[2] Whether each subparagraph of Article 79-2 of the former Enforcement Decree of the Framework Act on the Construction Industry, which provides for exceptional cases that fall short of the registration standards for construction business but are not subject to sanctions such as cancellation of registration, is an exemplary provision

[3] In a case where a constructor does not fall under any subparagraph of Article 79-2 of the former Enforcement Decree of the Framework Act on the Construction Industry but falls short of the standards for construction business registration temporarily, whether the cancellation of registration or the suspension of business for not more than one year pursuant to the proviso of Article 83 subparagraph 3 of the Framework Act

Furthermore, the main text of Article 83 subparag. 3 of the Act provides that the cancellation of the registration of a constructor or the suspension of business for not more than one year where a constructor fails to meet the registration standards for construction business, and the proviso of Article 83 subparag. 3 provides that “the same shall not apply to cases prescribed by Presidential Decree, such as temporary failure to meet the registration standards.” Considering that cancellation of registration pursuant to Article 83 of the Act or suspension of business for not more than one year constitutes the highest means of sanctions among the various kinds of sanctions prescribed by the above Act, it is intended to realize the principle of proportionality under the Constitution by preventing a constructor who temporarily falls short of the registration standards for construction business from taking a disciplinary measure pursuant to Article 8

[2] In view of the realization of the principle of proportionality under the Constitution, comprehensively taking account of the contents, structure, legislative intent, etc. of the provisions related to the Framework Act on the Construction Industry, each subparagraph of Article 79-2 of the former Enforcement Decree of the Framework Act on the Construction Industry (amended by Presidential Decree No. 27440, Aug. 4, 2016) is reasonable to deem that each subparagraph of the Framework Act on the Construction Industry (amended by Presidential Decree No. 2740, Aug. 4, 2016) is an example of the cases where the case is not subject

[3] Each subparagraph of Article 79-2 of the former Enforcement Decree of the Framework Act on the Construction Industry (amended by Presidential Decree No. 27440, Aug. 4, 2016; hereinafter “Enforcement Decree”) shall specify cases not subject to sanctions under the main sentence of Article 83 subparag. 3 of the Framework Act on the Construction Industry (hereinafter “the Act”) in accordance with the purport of delegation under the proviso of Article 83 subparag. 3 of the former Enforcement Decree of the Framework Act on the Construction Industry (hereinafter “Enforcement Decree”). Therefore, even if a constructor does not fall under any subparagraph of Article 79-2 of the Enforcement Decree, if a constructor is deemed not to temporarily lack the standards for registration of construction business, it is justifiable to interpret that the constructor is excluded from those subject to sanctions such as cancellation of registration or suspension of business for not more than one year pursuant to the proviso of Article 83 subparag.

1. Case summary and key issue

A. According to the reasoning of the first instance judgment cited by the lower court and the evidence duly admitted by the lower court, the following circumstances are revealed.

1) 천일종합건설 주식회사(본래 상호가 ‘구성건설 주식회사’였으나 2014. 3. 25. 현재 상호로 변경등기를 마쳤다, 이하 ‘천일종합건설’이라 한다)는 토목건축공사업, 조경공사업, 전기공사업, 부동산매매·임대업 등을 영위하는 법인인데, 2013. 11. 13. 건설공제조합에 건설업 등록기준에 필요한 출자증권 356좌의 출자금 492,269,680원을 예치하였다.

2) 회생절차가 진행 중이던 천일종합건설은 2013. 10. 28. 회생법원으로부터 기업 매각을 통한 변제계획을 인가받고, 2014. 2. 17. 회생절차종결 결정을 받은 다음, 2014. 2. 18. 천일종합건설의 전체 사업분야 중 토목건축공사업, 조경공사업 부분을 분할하여 원고(본래 상호가 ‘영성개발 주식회사’였으나 2014. 3. 25. 현재 상호로 변경등기를 마쳤다)에게 합병하기로 분할합병계약을 체결하였고, 2014. 3. 25. 분할합병 및 상호변경 등기를 마쳤다.

