[1] In a case where a public development project implementer is obligated to provide school facilities free of charge pursuant to Article 4-2(1) of the former Act on Special Cases concerning the Securing, etc. of School Sites, whether the public development project implementer bears the burden of installing school facilities only to the extent that the cost is compensated (negative)

[2] The meaning of “a contract under public law” and whether a party to a contract under public law contests validity against the other party or claims performance is a party litigation under public law (affirmative in principle)

[3] In a case where the plaintiff files a lawsuit as a civil litigation without intention or gross negligence, measures to be taken by the court of the lawsuit (=transfer to the competent court)

[1] Article 4-2(3) and (4) of the former Act on Special Cases Concerning the Securing, etc. of School Sites (amended by Act No. 14604, Mar. 21, 2017; hereinafter “former School Sites Act”) where a public development project implementer is obligated to provide school facilities free of charge pursuant to paragraph (1), permitting the relevant development area to less create urban parks or green areas than the basic area prescribed by the relevant Acts and subordinate statutes in the relevant development area, and to appropriate development gains generated from the creation and sale of the relevant land to the installation cost of school facilities within reasonable scope of the cost of the public development project implementer’s gratuitous supply of school facilities, thereby compensating for some of the expenses incurred by the public development project implementer’s free supply of school facilities within the scope of reasonable scope. It cannot be deemed that the public development project implementer bears the installation cost of school facilities only to the extent that the cost is compensated

However, according to Article 4-2 (2) and (5) of the former School Sites Act, it is reasonable to determine the method or rate of sharing the difference between the public development project implementer and the Superintendent of an Office of Education, based on the principle of free provision of school facilities by the public development project implementer and the Superintendent of an Office of Education, in cases where an agreement is not reached between the public development project implementer and the Superintendent of an Office of Education as to the "sharing of the difference" of the expenses incurred in installing small parks and landscaped green areas in school sites under Article 4-2 (1) of the former School Sites Act. In addition, it is reasonable to determine the method or rate of sharing the difference between the public development project implementer and the Superintendent of an Office of Education in consideration of all the circumstances, such as the details and scale of the expenses actually incurred by the public development project implementer and the Superintendent of an Office of Education in relation to the relevant development project, and the details and degree of the increased expenses at the special request of the superintendent of education.

[2] The term “party lawsuit” means a lawsuit in relation to a legal relationship based on a disposition, etc. by an administrative agency, and other legal relations under public law, and refers to a lawsuit in which one party to such legal relations is the defendant (Article 3 subparag. 2 of the Administrative Litigation Act). The term “contract under public law” refers to a public law act which is established with the declaration of intent between equal parties for the purpose of causing the effect of public law. A lawsuit in which either party to a contract in public law contests or claims performance against the other party is a dispute over legal relations under public law, barring special circumstances, such as where the substance of a dispute is not a dispute over the existence or scope of rights and obligations under public law, but limited to the specific calculation method and amount

[3] In a case where the plaintiff made a mistake in a civil suit against the plaintiff without intention or gross negligence, if the court of the lawsuit has jurisdiction over the administrative litigation at the same time, it shall be examined and judged by the administrative litigation, and if it does not have jurisdiction over the administrative litigation, it shall be transferred to the competent court.

[1] Article 4-2 of the former Act on Special Cases Concerning the Securing, etc. of School Sites (Amended by Act No. 14604, Mar. 21, 2017) / [2] Article 3 subparag. 2, Articles 8 and 39 of the Administrative Litigation Act / [3] Article 7 of the Administrative Litigation Act; Article 34(1) of the Civil Procedure Act

[2] Supreme Court Decision 2015Da215526 Decided November 9, 2017 (Gong2017Ha, 2304) Supreme Court Order 2017Ma6337 Decided April 10, 2019 (Gong2019Sang, 1033) / [3] Supreme Court Decision 2015Da21526 Decided November 9, 2017 (Gong2017Ha, 2304)

Korea Land and Housing Corporation (Law Firm LLC, Attorneys Lee Dong-young et al., Counsel for the plaintiff-appellant)

Seoul Special Metropolitan City (Law Firm Chang, Attorneys Park Young-ok et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2018Na2063250 decided September 19, 2019

The judgment of the court of first instance is reversed, and the judgment is revoked. The case is transferred to the Seoul Administrative Court.

The grounds of appeal are examined.

