) the land price at the time of completion 340,825,057,057,074 and ② (2) the land price at the time of commencement 24,127,262,089, ④ the development cost of development 271,372,626,836 and ⑤ development gains 11,282,64,9281 - (2) the development charges - (2) the development charges 1,410,330,610 x 25% x 50% (a tax reduction or exemption project).

C. On April 30, 2009, the Plaintiff filed an administrative appeal seeking revocation of the instant disposition with the Central Land Expropriation Committee, and the appeal was dismissed on August 20, 2009.

[Ground of recognition] Evidence Nos. 2-1, 2, and Gap Nos. 3-12, the purport of the whole pleadings

2. Whether the disposition is lawful;

A. Summary of the plaintiff's assertion

The disposition of this case is unlawful in calculating development costs as follows, and the development gains are nonexistent in calculating legitimate development costs, so such disposition shall be revoked in full.

(i) interest on construction funds, construction indirect costs, or other cost;

The “construction fund interest” in the instant case is interest on land compensation bonds, the National Housing Fund interest, and the general loan interest. The “construction indirect cost” in the instant case is the cost for the number of persons directly related to the instant business at the Plaintiff’s headquarters, each regional headquarters, and each site. The “other cost” in the instant case is the cost for the operation of the site office (such as construction supervision expenses, transportation expenses, and communication expenses).

Article 158 of the Regulations on the Implementation of Accounting Standards for Government-Invested Institutions (amended by Presidential Decree No. 2006, Dec. 26, 2006) provides that the elements of construction costs shall be divided into material costs, labor costs, and expenses. The cost of materials shall include interest on construction costs, and labor costs and expenses shall be the expense of construction indirect costs. Article 179 provides that the cost of construction indirect costs shall be classified by the head office, regional head office, and construction office. Article 181 provides that interest (construction interest) during the construction period of loans required for housing construction and housing site creation shall be included in the cost of construction. Accordingly, in accordance with the implementation regulations, each of the above items shall be recognized as included in the net construction cost (Article 12 (1) 1 of the Enforcement Decree of the Restitution of Development Gains Act (hereinafter “the Act”). However, the Defendant excluded the total amount of development costs (Plaintiff’s construction costs, KRW 505,507, KRW 389, KRW 389, KRW 479, KRW 4759,975).7).7

(b) General management expenses;

The “general management fee” in this case was calculated as 5% of the net construction cost, and the above net construction cost includes the construction fund interest, construction indirect cost, and other cost, and the general management cost should be calculated based on the sum of the investigation cost and design cost in addition to the net construction cost, but the Defendant calculated the amount excluding the above development cost (the Plaintiff’s assertion 5,409,531,531, and the Defendant’s recognition 4,791,607,546).

3. Construction charges of roads outside districts;

The "road construction charges outside the district" in this case is recognized as the total development costs stipulated in Article 12 (1) 5 through 6 of the Enforcement Decree of the Act. However, the defendant recognized that only the amount divided by the ratio of the area of the land subject to imposition of the development charges on the whole project district ( approximately 85%, and the remainder is excluded from imposition) as development costs (Plaintiff's assertion 64,464,192,183, and the defendant's recognition 54,875,478,259).

In addition, the cost to be fully recognized is KRW 22,294,51,000 (including the net cost of building site development in the time of a request for examination prior to the notification prior to the request for examination), which is 86,758,703,183, which is the sum of the cost of building a road outside the district and the cost of building a road site outside the district and the cost of building a road site development outside the district (Article 85% of the cost of building a building site development, which is considered to be included in the net cost of building a building site development in the time of the

B. Key statutes

It is as shown in the attached statutes.

C. Determination

(i) interest on construction funds, construction indirect costs, or other cost;

A) Criteria for determining development costs

The net construction cost from among the development costs subject to deduction in the calculation of development gains refers to the cost of material (direct material cost and indirect material cost, etc.), labor cost (direct labor cost and indirect labor cost), and so-called cost of construction, etc. However, the development gains themselves refer to the profit derived from the enhancement of the value of the land that is obtained through the development project. Thus, even if the construction cost of the above three items is the cost of construction, it can be said that it falls under the development cost as the net construction cost that has to be invested in the land subject to the project for the implementation of the relevant development project and bring about an increase in its convenience or value (see, e.g., Supreme Court Decisions 9Du8923, Jun. 9, 200; 9Du8923, Jan. 22, 2002).

B) However, according to the following circumstances that are acknowledged by comprehensively taking into account the descriptions of Gap evidence Nos. 5 through 9, the entire purport of the pleadings, and the key statutes, the construction funds, construction indirect costs, and other costs alleged by the plaintiff cannot be deemed as net construction cost. Thus, this part of the allegation is without merit.

① Article 39(3) of the Act on the Management of Public Institutions and Quasi-Governmental Institutions provides that matters necessary for the accounting principles, etc. of public corporations and quasi-governmental institutions shall be prescribed by Ordinance of the Ministry of Strategy and Finance. Article 19 of the said Act provides that matters necessary for the enforcement of the said rules shall be determined and publicly notified by the Minister of Finance and Economy, and the head of the institution may determine the details necessary for the enforcement of the said rules within the scope determined and publicly notified by the Minister of Finance and Economy. Accordingly, the Korea National Housing Corporation Act and the Regulations on the Implementation of Accounting Standards of Government-Invested Institutions (the Korea National Housing Corporation Act, the 20th Amendment, the 26th December 26, 2006, the hereinafter “Rules on the Implementation of the Plaintiff Accounting Standards”).

