Jeonju District Court 201Gadan36635 ( October 25, 2012)

Where there is an agreement between the ordering person, the principal contractor and the subcontractor for direct payment, the ordering person shall be liable to pay the subcontractor at the time the subcontract price is completed

Where there is an agreement between the ordering person, the principal contractor, and the subcontractor on the direct payment of the subcontract price for the construction work to be performed in the future, the ordering person immediately bears the obligation to pay the subcontractor directly at the time the construction work is completed. In such cases, the ordering person may refuse to pay the relevant contract price to the principal contractor. Therefore, the plaintiff has the right to claim payment of

Article 14 of the Fair Transactions in Subcontracting Act

2012 or 4117 Confirmation of Claim for Payment of Deposit

AAAAA

BB General Construction & 16 others

Jeonju District Court Decision 201Ga36635 Decided May 25, 2012

September 26, 2012

November 7, 2012

1. Revocation of a judgment of the first instance;

2. It is confirmed that, on September 16, 201, Jeollabuk-do deposited by the Jeonju District Court Decision 201No. 3551, Sept. 16, 201, that the Plaintiff has the right to claim a payment of deposit amount of KRW 000 out of KRW 000,00

3. The total costs of the lawsuit shall be borne by the Defendants.

The judgment of the first instance shall be revoked. The judgment as referred to in paragraph (2) shall be revoked.

1. Basic facts

(a) Contract and subcontract for construction work;

On August 17, 2010, Defendant BB General Construction Co., Ltd. (hereinafter “Defendant BB Construction”) contracted the instant construction work from Jeollabuk-do to KRW 000 for the construction cost and the construction period from August 17, 201 to February 15, 201. The Plaintiff was subcontracted from Defendant BB Construction for the roof work (hereinafter “instant roof work”) among the instant construction work from December 2, 2010 to December 31, 201.

(b) Direct payment agreement and work completion;

On December 2, 2010, the Plaintiff and Defendant BB Construction and Jeollabuk-do agreed to directly pay the subcontract price (hereinafter referred to as the “instant agreement”) with respect to the payment of the subcontract price for roof construction among the instant construction works (hereinafter referred to as “ roof construction cost”), and the Plaintiff completed the roof construction of the instant case on December 31, 2010.

[Agreement on Direct Payment of Subcontract Price]

1. Agreement between the ordering person, contractor and subcontractor that the subcontractor shall pay directly to the subcontractor the subcontract price corresponding to the portion executed by the subcontractor in the subcontract between the said contractor and subcontractor pursuant to Article 35 (2) of the Framework Act on the Construction Industry;

2. Methods and procedures for the direct payment of the subcontract price;

A contractor shall divide the details of the parts executed by the subcontractor when conducting the pre-inspection and the completion inspection;

The request for payment of subcontract consideration shall be made separately, and the person ordering shall pay the subcontract consideration directly to the subcontractor in the following account:

C. Provisional attachment on Defendant BB Construction’s claim for construction price

On December 31, 2010, the Plaintiff completed the roof construction of this case, and around December 31, 2010, Defendant BB Construction had a claim for construction price of KRW 000 against Jeollabuk-do (hereinafter “instant claim for construction price”). However, the remaining Defendants, as the creditors of Defendant BB Construction, received each of the above orders and rulings from Jeollabuk-do upon receiving each claim amounting to KRW 000,000 in total amount of credit, such as the attached provisional attachment, etc., and served each of the orders and rulings on each of the above orders and orders as recorded in the attached attachment list.

D. Deposit in Jeollabuk-do

On September 15, 201, Jeollabuk-do deposited KRW 160,004,200 (hereinafter referred to as “instant deposit”) with the Plaintiff and the Defendants on the ground that the order of priority cannot be known due to the direct payment agreement with the Plaintiff and the Defendants’ seizure and provisional seizure by this Court (hereinafter referred to as “the instant deposit”).

