[1] Whether the amended Act and subordinate statutes apply to the legal relationship on the conversion of rental housing into parcelling-out after the enforcement of the amended Act and subordinate statutes, where the Rental Housing Act and other relevant statutes have been amended in a situation where the legal relationship on the conversion of rental housing into parcelling-out has not yet been concluded after a rental business operator announced

[2] Whether the provisions of the former Rental Housing Act and other relevant Acts and subordinate statutes are mandatory (affirmative), and the validity of a sales contract concluded based on a pre-sale conversion price exceeding the amount based on the standard for calculation under such provisions (i.e., excess within the scope of excess)

[3] In a case where a rental business operator asserted that the pre-sale agreement was valid when concluding a lease contract with a lessee before the enforcement of the former Rental Housing Act and agreed on the construction cost of rental housing, which is one of the elements for calculating pre-sale conversion price, since such agreement was concluded, the case holding that even if there was such agreement, the legal relationship on pre-sale conversion was concluded after the enforcement of the above Act, and thus, the above Act should apply to the pre-sale agreement, and that the pre-sale agreement was invalid to the extent that the provisions of the above Act on pre-sale conversion price calculation standard are mandatory.

[4] The meaning of “building cost” under Article 3-3(1) [Attachment 1] of the former Enforcement Rule of the Rental Housing Act as the basis for calculating the pre-sale conversion price of rental housing (=construction cost actually invested within the scope of standard building cost)

[5] In a case where the Korea National Housing Corporation directly constructs public rental housing on the housing site developed by itself, the standards for calculating the housing site costs to be reflected in the pre-sale conversion

[1] Even if a rental business operator publicly announced the pre-sale conversion price standard in the notice of invitation of tenant under relevant statutes, such as the Rental Housing Act, the legal relationship on pre-sale conversion of rental housing, such as pre-sale conversion of rental housing, has not yet been terminated at the time of the public announcement. Thus, even if the relevant statutes, such as the Rental Housing Act, were amended, and the legal relationship were differently prescribed by the statutes prior to the amendment, the amended laws and regulations shall apply to the legal relationship on pre-sale conversion of rental housing, which takes place after the enforcement of the amended statutes, unless transitional provisions are prescribed by the Addenda. However, there is room to limit the application to protect such trust in a case where the trust of rental business operator on the continuation of the provisions prior to the amendment, which

[2] Relevant statutes, such as the former Rental Housing Act (wholly amended by Act No. 8966, Mar. 21, 2008; hereinafter “former Rental Housing Act”), aim at facilitating the construction of rental housing and stabilizing national housing conditions, and impose various restrictions on rental business operators with various support to achieve its objective. In particular, the former Rental Housing Act requires a rental business operator to prevent arbitrary pre-sale conversion of rental housing after the lapse of the mandatory rental period, and to establish a reasonable pre-sale conversion standard for pre-sale conversion. Nevertheless, if a rental business operator interpreted that pre-sale conversion standard is not binding upon the aforementioned pre-sale conversion standard, it is necessary to prevent rental business operators from arbitrarily setting pre-sale conversion of rental housing and to establish a pre-sale conversion standard, in violation of the former Rental Housing Act’s regulations and regulations on pre-sale conversion of rental housing, and to prevent rental business operators from purchasing pre-sale conversion of rental housing in excess of pre-sale conversion standard and to ensure that tenant interests can be avoided by taking account of the legislative purpose of the pre-sale conversion standard, including the former Rental Housing Act.

[3] The case holding that, in a case where a rental business operator asserted that the sales contract was valid after calculating the pre-sale conversion price based on the construction cost, since the rental business operator entered into a lease contract with lessee prior to the enforcement of the former Rental Housing Act (wholly amended by Act No. 8966, Mar. 21, 2008; hereinafter “former Rental Housing Act”) and agreed on the construction cost of the rental housing which is one of the elements for calculating the pre-sale conversion price, even if such agreement was entered into, the legal relationship on the pre-sale conversion should be applied to the pre-sale conversion price, and that as long as the provisions of the former Rental Housing Act, such as the former Rental Housing Act, are mandatory, the sales contract which was concluded with the pre-sale conversion price exceeding the calculation standard, is invalid within the extent of such agreement.