1. Case history

According to the reasoning of the lower judgment and the record, the following circumstances are revealed.

A. The Plaintiff was designated by the Minister of Land, Infrastructure and Transport based on the former Special Act on the Construction of Bogeumjari Housing, Etc. (amended by Act No. 12251 on January 14, 2014 to the Special Act on the Construction of Public Housing, Etc.; hereinafter “former Bogeumjari Housing Act”) and implemented the project for the development of the Seoul Gangnam-gu, Seocho-gu, Seoul District for Bogeumjari Housing (hereinafter “instant project”).

B. In implementing the instant project, under Article 4-2 of the former Act on Special Cases Concerning the Securing, etc. of School Sites (amended by Act No. 14604, Mar. 21, 2017; hereinafter “former School Site Act”), the head of the Gangwon-nam District Project Bureau, who was delegated by the Plaintiff, entered into an agreement with the superintendent of the district office of education delegated by the superintendent of the district office of education (hereinafter “instant agreement”), on the premise that the Plaintiff and the superintendent of the Seoul Special Metropolitan City Office of Education have a duty to install facilities within the instant project district and provide them free of charge and share their installation expenses. The main contents are as follows.

(1) The expenses for school facilities projects and internal expenses shall be fully borne by the Superintendent of an Office of Education: Provided, That when the development gains accrued from a green area axis, the Plaintiff shall use the development gains as school facilities project expenses and bear the difference (Article 4 subparag. 2).

(2) In entering into this Agreement, capital costs (interest on construction costs) that are mutually different issues shall be separately consulted between the superintendent of education and the plaintiff (Article 11(2)).

(3) If there is a difference between the Superintendent of an Office of Education and the Plaintiff regarding the matters and the interpretation not provided for in this Convention, it shall be decided in consultation with the Superintendent of an Office of Education and the Plaintiff, or in accordance with the relevant statutes and ordinances

C. Accordingly, the Plaintiff established ○○ Elementary School, △△ Middle School, and △△ Elementary School in the instant project district and transferred it to the Superintendent of the Seoul Special Metropolitan City Office of Education by December 2013. The superintendent of the Seoul Special Metropolitan City Office of Education paid to the Plaintiff KRW 50.8 billion in total, excluding capital costs (construction funds interest) and internal expenses for school facilities projects by April 2014.

D. The Plaintiff requested the Seoul Special Metropolitan City superintendent of education to pay the capital cost under Article 11(2) of the Convention, but the Superintendent of the Seoul Special Metropolitan City Office of Education refused to pay it. On January 11, 2016, the Plaintiff filed the instant lawsuit with the Seoul Central District Court seeking payment of approximately KRW 2.7 billion of the capital cost under Article 11(2) of the Convention against the Defendant who is a local government belonging to the Seoul Special Metropolitan City superintendent

2. The judgment of the court below

The lower court determined as follows.

A. In full view of the circumstances before and after the conclusion of the instant agreement, the contents of Articles 11(2) and 12 of the instant agreement, etc., it is reasonable to deem that separate consultation on capital cost as stipulated in Article 11(2) of the instant agreement was attempted, but if no agreement is reached, it is reasonable to deem that an agreement was made with the obligor to pay the burden according to the interpretation

B. The instant project implemented under the former Bogeumjari Housing Act does not constitute a development project under Article 2 subparag. 2 of the former School Sites Act, and is not subject to the former School Sites Act. Therefore, the Plaintiff is not obligated to install school facilities under Article 4-2 of the former School Sites Act in relation to the instant project. Nevertheless, the Plaintiff entered into the instant agreement on the premise that Article 4-2 of the former School Sites Act is applied to the instant project, and thus, the liability to bear capital costs under Article 11(2) of the former School Sites Act should be determined according to the interpretation of Article 4-2 of the former School Sites Act.

C. Comprehensively taking account of the structure, details, etc. under each item of Article 4-2 of the former School Sites Act, it is reasonable to interpret that the development project operator and the Superintendent of an Office of Education share the installation cost of school facilities only in cases where development gains have occurred through urban park and green area reduction, and that where development gains have not occurred through urban park and green area reduction, the Superintendent of an Office of Education bears the total amount of installation cost of school facilities.

D. The project in this case is a case where development gains through urban park and green area reduction have not occurred, and the costs of establishing new elementary and secondary schools within the project district in this case shall be fully borne by the superintendent of the Seoul Special Metropolitan City Office of Education.

