[1] Whether a residential environment improvement project under the former Act on Temporary Measures for Residential Environment Improvement Projects for Low-Income Urban Residents constitutes “public works” under the former Act on Acquisition of and Compensation for Land, etc. for Public Works Projects (affirmative)

[2] Whether an owner of a residential building in a residential environment improvement zone who has concluded a contract for sale of housing units to be constructed as a residential environment improvement project constitutes a "person subject to relocation measures" under Article 78 (1) of the former Act on Acquisition of and Compensation for Land, etc. for Public Works Projects (negative)

[1] A residential environment improvement project under Article 4 subparagraph 5 of the former Act on the Acquisition of Land, etc. for Public Works and the Compensation therefor (amended by Act No. 7304 of Dec. 31, 2004) constitutes a public work, which is a "project concerning the construction of housing for lease or transfer purposes by a local government or a person designated by a local government" or "project that can expropriate or use land, etc. under other Acts" under Article 4 subparagraph 7 of the same Act.

[2] Relocation measures under Article 78(1) of the former Act on the Acquisition of Land, etc. for Public Works and the Compensation therefor (amended by Act No. 7304, Dec. 31, 2004; hereinafter “former Public Works Act”) are established to restore the previous living conditions to those who lose their base of living due to the implementation of public works to the original state as well as to ensure a living environment worthy of human beings. However, the residential environment improvement projects under the former Act on the Improvement of Residential Environments and Dwelling Conditions for Residents (repealed by Article 2 of the Addenda to the Act No. 6852, Dec. 30, 2002) are for the improvement of the residential environment of low-income residents in the relevant project district, and it is more reasonable to allow the owners or tenants of land or buildings within the relevant project district to acquire housing units or housing units to be built as a residential environment improvement project than those of the previous residential environment improvement project regardless of the type of the residential environment improvement project to be built temporarily in the project district.

[1] Article 2 subparag. 2, subparag. 5, and 7 (see current Article 4 subparag. 8), Article 3(1) (see current Article 4(1)), Article 7(2) (see current Article 7(2) of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents and Dwelling Conditions for Residents and Article 4 of the Enforcement Decree of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents and Dwelling Conditions for Residents and Article 8 of the Enforcement Decree of the Act on the Maintenance and Improvement of Residents and Dwelling Conditions for Residents and Article 4 of the Act on the Maintenance and Improvement of Residents and Dwelling Conditions for Residents and Article 4 of the Act on the Maintenance and Improvement of Residents and Dwelling Conditions for Residents and Article 5 of the Enforcement Decree of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents and Dwelling Conditions for Residents and Article 40 of the Act on the Maintenance and Improvement of Residents and Dwelling Conditions for Residents and Article 40 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents and Dwelling Conditions for Residents

Plaintiff 1 and 43 others

Plaintiff 45 et al.

Plaintiff 49 and one other (Law Firm Woo, Attorneys Kim Byung-jin et al., Counsel for the plaintiff-appellant)

Korea Land and Housing Corporation (Attorneys Ansan-sik et al., Counsel for the plaintiff-appellant)

Daegu High Court Decision 2009Na8759 decided August 18, 2010

All appeals are dismissed. The costs of appeal are assessed against the Plaintiffs and the Intervenors succeeding to the Plaintiff.

The grounds of appeal are examined.

1. Whether the project falls under public works and the scope of persons subject to relocation measures

A. (1) Article 2 Subparag. 2 of the former Act on the Acquisition of Land, etc. for Public Works and the Compensation therefor (amended by Act No. 7304, Dec. 31, 2004; hereinafter “former Public Works Act”) provides that “public works mean the projects falling under any of the subparagraphs of Article 4,” and Article 4 Subparag. 5 provides that “the projects concerning the construction of houses or the creation of housing sites conducted by the State, local government, government-invested institution, local public enterprise, or a person designated by the State or local government for the purpose of lease or transfer” and subparagraph 7 provides that “other projects that can expropriate or use land, etc. under other Acts.”

Meanwhile, the former Act on Temporary Measures for the Improvement of Residential Environment for Low-Income Urban Residents (repealed by Article 2 of the Addenda to the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents, Act No. 6852, Dec. 30, 2002; hereinafter “former Act on Temporary Measures”) stipulates that the head of a Si (including the Special Metropolitan City Mayor, Metropolitan City Mayor, and the head of a Gun shall implement a residential environment improvement project after designating the relevant area as a residential environment improvement district in order to improve the residential environment of low-income urban residents whose residential environment is poor; and that the head of a Gun shall implement a residential environment improvement project, such as the construction of housing or maintenance of public facilities; however, when the Minister of Construction and Transportation deems it necessary to urgently implement a residential environment improvement project due to a natural disaster or other causes, he/she may, at the request of the Special Metropolitan City Mayor, Metropolitan City Mayor, or Do governor, allow the Korea National Housing Corporation or a public corporation established for the issue of a residential environment improvement project (Article 3(1) and 7(2)).

In addition, according to Article 10(4) of the former Temporary Measures Act and Article 8 [Attachment 3] of the Enforcement Decree of the Act on Temporary Measures for Residential Environment Improvement for Low-Income Urban Residents (repealed by Article 2 of the Addenda of the Enforcement Decree of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents, June 30, 2003; hereinafter “former Enforcement Decree of the Temporary Measures Act”), the owner of a building who is scheduled to construct a house in the relevant residential environment improvement district as of the base date under Article 9(1) of the former Enforcement Decree of the Act on Temporary Measures for Residential Environment Improvement (hereinafter “former Enforcement Decree of the Temporary Measures Act”) may be supplied with a house for sale or a long-term lease, and the tenant who resides in the relevant residential environment improvement district

(2) In full view of the content, form, purport, etc. of such relevant laws and regulations, residential environment improvement projects under the former Ad Hoc Act shall be deemed as public works under Article 4 subparag. 5 of the former Ad Hoc Act, which are “projects concerning the construction of houses for the purpose of lease or transfer conducted by a local government or a person designated by a local government” or “other projects that can expropriate or use land, etc. under other Acts” under Article 4 subparag. 7.

