Plaintiff 1 and six others (Law Firm Korea, Attorneys Kim Tae-sung et al., Counsel for the plaintiff-appellant)

Defendant Cooperatives (Attorney Sohn-ho et al., Counsel for the defendant-appellant)

June 7, 2006

Seoul Central District Court Decision 2003Gahap95236 Delivered on November 24, 2004

1. Revocation of a judgment of the first instance;

2. Each of the plaintiffs' claims is dismissed.

3. The total costs of the lawsuit are assessed against the plaintiffs.

1. Purport of claim

It is confirmed that the plaintiffs have the right to purchase each household of the real estate listed in the separate sheet in the same selling price as that of the defendant's union members.

2. Purport of appeal

The judgment of the first instance is revoked, and the plaintiffs' claims are dismissed.

1. Facts of recognition;

The following facts do not conflict between the parties, or may be acknowledged by comprehensively taking into account the following facts: Gap evidence 2, 3, Eul evidence 4-1, 4-5, Eul evidence 6-1 through 9, Gap evidence 6-1 through 17, Gap evidence 8, 10, 14, 19, 21, 22, Eul evidence 4 through 7, Eul evidence 8 through 13, Eul evidence 29-1 through 29, Eul evidence 16, Eul evidence 33 through 36, Eul evidence 37, Eul evidence 38, Eul evidence 39-1, 2, Eul evidence 40, 41, Eul evidence 43-1, and 43-2:

(a) Status of parties;

(1) The Defendant Mutual Aid Association is a reconstruction association that obtained approval from the head of Seocho-gu Office, the competent Gu office on April 25, 2003 for the establishment of a reconstruction project (hereinafter “instant reconstruction project”) on the following grounds: (a) the owners of tenement houses, multi-family houses, and detached houses on each site listed in the separate sheet (hereinafter “instant project site”) remove old buildings; and (b) reconstruction of apartment houses on the ground in the separate sheet of the size of two underground floors and 12 above ground level on the ground; and (c) the association obtained approval for the establishment of a reconstruction project from the above Gu office (hereinafter “instant reconstruction project”) on June 30, 2003.

(2) The plaintiffs, non-party 1 and the non-party 2 (hereinafter referred to as "the plaintiff et al.") are co-owners of Seocho-gu Seoul Metropolitan Government Seocho-dong (number omitted) and of the non-party 1 and the non-party 2 (hereinafter referred to as "the plaintiff et al.") with 380.3 square meters (115.04 square meters) contained in the project site of this case and the multi-family house with the third floor of the ground lament and the land of this case (hereinafter referred to as the "multi-family house of this case").

B. The acquisition of the instant multi-family house by the Plaintiff, etc. and the details of joining the association

(1) The apartment house of this case was originally owned by Nonparty 3, but it was acquired by Nonparty 4 upon receiving a successful bid on May 31, 1999. On May 11, 2001, Nonparty 5 and Plaintiff 7 purchased each co-ownership share from Nonparty 8 on July 25, 2002, when it was known that the reconstruction project of this case was carried out. Plaintiff 1, 2, 3, 4, 2, 7, 8, and Plaintiff 5 and Nonparty 1 purchased each co-ownership share on August 5, 202, and Plaintiff 6 purchased each co-ownership from Nonparty 7 on May 20, 203 and May 29, 2003.

(2) The plaintiff et al. subsequently decided to participate in the instant reconstruction project on September 25, 2003, and completed the registration of transfer of ownership with respect to the instant multi-family house on September 30, 2003 to the defendant partnership on September 26, 2003.

C. The process to discuss the share compensation of the instant multi-family house

(1) An inaugural general meeting

In the inaugural general meeting held on April 18, 2003 (hereinafter “Inaugural general meeting”), the Defendant association discussed the issue of share compensation of the Plaintiff, etc. with respect to the instant multi-family house and decided to grant two households to the Plaintiff, etc. by granting the Plaintiff, etc. as an association member. However, the Defendant association decided to discuss the opposition of the union members to the extent that the remaining seven households are sold in lots at the general sale price presented by the ○○ Reconstruction Promotion Committee (hereinafter “Promotion Committee”).