[Reasons for Recognition] Unsatisfy, the contents stated in Gap evidence 1, 3 through 5, and the purport of the whole pleadings

(e) Relevant laws;

Fair Transactions in Subcontracting Act (amended by Act No. 8359 of July 19, 2007)

Article 14 (Direct Payment of Subcontract Price)

(1) Where a cause falling under any of the following subparagraphs occurs, a person placing an order shall directly pay a subcontract price corresponding to the part which the subcontractor manufactures, repairs, constructs, or performs services:

1. Where a principal contractor is unable to pay the subcontract price due to the suspension of payment, bankruptcy or other causes similar thereto, or the permission, authorization, license, registration, etc. of his/her business and the subcontractor requests a direct payment of the subcontract price;

2. Where the ordering person, the prime contractor and the subcontractor agree to pay the subcontract price directly to the subcontractor.

3. When the subcontractor has requested a direct payment of the subcontract consideration where the principal contractor has failed to pay to the relevant subcontractor two or more installments of the subcontract consideration to be paid by the principal contractor as prescribed in Article 13 (1) or (3);

4. Where a principal contractor fails to fulfill his/her obligation to guarantee the payment of subcontract consideration referred to in Article 13-2 (1) and a subcontractor requests a direct payment of subcontract consideration;

(2) Where any ground under paragraph (1) arises, the obligation to pay the price to the principal contractor to the subcontractor and the obligation to pay the subcontract price to the principal contractor to the subcontractor shall be deemed extinguished within the scope

(3) Where a principal contractor requests suspension of direct payment of the relevant subcontract consideration with documents evidencing the fact that the subcontractor delays paying wages, price of materials, etc. in connection with the relevant subcontract, the person ordering need not pay the subcontract consideration directly, notwithstanding paragraph (1).

(4) When a person placing an order directly pays subcontract consideration to the relevant subcontractor pursuant to paragraph (1), the subcontract price already paid by the person placing an order shall be deducted.

(5) Where a subcontractor needs to verify the completed portion of a subcontract consideration directly received from an ordering person pursuant to paragraph (1), the principal contractor shall take necessary measures therefor without delay.

(6) Matters necessary for the method, procedure, etc. for direct payment of subcontract consideration under paragraph (1) shall be prescribed by Presidential Decree.

Enforcement Decree of the Fair Transactions in Subcontracting Act

Article 9 (Direct Payment of Subcontract Price)

(1) Any request made by a subcontractor for direct payment under Article 14 (1) of the Act shall take effect when the declaration of intention thereof reaches the ordering person, and the verification of the fact that the said declaration of intention has been reached shall be made

(2) When directly paying the subcontract consideration, a person placing an order may make a deposit pursuant to the relevant statutes if any ground for deposit under Article 248 (1), etc. of the Civil Execution Act exists.

(3) An ordering person shall be liable to pay the subcontract price directly to the principal contractor within the scope of the obligation to pay the price.

(4) Where the requirements for direct payment of the subcontract consideration are met and the subcontract price for the portion manufactured, repaired or constructed by the subcontractor is finally fixed, the person ordering shall pay the subcontract consideration to the subcontractor pursuant to the provisions of the contract.

Framework Act on the Construction Industry (amended by Act No. 8477 of May 17, 2007)

Article 35 (Direct Payment of Price for Subcontract)

(2) In any of the following cases, a project owner shall directly pay the subcontract price corresponding to the portion performed by the subcontractor to the subcontractor:

1. Where the project owner, contractor and subcontractor agree to pay the subcontract price directly to the subcontractor by clarifying the purpose thereof and the method and procedure for payment;

2. Where the contractor delays the payment of the subcontract price referred to in Article 34 (1) on at least two occasions and the subcontractor requests a direct payment of the subcontract price to the project owner;

3. Where the contractor becomes unable to pay the subcontract price due to the contractor's suspension of payment, bankruptcy or other causes similar thereto or the cancellation of the contractor's registration, etc. and the subcontractor requests the subcontractor to pay the subcontract price directly;

4. Cases falling under paragraph (1) 5 where the subcontractor requests the direct payment of the subcontract price to the ordering person.

(3) Where any ground falling under any subparagraph of paragraph (2) arises, the obligation to pay the price to the contractor and the obligation to pay the subcontract price to the subcontractor of the contractor shall be deemed extinguished within the scope of such obligation.

(4) Where it falls under any of the following items of paragraph (1) 3 and it is likely that a contractor may sustain losses due to causes attributable to a subcontractor, a contractor may request the ordering person to suspend the direct payment of the price for subcontract by specifying the causes.

