[Representation] Construction/Real Estate

Representing an urban development association, Barun Law wins the lawsuit filed by the members of the association to seek invalidation confirmation of the approval of a replotting plan for an urban development project on land sized more than 900,000m2

1. Background of the case

The defendant is an association established for the purpose of carrying out an urban development project implemented through land replotting. The plaintiffs are owners of land within the above project zone and members of the association.

The defendant held an extraordinary general meeting on November 29, 2019 and approved the preparation of a replotting plan, filing an application for approval of the replotting plan, and sale of land secured by the authorities in recompense of development outlay. The defendant received approval for the replotting plan from the mayor in accordance with the resolution of the extraordinary general meeting of this case on December 27, 2019. Accordingly, on January 15, 2020, the defendant announced the first replotting land designation disposition for the project area in this case according to the replotting plan (the “first disposition”). The defendant also held a meeting of delegates on May 16, 2022 and resolved to designate the project area in this case as a scheduled replotting site with the same contents as the first disposition. On June 7, 2022, the defendant re-announced the second replotting scheduled land designation for the project area in this case (the “second disposition”).

Claiming that the resolution of the extraordinary general meeting, the replotting plan, the approval disposition, and the first and the second dispositions were all illegal, the plaintiffs filed a lawsuit against the defendant in order to seek (i) confirmation of invalidity of the resolution of the extraordinary general meeting, (ii) invalidity confirmation or cancellation of the first disposition, and (iii) confirmation of the invalidity of the second disposition.

2. Our argument and role

Since the defendant’s second disposition was substantially the same as the first disposition, to the extent that the second disposition newly took effect, whether it would be sufficient to contest the second disposition and whether there was no legal interest in contesting the first disposition, which had already become a past legal relationship, were issues in this case. In addition, the issue of whether there were grounds for invalidity in the second disposition, which was resolved through the meeting of delegates, also became an issue.

Representing the association, we compared the details of the first and second dispositions of scheduled replotting land designation and found that the second disposition was substantially the same as the first disposition. On the basis of the finding, we emphasized that there was no legal benefit in seeking invalidation or cancellation of the first disposition. In addition, we argued that there was no reason for invalidity because the second designation had been resolved through the meeting of delegates on May 16, 2022, which was convened in accordance with legal procedures and met the quorum on the basis of the finding that the plaintiffs failed to file a suit for cancellation within 90 days from the date they had learned of the second disposition, and the plaintiffs were allowed to claim invalidity only due to the lapse of the prescribed period.

Meanwhile, the plaintiffs argued that even if the second disposition and the first disposition had substantially the same contents, they had a legal interest in seeking invalidation confirmation or cancellation of the first disposition in order to later hold the defendant liable for unfair enrichment or illegal acts. In response to this argument, we argued that the benefit claimed by the plaintiffs was not a “direct benefit” to seek invalidation confirmation or cancellation of the first disposition, but only an “indirect benefit” for filing a lawsuit for unfair enrichment or illegal acts against the defendant, so the lawsuit still did not have any merits.

Furthermore, the plaintiffs argued that the replotting plan, which was the basis for the first and the second dispositions, violated the plaintiffs’ property rights by applying an excessive reduction rate and was illegal by violating the principle of equality between the plaintiffs and the other members of the association. However, submitting the appraisal report evaluating the project site in this case at the time, we emphasized that the calculation of the reduction rate for the land owned by the plaintiffs could not be considered particularly illegal or disadvantageous and contrary to the principle of equality.

3. Decision

Based on our argument, the court determined that it considered the first and the second dispositions substantially the same disposition and there is no benefit for the plaintiffs in seeking invalidity confirmation or cancellation of the first disposition, the benefit of the lawsuit regarding the first disposition, which the plaintiffs claimed to later seek unfair enrichment or tort liability against the defendant, was only an indirect benefit., and the preliminary issues for civil litigation could not be considered to be included in the benefit of suit in a lawsuit filed for allegedly illegal dispositions. The court finally dismissed the plaintiffs’ appeal.

In addition, with regard to the plaintiffs’ claim that the defendant’s meeting of delegates was illegal due to insufficient number of delegates or violation of procedures, the court dismissed their claim on the basis of the following determination: the meeting of delegates at issue in this case is legal and valid as found from the list of delegates, the notice of the meeting and the approval of expenses for mail dispatch, which are produced by us to the court.

4. Significance of the decision

This case sets a meaningful precedent by ruling specifically on the fairness of appraisals and replotting plans, which frequently become an issue in urban development projects carried out through the evaluation oriented replotting method, and the effect of a resolution of extraordinary general meetings and delegate meetings for designating land scheduled for replotting.

The legal principle upheld by the Supreme Court that there is no legal interest in seeking invalidity confirmation is once again affirmed, if an administrative agency makes the same administrative disposition in accordance with the due procedure or formality with regard to an administrative disposition that is invalid due to procedural or formal defects, since the claim for invalidity confirmation for the previously invalid administrative disposition is nothing more than a dispute over the validity of the past legal relationship, although there are some differences in the content of the first and the second dispositions, as they are all based on the same replotting plan and the changes do not affect the rights of members of the association.

The project was a large-scale one to supply a new city sized more than 900,000 square meters, with a completion rate exceeding about 97%, and was involved by hundreds of members of the association, landowners, and prospective tenants. The decision in this case is also significant in that the project was able to be completed without a hitch.

□ Attorneys in charge: Suk Ho-chul, Kim Yong-woo and Park Min-chae

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