(2) Progress of the board of directors

(A) On April 25, 2003, at the board of directors, the board of directors decided to sell the instant multi-family house from less than seven households to the number of members in lots.

(B) On August 30, 2003, the board of directors decided on August 30, 2003 that the order of bringing apartment among the members of the instant multi-households is the first seven households, and that the soil, two households, and Geumsan will bring the last one household.

(C) On September 5, 2003, the board of directors held on September 5, 2003 a resolution to the effect that multi-households will draw out among the group 1 group.

(D) On October 6, 2003, at the board of directors meeting of the instant multi-family housing, the members recognized the compensation for the instant multi-family housing as two (2) members (the co-owners of the instant multi-family housing fall under the co-owners of the instant multi-family housing) and the resolution was passed at the intervals of seven (7) households at the unit selling

(3) Authorization of the special general meeting and the management and disposition plan of November 20, 2003

After that, on November 20, 2003, the Defendant Union presented the following four bills (the proposal was added at the site of the management and disposal general meeting) while holding an extraordinary general meeting of the association members (hereinafter referred to as the “management and disposal general meeting”), and among them, adopted a resolution to the effect that “as regards the remaining site area of the remaining site except for the area of the shares of two households with a key to recognize the qualification of the association members, cash purchase compensation shall be made at the appraisal price” (hereinafter the resolution in this case), and then, the above management and disposal plan was authorized by the Seocho-gu Office, the competent authority.

(1) A proposal 1: The remaining site area excluding the equity area of two households (23.2 square meter x 23.2 square meter x 46.4 square meter) with the intention to recognize the membership of an association member shall be purchased or compensated at the appraisal price, and where applying for parcelling-out to seven households of a non-members, seven households of an apartment house of one group shall be sold at the unit

(2) Draft 2: Purchasing or compensating for the purchase of the shares of two households (23.2 square meters x 2.2 households x 46.4 square meters) and the area of remaining sites, the height of which is recognized as members of the association, as usual development gains, and seven non-members of the association applying for parcelling-out apartments with respect to the application for parcelling-out of reconstruction apartments, the number of seven households of the non-members of the association shall be increased by 2,00,000 won per square meter compared to

(3) A proposal 3: Purchase of and compensation for cash on the remaining site area excluding the area of shares in two households (23.2 square meters x 23.2 square meters x 46.4 square meters) designated as a partner shall be made at the appraisal price.

(4) Draft IV: Nine households shall be entitled to the same qualification as members of the association, but they shall be sold in one-year apartment house.

D. Disputes between the plaintiff, etc. and the defendant association

(1) Nonparty 1, who was present at the general meeting of administration and disposal, clearly expressed his opinion to oppose the above resolution, which is different from the resolution at the board of directors. The resolution at this case is to be different from the resolution at the board of directors.

(2) On December 10, 2003, the Plaintiff et al. issued a certificate to the effect that he would cancel the trust contract of the instant multi-family house between the Defendant Cooperatives on the grounds of deception or mistake, and that he would withdraw from the membership. On January 9, 2004, in order to avoid damages to be removed by the instant multi-family house pursuant to the instant resolution, the Plaintiff et al. filed an application against the Defendant Cooperatives and the Nonparty Samsung Heavy Co., Ltd., a contractor for the instant reconstruction project, for removal and temporary injunction against the instant multi-family house and its site (Seoul District Court Decision 2004Kahap108), but was dismissed on March 2, 2004.

E. Subsequent, the progress of the reconstruction of this case and the provisional disposition prohibiting the sale of this case

(1) Meanwhile, the Defendant Cooperative removed all the buildings on the instant project site, such as the instant multi-family house, through the construction after the instant resolution, etc., and completed the procedures for the drawing of new apartment units and water units for its members, including Nonparty 1 and 2, to be recognized as its members among the co-owners of the instant multi-family house, by notifying the opening of an extraordinary general meeting for the allotment of Dong and lake numbers on February 24, 2004.

