In a case where a member becomes a person subject to cash settlement by fulfilling the requirements prescribed by the articles of association under Article 47(b) of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents, whether the project implementer may impose and collect dues under Article 61(1) of the same Act on and from the person subject to cash settlement (negative)

Articles 20(1), 47(1), 60(1), 61(1), and 61(3) of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents

Supreme Court Decision 2013Du19486 Decided December 24, 2014 (Gong2015Sang, 202)

A project association for housing reconstruction and rearrangement (Attorneys Kim Jae-chul et al., Counsel for the plaintiff-appellant)

Defendant 1 and one other

Defendant 2 and one other (Law Firm Cheongn, Attorneys Lee Dong-hwan et al., Counsel for the defendant-appellant)

Busan High Court Decision 2014Na21666 decided February 5, 2015

All appeals are dismissed. The costs of appeal between the Plaintiff, Defendant 1, and Defendant 3 are assessed against the Plaintiff, and the remainder between the Plaintiff and the remaining Defendants are assessed against each appellant.

The grounds of appeal are examined.

1. Plaintiff’s ground of appeal

A. In light of the contents, form, and structure of Articles 60(1), 61(1) and (3), and 47(1) of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (hereinafter “Urban Improvement Act”), and the process in which a project implementer imposes and collects the difference between the cost and revenue of a rearrangement project in the course of implementing a rearrangement project as dues, a member’s status is lost if a member becomes a person subject to cash settlement as a result of meeting the requirements stipulated in the articles of association of the association under Article 47(b) of the Urban Improvement Act. Thus, a project implementer cannot impose and collect surcharges under Article 61(1) of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (hereinafter “Urban Improvement Act”), and a cooperative, which is a project implementer, cannot impose and collect surcharges under Article 61(1) of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents, and the purport that a person subject to cash settlement should share a certain portion of the cost of the rearrangement project that occurred before he/she loses its membership.

B. The lower court rejected the Plaintiff’s assertion that, in calculating the liquidation amount to be paid to the Defendants, the Defendants should deduct the share of the project cost to be borne by the Defendants, on the grounds that the Plaintiff’s articles of incorporation did not provide that a person subject to cash settlement ought to share a certain amount of the rearrangement project cost incurred before he/she loses his/her membership, and there is no evidence to prove that the Plaintiff made a resolution to that effect at

C. Examining the records, although Article 10(1)5 of the Plaintiff’s articles of association provides that members are obliged to pay the cost of rearrangement project, this does not appear to the purport that a certain amount of the cost of rearrangement project incurred by a person subject to cash settlement until he/she loses his/her status as a union member should be shared. If circumstances arise, the lower court’s aforementioned determination may be deemed to be in accordance with the aforementioned legal doctrine. In so doing, contrary to what is alleged in the grounds of appeal, there were no errors by misapprehending the Articles of association

2. As to the grounds of appeal by Defendants 2 and 4

A. As to the first ground for appeal

According to the contents of the application for parcelling-out sent by the Plaintiff to Defendant 2 and Defendant 4, the lower court determined that the Plaintiff notified the said Defendants of the details of the site or structure subject to parcelling-out and the estimated amount of charges to the extent that they can decide on whether to apply for parcelling-out, and can be deemed as performing the notification obligation under Article 46(1) of the Urban

In light of the relevant legal principles and records, the court below did not err by misapprehending the legal principles regarding the scope of the duty to notify the owners of the land, etc. of the Housing Reconstruction Project Association under the Urban Improvement Act, contrary to what is alleged in the grounds of appeal.

B. Regarding ground of appeal No. 2

The court below acknowledged the market price of the previous real estate owned by the aforementioned Defendants based on the entrustment of market price appraisal, on the ground that the appraisal value based on the entrustment of market price appraisal by the court below was reflected in the price that reflects the development gains expected to arise from reconstruction on the premise that the reconstruction project is implemented, as an objective transaction price at the time of exercising the right to request sale of the previous real estate owned by the Defendants 2

In light of the relevant legal principles and records, the market price of the previous real estate owned by Defendant 2 and Defendant 4, recognized by the lower court, appears to have sufficiently taken into account the development gains as the objective transaction price of the real estate subject to the instant claim for sale. In so doing, the lower court did not err by misapprehending the legal doctrine on the calculation of the price of the real estate subject to the

3. Conclusion

Therefore, all appeals are dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Poe-dae (Presiding Justice)