Law Firm 12 Housing Redevelopment and Improvement Project Association (Law Firm City City, Attorneys Yoon Young-young, Counsel for the plaintiff-appellant)

The head of Seongdong-gu Seoul Metropolitan Government (Attorney Kim-type, Counsel for defendant)

October 6, 2010

1. On October 30, 2007, the conditions attached to the attached list added on February 17, 2010 among the conditions of authorization for implementation of a housing redevelopment project for the plaintiff on October 30, 2007 shall be revoked.

2. The participating administrative agencies shall bear the costs arising from the participation in the litigation costs, and the remainder shall be borne by the defendant.

The same shall apply to the order.

1. Details of the disposition;

A. The Plaintiff is a housing redevelopment and consolidation project association that obtained authorization from the Defendant on September 11, 2006 for the purpose of housing redevelopment and rearrangement project for the housing redevelopment of 500 square meters in Seongdong-dong, Seongdong-gu, Seoul for a house redevelopment and rearrangement project for 92,618 square meters.

B. On October 23, 2007, the Defendant: (a) designated the whole project zone as a housing redevelopment project zone under Article 207-86 of Seongdong-gu Seoul Metropolitan Government Notice on October 23, 2007; (b) designated the project implementation authorization to the Plaintiff on October 30, 207; and (c) accordingly, the maintenance infrastructure newly installed is a park (2,718 square meters), road (9,112.95 square meters), green area (3,361.10 square meters), etc. with the installation cost of 46,103,133,222 won (the compensation cost of land and buildings + the construction cost of 44,532,321,30 won + the construction cost of 1,570,81,922 won; and (d) assigned the land subject to re-consultation to the State or a local government pursuant to the Enforcement Decree of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions 475,747 and 17

C. Around July 2008, the Defendant notified the Plaintiff of the amount of KRW 2,260,103,410 square meters calculated by deducting the floor area ratio incentive calculation amount from KRW 43,843,029,812 with respect to the installation cost of fundamental infrastructure to be gratuitously reverted to the State or a local government in relation to the area of state-owned and public land to be gratuitously transferred to the Plaintiff pursuant to Article 65(2) of the Do Government Act, which was 46,103,133,222. On April 22, 2009, the Plaintiff filed a lawsuit for revocation of the part of the authorization for the execution of housing redevelopment project (Seoul Administrative Court 2008Guhap39097), and the above judgment was finalized on April 22, 2009 by the final appeal to the Supreme Court (No. 2009Du14279) to October 29, 2009.

D. Accordingly, on February 17, 2010, the Defendant notified the Plaintiff of the conditions of authorization as shown in the attached Form (hereinafter “instant conditions of authorization”) with regard to the gratuitous transfer of State and public property (hereinafter “the instant conditions of authorization”), and according to this, the land to be incorporated into the infrastructure to be newly installed by the Plaintiff (the State and public land where the new infrastructure for maintenance was installed, which is the State and public land) at KRW 46,103,133,222 at the cost of the construction of infrastructure for maintenance. According to Articles 6, 27, and 40 of the State Property Act, the State and public land, which is the site for infrastructure for maintenance, can not be disposed of at will as administrative property and can not be disposed of. Accordingly, Article 66(5) of the Do Government Act provides that the term “the State and public land included in the rearrangement project zone,” which is the object of disuse, is not an accurate concept, and the remaining amount of the State and public land to be disposed of at least 15,15,15,157,157,157,157.7

[Ground of recognition] Unsatisfy, Gap evidence 1 to 9

2. Whether the authorization conditions of this case are lawful

A. The parties' assertion

1) Plaintiff

The former part of Article 65(2) of the Do Government Act does not intend to deprive or limit the project implementer's property rights, but rather to uniformly determine the ownership relationship of public facilities, etc. in the project district to the future, and the latter part of the Act intends to compensate for property losses incurred to the private project implementer due to gratuitous reversion. Therefore, even though the latter part of the Act is expressed as "free transfer", it constitutes "exchange or sale" rather than "free transfer" as it is the consideration for "free reversion" of the former provision. Therefore, it violates the purpose of Article 65(2) of the Do Government Act to deduct overlapping land values from the value of the newly installed infrastructure for the maintenance of infrastructure is to compensate for the property losses of the association.