(2) As to the shares in the instant multi-family house owned by the Plaintiffs, the Defendant Union: (a) determined the amount of the Plaintiffs’ equity compensation as KRW 85,349,000, which is the 68.64 square meters [2.4 square meters (i.e., 115.04 square meters - 46.4 square meters) for the remaining seven households except for the Plaintiff’s 23.2 square meters x 2.04 square meters (i.e., 23., 115.04 square meters)]; (b) around January 13, 2004, the amount of the Plaintiffs’ equity compensation is KRW 86,349,000, remaining after paying for the Plaintiff’s 169,349,000 in subrogation on or around February 5, 2004.

(3) On April 17, 2004, the Plaintiffs filed a provisional injunction against sale with seven households among the newly-built apartments of this case, and was sentenced to the Seoul Central District Court 2004Kahap879 to accept the application.

2. Judgment on the defendant's main defense

Even if the lawsuit for confirmation of this case is accepted by the plaintiffs, the defendant files a lawsuit for performance again to be implemented by the plaintiffs. Thus, the plaintiffs' lawsuit for confirmation of this case is unlawful since it has no supplementary nature and there is no benefit of confirmation.

On the other hand, the plaintiffs, as co-owners of the multi-family house of this case, are in the position to acquire the right to sell in lots if there was a valid resolution of the defendant association as argued by the plaintiffs. If the right to sell in lots is recognized, the right to sell in lots should be sold in the same way as the members of the association according to the method of sale determined by the defendant association. As long as the defendant association disputes the right to sell in lots itself, the right to sell in lots is in the position of legal interest, and as long as the defendant association is in the dispute over the right to sell in lots, it

3. Judgment on the merits

A. The plaintiffs' assertion

(1) According to Article 22 Subparag. 4 of the Rules of the Defendant Union, the board of directors (the board of directors) may resolve on the matters delegated by the general meeting. On April 18, 2003, the Defendant Union duly delegated the issue of share compensation regarding the instant multi-family house to the board of directors (board of directors) in accordance with the above rules of the association at the general meeting of the general meeting of the board of directors, and the board of directors adopted a resolution to sell the instant multi-family house to the rest of seven households, in addition to recognizing the qualification of two members as the instant multi-family house.

(2) The resolution of this case made at the general meeting of the management and disposal of the defendant association was remarkably unfavorable to the plaintiffs in light of the resolution at the meeting of executive officers, and the change was not agreed at all by the plaintiffs, and the equality between the plaintiffs and the owners of the above neighborhood living facilities in cash compensation standards in consideration of development gains, etc. is not maintained. Thus, the new resolution at the general meeting of management and disposal shall not be effective as a resolution in violation of the Act

(3) In addition, the plaintiffs agreed to make compensation for the multi-family house of this case at the board of directors and agreed to sell it to seven households as members of the association and became members of the reconstruction association of this case. While the defendant association offered such faith to the plaintiffs or objectively viewed that the plaintiffs had good faith, it is against the principle of good faith that the defendant association reversely unfavorablely against the plaintiffs, unlike the resolution of the board of directors.

(4) Furthermore, if the resolution of the general meeting on management and disposition of the instant multi-family house exists, as alleged by the Defendant Union, only the resolution of the general meeting on management and disposition of the instant multi-family house, Nonparty 1, the representative of the owners of the instant multi-family house, left the general meeting of the general meeting of the management and disposition, and the general meeting of management and disposition did not have consented to the resolution on the instant multi-family house. In the rebuilding resolution, if several buildings exist in one house in the same complex, the rebuilding resolution should be carried out by each unit. Accordingly, the instant owner of the instant multi-family house has no resolution on the reconstruction

(5) Therefore, the resolution of compensation for the instant multi-family house was made at the meeting of executive officers of the Defendant Union in accordance with delegation by the inaugural general meeting, and the resolution of the instant case reversed is null and void. As such, the Plaintiffs have the right to purchase the remaining new apartment units, which are allocated to the members of the Defendant Union, at the same selling price as those of the Defendant Union.