[4] Under Article 3-3(1) [Attachment 1] of the former Enforcement Rule of the Rental Housing Act (wholly amended by Ordinance of the Ministry of Land, Transport and Maritime Affairs No. 19, Jun. 208), standard construction cost refers to the upper limit of construction cost reflected on the pre-sale conversion price. It is clear that construction cost, which is the basis for calculating the pre-sale conversion price, is based on construction cost, not the standard construction cost. Thus, the construction cost, which is the basis for calculating the pre-sale conversion price, shall be interpreted to mean the construction cost actually invested within the scope of standard construction cost and not the standard construction cost, unless there are special circumstances.

[5] In light of the purpose of existence and scope of business of the Korea National Housing Corporation, when the Korea National Housing Corporation supplies a housing site to a private rental business operator who intends to build, lease, or sell a public rental house, it is reasonable and fair to deem that the cost of construction at a discount of the cost of construction may be charged to a person who does not own a house by calculating the cost of construction at least the cost of construction at a cost of construction or the cost of housing at a higher level on the housing site developed by him/her without any restriction. In addition, it goes against the legislative purpose of the Rental Housing Act in order to ensure stability in residential life by providing a housing-based basis to the economically weak class. Therefore, if the Korea National Housing Corporation directly constructs a public rental house on the housing site developed by itself, the cost of the housing site reflected in the pre-sale conversion price of the public rental house should be inferred by applying Article 3-3(1) [Attachment 1] of the former Enforcement Rule of the Rental Housing Act (wholly amended by the Minister of Land, Transport and Maritime Affairs No. 19, Jun. 20, 2008).

[1] Article 15 (1) (see current Article 21 (1)) and (3) (see current Article 21 (10)) of the former Enforcement Decree of the Rental Housing Act (wholly amended by Act No. 896, Mar. 21, 208); Article 9 (5) of the former Enforcement Decree of the Rental Housing Act (wholly amended by Presidential Decree No. 896, Jun. 20, 2008); Article 13 (3) (see current Article 23 (8)) of the former Enforcement Rule of the Rental Housing Act (wholly amended by Act No. 1966, Jun. 3, 2008); Article 3-3 (1) (see current Article 9 (1)) of the former Enforcement Rule of the Rental Housing Act (wholly amended by Act No. 1966, Jun. 20, 200) / [2] Article 9 of the former Enforcement Decree of the Rental Housing Act (wholly amended by Act No. 1966, Mar. 21, 20008)

[1] Supreme Court Decision 2001Du274 decided Oct. 12, 2001 (Gong2001Ha, 2477) Supreme Court Decision 2007Da61496 decided Nov. 27, 2008 (Gong2008Ha, 1767) / [2] Supreme Court Decision 2004Da33605 decided Dec. 10, 2004 (overruled)

Plaintiff 1 and 70 others (Attorney Kim Sung-hoon, Counsel for the plaintiff-appellant)

Korea Land and Housing Corporation (Attorney Cho Sung-sung et al., Counsel for the plaintiff-appellant)

Gwangju High Court Decision 2008Na7054 Decided November 11, 2009

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

The grounds of appeal are examined.

1. As to the misapprehension of legal principles as to the applicable statutes

A. Even if a rental business operator publicly announced the pre-sale conversion price standard in the notice of invitation of a tenant under relevant statutes, such as the Rental Housing Act, the legal relationship on pre-sale conversion of rental housing, etc. is not yet concluded since the determination of priority conversion between the rental business operator and lessee at the time of the public announcement. Thus, even if the relevant statutes, such as the Rental Housing Act, were amended, and the legal relationship were differently prescribed by the statutes prior to the amendment, the amended laws and regulations shall apply to the legal relationship on pre-sale conversion of rental housing, which takes place after the enforcement of the amended statutes, unless transitional provisions are provided in the Addenda. However, there is room to limit the application to protect the lessor’s trust in the continuation of the provisions prior to the amendment in cases where it is deemed more worthy of protection than the demand of public interest (see, e.g., Supreme Court Decisions 201Du274, Oct. 12, 201; 2007Da61496, Nov. 27, 2008).

