[1] Whether a residential environment improvement project under the former Act on Temporary Measures for Residential Environment Improvement Projects for Low-Income Urban Residents constitutes “public works” under the former Act on Acquisition of and Compensation for Land, etc. for Public Works Projects (affirmative)

[2] Whether a purchaser of a residential building in a residential environment improvement zone who has concluded a contract for sale of housing units to be constructed as a residential environment improvement project constitutes "persons subject to relocation measures" under Article 78 (1) of the former Act on Acquisition of and Compensation for Land, etc. for Public Works Projects (negative), and whether a violation of the mandatory law is invalid in cases where the cost of basic living facilities is included in the sale price of housing units supplied by a residential environment improvement project implementer

[1] Article 2 subparag. 2, subparag. 5, and subparag. 7 (see current Article 4 subparag. 8), Article 3(1) (see current Article 4(1)), Article 7(2) (see current Article 7(1) of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents and Dwelling Conditions for Residents and Dwelling Conditions for Residents and Dwelling Conditions for Residents and Article 8(4) (see current Article 7(2)), Article 10(4) (see current Article 50(1) of the Enforcement Decree of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents and Dwelling Conditions for Residents and Article 8(2) of the former Enforcement Decree of the Act on the Maintenance and Improvement of Residents and Dwelling Conditions for Residents and Dwelling Conditions for Residents and Article 10(4) of the former Enforcement Decree of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents and Dwelling Conditions for Residents and Article 8(2) of the former Enforcement Decree of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents and Dwelling Conditions for Residents

[1] [2] Supreme Court Decision 2010Da80749 decided Nov. 24, 2011 (Gong2012Sang, 24)

Plaintiff 1 and 88 others (Law Firm Woo, Attorneys Kim Byung-jin et al., Counsel for the plaintiff-appellant)

Korea Land and Housing Corporation (Law Firm Apex, Attorneys Park Gi-ro et al., Counsel for the plaintiff-appellant)

Daejeon High Court Decision 2010Na4255 decided December 22, 2010

All appeals are dismissed. The costs of appeal are assessed against the plaintiffs.

The grounds of appeal are examined.

1. A. Article 2 Subparag. 2 of the former Act on the Acquisition of Land, etc. for Public Works and the Compensation therefor (amended by Act No. 8665 of Oct. 17, 2007; hereinafter “former Public Works Act”) provides that “public works mean the projects falling under any of the subparagraphs of Article 4,” and Article 4 Subparag. 5 of the same Act provides that “the projects concerning the construction of houses or the creation of housing sites conducted by the State, local governments, government-invested institutions, local public enterprises, or persons designated by the State or local governments for the purpose of lease or transfer” and subparagraph 7 of the same Article provides that “other projects that can expropriate or use land, etc. by other Acts”.

Meanwhile, the former Act on Temporary Measures for Residential Environment Improvement (repealed by Article 2 of the Addenda to the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents, Act No. 6852, Dec. 30, 2002; hereinafter “former Act on Temporary Measures”) provides that a residential environment improvement plan shall be formulated after designating the relevant area as a residential environment improvement district in order to improve the residential environment in a low-income urban community where residential environment is poor, and the head of a Si, etc. shall implement a residential environment improvement project, such as the construction of housing or maintenance of public facilities, but the Minister of Construction and Transportation deems it necessary to urgently implement a residential environment improvement project due to a natural disaster or other causes, he/she shall be permitted to implement a residential environment improvement project for the Korea National Housing Corporation or a corporation established with the items of business for the purpose of the residential environment improvement project (Article 3(1) and Article 7(1) and (2) of the Enforcement Decree of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents).

In full view of the details, form, and purport of the aforementioned relevant statutes, residential environment improvement projects under the former Temporary Measures Act shall be deemed as public works under Article 4 subparagraph 5 or 7 of the former Public Works Act.

