[1] Where a joint and several surety of the debtor acquired the right to indemnity by performing the joint and several surety obligation with repayment, etc. to the rehabilitation creditor who is the principal obligee after the commencement of rehabilitation procedures, whether the right to indemnity based on the joint and several surety contract constitutes a rehabilitation claim (affirmative)

[2] Where the contractor of a construction contract completed the performance of the contract by completing and delivering the construction before the commencement of the rehabilitation procedure, and the damage incurred by the defect of the object completed after the commencement of the rehabilitation procedure for the contractor is practically caused, whether the contractor’s claim for damages in lieu of defect repair constitutes a rehabilitation claim (affirmative in principle)

[1] A rehabilitation claim includes a future claim under Article 138 (2) of the Debtor Rehabilitation and Bankruptcy Act. In case where a joint and several surety of the debtor performs a joint and several obligation with repayment, etc. to a rehabilitation creditor who is the principal creditor after the commencement of rehabilitation procedures, if a joint and several surety contract is concluded before the commencement of rehabilitation procedures, the joint and several surety relationship, which is the main cause of the occurrence of the right to indemnity, is kept before the commencement of rehabilitation procedures. Thus, a right to indemnity based on

[2] If a contract for construction work has already been completed in a contract for construction work, the contract cannot be rescinded any longer, and if the contract for construction work cannot be rescinded due to the completion and delivery of the building before the commencement of the rehabilitation procedure, the contractor shall be deemed to have completed the execution of the contract before the commencement of the rehabilitation procedure. In such a case, even if the damage was actually caused by the defect of the object completed after the commencement of the rehabilitation procedure for the contractor, it is reasonable to deem that the major cause of the claim for damages in lieu of the defect repair exists before the commencement of the rehabilitation procedure, barring any special circumstance. Thus, the contract for

[1] Article 118 subparag. 1 and Article 138(2) of the Debtor Rehabilitation and Bankruptcy Act / [2] Article 667(2) of the Civil Act, Article 118 subparag. 1 of the Debtor Rehabilitation and Bankruptcy Act

[2] Supreme Court Decision 2001Da24174, 24181 decided Oct. 9, 2001 (Gong2001Ha, 2431)

Hyundai Construction Co., Ltd. (Law Firm Sejong, Attorneys Lee Young-gu et al., Counsel for the plaintiff-appellant)

East Asia Construction Industry Co., Ltd. (Bae & Yang LLC, Attorneys Woo-gn et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2011Na5488 decided November 17, 2011

The appeal is dismissed. The plaintiff's request for continuation of proceedings is dismissed. The costs of appeal are assessed against the plaintiff including the costs for request for continuation of proceedings.

1. The grounds of appeal are examined.

A. Regarding ground of appeal No. 1

Rehabilitation claims under Article 118 subparag. 1 of the Debtor Rehabilitation and Bankruptcy Act refer to any property claim arising from the cause of the occurrence of claims, such as expression of intent, prior to the commencement of rehabilitation procedures. As long as the cause of the occurrence of claims is based on the cause prior to the commencement of rehabilitation procedures, the details of the claim are not specific as long as the cause of the occurrence of claims is based on the cause prior to the commencement of rehabilitation procedures, or even if the maturity comes after the commencement of rehabilitation procedures (see, e.g., Supreme Court Decision 2012Da14851, May 16, 2014). Moreover, if the major cause of the claim lies prior to the commencement of rehabilitation procedures (see, e.g., Supreme Court Decision 2011Da843

In addition, rehabilitation claims include future claims under Article 138(2) of the Debtor Rehabilitation Act. Where a joint and several surety of the debtor acquires the right to indemnity by performing joint and several liability with repayment, etc. to the rehabilitation creditor who is the principal creditor after the commencement of rehabilitation procedures, if the joint and several surety contract was concluded before the commencement of rehabilitation procedures for the debtor, the principal cause of the right to indemnity exists before the commencement of rehabilitation procedures. Therefore, it is reasonable to deem that the right to indemnity based on the said joint and several

Meanwhile, the right to claim compensation in lieu of the defect repair under Article 667(2) of the Civil Act is the right existing in the contractor from the beginning because the right to claim compensation exists concurrently with the right to claim compensation and generally the right to claim compensation is established when actual damage occurs under the generally accepted social norms. Thus, the right to claim compensation in lieu of the defect repair is specifically established at the time the defect occurred and the repair is required (see Supreme Court Decision 2013Da29448, Sept. 4, 2014, etc.). However, in the case of a contract for a construction project, unless there are special circumstances, no longer cancel the contract for the construction project, and if it is impossible to cancel the contract for the construction project due to the completion and delivery of the building before the commencement of rehabilitation procedures, the contractor shall be deemed to have completed the performance of the contract for the construction project before the commencement of rehabilitation procedures (see Supreme Court Decision 201Da24174, 24181, Oct. 9, 2001).

