2020du48031 Nullity of a resolution of the general meeting

Attached Table 1 is as shown in the list of plaintiffs.

Law Firm LLC et al. and two others

Attached Form 2 is as shown in the list of intervenors joining the plaintiff.

Law Firm LLC et al., Counsel for the defendant-appellant

Operation Free Apartment Zone Housing Redevelopment and Improvement Project Association

Law Firm Choun et al., Counsel for the defendant-appellant

Seoul High Court Decision 2020Nu36498 Decided August 19, 2020

February 10, 2021

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

The grounds of appeal are examined.

1. Case summary and key issue

A. Review of the reasoning of the lower judgment and the record reveals the following circumstances.

(1) On June 23, 2009, the Defendant is a housing redevelopment and consolidation project partnership established with authorization from the head of Gyeyang-gu Incheon Metropolitan City in order to implement a housing redevelopment project (hereinafter “instant project”) within 63,813.30m of the Gyeyang-gu Incheon Metropolitan City, and the Plaintiffs are the owners of real estate in the instant project area.

(2) On January 25, 201, the Defendant established an initial project implementation plan and obtained authorization from the head of Gyeyang-gu Office on January 25, 201, followed the period of application for parcelling-out by setting the period of application for parcelling-out from April 4, 2011 to May 23, 201 of the same year (hereinafter referred to as “the first application procedure for parcelling-out”); 477 of the entire owners of land, etc. applied for parcelling-out within the period of application for parcelling-out; and 330 persons including the Plaintiffs did not apply for parcelling-out. Accordingly, the Defendant reported the total number of members from 807 to 477, and the head of Gyeyang-gu Office accepted it on August 2, 201

(3) On July 21, 2017, the Defendant applied for the approval of the abolition of the first project implementation plan to the head of Gyeyang-gu Office on July 21, 2017, and the head of Gyeyang-gu Office approved it on September 13, 2017.

(4) At an ordinary meeting of the defendant held on January 27, 2018, the defendant adopted a resolution to amend the articles of incorporation (hereinafter referred to as "resolution to amend the articles of incorporation of this case") that "a person (person subject to cash liquidation) who has not filed an application for parcelling-out in the procedure for application for parcelling-out in accordance with authorization for project implementation shall be reinstated when the project implementation is abolished (Provided, That it shall be deemed that the person is reinstated from the acceptance date of the report on the modification of the union members)" (hereinafter referred to as "the articles of this case"), and obtained approval for the amendment of the articles of incorporation from the head of Gyeyang-gu Office on February 20, 2018.

(5) After that, the Defendant filed an application for parcelling-out in the initial procedure for application for parcelling-out with the Plaintiffs, and filed a report on changing the total number of the association members from 477 to 799 under the premise that the owners of lands, etc. who withdrawn from partnership relations have recovered their status again in accordance with the instant Articles of Incorporation. The head of Gyeyang-gu Office accepted it on March 12, 2018.

(6) On April 14, 2018, the Defendant’s special general meeting (hereinafter “instant general meeting”) held on April 14, 2018 (hereinafter “instant general meeting”) established a new project implementation plan (hereinafter “instant project implementation plan”) with the consent of 570 from among 572 participants (hereinafter “instant general meeting resolution”), and the head of Gyeyang-gu approved the project implementation plan on September 19, 2018.

(7) Based on the project implementation plan of this case, the Defendant followed the procedure for application for parcelling-out by setting the period of application for parcelling-out from January 5, 2019 to February 26, 201, but (hereinafter referred to as "second application for parcelling-out") but the Plaintiffs did not apply for parcelling-out.

(8) The plaintiffs filed the lawsuit in this case seeking confirmation of invalidity of the resolution to amend the articles of incorporation of this case and cancellation of the project implementation plan of this case, and the court of first instance rendered a judgment accepting all plaintiffs' claims on January 10, 2020. The defendant appealed against this decision. However, at the defendant's ordinary meeting held on April 11, 2020, the amendment of the articles of this case, which changed the articles of this case to "a person (person subject to cash settlement) who did not apply for parcelling-out within the application period for parcelling-out in the application procedure for parcelling-out in accordance with project implementation authorization, can be recovered when the project implementation is abolished (Provided, That it is deemed that the change of the articles of this case is recovered from the date on which the report of change of union members is accepted)", and the amendment of the articles of this case was approved by the head of Gyeyang-gu Office on April 24, 2020, which continued the appellate court's appeal.