B. Article 78(1) of the former Public Works Act provides that "a project operator shall either establish and implement relocation measures or pay resettlement funds to those who lose their base of livelihood due to the implementation of public works (hereinafter referred to as "persons subject to relocation measures"), as prescribed by Presidential Decree, for a person who is deprived of their base of livelihood due to the provision of a residential building due to the implementation of the public works (hereinafter referred to as "persons subject to relocation measures"). The said relocation measures are prepared to restore the previous living conditions of those subject to relocation measures that would lose their base of livelihood due to the provision of a residential building

Unlike this, a residential environment improvement project under the former Temporary Measures Act is designed to improve the residential environment of low-income urban residents in the relevant project district. Accordingly, the owner or tenant of the land or building in the project district is not deprived of their base of living, and in particular, the owner of a residential building in the project district is bound to temporarily provide a residential building due to the implementation of a residential environment improvement project corresponding to the public works project. In particular, even if the owner of a residential building in the project district has to temporarily provide a residential building, he or she is entitled to preferential rights to purchase or lease a house to be newly constructed according to his or her choice. Since the owner of the land or building does not have to be able to reside in the project district, he or she is entitled to purchase or lease a house, regardless of whether or not the owner of the land or building has been deprived of their base of living. Furthermore, the State or a local government is able to preferentially subsidize the owner of the land or building in the residential environment improvement project and to improve the residential environment of the National Housing Fund or its neighboring area.

In addition, the implementation of public works, such as housing site development projects, are conducted regardless of the will of the persons who provide residential buildings. On the other hand, in order to be designated as a residential environment improvement district under the former Temporary Measures Act, the requirements such as the consent of at least 2/3 of the total number of the persons who own the land or buildings within the relevant area as of the base date and the consent of at least 1/2 of the total number of the tenants who reside in the relevant area for at least three months as of the base date should be met (Article 4(2) of the former Temporary Measures Act and Article 4(2) of the Enforcement Decree of the same Act). Therefore, it is distinguishable in that all the residents in

In full view of the contents, form, purport, and all other circumstances of the aforementioned relevant Acts and subordinate statutes, it is reasonable to view that the owners of residential buildings in a residential environment improvement zone who have concluded a contract for the sale of housing units to be built due to a residential environment improvement project does not constitute a person subject to relocation measures as stipulated in Article 78(1) of the former Public Works Act, that is, a person subject to the provision of residential buildings due to the implementation of public works, who is not a person who loses their base of livelihood as a result of the provision of a residential building due to the implementation of a public works project. Therefore, Article 78(4) of the former Public Works Act does not apply to a residential environment improvement project under the former Public Works Act

2. A. According to the reasoning of the judgment below, the defendant, the implementer of the residential environment improvement project of this case, calculated the sale price, including the cost of basic living facilities and the cost of sale in lots, to the plaintiffs as the cause of the claim in this case, was in violation of the former Public Works Act, and sought a return of unjust enrichment on the remainder after deducting the cost of basic living facilities from the cost of sale in lots already paid, which was void. Accordingly, the court below accepted the judgment of the court of first instance. The residential environment improvement project of this case does not constitute public works, but the plaintiffs, the residents of the residential environment improvement district of this case, cannot be treated the same as those subject to the relocation measures stipulated in Article 78(1) of the former Public Works Act. Thus, it cannot be deemed that the sale price of the housing supplied to the plaintiffs should be determined on the basis of the possession price, housing site development cost,

In light of the above legal principles and records, although the court below erred in finding that the residential environment improvement project in this case is not a public project, the conclusion of the court below's rejection of the plaintiffs' claim for return of unjust enrichment by deeming that the plaintiffs are not a person subject to relocation measures stipulated in Article 78 (1) of the former Public Works Act is justifiable. Therefore, the court below's above error did not affect the conclusion of the judgment, and it did not err by misapprehending the legal principles on the scope of a person subject to relocation measures under Article 78 (1) of the former Public Works Act, and it cannot be deemed that there

B. In a case where a false notice is made on important matters of transaction in the publicity and advertisement of a product in a manner to the extent to be subject to criticism in light of the duty of good faith, it constitutes a deception. However, there is a lack of deception as long as it can be recognized in light of the general commercial practice and good faith principle (see Supreme Court Decision 2009Da97864, Apr. 29, 2010, etc.).

Upon citing the judgment of the court of first instance, the court below determined that it is difficult to conclude that the Defendant agreed to sell the apartment of this case to below the construction cost less than the construction cost after deducting basic living facilities installation cost, etc. under the former Public Works Act by explaining the residential environment improvement project against the residents in the residential environment improvement district, including the Plaintiffs. In light of the aforementioned legal principles and records, the above judgment of the court below is just, and there is no error in the misapprehension of legal principles or incomplete deliberation as otherwise alleged in the ground of appeal.

In addition, in light of the provisions of the former Temporary Measures Act, the Defendant’s ground of appeal that the Defendant is obligated to sell the price below the construction cost to the Plaintiffs is a new argument that only comes into the final appeal, and thus, this cannot be a legitimate ground of appeal against the lower

3. Therefore, all appeals are 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 Yang Chang-soo (Presiding Justice)