Plaintiff 1 and 11 others (Attorney Kim Byung-soo, Counsel for the plaintiff-appellant)

Yongdu 6 District Housing Redevelopment and Improvement Project Association (Law Firm Squa, Attorneys Song-sop et al., Counsel for the plaintiff-appellant)

January 21, 2009

Seoul Northern District Court Decision 2007Gahap8635 Decided February 15, 2008

1. The defendant's appeal is dismissed.

2. The costs of appeal shall be borne by the Defendant.

3. The decision of the court of first instance was modified by the defendant's lawsuit acceptance as follows.

On May 29, 2006, the defendant confirmed that the resolution of selecting Samsung C&T Co., Ltd. is null and void at the residents' general meeting of May 29, 2006.

1. Purport of claim

Paragraph (3) of this Article.

2. Purport of appeal

The judgment of the first instance is revoked. The plaintiff's claim is dismissed.

1. Basic facts

The following facts shall not be disputed between the parties, or may be acknowledged by taking into account the whole purport of the pleadings in each entry in Gap evidence 1 through 4, and evidence Nos. 1 through 4:

A. The Yongsan-gu Housing Redevelopment and Improvement Project Promotion Committee (hereinafter “instant promotion committee”) was established for the purpose of establishing an association to implement a housing redevelopment improvement project under the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (hereinafter “instant redevelopment project”) on a site of 753-9 square meters of land in Dongdaemun-gu, Dongdaemun-gu, Seoul, with the aim of preparing for the establishment of the association. The association promotion committee approved by the head of Dongdaemun-gu Seoul Metropolitan Government on March 15, 2006, and the Plaintiffs are the owners of the land within the instant redevelopment project district.

B. After the approval for establishment, the committee of this case started the procedure to select the developer of the redevelopment project of this case, including the public announcement of the selection of the contractor of the redevelopment project of this case. On May 29, 2006, the committee of this case decided to hold a residents’ general meeting and independently submit the project participation proposal to select Samsung C&T corporation as the developer of the redevelopment project of this case (hereinafter “the resolution of this case”).

C. On October 11, 2007, the Plaintiffs filed the instant lawsuit seeking confirmation of invalidity of the instant resolution with the instant promotion committee as the Defendant. On May 16, 2008, the instant promotion committee continued to be affiliated with the instant case, held an inaugural general meeting for establishing the association, and the Defendant (hereinafter “Defendant Cooperative”) was duly established as a housing redevelopment and maintenance project association, and the Defendant Cooperative was authorized by the head of Dongdaemun-gu, the competent authority on September 4, 2008.

D. Accordingly, the Plaintiffs filed an application with the Defendant Partnership to have the Defendant Partnership take over the instant litigation procedures on the grounds that the Defendant Partnership comprehensively succeeded to all rights and obligations of the Promotion Committee.

2. Determination on the legitimacy of the taking-over of a lawsuit

It is true that Article 15 (4) of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents provides that a housing redevelopment and rearrangement project association shall comprehensively succeed to the rights and obligations of the promotion committee before its establishment. However, even if a third party comprehensively succeeds to the rights and obligations of the parties, where the transfer and inheritance are denied because the rights and obligations of the parties are subject to a lawsuit, the lawsuit acceptance cannot be allowed. In the lawsuit of this case, the effect of the resolution of the general meeting regarding the selection of a construction project conducted at the promotion committee level or the rights and obligations of the promotion committee arising therefrom cannot be succeeded to a newly established association, so the plaintiffs' request for taking over the lawsuit against the defendant

However, in a case where a member of the decision-making body under the articles of association of the organization brought a civil lawsuit claiming the existence or validity of a resolution made by the said decision-making body on the basis of his/her status as a member of the decision-making body, but died during the lawsuit for retrial, there is no room to take over the lawsuit due to the nature of the legal status in the lawsuit (see, e.g., Supreme Court Decision 2003Da64381, Apr. 27, 2004). Thus, in a case where the rights and duties of a corporation or non-corporate association are succeeded to a newly established corporation under the provisions of Acts, the legal status of such corporation or non-corporate association is succeeded to the newly established corporation, and thus, it is reasonable to view that the committee of promoters of this case and the committee of promoters of this case were entitled to take over the legal status of such corporation or non-corporate association under the provisions of Acts and subordinate statutes (see Supreme Court Decision 201Da4352, Nov. 26, 2002).

