In case where a contractor who has been awarded a contract for construction works on a building owned by the debtor was transferred the possession of the building to the debtor prior to the completion of the registration of the entry of the decision on commencing auction, but the lien is established by completing the construction work after the completion of the registration of the entry of the decision on commencing auction and completing the construction work after the seizure became effective, whether the contractor may oppose the purchaser of the auction procedure

A right of retention is established only when a claim arising with respect to an object is due (Article 320 of the Civil Act). Meanwhile, in cases where a lien has been acquired after the entry registration of the decision on commencing auction was completed on real estate owned by the debtor and the seizure became effective, it cannot be set up against the purchaser in the auction procedure with respect to real estate. Even if the contractor, who was awarded a contract for construction, such as extension, renovation, etc. of the building owned by the debtor, acquired possession of the building from the debtor before the completion of the registration of the entry of the decision on commencing auction, he/she cannot set up against the purchaser in the auction procedure on the ground of the right of retention, in cases where the lien has been established after the entry registration of the decision on commencing auction

Article 320 of the Civil Act, Articles 83(4), 91(5), and 92(1) of the Civil Execution Act

[Plaintiff-Appellant] Plaintiff 2008Da70763 decided Jan. 15, 2009 (Gong2009Sang, 158)

National Federation of Fisheries Cooperatives (Law Firm Han & Yang, Attorneys Kim Hong-seok et al., Counsel for the plaintiff-appellant)

Defendant 1 and one other

Seoul High Court Decision 2010Na115265 decided June 1, 2011

The judgment below is reversed and the case is remanded to Seoul High Court.

The grounds of appeal are examined.

1. Regarding ground of appeal No. 1

According to the reasoning of the judgment below, on February 22, 2008, the court below acknowledged the following facts: (a) on the original adjudication on the real estate in the attached list (hereinafter “the instant real estate”) owned by the Korea-Maart Co., Ltd. (hereinafter “Korea-Maart”), the Plaintiff loaned KRW 1.5 billion to Nonparty 1 on the same day on February 22, 2008; (b) on June 12, 2008, Nonparty 2 and 3 acquired the right to collateral security (hereinafter “the instant real estate”) with the maximum debt amount of KRW 1.95 million on the instant real estate; and (c) on October 28, 2008, upon requesting a voluntary auction based on the foregoing collateral, the Defendants filed a report on the decision to commence the construction work of KRW 300 million on the date of the instant construction contract with the Seoul Western District Court Decision 200,000,000 won to the date of completion of the construction work; and (d) on May 29, 2008, 2009.

Then, the lower court rejected the Plaintiffs’ assertion that the Defendants could not be deemed to possess the instant real estate prior to the decision on commencing the instant auction, on the ground that, in full view of various circumstances acknowledged by the evidence adopted, the instant construction was commenced on September 28, 2008, which was earlier than October 28, 2008, when the registration of the entry of the decision on commencing the auction was completed, and the Defendants occupied the instant real estate at around that time.

In light of the relevant evidence in light of the records, the above determination by the court below is just and acceptable, and there was no error of misunderstanding facts against logical and empirical rules.

2. Regarding ground of appeal No. 2

A. A right of retention is established only when a claim arising with respect to the subject matter is due (Article 320 of the Civil Act). Meanwhile, in cases where a right of retention is acquired after the registration of the entry of the decision on commencing auction was completed on real estate owned by the debtor and the seizure became effective, it cannot be set up against the buyer in the auction procedure regarding such real estate (see Supreme Court Decision 2008Da70763, Jan. 15, 2009, etc.). Even if the contractor who was awarded a contract for construction, such as expansion, renovation, etc., of the building owned by the debtor transferred possession of the building from the debtor before the registration of the decision on commencing auction was completed, and the construction becomes effective after the completion of the registration of the decision on commencing auction and the acquisition of the claim for construction payment becomes effective, the contractor cannot set up against the buyer in the auction procedure on the ground of such right.

B. (1) According to the reasoning of the judgment below, the court below rejected the Plaintiff’s assertion that the Defendants did not have a lien since the Defendants’ claim for construction price was not due at the time of the commencement decision of the instant auction, on the ground that the Defendants occupied the instant real estate for the purpose of the instant construction, and the claim for construction price was due due due due due to the completion of the instant construction, and thus the Defendants’ claim was established, and that the Defendants’ claim for construction price at the time of seizure of the instant real estate did

(2) However, the above determination by the court below is not acceptable in light of the legal principles as seen earlier.

Even according to the reasoning of the judgment of the court below, the defendants completed the construction of this case on July 30, 209, which was after the decision to commence the auction of this case, and there was a separate agreement on the due date for payment of the construction price claims, and even after examining the records, such circumstances cannot be found. If facts exist, even if the defendants commenced possession prior to the decision to commence the auction of this case, such possession alone does not constitute a lien, unless there are special circumstances to deem that the due date for payment of the construction price claims has arrived prior to the decision to commence the auction of this case. Thus, even if construction was completed after the registration of the decision to commence the auction of this case and acquired the construction price claims after the registration of the decision to commence the auction of this case, it cannot be asserted against the purchaser in the auction procedure of this case.

(3) Nevertheless, the lower court rejected the Plaintiff’s claim on the grounds stated in its reasoning without examining whether the time limit for repayment of the claim for construction cost has arrived, the time when the right of retention was established, and the time after the commencement of auction decision. In so doing, the lower court erred by misapprehending the legal doctrine on lien and auction procedure, thereby making a judgment.

3. Conclusion

Therefore, without examining the remaining grounds of appeal, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Nung-hwan (Presiding Justice)