Seocho L&C Co., Ltd. (Attorneys Lee Jae-in et al., Counsel for the plaintiff-appellant)

Support 1 District Housing Redevelopment Project Association and six others (Attorneys Kang Dong-dong et al., Counsel for the plaintiff-appellant)

October 20, 2017

Gwangju District Court Decision 2016Gahap174 Decided October 27, 2016

1. Of the judgment of the court of first instance, the part against the plaintiff against the defendant 1 district housing redevelopment and rearrangement project association, and defendant 2 shall be revoked.

Defendant 1 District Housing Redevelopment and Rearrangement Project Association, Defendant 2 jointly pays to the Plaintiff 30,000,000 won with 5% interest per annum from November 15, 2014 to October 10, 2017, and 15% interest per annum from the next day to the date of full payment.

2. The plaintiff's support one district housing redevelopment and rearrangement project association, the remaining appeals against the defendant 2 and the remaining appeals against the defendants are dismissed, respectively.

3. The plaintiff bears 80% of the total litigation costs incurred between the plaintiff, defendant 1 district housing redevelopment and rearrangement project association, and defendant 2, and the remainder of the defendant 1 district housing redevelopment and rearrangement project association and defendant 2, respectively, and the costs of appeal incurred between the plaintiff and the remaining defendants are borne by the plaintiff.

4. The part on which money is paid under paragraph (1) may be provisionally executed.

The judgment of the court of first instance is revoked. The Defendants jointly pay to the Plaintiff 200,000,000 won and the amount calculated by 5% per annum from November 15, 2014 to the date of service of the application for amendment of the purport of the instant claim (as stated above, June 22, 2017) and 15% per annum from the next day to the date of full payment (the Plaintiff reduced the purport of the claim as above in the trial).

1. Basic facts

A. Status of the parties

1) The Plaintiff was established on March 21, 2014 for the purpose of urban environment improvement projects, urban development, and improvement projects, etc., and completed registration as a specialized management businessman of rearrangement projects under the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (hereinafter “Urban Improvement Act”) on April 17, 2014.

2) Defendant 1 District Housing Redevelopment and Rearrangement Project Association (hereinafter “Defendant Cooperative”) was for the purpose of promoting housing redevelopment and rearrangement project (hereinafter “instant rearrangement project”) in the land ( Address omitted) of Dong-gu, Gwangju (hereinafter “instant rearrangement project”). On September 4, 2015, Defendant 2 implemented the instant rearrangement project in the form of “the Promotion Committee for the Establishment of Housing Redevelopment and Rearrangement Project Cooperatives in Support 1 Zone (hereinafter “instant Promotion Committee”). Defendant 2 was the chairman of the said Promotion Committee, and Defendant 3, Defendant 4, Defendant 5, Defendant 6, and Defendant 7 were the promoters of the said Promotion Committee (Defendant 7 is the head of the Defendant Cooperative at present).

(b) Selection of a rearrangement project management contractor;

1) On September 3, 2014, the instant promotion committee published a tender for the selection of a management entity specialized in improvement projects by means of open competitive bidding (hereinafter “instant tender”); and the tender participation regulations included in the tender announcement (hereinafter “instant tender participation regulations”) include the details of contract performance guarantee as follows:

(3) A tender falling under any of the following subparagraphs may be invalidated for an enterprise which is entitled to pay 50,00,000 won for contract performance guarantee to the Promotion Committee under Article 12 (Invalidation of Tender) of the table included in the main sentence. 1. A specialized management enterprise that intends to participate in a tender shall deposit KRW 50,00,000 in the head of a Tong established by the Promotion Committee as soon as it is selected by a person not qualified to participate in the tender. (1) A specialized management enterprise that intends to participate in a tender shall deposit the contract performance guarantee amount of KRW 50,000,000 in the head of a Tong established by the Promotion Committee as a successful bidder. (2) A contract performance guarantee bond of a bidder selected as a successful bidder shall be, in principle, paid in advance in accordance with an agreement between the Promotion Committee and a specialized management enterprise of rearrangement projects, and the balance may be used as office capital and a project implementer, and this shall be treated as a loan without interest.

