2017Da272080 (head office) Construction Costs

2017Da272097 (Counterclaim) Construction Costs

Saryary Appellee

A

Law Firm Jin-Jin Law, Attorneys Gyeong-seok et al.

Appellant

1. B

2. C

[Plaintiff-Appellant] Plaintiff 1 and 2 others

Seoul High Court Decision 2017Na2004230 (main office), 2017Na decided September 21, 2017

204247 Judgment (Counterclaim)

May 10, 2019

Of the lower judgment’s counterclaim claim, the part on the claim for damages caused by non-issuance of tax invoice is reversed, and that part of the case is remanded to the Seoul High Court. The Plaintiff (Counterclaim Defendant)’s appeal and the remainder of the Defendant (Counterclaim Plaintiff)’s appeal are all dismissed. The costs of appeal on the principal lawsuit are assessed against the Plaintiff

The grounds of appeal are examined.

1. As to the ground of appeal by the Plaintiff (Counterclaim Defendant, hereinafter referred to as “Plaintiff”)

A. As long as the establishment of a disposition document is deemed to be genuine among the claims filed in the principal lawsuit, the court shall recognize the existence and content of declaration of intent in accordance with the language stated in the disposition document, unless there is any clear and acceptable counter-proof as to the denial of the contents stated therein (see, e.g., Supreme Court Decision 2002Da23482, Jun. 28, 2002).

The court below rejected the plaintiff's assertion that a contract for a construction project with respect to "the second modification contract" signed and sealed by the plaintiff and the defendant (Counterclaim plaintiff, hereinafter referred to as "the defendant") is merely a false document prepared for bank loans, on the ground that the existence and content of the expression of intent can be recognized in accordance with the language and text thereof.

Examining the reasoning of the lower judgment in light of the aforementioned legal doctrine and the record, the lower court did not err by failing to exhaust all necessary deliberations or by misapprehending the legal doctrine regarding the probative value of a disposal document, as otherwise alleged in the grounds of appeal, and did not err by misapprehending the legal doctrine

B. Of the main claim, the appraiser’s appraisal result should respect the claim regarding the cost rate (ground of appeal No. 2) insofar as the appraisal method, etc. is contrary to the empirical rule or unreasonable (see, e.g., Supreme Court Decision 2012; 11; 2010Da930790, Sept. 29, 201).

The lower court rejected the Plaintiff’s assertion that, in calculating the instant additional construction cost, the same rate as that applied to the calculation of the cost of defect repair appraised at the request of the Defendants, should be applied, on the grounds that the instant contract and each modified contract jointly applied to the instant modified contract also apply to the calculation of the instant additional construction cost, and that the appraisal result by the appraiser pursuant to such calculation method cannot be deemed to have been excessively unfavorable or equitable to the Plaintiff.

Examining the reasoning of the lower judgment in light of the aforementioned legal principles and records, the lower court did not err in its judgment by failing to exhaust all necessary deliberations or by erroneously applying the expense rate in calculating additional construction costs, as alleged in the grounds of appeal.

2. As to the Defendants’ grounds of appeal

A. Claim for damages due to non-issuance of the tax invoice among the counter-claim claim

1) Where an entrepreneur supplies goods or services (excluding the supply of goods or services exempt from value-added tax), he/she shall issue a tax invoice to the person who receives the supply (Article 32(1) of the Value-Added Tax Act); and where a person liable to prepare and issue a tax invoice under the Value-Added Tax Act fails to issue a tax invoice, he/she shall be subject to criminal punishment (Article 10(1)1 of the Punishment of Tax Evaders Act). Meanwhile, Articles 126-4 of the former Restriction of Special Taxation Act (amended by Act No. 14390, Dec. 20, 2016; hereinafter the same shall apply) and the Enforcement Decree of the same Act (amended by Presidential Decree No. 27848, Feb. 7, 2017; hereinafter the same shall apply) provides that if a supplier of goods or services fails to obtain an input tax invoice from the person who receives the supply, he/she shall be entitled to receive the tax invoice under Article 121-2 of the Value-Added Tax Act without any justifiable reason for the supply.