B. According to the reasoning of the judgment below, the court below examined and judged whether the Korea Housing Corporation, a rental business operator of this case, made a public announcement of invitation on June 5, 200 and concluded a lease contract with the plaintiffs after the expiry of the mandatory period, and the construction cost and housing site cost related to the construction cost, which is the basis for calculating the pre-sale conversion conversion price, should be interpreted in accordance with the provisions of the Rental Housing Act and other relevant Acts and subordinate statutes, and then revised by the former Rental Housing Act (wholly amended by Act No. 8966, Mar. 21, 2008; hereinafter the same shall apply), the former Enforcement Decree of the Rental Housing Act (wholly amended by Presidential Decree No. 20849, Jun. 20, 2008; hereinafter the same shall apply) and the former Enforcement Rule of the Rental Housing Act (wholly amended by Presidential Decree No. 1975, Mar. 27, 2007; hereinafter the same shall apply).

C. In light of the aforementioned legal principles, the lower court’s application of the former Rental Housing Act and other relevant Acts and subordinate statutes is correct. In addition, the relevant Acts and subordinate statutes, such as the Rental Housing Act, which were enforced on June 5, 200 at the time when the Korea Housing Corporation, which is the rental business operator of this case, were deliberated and decided by the lower court, are different from the former Rental Housing Act and other relevant Acts and subordinate statutes, which were applied by the lower court in comparison with the former Rental Housing Act and other relevant Acts and subordinate statutes. Therefore, there is no room to limit the application of the former Rental Housing Act and other relevant Acts and subordinate statutes to protect the trust of the Korea Housing Corporation in respect of the existence of the previous provisions before the amendment as seen above. There is no error in the misapprehension of legal principles

2. As to misapprehension of legal principles as to criteria for calculating pre-sale conversion price

A. The purpose of the former Rental Housing Act is to promote the construction of rental housing and to ensure the stability of national and residential life by prescribing matters necessary for the construction, supply and management of rental housing and the rental housing business (Article 1). In particular, if constructed rental housing is sold after the expiration of the mandatory rental period (Article 14), the former Rental Housing Act provides for the preferential sale and conversion of leased housing to the lessee who is homeless (Article 15). The former Rental Housing Act provides for housing to the economically weak who have difficulty solving the housing problem by themselves through economic power and basic housing base, which is an essential and basic condition for their lives. The former Rental Housing Act provides for the National Housing Fund to allow the Government to preferentially use funds required for the construction of rental housing and to use it in the expenditure budget of each year (Article 5), to allow the State, local governments or government-invested institutions to preferentially purchase and sell constructed rental housing or constructed rental housing sites after the lapse of the mandatory rental period (Article 15); to preferentially purchase and sell housing sites or constructed housing sites to the rental business operator and to supply housing site development projects (Article 7).

Meanwhile, Article 12 of the former Rental Housing Act provides that a rental house for which the mandatory rental period has not elapsed due to restrictions corresponding to the above various support shall not be sold (Article 12); Article 14 of the former Rental Housing Act provides that the criteria for the terms and conditions of lease, such as the qualifications, selection methods, lease deposit, rent, etc. for lessees of the constructed rental house shall be determined by the Presidential Decree (Article 14); and Article 15(1) and (2) of the former Enforcement Decree of the Rental Housing Act provides that, where a rental business operator purchases a house constructed with funds from the National Housing Fund or constructs a house constructed on a housing site by a public project after the mandatory rental period has elapsed, preferential sale conversion shall be made to lessees; and Article 13(3) of the former Enforcement Decree of the Rental Housing Act provides that a rental business operator shall be subject to the standards for calculating pre-sale conversion price under Article 9(5) of the former Rental Housing Act in violation of the provisions of Article 5(1) and (2) of the former Enforcement Rule of the Rental Housing Act [2].

As above, relevant Acts and subordinate statutes, such as the former Rental Housing Act, aim at facilitating the construction of rental housing and stabilizing national housing life, and impose various restrictions on rental business operators to achieve the purpose thereof. In particular, the right to priority purchase conversion of rental housing, and the standards for calculating pre-sale conversion are prescribed in detail to prevent rental business operators from arbitrarily setting pre-sale conversion price and ensure that rental housing units can be sold at a reasonable pre-sale conversion price. Nevertheless, if a rental business operator construed that pre-sale conversion price is not binding upon the pre-sale conversion price standards as above, a rental business operator notifies tenants of the fact that the pre-sale conversion price should be set in excess of the pre-sale conversion price calculation standards after the expiration of lease obligation and the tenant would be allowed to receive and hold the pre-sale price exceeding the pre-sale conversion price calculation standards, thereby seriously impairing the legislative intent of the former Rental Housing Act and other relevant Acts and subordinate statutes. If a lessee refuses to enter into a pre-sale contract by demanding a rental business operator to comply with the pre-sale conversion standards under the former Rental Housing Act and other relevant laws and regulations, such as economic interests may be threatened.