2) Defendant

Urban development or maintenance project under the Do Government Act falls under an urban management plan prescribed by the National Land Planning and Utilization Act (hereinafter “the National Land Planning and Utilization Act”). Article 85(5) of the National Land Planning and Utilization Act and Article 97(6)6 of the Enforcement Decree thereof provide that “The protocol and drawings of public facilities newly installed as an urban planning facility project (limited to cases where a person other than an administrative agency is the implementer) and a statement of expenses for the installation thereof (limited to cases where a person is the implementer). In such cases, where land necessary for the installation of a new public facility and land on which the existing public facilities are installed are the same land, the cost calculated after subtracting the land price shall be calculated.” The latter part of Article 65(2) of the Do Government Administration and Utilization Act provides that the transfer is free of charge within the scope equivalent to “the cost for installation of the newly installed fundamental infrastructure” and thus, the overlapping value of the existing state and public land should be excluded from the cost of installation of the newly installed basic infrastructure. Moreover, the Plaintiff cannot be deemed unlawful by its own choice, since the overall building-land ratio is reduced.

B. Relevant statutes

Attached Form is as shown in the attached Form.

(c) Markets:

First of all, it is considered whether Article 85(5) of the Do Government Act and Article 97(6)6 of the Enforcement Decree of the Do Government Act apply to the improvement project under the Do Government Act.

Article 2 subparag. 11 of the Do Government Act classifys urban planning projects into urban planning facility projects, urban development projects under the Urban Development Act, and rearrangement projects under the Do Government Act. In particular, Article 8(5) of the Do Government Act and Article 97(6)6 of the Enforcement Decree thereof provide for urban functions in relation to the implementation of urban planning facility projects, and Article 2 subparag. 11 of the Do Government Act was enacted for the purpose of stipulating matters necessary for planned rearrangement of areas where urban functions are required in accordance with the urban management plan under the Do Government Act or residential environment is poor and for the efficient improvement of old and poor buildings. In light of the legislative form and purpose of the Do Government Act, it is difficult to view that Article 88(5) of the Do Government Act and Article 97(6)6 of the Enforcement Decree thereof directly apply to urban planning facility projects under the Do Government Act, which are regulations related to urban planning facility projects under the Do Government Act.

Next, we examine that the Plaintiff’s choice included duplicate land in the business area and obtained profit from relaxing the building-to-land ratio, etc., and therefore, the authorization conditions of this case are lawful.

The purport of Article 65(2) of the Do Government Act is to gratuitously transfer the infrastructure for rearrangement, the use of which is ceased to exist by the State or a local government as a result of the implementation of an improvement project, to a cooperative within the reasonable scope, to compensate for losses incurred by the management authority for the newly installed infrastructure by the implementation of an improvement project. This does not necessarily mean that the latter part of the said Act is excluded or the purport of the said provision is different solely on the ground that the association obtained benefits such as the purchase of gratuitously transferred portion and the relaxation of the building-to-land ratio or the floor area ratio (see Supreme Court Decision 2007Du14312, Dec. 11, 2008).

Therefore, this part of the defendant's argument is without merit.

Finally, the defendant's assertion seems unfair in light of the following, as to whether it is appropriate to deduct overlapping land value from the installation cost of new infrastructure for maintenance.

① Article 66(4) and (5) of the Do Government Act provides that the State-owned or public property in a rearrangement zone may be purchased preferentially by an association, which is the project implementer, and such State-owned or public property shall be deemed abolished from the date of public announcement of authorization for the implementation of the project. Article 65(4) of the Do Government Act provides that a rearrangement project shall be deemed reverted to the State or a local government, or reverted to or transferred to the project implementer at the time of notification to the management authority after authorization for the completion of the project is granted with regard to the time of gratuitous reversion or transfer under Article 65(2) of the Do Government Act. Since the object and the value of the State-owned or public land to be purchased by the project implementer, including the site for the rearrangement infrastructure to be abolished, are all determined at the time of authorization for the implementation of the project, the installation cost of the newly constructed infrastructure shall be deemed to include not only the cost of the rearrangement infrastructure newly installed, but also the cost of the existing rearrangement infrastructure to be purchased by the project implementer.

In full view of the purport of the above legal provisions, the time of gratuitous reversion, and the method of settlement of accounts, the defendant and the participating administrative agency's assertion that the price of overlapping land should be excluded from the installation cost of the newly established fundamental infrastructure on the ground that the plaintiff's transfer of overlapping land without compensation and later transfer of state-owned and public land which is abolished for other purposes is not required to pay for the cost equivalent to the value of the land.

