[1] Where a rebuilding and improvement project association agrees with the shopping district council on the content that the development gains and expenses should be separately settled separately from the apartment and the shopping district and that the shopping district council voluntarily prepares a management and disposal plan proposal, whether the contents should be stipulated in the articles of association of the association (affirmative in principle)

[2] The standard for the resolution of the general meeting that intends to modify the internal norms of the reconstruction and improvement project association is legitimate

[1] From among the members of a reconstruction and improvement project association, there is a case where the association and the commercial council agree to ensure that the sectional owners of the commercial buildings (hereinafter referred to as the "members of the commercial buildings") and the members of the commercial association agree on the contents of the management and disposal plan concerning the commercial buildings by separating the apartment and the commercial buildings and settling the development gains and expenses separately, and ② separate organization composed of the members of the commercial association (hereinafter referred to as the "commercial council") voluntarily establish the contents of the management and disposal plan concerning the commercial buildings (i) the portion falls under the matters concerning the "members of the association" and the "rights and obligations of the members of the association", and (ii) the preparation of the portion of the management and disposal plan that should be approved by the general meeting is not the board of directors of the association but the establishment of the portion of the commercial buildings among the management and disposal plan plan that should be approved by the association. Thus, in principle, the contents of the association's articles of association concerning the "rights and obligations of the association", the "members' rights and duties" and the "management plan."

However, if the resolution of the general meeting of the association that decided to adopt the association does not fully meet the requirements for modification of the articles of association, it is not formally modified, but if it is valid as a resolution of the general meeting, and if it has the substantial quorum for modification of the articles of association, it shall be deemed that at least it has the same effect as a norm binding an internal agency of the association. This is because the general meeting of the association is the highest decision-making agency of the association, and the modification of the articles of association shall be approved by the supervisory authority after the resolution of the general meeting of the association (Article 20(3) of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (amended by Act No. 13912, Jan. 27, 2016). Here, the approval of the supervisory authority is merely a supplementary act that completes the effect of the general

[2] The general assembly of a reconstruction and rearrangement project association is the highest decision-making body of the association, and the modification of the articles of association or the formulation and modification of the management and disposal plan is the resolution of the general assembly. As such, the general assembly of the association has the discretion to withdraw or modify the contents of the previous general assembly resolution by a new general assembly. However, such autonomy and discretion cannot be unlimited. To be legitimate for the general assembly resolution that intends to modify the internal rules of the association, the following criteria should be

First, the resolution of the general meeting shall meet the procedure and the quorum stipulated in the superior law and the articles of association. The procedure and the quorum of the general meeting shall be followed by the articles of association unless otherwise stipulated by the superior law (Article 24(6) of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (amended by Act No. 13912, Jan. 27, 2016; hereinafter “former Act”). However, the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (amended by Act No. 13912, Jan. 27, 2016; hereinafter “former Act”). However, Article 20(3) of the former Act provides that “the bearing of expenses of a cooperative” shall be subject to the consent of at least 2/3 of the members of the cooperative in order to modify it (Article 20(1)8) in comparison with the resolution of the previous general meeting, if the matters related to “sharing of expenses of a cooperative” are substantially modified to the extent that they have a significant influence on the interests of the cooperative members.

Second, the contents of the general meeting resolution should not violate superior laws and the articles of incorporation.

Thirdly, once an internal norm is established, the members of the association will be trusted that it will continue to exist, barring special circumstances. As such, the benefits to be achieved through the amendment of the internal norm should be superior to the interests of the members who trusted the existence of the previous internal norm. In order to determine whether the resolution of the general assembly that amends the internal norm of the association violates the principle of trust protection, on the other hand, the purpose of public interest to be realized through the amendment of the internal norm of the association should be comprehensively compared and balanced.

[1] Article 20(1)6 of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (Amended by Act No. 13912, Jan. 27, 2016; see current Article 40(1)6); Article 8 (see current Article 40(1)8); Article 40(1)9 (see current Article 40(1)9); Article 17 (see current Article 40(1)18); Article 31 subparag. 2 (see current Article 38 subparag. 2), Article 10 (see current Article 38 subparag. 10), and Article 15 (see current Article 38 subparag. 15) / [2] Article 20(1)6 of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (Amended by Act No. 13912, Jan. 27, 2016; see current Article 40(1)8(1)9); Article 48(3)4) of the former Act on the Maintenance and Improvement of Residents.

