Uniform Construction Co., Ltd. and two others (Law Firm Song, Attorneys Yeo-ok et al., Counsel for the defendant-appellant)

Seoul Special Metropolitan City (Nex Law Firm, Attorneys Park Ge-young, Counsel for the plaintiff-appellant)

June 5, 2019

Seoul Central District Court Decision 2015Gahap513768 Decided January 25, 2017

1. The part against the defendant among the judgment of the court of first instance is revoked, and all of the plaintiffs' primary claims corresponding to the above revoked are dismissed.

2. Pursuant to the preliminary claim added by this court, the defendant shall pay to the plaintiffs 46,098,899 won and 6% per annum from March 20, 2015 to August 16, 2019, and 15% per annum from the following day to the date of full payment.

3. The plaintiffs' remaining conjunctive claims added by this court are all dismissed.

4. The plaintiffs bear 90% of the total litigation costs, and the remainder shall be borne by the defendant.

5. Paragraph 2 can be provisionally executed.

1. Purport of claim

Main and Preliminary, the defendant shall pay to the plaintiffs 449,05,277 won and 15% interest per annum from the day following the delivery of a copy of the complaint of this case to the day of complete payment (the plaintiff added the conjunctive cause of claim in this court).

2. Purport of appeal

The text of paragraph (1) is as follows.

1. Basic facts

This Court's explanation is based on the main text of Article 420 of the Civil Procedure Act, since it is the same as the corresponding part of the judgment of the court of first instance except for the following addition.

[Supplementary Parts]

○ [Reasons for Recognition] add “A No. 35” to the column.

2. The plaintiffs' claims

(a) The main claim (the claim for indirect construction costs incurred by the extension of the construction period under the general contract);

The instant construction contract changed the term of completion of the instant construction project from January 5, 2012 to October 15, 2014 due to reasons not attributable to the Plaintiffs, such as lack of budget or delay of design, etc., and the Plaintiffs requested the Defendant to adjust the contract amount pursuant to Section V II of the instant general terms and conditions. Therefore, the Defendant is obliged to pay the Plaintiffs the amount of indirect construction cost incurred by the Plaintiffs from January 25, 2013 to June 30, 2014, during which the Plaintiffs agreed not to claim the additional indirect construction cost from January 25, 2013 to June 30, 2014, which was the period for which the Plaintiffs agreed not to claim the additional indirect construction cost with the Defendant.

(b) Preliminary claim (the contract period or the extended period under each contract for each number of vehicles, and the indirect construction costs for the blank machines between the contracts for each number of vehicles);

1) The Defendant shall pay indirect construction costs equivalent to 509 days (400 days from January 25, 2013 to February 28, 2014, and 109 days from March 14, 2014 to June 30, 2014) in total, the contract period or the extension period for each number of vehicles of which the contract period per each number of vehicles has been extended.

2) Also, due to the reasons attributable to the Defendant, immediately following February 28, 2014 when the contract by the type of the fourth vehicle was terminated, and the Plaintiffs continued to perform construction work, such as site management, even during the blank period between the contracts by the type of the fourth and fifth vehicles. This is in violation of contractual obligations that the Defendant should proceed without interruption, and the Defendant shall compensate the Plaintiffs for damages equivalent to the indirect construction cost corresponding to the said blank period 13 days (from March 1, 2014 to March 13, 2014). Since the Plaintiffs performed construction work even during the said blank period, the Defendant is obliged to pay the said indirect construction cost to the Plaintiffs in accordance with the overall or indirect construction cost payment agreement.

3. Judgment on the main claim

A. Relevant legal principles

A long-term continuing construction contract is not itself based on a conclusive agreement on the total construction price or total construction period, but rather linked with the conclusion of each annual contract. Generally, the parties to a long-term continuing construction contract appear to have an intent to use the total construction price and total construction period of each annual contract as a provisional standard in concluding each annual contract. The total construction price and total construction period stated in each annual contract themselves cannot be deemed to have an intention to generate conclusive rights and duties or have binding force on the construction price and construction period. In other words, the so-called "long-term continuing construction contract" in a long-term continuing construction contract shall be deemed to have an agreement on the fact that the contracting party is in the position of executing each annual contract with regard to the overall scale, construction amount, and construction period, etc. of the project, and the total scale of each contract shall be deemed to have been based on the overall contract. Accordingly, the validity of the comprehensive contract is not necessary to re-determine the determination procedure, such as competitive bidding, etc., of executing the contract without justifiable grounds, and separate contracts included in the total construction period (see Supreme Court en banc Decision 20130Do180.

