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

1.9 trillion won ($1.5 billion) redevelopment project in Sangdaewon 2, Seongnam, will remain with DL E&C for the time being. The court determined that the extraordinary general meeting held on May 30 likely did not meet the requirements for direct attendance and quorum. Notably, the number of direct attendees needed for contractor selection fell short by just one.

On July 31, the Seongnam branch of the Suwon District Court partially granted a request for a provisional injunction filed by DL E&C against the Sangdaewon 2 redevelopment association.

The court's decision provisionally recognized DL E&C's status as the contractor for the Sangdaewon 2 project. It also suspended 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 Construction as the new contractor was also suspended.

The key issue in the decision was whether the extraordinary general meeting that selected a new contractor met the legal and association bylaws regarding direct attendance and quorum.

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 considered 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 recorded that 1,137 members were present at the start of the meeting, just two above the legal threshold.

However, the court found that at least three of those listed as attendees could not be considered valid participants. One member left the meeting after signing the attendance sheet and was later seen visiting a restaurant and bakery in Yangpyeong, as confirmed by CCTV footage. Another member, while listed as present, stated that they had sent a third party in their place.

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

Excluding these three, the number of valid attendees dropped to 1,134, just one short of the required minimum of 1,135. The court concluded that proceeding with the contractor selection without a majority present was unlawful.

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 the proceedings, and any subsequent increase in attendance could not rectify the procedural defect that occurred at the outset.

The court also noted the poor management of attendee verification. Video footage showed several members leaving the venue before the meeting began, yet the association did not adequately 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 representatives from DL E&C 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 and classification of withdrawal letters. As a result, the court deemed the attendance figures recorded in the minutes and meeting notes unreliable.

In the general matters concerning the termination of the contract with DL E&C, the key issue was the status of the withdrawal letters. During the meeting, 904 withdrawal letters were submitted, but the association determined that only three were valid and not duplicates of existing letters.

In contrast, DL E&C submitted 51 withdrawal letters that overlapped with the existing ones. The court concluded that if these letters were considered, the general matters would also fail to meet the quorum requirement. The possibility of additional valid withdrawal letters submitted on the day of the meeting could not be ruled out.

The association contended that 38 of the 51 members who submitted withdrawal letters later submitted 're-withdrawal letters' on the day of the meeting, asserting that the original resolutions remained valid. However, the court found that the re-withdrawal letters did not clearly indicate a retraction of the prior withdrawal intentions, and the timing of their creation was also uncertain.

The fact that all re-withdrawal letters were pre-printed with the date of the meeting, May 30, raised further concerns. The court suggested that the association might have collected the re-withdrawal letters at the same time as the original withdrawal letters, making it difficult to accept their validity at this stage.

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

This ruling is expected to further delay the contractor selection process for the Sangdaewon 2 project. If the association appeals or if disputes over the contractor's status continue, the legal battles surrounding the 1.9 trillion won project and construction delays could persist for an extended period.