The construction cost calculation prescribed in Articles 158, 179, and 181, etc. of the Enforcement Rule of the Plaintiff’s Accounting Standards, which the Plaintiff is based on the inclusion of net construction costs, is determined as necessary for the accounting principles of public corporations and quasi-governmental institutions. As such, it does not necessarily coincide with the items and calculation purpose of development costs.

② Article 12(3)1 of the Enforcement Decree of the Act provides that material cost, labor cost, and expenses shall be calculated by applying the method of calculating material cost, labor cost, and expenses for calculating construction cost among the criteria for determination of estimated price under Article 9 of the Enforcement Decree of the Act on Contracts to Which the State Is a Party. According to Article 9(1)2 of the Enforcement Decree of the Act on Contracts to which the State is a Party, Article 6(1), 2, and 3 of the Enforcement Rule thereof, “the amount calculated by multiplying the quantity of materials required for the manufacture, construction, or service, etc., of the subject matter of a contract by the per unit price”; “the amount obtained by multiplying the quantity of labor cost by the unit price”; “the quantity of labor cost for each type of work required for the manufacture, construction, or service, etc., of the subject matter of a contract by the unit price”; “the total amount of expenses for each item of work required for the manufacture, construction,

③ Even if the cost items of construction costs are identical or similar to the net construction cost items of development costs according to the rules implementing the Plaintiff’s Accounting Standards, whether such costs may be included in the development costs, which serve as the basis for calculating the development charges, should have been invested in the land subject to the relevant development project for the implementation of the relevant development project, and bring about an increase in benefits or values. As seen earlier, the Plaintiff’s assertion (land compensation bond, interest on the National Housing Fund, interest on general loans), construction indirect costs (Plaintiff’s head office, local head office, personnel expenses at each site), and other cost (including construction supervision, transportation, and communications costs at the time of operating the site office), can be deemed as expenses for housing construction or as general management expenses, and thus, it is insufficient to view that such costs constitute net construction costs incurred in the land subject to the project

(4) If construction capital interest is recognized as development costs, the scope of recognition of development costs is larger than the general project operator who implements a project with his/her own capital, and the interest on construction capital, indirect costs, and other costs claimed by the plaintiff are aggregated of all the costs incurred in all construction works, and such costs are exempt from the scope of equity with the general project operator.

(5) The calculation of development costs cannot be treated differently from the public works, and the public works can only be treated differently from the public works by excluding and reducing the imposition, imposing the burden, etc.

(b) General management expenses;

A) Since the net construction cost cannot include the construction fund, indirect construction cost, and other cost of the Plaintiff’s assertion, this part of the allegation is without merit.

B) We examine the assertion that research costs and design costs are added.

Article 12(1)2, 3, and 4 of the Enforcement Decree of the Act provides that research expenses (the aggregate of survey expenses and other expenses incurred in the execution of the relevant development project, which do not fall under net construction expenses), design expenses (the total of all expenses incurred in the management activity sector in relation to the relevant development project), general management expenses (the total of all expenses incurred in the management activity sector in relation to the relevant development project), development expenses. According to the proviso to Article 12(2) of the Act on Contracts to Which the State is a Party, Article 9 of the Enforcement Decree of the Act on Contracts to Which the State is a Party, and Article 6(1)4 of the Enforcement Rule thereof, the general management expenses shall be calculated by multiplying the aggregate of the expenses for material, labor, and expenses by the rate of general management expenses. According to the items written in evidence No. 5 and the purport of the whole pleadings, although the Plaintiff reported the general management expenses by applying the rate of 5% to the amount including the survey and design expenses for the net construction expenses, the Defendant can recognize the fact that the general management expenses are calculated by

According to the above provisions, the calculation of general management expenses cannot be deemed as including investigation expenses and design expenses, and Article 11-2 (2) of the Rules on the Imposition and Collection of Development Charges by the plaintiff's claim stipulates the scope of recognition of the amount if it is reported based on the actual expenses paid in relation to the general management expenses, and it is deemed that the defendant's calculation method is lawful. Accordingly, the plaintiff's assertion on this part is without merit.

3. Construction charges of roads outside districts;

In this case, the construction cost of roads outside a district and the construction cost of a site for roads outside a district shall be the construction cost of Article 12 (1) 5 through 6 of the Enforcement Decree of the Act, on the condition that the expenses for the construction of roads outside a district shall be borne by the conditions for approval of the implementation plan for the housing site development project of this case.

However, as to whether development costs can be recognized in full, according to the items in Gap evidence Nos. 5, 6, and 7 and the purport of the whole pleadings, the defendant recognized development costs as the amount divided by the ratio of the area of land subject to imposition of development charges to the whole project area (85%) among the construction costs of roads outside a district reported by the plaintiff. As such, if land subject to imposition of development charges (sale apartment zone) and land subject to imposition excluded from imposition exist within the whole project district, there are special circumstances where the apartment zone and rental housing zone are excluded from the imposition of development charges for the national rental housing complex development project (rental housing zone) despite the existence of public land subject to imposition of development charges (sale apartment zone). Article 12 (1) 5 through 6 of the Enforcement Decree of the Act cannot be deemed as the basis for recognizing "total development costs" as the development costs of the public facilities or the value of land donated or contributed, considering the legislative purpose of the redemption of development gains resulting from the enhancement of the value of land obtained through the development project, it is necessary and reasonable to determine its scope.

3. Conclusion

Thus, the plaintiff's claim of this case is dismissed for reasons.

[Attachment Form No. 3]

Judges Yoon Jong-gu (Presiding Judge)