[1] Purport and legal nature of Article 65(2) of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (=Mandatory provisions)

[2] The validity of a project implementation authorization agency where the settlement amount is imposed on the ground that the cost for installation of a new infrastructure for rearrangement exceeds the appraised value of the infrastructure for rearrangement whose disuse is abolished, and whether the project implementer can seek a return of unjust enrichment against the amount equivalent to the settlement amount paid by the project implementer according to the above disposition (affirmative)

[3] In a case where a public sewerage system is abolished as a result of a redevelopment or reconstruction project under the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents and where a private project operator newly installs a new sewerage system, whether the cost is included in the cost of installation of the newly installed infrastructure (affirmative), and whether the same applies to a case where the appeal period, which can contest the conditions for approval for the implementation of a project that requires a private project operator to bear

[1] Articles 65(2) and 65(4) of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (amended by Act No. 11293, Feb. 1, 2012) provide that an infrastructure for rearrangement newly installed by a private project implementer shall naturally gratuitously revert to the State or a local government by obtaining authorization for the completion of a rearrangement project so that ownership shall be uniformly reverted to the State, etc. along with the management right to the State for the purpose of securing and efficiently maintaining and managing public facilities, such as roads, water supply and drainage systems, parks, public parking lots, and common utility conduits, and the infrastructure for rearrangement, which is disused within the extent equivalent to the installation cost of the newly installed infrastructure, by taking into account the project implementer’s property loss, shall be construed as a mandatory provision.

[2] If a project implementation authorizing agency imposes settlement money equivalent to the difference by deeming that the cost of installing new infrastructure for rearrangement exceeds the appraised value of the newly installed infrastructure for rearrangement, but the cost of installing new infrastructure for rearrangement is below the value of the infrastructure for rearrangement transferred to the project implementer due to the exclusion of some of them, etc., it is invalid as it goes against Article 65(2) of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (Amended by Act No. 11293, Feb. 1, 2012); thus, the project implementer may file a claim for return of unjust enrichment equivalent to the settlement money paid in accordance with the disposition

[3] Where the implementation of redevelopment or reconstruction project under the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (amended by Act No. 11293, Feb. 1, 2012) requires the relocation or extension of public sewerage existing in the project area, and where the existing sewerage is disused and a private project operator newly installs a new sewerage, the installation cost of the said sewerage shall be included in the installation cost of the newly installed infrastructure when settling the scope and value of the property reverted or transferred without compensation, and shall not be excluded from the installation cost on the ground of Article 32(2) of the former Sewerage Act (wholly amended by Act No. 8014, Sep. 27, 2006). This also applies to the case where the appeal period, which can be contested against the condition that the project operator bears the burden of this equipment, etc. under the conditions of authorization for the implementation of the urban renewal project, such as reconstruction, has expired.

[1] Article 65 (2) and (4) of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (Amended by Act No. 11293, Feb. 1, 2012) / [2] Article 65 (2) and (4) of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (Amended by Act No. 11293, Feb. 1, 2012) / [3] Article 65 (2) of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (Amended by Act No. 11293, Feb. 1, 2012); Article 32 (2) of the former Sewerage Act (Amended by Act No. 8014, Sep. 27, 2006)

[1] Supreme Court Decision 2007Du6663 Decided July 12, 2007 (Gong2007Ha, 1284) / [3] Supreme Court Decision 2006Du11149 Decided April 13, 2007

Distribution 2 Complex Housing Reconstruction and Improvement Project Association (Law Firm Square, Attorneys Song-pop et al., Counsel for the defendant-appellant)

Seocho-gu Seoul Metropolitan Government (Bae & Yang LLC, Attorneys Park Sang-hoon et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2011Na89615 decided August 17, 2012

The appeal is dismissed. The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

1. Article 65(2) of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (amended by Act No. 11293, Feb. 1, 2012; hereinafter “Urban Improvement Act”) provides that “The maintenance infrastructure newly installed by a project implementer, other than the head of a Si/Gun/Gu or a housing project, as a result of the implementation of an improvement project shall gratuitously revert to the State or a local government which will manage the infrastructure, and the infrastructure owned by the State or a local government, the use of which is ceased due to the implementation of an improvement project, shall be gratuitously transferred to the project implementer to the extent equivalent to the installation cost of the newly installed fundamental infrastructure.” In addition, Article 65(4) provides that the project implementer shall notify the management authority prior to the completion of a rearrangement project of the types and details of the infrastructure to be reverted to the management authority and the property to be transferred to the project implementer, and the relevant maintenance infrastructure shall be deemed reverted to the State or a local government or transferred to the project implementer

This means that the fundamental infrastructure newly installed by a private project operator is naturally reverted to the State or a local government without compensation through the completion authorization of a rearrangement project so that ownership can be uniformly reverted to the State, etc. for securing and efficiently maintaining and managing public facilities, such as roads, water supply and drainage systems, parks, public parking lots, common parking lots, and common ditches, while compelling the State, etc. to transfer the fundamental infrastructure to a project operator without compensation within the extent equivalent to the installation cost of the newly installed fundamental infrastructure by taking into account the property losses incurred by the project operator. The above provision on gratuitous reversion and free transfer is interpreted as a mandatory provision (see Supreme Court Decision 2007Du6663, Jul. 12, 2007).