2) According to the reasoning of the lower judgment, the lower court rejected the Defendants’ counterclaims claim for damages caused by non-issuance of the tax invoice on the following grounds. In other words, as alleged by the Defendants, the Plaintiff was paid the construction cost of KRW 70 million on the second modified contract as indicated in its holding with the Defendants, but only issued the Defendants a tax invoice of KRW 30 million on the value-added tax amount, and did not issue the remaining tax invoice on the value-added tax amount of KRW 15 million, even if the Defendants did not issue a tax invoice on the value-added tax amount of KRW 15 million, the Defendants may be entitled to receive a refund of value-added tax through the procedures for issuing the purchaser-issued tax pursuant to Article 126-4 of the former Restriction of Special Taxation Act and Article 121-4 of the Enforcement Decree of the same Act, so there is no proximate causal link between the Plaintiff’s assertion and the Defendants’ damages.

3) However, in light of the aforementioned legal principles, if the Plaintiff, as alleged by the Defendants, did not issue a tax invoice of KRW 15 million among them without justifiable grounds despite having received the amount of value-added tax equivalent to KRW 45 million from the Defendants, and the Defendants were found to have failed to deduct the amount of the input tax, there is room for the Plaintiff to bear liability for damages equivalent to the amount of the input tax not deducted against the Defendants, even if the Defendants could have been entitled to deduct the amount of the input tax within a certain period through the procedures for issuing the purchaser-issued tax invoice.

4) Nevertheless, the lower court’s determination that the causation between the Plaintiff’s non-issuance of the Plaintiff’s tax invoice and the Defendants’ assertion cannot be acknowledged on the ground of the procedure for issuing purchaser-issued tax invoice was erroneous by misapprehending the legal doctrine on causation between the illegal act and the loss incurred, thereby adversely affecting the conclusion of the judgment. The allegation contained in the grounds of appeal on this point

B. Claim for damages in lieu of defect repair among the counterclaim claim

The term "defect of a building" refers to a building, the construction contract of which is generally completed, which has a structural and functional defect different from the contents of the construction contract, or which does not have an ordinary quality in light of the transaction concept. The issue of whether a building is defective shall be determined by comprehensively taking into account various circumstances, such as the content of the contract between the parties concerned, whether the building is constructed in accordance with the design, and whether the building-related statute meets the standards prescribed (see, e.g., Supreme Court Decision 2008Da16851, Dec. 9,

The court below rejected the defendants' assertion that there was a defect that was not executed in the form of a vegetable product as stipulated in the contract of this case, on the grounds that the construction of a vegetable unit or a table, etc. in a fixed type, different from the method stipulated in the contract of this case, does not constitute "a defect that was done between the plaintiff and the defendants," and that the construction of a vegetable unit or a table, etc. in the form of a fixed type, unlike the method stipulated in the contract of this case, does not constitute "a defect that was done in accordance with the consultation on construction of a different type between the plaintiff and the defendants or at the request of the defendants."

Examining the reasoning of the lower judgment in light of the aforementioned legal principles and records, the lower court’s above fact-finding and determination are justifiable. In so doing, it did not err by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules or by misapprehending

3. Conclusion

Therefore, the part of the judgment of the court below concerning the claim for damages due to the non-issuance of the tax invoice shall be reversed, and that part of the case shall be remanded to the court below for a new trial and determination. All of the appeal by the plaintiff as to the main lawsuit and the remaining appeals as to the defendants' counterclaim are dismissed, and the costs of appeal as to the main lawsuit shall be borne by the plaintiff. It is so decided as per Disposition by the assent

Justices Park Sang-ok

Justices Noh Jeong-chul

A person shall be appointed.