[1] In a case where the necessary entry in the articles of association of a housing reconstruction association requires a procedure for a strict amendment of the articles of association, and the matters concerning the "expenses of a cooperative" or the "matters to be included in the contract" are substantially modified to a degree to have a significant impact on the interests of the association members compared to the time of the rebuilding resolution, the validity of the provisions of the articles of association which provide for the consent (=not less than 2/3 of the association members) and that the consent

[2] The standard for determining whether defects are significant and apparent in a case where an administrative agency rendered an administrative disposition by applying the rest of an erroneous interpretation in spite of the absence of a certain statutory provision as to a certain legal relationship or fact-finding

[3] In a case where the Housing Reconstruction Association passed a rebuilding resolution before the enforcement of the old Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents, but the project implementation plan with considerably modified floor area ratio, number of households, size of new apartment, etc. compared to the time of the reconstruction resolution after the enforcement of the above Act was decided by a simple majority at the ordinary meeting, the case affirming the conclusion of the court below that the management and disposal plan was legitimate on the ground that defects without the consent of at least 2/3 of the members in the project implementation

[1] In a case where the necessary entry in the articles of association of a housing reconstruction association requires a strict procedure for a modification of the articles of association, and the “matters to be included in the contract for the selection of a work executor, designer and designer,” are substantially modified to the extent that compared to the time of the initial rebuilding resolution, it is reasonable to view that the consent of 2/3 or more of the members of the housing reconstruction association is necessary by applying mutatis mutandis the provisions of Articles 20(3), 20(1)8 and 15 of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (amended by Act No. 8785 of Dec. 21, 2007) to protect the interests of the association members, even if such amendment does not take place in the procedure for the modification of the articles of association, and thus, it is difficult to recognize that the provisions of the reconstruction association’s articles of association have a very strict effect on the rebuilding resolution of the association members or on the “matters to be included in the contract for the selection of a work executor, designer and designer,” as well as they can be resolved with the consent of more than 20316.

[2] Where an administrative agency takes an administrative disposition by applying a certain legal provision to a certain legal relationship or fact, and there is no room for dispute over the interpretation because the legal principle clearly stated that the relevant provision cannot be applied to such legal relation or fact, and when an administrative agency takes the disposition by applying the above provision, the defect is grave and obvious, but if there is room for dispute over the interpretation because the legal principle that the relevant provision cannot be applied to such legal relation or fact is not clearly revealed, it is merely a mistake in the fact of the disposition requirements even if the administrative agency took an administrative disposition by erroneously interpreting it, and thus,

[3] In a case where the Housing Reconstruction Association has adopted a reconstruction resolution before the enforcement of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (amended by Act No. 7056 of Dec. 31, 2003), but the floor area ratio, the number of households, and the scale of new apartment compared to the time of reconstruction resolution after the enforcement of the above Act, was decided by a simple majority at the ordinary meeting, and again held an extraordinary general meeting and decided a project implementation plan with the consent of two thirds or more of union members, the case affirming the lower court's interpretation as to the validity of the provisions on the requirements for the articles of association of association applicable to the establishment of the project implementation plan where the floor area ratio, etc. has been significantly changed compared to the time of reconstruction resolution after the enforcement of the above Act, and there was no explicit Supreme Court decision on this matter, even if there was a defect in the establishment of the project implementation plan without obtaining the consent of two thirds or more of union members in the ordinary meeting, it is not clear that such defect is objectively apparent, and thus, it cannot contest the legality of the management disposition plan.

[1] Articles 20 (1) 8, 15, (3), and 28 (4) of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents / [2] Article 19 of the Administrative Litigation Act / [3] Articles 20 (1) 8, 15, and (3), and 28 (4) of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (amended by Act No. 8785 of Dec. 21, 2007)

[1] Supreme Court Decision 2007Da31884 Decided January 30, 2009 (Gong2009Sang, 233) / [2] Supreme Court Decision 2002Da68485 Decided October 15, 2004 (Gong2004, 1807) Supreme Court Decision 2009Du2825 Decided September 24, 2009 (Gong2009Ha, 1770)

See Attached List of Plaintiffs (Attorney Kim Dong-jin et al., Counsel for the plaintiff-appellant)

1. The term "non-permanent apartment reconstruction association" means the non-permanent apartment reconstruction association

Busan High Court Decision 2008Nu6349 decided June 9, 2010

All appeals are dismissed. The costs of appeal are assessed against the plaintiffs.

The grounds of appeal are examined.

