Jung-dong District Housing Development and Improvement Project Association (Law Firm Cheongn Law, Attorneys Choi Chang-sik et al., Counsel for the plaintiff-appellant)

Korea

December 4, 2008

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

The defendant shall pay to the plaintiff 327,537,00 won with 20% interest per annum from the day following the day of service of a copy of the complaint of this case to the day of complete payment.

1. Basic facts

The following facts do not conflict between the parties, or may be acknowledged by adding up the whole purport of pleadings to the statements in Gap evidence 1, evidence 2-1 to 3, evidence 3, 5, evidence 6-1, 2, evidence 8-1, 2, Gap evidence 14, and 15:

A. On December 30, 2005, the Plaintiff Union obtained the approval from the Minister of Maritime Affairs and Fisheries for the establishment of a housing redevelopment association pursuant to Article 16 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (hereinafter “Urban Improvement Act”). On July 7, 2006, the Plaintiff Union obtained the approval from the Minister of Maritime Affairs and Fisheries for the establishment of a housing redevelopment project on the ground of 811 square meters which was constructed on the land of 9,020 square meters in Busan Metropolitan City, Busan Metropolitan City, the Minister of Maritime Affairs and Fisheries (hereinafter “instant project implementation authorization”). The said approval was publicly notified in the Official Gazette on July 12, 2006.

B. On July 7, 2007, the head of the Busan Shipping Authority imposed a condition to authorize the Plaintiff Association to implement the project by acquiring ownership before the commencement of the project with respect to the state-owned land in the business area.

C. There were several parcels of state-owned land within the redevelopment improvement project zone, but among them, 378 square meters (hereinafter “instant state-owned land”) were located within the said project zone among the roads 1443, 143, Busan, Daegu, and the head of Busan, which was delegated by the Defendant, requested the Korea Appraisal Board and the Korea Appraisal Board (hereinafter “Korea Appraisal Board”) to appraise the price of the instant state-owned land on March 3, 2008.

D. Meanwhile, the instant state-owned land was also a road for use of land even at the time of the request for appraisal by the head of the Busan Metropolitan Government. The head of the Busan Metropolitan Government Shipping Authority added significant issues to the assessment of “an evaluation of reflection of the purchase and sale price of neighboring land”, “an evaluation of reflection of the purchase and sale price of neighboring land”, and “an evaluation of neighboring land and a group of land in consideration of the situation of use after the direction”

E. The appraisal of the Korea Appraisal Board on March 10, 2008 shall be based on July 12, 2006, which is the date of the announcement of the authorization for the project implementation of the instant case, to the head of the Busan Shipping Authority. However, in consideration of the fact that the head of the Busan Shipping Authority assessed the price according to the land to be used in the future, not the road that is the actual use of land, but the road that is the use of land. The appraisal result of the Korea Appraisal Board is KRW 1,250,000/m2, and the appraisal result of the appraisal was 1,200,000/m2.

F. On April 30, 2008, the Defendant entered into a contract with the Plaintiff’s association to sell the instant State-owned land (hereinafter “instant sales contract”). The sales price was KRW 1,225,00,000 ( KRW 1,225,000, KRW 378,000) based on the arithmetic average of the said appraisal result (hereinafter “the appraisal result of this case”). The Plaintiff’s association paid the Defendant a down payment of KRW 46,305,000 on June 12, 2008, and the remainder of KRW 416,745,000 on June 12, 2008.

G. Meanwhile, around March 2006, the date prior to the project implementation authorization of this case, the Plaintiff Union requested the head of the Shipping Authority to recommend an appraisal company with respect to the above improvement project, and the head of the Shipping Authority recommended the Plaintiff Association on the 16th day of the same month, in addition to the Dong State Appraisal Corporation (hereinafter “Dong State Appraisal”) which was already selected, the Plaintiff Association recommended the ASEAN Appraisal Corporation (hereinafter “ASEAN Appraisal”) to the Plaintiff Association on May 19, 2006. As of May 19, 2006, the above Dong State Appraisal assessed the price of the above State-owned land as KRW 362,00 per square meter, and the ASEAN Appraisal was assessed as KRW 35,00 per square meter on the same day on the basis that the present state of the State-owned land is a road.

(h) The provisions of the laws relating to the instant case are as follows:

Urban Improvement Act

Article 66 (Disposal, etc. of State or Public Property)

The State or public property within the rearrangement zone under paragraph (4) may be sold or leased by a private contract in preference to the project implementer, occupant or user, notwithstanding the state or public property management plan under Article 12 of the State Property Act or Article 77 of the Local Finance Act, and the contracting methods under Article 33 of the State Property Act and Article 61 of the Local Finance Act.

Notwithstanding the provisions of the State Property Act, the Local Finance Act, and other relevant Acts and subordinate statutes concerning the management and disposal of State or public land, which may be sold or leased in preference to other persons pursuant to the provisions of paragraph (5) 4, the previous use shall be deemed abolished from the date of public announcement of authorization for project implementation.

The evaluation of state and public land to be sold preferentially for the purpose of a rearrangement project under the provisions of paragraph (6) 4 shall be conducted on the basis of the date when the authorization for project implementation is publicly notified, and in the case of a residential environment improvement project, the sale price shall be 80/100 of the appraised amount: Provided, That the state and public land that has not concluded a sales contract within three years from the date when the authorization for project implementation is publicly notified shall

State Property Act

Article 20 (Restriction on Disposition, etc.)

