[1] Whether the object of deduction of the infrastructure charges under Article 8(5) of the former Infrastructure Charges Act and Article 7(8) of the former Enforcement Decree of the Infrastructure Charges Act includes the cost of maintaining, improving, and replacing the infrastructure charges in addition to the cost of new installation (affirmative)

[2] In a case where a person liable to pay infrastructure charges pays expenses instead of directly installing, maintaining, improving, or replacing infrastructure pursuant to Article 7(8) of the former Enforcement Decree of the Infrastructure Charges Act and deducts the payment of the infrastructure charges from the infrastructure charges, whether the requirements for the determination procedure of urban planning facilities or permission for development activities under Article 8(5) of the former Act apply mutatis mutandis (negative in principle)

[3] In a case where a person liable for payment under Article 7(8) of the former Enforcement Decree of the Infrastructure Charges Act that provides that Article 8(5) of the former Act shall apply mutatis mutandis mutatis mutandis, pays the corresponding expenses instead of directly installing, maintaining, improving, or replacing infrastructure, whether the corresponding amount may be refunded from the infrastructure charges already paid pursuant to Article 15(2)3 of the said Enforcement Decree (affirmative), and in such a case, whether the procedure for determining urban planning facilities or the procedure for permission for development activities shall be followed (negative)

[1] Article 8(5) of the former Infrastructure Charges Act (repealed by Act No. 9051, Mar. 28, 2008; hereinafter “infrastructure Charges Act”) and Article 7(8) of the former Enforcement Decree of the Infrastructure Charges Act (repealed by Article 2 of the Addenda of the Enforcement Decree of the National Land Planning and Utilization Act, Presidential Decree No. 21038, Sept. 25, 2008; hereinafter “Enforcement Decree of the National Land Planning and Utilization Act”) provide that the subject of deduction is “construction costs for infrastructure.” However, it is reasonable to view that the subject of deduction includes not only new installation costs but also maintenance, improvement, and replacement costs for infrastructure. The reason is that the infrastructure charges are for securing financial resources required for maintenance, improvement, or replacement of infrastructure as well as installation of infrastructure (Article 1 and Article 4 of the Enforcement Decree of the Act; hereinafter “infrastructure Charges”) and that new installation, improvement, or replacement charges for infrastructure should be taken into account in terms of the purpose of expanding, or expanding new installation of infrastructure.

[2] The purport of Article 8(5) of the former Infrastructure Charges Act (repealed by Act No. 9051, Mar. 28, 2008; hereinafter “infrastructure Charges Act”) that requires the procedure for determining urban planning facilities or permission for development activities (hereinafter “procedures for determining urban planning, etc.”) is to ensure that the public nature is maintained and secured by an excessive review or regulation of the competent administrative agency as to what infrastructure should be installed, maintained, improved, or replaced by a person obligated to pay infrastructure charges when he directly constructs, improves, or replaces infrastructure.

Therefore, in cases of maintaining and improving existing infrastructure, when a person liable to pay infrastructure charges performs the duties of maintenance, improvement, etc. after receiving prior examination from the competent administrative agency, such expenses are subject to deduction of the infrastructure charges, even if they did not go through the urban planning decision, etc. In the same purport, the requirement that the payment obligor is required to pay the infrastructure charges in lieu of directly installing, maintaining, improving, or replacing the infrastructure, as prescribed by Article 7(8) of the former Enforcement Decree of the Infrastructure Charges Act (repealed by Article 2 of the Addenda to the Enforcement Decree of the National Land Planning and Utilization Act, Presidential Decree No. 21038, Sept. 25, 2008), barring special circumstances, even if he/she pays the cost and deducts the cost from the infrastructure charges.