1. As to the assertion of misapprehension of legal principles as to the resolution for the establishment of a project execution plan and the correction of defects

A. The judgment of the court below

The court below held that since the defendant held 20 or more general meeting and sub-general meeting before the enforcement of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (amended by Act No. 7056, Dec. 31, 2003; hereinafter referred to as the "former Act"), 30 or more of the members of the association were approved on June 24, 200 by the former Housing Construction Promotion Act (wholly amended by the Housing Act No. 6916, Nov. 30, 2003; 4 or less of the total number of members of the 20 or less of the 20 or less of the rebuilding project plan, which was approved by the head of the 30 or less of the 40 or less of the total number of members of the association after the amendment of the 24 or less of the new project implementation plan, the defendant was also entitled to the 204 or more of the total number of members of the 30 or more of the rebuilding project plan, which was approved by the head of the 205 or more of the new project plan.

B. Judgment of the Supreme Court

(1) The articles of incorporation of a corporation and the detailed regulations for its business activities shall be deemed valid unless there are special circumstances. However, the same shall not apply to cases where it is considerably unreasonable in terms of social norms, such as violating good morals and other social order, or where the decision procedure is deemed to be in violation of justice (see, e.g., Supreme Court Decisions 91Da29026, Nov. 24, 1992; 2006Ma635, Jul. 24, 2007).

The main text of Article 28(4) of the amended Act provides that “A project implementer (excluding the head of a Si/Gun or the Housing Corporation, etc.) shall obtain consent from the owners of a plot of land, etc. (in cases of a housing reconstruction project, referring to the association members; hereinafter the same shall apply in this paragraph) under the conditions as prescribed by the articles of association, etc. before filing an application for authorization for project implementation (including

Article 20(1)8 and 15 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents provides that the matters to be included in the contract shall be included in the articles of association in consideration of the fact that the expenses of the association or the “matters to be included in the contract for the selection and design of the executor or designer” have a significant impact on the members’ share of expenses (Article 20(1)8 and 15). Article 20(3) of the Act provides that the consent of at least 2/3 of the members shall be required (Article 20(3) of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents shall be amended to the extent that it would substantially affect the interests of the members when compared to the time of the initial resolution for reconstruction, and it is reasonable to readily recognize that the provisions of Article 20(3), 8 and 15 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents, which are to be amended to the extent that it would seriously change the contents of the resolution of the association’s selection and resolution of at least 2/3 percent.

Examining the facts duly established by the court below in light of the above legal principles, the court below did not first determine whether the provisions on the requirements for resolution of the defendant's articles of incorporation to be applied to the establishment of a project implementation plan under Article 28 (4) of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents have considerably lost validity and its validity is null and void as it is difficult to recognize its validity, and it is not appropriate to determine only the requirements for resolution necessary to establish the project implementation plan of this case. However, the conclusion that the establishment of the project implementation plan of this case requires the consent of not less than 2/3 of its members by applying mutatis mutandis Article 20 (3) and (1) 15 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents.

(2) In order for a defective administrative disposition to be null and void as a matter of course, it must be objectively obvious that the defect is a serious violation of an essential part of the law and its purpose, meaning, function, etc. of the law in order to determine whether the defect is significant and obvious, and at the same time, it should be reasonably examined about the specificity of the specific case itself.

Where an administrative disposition was taken by applying a provision of a certain legal relationship or fact to a certain administrative agency, and there is no room for dispute over the interpretation of the said provision, the defect is grave and obvious. However, in a case where there is room for dispute over the interpretation of the said provision because there is no clear legal reasoning that the provision of the said Act is not applicable to the legal relation or fact, even if an administrative agency erroneously interpreted it and issued an administrative disposition, it is merely erroneous that the fact requiring the disposition was taken (see, e.g., Supreme Court Decisions 2002Da68485, Oct. 15, 2004; 2009Du2825, Sept. 24, 2009; 2009Du2825, Sept. 24, 2009; 2008Du98688, Sept. 24, 2009; 2009Du98689, Sept. 26, 2008).

However, even if the floor area ratio, size, and number of households of newly constructed apartment units after the enforcement of the former Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for the resolution of the articles of association applicable to the establishment of a business action plan pursuant to Article 28 (4) of the amended Act, there was no explicit decision of the lower court on this issue.