3) Following the foregoing split-merger, the Plaintiff comprehensively succeeded to the 356 share of investment certificates for the Construction Mutual Aid Association of the Incheon General Construction Project. The Construction Mutual Aid Association did not comply with the Plaintiff’s transfer of investment certificates and the issuance of the confirmation note of the possible amount of the investment certificates on the ground that the damages incurred from the partial redemption of the loan due to the rehabilitation procedures for the Incheon General Construction Project. The Plaintiff filed a lawsuit against the Construction Mutual Aid Association on November 25, 2015 against the Daegu District Court 2015Da207338, the Daegu District Court 20738, which had been pending in the lawsuit, claiming a return of the investment deposit, and the said lawsuit was withdrawn simultaneously with the payment of the investment deposit amount of KRW 515,00,000 from the Construction Mutual Aid Association on June 3, 2016.

4) In the aforementioned agreement on May 27, 2016, the Plaintiff and the Construction Mutual Aid Association agreed that “The Construction Mutual Aid Association shall pay to the Plaintiff KRW 515,00,000,000 of the refund money deposited to the Plaintiff under certain conditions, but the Plaintiff’s equity shares acquired in the name of the Plaintiff’s comprehensive construction project to pay the said amount, and the confirmation amount of the confirmation amount in the name of the construction comprehensive construction project issued by the Construction Mutual Aid Association immediately after the acquisition

5) 원고는 2016. 6. 3. 건설공제조합으로부터 위 출자예치금 환급금을 지급받은 다음, 같은 날 전문건설공제조합에 출자증권 56좌의 출자금 50,589,728원을 예치하였다. 그 후 원고는 2016. 6. 14. 전문건설공제조합에 출자금 574,824,720원을 추가로 예치하고, 같은 날 전문건설공제조합으로부터 토목건축공사업에 대하여 12억 원, 조경공사업에 대하여 7억 원의 각 보증가능금액확인서를 발급받았다.

6) The Defendant rendered a disposition against the Plaintiff under the main sentence of Article 10 of the Framework Act on the Construction Industry (hereinafter referred to as the “Act”), Article 13(1)1-2 of the former Enforcement Decree of the Framework Act on the Construction Industry (amended by Presidential Decree No. 2740, Aug. 4, 2016; Presidential Decree No. 2740, Aug. 4, 2016; Presidential Decree No. 20154, Mar. 3, 2017) on the ground that “The Plaintiff received the refund from the Construction Mutual Aid Association on June 3, 2016, and became invalid the existing guarantee amount under the name of the comprehensive construction under the agreement between the Plaintiff and the Construction Mutual Aid Association on May 27, 2016.” Accordingly, the Plaintiff failed to satisfy the criteria for the registration of construction business under the name of the Plaintiff from June 3, 2016 to June 13, 2016.”

B. The key issue of the instant case is whether the Plaintiff’s temporary violation of the criteria for registration of construction business can be subject to the disposition of suspension of business pursuant to the main sentence of Article 83 subparag. 3

2. Relevant legal principles

A. Principle of proportionality

The proportionality doctrine is the basic constitutional principle naturally derived from the principle of the rule of law, and is applicable to all state actions. Therefore, means to achieve administrative purposes should be effective and appropriate for achieving the objectives, and as far as possible, at least infringement should be caused, and at the same time, infringement upon the introduction of the said means should not be capable of the public interest (see Supreme Court Decision 96Nu1096, Sept. 26, 1997, etc.). In particular, in the case of a disciplinary measure on the grounds of the breach of duty by the counterparty, even though it is not strictly between the contents of the breach of duty and the amount of the disciplinary measure, a proportional relationship should be generally recognized, and in case of a disciplinary measure on the grounds of the violation of duty, it should be deemed that it constitutes deviation and abuse of discretionary power (see, e.g., Supreme Court Decision 2018Du48298, Sept. 9, 2019).

B. Details of the Framework Act on the Construction Industry

1) Article 9 of the Act provides that a person who intends to run a construction business shall meet the standards for registration of construction business, as prescribed by Presidential Decree, with respect to technical capacity, capital, facilities, equipment, and other necessary matters. According to the delegation, Article 13(1) of the Enforcement Decree of the Act provides that a constructor shall meet the standards for registration of technical capacity, capital, facilities, and equipment under [Attachment Table 2] (Article 1) and that a financial institution, etc. designated by the Minister of Land, Infrastructure and Transport shall submit a confirmation letter of guarantee amount of guarantee amount issued according to the following standards (Article 1-2).