2) On October 21, 2014, the instant promotion committee held a general meeting of residents to select the Plaintiff as a specialized management businessman of the instant rearrangement project. On October 28, 2014, at the fourth meeting of the promotion committee, a resolution was passed to delegate the authority to conclude a service contract with the Plaintiff to Defendant 2, the promotion committee chairperson, who is the promotion committee chairperson.

C. Conclusion of a service contract

On November 5, 2014, the Plaintiff entered into a service contract with the instant promotion committee and the Plaintiff’s commission of the instant improvement project (hereinafter “instant service contract”). The main contents are as follows (A’ is the instant promotion committee, and “B” is the Plaintiff).

(1) Where Party A’s business is entrusted to Party A for the performance of services under the name of Party A, and Party B faithfully performs the services entrusted by Party B. Article 3 (Scope of Services) (1) shall provide advice and support for the performance of the following affairs related to the instant improvement project by obtaining the approval of Party A, and the preparation and disposal of the documents related to the services shall be governed by the Urban Improvement Act, Gwangju Metropolitan City Ordinance on the Maintenance of Urban and Residential Environments, the Operating Rules of the instant Promotion Committee, and the articles of association, etc. (excluding value-added tax). (2) The cost of services to be paid to Party A shall be paid after the selection of the intermediate payment: 10% of the total amount of the contract amount after the conclusion of the contract at the time of cancellation of the contract; 5% of the total amount of intermediate payment after the conclusion of the contract at the time of cancellation of the contract; and 15% of the total amount of intermediate payment after the conclusion of the contract at the time of cancellation of the contract at the time of establishment of the inaugural general meeting:

(d) The details of the termination of the service contract;

1) On November 14, 2014, the instant promotion committee, by facsimile around 10:00, sent a notice of termination of the service contract (hereinafter “instant notice of termination”) stating that “The Plaintiff shall immediately deposit KRW 50,000,000 in the passbook opened by the promotion committee as soon as the Plaintiff was selected as a specialized management businessman of rearrangement projects, but it does not deposit the contract even after one month after the general meeting, so it is not deposited even after several times, and thus notification of termination is not made.” The said notice was sent to the Plaintiff around that time.

2) Since January 23, 2015, the instant promotion committee decided to terminate the contract with the Plaintiff at the seventh meeting of the promotion committee on January 23, 2015, and decided on April 30, 2015 that the instant service contract was null and void by holding a general meeting of residents, and notified the Plaintiff on May 11, 2015 that the instant service contract was terminated.

3) On the other hand, the instant promotion committee held the sixth meeting of the promotion committee on December 31, 2014, and concluded a consulting service contract with the Dadon Co., Ltd., and terminated it in order to prevent future legal litigation. On August 14, 2015, the resident general meeting was held to select a new management entity of rearrangement projects.

4) The instant promotion committee became the Defendant partnership by following the procedures for establishing the association and completing the registration of the Housing Redevelopment Project Association on September 4, 2015.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 4, 7, 8, Eul evidence Nos. 1, 2, 4, 6, 7, 12, 14 through 17 (including various numbers; hereinafter the same shall apply), the purport of the whole pleadings

2. Summary of the plaintiff's assertion

A. Regarding the occurrence of liability for damages

1) As to the defendant union

A) Although the Plaintiff had performed the instant service agency business on behalf of the Plaintiff due to the conclusion of the instant service contract, the instant promotion committee excluded the Plaintiff and had been in charge of the service agency business to a third party, so the Defendant Union succeeding the instant promotion committee is liable to compensate the Plaintiff for the damages incurred by the Plaintiff pursuant to Article 11(1)2 of the instant service contract.

