[1] Whether it is permissible for the other party to make a re-appeal against the counterclaim of offset in litigation (negative in principle), and whether such a legal principle applies likewise to cases where the other party makes a re-appeal against the counterclaim of offset in litigation by automatically claiming the other one of the two claims as the passive claims (affirmative)

[2] In a case where an obligor liable for damages due to a tort or non-performance of obligation claims set-off against a creditor, whether the liability limitation should be set-off against the amount of damages incurred after the limitation of liability (affirmative)

[3] The relationship between the right of the council of occupants' representatives to claim the warranty bond and the warranty bond that the contractor has against the contractor based on Article 28(1) of the former Framework Act on the Construction Industry and Article 667 of the Civil Code, etc.

[4] Where a contractor's damage liability in lieu of a defect repair to a contractor and a defect subject to the obligation to pay a defect repair bond to the council of occupants' representatives overlaps partially, whether the damage liability in lieu of a defect repair and the requirements for extinguishment of one of the damage liability claims in lieu of a defect repair and the damage liability in lieu of a defect repair are offset against the contractor's obligation to the contractor (negative)

[1] The Plaintiff’s re-claim of offset in the lawsuit does not generally have a benefit to allow it. Therefore, the Plaintiff’s re-claim of offset in the lawsuit against the Defendant’s counterclaim is not allowed unless there are other special circumstances. This legal doctrine likewise applies to cases where the Plaintiff claims two claims, one of which the Defendant claims as a passive claim, defects in the counter-claim in the lawsuit, and re-claim of offset in the lawsuit against the other claims as an automatic claim.

[2] In calculating the debtor's amount of damages due to tort or nonperformance, it is necessary to limit the debtor's liability in order to ensure the fairness of burden of damages, and in case where the debtor makes a set-off claim with the opposite claim against the creditor, it shall be set off after limitation of liability has been made.

[3] Under the former Housing Act (amended by Act No. 8974 of March 21, 2008) and the former Enforcement Decree of the Housing Act (amended by Presidential Decree No. 22254 of July 6, 2010), the right of a contractor to claim a warranty bond against a warranty company and the right of a contractor to claim a warranty bond against a contractor based on Article 28(1) of the former Framework Act on the Construction Industry (amended by Act No. 10719 of May 24, 201) and Article 667 of the Civil Act is different from each other.

Therefore, even if the council of occupants' representatives takes over a claim for damages in lieu of the defect repair for the seller who is the seller under the Act on the Ownership and Management of Aggregate Buildings (hereinafter "the Aggregate Buildings Act"), the contractor shall exercise the right of compensation in lieu of the defect repair as the defect repair as the defect repair obligation on behalf of the contractor who is the seller under the Aggregate Buildings Act, and the contractor directly claims the defect repair liability to the contractor as the guarantee creditor under the defect repair contract, it cannot be deemed that the contractor's obligation in lieu of the defect repair liability to the contractor and the obligation to pay the

[4] The contractor's damage liability in lieu of the defect repair to the contractor and the obligation to pay the defect repair to the contractor's representative council of the contractor's representative council may partially overlap with the defect subject to the defect repair, and as a result, it exists for the same defect repair to the extent that it overlaps. Thus, in the future, the council of occupants' representatives has won all the winnings in the lawsuit claiming the defect repair in lieu of the defect repair subrogated to the contractor's representative, and the council of occupants' representatives has actually received the amount equivalent to the cost of the defect repair within the scope related to the defect that was actually paid, and the purpose of the defect repair has been achieved within the scope related to the defect that was paid, other rights shall be extinguished. However, in case where the damage liability in lieu of the contractor's defect repair against the contractor's contractor is set off against the contractor's obligation to the contractor, the council of occupants' representatives cannot be deemed to have achieved the purpose of the right

[1] Article 492 of the Civil Act / [2] Articles 396, 492, and 763 of the Civil Act / [3] Article 46 of the former Housing Act (Amended by Act No. 8974, Mar. 21, 2008); Article 59 of the former Enforcement Decree of the Housing Act (Amended by Presidential Decree No. 22254, Jul. 6, 2010); Article 28 (1) of the former Framework Act on the Construction Industry (Amended by Act No. 10719, May 24, 201); Article 67 of the Civil Act; Article 9 of the Act on the Ownership and Management of Aggregate Buildings / [4] Article 46 of the former Housing Act (Amended by Act No. 8974, Mar. 21, 2008); Article 254 of the former Enforcement Decree of the Housing Act (Amended by Presidential Decree No. 2519, Jul. 24, 2010>

[1] Supreme Court Decision 2013Da95964 Decided June 12, 2014 (Gong2014Ha, 1382) / [3/4] Supreme Court Decision 2009Da23160 Decided September 13, 2012 (Gong2012Ha, 1655)

The Representative Council of the Hanbrut Management Council (Law Firm Cheonger, Attorneys Park Young-young, Counsel for the defendant-appellant)

Han-ro Co., Ltd and one other (Attorney Jeong-soo, Counsel for the plaintiff-appellant)

Seoul High Court Decision 2011Na97029 decided October 17, 2012

The part of the lower judgment against the Plaintiff against the Defendant Seoul Guarantee Insurance Co., Ltd. is reversed, and that part of the case is remanded to the Seoul High Court. The remaining grounds of appeal are dismissed. The costs of appeal between the Plaintiff and the Defendant Han-ro

The grounds of appeal are examined.