B. (1) Meanwhile, Article 78(1) of the former Public Works Act provides that "a project operator shall either establish and implement relocation measures or pay resettlement funds to a person who is deprived of his/her base of livelihood due to the implementation of public works (hereinafter "person subject to relocation measures"), as prescribed by Presidential Decree, for the person who is deprived of his/her base of livelihood due to the provision of a residential building due to the implementation of the public works (hereinafter "person subject to relocation measures"). The said relocation measures are prepared to ensure a living worthy of human dignity by restoring the previous living condition of a person subject to relocation measures who is deprived of his

However, the residential environment improvement project is to improve the residential environment of the entire low-income urban residents in the relevant project district, and therefore, the owner or tenant of land or building in the relevant project district is not deprived of the basis of living, but rather to be sold or leased a house constructed in the relevant project. In particular, even if the owner of a residential building in the project district has to provide a residential building due to the implementation of a residential environment improvement project corresponding to the public works project, he/she may temporarily enjoy the preferential right to purchase or lease a house to be constructed by the relevant project at his/her option, and the owner of the land or building does not necessarily have to reside in the project district, so it is not necessary to have the owner of the land or building reside in the

Furthermore, according to Articles 11(1) and 13(1) and (2) of the former Temporary Measures Act, the land owned by the State or a local government in a residential environment improvement zone shall be deemed to be abolished from the date when the housing environment improvement plan is publicly announced, and the land is transferred without compensation to the implementer of a residential environment improvement project, notwithstanding the provisions of the State Property Act, the Local Finance Act, and other relevant Acts and subordinate statutes on the management and disposal of State or public property, and the State and the local government may provide a subsidy or loan to the owner or project implementer of the land or building in a residential environment improvement zone, the construction of the site, the construction of the building, the improvement of the building, and other expenses incurred in the residential environment improvement project, from the National Treasury or the National Housing Fund or local government finance established under the Housing Construction Promotion Act. In this case, the State and the local government may provide the project implementer with a part of the required expenses, so the housing constructor's housing unit constructed by the project is generally lower than the housing environment improvement project without such subsidies, and the owners of the residential building may continue to meet the existing residential environment improvement expenses.

In addition, while the implementation of public works, such as housing site development projects, is conducted regardless of the will of the persons who provide residential buildings, according to Article 4(2) of the former Ad Hoc Measures Act and Article 4(2) of the former Enforcement Decree of the Ad Hoc Measures Act, the requirements for designation of a residential environment improvement district require the consent of at least 2/3 of the total number of the persons who own the land or buildings within the relevant area as of the base date and the consent of at least 1/2 of the total number of the tenants who reside in the relevant area for at least three months as of the base date. Thus, all residents in the project district do not provide non-voluntary residential buildings.

(2) In full view of the contents, form, and purport of the relevant laws and regulations, including these various circumstances, it is reasonable to view that the owners of residential buildings in a residential environment improvement zone who concluded a contract for the sale of houses to be constructed by the said project do not constitute a person subject to relocation measures under Article 78(1) of the former Public Works Act, that is, a person subject to relocation measures under Article 78(1) of the former Public Works Act

C. After compiling the adopted evidence, the lower court acknowledged the facts as indicated in its reasoning, and determined that the instant residential environment improvement project does not constitute public works, and that the Plaintiffs, residents in the residential environment improvement district of this case, and the Plaintiff’s succeeding intervenors who succeeded to the status of the sales contract from the Plaintiffs, who were residents of the instant residential environment improvement district, cannot be treated equally as those subject to the relocation measures stipulated in Article 78(1) of the former Public Works Act, and therefore, the Defendant, who is the project operator of this case, cannot be deemed as having to bear only the total amount of the purchase price

In light of the above legal principles, relevant statutes, and records, the lower court’s determination that the instant residential environment improvement project does not constitute a public project is justifiable in its conclusion that the Plaintiffs and the Plaintiff’s succeeding intervenors are not subject to relocation measures under Article 78(1) of the former Public Works Act. In so doing, the lower court did not err by misapprehending the legal doctrine on the scope of persons subject to relocation measures under Article 78(1) of the former

2. As to whether the sale price was a deception

In a case where a false notice is made on important matters of transaction in the advertisement of goods in a manner to the extent to be criticized in light of the duty of good faith, it shall be deemed a deception. However, the mere exaggeration in the advertisement or advertisement, which requires a false statement, is insufficient to the extent that it may be acceptable in light of the general commercial practice and the good faith principle (see Supreme Court Decisions 9Da55601, May 29, 2001; 2009Da97864, April 29, 201, etc.).

After compiling the adopted evidence, the lower court acknowledged the facts as indicated in its holding, and determined that the Defendant could not be viewed as deceiving that the sales price would not exceed the construction cost in concluding the sales contract for the housing of this case between the Plaintiffs and the withdrawing Plaintiffs.

In light of the above legal principles and records, the above judgment of the court below is just, and there is no error in the misapprehension of legal principles as to deception of sale price.

3. 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.

Justices Kim Nung-hwan (Presiding Justice)