[3] Article 15(2)3 of the former Enforcement Decree of the Infrastructure Charges Act (repealed by Article 2 of the Addenda to the Enforcement Decree of the National Land Planning and Utilization Act, Presidential Decree No. 21038, Sept. 25, 2008; hereinafter “Enforcement Decree of the Infrastructure Charges Act”) provides that a refund of infrastructure charges shall be made pursuant to Article 17(1) of the Act in cases where “the amount equivalent to the cost of installing the infrastructure charges is increased and the cost of installing the infrastructure charges is refunded” (Article 8(5)3 of the Enforcement Decree of the Infrastructure Charges Act) shall apply mutatis mutandis to cases where a person liable to pay the infrastructure charges has paid the cost equivalent thereto instead of directly installing, improving, improving, or replacing the infrastructure, and where the cost of the infrastructure charges has already been paid pursuant to Article 15(2)3 of the Enforcement Decree of the Infrastructure Charges Act, the relevant procedure for determining the infrastructure charges or the relevant permit for development activities shall not be required to be refunded.

[1] Articles 1, 4, and 8(4) and (5) of the former Act on Infrastructure Charges (repealed by Act No. 9051, Mar. 28, 2008); Articles 4, 7(8), and 15(2) of the former Enforcement Decree of the Infrastructure Charges Act (repealed by Article 2 of the Addenda to the Enforcement Decree of the National Land Planning and Utilization Act, Presidential Decree No. 21038, Sep. 25, 2008) / [2] Article 8(5) of the former Act on Infrastructure Charges (repealed by Act No. 9051, Mar. 28, 2008); Article 27(8) of the former Enforcement Decree of the National Land Planning and Utilization Act (repealed by Presidential Decree No. 21038, Sep. 25, 2008); Article 28(8) of the former Enforcement Decree of the National Land Planning and Utilization Act (repealed by Presidential Decree No. 21058, Sep. 28, 2008)

gallona Co., Ltd. (LLC, Kim & Lee LLC, Attorneys Oi-Myeon et al., Counsel for the plaintiff-appellant)

The head of Seongdong-gu Seoul Metropolitan Government (Attorney White-soo, Counsel for defendant-appellant)

Seoul High Court Decision 2012Nu37137 decided July 11, 2013

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

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

1. We examine the legal principles regarding the deduction and refund of infrastructure charges.

A. The infrastructure charges system is a system that requires a causing agent to bear the cost of building, maintaining, or improving infrastructure, such as roads, parks, green areas, water supply, sewerage, schools, and waste disposal facilities, which are caused by the construction of a building. This is introduced and implemented under the Infrastructure Charges Act (hereinafter “infrastructure charges Act”) and replaced with the imposition system of infrastructure charges newly established under the National Land Planning and Utilization Act on March 28, 2008 (hereinafter “National Land Planning and Utilization Act”). However, the repealed Act stipulates that the former provision shall govern infrastructure charges to be imposed or refunded under the previous Act prior to the repeal [Article 2 of the Addenda of the Infrastructure Charges Act (Act No. 9051, Mar. 28, 2008) and the Enforcement Decree thereof (amended by Presidential Decree No. 2138, Sep. 23, 2008).

Article 17(1) of the Act on the Charges for Infrastructure before the abolishment provides that the person liable for payment of the charges for infrastructure shall deduct all or part of the charges for infrastructure in cases where the person liable for payment of the charges for infrastructure has installed and donated infrastructure directly in relation to the relevant development project (Article 8(4) and (5) of the Act), and that the amount equivalent to the charges for infrastructure shall be refunded in cases where the area subject to the permission has decreased due to the cancellation of the building permit, the modification of the building plan, or any other similar cause after the payment of the charges for infrastructure has been made (Article 17(1) of the Act). Furthermore, the Enforcement Decree extended the grounds for refund by allowing the refund of the charges for infrastructure pursuant to Article 17(4) and (5) of the Act even in cases where the grounds for deduction under the above Act have occurred after the payment of the charges for infrastructure (Article 15(2) of the Enforcement Decree).

However, Article 8(5) of the Act provides for the deduction of installation costs where infrastructure is directly installed among the above deduction causes that “if a person liable for payment installs an infrastructure directly through the determination procedure of urban planning facilities or the permission for development pursuant to the provisions of other Acts, and such infrastructure comes to belong to the State or a local government, the “construction costs” shall be deducted. This provision applies mutatis mutandis to “Where a person liable for payment pays an amount equivalent to the installation costs of infrastructure in lieu of the direct installation of infrastructure” under Article 7(8) of the Enforcement Decree.

