Court Ruling Keeps DL E&C as Contractor for Sangdaewon 2 Redevelopment

The contractor status for the 1.9 trillion won redevelopment project in Sangdaewon 2, Seongnam, will remain with DL E&C for the time being. A court has determined that the extraordinary general meeting held on May 30 likely did not meet the requirements for direct attendance and quorum. Notably, the decision hinged on the fact that the number of attendees needed for a majority was just one short.

On July 31, legal sources reported that the 5th Civil Division of the Seongnam branch of the Suwon District Court partially accepted a request for a provisional injunction filed by DL E&C against the Sangdaewon 2 Redevelopment Association.

Through this injunction, the court provisionally recognized DL E&C's status as the contractor for the Sangdaewon 2 project. It also suspended the effectiveness of the association's notification to DL E&C regarding the termination of the construction contract and the resolutions made during the May 30 extraordinary general meeting. Consequently, the resolution to select GS Engineering & Construction as the new contractor was also suspended.

The core issue in the decision was whether the general meeting that selected a new contractor met the direct attendance and quorum requirements set by law and the association's bylaws.

According to the Urban Redevelopment Act and the association's bylaws, a majority of all members must be present in person to select a contractor. Attendance by proxy is also recognized as valid if proper delegation procedures are followed.

The total number of members in the Sangdaewon 2 association is 2,268, meaning at least 1,135 members needed to be present in person to proceed with the contractor selection. The minutes prepared by the association recorded that 1,137 members were present at the start of the meeting, just two above the legal threshold.

However, the court found it difficult to recognize at least three of the attendees as valid participants. One member was confirmed via closed-circuit television to have left the meeting to visit a restaurant and bakery in Yangpyeong, Gyeonggi Province. Another member, while listed as present, stated that they had actually sent a third party to attend on their behalf.

The third individual was a proxy who was not the representative member of a shared property. The court noted that there was no evidence that the change of the representative member had been properly reported to the association, thus invalidating the proxy's attendance.

Excluding these three individuals, the number of valid attendees dropped to 1,134, just one short of the required 1,135 for proceeding with the contractor selection. The court ruled that "it is unlawful to initiate discussions on the contractor selection agenda without a majority of members present."

The association argued that additional members entered after the meeting commenced, ultimately meeting the majority requirement. However, the court maintained that a majority must be present at the start of discussions on the contractor selection agenda. An increase in attendees afterward could not rectify the procedural defect that occurred at the beginning.

The court also noted the poor management of attendee records. Video footage showed several members leaving the venue before the meeting began, yet the association did not specifically track or manage those who left and re-entered. There were also instances where attendees were not required to remove masks, hats, or sunglasses, making it difficult to verify their identities.

The court pointed out that DL E&C's observers were only allowed into the venue about two hours after the meeting began, and even after entering, they found it challenging to monitor the verification of identities and the classification of withdrawal notices. Therefore, the court deemed it difficult to trust the attendance numbers recorded in the minutes and meeting records prepared by the association.

In terms of general agenda items, the key issue was the status of the withdrawal notices. During the meeting, 904 written withdrawal notices were submitted, but the association determined that only three were valid and not duplicates of existing notices.

In contrast, DL E&C submitted 51 withdrawal notices that overlapped with the written resolutions. The court concluded that if these withdrawal notices were considered, the general agenda would also fail to meet the quorum requirement of a majority of all members. The possibility of additional valid withdrawal notices existing among those submitted on the day of the meeting was not ruled out.

The association contended that 38 of the 51 members who submitted withdrawal notices later submitted 're-withdrawal notices' on the day of the meeting, arguing that the original written resolutions remained valid. However, the court found that the re-withdrawal notices did not clearly state the intention to retract the previous withdrawal notices, and the timing of their completion was also difficult to verify.

The fact that all re-withdrawal notices were pre-printed with the date of the meeting, May 30, raised concerns. The court suggested that the association might have received the re-withdrawal notices at the same time as the written resolutions, making it difficult to recognize their validity at this stage.

Ultimately, the court identified procedural defects in both the direct attendance and the handling of written resolutions, leading to a strong likelihood that the meeting's resolutions would be deemed invalid.

As a result of this decision, the contractor selection process for Sangdaewon 2 is likely to face further delays. If the association appeals or if disputes over the contractor status continue, the legal battles surrounding the 1.9 trillion won project and construction delays could persist for an extended period.