[1] Supreme Court Decision 2008Da53430 Decided May 27, 2010 (Gong2010Ha, 1223), Supreme Court Decision 2010Du13463 Decided August 23, 2012 (Gong2012Ha, 1607) / [2] Supreme Court Decision 2008Du8918 Decided April 23, 2012, Supreme Court Decision 2010Du13463 Decided August 23, 2012

Plaintiff 1 and two others (Bae & Yang LLC, Attorneys Kim Jong-hoo et al., Counsel for the plaintiff-appellant)

The Housing Reconstruction and Improvement Project Association (Attorneys Kim Bo-sik et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2015Nu60084 decided February 2, 2016

The part of the lower judgment against the Defendant is reversed, and that part of the case is remanded to the Seoul High Court. The Plaintiffs’ appeal is dismissed.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Regarding the plaintiffs' grounds of appeal

After compiling the adopted evidence, the lower court recognized the facts as indicated in its holding, and determined that there was no error of law in the proportion to commercial buildings and the evaluation base date of the previous asset price in the instant management

Examining the reasoning of the lower judgment in light of the record, the lower court’s fact-finding and judgment did not err by misapprehending the legal doctrine on the management and disposition plan, thereby failing to exhaust all necessary deliberations or by inconsistency

2. As to Defendant’s ground of appeal

A. (1) An association for maintenance and improvement projects is an administrative body with the authority to implement a rearrangement project under the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (wholly amended by Act No. 13912, Jan. 27, 2016; hereinafter “Urban Improvement Act”) (see Supreme Court Decisions 2008Da60568, Sept. 24, 2009). At the same time, a “organization under public law” comprised of its members has the character as an “organization under public law.” In a case where the Urban Improvement Act delegates to the articles of association certain autonomous matters relating to the implementation of a rearrangement project, the association may, to the extent that it does not violate the superior laws and regulations, establish “articles of association”, which is an autonomous norm within the organization, according to its autonomous and democratic intent, to the extent that it does not violate the said superior laws and regulations (see Supreme Court Decisions 2001Da78966, Apr. 26, 2002; 2007Du1464666

(2) Article 20(1)6, 8, 9, and 17 of the Act on the Improvement of Urban Areas and Dwelling Conditions provide that a cooperative shall prepare its articles of association, including “execution method of a rearrangement project,” “rights and obligations of partnership executives,” “expenses to be borne by a cooperative,” “other matters prescribed by Presidential Decree for the promotion of a rearrangement project, and the operation of a cooperative” (Article 20(1)6, 8, 9, and 17). According to delegation, the Enforcement Decree of the Act on the Improvement of Urban Areas and Dwelling Conditions, “matters concerning the allocation and vicarious performance, etc. of duties of executives,” “matters concerning the management and disposal plan,” and “matters concerning the rights and obligations of partners,” etc. (Article 31 subparag. 2,

Among the members of a reconstruction association, there is a case where the association and the commercial association agree on the following matters: (i) the sectional owners of the commercial building (hereinafter referred to as the "family member") among the members of the association; (ii) the association and the commercial association, which separates the apartment and the commercial building from the development gains and expenses and (iii) the separate organization consisting of the commercial association members (hereinafter referred to as the "family council") to autonomously establish the draft of the management and disposal plan concerning the commercial building (see Supreme Court Decision 2012Du3385, Mar. 28, 2013). ① Since the portion may affect the shares of each member, the portion falls under the matters concerning the "sharing of expenses of the association" and the "rights and obligations of members"; and (ii) the portion falls under the scope of the establishment of the management and disposal plan that should be approved at the general meeting of the association, not the board of directors of the association, but the contents concerning the "rights, obligations, etc. of the association's association's association's association's rights and duties.

However, if the resolution of the general meeting of a union that the union decides to adopt the above contents is not formally modified, but if it is valid as a resolution of the general meeting, and if it has the substantial quorum for amending the articles of association, it should be deemed that it has the effect as a norm binding the union internally (see Supreme Court Decision 2010Du13463, Aug. 23, 2012). This is because the general meeting of a union is the highest decision-making body of the union (see Supreme Court Decision 2008Da53430, May 27, 2010), the amendment of the articles of association must be approved by the supervisory authority after it has been decided through the general meeting resolution (see Article 20(3) of the Urban Improvement Act). Here, the supervisory authority’s approval is merely a supplement to complete the resolution of the general meeting, which is a basic act (see Supreme Court Order 2006Ma6356, Jul. 24, 2007).

