NAS Construction Co., Ltd. (Attorney Lee Dong-soo, Counsel for the plaintiff-appellant)

Construction Financial Cooperative

Sung Branch Construction Co., Ltd. (Law Firm Chon, Attorney Shin-chul et al., Counsel for defendant-appellant)

January 30, 2013

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit are assessed against the Plaintiff, including the part resulting from the supplementary participation.

The defendant shall pay to the plaintiff 297,282,480 won with 20% interest per annum from the day following the day of service of a copy of the complaint of this case to the day of complete payment.

1. Basic facts

A. On April 1, 2003, the Plaintiff, the Intervenor, the Defendant, and the Hansan Construction Co., Ltd. (hereinafter referred to as the “Korean Commercial Construction”) determined the investment ratio as Plaintiff 14%, the Defendant’s Intervenor 73.5%, and the Hansan Construction Co., Ltd. as 12.5%, and constituted a joint supply and demand organization in the joint performance method, which was concluded on April 1, 2003 with the Public Procurement Service that designated the procuring entity from the Public Procurement Service for the construction cost of KRW 5,063,965,00 (hereinafter referred to as the “instant construction”) and completed the instant construction work on November 30, 206.

B. During the process of concluding the instant contract, the Plaintiff, the Intervenor, and the Hanhwa Construction agreed to designate the representative of the joint supply and demand organization as the Defendant joining the Defendant, and jointly and severally assume the obligation under the instant contract and the liability for warranty against the defects arising in the instant construction work.

C. On December 28, 2006, the Plaintiff entered into each contract for the repair of defects, including the details of the attached defect liability contract, individually with the Defendant, in order to guarantee the obligation to repair the defects to be borne under the instant contract by having Ansan-si as the guarantee creditor on December 29, 2006, respectively (hereinafter “instant contract for the repair of defects”) with the Defendant among each contract for the repair of defects between the Defendant and the Defendant (hereinafter “instant contract for the repair of defects”).

D. After the completion of the instant construction, continuous subsidences occurred in the land partitionings in the Ansan-si General Sports Ground, and as a result, failure to obtain the official seal of the first-class land stadium, Ansan-si requested the Defendant to make a reservation of the warranty liability period under each of the above warranty liability contract on May 6, 2008, and on February 21, 2011, the Plaintiff, the Intervenor, the Intervenor, and the Hanhwa-si Construction requested the Defendant to repair the defects such as the above land erosion (hereinafter “instant defect”).

E. On July 27, 2010, the Intervenor’s Intervenor, upon receiving a decision on commencing rehabilitation procedures as Seoul Central District Court Decision 2010 Ma73 on July 27, 2010, failed to perform its duty to repair the defects in the instant case despite the aforementioned request for repair of defects in Ansan-si. Furthermore, the Intervenor’s Intervenor’s Intervenor was subject to the rehabilitation plan approval on March 28, 201 in the said rehabilitation procedure, and the said rehabilitation procedure was terminated by the decision on commencing rehabilitation

F. The Plaintiff and Hanhwa Construction agreed to perform the duty to repair defects of this case in accordance with 14% of the investment ratio of joint contractors and 12.5%, and in addition, with respect to 73.5% of the investment ratio of the Defendant joining the Defendant, the Plaintiff agreed to perform the said duty to repair defects in lieu of the Defendant joining the Defendant, in accordance with the respective investment ratio of the Plaintiff and Hanhwa Construction, 38.83% [ = 73.5% x 14/(14+12.5)] of the Plaintiff and Hanhwa Construction, as well as 34.67% [ = 73.5% x 12.5/5(14+12.5]

G. On June 2012, the Plaintiff and Han Han Construction subcontracted the repair work of the instant defects to the Joint Development Co., Ltd. and the CFFC Development Co., Ltd. for a total of KRW 785,60,000,000, and completed the repair work. The Plaintiff spent KRW 404,466,480 out of the said construction work price in accordance with the ratio set out in the agreement set forth in the said clause (b) (i.e., the Plaintiff’s investment ratio of KRW 107,184,00,00 corresponding to 14%, + KRW 297,282,480 corresponding to 38.83% of the Defendant’s investment ratio of the Defendant to the

[Reasons for Recognition] Facts without dispute, entry of Gap 1 through 9 (including each number), entry of Eul 1 and 2, the purport of the whole pleadings