(b) Markets:

(1) Therefore, first of all, we examine whether the issue of equity compensation for multi-family housing in this case is delegated to the executive board of the defendant association.

(A) Of the records in Gap evidence No. 12 (Abstract of the minutes of the inaugural general meeting), the statement to the effect that the issue of compensation for the multi-family house in this case is the key to the board of directors’ meeting shall not be trusted in light of the fact that there is no such entry in the Eul evidence No. 69 (total minutes of the inaugural general meeting). Meanwhile, according to the above facts, according to the above facts, the board of directors decided to discuss the issue of compensation for the multi-family house in this case at the board of directors’ meeting (as the records in the minutes of the inaugural general meeting, the non-party 9, who is the president of the defendant association, did not pass a resolution on the compensation for the multi-family house in this case at the board of directors’ meeting, one more debate is made at the newly organized board of directors at the newly organized board of directors with the thickness of the non-party 1 president, and it is recognized that there is no objection to the thickness of the members in the board of directors’ meeting.

However, in light of the fact that the above facts alone, it is insufficient to recognize that the general meeting of the above general meeting delegated the issue of compensation for the multi-family house in this case to the board of directors and delegated it to the board of directors, and there is no other evidence to acknowledge it.

(B) Rather, there is no dispute between the parties, or in full view of the overall purport of the arguments in the statements in Gap evidence Nos. 2, Gap evidence No. 10 to 11, Eul evidence No. 3-1, 2, Eul evidence No. 44 to 48, and Eul evidence No. 69, the following facts can be acknowledged.

1) Examining the progress of the inaugural general meeting, the issue of the share in the instant multi-family house was presented as the agenda at the 6th general meeting. At the time, the president of the association, the promotion committee, the members of the association, the general meeting at the same office, the members of the association, the resolution of the general sale price, not the members of the association, was made at the general meeting at the general meeting, and the promotion committee cannot correct the resolution at the general meeting. ② If it is difficult to conclude the resolution at the general meeting, the resolution at the executive meeting is re-convened again at the general meeting, and the part is ratified at the later general meeting, and ③ the resolution on the instant multi-family house is the resolution at the general meeting. As seen earlier, the resolution on the instant multi-family house again

2) The minutes of the meeting of the executive board of the Defendant Union stated as follows: “The contents resolved at the meeting of the board of directors (the property rights of the union members) shall be approved by the general meeting.” The Defendant Union, holding the 21st executive meeting on October 1, 2003, distributed the data, “The countermeasures (proof No. 10) against the union’s face-to-face interests in the instant multi-family house, etc.,” and accordingly, the Defendant Union presented the following proposals as to the share issues in the instant multi-family house, etc.

(1) First Bill: A resolution of the committee of promoters is adopted and approved by the committee of promoters at the general meeting of establishing the association, the number of members shall be 46.46 square meters of the total site area of the multi-family house, etc. in this case, whichever is about 115.04 square meters, and the remaining 68.58 square meters shall be compensated in cash (10,60,000 won per square year) at the time of resettlement.

(2) A proposal 2: It shall grant a right to parcelling-out to the additional three households (five households in total) after recognizing the qualification of two households, among co-owners of multi-family houses, etc. in this case, and the general parcelling-out price determined by the partnership shall be applied to the additionally allocated three households.

(3) Draft 3: To provide nine households if co-owners of the instant multi-family house, etc. request a total of nine households, and the sale price shall be the general sale price determined by all nine households in the partnership.

