[Exclusive] "Construction Cost Loss of 9.9 Billion Won"... Onepentas Union Members File Injunction Against Union

Samsung C&T Requests "Loss Compensation" After Completion in June Last Year
Temporary General Meeting Passes "Construction Cost Compensation" Agenda
Association Members Form Countermeasure Committee and File for Injunction to Suspend Meeting Resolution

After the Raemian One Pentas (formerly Sinbanpo 15th Complex) reconstruction association passed a plan to pay Samsung C&T a loss compensation amount of 9.9 billion KRW, some association members opposed this and filed a lawsuit. Their opinion is that there is no reason to compensate for losses that are not obligated to be paid at the completion of construction, especially after the construction costs have already been increased three times.

According to the industry on the 7th, 39 association members participating in the 'Sinbanpo 15th Refund Protection Countermeasure Committee' filed a provisional injunction application to suspend the effectiveness of the temporary general meeting resolution against the association on the 4th. The association held a temporary general meeting on the 28th of last month and passed the 'Samsung C&T Construction Cost Compensation Case,' and they requested the suspension of its effect. At the temporary general meeting, a proposal to compensate Samsung C&T with 9.9 billion KRW in construction costs was discussed, and among 168 attending members, 105 voted in favor (61 opposed, 2 abstained).

The countermeasure committee viewed that after the contract with Samsung C&T as the contractor, construction costs were increased three times by 48.9 billion KRW, and that there is no legal obligation to pay the compensation amount. The Sinbanpo 15th association raised the construction cost per 3.3㎡ from 5.71 million KRW in June 2020 to 6.4 million KRW (October 2021), 6.64 million KRW (December 2022), and 6.87 million KRW (December 2024). They also argued that according to current law, matters concerning construction cost compensation require the consent of more than two-thirds of the association members, so a general meeting resolution with only a majority consent is invalid.

The countermeasure committee stated, "The 9.9 billion KRW is association shared property that would be refunded to individual members at an average of 55 million KRW each," adding, "Even this amount is likely to be significantly reduced due to disputes and lawsuits filed against the association." They continued, "This increase was vaguely requested without specifying which particular construction it was for," and emphasized, "Samsung C&T should have presented the legal and contractual grounds for the compensation they are entitled to receive, and only after a thorough review should the decision on payment have been made." The Sinbanpo 15th association initially selected Daewoo Construction as the contractor in 2017 but changed to Samsung C&T three years later. Daewoo Construction subsequently filed a 30 billion KRW damages lawsuit. The countermeasure committee explained that paying the construction cost compensation amid upcoming expenditures such as increased corporate taxes is not a priority. They also stated that since Samsung C&T waived delay damages of 27.9 billion KRW for extending the completion deadline by about six months from the original schedule, there is no reason for an increase.

On the other hand, the association explained the reason for the construction cost compensation proposal, saying, "Although there is no contractual obligation to pay additional construction costs, Samsung C&T completed the construction as scheduled without interruption and actively cooperated with the subsequent move-in procedures," adding, "We lent general project funds at a low interest rate of 1.9% per annum and enabled the association to procure funds at a low interest rate through joint guarantees for construction costs." They also claimed, "We lent emergency funds to promptly resolve Daewoo Construction's provisional seizure and successfully completed the general sale." They emphasized that if the construction cost dispute escalates into a lawsuit, the project cannot be completed for a long time.

Regarding the request for construction cost compensation, a Samsung C&T official explained, "This complex was prepared even before COVID-19, and the amount of 9.9 billion KRW was agreed upon after negotiations reflecting changes in the construction environment to ensure minimal profit and loss compensation."

Samsung C&T has requested a construction cost increase of 28.6 billion KRW from the association since 2023. In November last year, they sent an official letter requesting compensation for losses due to rising construction prices (material and labor costs). In the letter to the association, Samsung C&T cited reasons for the increase, including changing the contract from pre-sale to progress payment to implement post-sale, recognizing Daewoo Construction's land provisional seizure during the general sale promotion, and immediately paying 20.6 billion KRW to resolve the seizure. They also mentioned that despite the rejection of the construction cost increase request, they completed the construction on time without suspension, unlike other complexes, and achieved the highest general sale price in Gangnam.

Kim Jong-il, head of the Sinbanpo 15th association, said, "The agenda was judged to be lawful and was passed, and if a lawsuit is filed, the association will respond."

Meanwhile, Raemian One Pentas was developed by reconstructing the Sinbanpo 15th apartment complex into a complex with 641 households, ranging from 4 basement floors to 35 above-ground floors, located at 12 Banpo-dong, Seocho-gu. At the time of sale in July last year, the price was set at 67.37 million KRW per 3.3㎡, recording the highest sale price since the implementation of the price ceiling system, and it attracted attention as a lottery complex with a market price gain exceeding 2 billion KRW.