In light of the above circumstances, even if there was a defect in the establishment of the project implementation plan of this case by the resolution of the general meeting of the shareholders of April 29, 2006 without obtaining the consent of at least 2/3 of the members, since the requirement for the resolution was not clear, the defect in the establishment of the project implementation plan of this case is not a cause of invalidation but a cause of revocation because it is difficult to view that the defect in the requirement for the resolution was objectively apparent. Furthermore, since the project implementation plan of this case and the management and disposal plan of this case generated a separate legal effect independently from each other, the defect that is a cause of revocation for the establishment of the project implementation plan of this case does not succeed to the management and disposal plan of this case, and thus, it cannot

Therefore, the court below erred in finding that the project implementation plan of this case was invalid because it did not meet the resolution requirements necessary for its establishment, but it was reasonable to conclude that the management and disposal plan of this case was lawful. Thus, there was no error of law that affected the conclusion of the judgment due to misunderstanding of legal principles as to the recovery of defects, such as the ground for appeal

2. As to the assertion of misapprehension of legal principles as to calculation method of the quorum of the management and disposal plan

According to the reasoning of the judgment below, the court below determined that the defendant adopted the second proposal with the consent of 395 members for the first bill and the second bill with the consent of 2,560 members for the second bill as of October 14, 2007, on the ground that the first bill and second bill were the same in consideration of the following facts: (a) new cost (e.g., estimated amount: approximately KRW 37.1 billion), corporate tax (for example: KRW 8 billion), civil petition compensation (for example: KRW 10 billion), etc. for the union members, and the first bill and the second bill, which are borne by the union members for each union member, and the second bill, which are adopted with the consent of 2,560 members for the second bill; (b) the first bill and second bill only increase or decrease the equity ratio for the union members, i.e., the remaining matters, and the number of members to whom the resolution for sale is newly made; and (c) the second bill are the same in substance as the result of the management disposition plan.

However, the defendant not only carried out the voting by clearly separating the proposal 1 and 2, but also there is a certain difference in the ratio of free shares of new expenses, corporate tax, compensation for civil petitions, and members. Moreover, even if it can be deemed that the proposal 1 and 2 are substantially the same in terms of the burden of members, as the judgment of the court below, there is a difference in the timing of bearing the expenses, and therefore it cannot be concluded that the members who agreed to the proposal 1 did not necessarily agreed to the proposal 2 even if there was no proposal 1, it cannot be concluded that the decision of the court below was reached. Thus, it is difficult to determine whether the proposal 1 and 2 are satisfied by aggregating the result

However, based on the project implementation plan of this case, the defendant can establish the management and disposal plan in accordance with the procedure stipulated by the Act on the Maintenance and Improvement of Urban Areas, and the formulation of the management and disposal plan is sufficient pursuant to Article 24 (3) 10 and Article 24 (5) of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Areas. According to the facts acknowledged by the court below, the number of consenters on the proposal of the management and disposal plan meets the quorum stipulated by the articles of incorporation of the defendant. Thus, the establishment of the management and disposal plan of this

Ultimately, the lower court erred in determining whether the instant management and disposition plan satisfies the quorum for the establishment of the instant management and disposition plan by adding up the votes of the first and second bills of the management and disposition plan, but the conclusion that the instant management and disposition plan was lawful is justifiable. In so doing, the lower court did not err by misapprehending the legal doctrine on calculating the quorum for the formulation of the management and disposition plan

3. As to the assertion of misapprehension of the legal principle as to whether prior notice should be given as to Article 48(1)4 of the Act on the Improvement of Urban Areas

Generally, in convening a meeting, the purpose of the meeting to be included in the notice is sufficient to the extent that it makes it possible to make a decision or prepare for the members to attend the meeting, and it does not necessarily require to be included in the notice of convening a meeting, unless otherwise expressly provided for in statutes or articles of incorporation (see Supreme Court Decision 2011Du9164, Jan. 27, 2012).

However, according to Article 48 (1) 4 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (amended by Presidential Decree No. 21171, Dec. 17, 2008; hereinafter “Enforcement Decree of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents”), a project implementer shall establish a management and disposal plan including the details of the previous land or buildings by objects of parcelling-out and the price as of the date of the public announcement of approval for project implementation (hereinafter “the price as of the date of public announcement of approval for project implementation”), and Article 49 (1) of the same Act provides that the project implementer shall make a copy of the relevant documents available for public perusal for at least 30 days before obtaining authorization for a management and disposal plan under Article 48 (1) 4 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (hereinafter “the Enforcement Decree of the Act”). However, the project implementer did not provide for the details of the existing land or buildings by objects of parcelling-out and the details and estimated value of the sites or structures scheduled for parcelling-out before the general meeting.

