The meaning of “construction” and “construction business” under the Framework Act on the Construction Industry, and whether construction business shall be deemed to have been conducted in the case of completion by directly performing and performing all or some of the contracted construction works, as well as in the case of completion by subcontracting (affirmative)

The Framework Act on the Construction Industry provides that “The purpose of this Act is to promote the proper execution of construction works and the sound development of the construction industry by prescribing fundamental matters concerning the investigation, design, execution, supervision, maintenance and management, technical management, etc. of construction works, and necessary matters concerning the registration of construction business and the contract for construction works (Article 1).” Article 2 Subparag. 1 through 3 of the Framework Act on the Construction Industry provides that “construction business” refers to “construction service business,” which is a business that conducts construction works, and “construction business,” which is a business that provides services related to construction works, such as investigation, design, supervision, business management, and maintenance and management (Article 2 Subparag. 1 through 3). In full view of the legislative purpose of the Framework Act on the Construction Industry as above and the definitions of the construction industry and the construction business and the construction service business, “construction business” can be interpreted as “business

Meanwhile, the main text of Article 9(1) of the Framework Act on the Construction Industry provides that “any person who intends to conduct construction business shall file for registration with the Minister of Land, Infrastructure and Transport according to the type of business prescribed by Presidential Decree.” Article 96 Subparag. 1 of the same Act provides a penal provision on “any person who conducts construction business without registration or with registration obtained by improper means.” In light of the legislative purpose of the Framework Act on the Construction Industry to promote the proper execution of construction works and the sound development of the construction industry and the purport of the registration system for construction business to protect the lives and property of the people by preventing defective construction by unregistered business operators.” In light of the legislative purpose of the Framework Act on the Construction Industry and the purport of the registration system for construction business to protect the lives and property of

Therefore, the term “construction business” should be interpreted as “a business that performs all acts performed to complete construction works in accordance with the design by direct or by contract.” Thus, it should be deemed that construction business was conducted not only in the case of completion of construction works directly or by contract but also in the case of completion of construction works by subcontract.

Article 1, Article 2 subparags. 1, 2, 3, and 4 of the Framework Act on the Construction Industry, Article 9(1) of the Framework Act on the Construction Industry, Article 96 subparag. 1 of the Framework Act on the Construction Industry (Amended by Act No. 14708, Mar. 21, 2017)

[Plaintiff-Appellant] Plaintiff 1 and 1 other (Law Firm Domin, Attorneys Han-soo et al., Counsel for plaintiff-appellant)

Defendant

Prosecutor

Gwangju District Court Decision 2016No417 Decided January 11, 2017

The judgment of the court below is reversed, and the case is remanded to the Gwangju District Court Panel Division.

The grounds of appeal are examined.

1. Of the facts charged in the instant case, the summary of the violation of the Framework Act on the Construction Industry due to unregistered construction business is that the Defendant subcontracted all of the “○○○ Public Security Center Construction Corporation” (hereinafter “instant construction”) subcontracted to Nonindicted Co. 1 Company (hereinafter “Nonindicted Co. 1”) without registering the construction business to Nonindicted Co. 2, without registering the construction business, and Nonindicted Co. 2 had Nonindicted Co. 2 carry out the instant construction business without registration.

As to this, the lower court upheld the first instance judgment that acquitted the Defendant on the facts charged on the ground that the Defendant’s subcontracting of all of the instant construction work that was subcontracted by Nonindicted Company 1 to Nonindicted 2 does not constitute “construction work” under Article 2 subparag. 4 of the Framework Act on the Construction Industry.

2. However, the lower judgment is difficult to accept for the following reasons.

A. The Framework Act on the Construction Industry provides that “The purpose of this Act is to promote the proper execution of construction works and the sound development of the construction industry by prescribing fundamental matters concerning the investigation, design, execution, supervision, maintenance, management, technical management, etc. of construction works, and necessary matters concerning the registration of construction business and the contract for construction works (Article 1).” The term “construction industry” provides that “construction business” refers to “construction business” which is a business that conducts construction works, and “construction service business” which is a business that provides services related to construction works, such as investigation, design, supervision, business management, maintenance, and management (Article 2 subparag. 1 through 3). In full view of the legislative purpose of the Framework Act on the Construction Industry as seen above and the definition of the definition of the construction industry, construction business, and construction service business, “construction business” can be interpreted as “business that performs construction works.”

Meanwhile, the main text of Article 9(1) of the Framework Act on the Construction Industry provides that “any person who intends to conduct construction business shall file for registration with the Minister of Land, Infrastructure and Transport according to the type of business prescribed by Presidential Decree.” Article 96 Subparag. 1 of the same Act provides a penal provision on “any person who conducts construction business without registration or with registration obtained by improper means.” In light of the legislative purpose of the Framework Act on the Construction Industry to promote the proper execution of construction works and the sound development of the construction industry and the purport of the registration system for construction business to protect the lives and property of the people by preventing defective construction by a unregistered business operator.” In light of the legislative purpose of the Framework Act on the Construction Industry and the purport of the registration system for construction business to protect the lives and property of the people, the term “construction” can be interpreted as meaning “any act performed to complete construction work by direct or by contract” (see Supreme Court Decision 20

Therefore, the term "construction business" shall be interpreted as "business of performing any act performed in order to complete construction works in accordance with the design, directly or by contract," and it shall be deemed that construction business was conducted not only in the case of completion of construction works directly or by contract, but also in the case of completion of construction works by subcontract.

B. The evidence duly admitted by the first instance court maintained by the lower court reveals the following: (a) the Defendant, without registering construction business under the Framework Act on the Construction Industry, actually operated △△ case that had completed business registration under the name of his spouse, and (b) Nonindicted Company 1 and the Defendant entered into a subcontract with the Republic of Korea at KRW 195,00,000 on the contract amount for the whole of the instant construction work that Nonindicted Company 1 contracted from the Republic of Korea on June 2013; (c) the Defendant and Nonindicted Party 2 entered into a sub-subcontract with the contract amount of KRW 180,00,000 on the whole of the instant construction work around June 2013; (d) Nonindicted Party 2 performed the instant construction work by November 19, 2013; and (e) the Defendant did not reside, but did not act as a field manager at the site of the instant construction work.

C. Examining the above facts in light of the legal principles as seen earlier, the Defendant entered into a subcontract with Nonindicted Company 1 with the intent to carry out the instant construction work without registering the construction business, and carried out the instant construction work by re-subcontracting it to Nonindicted Party 2, and thus, it can be deemed that the Defendant carried out a construction business without registration, which is subject to punishment under Article 96 Subparag. 1 of the Framework Act

D. Nevertheless, the lower court erred by misapprehending the legal doctrine on the interpretation of “construction business” under Article 2 subparag. 2 of the Framework Act on the Construction Industry. The allegation contained in the grounds of appeal on this point is with merit.

3. Scope of reversal

For the above reasons, the part of the judgment of not guilty among the judgment below should be reversed. The prosecutor appealed against the whole of the judgment of the court below (However, there is no statement of grounds for objection in the petition of appeal or the appellate brief about the guilty portion among the judgment of the court below). The above reversed part and the guilty part which should be sentenced to one punishment as to the whole should be reversed in relation to concurrent crimes under the former part of Article 37

4. Conclusion

Therefore, the judgment of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Shin (Presiding Justice)