B) In addition, the instant service contract constitutes a bearer contract of similar nature to the delegation that aims at the Plaintiff’s interest, who is the mandatory, and the instant promotion committee, the delegating, terminated the instant service contract without justifiable grounds, and thus, is liable to compensate the Plaintiff for the damages incurred therefrom. Even if the instant promotion committee can freely terminate the instant service contract, the instant promotion committee did not have any inevitable reason to terminate the instant service contract, and thus, the Defendant Union is liable for damages therefrom.

2) As to the defendants other than the defendant association

Defendant 2, as the chairperson of the instant promotion committee, led to the termination of illegal service contracts and replacement of a management entity specialized in improvement projects. Defendant 3, Defendant 4, Defendant 5, Defendant 6, and Defendant 7 actively participated in the aforementioned tort as a promoters of the said promotion committee. As such, Defendants, other than the Defendant Association, are jointly and severally liable for damages incurred by the Plaintiff.

B. Regarding the scope of damages

1) The service costs that the Plaintiff is entitled to receive pursuant to the instant service contract are total of KRW 1,128,984,750 (=total floor area of KRW 83,628 square meters x 13,500 square meters x 13,500 square meters). Generally, the rate of return earned by a management entity specialized in the improvement project of a housing redevelopment project is 20% of the above service costs. As such, the Defendants are jointly obligated to pay the Plaintiff 200,000,000 won, which is a part of the profits (i.e., KRW 1,28,984,750 x 20%) and its delay damages.

2) Even if the above assertion is not acknowledged, the Plaintiff is a company established for the purpose of concluding the instant service contract, and even if it has invested KRW 134,80,00,00 for employees’ wages, KRW 4,583,180 for four insurance premium, KRW 7,053,00 for office rent, and KRW 2,91,720 for radio communication expenses, KRW 5,340 for office supplies, KRW 6,750,00 for vehicles, KRW 6,750,00 for food expenses, KRW 9,60,00 for food expenses, KRW 42,746,40 for personnel expenses, KRW 10 for Non-Party 1 (non-party 1 for total of KRW 213,864,50 for employees, and thus, the Defendants are jointly obligated to jointly pay the Plaintiff an opportunity to recover and delay damages.

3. Determination

(a) Occurrence of liability for damages;

1) Legal nature of the instant service contract and freedom of termination

Article 71 of the Urban Improvement Act provides that "Except as otherwise provided for in this Act, the provisions on delegation in the Civil Act shall apply mutatis mutandis to the relationship between a management entity specialized in improvement projects who has entrusted or requested the management entity specialized in improvement projects with a person who has requested the management entity specialized in improvement projects," and the instant service contract is a contract that allows the Plaintiff, who has completed registration as a management entity specialized in improvement projects under the Urban Improvement Act, to perform the affairs concerning authorization and permission of the instant improvement project, consultation on union members management, and examination of optimalness, etc. under the condition that a management entity specialized in improvement projects is paid a certain amount of service costs, and Article 9 of the instant service contract does not explicitly exclude termination under the Civil Act. In light of the fact that Article 9 of the instant service contract does not explicitly exclude termination under the Civil Act, the instant service contract is a "exclusive delegation contract," and the instant promotion committee may terminate the instant service contract freely pursuant to Article 689

In this regard, the plaintiff asserts that the service contract of this case is a bearer contract similar to delegation, the object of which is the plaintiff's interest. However, in light of the nature of the service contract of this case and the process of conclusion, the contents of the plaintiff's work in charge, and the scale and method of payment of the service cost incurred therefrom, etc., the service cost stipulated in the service contract of this case is limited to the remuneration that the plaintiff receives as consideration for the plaintiff's performance of duties under the service contract of this case, i.e., remuneration as consideration under the ordinary delegation contract, and therefore, it is reasonable to view that the service contract of this case does not constitute a contract for the benefit of the plaintiff, the mandatory,

2) Whether there are unavoidable reasons

However, even if each of the parties to a delegation contract can at any time terminate the delegation contract, if one of the parties terminates the contract at a disadvantage of the other party without any inevitable reason, the damages shall be compensated (Article 689(2) of the Civil Act).