2) Article 83 Subparag. 3 of the Act provides that “Where a constructor fails to meet the standards for registration of construction business under Article 10, the Minister of Land, Infrastructure and Transport may cancel his/her construction business registration or order him/her to suspend construction business for a fixed period not exceeding one year.” The proviso to Article 83 Subparag. 3 provides that “However, this shall not apply to cases prescribed by Presidential Decree, such as temporary failure to meet the standards for registration of construction business.” Following delegation, Article 79-2 of the Enforcement Decree of the Act provides that “where the period of falling short of the standards for registration due to death, disappearance, or retirement of a person who has technical capacity under [Attachment Table 2] falls short of the capital standards under Article 13(1)1, the period of falling short of the capital standards does not exceed 50 days” (Article 13(1)1; where rehabilitation procedures are being implemented due to a court’s rehabilitation decision; where rehabilitation procedures are deemed not impeded in the implementation of a rehabilitation plan after receiving a decision for the completion of rehabilitation procedures from a court; where the procedures for joint administrative proceeding are commenced within one year.”

3) Article 84 of the Act provides that the Minister of Land, Infrastructure and Transport shall determine the criteria for cancellation of registration of a construction business or the degree of violation, the period of suspension of business, and other necessary matters, based on the type and degree of violation. According to delegation, Article 80(1) of the Enforcement Decree provides that “the period of suspension of business or the amount of penalty surcharges depending on the type and degree of violation under Article 84 of the Act shall be as shown in attached Table 6.” The main text of Article 80(2) provides that “The Minister of Land, Infrastructure and Transport may increase or decrease the period of suspension of business or the amount of penalty surcharges within the scope of 1/2 of the amount of penalty surcharges under paragraph (1) in consideration of the motive, content and frequency of violation, characteristics of construction works related to the violation, bidding methods, etc.” Meanwhile, [Attachment Table 6] of the Enforcement Decree provides that “the period of suspension of business and the amount of penalty surcharges under subparagraph 2 may be increased or reduced by up to 1/2 of the individual standards for suspension of business”.

C. Justifiable interpretation of the proviso of Article 83 subparag. 3 of the Framework Act on the Construction Industry

1) As can be seen, the legislative purpose of this Act is to ensure the proper execution of construction works and the sound development of the construction industry by forcing constructors to satisfy certain standards for registration and preventing constructors who fail to meet such standards from doing activities in the construction market (see Articles 1 and 3 of the Act).

Furthermore, the main text of Article 83 subparag. 3 of the Act provides that the cancellation of registration of a constructor or the suspension of business for less than one year where a constructor fails to meet the registration standards for construction business, and the proviso of Article 83 subparag. 3 provides that “any case prescribed by Presidential Decree, such as temporary failure to meet the registration standards, shall be excluded” is intended to realize the principle of proportionality under the Constitution by preventing a constructor who temporarily falls short of the registration standards for construction business from taking into account the fact that the cancellation of registration under Article 83 of the Act or the suspension of business for not more than one year constitutes the highest means of sanctions among the various kinds of sanctions prescribed by the above Act.

2) In light of the realization of the principle of proportionality under the Constitution, comprehensively taking account of the contents, structure, legislative intent, etc. of the provisions related to the Framework Act on the Construction Industry, each subparagraph of Article 79-2 of the Enforcement Decree is reasonable to deem that each subparagraph of Article 83-3 of the Act is an exemplary provision by specifying cases that are not subject to sanctions under the main sentence of Article 83-3 of the Act according

The reason is that it is practically difficult to prescribe the Enforcement Decree in full and without exception the exceptional circumstances that cannot be considered as the grounds for the cancellation of registration of a constructor or the suspension of business for not more than one year, because it is merely a “temporary short of the registration standards, etc.” in accordance with the purport of the delegation provision of the mother Act (proviso of Article 83 subparag. 3 of the Act) and the following circumstances should be considered.

