[1] Where the contractor does not notify the contractor of the defects of the building completed due to the order of the contractor, whether the contractor is liable to compensate for the defects of the building (affirmative)

[2] Where there is an important defect in an object completed under a contract, the scope of compensation for damages in lieu of a defect / In the case of a serious defect in the completed building, etc., where the repair is impossible and it is inevitable to re-construction, whether the amount equivalent to the expenses incurred in the removal and re-construction of the building can be claimed as damages due to the defect (affirmative in principle

[1] Where the contractor who performs a construction work upon the order of the contractor fails to notify the contractor of the defect liability even if the defect of the completed building is attributable to the order of the contractor, even though it is not due to the defect of the contractor.

[2] Where there is a defect in the object completed under a contract, the person placing an order may claim damages in lieu of the repair of the defect or the repair of the defect to the contractor. In such cases, where the defect is important, even if excessive expenses are needed for the repair, the expenses actually needed for the repair shall be included in damages. Furthermore, where there is a serious defect in the completed building and other structures of land (hereinafter “building, etc.”) and the repair of the building, etc. is impossible due to the risk of collapse and it is inevitable to re-construction, the person placing an order may claim for damages for the amount equivalent to the expenses incurred in the demolition of the building, etc. and re-construction

[1] Article 669 of the Civil Code / [2] Articles 393 and 667 of the Civil Code

[1] Supreme Court Decision 94Da31747, 31754 decided Oct. 13, 1995 (Gong1995Ha, 3756) / [2] Supreme Court Decision 95Da30345 decided Mar. 13, 1998 (Gong198Sang, 96)

Gi integrated Construction Co., Ltd. (formerly: A.S. Construction) (Attorney Yoon-soo et al., Counsel for the plaintiff-appellant)

Han-gu et al. (Law Firm LLC, Attorneys Lee Jae-gu et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2012Na841, 858 decided April 16, 2014

Of the part of the judgment below against the plaintiff, 43,163,784 won and damages for delay against the defendant limited partnership company and 57,781,113 won and damages for delay against the defendant limited partnership company's creation are all reversed, and this part of the case is remanded to the Seoul High Court.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Regarding ground of appeal No. 1

A. Where the contractor who performs a construction work upon the order of the contractor fails to notify the contractor of the inappropriate direction despite being aware of the defects of the completed building due to the order of the contractor, the contractor may not be exempted from the warranty liability (see Supreme Court Decision 94Da31747, 31754, Oct. 13, 1995, etc.).

In addition, where there is a defect in the object completed in a contract for work, the contractor may claim against the contractor for damages in lieu of the repair of the defect or the repair of the defect. In such cases, where the defect is important, even if excessive expenses are needed for the repair, the expenses in lieu of the repair are included in damages (see Supreme Court Decision 95Da30345, Mar. 13, 1998). Furthermore, in cases where there are serious defects in the completed building and other structures of land (hereinafter “building, etc.”) and where the repair of the building, etc. is difficult and it is inevitable to re-construction due to the danger of collapse, the contractor may claim for damages equivalent to the expenses incurred in the removal of the building, etc. and re-construction, barring special circumstances.

B. According to the reasoning of the first instance judgment cited by the lower court, the reasoning of the lower judgment, and the evidence duly admitted, the following facts are revealed.

(1) The Defendants and six companies (hereinafter “instant joint contract companies”) including Hanyangho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-ho-

(2) Around August 2008, the Plaintiff was awarded a contract for the construction of the said land as a factory site (hereinafter “instant construction”) with the construction cost of KRW 560,000,000 from August 2008 to October 2008. The instant construction contract (Evidence (Evidence (No. 1) states that “the blasting to stack for reinforced soil” was predicted,” and the Plaintiff constructed a stone axis by piling up electric tin for the slopes of the instant construction section.

(3) On July 6, 2009, the Plaintiff and the instant joint contractors agreed to settle accounts for the instant construction and additional construction (hereinafter “instant settlement agreement”) and the Plaintiff completed all the instant construction and additional construction around July 30, 2009.

(4) Following the settlement agreement of this case, following the Defendants’ partial repayment of the construction cost, the Defendants’ payment of the construction cost, as of the date of the final argument in the lower judgment, is KRW 123,564,373 as of the date of the final argument in the lower judgment, and the payment of the construction cost due to the failure to pay the Defendant’s assistance was KRW 173,347,300.

(5) Meanwhile, the Nonparty of the lower judgment’s appraiser: (a) constructed a stone embankment by piling up stone in the slopes of the Section A (the Defendant Han-Tech’s exclusive ownership, the height of construction 7m) and F (the Defendant Cho Ho-ho’s exclusive ownership, and the height of construction 5.8m) among the instant construction sections; (b) it was erroneous for the first party to select a construction method; and (c) the construction was performed in bad faith; and (d) ultimately, if safety is required for the Section A and F sections, the said stone embankment should be removed and the construction shall be completely reinforced for reconstruction with a concrete retaining wall. However, the cost of reconstruction construction of a concrete retaining wall in the Section A section is 65,490,818, and the cost of reconstruction construction of a concrete retaining wall in the F section is 87,364,487, as the cost of reconstruction construction of a concrete retaining wall in the F Section.