On the other hand, the following circumstances acknowledged by the above evidence, i.e., contract performance guarantee stipulated by the contract participation provision of this case, which is related to participation in the bidding process of this case, is not money to be paid in the bidding process of this case, 2. Article 16 (1) of the contract participation provision of this case provides that the bidder shall pay the above contract performance guarantee immediately after being selected as a specialized management business operator of the improvement project of this case, 3. Although the plaintiff did not pay the above contract performance guarantee for a considerable period after being selected as a successful bidder under the bidding of this case, the service contract of this case was concluded, and Article 10 (1) of the contract of this case provides that the service contract of this case shall pay 50,00,000 won immediately after concluding the contract. 4. It seems that the promotion committee of this case demanded that the plaintiff pay 50,000,000 won separately from the contract performance guarantee stipulated by the contract participation provision of this case.

However, comprehensively taking account of the Plaintiff’s statement Nos. 5, 9, and 11 as well as Nonparty 1’s testimony of the court of first instance, Nonparty 1, who actually led to the conclusion of the instant service contract, as the Plaintiff’s auditor on Nov. 6, 2014 following the conclusion of the instant service contract, requested Defendant 2 to deposit KRW 50,00,00 in the name of the instant promotion committee, and requested Nonparty 2 to inform the number of financial institutions in the name of the instant promotion committee. However, Defendant 2 did not use the existing financial account because it is likely for Nonparty 1 to provisionally attach the financial account of the promotion committee in an international city, which is a specialized management company for improvement of rearrangement project, to which Nonparty 1 knew Defendant 2 of the fact that Nonparty 1 did not receive another financial account under the name of the promotion committee, and that Nonparty 1 did not receive the instant notice of termination on Nov. 14, 2014.

3) Judgment on the Plaintiff’s assertion

The plaintiff asserts that the promotion committee of this case shall compensate for damages pursuant to Article 11 (1) 2 of the service contract of this case since the service executor of this case was replaced by a third party, not the plaintiff, but the plaintiff. However, in light of the provisions of the service contract of this case, although the service contract of this case still exists valid, the above damages claimed by the plaintiff are acknowledged when the promotion committee of this case excluded the plaintiff and the third party was selected as a new management contractor of rearrangement project. As seen above, the promotion committee of this case selected a new management contractor of rearrangement project after the lawful termination of the service contract of this case, the plaintiff's above assertion on other premise is without merit.

4) Sub-committee

A) Ultimately, since the instant promotion committee and Defendant 2, who was the chairperson of the instant promotion committee, knew that there was no unavoidable reason to terminate the instant service contract, the Defendant Union and Defendant 2, who succeeded to the instant promotion committee, are jointly liable to compensate the Plaintiff for damages arising from the said tort.

B) The Plaintiff asserts that, in collusion with Defendant 2, Defendant 3, Defendant 4, Defendant 5, Defendant 6, and Defendant 7 (hereinafter “Buss Defendants”) who were the promoters of the instant promotion committee should be liable for damages, since the instant service contract was terminated.

According to the evidence Nos. 10 and 11 of this case, the promotion committee of this case requested the termination of the service contract of this case to Defendant 2 on November 12, 2014 and November 12, 2014 on the ground that the remaining Defendants, who were in charge of the audit or promotion commissioner of the promotion committee of this case, did not pay the contract deposit delayed until November 10, 2014. However, the promotion committee of this case delegated the right to deposit related to the conclusion of the service contract of this case to Defendant 2 as seen above. The remaining Defendants did not know that the contract deposit was not immediately deposited with the financial account of the promotion committee of this case, or that Defendant 2 did not inform the Plaintiff of the fact that Defendant 2 requested the termination of the service contract of this case. Thus, the remaining Defendants did not have any reason to acknowledge that the service contract of this case was terminated.

