As shown in the attached Form (Law Firm Hangran, Attorney Lee Dai-hoon, Counsel for the defendant-appellant)

New Distribution Primary Rebuilding Housing Association (Law Firm Gyeong et al., Counsel for the plaintiff-appellant)

December 24, 2015

1. All of the plaintiffs' primary claims are dismissed.

2. All of the plaintiffs' conjunctive claims are dismissed.

3. The costs of lawsuit are assessed against the plaintiffs.

On October 29, 2013, it is confirmed that the effect of the resolution of the special general meeting on the agenda in the attached Form 2, which the defendant adopted in Seocho-gu Seoul ( Address omitted) on October 19, 2013, is invalid.

Preliminaryly, the Defendant’s obligation to pay 20% of the additional profits to the Defendant’s executives as incentives based on the effect of the resolution of the special general meeting on the attached Table 2 set forth in the Seocho-gu Seoul ( Address omitted) on October 29, 2013.

1. Basic facts

A. Status of the parties

1) A around November 197, the apartment building (the name omitted of the apartment) constructed on each land of Seocho-gu Seoul (number omitted) (hereinafter referred to as the “instant apartment building”) consists of 19 units of the five-story apartment building (1-19 units) on the land of the above (number 2 omitted), and 2 units of the five-story apartment building (20 units, 21 units) on the land of the above (number 3 omitted).

2) In order to promote a reconstruction project of the instant apartment, the Defendant, established on June 27, 2003, obtained an association authorization pursuant to the former Housing Construction Promotion Act (amended by Act No. 6852, Dec. 30, 2002; Act No. 6852, Jul. 1, 2003); completed the establishment registration on July 21, 2003 pursuant to the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (hereinafter “Urban Improvement Act”); and promoted the reconstruction improvement project for one-19 units of the instant apartment.

3) The Plaintiffs are the Defendant’s members.

B. Articles of association of the defendant

The parts related to this case among the contents of the articles of association of the defendant's association (hereinafter referred to as "articles of association") are as follows:

Article 10 (Rights and Duties of Members) (1) (1) of the table included in the main sentence of this Act shall have the following rights and duties. 5. 5. The following matters shall be established: 5. The members shall be appointed from among the members; 5. The executive members of an association, who are not the head of an association, as well as the liability to pay expenses, such as the improvement project cost, liquidation amount, dues therefor, late payment and late payment damages (including late payment of interest, delay of a contract, and delay due to disputes among the members of an association) (1) the association shall have the following executive officers: 2. Not more than 8 auditors; 3. The association shall have not more than two auditors, and 20 (Establishment of General Meeting) the general meeting consisting of all the members. 1. The following matters shall be decided upon by the resolution of the general meeting. 24 (Establishment of General Meeting) (1) the representatives shall be elected from among the members; 25 (Matters to be resolved by the president of the board of representatives); 3. The general meeting and the association shall be convened and the association:

C. The defendant's general meeting resolution process

1) On August 23, 2013, the Defendant obtained approval for the change of a project implementation plan, and applied for parcelling-out from August 27, 2013 to September 26, 2013, and carried out the procedures for application for parcelling-out under Article 46 of the Urban Improvement Act. Around that time, the Defendant decided to implement the reconstruction project including 20 units and 21 units of the instant apartment complex.

2) On September 25, 2013, the Defendant: (a) held a board of directors meeting on September 25, 2013; (b) decided to present a resolution to increase profitability to the board of representatives on the agenda item (2); and (c) the content of the said plan to increase profitability is as follows.

3. The execution of project costs, etc. in excess of the budget shall be executed after the resolution of the general meeting in advance. The execution of the project costs, etc. in excess of the budget shall not be recognized before the general meeting: ① the implementation of the incentive system: (i) the head of the partnership, one auditor, and eight directors (ten in total) where losses are incurred from the refund and additional charges of each member of the plan to modify the management and disposal plan at the time of dissolution of the partnership; (ii) the additional refund and additional charges of each member of the plan to modify the management and disposal plan at the time of dissolution of the partnership shall be excluded; and (iii) the additional amount of refund shall be increased due to the occurrence of additional profits from the refund and additional charges of each member of the plan to modify the management and disposal plan at the time of dissolution of the partnership; and (iv) the additional charges shall be paid 30% of the additional profits to the partnership head, one auditor, and eight directors.

