Hello, this is attorney Park Jong-han of Cheongchul Law Firm.

In connection with authorisation of association establishment and authorisation of changes to it, we examine what becomes of the authorisation disposition where the written consents are defective, and what happens once a change authorisation has been granted.

[Question] How does a defect in the association establishment consent affect the authorisation disposition, and can the earlier disposition still be challenged after a change authorisation has been granted?

[Answer]

A. Legal character of the establishment consent

Under the Act on the Improvement of Urban Areas and Residential Environments (the “Urban Improvement Act”), an improvement project association is created by the competent authority’s authorisation and by registration. Accordingly, the consent of landowners to the establishment is merely one of the procedural requirements for the administrative disposition of authorisation.

The Supreme Court consistently holds that even if the consent is defective, the authorisation disposition is not void ab initio unless the defect is grave and obvious.

In Supreme Court Decision 2009Da29380 (28 October 2010), signatures and seals were obtained from landowners while the item for the “estimated cost of demolition and new construction” was left blank, and the promotion committee later filled in the estimate by hand for all of them. The Court held that “so long as the estimated cost of demolition and new construction was recorded in the consent forms submitted to the authority at the time of the application, the authorisation cannot be said to be void ab initio even if that part was blank when consent was given.”

Supreme Court Decision 2010Da85379 (27 December 2012) is to the same effect: where the “design outline of the new building” and the “estimated cost of demolition and new construction” had all been completed by rubber stamp at the time of the application, the defect could not be regarded as grave and obvious even if those parts were blank when consent was given, so the authorisation was not void ab initio.

B. The authority’s standard for reviewing consents

On how an authority should review landowner consent upon an application, Supreme Court Decision 2010Da85379 (27 December 2012) held that “in reviewing landowner consent as a requirement for authorising a redevelopment association, the authority must, above all, review the content of the consent by reference to whether the consent form contains all the statutory items listed in each subparagraph of Article 26(1) of the former Enforcement Decree of the Act on the Improvement of Urban Areas and Residential Environments, and review the genuineness of the consent by reference to whether the seal impression affixed to the form matches that on the seal certificate.”

Note, however, that under Article 36 of the current Urban Improvement Act, written consent for association establishment authorisation requires, in principle, the name, a fingerprint seal and an attached copy of identification.

C. Which disposition must be challenged — the original authorisation or the change authorisation

Where a change authorisation follows the original authorisation, the question arises whether the earlier authorisation or the change authorisation itself must be challenged.

The Supreme Court distinguishes cases according to (1) whether the change authorisation went through the same requirements and procedures as obtaining a fresh authorisation, and (2) whether subsequent acts were carried out on the basis of the original authorisation.

Where a change authorisation was obtained through the same requirements and procedures as a fresh authorisation, the original change authorisation is revoked or withdrawn and the amended change authorisation becomes the new one, so absent special circumstances the defect in the change authorisation itself must be challenged.

The Court held that “where, owing to a dispute over the legality or validity of the earlier authorisation, the association went through the authorisation procedure afresh from the beginning and obtained a change authorisation, that change authorisation can be regarded as meeting the requirements of a new authorisation only if, absent other special circumstances, procedural requirements such as convening a new general meeting before applying for the change authorisation and resolving on the confirmation of the articles of association and the election of officers were satisfied” (Supreme Court, 29 May 2014, 2013Du18773).

As to such a case, the Court also held that “where a housing redevelopment association, after an initial change authorisation, obtains through lawful procedures a further change authorisation that includes and amends everything covered by the initial one, the initial change authorisation is revoked or withdrawn and the amended change authorisation becomes the new change authorisation. In that case the initial change authorisation is a disposition that no longer exists or a past legal relationship, so absent special circumstances there is no interest in seeking its revocation” (Supreme Court, 24 October 2013, 2012Du12853).

By contrast, where subsequent acts were carried out on the basis of the original authorisation, challenging the defect in that original authorisation is also permitted.

The Court held that “where a housing reconstruction association obtains a change authorisation through the same requirements and procedures as a fresh authorisation, if the association had already carried out subsequent acts — exercising the right to demand sale, resolving at a general meeting on the selection of the contractor, formulating the project implementation plan or the management and disposal plan — on the premise that the original authorisation was valid, then, since those acts would retroactively lose effect if the original authorisation were confirmed void or revoked, it cannot be said, absent special circumstances, that the interest in seeking confirmation that the original authorisation is void has been extinguished” (Supreme Court, 25 October 2012, 2010Du25107).

D. Effect on a later change authorisation when the earlier authorisation is void or revoked

If the original authorisation is revoked or confirmed void, a change authorisation made on its basis also loses effect or is void in principle. Where, however, the later change authorisation substantively satisfies all the requirements of a new authorisation, it remains valid even though the original authorisation is revoked or void.

The Supreme Court held that “where the original authorisation is revoked through litigation or confirmed void, it is proper to interpret a change authorisation made on its basis as also losing effect or being void in principle” (Supreme Court, 29 May 2014, 2011Du25876).

The same judgment continued, however, that “even where a preceding change authorisation is revoked through litigation or confirmed void, if the subsequent change authorisation satisfies the requirements of a new change authorisation, including the matters altered by the preceding one, effect may be recognised accordingly” — that is, where the later change authorisation substantively completes the requirements of a new authorisation, its effect may be recognised notwithstanding the invalidity or revocation of the earlier disposition.

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