(b) Scope of damages;

1) First, the Plaintiff sought compensation for the amount equivalent to the actual profit, excluding expenses, etc., from the service cost that can be gained by executing the instant service contract. However, the Plaintiff’s assertion seeking compensation for performance benefit arising from the termination of the instant service contract is without merit, as it is anticipated at the time of the contract to lose the right to claim remuneration when the contract is terminated prior to the completion of administrative affairs, regardless of the time (see, e.g., Supreme Court Decisions 2012Da71411, Dec. 23, 2015; 90Da18968, Apr. 9, 191).

2) However, the following circumstances, which are acknowledged by comprehensively taking into account the facts as seen earlier, the statements in the evidence Nos. 6 and 9 and the testimony of Non-Party 1 of the first instance trial witness, namely, ① the Plaintiff was established in advance of about eight months from the date of entering into the instant service contract, and the Plaintiff appears to have been used to conclude and implement the instant service contract (the Plaintiff appears to have not performed the services agency business for other rearrangement projects than the instant rearrangement project after its establishment). ② The Plaintiff’s failure to recover the input cost was rarely attributable to the Plaintiff, and ③ the Plaintiff appears to have dispatched one employee to the instant promotion committee by December 31, 2014 even after the termination of the instant service contract, and the Plaintiff appears to have performed the supporting business by dispatching one employee to the office of the instant promotion committee, it is reasonable to compensate for the amount equivalent to the expenses incurred by the Plaintiff in trust in entering into the instant service contract.

3) Specifically, according to the purport of each description of evidence Nos. 18 through 32 and all pleadings, it is recognized that the Plaintiff already paid or bears the obligation to pay in the future expenses equivalent to KRW 213,864,50 that the Plaintiff claimed earlier.

However, even according to the plaintiff's assertion, the representative director, non-party 2 did not perform any particular duties in the course of concluding the instant service contract; the expenses paid after the termination of the instant service contract among the expenses claimed by the plaintiff cannot be deemed directly related to the conclusion of the instant service contract; the expenses paid before the termination of the instant service contract include the part of the essential maintenance expenses paid by the plaintiff irrespective of the instant service contract; the expenses claimed by the plaintiff are most expenses incurred in the establishment and operation of the company; the plaintiff was established solely with the defendant's side for the purpose of executing the instant service contract, and is presumed not to have been scheduled to be dissolved when the implementation of the said service contract is completed; however, it is deemed that considerable damages were incurred to the plaintiff due to the unfair termination of the instant service contract; however, it is extremely difficult to prove the specific amount of liability owed to the defendant union and the defendant 2; in accordance with the provisions of Article 202-2 of the Civil Procedure Act; the expenses paid before the termination of the instant service contract shall be determined by deducting the amount of KRW 500,5000,500 million won.

4) Therefore, from November 15, 2014 on the day following the date of the notice of termination of the instant case sought by the Plaintiff, the Defendant Union and the Defendant 2 jointly have the obligation to pay jointly the Plaintiff damages for delay calculated at the rate of 5% per annum under the Civil Act until November 10, 2017, which is deemed reasonable to dispute as to the existence and scope of the said obligation, and the amount of damages for delay calculated at the rate of 15% per annum under the Act on Special Cases concerning the Promotion, etc. of Legal Proceedings from the next day to the day of full payment.

4. Conclusion

Therefore, the plaintiff's claim against the defendant union and the defendant 2 is justified within the scope of the above recognition, and the remaining claim is dismissed as it is without merit. The plaintiff's claim against the remaining defendants is dismissed as there is no ground. Since the part against the defendant union and the defendant 2 in the judgment of the court of first instance as to the defendant union and the defendant 2 are partially unfair, it is revoked, and it is ordered to pay the above amount. The plaintiff's appeal against the remaining defendants is dismissed as it is without merit. It is so decided as per Disposition.

Judges Park Byung-chul (Presiding Judge) (Presiding Justice)

1) The Plaintiff also claimed approximately KRW 26 million for expenses incurred in the process of holding the residents’ general meeting for the selection of successful bidder ( October 21, 2014), and sought a separate lawsuit to seek this part of the lawsuit. Meanwhile, the Plaintiff did not expand the purport of the claim regarding the portion exceeding KRW 200,000,000.