Hyundai E&C said it cannot return the land ownership of the Hyundai Apartments in Apgujeong-dong, Gangnam, Seoul, even under the court's recommendation for settlement, for which it currently holds ownership.
Apgujeong District 3 is where Seoul City designated a special planning zone to push a reconstruction project. The total area is 360,187.8 square meters and includes 3,946 households in Hyundai phases 1–7, 10, 13, and 14. Of these, nine parcels (total area 40,706.6 square meters) of the Hyundai phase 3 and 4 apartments are held by Seoul City, Hyundai E&C, and HDC Hyundai Development Company.
In the registration process, a builder must transfer ownership of both the building and the site to the people who bought the apartments, but problems arose when it transferred only the building ownership while retaining the land ownership as is or donating it to Seoul City through contributed acceptance. Considering equity ratios and market prices, it is about 2.6 trillion won. After developing the Apgujeong apartment district in the 1970s, Seoul City and builders such as Hyundai E&C have remained registered as land owners to this day.
In response, 125 owners from the phase 3 and 4 apartments filed a lawsuit over two of the parcels (worth about 125 billion won at market price) that Hyundai E&C holds, and the Seoul Central District Court on the 16th recommended a settlement to unconditionally return ownership of the land to the owners. A settlement recommendation is a decision in which the bench recommends that both parties settle (agree) on certain terms to resolve the case. If neither party files an objection within two weeks, it has the same effect as a final judgment; if an objection is filed, the lawsuit proceeds again.
According to the maintenance industry on the 28th, Seoul City, Hyundai E&C, HDC Hyundai Development Company, and the Apgujeong District 3 reconstruction association recently held a meeting related to Apgujeong District 3 land ownership, and Hyundai E&C said at the meeting it could not accept the settlement recommendation.
A maintenance industry official said, "I understand Hyundai E&C conveyed to Seoul City that it would not accept the settlement recommendation." A Hyundai E&C official said, "A listed company cannot accept a court decision to unconditionally transfer ownership. It could constitute a breach of duty to shareholders," adding, "We conveyed this position to Seoul City and the Apgujeong District 3 association."
The legal community interprets the court's unconditional order to transfer ownership through a settlement recommendation as meaning Hyundai E&C is likely to lose. It means the cause of this dispute lies with Hyundai E&C because mistakes were made during the development of the Apgujeong apartment district. Even so, the reason Hyundai E&C decided not to transfer ownership is that accepting the settlement recommendation and handing over land ownership unconditionally could constitute a breach of duty to shareholders.
Within the maintenance industry, some also think Hyundai E&C will use the land ownership it currently holds to be selected as the builder for the reconstruction of Apgujeong District 3 in the future.
A maintenance industry official said, "It is questionable whether it can refuse the court's settlement recommendation yet use the land ownership, obtained due to Hyundai E&C's mistake, as a tool to win the construction contract."