2. The plaintiff's assertion

The plaintiff paid KRW 404,466,480 to one of the members of the joint supply and demand organization jointly and severally liable for the repair obligation of the defect in this case with the defendant joining the defendant, and fulfilled the duty of repair of the defect in this case. The plaintiff fulfilled the duty of repair of the defect in excess of the part of the plaintiff's own share, and acquired the right to indemnity equivalent to KRW 297,282,480 against the defendant joining the defendant. At the same time, in accordance with the legal principles of subrogation for securing the above right to indemnity, the right to guarantee guarantee contract of this case against the defendant, whose guarantee creditor was Ansan-si, has been transferred as a matter of course to the plaintiff, and the defendant is obligated to pay KRW 297,282,480 under the guarantee contract of this case to the plaintiff subrogated to Ansan-si.

3. The judgment of this Court

A. Relevant statutes and legal principles

1) Relevant statutes

○ Civil Act

Article 425 (1) When one of the obligors jointly and severally liable is repaid, or he is jointly indemnified at his own expense, he may exercise the right to indemnity against the other obligors' shares.

§ 481. A person who has a legitimate interest in performance shall automatically subrogate the obligee by performance.

Article 482 (1) A person who has subrogated to an obligee under the preceding two Articles may exercise his/her right to claims and rights to collateral thereof within the scope of a claim for reimbursement by virtue of his/her right.

Article 483 (1) If a subrogation has been made for a part of the claim, the subrogated shall exercise his right together with the obligee in proportion to the amount of performance effected.

○ Debtor Rehabilitation and Bankruptcy Act (hereinafter “Integrated Act”)

Article 126 (1) Where multiple persons are liable to entirely fulfill each individual obligation, when the rehabilitation procedures commence for all or part of such persons, the creditors may exercise their rights on the total amount of the claims they hold at the time that the rehabilitation procedures commence as rehabilitation creditors in each rehabilitation procedure.

(2) In cases falling under paragraph (1), even when any person who is liable to entirely fulfill other obligations performs repayment and extinguishs his/her obligations to any creditor (hereafter referred to as "payment, etc." in this Article) after the rehabilitation procedures commence, such creditor may exercise his/her rights on the total amount of the claims he/she holds at the time that the rehabilitation procedures commence, except where the total amount of the claims are extinguished.

(3) In cases under paragraph (1), anyone who holds a right to indemnity that may future for the debtor may participate in the rehabilitation procedures for the total amount of such right: Provided, That the same shall not apply where the creditor participates in the rehabilitation procedures for the total amount of the claims he/she holds at

(4) Where any creditor participates in the rehabilitation procedures pursuant to the provisions of paragraph (1), when the total amount of the claims is extinguished due to the repayment, etc. to any creditor after the rehabilitation procedures commence, anyone who holds a right to indemnity that may be exercised for the debtor may exercise his/her rights within the scope of such right

Article 250 (2) The rehabilitation plan shall not affect the rights or security falling under any of the following subparagraphs:

1. The right held by any rehabilitation creditor or any rehabilitation secured creditor against any guarantor of the debtor for whom rehabilitation procedures commence and any other person who bears obligations together with the debtor for whom rehabilitation procedures commence;

When it is decided to authorize the rehabilitation plan pursuant to the provisions of Article 251, the debtor shall be exempted from liability for all rehabilitation claims and rehabilitation security rights, except for the rights recognized pursuant to the provisions of the rehabilitation plan or this Act, and all the rights of shareholders and equity right holders and the debtor's property that

2) Relevant legal principles

A) When a joint and several sureties performs the principal obligation on behalf of a debtor at his own expense on behalf of a debtor, the creditor has a claim (original claim) and security right held by the principal debtor and another joint and several sureties as a matter of course to the joint and several sureties, but subrogation is a system to secure the validity of the right to indemnity held by the principal debtor and other joint and several sureties by repaying the principal obligation, and the scope of the exercise of the principal claim and security right by subrogation is limited to the scope of the right to indemnity (see Supreme Court Decision 98Da22451 delivered on October 22, 199, etc.).

B) Under Article 110(1)1 of the former Company Reorganization Act, a person who has future right to indemnity against the reorganization company, such as a joint guarantor and a joint guarantor of the reorganization company, may participate in reorganization proceedings and exercise the rights of reorganization creditors as a reorganization creditor. Thus, if he/she does not participate in reorganization proceedings with a claim for indemnity, he/she shall thereafter lose the right to indemnity against the joint guarantor for the portion exceeding the finalized portion reported and confirmed by the creditor among the amount repaid by the joint guarantor to the creditor of the reorganization company (see Supreme Court Decision 94Da50397 delivered on November 10, 195, etc.).

