[1] The meaning of "land which is completed due to the implementation of a development project subject to development charges" under Article 4 (1) [Attachment Table 1] subparagraph 1 of the former Enforcement Decree of the Restitution of Development Gains Act

[2] In a case where Company A purchased the land from Company B and removed the corporate housing of Company B which was constructed on the ground, and the competent Mayor imposes development charges on Company A on the land which became a site for collective housing on the ground that the said collective housing construction project is a project subject to the imposition of development charges, the case holding that the court below erred in the misapprehension of legal principle on the ground that the said collective housing construction project should be deemed a development project exempt from the imposition of development charges

[1] Articles 1, 2 subparag. 1, 2 subparag. 2, and 5(1)1, and (3) of the former Restitution of Development Gains Act (amended by Act No. 11690, Mar. 23, 2013); Article 4(1) [Attachment 1] of the former Enforcement Decree of the Restitution of Development Gains Act (amended by Presidential Decree No. 24443, Mar. 23, 2012; hereinafter “former Enforcement Decree of the Restitution of Development Gains”), and the details and purport of the provisions on the development project subject to the imposition of development charges, the term “land which has been created due to the implementation of the development project subject to the imposition of development charges” under subparagraph 1 of Article 4(1) [Attachment 1] of the former Enforcement Decree of the Restitution of Development Gains Act shall not be deemed to have been asked whether the development charges have been actually imposed on the development project, as the land on which the development charges have been completed.

[2] In a case where Company A purchased land from Company B and removed Company B’s company houses constructed on the ground and newly constructed apartment houses, the competent Mayor erred by misapprehending the legal principles as seen otherwise, on the ground that the said apartment construction project is subject to development charges under Article 4(1) [Attachment Table 1] [Attachment Table 1] of the former Enforcement Decree of the Restitution of Development Gains Act (amended by Presidential Decree No. 24443, Mar. 23, 2012; hereinafter “former Enforcement Decree of the Development Gains Refund Act”), on the ground that it is a project subject to development charges under subparagraph 1 of Article 4(1) of the former Enforcement Decree of the Restitution of Development Gains Act, the said land constitutes “land for which the development project subject to development charges has been completed” under the proviso to subparagraph 1 of [Attachment Table 1] of Article 4(1) of the former Enforcement Decree of the Development Gains Refund Act, and the said apartment house construction project is a housing construction project implemented on such land, which is exempt from development charges

[1] Articles 1, 2 subparag. 1 and 2, and 5(1)1 and (3) of the former Restitution of Development Gains Act (Amended by Act No. 11690, Mar. 23, 2013); Article 4(1) [Attachment Table 1] subparag. 1 of the former Enforcement Decree of the Restitution of Development Gains Act (Amended by Presidential Decree No. 24443, Mar. 23, 2012); Article 4(1) [Attachment Table 1] subparag. 1 of the former Enforcement Decree of the Restitution of Development Gains Act / [2] Article 5(1)1 and (3) of the former Restitution of Development Gains Act (Amended by Act No. 11690, Mar. 23, 2013); Article 4(1) [Attachment 1] of the former Enforcement Decree of the Restitution of Development Gains Act (Amended by Presidential Decree No. 24443, Mar. 23, 2012)

wason Industry (Attorney Soh-young et al., Counsel for the plaintiff-appellant)

Sungnam Market (Law Firm Apex, Attorneys Lee Ji-hoon et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2013Nu13817 decided November 15, 2013

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

The grounds of appeal are examined.

1. The former Restitution of Development Gains Act (amended by Act No. 11690, Mar. 23, 2013; hereinafter “former Restitution of Development Gains Act”) was enacted to recover development gains accruing from land and appropriately distribute them to prevent speculation in land, promote the efficient use of land, and contribute to the sound development of the national economy by facilitating the efficient use of land (Article 1). According to the Act, “development gains” refers to an increase in the value of land that exceeds normal land prices increase due to the implementation of a development project, change of a land use plan, or other social and economic factors (Article 2 subparag. 1); and “development projects” refers to projects under Article 5, such as housing site development projects or industrial complex development projects implemented with approval, permission, license, etc. from the State or a local government (Article 2 subparag. 2).

Furthermore, Article 5(1)1 of the former Act on the Restitution of Development Gains provides that “A housing site development project (including a housing complex development project)” shall be deemed as a development project subject to development charges under Article 5(1)1, and Article 5(3) of the same Act provides that “the scope, scale, etc. of a development project shall be prescribed by Presidential Decree,” and accordingly, Article 4(1) [Attachment 1] [Attachment 1] of the former Enforcement Decree of the Restitution of Development Gains Act (amended by Presidential Decree No. 24443, Mar. 23, 2013; hereinafter “former Enforcement Decree of the Development Gains Refund Act”) shall be included in the scope of the housing site development project, and “A housing construction project or housing construction project, which is implemented on the land upon which the development charges are imposed, is excluded from the development project subject to development charges.

In full view of the purpose of the relevant laws and regulations and the details and purport of the development project subject to the imposition of development charges, “land which is completed by the implementation of the development project subject to the imposition of development charges” under Article 4(1) [Attachment 1] 1 of the former Enforcement Decree of the Development Gains Restitution Act shall not be asked whether the development charges are actually imposed on the land on which the implementation of the development project is completed.

2. According to the reasoning of the lower judgment and the record, ① Korea Institute of Science and Technology (the title prior to the alteration was “Korea Institute of Culture and Arts,” hereinafter “Korea Institute of Science and Technology”) shall newly construct a number of buildings with a total of 2,95 square meters of 22,95 square meters, including 1 omitted) in Seongdong-si (the address of 1 omitted) and 20,000,000,000 for 20,000 square meters for 20,000,000,000,000,000,000 24,000,000,000,000,000,000 2,000,000,000,000,000,000,00,000,000,00,000,00,00,00,00,00,00,00,00.

Examining these facts in light of the former Act and subordinate statutes and legal principles, it is reasonable to view that the instant land constitutes “land that is completed by the implementation of a development project subject to imposition of development charges” under the proviso to Article 4(1) [Attachment 1] subparagraph 1 of the Enforcement Decree of the Development Gains Refund Act, and the instant multi-family housing construction project is a housing construction project implemented on such land, which is exempt from the imposition of development charges.

Nevertheless, for reasons indicated in its reasoning, the lower court determined that the instant apartment construction project does not constitute “housing construction project implemented on the land that was completed by implementing a development project subject to imposition of development charges.” In so doing, the lower court erred by misapprehending the legal doctrine on the scope of application under Article 4(1) [Attachment 1] [Attachment 1] of the Enforcement Decree of the Development Gains Refund Act, thereby adversely affecting the conclusion of the judgment. The allegation in the grounds of appeal

3. Therefore, without examining the remaining grounds of appeal, the judgment of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Jo Hee-de (Presiding Justice)