B. Determination

The fact that the instant construction contract is a long-term continuing construction contract is as recognized earlier. According to the foregoing legal doctrine, the total construction period stipulated in the overall contract is not legally binding, and the estimate or bill of quantity calculated based on the total construction period or the total construction period cannot be deemed as included in the contents of the relevant contract. Ultimately, whether the construction period is extended or not shall be determined based on the respective number of contracts. As such, even if the total construction period has been extended more than the first additional additional construction period under the overall contract of the instant contract, the adjustment of the contract amount is not recognized in light of a change of the construction period or other modification of the terms of the contract. Accordingly, the Plaintiffs’ primary claim on a different premise is without merit without further review.

4. Judgment on the conjunctive claim

(a) Whether an indirect construction cost claim has arisen due to the extension of the construction period;

1) Occurrence of the cause for the adjustment of the contract amount following the extension of the construction period

A) In accordance with the above legal doctrine, whether a cause for adjusting the contract price occurred due to a change in the period of construction in a long-term continuing construction contract should be determined based on each of the following contracts.

B) According to the evidence Nos. 2 and 32-1 through 4 of evidence Nos. 2-2, the Defendant: (a) decided to change the construction period from May 2013 to June 2014; and (b) decided to additionally implement construction, such as relocation of parking lots, maintenance of access roads and brick factories sites, and creation of network connections, in addition to the instant construction, from May 10, 2013 to the competent supervisor around May 10, 2013; (c) the Defendant notified the pertinent additional construction implementation plan to the responsible supervisor around August 27, 2013; (d) the Defendant did not request the Defendant to change the construction period from December 31, 2013 to February 28, 2014; (e) it appears that there were no special reasons to deem that the contract period was extended to the Defendant on September 4, 2013 as the grounds for the extension of the construction period, and (e) there were no special reasons to deem that the Plaintiffs and the Defendant concluded an extension of the contract period.

C) As to this, the Defendant asserts that there is no additional indirect construction cost that the Defendant shall pay to the Plaintiffs, since the contract was concluded on the ground of the increase in the quantity due to the modification of the design, and the indirect construction cost due to the extension of the construction period was reflected in the increased construction cost pursuant to the above modified contract.

The fact that there was a change in the construction period to perform additional construction in accordance with the first revision contract of September 3, 2013 for each type of the fourth type of the contract, and that the construction period has been extended, and that the construction cost of the fourth type of the contract has been increased by 278,50,000 won in accordance with the above one-time revision contract, and 78,31,000 won in accordance with the two-time revision contract of December 2013, it is recognized that the total of 356,81,000 won has increased, respectively, according to the two-time revision contract of December 2013.

However, the following circumstances revealed in full view of the evidence and the purport of the entire pleadings, namely, ① the adjustment of the contract amount due to the modification of a design, as a matter of principle, directly causes a change in the quantity of construction work; ④ adjustment of the contract amount due to the extension of a construction period directly causes different regardless of the increase in the quantity of construction work; ② adjustment of the contract amount due to the extension of a construction period only provides that the amount shall be calculated within the extent not exceeding the actual expenses actually paid during the extended construction period; ② adjustment of the contract amount due to the adjustment of the contract price due to the modification of a design does not immediately be calculated according to the contract price, such as the adjustment of the contract price, the bid price, or the adjustment rate of the contract price; ③ indirect construction cost is reflected in the ratio even if the change of the construction period without the extension of the construction period. Thus, if the total amount of the increased indirect construction cost due to the modification of a design is to be deducted from the indirect construction cost incurred by the extension of the construction period without the extension of the construction period, even if the increased construction period included in the additional construction period.

