[1] Whether the latter part of Article 65 (2) of the Act applies in a case where a private project implementer of a reconstruction project that received approval of a project plan prior to the implementation of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents enters into a contract for the transfer or reversion of infrastructure owned by the State, etc. whose use is abolished

[2] The validity of a sales contract, etc. concluded with the State or local government in violation of the latter part of Article 65 (2) of the Act on the Maintenance and Improvement of Urban Areas

[1] It is reasonable to view that the latter part of Article 65 (2) of the Act applies to cases where a private project implementer of a reconstruction project that received approval of a project plan prior to the implementation of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents enters into a contract with the State or a local government with regard to the transfer or reversion of infrastructure for rearrangement projects

[2] In light of the legislative intent of the latter part of Article 65(2) of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents, since it is a mandatory provision compelling a transfer of the fundamental infrastructure to be disused within the extent equivalent to the installation cost of the fundamental infrastructure to be newly installed by a private project implementer, it shall be null and void a sales contract, etc.

[1] Article 65 (2) of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents, Article 3, Article 6, Article 7 (1) of the Addenda to the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents ( December 30, 2002) / [2] Article 65 (2) of the Act on the Maintenance

[2] Supreme Court Decision 2007Du6663 decided Jul. 12, 2007 (Gong2007Ha, 1284)

Plaintiff Reconstruction Housing Association (Law Firm Rogo et al., Counsel for the plaintiff-appellant)

The Yangcheon-gu Seoul Metropolitan Government (Attorney Go Young-deok, Counsel for defendant-appellant)

Seoul High Court Decision 2007Na20763 decided January 31, 2008

The judgment below is reversed and the case is remanded to Seoul High Court.

1. The judgment of the court below

In full view of their employed evidence, the lower court: (a) concluded a construction project plan with respect to the above 423-3 and 14 lots of land owned by the Plaintiff; (b) it was a reconstruction association established to promote a private housing construction project on the 14-4 and 2-1,921.39 square meters of land; and (c) obtained approval on June 30, 203 from the Defendant for the construction project plan to be approved on the 30-4 and 40-6-4 of the former Housing Construction Promotion Act for the purpose of maintaining the ownership of the new site for the purpose of maintaining the new site for the construction of the 19-4 and 40-6-4 of the housing construction project; and (d) it was not in violation of the former Housing Construction Promotion Act (amended by Act No. 6916, May 29, 2003 to be implemented before the implementation of the construction project plan; hereinafter the same shall apply). The Plaintiff purchased the new site for the construction of the 20-4 and new site for the construction project.

2. The judgment of this Court

However, this decision of the court below is not acceptable for the following reasons.

Article 7 (1) of the Addenda to the Act on the Improvement of Urban Areas and Dwelling Conditions for Residents (amended by Act No. 720, Jun. 15, 2007; hereinafter “Act on the Improvement of Urban Areas and Dwelling Conditions for Residents”) provides that “The previous provisions shall apply to a reconstruction association which has already obtained approval of a project plan under the previous Act”. In principle, when obtaining approval of a project plan for a reconstruction project before the implementation of the Act on the Improvement of Urban Areas and Dwelling Conditions for Residents, administrative agencies’ involvement shall be terminated, and members shall acquire the right to purchase land (see Supreme Court Decision 2005Du5369, Jun. 15, 2007) (see Supreme Court Decision 2005Du5369, Jun. 15, 2007). Therefore, it is difficult to view that Article 3 of the Addenda to the Act on the Improvement of Urban Areas and Dwelling Conditions for Residents is necessary or reasonable to implement the remaining project under the previous Act on the Improvement of Urban Areas and Dwelling Conditions (hereinafter “Act on the Improvement Projects”).

Article 65(2) of the Act on the Maintenance and Improvement of Urban Areas provides that “An infrastructure newly installed by a project implementer who is not the head of a Si/Gun or a housing construction project shall gratuitously vest in the State or a local government to manage such infrastructure, and an infrastructure owned by the State or a local government shall be transferred gratuitously to the project implementer within the extent equivalent to the installation cost of the infrastructure newly installed by the project implementer due to the implementation of an improvement project.” This provision provides that “If a private project implementer installs public facilities within a project district, the ownership of such public facilities and site shall be attributed to the State or a local government without compensation, the provisions of Article 33(8) of the former Housing Construction Promotion Act, the former Urban Planning Act (amended by Act No. 6243, Jan. 28, 200; hereinafter the same shall apply) shall be deemed to have been amended by Act No. 6655, Feb. 4, 2002; the same shall apply to the State or a local government’s new provisions on the maintenance and improvement of urban facilities within the scope of the State or local government.

Therefore, it is reasonable to view that the latter part of Article 65(2) of the Act applies to cases where a private project implementer of a reconstruction project who obtained approval prior to the implementation of the Act enters into a contract with the State or a local government on the transfer or reversion of infrastructure owned by the State or a local government, the purpose of which is ceased due to the implementation of a rearrangement project after the implementation of

In addition, in light of the legislative intent of the latter part of Article 65 (2) of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions, this is a mandatory provision compelling a transfer of the fundamental infrastructure to be disused within the extent equivalent to the installation cost of the fundamental infrastructure to be newly installed by a private project operator (see Supreme Court Decision 2007Du6663, Jul. 12, 2007). Thus, a sales contract, etc. concluded between a project operator and the State or a local government in violation of the above provision

In light of the above legal principles and facts, the provisions applicable to the sales contract of this case concluded between the plaintiff and the defendant after the enforcement of the Urban Improvement Act are the latter part of Article 65 (2) of the Urban Improvement Act. The sales contract of this case with the purport that the plaintiff purchases the part equivalent to the installation cost of the newly installed road from the defendant for the public land of this case shall be null and void because it violates the latter part of Article 65 (2) of the Urban Improvement Act, which is a mandatory provision, and unless there is no evidence to specify the invalid part of the public land of this case, only part of the sales contract of this case shall not be null and void. Thus, the sales contract of this case

Nevertheless, the court below determined that the sales contract of this case is valid under the premise that Article 65 (2) of the Act on the Maintenance and Improvement of Urban Areas is not applicable to the sales contract of this case. Thus, the court below erred by misapprehending the legal principles on the interpretation and application of Article 65 (2) of the Act on the Maintenance and Improvement of Urban Areas and the requirements for the validity of the sales contract, and such

3. Conclusion

Therefore, without further proceeding to decide on the remaining grounds of appeal, the lower judgment 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 Park Ill-sook (Presiding Justice)