Since the legislative purpose of the former Rental Housing Act is essentially infringed on the legislative purpose of the former Rental Housing Act, it is insufficient to impose criminal punishment on a rental business operator who converted rental housing into a housing unit in violation of the pre-sale conversion standard under the relevant laws, such as the former Rental Housing Act, to prevent such a violation of the pre-sale conversion standard under the relevant laws and regulations, and to prevent economic benefits accrued from the pre-sale conversion standard in violation of the said standard from reverting to a rental business operator. Therefore, the provisions of relevant laws and regulations, such as the former Rental Housing Act, should be deemed to be a mandatory law, and the pre-sale conversion

On the other hand, the Supreme Court Decision 2004Da33605 Decided December 10, 2004, which held that a pre-sale contract was concluded based on a pre-sale conversion price in violation of the standard for calculating the standard under the Enforcement Rule of the Rental Housing Act cannot be deemed to be denied under the private law merely because it was concluded, and that the pre-sale conversion price is too high to the extent that it is in violation of the Rental Housing Act’s legislative purpose is practically infringed upon by the lessee’s preferential right to buy-out conversion, and thus, it shall be modified to the extent inconsistent with this Opinion.

B. Examining the reasoning of the judgment below in light of the above legal principles, the court below is just in holding that the sales contract concluded at the price in violation of the pre-sale conversion standard under the relevant laws such as the former Rental Housing Act shall be valid only within the scope of the standard for calculation, and the exceeding part shall be deemed null and void. There is no error in the misapprehension of legal principles as to the interpretation and application of the pre

3. As to the misapprehension of legal principles on the interpretation of public announcement of invitation of residents and the validity of agreement on calculation of pre-sale conversion price

A. Even if there was an agreement between a lessor and a lessee on the construction cost of a rental house, which is only an element for calculating pre-sale conversion price before the enforcement of the former Rental Housing Act, the legal relationship on pre-sale conversion is completed after the enforcement of the relevant laws, such as the former Rental Housing Act, and the relevant laws and regulations, such as the former Rental Housing Act, shall apply thereto. Therefore, a rental business operator should calculate the pre-sale conversion price in accordance with the standards prescribed by the relevant laws and regulations, such as the former Rental Housing Act, and as seen earlier, insofar as the provisions of the relevant laws and regulations, such as the former Rental Housing Act, on the pre-sale conversion price calculation basis, are mandatory,

B. According to the reasoning of the lower judgment, the lower court determined that, even if the Plaintiffs agreed to calculate the pre-sale conversion price based on the construction cost publicly announced in the public announcement of invitation of residents at the time of entering into a lease contract with the Korea National Housing Corporation, the Korea National Housing Corporation should calculate the pre-sale conversion price based on the legitimate construction cost under the relevant Acts and subordinate statutes, such as the former Rental Housing Act at the time of conversion of ownership. This is justifiable in accordance with the legal doctrine as seen earlier. In so doing

4. As to the misapprehension of legal principle as to the calculation of construction cost

A. Article 3-3(1) [Attachment 1] of the former Enforcement Rule of the Rental Housing Act provides that “If the mandatory rental period is five years, the pre-sale conversion price shall be the arithmetic mean of the construction cost and the appraised value, but shall not exceed the amount obtained by deducting the depreciation costs during the lease period from the price of the relevant house calculated at the time of conversion for sale based on the construction cost of rental housing and housing site cost (hereinafter “calculated price”)” [paragraph (1)(b)]] and Article 3-3(1) [Article 3-3(1) [Attachment 1] of the former Enforcement Rule of the Rental Housing Act provides that “If the mandatory rental period is five years, the pre-sale conversion price shall not exceed the arithmetic mean the construction cost and the appraised value, and shall not exceed the amount obtained by deducting the depreciation costs during the lease period from the price of the relevant house calculated at the time of conversion for sale for sale for rental housing based on the construction cost of rental housing and housing site cost” [paragraph (2)(d)(1)(a)]] of the same provision.