According to the reasoning of the judgment below, the court below acknowledged the facts as stated in its holding, and determined that the claim for indemnity of this case was a rehabilitation claim rather than a rehabilitation claim after the commencement of rehabilitation procedure under Article 181 (1) of the Debtor Rehabilitation Act, and unless there are special circumstances such as active acts for repairing defects of buildings completed before the commencement of rehabilitation procedure, the defendant's administrator acquired the claim for indemnity of this case by paying joint and several liability to the defendant, since the principal causes of the claim for indemnity of this case, such as the conclusion of the guarantee obligation agreement of this case between the plaintiff and the defendant, issuance of a warranty bond of this case, and the completion of apartment constructed by the defendant, etc., all of the major causes of the claim for indemnity of this case, such as the contract of this case between the plaintiff and the defendant, are prior to the commencement of rehabilitation procedure for the defendant. Thus, even if the plaintiff acquired the claim for indemnity of this case, it cannot be deemed that the defect of the building constructed by the defendant constitutes a compensation claim for damages of this case by subrogation.

In light of the above legal principles and records, the above judgment of the court below is just, and there is no error of misapprehending the legal principles as to rehabilitation claims, other claims after commencement of the Debtor Rehabilitation Act, or other claims for common interest under the Debtor Rehabilitation Act. The Supreme Court Decision 2005Da16959 Decided August 25, 2006 cited in the ground of appeal is different from this case and it is not appropriate to invoke this case.

B. Regarding ground of appeal No. 2

Article 126 of the Debtor Rehabilitation Act provides, “Where multiple persons are liable to entirely or partially fulfill each obligation, if rehabilitation procedures commence, any creditor may exercise his/her rights as rehabilitation creditors in each rehabilitation procedure with respect to the total amount of the claims that he/she holds at the time that the rehabilitation procedures commence,” while Paragraph (2) provides, “If anyone who is liable to fully or partially fulfill any other obligation in the case of paragraph (1) performs the act of repaying his/her obligations and extinguishing his/her obligations to the creditor (hereafter in this Article, referred to as “performance, etc.”) after the rehabilitation procedures commence, any creditor may exercise his/her rights to the total amount of the claims that he/she holds at the time that the rehabilitation procedures commence, except where the total amount of the claims is extinguished in the case of paragraph (1).” Paragraph (3) provides, “Where a person who has the right to indemnity that is likely to exercise in the future is entitled to exercise the right to indemnity in the case of paragraph (1) after the rehabilitation procedures commence, the same shall not apply to any person who holds such right in the future.”

In light of the contents and purport of the above provisions, in cases where multiple persons are liable to perform the entire amount of claims, rehabilitation procedures commence for one person; when creditors exercise their rights as rehabilitation creditors with respect to the total amount of claims, a person holding future claims for reimbursement against the rehabilitation debtor cannot exercise his/her rights as rehabilitation creditors; however, in cases where the total amount of claims has been paid by subrogation in the future as of the last day, a creditor may exercise his/her rights by changing the reported name under Article 154 of the Debtor Rehabilitation Act. However, in cases where a portion of claims has been paid by subrogation, unless the total amount of the claims is extinguished, the creditor can exercise his/her rights as rehabilitation creditors (see Supreme Court Decisions 201Da24938, Jun. 29, 2001; 2008Da64942, Sept. 24, 2009, etc.).

After finding the facts as stated in its holding, the court below determined as follows: (a) under the instant guarantee obligation agreement, the Plaintiff, a joint guarantor, and the Defendant, the primary debtor, are liable for the full performance of all of the house guarantee obligations for the Defendant; and (b) the obligee’s house guarantee constitutes “total obligor” who is liable for the full performance of the entire obligation under Article 126(1) of the Debtor Rehabilitation Act; (c) since the obligee’s house guarantee participated in the rehabilitation procedure against the Defendant as to the total amount of the claim based on the instant guarantee obligation agreement; (d) even if the Plaintiff’s subrogation for the house guarantee after the commencement of the rehabilitation procedure was possible to exercise in the future against the Defendant, who is the obligor by subrogation, the Plaintiff cannot participate in the rehabilitation procedure against the Defendant pursuant to the proviso to Article 126(3) of the Debtor Rehabilitation Act; (e) however, only if the claim is extinguished by repayment, etc. for the house guarantee, the court

In light of the aforementioned legal principles and records, the above determination by the court below is just, and there is no error by misapprehending the legal principles on Article 126 of the Debtor Rehabilitation Act.

2. We examine the plaintiff's request for taking over the proceedings.

According to the records, on August 25, 2014, which was not timely filed, the fact that there was a decision on commencing the rehabilitation procedure against the defendant on August 25, 2014, which was later filed. However, when the court of final appeal rendered a judgment without holding any pleadings at the same stage, it is not necessary to have the defendant’s custodian take over the litigation procedures (see, e.g., Supreme Court Decision 2012Da6349, Jul. 11, 2013). Accordingly, the Plaintiff

3. Conclusion

Therefore, each appeal and the plaintiff's request for continuation of proceedings are dismissed, and the costs of appeal shall be borne by the plaintiff including the costs for the request for continuation of proceedings. It is so decided as per Disposition by the assent of all participating Justices.

Justices Park Poe-young (Presiding Justice)