B. As above, the Act and subordinate statutes stipulate that the subject-matter of deduction is “construction cost” of infrastructure. However, it is reasonable to regard that the subject-matter of deduction includes not only the new installation cost but also the cost for maintenance, improvement, and replacement of infrastructure. The reason is that the Act and subordinate statutes stipulate that the infrastructure charges are required to secure financial resources needed for the maintenance, improvement, and replacement as well as the installation of infrastructure (Articles 1 and 4 of the Act, Article 4 of the Enforcement Decree of the Act, and Article 4 of the Enforcement Decree of the Act), and (2) the installation of additional infrastructure is inevitable in any form in any form in any form in the improvement, improvement, or replacement of infrastructure, and (3) it contributes to the achievement of the purpose of expanding the infrastructure in response to the increase in demand of the existing infrastructure regardless of new installation, and (4) it does not have any reasonable reason to deal with the improvement, improvement, or replacement of infrastructure in terms of the actual burden in relation to the expansion of infrastructure in addition to the payment of the infrastructure charges.

C. Next, Article 8(5) of the Act provides that the deduction for the installation cost in a case where a person liable to pay infrastructure charges directly installs infrastructure requires that the infrastructure be installed through the determination procedure for urban planning facilities or the permission for development activities (hereinafter “decision procedure for urban planning, etc.”). In accordance with Article 7(8) of the Enforcement Decree of the Act, the issue of whether the person liable to pay infrastructure charges is subject to deduction only when the person liable to pay pays an amount equivalent to the installation cost of infrastructure in lieu of the installation of infrastructure directly.

The purport of Article 8(5) of the Act, which requires the procedure such as the determination of an urban planning, is to ensure that the public nature is maintained and secured by imposing prior examination or regulation of the competent administrative agency as to what infrastructure should be installed, maintained, improved, or replaced by a person liable for payment of infrastructure charges when he/she directly installs, improves, or replaces infrastructure.

Therefore, in cases of maintaining and improving existing infrastructure, if a person liable to pay infrastructure charges performs the duties of maintenance, improvement, etc. after receiving prior examination from the competent administrative agency, such expenses shall be deemed as subject to the deduction of the infrastructure charges, even if they did not go through the urban planning decision, etc. In the same purport, the requirement that a person liable to pay the infrastructure charges pay the cost instead of directly installing, maintaining, improving, or replacing the infrastructure, as provided by Article 7(8) of the Enforcement Decree of the above Act, and deduct the payment cost from the infrastructure charges should not be applied mutatis mutandis, unless there are special circumstances.

D. Meanwhile, Article 15(2)3 of the Enforcement Decree provides that a refund of infrastructure charges shall be made pursuant to Article 17(1) of the Act in cases where “in cases where a refund is made due to an increase in the amount corresponding to the installation cost of the infrastructure charges, which shall be deducted under Article 8(5) of the Act.” Therefore, Article 7(8) of the Enforcement Decree providing that Article 8(5) of the Act shall apply mutatis mutandis to cases where a person liable to pay infrastructure charges pays an amount equivalent to the cost of the infrastructure charges instead of directly installing, maintaining, improving, or replacing infrastructure, the infrastructure charges already paid pursuant to Article 15(2)3 of the Enforcement Decree may be refunded. In such cases, it shall not be deemed that the relevant amount may be refunded from the infrastructure charges already paid pursuant to Article 15(2

2. A. Comprehensively taking account of the reasoning of the lower judgment and the evidence duly admitted, the following facts are revealed.

1) The Plaintiff is a project proprietor who implements a project to newly construct and sell main apartment units on a ground of 17,490 square meters located within a zone of 17,490 square meters in Seongdong-gu Seoul ( Address omitted) (hereinafter “instant project”).

2) In relation to the instant project, the Defendant imposed KRW 8,343,703,819 on the Plaintiff, and the Plaintiff paid the said KRW on or around February 9, 2009. The Plaintiff applied for partial refund of the said infrastructure charges on July 8, 2011, and the Defendant decided to refund KRW 2,846,109,049 among the said infrastructure charges to the Plaintiff on the same day.