2) Whether an application for a contract price is lawful

A) Relevant legal principles

Even if the cause for the adjustment of the contract amount due to the extension of the construction period has occurred, the contract amount is not automatically adjusted, but the contract amount is just by the application for the adjustment of the contract amount to the other party (see Supreme Court Decision 2004Da28825, Sept. 14, 2006). If it is necessary for the other party to the contract to adjust the contract amount due to the change of the construction period, it is sufficient that there exists an agreement with the ordering agency regarding the extension of the construction period due to obtaining approval from the ordering agency prior to the commencement of the extended construction period, etc., and it is not necessary to complete the application for the adjustment of the contract amount or the subsequent adjustment before the commencement of the changed construction period. However, since the fixed payment is not subject to the contract amount adjustment from the trust protection of the parties, the other party to the contract shall complete the application for the adjustment of the contract amount due to the change of the contract contents before the payment of the last time price (or completion price).

B) Determination

(1) On February 27, 2014, before February 28, 2014, the date of receipt of the completion cost of the contract by the type of the fourth car, the Plaintiffs filed an application for the adjustment of the contract amount with respect to the construction period extended by the contract by the type of the fourth car, which was before February 28, 2014, as seen earlier. Therefore, barring any special circumstance, the Plaintiffs lawfully claimed indirect construction cost due to the extension of the construction period to the Defendant, barring any special circumstance.

(2) On February 27, 2014, the Defendant asserts to the effect that an application for the adjustment of the above contract price to the Defendant on the ground of the extension of the total construction period of the overall contract cannot be deemed a legitimate application for adjustment of the contract price based on the fourth multiple contracts. However, considering the aforementioned evidence and the purport of oral argument, the following circumstances, i.e., ① the adjustment of the contract price system due to extension of the construction period, which is based on the provisions of Article 22 of the Local Government Contracts Act, Articles 73, 75, and 78 of the Enforcement Decree of the same Act, and the general conditions of the construction contract, are not immediately fixed upon the request of the contracting party, but the procedure for the adjustment of the contract price by the head of a local government or the contracting officer is not determined by a certain method. Considering that the above application for adjustment of the contract price is not clearly specified, or that the application for adjustment of the contract price cannot be deemed an extension of the construction period based on the objective extension of the contract period by the contracting party.

3) Sub-determination

Therefore, barring any special circumstance, the Defendant is obliged to pay the Plaintiff the indirect construction cost incurred for 59 days, which is the extended construction period for each extended contract by the fourth number of vehicles.

(b) Whether an indirect construction cost claim has occurred due to the blank period between contracts by each number of vehicles;

On the other hand, there is no evidence to deem that the Defendant has a duty to proceed with each of the contracts under the instant construction contract without a blank period, or that the Plaintiffs raised any objection against the Defendant’s breach of the above contractual obligation, and it is difficult to view that the total construction period under the overall contract is binding on the parties or that there was a separate indirect construction cost payment agreement between the Plaintiffs and the Defendant. Therefore, this part of the Plaintiffs’ assertion is without merit without any need to further examine.

C. Scope of indirect construction cost

1) Principles for calculating the amount of indirect construction cost

Article 22 of the Local Government Contracts Act provides for the adjustment of the contract amount due to changes in the terms of contract, such as design change and price fluctuation, in addition to the change of construction period, and Article 75(1) of the former Enforcement Decree of the Local Government Contracts Act provides that the adjustment shall be made to the extent that does not exceed the actual cost according to the changed terms, and Article 75(1) of the former Enforcement Decree of the Local Government Contracts Act also provides for the same purport. The standard for calculating the actual cost under the relevant Acts and subordinate statutes is prescribed in the Standards for Local Government Tender and Contract Execution. Although the said standard is not an absolute standard in claiming indirect construction cost by the plaintiffs, it appears that the said standard serves as an important standard in calculating the actual cost, even if the said standard does not constitute an absolute standard in claiming indirect construction cost by lawsuit. Meanwhile, the actual cost prescribed under the said provision must not

2) Adjustment of indirect construction costs

According to the instant construction contract, only the standard for adjusting the contract amount due to the amendment to the terms and conditions of the contract and the limit are presented within the extent not exceeding actual expenses by agreement between the parties, and since the adjusted amount is not immediately calculated by the contract price or the successful bid price adjustment rate, such as the contract price adjustment due to the modification of design or price fluctuation, as well as the contract price adjustment rate or the contract price adjustment rate due to price fluctuation, the court may also determine the reasonable adjustment amount within the extent of actual expenses, considering the details and reasons behind the amendment to the terms and conditions of the contract in light of the good faith and the principle of fairness. In light of the above, the above facts and the first instance court appraiser 00 in the first instance trial act as the limit of the contract amount and the purport of the entire arguments, i.e., the possibility that the contract amount adjustment was actually conducted through consultation between the parties. Thus, the possibility that the contract amount adjustment is less than the actual cost if the contract amount is extended due to the extension of the construction period due to the reasons not attributable to the plaintiffs, and it is difficult to clearly distinguish the indirect construction cost paid by the plaintiffs from the extension of the construction period.