Paragraph (1) The administrative property and conservation property shall not be leased, sold, exchanged, entrusted, or trusted, or shall not be subject to investment and may not be created a private right: Provided, That the Office of Administration may exchange or transfer in any of the following cases:

Article 31 (Disposition, etc.)

The miscellaneous property may be loaned, sold, exchanged, transferred, entrusted, or entrusted, and may be invested in kind in case of special provisions by Acts.The

Article 34 (Pricing of Property to be Disposed of)

In disposing of miscellaneous property, its price shall be determined in consideration of the market price in accordance with the Presidential Decree.

Enforcement Decree of the State Property Act

Article 37 (Pricing of Property)

When disposing of the miscellaneous property as referred to in paragraph (1), the estimated price shall be determined in consideration of the market price: Provided, That with respect to the property presumed to be at least five million won (five million won in the case of the Special Metropolitan City, Metropolitan Cities (excluding any Gun) and areas designated by the Office of General Administration), the estimated price shall be determined by requesting two or more appraisal corporations to appraise it, and the amount calculated by taking an arithmetic mean of the estimated price.

2. The plaintiff's assertion

A. The assertion of violation of mandatory law

Although the state-owned land of this case is a road as of the date of the public announcement of the authorization to implement the project of this case, the appraisal of this case was conducted on the premise that it is a site. Although the appraisal of this case was made on the date of public announcement of the authorization to implement the project of this case, it cannot be deemed as an appraisal based on the date of public announcement of the authorization to implement the project of this case. Thus, the appraisal of this case violates Article 66(6) of the Act on the Improvement of Urban Areas and Dwelling Conditions for Residents (hereinafter “the provision of this case”). Meanwhile, the provision of this case is a mandatory law in light of its legislative intent. Since the part exceeding the appropriate value of the state-owned land of this case among the sales contract of this case is in violation of the above mandatory law and is null and void, the defendant is obligated to return to the Plaintiff Association the purchase price of this case in excess of 135,513,000 won, which is the appropriate value of 463,050,000 won.

B. The assertion of unfair legal practice

The State-owned land of this case is a business site to be naturally acquired for redevelopment improvement project. The actual negotiating party of the sales contract of this case is in superior position to the Plaintiff Association as the head of the shipping substitute with the authority to permit and supervise the above redevelopment improvement project. The Plaintiff Association was requested to increase the contract amount from the Plaintiff KK Construction Co., Ltd. which is the contractor of redevelopment improvement project. Since the Korea K KK Association, which was the contractor of the above redevelopment improvement project, had constructed a church building within the redevelopment improvement project zone, was not approved for the use of the above new construction project since the sales contract of this case was not concluded, it was requested to the Plaintiff Association for the conclusion of the sales contract of this case around April 2008. In light of the fact that the purchase price according to the appraisal result of this case exceeds about 3.4 times the adequate price, the agreement on the purchase price of the Plaintiff Association's money exceeding the reasonable price stipulated in the sales contract of this case is obviously null and void due to the Plaintiff Association's failure to pay the above amount of money to the Plaintiff.

3. Determination

A. Judgment on the assertion of violation of mandatory law

1) Although the appraisal result of this case was in violation of the provisions of this case, the provision of this case should be mandatory in order to invalidate part of the agreement on the purchase price of this case among the sales contract of this case as asserted by the Plaintiff Union. Thus, first, we examine whether the provision of this case is mandatory.

2) Although the contract of this case was concluded pursuant to Article 66 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for the purpose of acquiring land owned by the Defendant by the Plaintiff Union through consultation between the Plaintiff Union and the Defendant, it is nothing more than a private trade act conducted by the Plaintiff Union and the Defendant as a private economic entity. Therefore, in concluding a contract for the acquisition of land through consultation, it cannot be forced to comply with the criteria set forth by the provision of this case to the Defendant regarding the determination of the purchase price. Since the provision of this case does not grant the Plaintiff Association the authority to make a compulsory contract in accordance with such criteria, even if there was a proposal about the number of purchase price under the provision of this case between the Plaintiff Union and the Defendant, the other party can refuse this proposal. In light of the fact that if the agreement was not completed, the Plaintiff Union cannot only expropriate the land in accordance with Article 38 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions, the provision of this case is merely a provision on the determination of the purchase price.

3) Therefore, inasmuch as an agreement between the parties at the time of the acquisition through consultation can determine the purchase price that is not in conformity with the criteria under the instant provision, part of the agreement on the purchase price in the instant sales contract cannot be deemed null and void as it violates the mandatory law. Ultimately, the Plaintiff’s above assertion premised on the premise that the instant provision is a mandatory law is without merit.

B. Determination on the assertion of unfair legal practice

In light of the above, the above legal act under Article 104 of the Civil Act is established when there exists an objective imbalance between benefits and consideration, and a transaction which has lost balance as such subjectively, is conducted using gambling, rashness or experience of the victimized party. The purpose of this act is to regulate gambling, rashing, or inexperienceless experience of the victimized party. The term "gambling" refers to 'bombling," which may be based on an economic cause, and may be based on mental or psychological cause. Whether the injured party was in gambling condition or not should be determined specifically by taking into account all the circumstances, such as the status and property status of the gambling union, and the degree of gambling of the situation at which the gambling party was in the situation of gambling, light, or experience, and the intent to use the gambling status of the dambling party to the gambling housing association and the gambling status of the ging party to the gambal.

4. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit. It is so decided as per Disposition.

Judges Go Young-tae (Presiding Judge)