E. If the Plaintiff is not a person responsible for installing school facilities or a person responsible for installing school facilities in accordance with the instant agreement, the Defendant is obligated to pay the amount equivalent to the statutory interest on the costs borne by the Plaintiff in accordance with the delegated person’s obligation to reimburse the costs, and such statutory interest amount is deemed to be included in the installation cost of school in a broad sense.

3. Judgment of the Supreme Court

The judgment below is hard to accept for the following reasons.

A. Interpretation of the instant agreement

According to Articles 11(2) and 12 of the Convention, first of all, the time when the Plaintiff first disbursed the installation cost of school facilities and whether the Superintendent of the Seoul Special Metropolitan City Office of Education, after delivery of the completion and the delivery of the school facilities, bears the amount of capital according to the time gap between the time when the Plaintiff pays the settlement amount to the Plaintiff. However, if the agreement is not reached, it shall be deemed that the agreement was reached to make a decision

B. The meaning of Article 4-2 of the former School Sites Act

(1) According to Article 4-2 of the former School Sites Act, where a development project operator under each item of Article 4(3)1 of the same Act performs a development project to supply school sites without compensation in the Seoul Metropolitan area under Article 2 subparag. 1 of the Seoul Metropolitan Area Readjustment Planning Act, he/she shall install school facilities including small parks and landscaped green areas and supply them to City/Do offices of education without compensation (Paragraph (1)). A development project operator who installs school facilities pursuant to paragraph (1) shall consult with the Superintendent of an Office of Education about the number and scale of schools, small parks and landscaped green areas to be installed in school sites, time of opening schools, expenses for establishment, etc. (Paragraph (2)). Notwithstanding Article 14(2) of the Act on Urban Parks, Greenbelts, Etc., a development project operator who installs school facilities pursuant to paragraph (1) may secure the area of urban parks or green areas calculated by subtracting a maximum of 1/100 of the area of development projects from the standard areas under the same paragraph (3) through paragraph (4) (where he/she reduces the development expenses pursuant to paragraphs (3) and (4)).).

(2) Article 4-2 of the former School Sites Act (amended by Act No. 9743 of May 28, 2009) is a provision newly established under the amended Act (amended by Act No. 9743 of May 28, 2009) in order to strengthen the responsibilities of a public development project implementer by increasing demand for school establishment due to various development projects, but in some areas, it is difficult to establish a school due to the lack of financial resources in the relevant development project or by improving the problems such as housing sales in the absence of a school, etc. and by providing school facilities as well as school sites in the case of a public development project implementer like the Plaintiff. Accordingly, Article 4-2 of the former School Sites Act should be understood

(3) In other words, Article 4-2(3) and (4) of the former School Sites Act provides that where a public development project implementer is obliged to provide school facilities free of charge pursuant to paragraph (1), the legislative purpose is to compensate for the costs incurred by the public development project implementer resulting from the free supply of school facilities within reasonable limits by allowing the development project implementer to less than the basic area prescribed by the relevant laws and regulations in the relevant development area and by using the development gains accruing from the creation and sale of the relevant land in a housing site or commercial site, etc. for the installation costs of school facilities. It cannot be deemed that the public development project implementer bears the cost of school facilities only to the extent that the cost is compensated.

(4) However, according to Article 4-2(2) and (5) of the former School Sites Act, it is reasonable to determine the method or rate of sharing the difference between the public development project implementer and the Superintendent of an Office of Education on the basis of the principle of free provision of school facilities by the public development project implementer and the Superintendent of an Office of Education on the basis of the principle of free provision of school facilities as stipulated in paragraph (1), in cases where an agreement on the apportionment of the difference has not been reached between the public development project implementer and the superintendent of education on the basis of the principle of free provision of school facilities by the public development project implementer and the superintendent of education on the relevant development project, among the total expenses incurred by the public development project implementer and the superintendent of education on the relevant development project, the details and scale of the actual expenses incurred by the public development project implementer and the superintendent of education on the site of school, and the increased expenses at the special request of the superintendent of education on the site of school under Article 4-2(1) of the former School Sites Act.