B. Determination

1) According to the above statutes and legal principles, subrogation system under the Civil Act is to transfer to the obligor other rights, including security rights held by the obligee against the obligor in order to secure the validity of the obligee’s right to indemnity, within the scope of the obligee’s right to indemnity. Therefore, unless there is no obligee’s right to indemnity, subrogation right cannot be established. Therefore, in order to recognize the exercise of the obligee’s right to indemnity under the instant guarantee agreement based on subrogation by the obligee asserted by the Plaintiff, the Plaintiff should have the right to indemnity against the obligor,

2) With respect to the existence of the Plaintiff’s right to indemnity against the Intervenor joining the Defendant, the Plaintiff and the Intervenor, as a member of a joint supply and demand organization, are entitled to claim reimbursement against the other joint and several liability, if either of the joint and several obligors performs his obligation to the extent that it exceeds their share of liability. The Plaintiff and the Intervenor, as a member of a joint and several liability organization, are jointly and severally liable to repair the instant defect under the joint and several supply and demand agreement, and the Plaintiff’s performance of the obligation to repair the defect corresponding to

However, according to the above laws and legal principles, a person who holds a future right to indemnity against a debtor under the Dodosan Act may participate in the rehabilitation procedure regarding the total amount of the claim for indemnity as a rehabilitation creditor and exercise the right as a rehabilitation creditor. If he did not participate in the rehabilitation procedure with the right to indemnity thereafter, the creditor's right to indemnity against the debtor's creditor out of the amount discharged, which exceeds the amount that became final and conclusive after the creditor filed a rehabilitation claim, shall be exempted when the rehabilitation plan is approved. The plaintiff performed the defective repair obligation after the rehabilitation procedure against the defendant's intervenor commenced the rehabilitation procedure against the defendant's intervenor, and the fact that the rehabilitation plan for the defendant's intervenor was issued on March 28, 2011 and the decision for the completion of the rehabilitation procedure was issued after the above rehabilitation procedure was reported as a future rehabilitation claim against the defendant's defendant, or that the plaintiff reported the defect repair claim of this case as a rehabilitation claim against the defendant's intervenor or the administrator of the defendant's right to indemnity against the defendant's subrogation obligation without any evidence supporting the plaintiff's's defect.

3) On this point, the plaintiff asserts that the rehabilitation procedure against the defendant as the defendant as the debtor, not the defendant as the defendant as the defendant as the defendant as the debtor, is irrelevant to the plaintiff's right to demand reimbursement. The rehabilitation procedure against the defendant as to the defendant as the defendant as the defendant as the defendant as the defendant is asserted that it is irrelevant to the plaintiff's right to demand reimbursement. But Article 250 (2) 1 of the Consolidated Bankruptcy Act provides that "the rehabilitation plan under the Consolidated Bankruptcy Act does not affect the rehabilitation creditor's right to the guarantor of the debtor as the defendant as the defendant as the debtor, the right which does not affect the rehabilitation plan as above means the right to demand a deposit under the contract of this case, which is directly against the defendant as the debtor as the debtor of the defendant as the plaintiff as the defendant as the debtor of the defendant as the defendant as the ground for the performance of the duty to demand reimbursement of the defect in this case. Thus, the plaintiff's right to demand reimbursement against the defendant as to the defendant as the defendant as the defendant as the defendant

4. Conclusion

If so, the plaintiff's claim is without merit, and it is dismissed. It is so decided as per Disposition.

[Attachment]

Judges O Jae Jae-sung (Presiding Judge)

1) The former Company Reorganization Act was incorporated into the Bankruptcy Act and the Composition Act as a result of its enactment and enforcement on April 2006. Article 110(1) of the former Company Reorganization Act provides, similar to Article 126(1) and (3) of the former Company Reorganization Act, that “where several persons are liable to perform the entire amount, if the reorganization proceedings are commenced in respect of all or some of them, or one of them, a person holding the right to indemnity that might be exercised against them in the future, may exercise his right as a reorganization creditor in respect of the total amount of the claim. However, this provision shall not apply where a creditor exercises his right as a reorganization creditor with respect to the total amount of the claim.”