3) Meanwhile, the instant project constitutes a project subject to traffic impact assessment pursuant to Article 15 of the Urban Traffic Improvement Promotion Act, and the Plaintiff submitted a traffic impact assessment report to the Mayor of Seoul Special Metropolitan City. The Mayor of Seoul Special Metropolitan City, which was held on August 6, 2007, notified the Plaintiff of the plan to take comprehensive measures for traffic improvement, including the traffic system management improvement project within 1 km around the instant project site, in order to minimize traffic impact resulting from the implementation of the instant project following deliberation by the Seoul Special Metropolitan City Traffic Impact Deliberation Committee on the 28th Traffic Impact, which was held on August

4) On June 201, the Plaintiff submitted a report to the Seoul Special Metropolitan City Mayor on the comprehensive traffic improvement measures around the instant project site. The details of the need to improve the traffic environment surrounding the instant project site, such as the improvement of the traffic environment (the installation of signal lamps, the replacement of road lighting signs, the replacement of structures, the obstruction of parking, the re-fluence of crosswalks), the improvement of facilities for bicycle riding (the replacement and replacement of bicycle storage facilities, the installation of bicycle storage facilities, the installation of CCTV and crosswalks), the improvement of the pedestrian environment (the installation of pedestrian protection fences, the installation of pedestrian protection fences, the installation of vehicle entry control posts), the improvement of the public transportation system (the installation of parking monitoring CCTV and the installation of bus bluences), and the installation of connected lamps, etc. include the details that the Plaintiff would pay KRW 2 billion to the competent administrative agency for the improvement of the traffic environment.

5) The Mayor of Seoul Special Metropolitan City approved the above traffic improvement measures submitted by the Plaintiff, and on June 28, 201, imposed the instant traffic improvement contributions in proportion to the transport improvement project cost of KRW 2 billion on the Plaintiff. The Plaintiff paid the total amount of the contributions on June 30, 201.

B. Based on the above factual basis, the lower court determined that the instant traffic improvement contributions did not constitute “construction costs of infrastructure” under Article 7(8) of the Enforcement Decree, on the ground that the instant traffic improvement contributions paid by the Plaintiff were used in the “traffic system management improvement project and sexual traffic expansion project, etc.” as part of the traffic improvement measures for the development project implemented by the Plaintiff, and that the said “traffic system management improvement project and sexual traffic expansion project, etc.” did not fall under the case of “construction” under the procedure for determination of urban planning facilities, failing to undergo permission for development, or resulting in the construction of infrastructure.

3. However, the lower court’s determination is difficult to accept in light of the legal doctrine as seen earlier.

First of all, according to the above facts, the traffic improvement contributions in this case are part of the traffic improvement measures for the approval of the project plan of this case based on the Urban Traffic Improvement Promotion Act, and the expenses are paid to the administrative agency instead of directly installing, maintaining, improving, or replacing the facilities and bridges, such as signal lights, etc. around the project site of this case, and roads fall under the infrastructure stipulated in subparagraph 1 (a) of Article 2 of the Infrastructure Charges Act, and the facilities and bridges, such as signal, etc. to be installed, maintained, improved, or replaced with the traffic improvement contributions in this case constitute roads themselves or road appurtenances (see Article 2 subparagraph 1 and 2 of the Road Act, Article 2 and Articles 3 of the Enforcement Decree of the Road Act).

Therefore, in order to minimize traffic impacts caused by the implementation of the instant project, the instant traffic improvement contributions are paid by the Plaintiff instead of directly installing, maintaining, improving, or replacing roads for the purpose of expanding the “road,” which is an infrastructure in the vicinity of the project site. Therefore, it constitutes subject to deduction under Article 7(8) of the Enforcement Decree. Since the Plaintiff paid the instant traffic improvement charges after paying the infrastructure charges, it constitutes subject to refund under Article 15(2)3 of the Enforcement Decree.

Nevertheless, the lower court determined that the instant traffic improvement contributions did not constitute “infrastructure installation costs” under Article 7(8) of the Enforcement Decree. In so determining, the lower court erred by misapprehending the legal doctrine on deduction, refund, etc. of infrastructure charges, thereby adversely affecting the conclusion of the judgment. The allegation contained in the grounds of appeal on this point is with merit.

4. Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kwon Soon-il (Presiding Justice)