(3) The general assembly of a cooperative is the highest decision-making body of the cooperative, and the modification of its articles of association or the formulation or modification of its management and disposal plan is subject to the resolution of the general assembly. As such, the general assembly of a cooperative has the discretion to withdraw or modify the contents of the previous general assembly resolution by a new general assembly. However, such autonomy and discretion cannot be unlimited. If the general assembly resolution intended to modify the internal rules of the cooperative is legitimate, the following must be satisfied:

First, the resolution of the general meeting shall meet the procedure and the quorum stipulated in the superior law and the articles of association. The procedure and the quorum of the general meeting shall be complied with unless otherwise stipulated by the superior law (Article 24(6) of the Urban Improvement Act). However, in order to modify the matter to be stipulated in the articles of association, the Urban Improvement Act stipulates that the bearing of expenses of a cooperative shall be decided by the articles of association (Article 20(1)8), and the consent of at least 2/3 of the members of the cooperative shall be obtained (Article 20(3)). Thus, in a case where the matters concerning the “sharing of expenses of a cooperative” are substantially modified to the extent that they have a significant impact on the interests of the union members when compared with the resolution of the previous general meeting, even if they are not subject to the amendment of the articles of incorporation, it is reasonable to view that the provisions of Article 20(3) and (1)8 of the Urban Improvement Act that protect the interests of the union members should apply mutatis mutandis to the amendment of the articles of association (see Supreme Court Decision 2010Du13463, Aug.

Second, the contents of the general meeting resolution should not violate superior laws and the articles of incorporation.

Thirdly, once an internal norm is established, the members of the association will have the trust that it would continue to exist, barring any special circumstances. As such, the profit to be achieved through the amendment of the internal norm should be superior to the interests of the members who trusted the existence of the previous internal norm. In order to determine whether the resolution of the general assembly that amends the internal norm of the association violates the principle of trust protection, on the other hand, the public interest purpose to be realized through the amendment of the internal norm of the association should be comprehensively compared and balanced (see Supreme Court Decision 2008Du8918, Apr. 23, 2009).

B. The reasoning of the lower judgment reveals the following circumstances.

(1) The defendant is a reconstruction association established on June 12, 2003, and established a project implementation plan on July 27, 2007 and received authorization for the project implementation on April 1, 2008.

(2) On June 17, 2013, the Defendant entered into a business agreement with only the Defendant’s member of the shopping mall to adopt the so-called “independent settlement system” (hereinafter “instant business agreement”). The content of the business agreement: ① the development gains of the shopping mall and the expenses incurred in reconstruction thereof are shared only among the members of the shopping mall; ② the establishment of the plan for the management and disposal of the shopping mall including the size of the shopping mall, the timing of sale, the price of sale, the internal design and design, the purpose of the shopping mall, the structure of the store, the establishment of the new construction plan including the shopping mall, the plan for the disposal and settlement of the development gains of the shopping mall, and the external affairs of the Defendant actively cooperate.

(3) On July 15, 2013, the Defendant passed a resolution at a general meeting to ratification the conclusion of the instant business agreement with the consent of 80.87% of its members.

(4) On October 29, 2014, the commercial council voluntarily prepared a commercial management disposition plan (hereinafter “instant commercial management plan”) and resolved by the council, and notified the Defendant that the instant plan was resolved by the council of representatives, and sent a special meeting book containing the instant plan. However, the Defendant Union returned the plan to the commercial council on November 4, 2014.

(5) On November 19, 2014, the Commercial Building Council held an extraordinary meeting of the Commercial Building Council and decided on the proposal of the instant commercial building management and disposition plan with the consent of 154 out of 285 members (at the consent rate of 54.03%), and on November 24, 2014, notified the Defendant that the instant proposal of the commercial building management and disposition plan was resolved at the extraordinary meeting of the Commercial Building Council, and sent the minutes of the said extraordinary meeting of the Commercial Building Council to the Defendant on November 28, 2014.

(6) On December 1, 2014, the Defendant requested the shopping mall management and disposal plan of this case, including the list of the participants of the extraordinary general meeting of the shopping mall council, written resolution, special general meeting stenographic records, and recording files, to forward by no later than December 4, 2014. However, the shopping mall management and disposal plan of this case, which reflects the intent of the shopping mall members, was established.

