Whether a contractor may exercise a lien based on a claim for the remainder of the construction (negative in principle) in a case where a contractor simultaneously raises an objection against the contractor’s payment of the remainder of the construction based on the claim for repair of defects, since there is a defect in a newly constructed building completed in a new building contract and the amount corresponding to the defect and damage is more than the remainder

In light of the fact that the contractor’s claim for the construction price of the contractor is simultaneously performed with the damage claim, etc. in lieu of the contractor’s claim for the repair of defects or the damage claim in lieu of the defect repair and the purport that the due date of the secured claim is stipulated as the requirements for establishing a lien, etc., even if the contractor completed the construction in a new building construction contract, the contractor may not exercise a lien based on the remainder payment claim unless the contractor has provided the contractor with the performance of the obligation to compensate for the defect or the damage liability in lieu of the defect repair claim against the contractor, as long as there is a defect in the newly constructed building and the amount corresponding to the defect and the damage is more than the remainder amount of the construction.

Articles 320, 536, 665, and 667 of the Civil Act

Main Tech Co., Ltd.

Defendant (Attorney Lee Yong-hoon, Counsel for defendant-appellant)

Seoul High Court Decision 2012Na76609 decided March 22, 2013

The appeal is dismissed. The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

1. When there is a defect in the object completed in a contract for work, the contractor may claim against the contractor for the repair of the defect or for damages in lieu of or together with the repair of the defect (Article 667 of the Civil Act). These claims are in a concurrent performance relationship with the contractor's claim for the construction price (see Supreme Court Decision 2007Da31914, Oct. 11, 2007, etc.). Meanwhile, since the lien is established when the claim arising in relation to the said object is due (Article 320 of the Civil Act). It is not possible to exercise the lien on the basis of the claim which is not yet due (see Supreme Court Decision 2005Da41740, Sept. 21, 2007, etc.). If the lien takes place before the due date, it is indirectly compelling the performance before the due date.

In light of the fact that the contractor's claim for the construction price of the contractor is simultaneously performed with the damage claim in lieu of the defect repair claim of the contractor or the damage claim in lieu of the defect repair, and the purport that the due date of the secured claim is stipulated as the requirement for establishing a lien, etc., even if the contractor completed the construction in the new building construction contract, if the contractor raises an objection to the simultaneous performance of the contractor's claim for the whole of the remainder of the construction price based on the defect repair claim or damage claim in lieu of the defect repair claim against the contractor, the contractor cannot exercise a lien based on the remainder of the construction price unless the contractor provides the contractor with the obligation to repair the defect or the obligation to compensate for the defect in lieu of the defect repair.

(6) On June 25, 2009, the Plaintiff filed a claim for additional construction charges of KRW 20,50 with the Seoul High Court for 19: (1) No later than April 20, 2010; (2) Nonparty 1, the representative director of the Plaintiff, opened a meeting related to the completion of construction; (3) No later than 2, 4, 200, 206, 200, 206, 206, 206, 30, 50, 500, 206, 50,000,000,000,000,000,000,000,000,0000,000,000,000,000,000,000,000,000,000,000,000,00,000,00,000.

In light of the aforementioned facts in light of the legal principles as seen earlier, insofar as the defect repair cost for the newly constructed building of this case was found to have exceeded KRW 210,325,00 of the remainder amount of the construction work of Manium 255,952,766, the Plaintiff’s refusal to pay the remainder amount of the construction due to defect repair or defects constitutes an exercise of legitimate simultaneous performance defense, and thus, the Plaintiff’s refusal to pay the remainder amount of the construction work constitutes an exercise of the right of defense. Therefore, the Man Construction cannot exercise a right of retention based on the remainder amount of the construction payment without providing the Plaintiff with any defect repair liability or performance of damage liability against the Plaintiff. Therefore, the Defendant, the representative director of Man Construction, who occupied the new building of this case and controlled the Plaintiff’s access, cannot be deemed lawful as an exercise of the right of retention for Man Construction. Although the lower court’s reasoning was insufficient, the conclusion of rejecting the Defendant’s assertion that the act of this case, such as occupation of new building of this case is legitimate as the exercise of lien is justifiable.

3. Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Yong-deok (Presiding Justice)