1. As to the ground of appeal against Defendant Han-chul

A. The assertion regarding the second defense of a set-off in litigation

(1) A set-off defense as a means of defense in litigation is a kind of preliminary defense that usually takes place on the premise that the existence of a set-off claim becomes final and conclusive, not a final and conclusive effect by the declaration of intent of set-off in litigation, but a case where a court makes a substantial decision on set-off such as the existence of a passive claim in the lawsuit in question, etc., the effect of set-off in substantive law arises only when the court makes a substantial decision on the said claim (see Supreme Court Decision 2011Da3329, Mar

In a case where, in order for the plaintiff to again extinguish the defendant's automatic claim against such offset in the lawsuit, the court does not need to determine the re-appeal of offset in the lawsuit when the court rejects the defendant's counterclaim for the reasons unrelated to the plaintiff's re-appeal in the lawsuit. In a case where the defendant's counterclaim for the offset in the lawsuit is deemed to have been extinguished on an equal amount at the time of the offset in the lawsuit, since the defendant's automatic claim, which is the plaintiff's claim, and the defendant's automatic claim, which is the plaintiff's claim, should be viewed to have been extinguished on an equal amount at the time of the offset in the lawsuit, the plaintiff's automatic claim, which is the subject of offset in the lawsuit, does not exist within the scope of the offset in the lawsuit, and even in this case, there is no need to determine the re-appeal in the lawsuit of the plaintiff. Moreover, if the plaintiff has other claims against the defendant in addition

If so, the Plaintiff’s re-claim of offset in the lawsuit would normally have no benefit to allow it. Therefore, it is reasonable to view that the Plaintiff’s re-claim of offset in the lawsuit against the Defendant’s lawsuit is not allowed, barring any special circumstances (see Supreme Court Decision 2013Da95964, Jun. 12, 2014). This legal doctrine also applies to the case where the Plaintiff claims two claims, one of which the Defendant claims as several claims, and the same applies to the case where the Plaintiff re-claims another claim of offset in the lawsuit against the said claims as automatic claims.

(2) According to the reasoning of the lower judgment and the record, the lower court determined that (A) KRW 439,398,688 of the damage claim in lieu of the defect repair, which the Plaintiff exercised on behalf of the contractor, was extinguished within an equal amount retroactively from the time of occurrence of each defect by the declaration of offset on May 24, 2011, with the claim of KRW 214,313,428 of the remainder of the construction price in this case, which was the Defendant Han-gu Co., Ltd. (hereinafter “Defendant Han-gu”) as the automatic claim, after the use inspection conducted by the Co., Ltd. (hereinafter “APD”) on May 8, 201, the lower court rejected the Plaintiff’s subsequent claim based on its determination that the Plaintiff had set off the damages claim in lieu of the remainder of the construction price in this case on June 12, 2012 as the offset against the Plaintiff’s damages claim in lieu of the damages claim in front of the remainder of the construction price in this case, and that contained the Plaintiff’s claim in the same set-off.

(3) Examining the reasoning of the lower judgment in light of the evidence duly admitted, such determination by the lower court seems to be based on the legal doctrine as seen earlier. In so doing, contrary to what is alleged in the grounds of appeal, the lower court did not err by misapprehending the legal doctrine on simultaneous performance relationship, set-off, litigation, set-off

B. Claim concerning set-off prior to limitation of liability

(1) When calculating the debtor's damages due to tort or nonperformance, it is necessary to limit the debtor's liability in order to ensure the fairness of the burden of damages, and where the debtor claims a set-off with the opposite claim held against the creditor, it shall be set off against the limited liability amount after making a set-off.

(2) On the grounds indicated in its reasoning, the lower court determined that set-off based on the claim for the remainder of the construction price of this case by Defendant Han-do should be made with respect to the amount after the limitation of liability under the principle of fairness or the principle of trust and good faith among the damage claims in lieu of defect repair against Defendant Han-do, which the Plaintiff exercised on behalf of, and determined to the effect that the limitation of liability and the balance of the construction price of this case by

(3) Such determination by the court below is consistent with the above legal principles, and contrary to the allegations in the grounds of appeal, there is no error of law by misunderstanding the legal principles as to the time of offset and the object of offset.

