Korea Development Co., Ltd. and two others (Attorney Kang-gu, Counsel for the defendant-appellant)

Environmental Management Corporation

Korea

Korea Labor Welfare Corporation

September 4, 2009

Suwon District Court Decision 2008Gahap15417 Decided April 28, 2009

1. The Defendant’s Intervenor’s appeal is dismissed.

2. The costs of appeal are borne by the Republic of Korea for the Intervenor joining the Defendant.

Purport of claim

The defendant shall pay to the plaintiffs 338,973,880 won with 20% interest per annum from the day following the delivery of a copy of the complaint of this case to the day of complete payment.

Purport of appeal

The part of the judgment of the court of first instance against the defendant shall be revoked, and all plaintiffs' claims corresponding to the revoked part shall be dismissed.

1. Basic facts

A. In order to jointly supply and demand construction works for Section 2-1 Section for the Han River Sewerage Maintenance Works ordered by the Defendant (hereinafter “instant construction works”), the Plaintiffs and Nonindicted Construction organized a joint supply and demand agreement on joint performance of construction works in accordance with the joint supply and demand agreement (hereinafter “instant joint supply and demand agreement”) stating the following provisions regarding the joint performance of construction works under the joint supply and demand agreement (hereinafter “instant joint supply and demand agreement”). On November 29, 2006, the Defendant and the Defendant entered into a contract for construction works with the total construction amount of KRW 71,580,23,000, and from December 5, 2006 to October 4, 2010.

Article 1 (Purpose)

This Agreement sets out an agreement with the plaintiffs to jointly and severally carry out a joint project for the following construction projects by mobilization of finance, management, technical ability, personnel, and equipment and materials.

1. Name of the project: The Han River System Improvement Project (No. 2-1 Section);

4. Name of the project owner: The Environmental Management Corporation;

Article 4 (Members of Joint Contractor)

(2) The representative of a joint contractor shall be considered and developed for the plaintiff.

(3) The representative shall represent the contracting agency and the third party, and shall have the authority to manage the property of the joint contracting agency and to request the price therefor.

Article 7 (Responsibility)

Members of a joint supply and demand organization shall be jointly and severally liable for the performance of contractual obligations to the project owner.

Article 8 (Responsibility for Subcontract)

The members of a joint contractor shall not subcontract part of the joint contract work without the consent of other members.

Article 9 (Receipt of Consideration, etc.)

The compensation, etc. for construction works shall be paid to each of the following accounts by each member of the joint contractor according to the amount claimed by each member of the joint contractor: Provided, That the advance payment for construction works shall be paid en bloc by the representative of the joint contractor

(Account Number omitted)

Article 10 (Ratio of Investment by Members)

(1) The ratio of investment by joint contractors shall be as follows:

1. Consideration and development: 36%;

2. Construction for pairs: 34%;

3. Mobilization and construction: 15 percent.

4. Non-permanent construction: 15%;

§ 10-1. Distribution of profits and losses

Where any profit or loss occurs after a contract for work is implemented, it shall be distributed or shared in accordance with the ratio prescribed in Article 10.

Article 11 (Restrictions on Transfer of Rights and Obligations)

No member shall transfer his/her rights and obligations under this Agreement to a third party.

Article 12 (Measures against Duplicing Withdrawal)

(1) Members of a joint supply and demand organization shall not withdraw from the country by the date of completion of tender or the execution of the contract concerned without the consent of all the ordering person and all the members: Provided, That with respect to any member of a joint supply and demand organization who has received a request for withdrawal from the ordering person due to his failure to perform the contract concerned without any bankruptcy, dissolution, dishonor, or any justifiable reasons

(2) Where part of any partner withdraws, the remaining members shall jointly perform the relevant contract.

(3) In cases falling under paragraph (2), the ratio of investment shall be divided according to the ratio of investment by the remaining members and added to the ratio of Article 10.

Article 13 (Defect Warranty Liability)

If any defect occurs in the construction work concerned after the joint supply and demand company is dissolved, it shall be jointly and severally liable.

B. The Defendant paid KRW 6,084,318,95 in advance of the execution of the instant construction project pursuant to the proviso of Article 11(2) of the Guidelines for the Management of Joint Contract (established Accounting Rules 2200.04-136-11; August 16, 2004) and the proviso of Article 9 of the above Joint Supply and Demand Agreement, which provides that advance payment shall be paid to the representative of the joint supply and demand organization. If the Defendant claims for advance payment for each time of discrimination divided by members of the joint supply and demand organization, the Defendant paid advance payment by the method of deducting the advance payment amount of the relevant vehicle from the completion of the pre-payment inspection, and then transferring the remainder to each member’s account.

C. On October 24, 2007, the Plaintiff Korea-based Development Co., Ltd. demanded the Defendant to pay KRW 1,428,00,000 in total as the second progress payment, and KRW 3,832,00,000 in total as the third progress payment around November 30, 2007. On the ground that the Republic of Korea-based creditors of non-construction did not pay any national tax for the year 2007 value-added tax, etc. for non-construction, the Defendant’s attachment of KRW 19,183,410 among the construction cost claims against the Defendant of the instant construction project against the Defendant on February 21, 2008. The Defendant’s attachment of KRW 30,383,00 for the reason that the Defendant’s Intervenor’s non-construction’s delinquency in payment for industrial accidents and insurance premiums for non-construction in 207 to the Defendant on July 11, 2008, the Defendant’s attachment of KRW 3130,3139,5387.