B. The key issue of the instant case is (1) whether it is reasonable for the Plaintiffs to seek the cancellation of the instant project implementation plan against the Defendant without seeking the cancellation of the approval disposition by the head of Gyeyang-gu on the instant project implementation plan, (2) whether the Plaintiffs are legally interested in seeking the cancellation of the instant project implementation plan, and (3) whether the defects in cash clearing persons who are not the Defendant’s members in the instant project implementation plan should be deemed to be illegal for the cancellation of the instant project implementation plan

2. Determination of objects for litigation;

A. A project implementation plan formulated by a housing redevelopment and consolidation project association based on the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (amended by Act No. 12116, Dec. 24, 2013; hereinafter referred to as the "Urban Improvement Act") falls under an independent administrative disposition binding on interested parties if authorization and public notice by the competent administrative agency is given, and the approval disposition by the competent administrative agency constitutes a supplementary act that completes the legal effect of the project implementation plan. Therefore, if there is any defect in the project implementation plan, which is a basic act, and there is a defect inherent in the approval disposition as a supplementary act, the confirmation or cancellation of the approval disposition should be sought. However, if there is a defect in the project implementation plan because there is no unique defect in the approval disposition, the confirmation or cancellation of the approval disposition should be sought. The ground for invalidation of the project implementation plan should not immediately seek the confirmation or cancellation of the approval disposition (see, e.g., Supreme Court Decision 2009Du4913, Dec. 9,

B. In this case, the plaintiffs did not claim that there is an inherent defect in the approval disposition of the head of Gyeyang-gu Office on the project implementation plan of this case, but they asserted that the project implementation plan of this case is unlawful because there are defects in cash clearing subjects who are not the defendant's members in the resolution of the general meeting of this case. The lawsuit of this case seeking the cancellation of the project implementation plan of this case is legitimate on the premise that the lawsuit of this case is legitimate. The court below was just in making a decision on the main issue on the premise that the project implementation plan of this case

3. Whether legal interest exists to seek cancellation of the project implementation plan of this case

A. On July 21, 2017, the lower court determined that the Defendant’s first project implementation plan was invalidated by obtaining the approval of the head of Gyeyang-gu Office, and thereafter, the Defendant newly established the instant project implementation plan and obtained the approval and public notice from the head of Gyeyang-gu and re-granted the authority to apply for the adjudication of expropriation pursuant to Article 40(1) and (2) of the Act on Acquisition of and Compensation for Land, etc. for Public Works Projects, and thus, the Plaintiffs, who are those subject to cash settlement, have legal interests to seek the cancellation of the instant project implementation plan in order to prevent the expropriation of their own land, etc. or delay the time of the adjudication of expropriation.

B. Examining the reasoning of the lower judgment in light of the relevant provisions and legal principles, such determination by the lower court is justifiable, and there is no error in the misapprehension of legal doctrine regarding standing to sue

4. Whether the project execution plan of this case is illegal due to defects in the resolution of the general meeting of this case

A. The court below held that 330 persons eligible for cash liquidation who did not apply for the application for parcelling-out in the first application for parcelling-out procedure were not eligible for membership of the defendant at the time of the resolution of the general assembly of this case, and 330 persons eligible for cash liquidation who did not have been eligible for membership of the defendant participate in the resolution of the general assembly of this case. As such, the resolution of the general assembly of this case should be deemed null and void because of serious defects

In this case, the project execution plan of this case, which was established through the resolution of the general assembly of this case, should be revoked as it is illegal.

