The meaning of "site development projects or housing construction projects" under Article 4 (1) [Attachment 1] subparagraph 1 of the Enforcement Decree of the former Restitution of Development Gains Act, and whether a housing construction project is subject to development charges where only a housing construction project is conducted on land that needs not be built (negative)

Articles 1, 2 subparag. 1 and 2, and 5(1)1 and (3) of the former Restitution of Development Gains Act (Amended by Act No. 11690, Mar. 23, 2013); Article 4(1) [Attachment Table 1] subparag. 1 of the former Enforcement Decree of the Restitution of Development Gains Act (Amended by Presidential Decree No. 24443, Mar. 23, 2013); Articles 2 subparag. 6 and 16(1) of the former Housing Act (Amended by Act No. 11365, Feb. 22, 2012)

Mea Co., Ltd. (LLC, Kim & Lee LLC, Attorneys Song-chul et al., Counsel for the plaintiff-appellant)

The head of Yeonsu-gu Incheon Metropolitan City (Government Law Firm Corporation, Attorneys Kim Young-chul et al., Counsel for defendant-appellant)

Seoul High Court Decision 2013Nu51666 decided September 19, 2014

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

The grounds of appeal are examined.

1. The purpose of the former Restitution of Development Gains Act (amended by Act No. 11690, Mar. 23, 2013; hereinafter “former Restitution of Development Gains Act”) is to prevent speculation in land, promote the efficient use of land, thereby contributing to the sound development of the national economy by recovering development gains accruing from land and distributing them appropriately (Article 1). “Development gains” means increases in land prices belonging to a person who implements a development project in excess of increases in normal land prices due to the implementation of a development project, change of a land-use plan, or other social and economic factors (Article 2 Subparag. 1); “Development projects” subject to development charges refers to projects under Article 5, such as housing site development projects or industrial complex development projects implemented with authorization, permission, license, etc. from the State or a local government (Article 2 Subparag. 2).

Article 5(1)1 and (3) of the former Act on the Restitution of Development Gains (amended by Presidential Decree No. 2443, Mar. 23, 2013; hereinafter “former Enforcement Decree of the Development Gains Restitution Act”) provides that “A housing site development project or housing construction project (including a housing complex development project) shall be one of the development projects, and matters necessary for the scope, size, etc. of the development project shall be prescribed by Presidential Decree. Accordingly, Article 4(1) [Attachment 1] 1 of the former Enforcement Decree of the Restitution of Development Gains Act (amended by Presidential Decree No. 24443, Mar. 23, 2013; hereinafter “former Enforcement Decree of the Development Gains Restitution Act”) provides that “a housing site development project or housing construction project” based on the former Housing Act (amended by Act No. 11365, Feb. 22, 2012; hereinafter “former Housing Act”). According to Articles 2 subparag. 6 and 16(1) of the former Housing Act, a person who intends to implement a housing site or housing site development project after obtaining approval.

In full view of the contents and purport of the aforementioned relevant Acts and subordinate statutes, the term “site development project or housing construction project” under Article 4(1) [Attachment Table 1] 1 of the former Enforcement Decree of the Development Gains Refund Act means not only a housing construction project implemented with a site development project exceeding a certain area subject to the former Housing Act or with a building site creation of the same area, but also a housing construction project is subject to a project plan under the former Housing Act if the scale of housing construction implemented with a site creation plan is conducted with a site creation plan under the same Act even if the area of housing site is below the area, the housing construction project is subject to the imposition of development charges

2. According to the records, on November 12, 1990, Incheon Metropolitan City completed reclamation works on May 11, 2005 after obtaining a license to reclaim public waters from the chief of the Incheon Regional Maritime Affairs and Fisheries Office for the purpose of supplying a housing site,

In light of the above facts in light of the legal principles as seen earlier, the housing construction project of this case does not constitute the subject of development charges, which is a housing construction project not involving housing site preparation works.

Nevertheless, the lower court determined that the housing construction project not accompanied by the housing site preparation work is not only subject to development charges, but also subject to the housing construction project of this case, and that the housing construction project of this case is partially accompanied. In so doing, the lower court erred by misapprehending the legal doctrine on the project subject to development charges and by misunderstanding facts contrary to logical and empirical rules

3. Therefore, without examining 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 on the bench.

Justices Kim Yong-deok (Presiding Justice)