[1] In the case where a special supply contract entered into between a person subject to relocation measures and a project operator includes installation costs of basic living facilities under Article 78(4) of the former Act on the Acquisition of Land, etc. for Public Works and the Compensation therefor in the sale price, whether such part is null and void due to its violation of the mandatory law (affirmative)

[2] Whether a road to be provided as basic living facilities by a project operator who implements a housing construction project or a housing site preparation project within a housing site development project zone, which is a public project, includes all the “road within a housing complex, which connects roads to the same kind of road outside the housing complex, regardless of its length or width (affirmative)

[3] Whether a project operator of a large-scale development project constitutes the installation cost of "basic living facilities according to the relevant local conditions" under Article 78 (4) of the former Act on the Acquisition of Land, etc. for Public Works and the Compensation therefor (negative) and whether a project operator may be deemed to have obtained profits without any legal ground in cases where he/she transferred the burden of the said contribution through a sales contract concluded with a person subject to relocation measures (negative)

[1] Article 78 (4) of the former Act on the Acquisition of Land, etc. for Public Works and the Compensation Therefor (amended by Act No. 8665 of Oct. 17, 2007) / [2] Article 78 (1) and (4) of the former Act on the Acquisition of Land, etc. for Public Works and the Compensation Therefor (amended by Act No. 8665 of Oct. 17, 2007), Article 2 subparagraph 8 of the former Housing Act (amended by Act No. 9405 of Feb. 3, 2009), Articles 21 (1) 2 and 23 (1) and (6) of the former Enforcement Decree of the Act on the Acquisition of Land, etc. for Public Works and the Compensation Therefor (amended by Presidential Decree No. 2101 of Feb. 17, 2009), Article 24 (4) of the former Enforcement Decree of the Housing Act (amended by Act No. 21290 of Feb. 17, 2009)

[1] [2] Supreme Court en banc Decision 2007Da63089, 63096 Decided June 23, 2011 (Gong2011Ha, 1440) / [2] Supreme Court Decision 2012Da3303 decided September 26, 2013 (Gong2013Ha, 1937)

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

Sung-nam City and one other (Attorneys Choi Jin-jin et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2011Na11346 decided May 24, 2012

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

The grounds of appeal are examined.

1. As to the ground of appeal by Defendant Korea Land and Housing Corporation

According to Article 78 of the former Act on the Acquisition of Land, etc. for Public Works and the Compensation therefor (amended by Act No. 8665 of Oct. 17, 2007; hereinafter “former Public Works Act”), a project operator shall either establish and implement relocation measures or pay resettlement funds as prescribed by the Presidential Decree for persons who are deprived of their base of livelihood due to the provision of residential buildings due to the implementation of public works (hereinafter “persons subject to relocation measures”), and the contents of relocation measures include basic living facilities according to the relevant regional conditions, such as roads, water supply facilities, drainage facilities, and other public facilities in the resettlement area, and the cost necessary therefor shall be borne by the project operator (Article 4). Accordingly, if a special supply contract between a person subject to relocation measures and a project operator included the cost of installation of basic living facilities as stipulated in Article 78(4) of the former Public Works Act in the sale price of a housing site or housing, the portion of the special supply contract included the cost of installation of the basic living facilities in the sale price in violation of Article 78(360(6) of the former Public Works Act.

According to the reasoning of the judgment below, in entering into a special supply contract with the plaintiffs who are subject to relocation measures (hereinafter “Defendant Corporation”) on the instant housing site, the part that does not exceed 265 square meters is calculated by comparing the amount calculated by deducting basic facilities installation costs according to the calculation method of Defendant Corporation based on the cost of the housing site development with the amount equivalent to 80 percent of the cost of the housing site development. In light of the above legal principles, if the supply price of the said housing site includes basic facilities installation costs in light of the above legal principles, it shall be deemed that unjust enrichment is established, and the above supply price of the housing site does not fall short of the cost of the housing site development. In this case where the supply price of the housing site is not determined on the basis of appraisal price, the argument that the cost of the basic living facilities should be calculated on the basis of the supply price of the housing site equivalent to the appraisal price shall not be accepted.

According to the reasoning of the judgment below, the court below calculated the cost of installing basic living facilities per square meter from the cost of creating a housing site per square meter, and calculated the sale price per one square meter, and determined each unjust enrichment against the Plaintiffs of the Defendant Corporation by calculating the amount exceeding the sale price calculated as above.