D. Meanwhile, the Plaintiff Korea Development Co., Ltd., while jointly performing the instant construction project with the members of the other non-identical Construction Co., Ltd., and claiming the Defendant for the third time payment following the joint performance of the instant construction project. In particular, the relationship with the non-identical Construction Co., Ltd., even though the non-construction did not perform all the construction works corresponding to its equity shares, on the basis of the application document for non-identical Construction, the Plaintiff claim for the payment of the cost of construction each time-discriminatoryly divided the construction cost to be paid to the Plaintiff, and the construction cost for the portion actually executed beyond its own equity share was later recovered from the construction. The construction cost for the portion actually performed after the Korea Development Co., Ltd., Ltd., concluded the instant construction project with the Defendant Co., Ltd., Ltd. on or around February 4, 2008, under the mutual supply and demand agreement between the Plaintiff Co., Ltd and the remaining members of the Plaintiff Co., Ltd., Ltd, which had changed on or around 208.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 20 (including each number, hereinafter the same shall apply), Eul evidence Nos. 1 through 3, non-party 1's testimony and the purport of the whole pleadings

2. The parties' assertion

A. The plaintiffs' assertion

Since a joint supply and demand organization composed of the plaintiffs and non-construction as to the construction project in this case constitutes a partnership under the Civil Act, as long as such joint supply and demand organization enters into the contract for the construction project in this case as a partnership, the claim for the construction work shall be reverted to all members, including the amount equivalent to the share of non-dual construction, and thus, the defendant is obliged to pay the payment for delay and delay damages to the plaintiffs, regardless of the invalid seizure of the creditors of non-dual construction, under the premise that the claim for construction work belongs

B. Defendant and Defendant Intervenor’s assertion

The claim for the construction cost of a joint contractor under the construction contract of this case is not belonging to the plaintiffs and the members of the joint contractor at least in external relations, but belongs to each of the members of the joint contractor. As such, each claim seizure against the claim for the construction cost under the construction contract of this case is valid, and as long as the creditor of the construction cost whose payment is suspended by the defendant should be deemed to be the construction without restriction, the defendant has no obligation to pay the above construction cost to the plaintiffs.

3. Determination

A. The nature of the joint contractors of this case

According to the joint supply and demand agreement of this case, the plaintiffs and non-legal construction constituted a joint supply and demand organization with the aim of jointly performing the project for the purpose of bidding and execution of the project in this case. Accordingly, the plaintiffs and non-legal construction bear the investment obligation according to the investment ratio for the project in this case for the project in this case and share the profits and losses from the project in accordance with the ratio. ② The contractual liability for external execution and repair of defects against the defendant, who is the ordering person, is jointly and severally held by all the members of the joint supply and demand organization (Articles 7 and 13 of the joint supply and demand agreement), and the liability for the payment of the construction price to the subcontractor is also jointly and severally borne by all the members of the joint supply and demand organization (Article 57 (1) of the Commercial Act). ③ The joining and withdrawal from the joint supply and demand organization is limited, and the investment shares of some members are divided into the remaining members according to the remaining members' investment ratio. In light of the comprehensive consideration of the above, the plaintiffs and non-legal construction constituted the joint supply and demand organization in this case.

B. Reversion of the claim for construction price under the instant contract

Article 24 of the Contract for Construction Works provides that "the person who intends to enter into a joint supply and demand contract shall constitute a joint supply and demand organization." The separate provisions of the Contract for Construction Works shall apply to the separate provisions of the Guidelines for the Operation of the Contract for Construction Works (00. 04-136-1; 16. 204.)." Article 11 (1) and (2) of the Guidelines for the Operation of the Contract for Construction Works provides that "a contracting officer shall submit an application classified by the joint supply and demand organization and shall pay the amount requested to the respective members of the joint supply and demand organization if such application is made so far as it is difficult for the joint supply and demand organization to enter into an inevitable agreement between the members of the joint supply and demand organization." Article 9 of the Contract for Construction Works shall be deemed to have been made only by the joint supply and demand organization to which all the members of the joint supply and demand organization shall belong, and shall not apply to the joint supply and demand organization to which all the members of the joint supply and demand organization shall be deemed to vest the contract."

C. Sub-committee

Therefore, the defendant is obliged to pay to the plaintiffs, who are all members of the joint supply and demand organization, 338,973,80 won for the above payment for the construction work of this case, which has not been paid yet, and to pay damages for delay at the rate of 6% per annum under the Commercial Act from August 8, 2008 to April 28, 2009, which is the day following the delivery of a copy of the complaint of this case, and 20% per annum under the Act on Special Cases concerning the Promotion, etc. of Legal Proceedings from the next day to the day of full payment.

4. Conclusion

Therefore, the plaintiffs' claim of this case is justified within the scope of the above recognition, and the remaining claims shall be dismissed without merit. The judgment of the court of first instance with the same conclusion is justifiable, and the defendant's appeal of the Republic of Korea is dismissed. It is so decided as per Disposition.

Judges Cho Young-chul (Presiding Judge) Kim U.S.-U.S. type