According to the above legal principles, amended Urban Improvement Act, and the Defendant’s articles of incorporation, the Defendant need not be deemed to notify the members of the instant management and disposition plan prior to October 24, 2007, for the establishment of the instant management and disposition plan.

Nevertheless, the court below erred in finding that the project implementer has a duty to notify its members of the matters No. 4 prior to the general meeting to formulate a management and disposal plan, but the conclusion that the instant management and disposal plan was lawful by the resolution at the general meeting of October 24, 2007 on the grounds of the circumstances in its reasoning is justifiable. Therefore, there is no error of law by misapprehending the legal principles as to whether prior notice of the matters No. 4, such as the grounds for appeal in this part

4. As to the assertion of misapprehension of legal principles as to Article 20(3) and (4) of the Act, Article 28(4) of the Enforcement Decree of the Act on the Improvement of Urban Areas and Dwelling Conditions for Residents

Article 20(1)4 of the amended Act provides for “the location and size of each prearranged zone for a rearrangement project” as one of the matters to be included in the articles of association of the association. Article 20(3) of the same Act provides for the requirements for the consent of the association members when the association intends to amend its articles of association. The “location and size of each prearranged zone for a rearrangement project” requires the consent of at least 2/3 of the association members. In addition, Article 20(4) of the amended Act provides that Article 17 of the amended Act provides for the consent of the association members for the alteration of the articles of association shall apply mutatis mutandis to the method of consent of the owners of land, etc., and Article 28(4) of the Enforcement Decree of the amended Act provides for the consent of the owners of land, etc. shall be accompanied by a written consent using a seal imprint and a certificate of seal impression in this case. Meanwhile, Article 28(1) of the amended Act provides that a project implementer intends to implement a rearrangement project, along with the articles of association, etc. and other documents prescribed by the Ordinance of association.

According to the reasoning of the judgment below and the record, the project implementation area stipulated by the articles of incorporation established at the time of the Defendant’s rebuilding resolution is 317,668 square meters. The project implementation area stipulated in the instant management and disposal plan is 341,410 square meters, and the area has increased, and the head of Busan Metropolitan City on October 19, 2005, the head of Busan Metropolitan City designated and publicly notified by changing the housing reconstruction improvement area of the Sejong Metropolitan City to 341,410 square meters.

In light of the above relevant laws and regulations, where the project implementer intends to revise the project area of this case, the articles of incorporation submitted by the defendant at the time of applying for the approval of the project implementation plan of this case shall be deemed not to have gone through the modification procedure. However, Article 28(1) of the amended Urban Improvement Act and Article 9(1) of the former Enforcement Rule of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (amended by the Ordinance of the Ministry of Land, Transport and Maritime Affairs No. 79 of December 17, 2008) provide that the project implementer shall submit an application for the approval of the project implementation where the project implementer intends to obtain the approval of the project implementation plan, such as the articles of incorporation, and the competent administrative agency does not request the approval of the project implementation plan to actually examine whether the project implementer has gone through the lawful amendment procedure including the amendment of the articles of incorporation, and Article 38 subparag. 10 of the Enforcement Decree of the amended Urban Improvement Act does not stipulate the modification of the project implementation plan of this case as one of the project implementation plan.

Although the reasoning of the court below is inadequate, the conclusion of the court below is justified, and there is no error of law that affected the conclusion of the judgment due to misunderstanding of legal principles as to this part of the ground for appeal.

6. As to the assertion of misapprehension of legal principles concerning the calculation of expenses under the management and disposal plan

A. On the proceeds from the sale of the school site

According to the reasoning of the judgment below, the court below acknowledged that the sales price of the school site was calculated as the estimated revenue estimated amount of KRW 8,182,500,000 at the time of the establishment of the management and disposal plan of this case and calculated the estimated expense rate of the association members based on the plan for the management and disposal plan of this case. The court below determined that the sales price of the school site of this case did not constitute an unlawful act of not

In light of relevant statutes and records, the above measures of the court below are just and there is no error in the misapprehension of legal principles as to the calculation of gratuitous shares under the management and disposal plan as stated in the ground of

B. As to the land purchase compensation for the construction of a road in a complex

According to the reasoning of the judgment below, the court below acknowledged the following facts in full view of the adopted evidence and acknowledged the following facts: (a) as to the conditions for authorization for project implementation for the construction of infrastructure abolished due to the implementation of the instant reconstruction project against the Defendant and the Northern-gu Busan Metropolitan City Office to purchase at a cost; and (b) the time when the judgment in favor of the Defendant became final and conclusive in the said lawsuit was April 25, 2009, which was after the establishment of the instant management and disposal plan; (c) on October 14, 2007, when the aforementioned lawsuit was established, it cannot be deemed unlawful to calculate the land purchase compensation cost for the construction of a road in the management and disposal plan.