In this case where the Defendant Corporation set the supply price of the housing site at a certain amount at the cost of creating the housing site, as seen earlier, the method of calculating the lower court’s above is just in that it calculated the cost equivalent to the cost of installing the basic living facilities included in the supply price of the housing site as unjust enrichment. In so doing, contrary to what is alleged in the grounds of appeal, there is no error of law by misapprehending the legal principles on the interpretation of Article 78(4) of the former Public Works Act

2. As to the Defendants’ grounds of appeal

(a) Whether to recognize the obligation to return profits added to the cost of installing the basic living facilities;

According to the reasoning of the judgment below, if the cost of the instant housing site sold by the Defendants is calculated by aggregating the cost of the basic living facilities and the remainder, and if the Defendants added a certain percentage of profit to the cost when determining the supply price of the housing site, it is reasonable to deem that such profit is the sum of profit added to the cost of the basic living facilities and profit added to the remainder of the cost. As such, in calculating unjust enrichment on the cost of the basic living facilities included in the supply price of the housing site after the sale of the housing site due to the addition of profit, the lower court determined that it should be included in the unjust enrichment

However, according to the reasoning of the judgment below and the fact-finding conducted by the court of first instance on the head of the relevant urban development project group, the supply price of the portion not exceeding 265 square meters among the housing sites sold to the plaintiffs does not specify a certain ratio of profit to the development cost of the housing site, but rather is determined by applying the difference by the rate of 1,691,804 won per 1 square meter calculated by deducting the basic facilities installation cost of the housing site per 1 square meter from the development cost of the housing site in accordance with the calculation method of the defendant corporation, and by applying the average of the sum of the new public facilities cost per 1 square meter, calculated by applying the difference by 1,691,804 won. Thus, the part of the supply price of the portion not exceeding 265 square meters among the housing sites sold to the plaintiffs shall not be immediately recognized as the profits of the defendants.

Nevertheless, the lower court limited the Defendants’ profit to the portion of the supply price of the portion not exceeding 265m2 of the housing site that was partially purchased by the Plaintiffs, which exceeds the amount exceeding the above 1,691,804m2, and included the amount of unjust enrichment to be returned by the Defendants. In so doing, the lower court erred by misapprehending the legal doctrine on the scope of unjust enrichment to be returned by the Defendants pursuant to Article 78(4) of the former Public Works Act, thereby adversely affecting the conclusion of the judgment.

(b) Acknowledgement of the cost of installing basic living facilities;

1) The purpose of Article 78(4) of the former Public Works Act is to provide a person subject to relocation measures with a basis of living. As such, the term “basic living facilities according to the relevant regional conditions, such as roads, water supply facilities, drainage facilities, and other public facilities” under the relevant provision refers to roads, water supply and drainage facilities, electric facilities, telecommunications facilities, gas facilities, or district heating facilities, which are installed by a project operator who implements a housing construction project or a housing site development project pursuant to the relevant statutes, such as Article 23 of the Housing Act (see the foregoing en banc Decision). The purport of the judgment above is to clarify the basic living facilities through the concept of arterial facilities stipulated in Article 78(4) of the former Public Works Act, which are “basic living facilities according to the relevant regional conditions, such as roads, water supply and drainage facilities, and other public facilities, etc., which are to be provided as a basis of living for the person subject to relocation measures.” As such, it is unclear how

2) In calculating the cost of the basic living facilities for the housing site development project of this case, the court below is just in light of the legal principles as seen earlier, which include ① the cost of each site for transportation square, water supply square, heating station, sewage treatment station, drainage station, transformation station, etc. ② the cost of the construction of the basic living facilities, ② the cost of the appurtenant works, the cost of the survey and design, the cost of the confirmation survey, the cost of the supplementary facilities, and the cost of each installation of pressure station, drainage station, sewage treatment station, etc.

3) In addition, in calculating the cost of creating basic living facilities, the lower court did not limit the cost of installing street lamps, underground tea roads, tunnels, bridges (road bridges, etc.) and bridges (rivers) to the part related to roads with a width of at least 200 meters and a width of at least eight meters within the instant housing site development project district.

In a housing site development project zone, a road which a project operator who implements a housing construction project or a housing site development project shall provide as a basic living facility to a person subject to relocation measures without asking the length or width thereof, shall include both roads corresponding to arterial facilities as stipulated in Article 2 subparagraph 8 of the former Housing Act (amended by Act No. 9405 of Feb. 3, 2009) and roads connecting roads located outside the housing complex with the same kind of road located outside the housing complex. Therefore, the above determination by the court below is just in its conclusion, and contrary to the allegations in the grounds of appeal, there is no error of law by misapprehending the legal principles on the scope of the cost of the basic living

4) Meanwhile, the court below held that even if the Defendants shared the instant contributions in accordance with measures to improve metropolitan transportation under Article 7 of the former Act on the Management of Intercity Transport in Metropolitan Areas (amended by Act No. 8251, Jan. 19, 2007; hereinafter “former Intercity Transport Act”), it is difficult to view that it constitutes “basic living facilities according to the relevant local conditions” under Article 78(4) of the former Public Works Act. However, the part where the Defendants transferred the Plaintiffs’ supply price of the instant contributions to the housing site is invalid against Article 11-2(1)3 of the former Special Act on the Management of Intercity Transport in Metropolitan Areas (amended by Act No. 8251, Jan. 19, 2007; hereinafter “former Intercity Transport Act”), and even if the Defendants shared the instant contributions to the Plaintiffs in accordance with the measures to improve metropolitan transportation under Article 7 of the former Intercity Transport Act, in light of the circumstances indicated in its reasoning, the Defendants cannot have again bear them.