3) On October 4, 2013, the Defendant held the board of directors at around 18:20 on October 4, 2013, and passed a resolution on the agenda to hold an extraordinary general meeting on October 29, 2013. On the same day, around 19:00, the Defendant held 126th board of representatives at around 102, among 104 incumbent representatives, and proposed a resolution on the improvement of profitability. However, the above agenda was withdrawn in opposition of some representatives. The Defendant’s president and eight directors of the partnership held the board of directors at around 20:30 on the same day, held the board of directors at around 20:30 on the same day, and passed a resolution on the agenda to hold an emergency meeting (paragraph 1) to form an election commission for the purpose of election of new enforcement departments as a whole.

4) Accordingly, in the Defendant’s 127th conference held on October 7, 2013, 66 incumbent representatives among 104 at the Defendant’s 127th conference, the composition of the said election commission was rejected as the unanimous order of the representatives present at the conference, and a resolution was made to request the performance of duties to the withdrawal and tenure of the officers resigned as a lump sum with the consent of 42 representatives from among the delegates present at the conference, and to have eight representatives organize a training committee and prepare a reasonable compromise on the plan to enhance profitability.

5) On October 8, 2013, the Settlement Board organized by the above resolution discussed the measures to increase the above profitability, and drawn up the conclusion that “(i) losses and profits arising from reconstruction are responsible and equal for all union members; (ii) 30 times the refund amount of the general union members for the president of the union; and three times the refund amount of the general union members for the directors and auditors as compensation for union officers; and (iii) delivered the above conclusion derived from October 11, 2013 to the head of the defendant’s association.

6) On October 15, 2013, the Defendant: (a) held an explanatory meeting on the plan to increase profitability while 528 members present; (b) decided on October 29, 2013 to present the case of approval of the plan to increase profitability (hereinafter “the instant case”); (c) held an extraordinary general meeting (hereinafter “instant general meeting”) at around 19:00 on October 29, 2013; and (d) proposed the instant case as an agenda under subparagraph 7; (c) 543 affirmative votes (148 dissentings, 199) of all the 710 members, among all the 710 members, were resolved (hereinafter “instant resolution”).

[Ground of recognition] Facts without dispute, Gap evidence 1 through 5, 23, 25 through 34, Eul evidence 1 and 5, the purport of the whole pleadings

2. Judgment as to the main claim

A. The plaintiffs' assertion

For the following reasons, the instant resolution is null and void, and the Plaintiffs seek confirmation that the instant resolution is null and void.

① Although an agenda item of a general meeting is subject to prior deliberation and resolution by the board of directors and the board of representatives pursuant to Article 25(1)3 of the articles of association, the head of the defendant association presented the agenda item to the general meeting of this case ex officio without undergoing prior deliberation and resolution by the board of directors and the board of representatives in the process of the resolution of this case. The resolution of this case is null and void since it violated the

② The resolution by a general meeting of a reconstruction association is limited to matters specified in the Urban Improvement Act, the Act, and the articles of association. Since the instant agenda does not constitute the resolution by the general meeting, the instant resolution is null and void as the presentation of the agenda per se becomes null and void.

③ The president of the Defendant Union has the duty of good faith and sound reasoning to fully explain the existence of the instant agenda items, which was presented and withdrawn by the 126th council of delegates, and the circumstances leading up to the instant agenda items presented to the instant general meeting and the specific contents that the instant agenda items are disadvantageous to the union members. Nevertheless, the head of the Defendant Union violated the said duty by failing to fully explain the contents of the instant agenda items to the union members. Accordingly, the instant resolution is null and void.