3. Determination on this safety defense

With respect to the lawsuit in this case seeking confirmation of invalidity against the defendant association on the ground of the substantive and procedural defects in the resolution in this case, the defendant association does not bind the defendant association established after the above resolution, but set forth the status of a temporary contractor on the condition of ratification at the general meeting of the association members to be held later, and the defendant association's articles of association stipulate that the defendant association shall select the contractor through a resolution at the general meeting of the association. Accordingly, the defendant association must select the contractor without relation to the resolution in this case and plans to select the contractor through a resolution at the general meeting of the association. Thus, the lawsuit in this case is not an effective and appropriate means to resolve the concerns and risks existing in the rights or legal status of the plaintiffs, and further, as long as the promotion committee, which is the subject of the resolution in this case, is extinguished, and the validity of the resolution in this case is not bound by the defendant association, the lawsuit in this case is unlawful since it becomes an object of confirmation of past legal relations not permitted under the Civil Procedure Act.

However, this case's resolution was adopted at the stage of the promotion committee prior to the establishment of the defendant association. However, the plaintiffs' filing a lawsuit in this case is seeking confirmation as to the invalidity of this case's resolution between the defendant association and the association succeeding to all rights and obligations of the promotion committee. Thus, the lawsuit in this case cannot be viewed as an object of confirmation as alleged in the defendant association's association. Further, although the defendant association is a person whose effect of the resolution in this case is not against the defendant association, it is still seeking rejection or dismissal of the plaintiffs' claim seeking confirmation of invalidity of the resolution in this case's lawsuit in this case's lawsuit, and the response of the defendant association in this case's lawsuit in this case's lawsuit in this case can not be completely ruled out the possibility of the redevelopment project in this case's future based on the contents of the resolution in this case's lawsuit in this case's lawsuit. Thus, the plaintiffs who are owners of the land in this case's business area can still be viewed as a means of dispute resolution with respect to the redevelopment project in this case's case's new procedure or resolution.

4. Judgment on the merits

A. The relevant Acts and subordinate statutes in force at the time of the resolution of this case regarding the division of business between the promotion committee and the partnership and the selection of the executor for the redevelopment project are as follows:

The Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions

Article 8 (Implementers of Housing Redevelopment Projects, etc.)

(1) A housing redevelopment project may be implemented by a cooperative under Article 13 (hereinafter referred to as the "cooperative"), or implemented by the cooperative jointly with the head of a Si/Gun, the Housing Corporation, etc., a constructor under Article 9 of the Framework Act on the Construction Industry (hereinafter referred to as the "contractor"), a registered business operator deemed a constructor under Article 12 (1) of the Housing Act (hereinafter referred to as the "registered business operator"), or a person who satisfies the requirements prescribed by Presidential Decree, by obtaining the consent of a majority

Article 11 (Selection of Work Executors before Amendment by Act No. 7960 of May 24, 2006)

(1) Each housing reconstruction project association shall select a constructor or registered project operator as the contractor after obtaining authorization to implement the housing reconstruction project.

Article 13 (Establishment of Partnership and Composition of Promotion Committee)

(1) Where a person other than the head of a Si/Gun or the Housing Corporation, etc. intends to implement a rearrangement project, he/she shall establish an association comprised of owners of land, etc.: Provided, That the same shall not apply where the owners of land, etc. intend to independently implement

(2) Where it is intended to establish an association under paragraph (1), it shall be organized with at least five members including the chairperson with the consent of a majority of the owners of lands, etc., and shall obtain approval of the head of Si/Gun according to the methods and procedures prescribed by the Ordinance of the Ministry of Construction and Transportation.