Therefore, even though the installation cost of new infrastructure for rearrangement exceeds the appraised value of the newly installed infrastructure for rearrangement, if the project execution authorizing agency imposes an settlement amount equivalent to the difference on the ground that it falls short of the value of the infrastructure for rearrangement to be transferred to the project implementer by excluding part of the cost of installation of newly installed infrastructure for rearrangement, it is invalid as it goes against the above mandatory provision. Therefore, the project implementer can file a claim for return of unjust enrichment against the amount equivalent to the settlement amount paid in accordance with the disposition of imposition.

Meanwhile, Article 32(2) of the former Sewerage Act (wholly amended by Act No. 8014, Sep. 27, 2006; hereinafter the same) provides that the cost of the construction of the public sewerage required due to other construction works or other acts (other than construction works affecting the public sewerage) may be borne, in whole or in part, by the implementer of the relevant other construction works or by the other acts. However, in light of the legislative purport of the provisions of the Urban Improvement Act and the compulsory nature of the aforementioned provisions, in a case where the existing public sewerage is disused due to the implementation of redevelopment or reconstruction projects under the Urban Improvement Act, and where the private project implementer newly installs a new public sewerage, the cost of the construction of the said public sewerage shall not be included in the cost of the construction of the newly installed infrastructure, and the cost of construction of the new public sewerage shall not be subject to the exclusion of the cost of construction of the newly installed infrastructure for the reason of the aforementioned provisions (see, e.g., Supreme Court Decision 2006Du11496, Apr. 13, 2007).

2. The lower court acknowledged the following facts based on the evidence of employment. In other words, the head of Seocho-gu (hereinafter “instant project”) approved the Plaintiff to implement the housing reconstruction project (hereinafter “the instant project”) and added a condition to authorize the Plaintiff to expand and remove sewage cancer on the south side of the rearrangement zone and the north side of the instant project at the Plaintiff’s expense, and the Plaintiff removed sewage cancer in accordance with the authorization conditions. At the time of notification of the approval of the completion of the instant project, the Defendant: (a) up to the time of notification of the completion of the instant project, the “construction cost for newly installed maintenance infrastructure” in the instant rearrangement zone was included in the construction cost for the connected urban planning road with 25 meters in the portion of the instant rearrangement zone; (b) new distribution; (c) new distribution; (d) construction cost for the new park site; and (e) construction cost for the construction cost for the construction cost for the construction of the new park site; and (c) the Plaintiff did not include the difference in the sewage cancer construction cost for the instant project in the aggregate of the appraisal price and appraisal cost for the purchase price.

Based on the above facts, the court below determined that the transfer cost of sewage and rocky construction constitutes “the installation cost of the newly installed fundamental infrastructure” under the latter part of Article 65(2) of the Act on the Improvement of Urban Areas and Dwelling Conditions for Residents, and determined that it should be included in “the installation cost of the newly installed fundamental infrastructure” in settling the cost of gratuitous reversion and the value of the transferred fundamental infrastructure, and that if so settled, the cost of installation of the fundamental infrastructure installed by the plaintiff exceeds the appraised value of the fundamental infrastructure disused as owned by the defendant and the Seoul Special Metropolitan City, so that there is no settlement amount to be paid by the plaintiff to the defendant, and accepted the claim of this case seeking the return

3. In light of the above legal principles, while notifying the Plaintiff of the authorization of completion of the rearrangement project of this case and settling the value of the property to be gratuitously reverted and the property to be transferred without compensation, the disposition imposed after calculating and imposing the settlement amount excluding the installation cost of the rearrangement infrastructure newly installed the construction cost of sewage shall be null and void to the extent that it violates Article 65 (2) of the Urban Improvement Act, which is a mandatory provision. However, according to the judgment of the court below, the settlement amount to be paid by the Plaintiff shall not exist if the above construction cost of the rearrangement infrastructure newly installed is included in the installation cost of the rearrangement infrastructure, and the settlement amount paid by the Defendant in accordance with the above disposition shall be deemed to constitute unjust enrichment. The judgment of the court below was inappropriate in its reasoning, such as the imposition of the settlement amount is the settlement of the purchase price by sale, which is a private contract between the Plaintiff and the Defendant, but it is justifiable in its conclusion to accept a request for return of unjust enrichment. The Supreme Court Decision 2007Du663 Decided July 12, 2007>

4. Therefore, the appeal is 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 Kim Chang-suk (Presiding Justice)