④ According to Articles 24, 60, 61 of the Act, and Article 10 of the Articles of Incorporation of the Association, the Defendant, a reconstruction association, may require its members to bear expenses, such as project costs, liquidation money, and dues, and constitutes mandatory regulations. As such, since members are obligated to bear expenses, they are naturally entitled to claim for the distribution of profits resulting from the implementation of a project. However, the Defendant determined to pay 20% of the additional profits to be distributed to its members through the instant resolution as incentives to the executives of the association including the head of the association. The instant resolution is null and void in violation of the aforementioned Act and the Enforcement Decree of the Articles of Incorporation. In addition, Article 57(3) of the Enforcement Decree of the Act lists matters to be appropriated as “expenses” at the time of the liquidation of the association. In addition, the instant resolution does not include the items enumerated above, but does not have legal grounds for the Defendant to pay incentives to its executives. Therefore, the instant resolution, which is a mandatory law, is null and void because it violates the above provisions of the Act.

⑤ The Defendant’s success in the sale in lots is anticipated to bring about a minimum of KRW 100 billion. The Defendant’s association’s profits that the Defendant’s association’s president and executive officers would be the astronomical amount up to 20 billion. On the other hand, the Defendant’s association president decided to set up a right to collateral security on the Seocho-gu Seoul, (number 2 omitted) (Dong name 2 omitted) (Dong name 2 omitted) (Dong name 2 omitted) (hereinafter “the instant partitioned building”) owned by himself in order to compensate for the loss of the association through the instant resolution. However, prior to the instant resolution, prior to the instant resolution, the instant partitioned building was already set up in the name of the National Bank of Korea with the maximum debt amount of KRW 1.32 billion and it constitutes deception against its members. Considering this, the instant resolution with the contents of incentives paid to executive officers by a reconstruction association, which is a public corporation, is null and void, contrary to the principle of proportionality and the principle of good faith.

6) Unlike the grounds for the proposal of the instant case, considering the following, the instant apartment complex was located in the Han River as the fifth floor apartment complex, and thus, it was predicted that high profitability was high, and the members of the instant apartment complex were not only two members of the instant association, but also became a person subject to cash settlement due to the failure of the head of the association, not the demand for cash settlement by concerns about the expansion of additional burden, and the plan to increase profitability of the instant apartment complex becomes a person subject to cash settlement due to the failure of the head of the association, and the plan to increase profitability of the instant apartment complex is not a way to increase objectively acceptable profitability, but rather a way to actually pay 20% of the additional profit to the head of the association and its officers as piece rate, it constitutes an unfair juristic act and thus

7) The president and executive officers of the Defendant’s association agreed to receive 20% of the additional profits as incentives without considering the interests of the association members. Accordingly, the Defendant’s association president and executive officers violated their duties and caused enormous damages to the Defendant and its members. As such, the instant resolution constitutes a juristic act contrary to social order and thus, is null and void in accordance with Article 103 of the Civil Act.

(8) The instant agenda item is deemed to be an alteration of the contents of a rebuilding resolution adopted by the Defendant at the time of establishment or to contain matters concerning the apportionment of rebuilding expenses at the stage of the implementation of reconstruction. Therefore, the quorum for the instant agenda item shall not be less than 4/5 of the entire members pursuant to Articles 49 and 47(2) of the Act on the Ownership and Management of Aggregate Buildings (hereinafter “Act on the Ownership and Management of Aggregate Buildings”). Since the instant resolution did not meet the above quorum, it is null and void.

B. Determination

1) As to the assertion that the board of representatives did not undergo prior deliberation and resolution procedures

In light of the following circumstances, it is difficult to view that there is a defect that did not undergo prior deliberation and resolution procedures by the board of representatives in the instant resolution, and there is no evidence to find otherwise. Accordingly, the Plaintiffs’ allegation in this part is without merit.

① Article 25(1) of the Urban Improvement Act provides that any association, the number of members of which is at least 100, shall have a board of representatives. This may be deemed to allow a board of representatives to act on behalf of the general meeting with respect to matters other than the core matters related to the existence of the association, etc. due to difficulties in holding a general meeting or making a resolution, if the number of members is at least 100. Therefore, even if the articles of association made a resolution at a general meeting without going through the board of representatives on the matters determined as the resolution of the board of representatives, such

② Article 25 (1) 3 of the articles of association of a board of representatives only provides for “prior deliberation on the agenda of a general meeting” as a matter of resolution by the board of representatives, and does not provide for “prior deliberation on the agenda of a general meeting.” This appears to the purport to allow a council member to exercise appropriate voting rights when the relevant agenda is referred to the general meeting, and it does not necessarily require the council’s approval and resolution with respect to the relevant agenda.

