The meaning of “non-performing construction” as stipulated in Article 53(1) of the Construction Technology Promotion Act and whether it constitutes a fraudulent construction work only when the risk has been realized due to damage to safety (negative)

Article 53(1) of the Construction Technology Promotion Act

Supreme Court Decision 200Da58859 Decided June 12, 2001 (Gong2001Ha, 1580), Supreme Court Decision 2011Du29069 Decided January 29, 201 (Gong2014Sang, 512)

Hanil Co., Ltd. and one other (Law Firm Central, Attorneys Go Han-hee et al., Counsel for the plaintiff-appellant)

Head of Maritime Affairs and Fisheries

Busan High Court Decision 2018Nu20054 decided November 21, 2018

The judgment below is reversed, and the case is remanded to Busan High Court.

The grounds of appeal are examined.

1. Case history

According to the reasoning of the judgment below, the following circumstances are revealed.

A. On March 20, 2015, the Defendant, the contracting authority, entered into a working design service contract (hereinafter “service fee of KRW 59,376,400) with the Defendant for the construction of facilities for public parking lots in front of the ○○ Library (hereinafter “instant construction”) and submitted the working design drawings to the Defendant around July 2015 (hereinafter “instant design service”).

B. The specifications submitted by the Plaintiff Company do not contain any indication as to the materials of the “brupt installation (including the mold)”, and the unit price table in the “brupted wood material cost of KRW 32,00 (water price data of KRW 132),” and the “brupted wood cost of KRW 861,197, including the total material cost of KRW 832,00,00, applying the “brupted wood volume of KRW 26 and unit price of KRW 32,00” in the “brupted wood volume of KRW 37,892,668,” and the “4090,” in the design drawings (hereinafter “the design drawings of this case”).

C. The preliminary construction company that won the instant construction project from the Defendant was awarded a successful bid for the instant construction project completed the construction project by selecting a room.

D. On December 17, 2016, Busan Metropolitan City conducted a large construction work construction audit in 2016, demanded the Defendant to take measures for damages and administrative measures against the Plaintiffs calculated an excessive construction cost from the design service of this case. Accordingly, on March 27, 2017, the Defendant issued the instant disposition imposing two points for each of the Plaintiffs on the ground that the inconsistency with the design drawings of this case constitutes Article 53(1) of the Construction Technology Promotion Act and Article 87(5) [Attachment Table 8] of the former Enforcement Decree of the Construction Technology Promotion Act (amended by Presidential Decree No. 29918, Jun. 25, 2019; hereinafter “former Enforcement Decree”), on the ground that the difference between the design drawings of this case and the design drawings of this case falls under Article 53(1) of the Construction Technology Promotion Act and Article 87(5) [Attachment 8] of the former Enforcement Decree of the Construction Technology Promotion Act.

2. Regarding ground of appeal No. 1

(a) Article 53(1) and (4) of the Construction Technology Promotion Act provides that where a fraudulent construction work has occurred or is likely to occur because a construction technology service business entity, etc. fails to faithfully perform construction technology services, construction design, construction supervision, or construction works, and where a construction technology service business entity, etc. causes damage to a contracting authority by making a false prediction of demand for construction works intentionally or by negligence in the course of feasibility study of construction works, the Minister of Land, Infrastructure and Transport, a contracting authority, and the head of an authorizing and permitting agency shall give penalty points after measuring the degree of fault, and necessary matters

According to the delegation, Article 87(1) of the former Enforcement Decree of the Construction Technology Promotion Act provides for “a construction design with a total service cost of at least KRW 150 million” in subparagraph 2 of Article 53(1) of the former Enforcement Decree of the Construction Technology Promotion Act, “other construction designs deemed necessary by the Minister of Land, Infrastructure and Transport, a contracting authority, or the head of an authorizing or permitting agency” under subparagraph 5 of the same Article.

B. The lower court determined that, in the case of the instant design service, the service cost is KRW 59,376,400, but the Defendant, the contracting authority, constitutes a construction design deemed necessary, and thus becomes subject to a false measurement and the imposition of penalty points pursuant to Article 87(1)5 of the former Enforcement Decree. In so determining, the lower court did not err by misapprehending the legal doctrine on the subject of false measurement under the Construction Technology Promotion Act, contrary to what

3. As to the grounds of appeal Nos. 2 and 3

A. (1) Article 87(5) [Attachment 8] [Attachment 8] of the former Enforcement Decree pursuant to delegation of Article 53(4) of the Construction Technology Promotion Act provides that the standards for the measurement of given points for construction works, etc. 5. [Attachment 8] of the standards for the measurement of given points for construction works, etc. and the standards for the measurement of given points for construction technology service providers and construction engineers, etc. shall be prescribed as the major defective contents. Article 3.6 of the Standards for the measurement of given points for the calculation of given points for construction works, etc. provides that where a part of the design documents is omitted or the design documents are not satisfied, the given points for the “cases where the design documents are not in compliance with the design documents, etc.,”

(2) “False construction works” under Article 53(1) of the Construction Technology Promotion Act refers to the act of damaging the safety of a building itself or its construction works or causing danger to another person’s body or property by performing construction works contrary to various statutes, design documents, construction practices, and general common sense as a constructor, including the Building Act (see, e.g., Supreme Court Decisions 2000Da5859, Jun. 12, 2001; 201Du29069, Jan. 29, 2014). However, even in such cases, it does not constitute defective construction works only where the risk, such as the occurrence of safety problems, arises at a building or construction site, is realized due to the damage to safety.

B. We examine the factual relations of this case in accordance with the relevant provisions and legal principles. The statement of each type of work and the item column of the daily price list submitted by the Plaintiff Company to the Defendant include “brupt trees” with low unit price, and contrary thereto, even if the “material cost” includes the unit price of synthetic timber with high unit price, it is reasonable to deem that it is merely a mere error in the simple statement. In addition, there is no data suggesting that the Defendant, the contracting authority, required the use of synthetic timber in the instant construction work. Moreover, there is no ground to deem that there is a risk of undermining the safety of the building itself or its construction when using “brupt timber” in the instant construction work, compared to the use of “brupted timber” in the instant construction work. Accordingly, it cannot be deemed that the instant design service constitutes “where defective construction works occur or are likely to occur by failing to faithfully implement the construction design,” which is the requirement for imposing penalty points under Article 53(1

C. Nevertheless, the lower court determined as follows: (a) the concept of “non-performing” under Article 53(1) of the Construction Technology Promotion Act does not necessarily require complementary construction; or (b) does not necessarily require any situation leading to the occurrence of a safety accident; and (c) the instant design service violates the standards prescribed in Article 48(6) of the Construction Technology Promotion Act; and (d) Article 40(1)1 of the Enforcement Rule of the Construction Technology Promotion Act and constitutes “cases where construction works occur or are likely to occur by failing to faithfully perform construction design,” under Article 53(1) of the Construction Technology Promotion Act.

The lower judgment erred by misapprehending the legal doctrine on the requirements for imposing penalty points under the Construction Technology Promotion Act, thereby adversely affecting the conclusion of the judgment. The ground of appeal assigning this error is with merit.

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 Kim Seon-soo (Presiding Justice)