(5) Notwithstanding paragraph (2), where a contractor requests suspension of the direct payment of the subcontract consideration with documents evidencing the fact that a subcontractor delays the payment of wages, materials costs, etc. in connection with the subcontract, the project owner need not pay the subcontract consideration directly to the subcontractor.

(6) Where a subcontractor needs to verify, etc. the part performed by the subcontractor to be directly paid the subcontract price by the project owner pursuant to paragraph (1) or (2), the contractor shall take necessary measures without delay.

(7) Methods and procedures for directly paying subcontract consideration under paragraphs (1) 3 through 5 and (2) 2 or 3 shall be prescribed by the Ordinance of the Ministry of Construction and Transportation.

2. Summary of the plaintiff's assertion

The Plaintiff’s agreement between the Plaintiff and Defendant BB Construction and the third party of Jeollabuk-do constitutes Article 14(1)2 of the Fair Transactions in Subcontracting Act and Article 35(2) of the Framework Act on the Construction Industry, and the Plaintiff’s right to demand direct payment to Jeollabuk-do immediately after the agreement is reached. Upon completion of the roof construction of this case, KRW 47,300,000 equivalent to the roof construction cost of this case out of the instant construction cost claim, which was retroactively from December 2, 2010. However, the Defendants’ decision of provisional attachment was merely the provisional attachment of Defendant DaD, and the Plaintiff may oppose the remainder of the Defendants except DaD, and even if the Plaintiff deducts the amount of credit amount of the above leapD’s construction cost claim, the Plaintiff claimed that the remainder of the instant construction cost claim should have priority over the other Defendants’ seizure and provisional attachment amount of KRW 000,000,000, out of KRW 100,000.

3. Determination

(a) The time when the subcontractor’s right to demand the direct payment has occurred to the ordering person shall be whether or not the subcontractor’s right to demand the direct payment has occurred. (1) The Fair Transactions in Subcontracting Act, Act No. 8359 on July 19, 2007

Article 14 (1) 2 of the Act provides that "the time the subcontractor requests the direct payment of the subcontract price" shall be deleted, and if there is an agreement between the ordering person and the prime contractor or the subcontractor for direct payment, the subcontractor who performs the construction work without the request for payment thereof may directly receive the subcontract price. ② The amendment of the above provision aims at "in order to relieve financial difficulties of the subcontractor by allowing the subcontractor to pay the direct payment at the time of agreement without the subcontractor's request," and ③ as amended by Act No. 847 of May 17, 2007, Article 35 (2) of the Framework Act on the Construction Industry requires the direct payment of the subcontract price to the subcontractor by newly establishing a new attachment and provisional attachment order to prevent the subcontractor from being paid the subcontract price if it is obviously impossible for the subcontractor to directly pay the subcontract price by the ordering person due to the provisional attachment against the subcontractor's other creditors. ④ If the construction work is conducted by the prime contractor, it is not possible for the subcontractor to do so at the time of seizure or provisional attachment.

B. We examine the instant case.

In the instant case, on December 2, 2010, on which the agreement in this case was reached, Jeollabuk-do, the ordering person, was obligated to directly pay the price for roof construction to the Plaintiff, the subcontractor, and thus, the Plaintiff is entitled to assert and oppose the direct claim for the construction cost against the creditors of seizure and provisional seizure that was already subject to seizure and provisional seizure. As such, the priority on the instant claim for the construction cost between the Plaintiff and the Defendants other than Defendant BB should be determined by the date the original copy of the decision on seizure and provisional seizure reached Jeollabuk-do and after December 2, 2010 where the agreement in this case was reached. According to the above facts, since the agreement in this case was concluded prior to the provisional seizure and collection order, the provisional seizure and collection order, which made the remaining Defendants except for Defendant DaD 1 in the table No. 1 attached to the list No. 1, which took precedence over the Plaintiff (=1 - KRW 0000 won), the remaining deposit or provisional seizure order against the Plaintiff can be attached to the Plaintiff’s claim for the deposit payment of this case.

4. Conclusion

Therefore, the plaintiff's claim against the defendants shall be accepted for all reasons, and since the judgment of the court of first instance is unfair with different conclusions, it is revoked, and it is so decided as per Disposition with the plaintiff's claim accepted.