According to the above provisions, the standard construction cost refers to the upper limit of the construction cost reflected in the pre-sale conversion price. It is clear that the construction cost, which is the basis for calculating the pre-sale conversion price, is clearly distinguishable from the construction cost. It is clear that the construction cost, which is the basis for calculating the pre-sale conversion price, is based on the construction cost not on the standard construction cost. Thus, it is reasonable to interpret that the construction cost, which is the basis for calculating the pre-sale

B. The judgment of the court below to the same purport is just, and there is no error in the misapprehension of legal principles as to the interpretation and application of Article 3-3(1) [Attachment 1] of the former Enforcement Rule of the Rental Housing Act as otherwise alleged in

5. As to the misapprehension of legal principle as to the calculation of housing site cost

A. Article 3-3(1) [Attachment 1](d)(2)(a) of the former Enforcement Rule of the Rental Housing Act provides that “The supply price of a housing site developed and supplied by the State, a local government, or a public institution, such as the Korea Land Corporation or the Korea National Housing Corporation (hereinafter “public housing site”) under the Act, such as the Housing Site Development Promotion Act, shall be the standard for calculating the cost of the housing site.” Article 18(2) of the Housing Site Development Promotion Act and Article 13-2(7) of the Enforcement Decree of the same Act provide that “The supply price of a housing site developed by a public institution, such as the Korea Housing Corporation or the Korea National Housing Corporation, shall be the standard for calculating the cost of the housing site.” However, the main sentence of Article 18(1) of the former Enforcement Rule of the Housing Site Development Promotion Act provides that “Where a project operator intends to supply a housing site developed by the public institution, such as the Korea Housing Corporation, shall be the supply price at a certain rate without directly calculating the cost of the housing site development.”

According to the former Korea National Housing Corporation Act (repealed by Act No. 9706 of May 22, 2009), the Korea National Housing Corporation is a public corporation established by the Government with capital invested in full for the purpose of contributing to stabilizing the lives of citizens and promoting public welfare by constructing, supplying, managing housing and improving inferior housing (Articles 1, 2, 5, and 9), and as part of the work of constructing, supplying, leasing, and managing housing, and building and supplying housing sites (Article 3(1)1 and 4). In light of the aforementioned purpose and scope of the existence of the Korea National Housing Corporation and its business, in cases where the Korea National Housing Corporation supplies housing sites to private rental business operators who intend to build, lease, or sell public rental housing sites, the Korea National Housing Corporation applies the discounted cost of construction, and thus, it is not reasonable to deem that the cost of construction or the cost of housing sites can be calculated without any restriction if it directly constructs and sells housing sites on its own, and thus, it goes against the legislative purpose of the Korea National Housing Corporation’s housing site development guidelines [Article 1).

Meanwhile, “Standard rental deposit and standard rent” under Article 193-399 of the former Rental Housing Act (amended by Act No. 4629 of Dec. 27, 1993) provides that “The construction cost of the relevant house shall be the price calculated in accordance with the guidelines for the implementation of the system of the unit price of the unit price for the unit price for the unit price for the unit price for the unit price for the unit price for the unit price for the unit price for the unit price for the unit price for the unit price for the unit.” However, if the housing construction entity directly develops the housing site, the site cost for the unit price for the unit price for the unit price for the unit price for the unit price for the unit price for the unit price for the unit price for the unit price for the unit price for the unit price for the unit price for the unit price for the unit price for the unit price for the unit price for the unit. However

B. The decision of the court below to the same purport is just, and there is no error in the misapprehension of legal principles as to the interpretation and application of Article 3-3 (1) [Attachment 1] of the former Enforcement Rule of the Rental Housing Act, Article 18 (1) [Attachment 3] of the Housing Site Development Business Guidelines and Article 193-39 of the Construction Division Notice.

6. As to the violation of the rules of evidence regarding the calculation of housing site costs and construction costs

The ground of appeal pointing out the lower court’s rejection of the Defendant’s request for fact-finding regarding the meaning of housing site cost and construction cost, which serve as the basis for calculating pre-sale conversion price, cannot be a legitimate ground of appeal, since the lower court’s assertion in the grounds of appeal, which is the fact-finding court, is concerned with the

7. Conclusion

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.

Chief Justice Park Si-hwan (Presiding Justice)