C. Determination on the instant case

(1) According to the instant agreement, the Superintendent of an Office of Education has fully borne general expenses (facility operating expenses and internal expenses) incurred in the establishment of an elementary or secondary school in the instant project district. However, as seen earlier, the Seoul Special Metropolitan City Superintendent of an Office of Education did not reach an agreement on the amount of the capital cost incurred by the time difference between the time when the Plaintiff first disbursed the installation expenses of school facilities and the time when the Superintendent of an Office of Education pays the settlement money to the Plaintiff after the completion of construction and delivery of school facilities. Therefore, pursuant to Article 4-2 of the former School Site Act, it is necessary to determine the person liable to bear the expenses according to the legitimate interpretation of Article 12

(2) According to the reasonable interpretation of Article 4-2 of the former School Sites Act, if the public development project implementer and the superintendent of education did not reach an agreement on the apportionment of school facilities installation costs, the court has to determine the method or rate of sharing the difference between the public development project implementer and the superintendent of education by taking into account all the aforementioned circumstances.

(3) However, the result of the above interpretation of the relevant laws and regulations is that the superintendent of the Seoul Special Metropolitan City Office of Education has already paid approximately KRW 50.8 billion to the Plaintiff for expenses incurred in installing school facilities (facility project costs and internal expenses) excluding the capital costs, which is about KRW 2.7 billion, and the capital costs of this case sought by the Plaintiff are about KRW 5.5 billion, and even if excluding the capital costs, it can be deemed that the superintendent of the Seoul Special Metropolitan City Office of Education bears almost much of the expenses incurred in installing school facilities, and where the superintendent of the Seoul Special Metropolitan City Office of Education bears the expenses incurred in installing school facilities, the Plaintiff would not bear all the expenses incurred in installing school facilities. In full view of all the circumstances revealed in this case, which are contrary to the purport of Article 4-2(5) of the former School Sites Act that prescribes that the expenses incurred in installing school facilities should be borne by

(4) Nevertheless, the lower court determined that, in the instant project, since the development gains through the reduction of urban parks and green areas did not occur at all, it is reasonable to fully bear the expenses incurred in installing elementary and secondary schools in the instant project district, and that the Superintendent of an Office of Education shall bear the capital expenses prescribed in Article 11(2) of the instant Convention, because such capital expenses are included in the expenses incurred in installing school facilities. In so doing, the lower court erred by misapprehending the legal doctrine on the free supply system of school facilities under Article 4-2 of the former School Sites Act, thereby adversely affecting the conclusion

D. Determination as to the legal nature of the instant agreement and the method of litigation

(1) The term “party lawsuit under public law” means a lawsuit in relation to a legal relationship based on a disposition, etc. of an administrative agency, and other legal relations under public law, and refers to a lawsuit in which one party to such legal relations is the defendant (Article 3 subparag. 2 of the Administrative Litigation Act). Contracts under public law refer to a public law act which is constituted with the agreement between equal parties for the purpose of causing the effect of public law. Lawsuits where one party to a contract in public law contests its effect against the other party or claims its performance against the other party are related to legal relations under public law, barring special circumstances, such as where the substance of a dispute is not a dispute over the existence or scope of rights and obligations under public law, but limited to the specific calculation method and amount of damages (see, e.g., Supreme Court Decisions 2015Da21526, Nov. 9, 2017; 2017Ma637, Apr. 10, 2019).

(2) The instant agreement constitutes a contract under public law, since the Plaintiff, a public corporation, entered into an agreement with the competent superintendent of education regarding the performance of the obligation to provide free school facilities under Article 4-2 of the former School Sites Act in the course of performing public administrative activities, such as the implementation of the project for the development of the Bogeumjari Housing District, and thus, it constitutes a contract under public law. The dispute over the existence and scope of the contractual obligation under public law ought to be deemed as the subject of litigation

(3) In a case where the Plaintiff, without intention or gross negligence, files a civil suit against the Plaintiff as a civil litigation, the court of the lawsuit shall deliberate and determine the case as an administrative litigation if it has jurisdiction over the administrative litigation at the same time, and shall transfer it to the competent court if it does not have jurisdiction over the administrative litigation (see Supreme Court Decision 2015Da21526, Nov. 9, 2017, etc.).

(4) Nevertheless, the first instance court and the lower court did not take measures to transfer the instant claim to the competent court, and did so to determine the merits of the instant claim. In so determining, the first instance court and the lower court erred by misapprehending the legal doctrine on the legal nature of the instant agreement and the method of litigation.

4. Conclusion

Therefore, the judgment of the court of first instance is reversed ex officio, and the case is transferred to the competent court. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Jung-hwa (Presiding Justice)