(3) Therefore, even though the Defendant’s resolution on the instant agenda itself was not made by the Defendant’s board of representatives, the absence of such resolution procedure does not constitute a defect in the instant resolution. In addition, there was a prior deliberation as to whether to pay incentives to the Defendant’s executives through the 126th board of representatives and the 127th board of representatives, and how to pay incentives to the Defendant’s executives, so the Defendant may be deemed to have undergone the deliberation process by the board of representatives regarding the instant agenda.

④ The Plaintiffs asserted that the instant agenda cannot be referred to the instant general meeting pursuant to Article 25(1)3, since the Defendant’s 126 council’s 126 council’s 126 council’s 126 council’s 1. The instant agenda is different from the Defendant’s 169 council’s 169 council’s 129 council’s 127 council’s 127 council’s 127 council’s 1. Thus, the instant resolution on the instant agenda is null and void since the 126th council’s 5th council’s 126th council’s 127 council’s 20 council’s 20th council’s 127 council’s 20 council’s 20th council’s 126th council’s 127 council’s 5th council’s 20th council’s 20 council’s 1st council’s 20th council’s 20 council’s 1st council’s 20th council’s 1.

2) As to the assertion that the instant agenda does not constitute a resolution by the general assembly

The general assembly of a reconstruction association is the highest decision-making body that determines the intention of the association as a body comprised of all the members of the association. In principle, the general assembly shall be deemed to have the right to make a resolution on all the affairs related to the association. In addition, the reason why the Act on the Maintenance of Urban Areas and Dwelling Conditions or the Articles of Incorporation separately provides for the resolution of the general assembly is that at least those matters have an important impact on the rights and obligations of the association members, and thus, the purport of restricting the effect of the relevant resolution is to be limited in case of violation

Therefore, it is reasonable to view that the instant agenda can be resolved at the Defendant’s general meeting regardless of whether the Act on the Maintenance of Urban Areas or the Articles of Incorporation provides for the resolution of the general meeting, and that this part of the Plaintiffs’ assertion is without merit.

3) As to the assertion of violation of duty to explain

In light of the following circumstances, which acknowledged that the aforementioned facts are based on Gap evidence Nos. 4 and 35 as well as the overall purport of oral argument, it is difficult to deem that the head of the defendant cooperative bears the duty of explanation as alleged by the plaintiffs in the course of resolving the instant agenda at the general assembly of this case, or that it has violated such duty of explanation. Therefore, the plaintiffs' assertion on this part is without merit.

① As seen earlier, the Defendant underwent sufficient prior deliberation procedures with respect to the payment of incentives to executives through the 126th and 127 representatives’ meeting. In particular, the 126th representatives’ meeting was a hot debate to the extent that the proposal on the plan to increase profitability was withdrawn while the 102 representatives were present. This process appears to have been sufficiently delivered to non-representatives through the above representatives who correspond to the Defendant’s members. Therefore, it is difficult to view that the head of the Defendant partnership, around the general meeting of this case, has a duty to inform the members of the fact that the 126th representatives’ meeting was presented and withdrawn.

② On October 15, 2013, the Defendant held an explanatory meeting on a plan to increase profitability while at the meeting of 528 members, and sent to the members of the instant general meeting by up to the meeting data (Evidence A No. 4) prior to the instant general meeting, and knew the details of the instant case’s agenda.

③ On the day of the instant general meeting, there was active discussions on the instant agenda between the head of the Defendant Union and the members of the instant association. From this point, even if the resolution on the instant agenda, it appears that the members could have sufficiently transmitted information to the extent that they could make a decision on the outcome of the resolution on the instant agenda by themselves.