2. As to the ground of appeal against Defendant Seoul Guarantee Insurance Co., Ltd.

A. The right of the council of occupants’ representatives to claim a warranty bond against a contractor based on the former Housing Act (amended by Act No. 8974, Mar. 21, 2008) and the former Enforcement Decree of the Housing Act (amended by Presidential Decree No. 22254, Jul. 6, 2010) and the right of the contractor to claim a warranty bond against the contractor based on Article 28(1) of the former Framework Act on the Construction Industry (amended by Act No. 10719, May 24, 2011) and Article 667 of the Civil Act is different from each other.

Therefore, even if the council of occupants' representatives takes over the right of compensation in lieu of the defect repair from the sectional owners under the Act on the Ownership and Management of Aggregate Buildings (hereinafter "the Aggregate Buildings Act"), the contractor shall exercise the right of compensation in lieu of the defect repair as the defect repair as the defect repair obligation on behalf of the contractor who is the contractor under the Aggregate Buildings Act, and the contractor directly claims the defect repair liability to the contractor as the guarantee creditor under the defect repair contract, it cannot be deemed that the contractor's obligation to substitute the defect repair to the contractor and the obligation to pay the defect repair bond to

However, the contractor's damage liability in lieu of the defect repair to the contractor and the obligation to pay the defect repair to the contractor's council of defect repair companies may partially overlap, and as a result, it exists for the same defect repair to the extent that it overlaps. Therefore, in the future, the council of occupants' representatives has received all winnings in the lawsuit claiming the defect repair in lieu of the defect repair subrogated to the contractor and the lawsuit claiming the defect repair to the company for the defect repair liability in lieu of the defect repair, and the council of occupants' representatives has exercised one of the rights and actually received the amount equivalent to the cost of the defect repair within the scope related to the defect payment, and the purpose of the defect repair has been achieved within the scope related to the defect payment (see Supreme Court Decision 2009Da23160, Sept. 13, 2012), other rights may be extinguished (see Supreme Court Decision 2009Da23160, Sept. 13, 2012). Therefore, it does not affect the contractor's right to claim the defect repair bond against the company.

B. In light of the above legal principles, in the instant case, the Plaintiff transferred the damage liability in lieu of the defect repair against the owner of the instant apartment from the owner of the instant apartment, and claimed damages against the Defendant Han-gu, the contractor on behalf of the contractor, by subrogation. Moreover, it cannot be deemed that the Defendant Han-D’s damage liability and the Defendant Seoul Guarantee Insurance’s obligation to pay the defect repair bond are jointly and severally liable, on the ground that the Plaintiff directly claims the defect repair bond against the Defendant Seoul Guarantee Insurance

Therefore, as seen earlier, according to set-off of the balance of the construction cost of this case held by Defendant Han LAD against further LAD, even if part of the damage compensation liability in lieu of defect repair or damages liability due to nonperformance of defect repair borne by Defendant Han LAD as the contractor, is extinguished, the purpose of compensation for defect repair against the Plaintiff cannot be deemed to have been achieved in lieu of the defect repair or its substitute damage liability. Therefore, its effect does not affect the obligation to pay the warranty bond to the Plaintiff, which is the council of occupants’ representatives, under each of the instant defect repair contract

In addition, the obligation extinguished by the set-off is not the obligation of Defendant Han LAD against the Plaintiff, and the obligation of Defendant Han LAD, the principal obligation of each of the instant warranty contracts, is not the defect repair liability borne by the Plaintiff pursuant to the former Housing Act and subordinate statutes. Thus, even according to Article 434 of the Civil Act that provides that the guarantor may set-off the principal obligor’s obligation against the Plaintiff by offsetting the principal obligor’s claim, it cannot be said that the liability of defect repair borne by the Defendant Han LAD to the Plaintiff is reduced, or that the obligation of

C. Nevertheless, the lower court determined otherwise by the set-off by Defendant Han-do that KRW 214,313,428 of the damages liability in lieu of the defect repair liability of the Plaintiff, the principal obligor of each of the instant defect repair contracts, or the damages liability due to the nonperformance of the defect repair liability, was extinguished, and on this premise determined that the Defendant Seoul Guarantee Insurance should deduct the above amount from the defect repair liability amount to be paid to the Plaintiff by the Plaintiff. Accordingly, the lower court erred by misapprehending the legal principles on the right to claim damages in lieu of the defect repair to the contractor, and the legal nature and difference of the right to claim the defect repair liability under the former Housing Act and the Housing Act of the council of occupants’ representatives

3. Conclusion

Therefore, the part of the lower judgment against the Plaintiff regarding the Defendant Seoul Guarantee Insurance is reversed, and that part of the case is remanded to the lower court for further proceedings consistent with this Opinion. The remaining grounds of appeal are dismissed. Of the costs of appeal, the part arising between the Plaintiff and the Defendant Korea is assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices

Justices Kim So-young (Presiding Justice)