The method of calculating the scope of wage claims prohibited from seizure under Article 88 of the former Framework Act on the Construction Industry and Article 84 (1) of the Enforcement Decree of the Framework Act on the Construction Industry, among the remaining construction costs under the settlement agreement, where the construction contract has been terminated even and there has been a contract for the settlement of construction price until the time.

The scope of wage claims prohibited from seizure under Article 88 of the former Framework Act on the Construction Industry (amended by Act No. 10719, May 24, 201) and Article 84(1) of the Enforcement Decree of the Framework Act on the Construction Industry shall be the aggregate amount of the wages specified in the calculation sheet among the contract amount of the construction work and specified in the contract or subcontract. Therefore, where a construction contract is terminated in the middle of construction work and the settlement agreement for the construction cost is reached, the amount of the wage claims prohibited from seizure during the settlement of the contract amount shall be calculated by adding the amount of the wage claims arising until the settlement agreement is reached among the wage claims entered in the calculation sheet of the contract amount, unless there are special circumstances. In the event of the construction work amount received as progress payment by the settlement date, the amount of the wage claims prohibited from seizure among the remaining construction work amounts shall be calculated by deducting the amount of the wage claims calculated on the calculation sheet of the contract amount from the (n) contract amount calculated on the calculation sheet of the contract amount.

Article 88 of the former Framework Act on the Construction Industry (Amended by Act No. 10719, May 24, 201) and Article 84(1) of the Enforcement Decree of the Framework Act on the Construction Industry

Plaintiff

E. E.S. and one other (Law Firm Chang-ju, Counsel for the plaintiff-appellant)

Seoul High Court Decision 2010Na115845 decided July 22, 2011

The part of the lower judgment against the Plaintiff is reversed, and that part of the case is remanded to the Seoul High Court. All appeals by the Defendants are dismissed.

1. Determination on the appeal by Defendant SPP (hereinafter “Defendant Corporation”)

Defendant Corporation did not submit the appellate brief within the due time limit, and did not state the grounds for appeal in the petition of appeal.

2. Determination as to the grounds of appeal by the Plaintiff and Defendant Yang Sung Construction Co., Ltd. (hereinafter “Defendant Yang Chang Construction”).

A. As to the Plaintiff’s ground of appeal Nos. 3 and 4, and Defendant Yang Sung Construction’s ground of appeal No. 3

The lower court, based on its employed evidence, acknowledged that, on July 4, 2008, Defendant Yangyang Construction Co., Ltd. (hereinafter referred to as “Nonindicted Co., Ltd.”) contracted from Defendant Yangyang Construction to the Defendant Construction with KRW 3,207,30,00 for reinforced concrete construction (hereinafter referred to as “instant subcontracted construction”) among apartment complexes in Songpa-gu Seoul Special Metropolitan City Housing Site Development Zone 856-1, Songpa-dong, Songpa-gu, Seoul and 13 Complex Housing Site Development Zone (hereinafter referred to as “instant subcontracted construction”) had to perform construction works under a subcontract with KRW 3,207,30,00, and gave up construction works, the lower court: (a) acknowledged that the amount of other settlement agreement was 2,805,760,000 won; and (b) determined that the amount of the previous settlement agreement was 185,893,000 won; and (c) determined that the remaining amount of the construction price was 00,000 won for the Plaintiff’s construction bond and the Defendant 1.

In light of the relevant legal principles and records, the judgment of the court below is just, and there is no violation of the rules of evidence as alleged in the grounds of appeal.

As above, inasmuch as the amount of the claim for construction price owed by the non-party company against the defendant Yang & Yang Construction was determined by the agreement on the settlement of accounts in the instant case, which was concluded before the collection order was served on the defendant Yang & Yang Construction, the legitimacy of the remaining grounds of appeal on this part of the plaintiff or defendant Yang & Yang Construction as to whether the amount of the construction price actually paid to the non-party company until the time of the agreement on the settlement of accounts in the instant case cannot affect the conclusion of the

B. The Plaintiff’s ground of appeal No. 1

1) The lower court determined that the instant agreement on the settlement of accounts was merely a settlement agreement to terminate the said construction contract on the basis of the first construction contract rather than a separate contract to alter the first contract for construction works. In light of the records, the lower court’s determination is justifiable, and there is no error of misapprehending legal principles as argued in the Grounds for Appeal.