② According to the Do administration Act, when a project implementer intends to implement a rearrangement project, he/she shall prepare a written project implementation plan and obtain authorization from the competent authorities (Article 28(1)). The written project implementation plan requires that the written project implementation plan be accompanied by a protocol, drawing, and appraisal report, drawing, and an appraisal statement of fundamental infrastructure to be newly installed by two or more appraisal business entities, and an appraisal statement of installation cost (Article 65(4) and Article 41(2)11 of the Enforcement Decree of the Act). As such, at the time of project implementation authorization, the “existing facilities and their value” and “construction cost of new facilities” are specified in both cases, and the said appraisal statement and installation cost statement include both the value of overlapping land as they are intended to compare and settle gratuitous reversion and transfer value, and there is no reason to deduct the amount of installation cost of the newly installed fundamental facilities from the amount of installation cost of the land.

③ The former part of Article 65(2) of the Do Government Act does not have the essence of deprivation and restriction of a project implementer’s property rights, but is a mandatory provision to uniformly determine the project implementer’s status toward the future by prescribing the ownership relationship of public facilities, etc. in the project district. The legislative purport of the latter part is to consider the project implementer’s property loss caused by the private project implementer’s gratuitous reversion of the infrastructure newly installed by the private project implementer in accordance with the former part in consideration of the project implementer’s property loss within the scope equivalent to the installation cost of the newly installed infrastructure, thereby compensating the project implementer for such property loss by allowing the State or local government’s rearrangement infrastructure whose use is ceased to exist due to the implementation of the improvement project to be gratuitously transferred to the project implementer within the extent equivalent to the installation cost of the newly installed infrastructure (see Supreme Court Decision 2007Du663, Jul. 12, 2007).

Therefore, in order to be persuasive, the defendant's argument should be consistent with the legal purport that compensates for property loss within the reasonable scope.

However, above all, the fundamental infrastructure to be abolished and the fundamental infrastructure to be newly installed are specifically determined by the project implementation plan prepared by the project operator. In accordance with the defendant's pum law, the substantial difference occurs between the case where the plaintiff deducts overlapping land in the project implementation plan and the case where the overlapping land is added (in this case, the difference between the 15 billion won and the case where the overlapping land is added) and the case where the overlapping land is added, it is unreasonable to change the scale of the land to be gratuitously transferred according to the friendly circumstances.

Although it is somewhat extreme that the defendant's calculation method is unfair, it is clear that the following cases are also clear.

If the defendant's argument that all the existing fundamental infrastructure in the rearrangement zone is to be incorporated into the newly installed fundamental infrastructure (the construction cost is not paid for the convenience of the discussion), the project implementer is required to purchase the newly installed fundamental infrastructure in the rearrangement zone because the cost of installation is zero (0) while the cost of installation is reverted to the state or local government without compensation, so the overlapping land is not subject to transfer without compensation. In the end, even though there is no change in the form and ownership relationship of the fundamental infrastructure before and after the rearrangement project, it would result in receiving the overlapping amount of land value as the sale price even if there is no change in the form and ownership relationship of the fundamental infrastructure before and after the rearrangement project.

④ The former part of Article 65(2) of the Do Government Act stipulates that the infrastructure to be newly installed by a project implementer shall gratuitously vest in the State or a local government. In this case, the State or a local government shall acquire the ownership of the land and facilities constituting the public facilities smoothly (see Supreme Court Decision 96Da24897, Apr. 15, 199). Thus, this decision is related to Article 83(2) of the former Urban Planning Act (amended by Act No. 4427, Dec. 14, 191), which is a telegraph of the Urban Planning Act, and the above provision is to the same effect as Article 65(2) of the Do Government Act, and it is reasonable to interpret the latter part of the latter part of Article 65(2) as naturally included in the cost of installing the newly installed infrastructure in the latter part of the same Act to the extent that it is included in the site value.

(5) Meanwhile, according to the evidence No. 9, where land necessary for the installation of new public facilities and land on which existing public facilities are installed are the same, the Defendant separately manages them as “containment part,” and excluded the “construction infrastructure where use is abolished” subject to gratuitous transfer corresponding to the above installation costs, instead of including the price of the land on the maintenance infrastructure installed by the new public facilities”, but it is acknowledged that the road administration officer of Seoul Metropolitan Government requested legal advice as to whether it is reasonable for many attorneys by deeming that the construction cost would be deducted from the installation cost by applying the above provisions of the state law to each Gu office, while the land price is deducted from the installation cost, the maintenance infrastructure where use is abolished without compensation.

Therefore, examining the forms and contents of the regulations of the Do administration and the national law, the intent of the Do administration and the law, etc., the conditions of the authorization of this case can be seen as unfair.

3. Conclusion

If so, the plaintiff's claim shall be accepted for the reasons and it is so decided as per Disposition.

[Attachment Form 5]

Judge Ori (Presiding Judge) Kim Young-sik