[2] Whether the total construction amount can be adjusted on the grounds of extension of the total construction period of a long-term continuing construction contract under Article 19 of the former Act on Contracts to Which the State Is a Party, Article 6(1) of the Enforcement Decree of the Act on Contracts to which a Local Government is a Party, Article 22 of the Act on Contracts to which a Local Government is a Party, and Article 75(1) of the Enforcement Decree of the Act on Contracts to which a Local Government is a Party (negative) / Whether an application for the adjustment of the annual contract amount can be filed on the grounds of extension of the annual construction period of a long-term continuing construction contract pursuant to the said Act and subordinate statutes (affirmative

Review of the reasoning of the lower judgment and the record reveals the following facts.

A. On December 18, 2002, the Plaintiff concluded the first construction contract with the Defendant on December 18, 2002, with a long-term continuing construction contract awarded by the Defendant for the road confirmation and packing work (hereinafter “instant construction work”). The total construction cost of KRW 29,975,490,000, and the total construction period of KRW 60 from December 20, 2002 to December 20, 2007 (hereinafter “instant construction contract”).

B. The instant construction contract was based on a long-term continuing construction contract and the initial total construction period was until December 20, 207. However, the construction period was extended and completed on July 11, 2012. Accordingly, the Plaintiff and the Defendant concluded an annual contract over 12 occasions as shown in the attached Table of the judgment of the first instance, and the construction cost was paid in full on a yearly basis. In the case of the secondary contract, the initial construction period was from December 5, 201 to April 2, 2012, but the subsequent construction period was extended on July 11, 2012.

C. On July 16, 2012, before receiving the payment of the base price for the 12th contract, the Plaintiff filed an application with the Defendant for the adjustment of the contract amount seeking the payment of the additional indirect construction cost as the total construction period of the instant construction project extended from December 20, 2007 to July 11, 2012 (the Plaintiff had not previously filed an application for the adjustment of the contract amount due to extension of the construction period; hereinafter “instant application for adjustment”), and received the remaining progress payment from the Defendant on August 21, 2012.

2. Judgment of the first instance court and the lower court

The Plaintiff filed the instant lawsuit seeking payment by asserting that the Defendant was liable to pay the said money and damages for delay, on the ground that the total construction period of the instant construction was extended from December 20, 2002 to December 20, 2007 to December 20, 2007, from December 20, 2002 to July 11, 2012. As a result, KRW 1,760,015,182 was additionally disbursed as indirect construction costs. Accordingly, the Defendant filed an application for the adjustment of the contract amount due to extension of the total construction period before receiving the final payment amount.

In regard to this, the first instance court determined that the application for the adjustment of the contract amount following the extension of the construction period should be made before receiving the payment of the annual construction period. The instant application for adjustment was made after the Plaintiff received the payment of the initial contract up to the 11st contract, and was made before receiving the payment of the initial payment of the 12th contract. Accordingly, the first instance court determined that the application for adjustment of the contract amount was lawful only as the application for the adjustment of the annual construction period due to the extension of the 12th contract. Accordingly, the Plaintiff’s application for adjustment refers to only the amount of indirect expenses additionally paid

With respect to the judgment of the first instance, only the Plaintiff appealed. On the grounds stated in its reasoning, the lower court dismissed the Plaintiff’s appeal instead of dismissing the Plaintiff’s claim in accordance with the principle of prohibition of disadvantageous change.

3. Judgment of the Supreme Court

A. Article 21 of the former Act on Contracts to Which the State is a Party (amended by Act No. 11377, Mar. 21, 2012) which applies mutatis mutandis Article 63 of the former Local Finance Act (amended by Act No. 7663, Aug. 4, 2005); Article 29(2) of the Enforcement Decree of the Act on Contracts to which the State is a Party (hereinafter “State Contract Act”); or Article 24(1) of the Act on Contracts to which a Local Government is a Party (hereinafter “Enforcement Decree of the State Contract Act”); Article 78(2) of the Enforcement Decree of the Act on Contracts to which a Local Government is a Party (hereinafter “Enforcement Decree of the Local Contract Act”); a long-term continuing construction contract, which is prescribed under Article 63 of the former Local Finance Act, is not a separate form of contract for total construction cost and total construction period, and is also an additional statement of total construction price and total construction period, based on the total construction price determined and total construction period of an annual contract.

Therefore, with respect to the adjustment of the contract amount due to the extension of the construction period under Article 19 of the State Contracts Act, Article 66(1) of the Enforcement Decree of the State Contracts Act, Article 22 of the Local Contracts Act, and Article 75(1) of the Enforcement Decree of the Local Contracts Act, in cases of long-term continuing construction contracts, the annual contract amount can be adjusted on the grounds of extension of the annual construction period, and the total construction amount cannot be adjusted on the grounds of extension of the total construction period. Furthermore, an application for adjustment of the annual contract amount shall be made before the receipt of the annual contract price (see Supreme Court en banc Decision 2004Da28825, Sept. 14, 2006; 2014Da235189, Oct. 30, 2018).

B. Examining the aforementioned facts in light of the aforementioned legal principles, the Plaintiff cannot file an application for adjustment of the total construction cost on the grounds of extension of the total construction period in relation to the instant construction contract, and only can the Plaintiff file an application for adjustment of the annual contract amount on the grounds of extension of the annual construction period, and the application shall be filed before receiving the annual construction cost. Thus, the instant application for adjustment filed by the Plaintiff before receiving the price of the 12 contract after receiving the payment of the 11th contract in full. Accordingly, the application for adjustment filed by the Plaintiff is legitimate only as the application for the contract amount according to extension of the annual construction period of the 12th contract. Therefore, the Plaintiff’s claim is reasonable only within the scope of the additional indirect construction cost

Although the reasoning of the lower judgment is partly inappropriate, the lower court’s conclusion that upheld the conclusion of the first instance court that accepted the Plaintiff’s claim within the scope of recognition is justifiable. In so determining, the lower court did not err by misapprehending the legal doctrine regarding the time of filing an application for contract amount, the obligation to explain terms and conditions, interpretation of legal act and adjustment of contract amount, etc., or by exceeding the bounds of the principle of free evaluation of evidence in violation

4. Conclusion

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Jung-hwa (Presiding Justice)