4. Draft 4: In cases where co-owners of the instant multi-family house, etc. request all of the details expropriated at the executive meeting up to now, the details of resolution adopted by the promotion committee, which is set at a height of 20,000 households, shall be applied to the general meeting of partners, and where they

3) The executive officers of the Defendant Union discussed several proposals at each executive meeting over several occasions, and resolved to sell them to seven generations, including the Plaintiff, at the number of union members, on the premise that they are ultimately subject to the approval of the management general meeting (the non-party 1 representing the Plaintiff et al. was the executive officers of the Defendant Union).

(C) According to the above facts, at the executive meeting of the defendant association, the board of directors of the defendant association made a resolution to sell a lot of proposals about the issue of compensation for the instant multi-household housing to seven households who are not qualified as a member of the association. However, this was based on the premise of the approval of the general meeting, and the actual general meeting of management and disposition was presented four bills as mentioned above, and the general meeting of management and disposition adopted a resolution to adopt one of them. In light of these circumstances, it is difficult to view that the general meeting of directors delegated the board of directors to finally determine the issue of compensation for multi-household housing of this case.

In addition, even if there are several co-owners with regard to multi-family houses, only one member's qualification is recognized (Article 44-3 (6) of the former Housing Construction Promotion Act), and the fact that the defendant union granted two members' qualification to the plaintiff et al. is equal as seen earlier. As such, the remaining co-owners are compensated only because the fact that the other co-owners are entitled to the membership of the plaintiff et al., and the fact that the other co-owners are admitted the membership of the co-owners of the multi-family house of this case is the same as the actual recognition of the membership of all co-owners of the multi-family house of this case. The compensation for multi-family houses of this case is a matter that has a significant influence on the share of the members of the association, and this is not a matter that can wholly delegate the resolution of the re-building cost to the board of directors (if the compensation resolution on the multi-family house of this case was delegated to the board of directors of the defendant association as alleged by the plaintiffs, the resolution of the general meeting of directors cannot be denied

(D) Therefore, the compensation for the instant multi-family house shall be subject to the resolution of the general meeting for administration and disposal. Thus, the above general meeting delegated the issue of compensation for the instant multi-family house to the board of directors, and the resolution of the general meeting for management and disposal of the instant case on the premise that the board of directors delegated the resolution as alleged by the Plaintiffs at the board of directors to the board of directors. The resolution of the general meeting for management and disposal of the instant case was modified disadvantageously to the Plaintiffs against the principle of equity,

(2) The Plaintiffs did not delegate the resolution on compensation for the instant multi-family house to the board of directors of the Defendant Union, and even if there exists only the resolution at the general meeting of the management and disposal assembly, the Plaintiffs asserted that ① the contents of the resolution on compensation for the instant multi-family house which was resolved at the general meeting of the management and disposal assembly are contrary to the principle of equity, and ② Nonparty 1, the representative of the owners of the instant multi-family house at the general meeting of the Defendant Union and the general meeting of the management and disposal assembly of the Defendant Union, did not consent to the rebuilding resolution and the resolution on compensation, and eventually, the rebuilding resolution in itself is null and void or at least there is no resolution on the instant multi-family house (see subparagraph (a)(4)). ③ The resolution on compensation for the instant multi-family house at the general meeting of management and disposal assembly

On the other hand, as seen earlier, the co-owners in a multi-family house recognize only one partner. The defendant recognized two members of the defendant and there is no evidence to acknowledge that the plaintiffs have the status of a member of the defendant's association. Thus, the compensation resolution on the multi-family house in this case becomes null and void as alleged by the plaintiffs (in addition to the claim for damages against the defendant's executive officers or the defendant's association, the right to claim the right to sell to the defendant's association is not acknowledged. Thus, the plaintiffs' above assertion is without merit.

3. Conclusion

Therefore, all of the plaintiffs' claims are dismissed due to the lack of merit, and the judgment of the court of first instance is unfair, so the defendant's appeal is accepted and the judgment of the court of first instance is revoked and the plaintiffs' claim is dismissed. It is so decided as per Disposition.

[Attachment Omission of List of Real Estate]

Judges Choi Byung-chul (Presiding Judge)