2) The scope of wage claims prohibited from seizure under Article 88 of the former Framework Act on the Construction Industry (amended by Act No. 10719, May 24, 201) and Article 84(1) of the Enforcement Decree of the same Act refers to the sum of the wages listed in the calculation sheet among the contract amount of construction works and specified in the contract or subcontract agreement. Therefore, where a contract for construction works is terminated halfway and the settlement of construction price is reached, the amount of the wage claims prohibited from seizure shall be calculated by adding up the amount of the wage claims arising until the settlement of accounts among the wage claims listed in the (n) contract amount calculation sheet, unless there are special circumstances, and where the construction price has been received as progress payment by the settlement date, the amount of the wage claims prohibited from seizure among the remaining construction price shall be calculated by deducting the amount of the contract amount calculated on the basis of the calculation sheet from the amount of the (n) contract amount calculated on the basis of the calculation sheet.

According to the reasoning of the lower judgment and the record, in this case, the instant subcontract agreement between the non-party company and the non-party company was concluded to settle the construction cost by the termination of the subcontract agreement between the non-party company and the non-party company. According to the reasoning of the lower judgment and the record, the non-party company under the instant subcontract agreement provides that the non-party company shall submit a written confirmation as to the existence of materials, wages, equipment, and other expenses incurred before the receipt of the progress payment for each month, and if the overdue payment is confirmed, it shall be paid. The defendant company shall, on March 27, 2009, pay the non-party construction cost of this case directly to the non-party company. The non-party company shall have agreed to pay the non-party company with the non-party company the payment of the remainder of the subcontract price of this case by the non-party company under the above direct settlement agreement between the non-party company and the defendant company and the non-party company under the non-party company's settlement of accounts of the total construction cost of the non-party construction cost of this case 10.

Examining this in light of the aforementioned legal principles, the amount of wage claims, the attachment of which is prohibited out of the remaining construction cost upon the settlement agreement in the instant case, shall be calculated, first, on the basis of the calculation sheet of the subcontract amount among the amount of other settlement agreement in the instant case, and the amount of wage claims calculated on the basis of the calculation sheet of the subcontract amount among the construction cost paid up until that time, by deducting the following amount from the previous amount.

Nevertheless, the lower court determined otherwise, that the amount of wages calculated as above out of the remainder of the construction payment pursuant to the subcontract contract of this case is 54%, and thus, the amount of wage claim of this case is also 1,615,492,620 won (=2,91,653,000 won x 0.54) calculated at the same rate, and the overdue wage of Defendant Yang & Yang Construction, as at the time of the other settlement agreement, is 185,638,000 won, which Defendant Yang & Yang Construction, actually paid on behalf of the non-party company at the time of the above other settlement agreement, is naturally unpaid to the non-party company, and the amount is within the scope of the wage claim of the other settlement agreement, and thus, the amount of wage claim of the remainder of the construction payment pursuant to the other settlement agreement is prohibited from seizure. In so doing, the lower court erred by misapprehending the legal doctrine on the scope of wage claim prohibited from seizure and the method of calculation, which affected the conclusion of the judgment

C. Determination on the grounds of appeal Nos. 1 and 2 as to Defendant Yang Ho Construction

According to the records, it cannot be deemed that Defendant Yang & Yang Construction, on the ground that there was an agreement on direct payment of labor costs to Nonparty 1 and 2 at the time of the conclusion of the argument in the other settlement agreement in the case, or on the ground that he was not paid the security deposit for repairing defects under Article 25 of the subcontract of this case due to the cancellation of the contract, it cannot be deemed that there was a ground for rejection of payment. Accordingly, this part of the ground for appeal by Defendant Yang & Yang Construction, premised on the existence of the aforementioned defense, is unacceptable

3. Conclusion

Therefore, without further proceeding to decide on the remaining grounds of appeal by the Plaintiff, the part against the Plaintiff among the judgment below is reversed, and that part of the case is remanded to the court below for further proceedings consistent with this Opinion. The Defendants’ appeals are all dismissed. It is so decided as per Disposition by the assent of all participating

Justices Lee In-bok (Presiding Justice)