In light of relevant statutes and records, the above measures of the court below are just and there is no error in the misapprehension of legal principles as to the calculation of expenses under the management and disposition plan.

C. As to other expenses

According to the reasoning of the judgment below, the court below determined that the management and disposal plan of this case was not established against the relevant statutes and the defendant's articles of incorporation or against the equity among the union members on the ground that the defendant appropriated the incidental expenses of this case as 62.4 billion won, and that there is no detailed statement about the management and disposal plan of this case.

In light of relevant statutes and records, the above measures of the court below are just and there is no error in the misapprehension of legal principles as to the calculation of expenses under the management and disposition plan.

7. As to the assertion of misapprehension of legal principles as to the public notice of sale and the procedure for application for parcelling-out under Article 7 (2) of the Addenda of the former Act on the Maintenance of Urban Areas and Article 46 (1)

A. As to the assertion of misapprehension of legal principles as to Article 7 (2) of the Addenda to the former Act on the Improvement of Urban Areas

According to the reasoning of the lower judgment, the lower court determined that the Defendant’s act of selecting a contractor and the instant management and disposition plan cannot be deemed unlawful on August 30, 2003, based on the following: (a) comprehensively based on the evidence adopted by the lower court, concluded an agreement on the construction of a lot and the instant apartment reconstruction project with the consent of approximately 86% of the owners of land, etc. on August 30, 203; (b) on the same day

In light of relevant Acts and subordinate statutes and records, the above measures of the court below are just and there is no error of law by misapprehending the legal principles as to Article 7 (2) of the Addenda of the former Act on the Maintenance of Urban Areas.

B. As to the assertion of misapprehension of legal principles as to the sale announcement and application procedure

Article 46 (1) of the amended Urban Improvement Act shall notify the owners of lands, etc. of the outlined charges, the period for application for parcelling-out, and other matters prescribed by the Presidential Decree within 21 days from the date of public announcement of the authorization for project implementation under Article 28 (3) (in the case of a housing reconstruction project, the date of concluding a contract by selecting a contractor under Article 11), and publicly notify the owners of lands, etc. of the matters prescribed by the Presidential Decree, such as the details of sites or structures subject to parcelling-out in the relevant area. In this case, the period of application for parcelling-out shall be from 30 days to 60 days from the date of notification of the application for parcelling-out: Provided, That where a project implementer deems that there is no impediment to the establishment of a management and disposal plan under Article 48

According to the reasoning of the judgment below and the records, the defendant, after completing the report on the selection of a contractor on August 30, 2003 as construction site for the construction project, entered into a contract between the construction site and the construction site on April 13, 2004. The defendant, on June 23, 2006, issued the approval of the project implementation plan of this case from the head of the North Korean government on July 1, 2006, issued the public notice on sale in Busan, but rejected the conclusion of the sale contract on July 28, 2006 on the ground that some of the members were unclear in ownership ratio and shares of association members, issued the public notice on July 28, 2006, revoked the public notice on the sale in lots on March 14, 2007, issued the public notice on the sale in lots to the head of the above 207 construction project by dividing the project cost, increase the corporate tax on the construction day and the indemnity amount due to the change in the improvement plan, etc.

In light of the above relevant laws and regulations, the Defendant concluded a contract for the construction and the reconstruction of the apartment of this case on the basis of the voting results of the members of the association by submitting the management and disposal plan two divided into two parts and presenting the proposal to the special general meeting as the Defendant concluded a contract for the construction and the reconstruction of the apartment of this case under the agreement with the construction company prior to the notice of sale in lots and the notice of sale in lots. Thus, the matters provided for in Article 46 (1) of the Enforcement Decree of the amended Act in the notice of sale in lots and the notice of sale in lots are deemed to have been sufficiently notified to the members of the association. Accordingly, the instant management and disposal plan cannot be deemed unlawful merely on the ground that the conclusion of the contract with the construction company was made after the announcement of sale in lots and

In the same purport, the conclusion of the court below that the procedure for the notice of sale in this case and the notice of sale in this case is legitimate is just, and it is not erroneous in the misapprehension of legal principles as to the sale in lots and the procedure for the application for sale in lots under Article 46 (1)

8. Conclusion

Therefore, all appeals are dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

[Attachment] List of Plaintiffs: omitted

Justices Min Il-young (Presiding Justice)