Article 14 (Functions of Promotion Committee)

(1) The promotion committee shall perform the following duties:

1. Affairs concerning an application for a safety diagnosis under Article 12;

2. Selection of the specialized management businessman of rearrangement project under Article 69 (hereinafter referred to as the “specialized management businessman of rearrangement project”);

3. Preparation of a rough implementation plan for an improvement project;

4. Preparatory affairs for obtaining authorization for the establishment of a cooperative;

5. Other affairs necessary for promoting an establishment of the partnership, which are prescribed by the Presidential Decree.

(2) The promotion committee shall select the specialized management businessman of rearrangement project by the method of competitive bids as stipulated by the operational rules under Article 15 (2).

(3) Where the details of duties performed under paragraph (1) are accompanied by the bearing of costs by the owners of lands, etc. or cause changes in rights and duties, the promotion committee shall obtain the consent of the owners of lands, etc. in excess of the ratio prescribed by

Article 24 (Convening of General Meeting and Matters for Resolution)

(1) A general meeting comprised of union members shall be established.

(3) The following matters shall undergo a resolution at a general meeting:

6. Selection and alteration of the removal businessman, work executor and designer;

Enforcement Decree of the Act on the Maintenance and Improvement of Urban Areas

Article 22 (Duties of Promotion Committee) The term “Duties as prescribed by the Presidential Decree” in Article 14 (1) 5 of the Act means the following matters:

1. Preparation of provisions for operation of the association establishment promotion committee under Article 13 (2) of the Act (hereinafter referred to as the “promotion committee”);

2. Demand for written consent of the owners of land, etc.;

3. Preparation for the inaugural general meeting for establishment of associations;

4. Preparation of the articles of association;

5. Other matters prescribed by operational regulations of the promotion committee.

Article 23 (Consent of Owners of Land, etc. on Duties of Promotion Committee)

(1) The promotion committee under Article 14 (3) of the Act shall obtain consent from the owners of lands, etc. in accordance with the standards falling under each of the following subparagraphs, when the contents of its business are accompanied by the bearing of expenses or cause any change in rights and duties. In such cases, matters other than those falling under the following subparagraphs shall

1. Matters requiring consent from at least 2/3 of the owners of land, etc. who have consented to organizing a majority of the owners of land, etc. or promotion committee;

(a) Preparation of operational regulations of the promotion committee;

(b) Expansion or reduction of the scope of implementing the rearrangement project;

2. Matters requiring consent of a majority of the owners of lands, etc. consenting to organizing the promotion committee;

(a) Selection of the specialized management businessman of rearrangement project under Article 69 of the Act (hereinafter referred to as the “specialized management businessman of rearrangement project”);

(b) Formulation of an outline project implementation plan;

(2) Article 28 (1) and (4) shall apply mutatis mutandis to the calculation of the number of consenters of owners of lands, etc. under paragraph (1).

B. As above, Article 14 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents, Articles 22 and 23 of the Enforcement Decree of the same Act stipulate the duties of the committee of promoters and provide for the consent of owners of lands, etc. with respect to the duties involving the cost bearing. Since the committee of promoters does not include the duties concerning the selection of constructors, the committee of promoters does not have the authority to convene a residents' meeting for the selection of constructors. In addition, Article 8 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents provides that housing redevelopment projects can be implemented by the association or the association of constructors with the consent of a majority of its members, and the selection of constructors should be conducted by the committee of promoters in light of the relevant provisions of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents, it is reasonable to view that the selection of constructors is not the authority of the committee of promoters or the committee of promoters to be established in the future, but the resolution of the committee of promoters selected by the committee of promoters which was not the committee of promoters prior to the implementation of this case.

5. Conclusion

Therefore, the plaintiffs' claim of this case seeking the confirmation of invalidity of the resolution of this case is reasonable, and the judgment of the court of first instance is just, and thus, the appeal of this case is dismissed as it is without merit. However, the decision of the court of first instance that confirmed the invalidity of the resolution of this case by stating the promotion committee of this case before the lawsuit is brought to the defendant and confirmed the invalidity of the resolution of this case is modified to confirm the invalidity of the resolution of this case by the defendant union's lawsuit acceptance. Thus, it is so decided as per Disposition.

Judges Sung Pung-chul (Presiding Judge)