(7) On December 9, 2014, the Defendant held an ordinary general meeting and passed a resolution to approve the management and disposal plan plan formulated separately by the Defendant’s board of directors (including not only the management and disposal plan on apartment but also the management and disposal plan on commercial buildings in such period) without reflecting the draft of the management and disposal plan for commercial buildings (hereinafter “instant management and disposal plan”), and the head of Songpa-gu Seoul Metropolitan Government announced it on January 29, 2015 after approving the instant management and disposal plan on January 27, 2015 (No. 2015-7 of the Songpa-gu Seoul Metropolitan Government Notice).

C. Examining these circumstances in light of the relevant laws and regulations and legal principles as seen earlier, the following can be determined as follows.

(1) The contents stipulated in the instant Work Convention have a significant impact on not only commercial partnership members but also apartment association members’ share of expenses. Thus, the introduction of the same constitutes a substantial modification of the main part of the articles of association, and thus requires the consent of at least 2/3 of the association members. Accordingly, the Defendant passed a resolution to approve the instant Work Agreement and to adopt an independent business settlement system after obtaining the consent of 80.87% from the Defendant’s union members at the general meeting on July 15, 2013, and thus, the details of the resolution became binding inside the Defendant.

(2) If the content of the instant management and disposition plan formulated by the Defendant through the resolution of the general meeting on December 9, 2014 is partly inconsistent with the independent settlement system of commercial buildings adopted through the resolution of the general meeting on July 15, 2013, it can be deemed that the purport of partially withdrawing or modifying the contents of the previous general meeting’s resolution is included by the resolution of the new general meeting.

(3) Therefore, even if the content of the instant management and disposition plan is partially contrary to the separate settlement system and part of the separate settlement system adopted through the resolution of the general meeting of July 15, 2013, such circumstance alone cannot be readily concluded as unlawful. It is necessary to examine whether the resolution of the general meeting of December 9, 2014, which was adopted through the resolution of the general meeting of July 15, 2013, satisfies the above criteria while partially withdrawing or amending the contents of the instant management and disposition plan.

(4) In particular, since the separate settlement system is related to the expenses borne by a cooperative, it is necessary to examine whether the defendant satisfies the requirements for the consent of 2/3 of the members of the cooperative in order to substantially change the matters. Furthermore, there is an objective circumstance and necessity for the defendant to partially withdraw or modify the contents of the separate settlement system adopted before, and thereby, there is a benefit to be achieved by the defendant, and the benefits infringed upon by a member of the commercial cooperative due to partial withdrawal or modification of the separate settlement system are worthy of protection to a certain extent, and the degree of infringement is certain, and the defendant has made efforts to minimize the credibility of the members of the commercial cooperative in the continuation of the separate settlement system, by comprehensively comparing and balancing various circumstances such as how much efforts were made to minimize the infringement on the trust of the members of the commercial cooperative on the existence of the separate settlement system.

D. Nevertheless, the lower court, without examining and determining whether the resolution of the general meeting held on December 9, 2014 had been lawfully withdrawn or modified in part of the content of the independent settlement system adopted through the resolution of the general meeting held on July 15, 2013, determined that the part inconsistent with the instant plan for the management and disposal of commercial buildings (i.e., the part concerning the standard for the sale of commercial buildings, the method for liquidation under Article 7(2), the part concerning the structure of the business and allocation of commercial buildings under Article 13(8), and the part concerning the adjustment authority of the board of directors relating to the establishment of the internal rules of the general meeting, the requirements for special approval, and the formulation of the management and disposal plan, which were all necessary, was unlawful. Therefore, the lower court erred by misapprehending the legal doctrine on the establishment of the internal rules of the general meeting of cooperatives, the establishment of the requirements for consent, and failing to exhaust all necessary deliberations, thereby adversely affecting the conclusion of the judgment.

3. Conclusion

Therefore, without further proceeding to decide on the remaining grounds of appeal by the defendant, the part against the defendant among the judgment below is reversed, and that part of the case is remanded to the court below for further proceedings consistent with this Opinion. The plaintiffs' appeal is dismissed. It is so decided as per Disposition by the assent of

Justices Kim Jae-hyung (Presiding Justice)