4) As to the assertion of violation of mandatory law

Based on the above facts, the following circumstances are acknowledged to show the overall purport of Gap evidence 7 and 35 evidence, namely, ① there is no provision of the Act on Urban Improvement or the provisions of the articles of association that explicitly prohibit the payment of incentives to union executives, ② At the general assembly of this case, members of the association at the general assembly of this case are expected to have sufficiently predicted the circumstances that, if the defendant's general sale of shares is successful, part of the profits to be distributed to union executives would be paid as piece rates and thus, the profits to be distributed to non-executive members would be reduced accordingly. Nevertheless, the resolution of this case was decided at the highest rate of about 76.47% for union members; ③ The time when the Seoul Special Metropolitan City publicly announced the Standard Administrative Service Regulations for the Rearrangement Project, such as the Seoul City Association, etc., which contains the contents prohibiting the payment of incentives to union executives, it is difficult to view that the plaintiffs violated the provisions of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions, etc., and there is no reason to deem the provision of this case to be invalid.

5) As to the assertion of violation of good faith

In light of the following circumstances, it is difficult to view that the resolution of this case is invalid after the resolution of this case, because the size of incentives to be paid to the executive officers of the defendant pursuant to the resolution of this case is more than the expected size of ordinary union members after the resolution of this case, the resolution of this case is considerably larger than the expected size of ordinary union members, and it cannot be seen that the resolution of this case violates the good faith principle after the resolution of this case is adopted. ③ If the defendant suffers loss with respect to incentives of this case, the president of the association should compensate for union losses within the limit of 1 billion won, and the president of the association should establish the right to collateral on the partitioned building of this case as collateral, so it is difficult to conclude that the resolution of this case violates the good faith principle of this case's 10 billion won or 20 billion won, and there is no reason to conclude that the resolution of this case is against the good faith principle of this case's 100 million won or 500 million won.

6) As to the assertion of unfair legal acts

A) A juristic act which has considerably lost fairness due to the party’s old-age, rashness, or inexperience shall be null and void (Article 104 of the Civil Act). Furthermore, in a case where the contents of a resolution of the general assembly of a reconstruction association are considerably unfair, such resolution may also be null and void pursuant to Article 104 of the Civil Act (see Supreme Court Decision 2002Da68034, Jun. 27, 2003, etc.).

B) Regarding the instant case, the Health Unit, introduced to the members of the union in relation to the instant general assembly, “The profits of the political party association will depend on the success of the general sale. In a situation where the success of the general sale of real estate is not possible due to long-term real estate erosion, members of the association would have been seriously threatened with the breadth of additional charges at the time of occupancy, and there is apprehension that additional charges would have been incurred, and that there would be concerns over additional charges. Therefore, in order to enhance profitability and to solve the anxiety of the members, a resolution of all the members of the association would be sought for the improvement of profitability, such as attachment.” The fact that the Defendant’s members of the association are two persons who lost their status as the members of the association by being subject to cash liquidation is either based on the basic facts or there is no dispute between the

C) However, in light of the following circumstances in which the aforementioned basic facts were acknowledged to show the purport of the entire pleadings, it is insufficient to recognize that the instant resolution was made by the Defendant’s union members due to gambling, rashness, or inexperience, or that it was considerably lost fairness. There is no evidence to acknowledge otherwise. Accordingly, the Plaintiffs’ assertion on this part is without merit.

① The Defendant had undergone sufficient prior deliberation procedures in relation to the payment of incentives to executive officers through the board of representatives set forth in Articles 126 and 127. On October 15, 2013, the Defendant held an explanatory meeting for members on the plan to increase profitability while 528 members were present.

② On the day of the instant general meeting, there was active discussions on the instant agenda between the head of the Defendant Union and the members of the instant association. From this point, even if the resolution on the instant agenda, it appears that the members were able to have sufficiently transmitted information to the extent that they could make a decision on the outcome of the instant agenda by themselves.

③ It should be determined at the time of the resolution as to whether the resolution of this case was a juristic act which has considerably lost fairness, and it cannot be readily concluded that the reconstruction project promoted by the defendant as at the time of the resolution of this case is likely to bring about a large amount of profit.

