The meaning of “budget” under Article 24(3)5 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (i.e., the revenue and expenditure plan of one fiscal year as stipulated by the articles of association of the association), / Where the association fails to meet the requirements of such budget but has passed a resolution of a general meeting on the amount of expenditure for the rearrangement project cost, which is the cost of the rearrangement project, including the construction cost, in the course of promoting the rearrangement project,

Article 24(3)5 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (hereinafter “Urban Improvement Act”) provides that “a contract that shall become a partner, other than the matters stipulated in the budget, shall be subject to the resolution of the general meeting.” Article 85 Subparag. 5 of the same Act provides that an “executive of a union that voluntarily promotes the projects under the subparagraphs of Article 24(3) without the resolution of the general meeting under the provisions of Article 24” shall be punished.

However, the prior meaning of “budget” refers to “a plan determined by the State or an organization in advance by means of the revenue and expenditure of one fiscal year.” Meanwhile, the accounts of a union and the timing of convening a general meeting should be included in the articles of association of the association pursuant to Article 20(1)5 of the Urban Improvement Act. As such, “budget” refers to “a plan for revenue and expenditure of one fiscal year prescribed by the articles of association of the association” as “a plan for revenue and expenditure of one fiscal year” under Article 24(3)5 of the Urban Improvement Act. Thus, insofar as the requirements of budget are not satisfied in the course of implementing a rearrangement project by the association, it cannot be deemed as “budget” under Article 24(3)5 of the Urban Improvement Act, even if there is less than the budget for the estimated expenditure amount of the rearrangement project cost, which is the

Article 20(1), Article 24(3)5, and Article 85 subparag. 5 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents

Constitutional Court en banc Order 2012Hun-Ba390, 2014Hun-Ba155 Decided May 29, 2014 (Hun-Gong212, 961)

Defendant

Prosecutor

Seoul Western District Court Decision 2014No277 decided June 13, 2014

The part of the judgment of the court below against the defendant is reversed, and that part of the case is remanded to the Seoul Western District Court Panel Division.

The grounds of appeal are examined.

1. Article 24(3)5 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (hereinafter “Urban Areas and Dwelling Conditions for Residents”) provides that “a contract that will become a partner, other than the matters stipulated in the budget, shall be subject to the resolution of the general meeting,” and Article 85 Subparag. 5 provides that “an officer of a cooperative who promotes any project under each subparagraph of Article 24(3) without a resolution of the general meeting under Article 24, shall be punished.”

However, the prior meaning of “budget” refers to “a plan determined by the State or an organization in advance by means of the revenue and expenditure of one fiscal year.” Meanwhile, the accounts of a union and the timing of convening a general meeting should be included in the articles of association of the association pursuant to Article 20(1) of the Urban Improvement Act. If so, “budget” as stipulated in Article 24(3)5 of the Urban Improvement Act refers to “a plan for revenue and expenditure of one fiscal year prescribed by the articles of association of the association” (see Constitutional Court en banc Decision 2012Hun-Ba390, 2014Hun-Ba15, May 29, 2014). Therefore, insofar as it does not meet such budget requirements, insofar as it goes through a resolution of the general meeting under the pretext of the project cost, such as construction cost, in the course of promoting a rearrangement project, it cannot be deemed “budget” as stipulated in Article 24(3)5 of the Urban Improvement Act.

2. Of the facts charged in the instant case, the gist of the violation of the Act on the Improvement of Urban Areas and Dwelling Conditions (hereinafter “instant association”) was that the Defendant, the president of the redevelopment association in 003 area (hereinafter “instant association”), held a temporary board of directors on March 28, 201 and selected six service companies as indicated in the attached list of crimes at the time of original adjudication, such as the establishment of an urban renewal acceleration plan and the provision of services, etc.; on May 7, 2011, before the general meeting of association members, without a resolution of the general meeting of association members at the end of March 2011, the instant association’s general meeting of association members, without obtaining a resolution from the general meeting of association members, entered into a service agreement (hereinafter “each service agreement of this case”) equivalent to KRW 2,270,000,000 (excluding value-added tax) for the aggregate of the contract amounts to be borne by association members. Accordingly, the association’s officers, without going through a resolution at the general meeting of association members.

3. According to the reasoning of the judgment below, the court below reversed the judgment of the court of first instance that found the Defendant guilty of this part of the charges on the ground that the instant project cost budget, which was "budgets according to the alteration of the rearrangement plan," which was decided at the extraordinary general meeting of the instant association on September 11, 2008, constituted the budget stipulated in Article 24 (3) 5 of the Urban Improvement Act, was merely the execution of the matters stipulated in the budget of the instant project cost.

4. However, it is difficult to accept the above determination by the court below for the following reasons.

A. According to the reasoning of the lower judgment and the evidence duly admitted by the first instance court, ① Article 32 of the instant association’s articles of association provides for one fiscal year from January 1 to the end of December each year; ② the Defendant entered into each of the instant services agreements on or around the end of March 2011, even though it was not reflected in the annual budget of 2011 of the instant association; and subsequently, the Defendant was only subject to ex post facto ratification at the general meeting of the instant association held on May 7, 201; ③ the instant project cost budget, which was resolved at the special meeting of the instant association on September 11, 208, is merely a modification of the originally planned amount of the maintenance and disposal plan as the instant association’s new site planned to be newly built in the instant association’s management and disposal plan changed into a new site of apartment, thereby making it possible to additionally construct an apartment.

B. Examining these facts in light of the legal principles as seen earlier, the instant project cost is merely the estimated amount of expenditure for the rearrangement project cost that the instant association established in the course of promoting the rearrangement project. It cannot be deemed as the revenue and expenditure plan for the fiscal year 201 of the instant association that entered into each of the instant services contracts, which was not reflected in the annual budget of the instant association in 2011. As above, each of the instant services contracts, which was not reflected in the annual budget of the instant association pursuant to Article 24(3)5 of the Urban Improvement Act, constitutes “a contract that imposes a burden on its members, other than the matters stipulated in the budget,” which shall be subject to the resolution of the general meeting pursuant to Article 24(3)5 of the Urban Improvement Act. Considering such circumstances, the Defendant’s act of entering into each of the instant services contracts without obtaining

C. Nevertheless, the lower court rendered a not-guilty verdict on this part of the facts charged solely based on its stated reasoning. In so doing, the lower court erred by misapprehending the legal doctrine on the interpretation of “budget” under Article 24(3)5 of the Act, thereby adversely affecting the conclusion of the judgment. The ground of appeal assigning this error is with merit.

Therefore, the part of the judgment of the court below which acquitted the defendant should be reversed. In this case, the prosecutor appealeds against the whole judgment of the court below, and the remaining guilty part in the concurrent crime relation under the former part of Article 37 of the Criminal Act should be reversed

5. Therefore, the part of the lower judgment against the Defendant 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 Jo Hee-de (Presiding Justice)