B. If a member of a housing redevelopment project association fails to apply for parcelling-out in the procedures for application for parcelling-out, he/she becomes a person subject to cash liquidation on the date following the expiration of the period for application for parcelling-out and loses his/her status (see, e.g., Supreme Court Decision 2008Da91364, Jul. 28, 201). Even if the project implementation plan, which served as the basis for the procedure for application for parcelling-out, becomes effective due to the expiration or abolition of the project implementation period, this only takes effect in the future (see, e.g., Supreme Court Decision 2016Du34905, Dec. 1, 2016). Thus, the legal effect of withdrawal of an association that occurred before the project implementation plan is retroactively extinguished or lost cannot be deemed automatically restored. It is reasonable to conclude that the association did not have an opportunity to apply for parcelling-out and re-out to an association by taking advantage of the opportunity to apply for parcelling-out and re-out, and thus, it is difficult to the extent of an association’s’ interest in cash liquidation.

(1) A union’s general meeting is the highest decision-making body of the union, and the formulation and modification of a project implementation plan are matters resolved by the general meeting. As such, the general meeting has the discretion of autonomy and formation to formulate and modify a project implementation plan to the extent not contrary to superior statutes and the articles of incorporation. Therefore, the general meeting should not readily deny the effect of the resolution of the general meeting, unless the resolution of the general meeting which establishes and amends a project implementation plan has the procedure and the quorum stipulated in superior statutes and the articles of incorporation, and the contents of the resolution are not contrary to superior statutes and the articles of incorporation (see, e.g., Supreme Court Decision 201

(2) Even if there are defects in the procedures such as a public notice of convening a general meeting of a cooperative, the absence of substantial interference with the members’ participation in the general meeting is insignificant and thus, the general meeting resolution does not constitute unlawful (see, e.g., Supreme Court Decision 2018Du34732, Jun. 25, 2020). Therefore, the resolution of the general meeting of this case cannot be deemed unlawful solely on the ground that the notice of convening a general meeting was made not only for union members but also for those who are not qualified for union members.

(3) Even if there are defects in the resolution of the general meeting of a cooperative, if it is deemed that such defects did not affect the result of the resolution of the general meeting, in light of various circumstances, such as the progress of the resolution and the exclusion of qualified persons from the voting, the resolution of the general meeting is not unlawful (see, e.g., Supreme Court Decision 96Da23375, May 30, 1997). While 136 persons eligible for cash liquidation who are not qualified as union members participated in the resolution of the general meeting of this case, 436 of the total number of union members were present even if 434 of them were excluded, 434 of them (as 90% of the total number of union members, about 99% of the number of union members, and about the number of union members present), the resolution of the general meeting of this case was made and the resolution of the general meeting of this case was met.

(4) Although the rearrangement project cost is essential to state in the project implementation plan (Article 30 subparag. 8-2 of the Urban Improvement Act), the rearrangement project cost at the formulation stage of the project implementation plan is merely a rough estimate that reflects the scale of the rearrangement project. Since the number of union members and persons subject to cash settlement participating in the project to proceed with the project after the formulation of the project implementation plan is determined, it is difficult to accurately understand the total amount of cash settlement money to be paid to the person subject to cash settlement at the formulation stage of the project implementation plan. Furthermore, even if the amount of cash settlement money increases after the short-scale of the cash settlement money, it is difficult to view that the number of union members or cash settlement money presented at the formulation stage of the project implementation plan is directly affected by the proportion and the amount of cash settlement money, or that it is an important matter of interest of union members (Article 46(1) of the Urban Improvement Act also provides that the procedure for application for parcelling-out after the approval and announcement of the project implementation plan shall also be included in the project implementation plan of this case.

(5) There is no special circumstance to deem that there was any substantial impact on the outcome of the instant project implementation plan on the establishment of the instant project implementation plan, with some participation of the non-qualified cash clearing agents in the resolution of the instant general assembly.

D. Nevertheless, the lower court, on the grounds indicated in its reasoning, determined that the instant resolution of the general assembly was null and void due to serious defects, and that the instant project implementation plan formulated through the instant general assembly resolution was unlawful. In so doing, the lower court erred by misapprehending the legal doctrine on the establishment of the project implementation plan of the general assembly of an association, thereby adversely affecting the conclusion

5. Conclusion

Therefore, without further proceeding to decide on the remaining grounds of appeal, the judgment of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices

Justices Kim Jae-hwan

Justices Park Sang-ok

Justices Lee In-bokon

Justices Noh Jeong-hee