Article 13(1) of the Enforcement Decree provides for the submission of the confirmation note of confirmation of possible amount by financial institutions, etc., in addition to “to have technical capability, capital, facilities, and equipment” as the criteria for registration of construction business. However, each subparagraph of Article 79-2 of the Enforcement Decree provides only the cases where a constructor temporarily fails to meet the technical ability and capital standards,” and does not provide for the exceptional grounds for exception to “where a constructor fails to temporarily satisfy the confirmation note of possible amount by a financial institution, etc.” However, in any case where a constructor fails to meet the criteria for the registration of confirmation of possible amount by a financial institution, etc., it is difficult to evaluate that the legislative intent, which is subject to sanctions under the main sentence of Article 83 subparag. 3 of the Act, has been realized. It is reasonable to regard it as the blank of the discipline that the founder of the Enforcement Decree did not intend. This is because there is no clear ground to treat both parties differently, such as having the nature or weight that the registration criteria for submission of confirmation note of possible amount by a financial institution, etc.

On the contrary, the cases where each subparagraph of Article 79-2 of the Enforcement Decree is not subject to sanctions under the main sentence of Article 83 subparag. 3 of the Act are limited to those where the registration standards for construction business are temporarily insignificant, it would result in the result that a disposition of suspension of business for not less than three months and not more than six months should be imposed for the reason that it does not fall under any subparagraph of Article 79-2 of the Enforcement Decree merely because it does not fall under the cases listed in any subparagraph of Article 79-2 of the Enforcement Decree, even though the registration standards for construction business are temporarily insignificant, a disposition of suspension of business for not less than three months and not more than six months should be imposed for the reason that it does not fall under any subparagraph of Article 83 subparag. 3 of the Act and any subparagraph of the Enforcement Decree [Attachment 6].

3) Therefore, each subparagraph of Article 79-2 of the Enforcement Decree provides an example of cases not subject to sanctions under the main sentence of Article 83 subparag. 3 of the Act in accordance with the purport of delegation under the proviso of Article 83 subparag. 3 of the Act. Thus, it is justifiable to interpret that a constructor is excluded from those subject to sanctions such as cancellation of registration or suspension of business for not more than one year pursuant to the proviso of Article 83 subparag. 3 of the Act where a constructor may be deemed to temporarily lack the registration standards of construction business even if he/she does not fall under any subparagraph of Article 79-2 of the Enforcement Decree. Accordingly, subordinate statutes are consistent with the principle

3. Determination as to the instant case

A. Based on the above facts, we examine the contents and legal principles of the Framework Act on the Construction Industry as seen earlier.

1) 원고가 천일종합건설의 토목건축공사업, 조경공사업 부분을 분할·합병함으로써 건설업자가 된 후로 금융기관 등의 보증가능금액확인서를 구비하지 못하여 건설업 등록기준을 위반한 기간은 11일에 불과하다.

2) The Plaintiff’s failure to satisfy the confirmation amount of the possible guarantee amount for 11 days is not due to the Plaintiff’s financial condition or the construction mutual aid association’s termination of the confirmation amount of the possible guarantee amount due to a decline in credit rating, but rather due to the Plaintiff’s refusal of the change of the holder of the investment certificate and the re-issuance of the confirmation amount of the confirmation amount with the intent to obtain compensation from the Plaintiff, contrary to the contents of the authorized repayment plan in the rehabilitation procedure for the comprehensive construction in the Incheon days

3) As above, if the period of insufficient construction business registration standards is very short due to the Plaintiff’s failure to satisfy the confirmation note of possible guarantee amount, and the Plaintiff’s fault or possibility of criticism is difficult to be deemed to be significantly attributable to the Plaintiff on the part of the construction mutual-aid association, it is reasonable to deem that the case constitutes “where the constructor temporarily violates the registration standards for construction business in a minor manner.” Therefore, it cannot be subject to sanctions such as cancellation of registration or suspension of business for not more than one year pursuant to

B. Nevertheless, the lower court determined that the instant disposition that ordered the suspension of business for four months pursuant to Article 83 subparag. 3 of the Act and the Enforcement Decree [Attachment 6] was a legitimate disposition solely on the ground that the Plaintiff’s case does not fall under any of the cases listed in subparagraphs of Article 79-2 of the Enforcement Decree. In so doing, the lower court erred by misapprehending the principle of proportionality under the Constitution and the legal doctrine on the proviso to Article 83 subparag. 3 of the Act

4. Conclusion

Therefore, without further proceeding to decide on the remaining grounds of appeal, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Ahn Jae-chul (Presiding Justice)