3) Specific calculation

In full view of the appraisal results by ○○○○○○○○○ of the first instance trial, comprehensively taking account of the overall purport of the pleadings, indirect construction costs incurred as a result of the extension of the construction period of the contract by the fourth number of vehicles by totaling 59 days may be recognized as the facts constituting the cause of KRW 51,220,99 as shown in attached Table 4.

Therefore, the Defendant is obliged to pay the Plaintiffs the amount of KRW 46,098,899 calculated by multiplying the aforementioned extension by 90% (i.e., 100% - 10%) of the adjustment ratio (i., 51,220,99 won x 0.9,000 won) and damages for delay.

(d)the initial date of the damages for delay;

1) The instant general terms VII.1.g., applied mutatis mutandis by e., April 1, 200, the ordering agency stipulates that the contract amount shall be adjusted within 30 days from the date of receiving the other party’s claim for the adjustment of the contract amount, and the contract officer of the instant general conditions X. b. provides that a contract officer may make a special agreement to extend the payment period by an agreement with the other party, within seven days (excluding holidays and Saturdays) after receiving the other party’s claim for the payment of the contract amount.

In full view of the above provisions, it is reasonable to view that the time limit for the payment of the contract amount is set, and it does not constitute a direct basis for determining the time limit for the payment of indirect costs claims. In light of the following: (a) the details of performance by the contracting party; (b) the scope of the construction price to be paid to the contracting party; and (c) the period for the performance of the contract, etc. are specifically fixed through a multiple-level contract; and (d) unless there is any evidence to deem that there exists an agreement to separately determine the time limit for the payment; (b) the initial date of the additional construction cost due to the extension of the contract period by the number of different contracts is the time when the time limit for the payment of the completion price and the time limit for the payment of the contract amount due to the legitimate request by the plaintiffs under Article 1 X.

2) The facts alleged by the Plaintiffs in the instant complaint claiming for the payment of KRW 532,315,00 as additional indirect construction cost due to the extension of the construction period and the delayed payment thereof are apparent in the record. No evidence exists to acknowledge that the Plaintiffs previously claimed the payment of the additional construction cost, and it is apparent that the deadline for the obligation to adjust the contract amount due to the lawful claim for adjustment of the contract amount arrived at around the around March 29, 2014, which is the previous claim for the said additional construction cost.

Then, the plaintiffs shall be held liable for delay from March 10, 2015 to March 20, 2015 after seven days (excluding holidays and Saturdays) from March 10, 2015, on which the duplicate of the complaint of this case was served on the defendant.

5. Conclusion

Thus, the defendant is obligated to pay to the plaintiffs 46,098,89 won as well as damages for delay calculated by the ratio of 6% per annum under the Commercial Act from March 20, 2015 to August 16, 2019, which is the date of this decision, and 15% per annum under the Act on Special Cases concerning the Promotion, etc. of Legal Proceedings from the next day to the date of full payment.

Ultimately, all of the plaintiffs' primary claims are dismissed without merit, and the supplementary claims added by this court shall be accepted within the scope of the above recognition. Since the judgment of the court of first instance is unfair with different conclusions, the defendant's appeal shall be accepted, and the part against the defendant in the judgment of first instance shall be revoked, and all of the plaintiffs' primary claims corresponding to the revoked part shall be dismissed, and the court shall order the defendant to pay the amount equivalent to the above quoted amount, and all of the plaintiffs' conjunctive claims shall be dismissed. It is so decided as per Disposition.

(attached Form omitted)

Judges Kim Sang-woo (Presiding Judge)

(1) On February 27, 2014, the fact that the Plaintiffs filed an application for the adjustment of the contract amount with respect to the construction period extended by the contract by the number of teas as of February 27, 2014.

Note 2) March 14, 2015 ( Saturdays) and March 15, 2015 ( Sundays)