However, it is difficult to accept such judgment of the court below for the following reasons.

According to Article 2 of the former Metropolitan Transport Act, the term “metropolitan area” means the area prescribed by the Presidential Decree among the areas located in the traffic life zone such as the Special Metropolitan City, Metropolitan Cities, and their cities under Article 2 (1) 1 of the Local Autonomy Act ( subparagraph 1); and the term “wide traffic facilities” means traffic facilities for dealing with a wide-area traffic demand of metropolitan areas, which meet the requirements prescribed by the Presidential Decree (hereinafter referred to as “wide-area roads”) and (a) and (b) “urban railroads or railroads operated across two or more Cities/Dos and meeting the requirements prescribed by the Presidential Decree (hereinafter referred to as “wide-area railroads”)” and “urban railroads or railroads (hereinafter referred to as “wide-area railroads”) meeting the requirements prescribed by the Presidential Decree, which are urban railroads or railroads (hereinafter referred to as “wide-area railroads”).

In addition, according to the former Metropolitan Transport Act, the Mayor/Do Governor in the area where the project is implemented with respect to the projects prescribed by the Presidential Decree, such as large-scale development projects affecting metropolitan transport in metropolitan areas, shall formulate and submit measures to the Minister of Construction and Transportation (Article 7(1)); the Minister of Construction and Transportation shall determine measures to improve metropolitan transport submitted pursuant to the provisions of paragraph (1) through deliberation by the Metropolitan Transport Committee under Article 8; and shall notify the relevant Mayor/Do Governor thereof (Article 7(2)); the head of the relevant central administrative agency; the head of the relevant local government; the head of the relevant local government; and the operator of the development project shall faithfully implement the measures to improve metropolitan transport established pursuant to the provisions of paragraph (2) (Article 7(3)); the Enforcement Decree of the Special Act on the Management of Metropolitan Transport in Metropolitan Areas (amended by Presidential Decree No. 20021, Apr. 20, 2007); housing site development projects under Article 7(1) of the Act; and the head of the relevant central administrative agency or local government shall establish necessary measures (hereinafter referred to “approval plan”) within one month.

Meanwhile, according to the former Metropolitan Transport Act, a person who implements a housing site development project under the Housing Site Development Promotion Act among metropolitan transport facilities prescribed by the Presidential Decree among metropolitan areas shall pay metropolitan transport facility charges for the construction and improvement of metropolitan transport facilities (Article 11 subparagraph 1), and a person who creates housing sites and constructs housing units in accordance with the implementation of relocation measures under Article 8 of the Act on Special Cases concerning the Acquisition of Land for Public Use and the Compensation Therefor shall not be subject to the charges for metropolitan transport facilities (Article 11-2(1)3).

In full view of the contents, form, purport, etc. of the above relevant statutes, the contributions paid by the operator of a large-scale development project in accordance with the measures to improve metropolitan transport under Article 7 of the former Act shall not be deemed to constitute the installation cost of basic living facilities according to the relevant regional conditions under Article 78(4) of the former Public Works Act, and the exemption provision under Article 11-2(1)3 of the former Public Transport Act, which applies to the charges for metropolitan transport facilities, is not applicable. Thus, even if the project operator imposed the burden on the said contributions through the sales contract concluded with the person subject to relocation measures, it shall not be deemed that the project operator gains profits without any legal grounds.

However, according to the reasoning of the lower judgment and the evidence admitted by the lower court, the instant housing site development project includes the following facts: (a) the area of the instant housing site development project is 9,315,000 square meters; (b) the accommodation number is 29,674 households, which constitute large-scale development projects; and (c) the measures to improve metropolitan transport projects finalized with respect to the said project include the Defendants’ share of KRW 440 billion, which is 37% of the construction cost of Gyeyang-Yyang-Yon-Yon-Yon-Yon-Son-Son-Son-Son-Son-Son-Son-Son-Son-Son-Son-Son-Son-Son-Son-Son-Son-Son-Son-Son-Son-Son-Son-Son-Son-Son-

Nevertheless, the court below erred by misapprehending the legal principles on Article 7 of the former Intercity Transport Act, which affected the conclusion of the judgment, in deciding that the Defendants shall refund the portion of the instant contribution included in the supply price of the Plaintiffs’ housing site as unjust enrichment.

3. Conclusion

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.

[Attachment] List of Plaintiffs: omitted

Justices Kim Yong-deok (Presiding Justice)