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Changes in Judicial Precedent of Invalidation of Union Establishment

2010.11.16

A decision of the Supreme Court in January, 2010 states that a blank document of consent collected from the land-owners by the Steering Committee of the Reconstruction Union (the "Union") which omits the land-owners' consent for various items outlined in Article 26(1) of Decree of Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (the "Old Act") are null and void. Therefore, because the disposition of approval for the establishment of the Union which was based on such consent had grave and apparent legal flaws, it was ruled that the disposition ought to be invalidated (Supreme Court Decision 2009Du4845 dated January 28th, 2010). This decision which states that the approval for the establishment was invalid from the very beginning because of a legal flaw in the process is expected to have wide-ranging repercussions. 
 
A summary of the main points of the decision are as follows; 
 
"Reasoning and record of the trial's decision states that the written consents which the Steering Committee of the Intervenors' Union submitted to the defendants after collecting them from the land-owners had completely omitted items which were specifically required to be recorded even though the form had sections for recording the 'Design Outline of the Buildings to be constructed' as set out in Article 26(1)1 of Decree of the Old Act and 'Estimated Amount Necessary for Removal of Structures and New Construction' as set out in Article 26(1)2 of the same Decree. Nonetheless, on January 24th 2010, the defendants approved the establishment of the Intervenors' Union. 
 
If this is the case, the disposition which acknowledges an invalid consent as a valid one whilst violating the examination criteria of written consent of land-owners which is necessary for the approval of establishment of Unions is illegal. Given the importance of the meaning of written consents from the land-owners, who are directly interested parties of the Union, it can be said that the legal flaw in the disposition above is sufficiently serious. Furthermore, the legal flaw is also clear and apparent if one considers the fact that the defendants effectuated the written consents even though it was the legal flaws were easy to detect (Supreme Court Decision 2009Du4845 dated January 28, 2010)." 
 
However, in October 2010, the Supreme Court delivered another decision which appeared to contradict the original judgment – it accepted a claim for sale filed by the Union which had obtained approval for establishment of the Union based on blank consents (Supreme Court Decision 2009Da29380 dated October 29, 2010). 
 
"Facts admitted by the original court shows that the claimants held an inaugural meeting on May 13th, 2006, obtained approval for establishment from the head of Nowon District on June 12th, 2006, and completed incorporation registration on June 15th, 2006, and written consent which was submitted as part of the application for establishment of the Union to the administrative authority was a complete and valid document even though the items for 'estimated amount necessary for removal of structures and new construction' were missing in the written consent originally collected from the land-owners. As such, even though the relevant information was omitted in the written consent submitted during the establishment of the Union, disposition of the administrative authority which approved the establishment of the Union may not be recognized as ipso jure null and void so long as the written consent submitted as part of the application for approval of the establishment of the Union to the administrative authority had the 'estimated amount necessary for removal of structures and new construction.'" (Supreme Court Decision 2009Da29380 dated October 29, 2010) 
 
At first glance, the two decisions appear to contradict each other, but this is not the case. Supreme Court's Decision 2009Du4845 delivered on January 28th, 2010 points out that the administrative authority approved the establishment of the Union even where the written consents were submitted while some items were left blank, and Supreme Court Decision 2009Da29380 delivered on October 29th, 2010 concerned a case in which the blank consent was supplemented before the application for establishment of the Union was actually filed. 
 
Supreme Court's decisions can be interpreted in two separate ways. First, where the Union obtains an approval for establishment based on blank consent, if the Union wants to avoid the decision becoming null and void due to its grave and apparent legal flaws, it should fill in the blank items of consent before submitting it for application. Second, if the Union fails to get the necessary consent for the application due to the legal flaws in the written consent, or if some specific items were omitted in the written consent which the public officer receives, invalidation of the disposition of approval for the Union establishment may not be avoidable even if the Union supplements the legally flawed written consent. 
 
The Supreme Court's latest decision is significant because it acknowledges for the first time that even where a written consent is collected as a blank consent, if the blank is filled in before the application for disposition is filed, the disposition of approval of the establishment of the Union shall not be null and void. The degree of severity of the legal flaws which will determine whether the approval of the establishment of the Union based on grave and apparent flaws would be accepted or rejected was quoted by the Seoul High Court in a trial appealed by the Union who lost the case in the first court of first instance (Seoul High Court Decision 2009Na21302, dated June 23, 2010). The logic presented by the Court in this case may lay the legal foundations for future cases of reconstruction of unions and construction companies which experience similar legal problems and could enable them to continue their schedules. 
 
Taking into consideration the significance of the consent of the land owners who are the directly interested parties in the reconstruction projects, if the written consent is collected while the sections for 'design outline of the buildings to be constructed' and 'estimated amount necessary for removal of structures and new construction' are left blank, even though the Union may have applied for disposition of approval of the establishment of the Union by filling in the blanks afterwards, it can be said that the disposition of approval still has grave and apparent legal flaws. However, the administrative authority which receives application for disposition of approval of establishment of the Union can only examine whether or not all items required by each section of Article 26 (1) of the Decree of the Old Act are satisfied in the written consent. At the same time, the administrative authority has neither the authority nor the obligation to examine whether the sections on the 'design outline of the buildings to be constructed' and 'estimated amount necessary for removal of structures and new construction' were filled in from the beginning or supplemented at a later stage. 
 
Therefore, the legal flaws mentioned above cannot be classified as apparent flaws (Seoul High Court Decision 2009Na21302, dated June 23, 2010).

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