7) As to the assertion of juristic act against social order

In light of the following circumstances, which show the purport of Gap evidence No. 35 and the entire argument, the following facts: (i) there is no provision of the Urban Improvement Act or the provisions of the articles of association that explicitly prohibit the payment of incentives to union executives; (ii) at the time of the general assembly of this case, the general assembly of this case seems to have been sufficiently predicted that the general assembly of this case, when the defendant's successful sale in lots is made, some of the profits to be distributed to union members would be paid to union members as piece rate and thus, the profits to be distributed to union members who are not union members would be reduced. Nevertheless, the resolution of this case was decided at the highest ratio of about 76.47% for union members, and there is no other evidence to support this part of the plaintiffs' assertion.

8) As to the assertion that the quorum was not satisfied

Article 16 (2) of the Act on the Maintenance and Improvement of Urban Areas provides that "where a committee of promoters of a housing reconstruction project intends to establish an association, at least 2/3 of the sectional owners of the apartment buildings in a housing complex by Dong (in the case of welfare facilities, all welfare facilities within a housing complex shall be regarded as one Dong) and at least 1/2 of land size (excluding where each sectional owners of multi-family housing by Dong is not more than 5), and at least 3/4 of all sectional owners within a housing complex, and with the consent of landowners of at least 3/4 of land size, the authorization of the head of a Si/Gun shall be obtained with the consent of at least 3/4 of land size. The same shall apply to an alteration of the authorized matters." Article 26 (2) of the Enforcement Decree of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Areas provides that the consent of the plaintiffs pursuant to Article 26 (2) of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Areas shall not be applied to the consent of the Association.

3. Judgment on the conjunctive claim

A. The plaintiffs' assertion

1) The instant resolution is a sort of contract for the payment of the agreed amount concluded between the Defendant’s members and the Defendant. However, since the Plaintiffs explicitly opposed to the offer that the Defendant paid 20% of the additional profit to the Plaintiff’s members and the executives as piece rates, the Plaintiffs and the Defendant did not establish the said contract for the payment of the agreed amount. Therefore, there is no obligation that the Plaintiffs would pay the Defendant’s additional profit to the executives as piece rates according to the validity of the instant resolution.

2) Even if the above contract for the payment of the agreed amount was established, since the plaintiffs' expression of intent to pay the agreed amount to the defendant was caused by fraud or mistake, the plaintiffs revoked the above declaration by delivering the copy of the complaint of this case pursuant to Articles 109 and 110 of the Civil Code. Therefore, there is no obligation that the plaintiffs pay 20% of the additional profit to the executives of the defendant according to the validity of the resolution of this case by the defendant.

B. Judgment on the Defendant’s main defense of safety

1) The defendant asserts that the plaintiffs' conjunctive claim part is unlawful as there is no benefit of confirmation.

2) In a lawsuit for confirmation, there should be a benefit of confirmation as a requirement for the protection of rights. The benefit of confirmation is acknowledged in cases where there is a dispute between the parties as to the legal relationship subject to confirmation, and thereby, a judgment of confirmation is the most effective and appropriate means to eliminate such apprehension or risk when there is apprehension or risk in the Plaintiff’s rights or legal status (see Supreme Court Decision 2014Da218511, Dec. 11, 2014).

3) According to such legal principles, the following circumstances are acknowledged as follows: (i) the subject liable to pay incentives to the Defendant’s executives according to the resolution of the instant case, namely, the Defendant, not the Plaintiffs who are members of the instant association; and (ii) the obligee holding the incentive payment claim according to the resolution of the instant case is the Defendant, not the Defendant, but the Defendant’s executives; and (iii) even if the Plaintiff’s claim was accepted, the effect of the judgment of the instant case does not extend to the Defendant’s executives, it cannot be deemed as having the benefit of confirmation. Therefore, the Plaintiffs’ lawsuit on the conjunctive claim cannot be deemed as

4. Conclusion

Therefore, all of the plaintiffs' primary claims are dismissed as it is without merit, and since the plaintiffs' primary claims are illegal, it is so decided as per Disposition by the assent of all of them.

(attached Form omitted)

Judge Jeong-su (Presiding Judge)