C. Examining these facts in light of the legal principles as seen earlier, the following circumstances are revealed.

(1) In the case of construction of slopes arising from civil engineering works, the method of construction of concrete retaining walls and reinforced soil retaining walls shall be selected and constructed, depending on the height of construction, soil pressure, and the need for sub-sprinking. It shall be used as a method of piling up stone, fluoring stone, concrete retaining walls, and reinforced soil retaining walls. In general, it shall be used as a method of piling up concrete retaining walls and reinforced soil retaining walls in a height not exceeding 2 meters. If the height exceeds 3 meters, it shall be used as a method of construction of retaining walls and reinforced soil retaining walls.

In concluding the instant construction contract, the Plaintiff and the instant joint contractors agreed to construct stone festivals by means of piling up tin. Accordingly, the Plaintiff performed a stone shed by piling up tin stone in the instant construction section while constructing a sloping of A and F sections among the instant construction works. In accordance with the terms and conditions of the instant construction contract, there is room to view that the Plaintiff’s construction work of piling-out in A and F sections is the same as under the order of the contractor.

However, the Plaintiff, a contractor, is an expert in civil and architectural works, and has a basic duty to determine the safety, solidness, suitability, etc. of stone-to-face construction for a non-sloping construction regardless of the demand of the instant joint contractors. Even if the instant joint contractors demanded the Plaintiff to construct a stone-to-face construction in the instant construction section, the Plaintiff did not accept it and conclude a contract as it is, but it was judged inappropriate for the Plaintiff to construct a stone-to-face storage method, not a concrete retaining wall or a reinforced soil retaining wall, if it was determined that it was inappropriate for the Plaintiff to construct a stone-to-face storage method, not a concrete retaining wall or a reinforced stone retaining wall, in the instant construction section.

However, in the event that the Plaintiff constructs a stone embankment in a sloping of the slope section A and F, not a concrete retaining wall or a reinforced soil retaining wall, not a concrete retaining wall or a reinforced stone retaining wall, it is impossible to trust the safety of the stone embankment because it is impossible to secure the safety of the stone embankment because it is impossible to do so. Thus, it is reasonable to view that the Plaintiff is liable to guarantee the safety of the stone embankment, inasmuch as he knew that the above stone embankment construction is very inappropriate, without notifying the Defendants thereof.

(2) According to the appraisal by the Nonparty of the lower judgment, the Plaintiff’s construction of a stone embankment, not a concrete retaining wall or reinforced soil retaining wall, on the slope of the section A or F, was erroneous from the beginning in the selection of a construction method, and the repair thereof is so serious that it is impossible to repair the stone. As such, there is no other way to secure safety except for the method of removing the said stone embankment and re-construction with a concrete retaining wall. Therefore, barring any special circumstance, the Defendants, the contractor, as the contractor, may claim as damages for the amount equivalent to the cost of removing the said stone embankment and the cost of re-construction by the adequate construction method.

However, in the instant construction contract, it appears that the contractor agreed to construct a stone embankment, not a concrete retaining wall, and the construction cost was agreed on that premise. Thus, even if the contractor (contractor) is obligated to notify the Defendants of the method suitable for the construction of the slopes A and F section at the time of the said agreement, barring any special circumstance, it cannot be said that the contractor has a duty under the construction contract to bear the construction cost exceeding the construction cost, as agreed upon under the premise of the construction of a stone embankment. In light of the foregoing, even if the Defendants may claim against the Plaintiff for re-construction of the slopes A and F section or for compensation for damages therefrom, barring any special circumstance such as the pre-agreement regarding the bearing of the cost, it cannot be demanded to re-construction if the costs exceeding the construction cost exceeds the agreed construction cost, and ultimately, as to the expenses incurred again by the construction method in addition to the cost of demolition of the said stone, it cannot be claimed for damages exceeding the agreed construction cost.

In addition, the records reveal that the restoration design submitted by the joint contractor of this case after obtaining development permission in the area of this case was planned to be constructed with the retaining wall construction method on the slope of the A and F section. As such, the damage caused by stone-scale removal and reconstruction can be derived from the construction contract of this case without selecting the retaining wall method for the non-sloping construction of the A and F section and the construction of a stone-to-turbing construction method without selecting the retaining wall method for the reinforcement of the B and F section. Thus, if it is acknowledged that the defendants, the contractor, were negligent in the process leading to this agreement, and if it is deemed that the defendants, who were the contractor, processed the above defects and the damage or the expansion thereof, the scope of compensation for damage should be determined by taking into account the above defects and damages (see Supreme Court Decision 9Da1288, Jul. 13, 199, etc.).

D. Nevertheless, the lower court determined otherwise on the grounds indicated in its reasoning that the damages amount arising from the re-construction of the part due to the defect in the sloped part of A and F sections includes the full amount of the expenses for reconstruction of a concrete retaining wall (the cost of reconstruction of the F Sections 65,490,818, the cost of construction of the non-sloping part) exceeding the construction cost agreed upon in the instant construction contract, and on that premise, offset this part of the Defendants’ damages claim against the amount equal to the Plaintiff’s damages claim on the premise of the automatic claim.

Therefore, the judgment of the court below is erroneous in the misapprehension of legal principles as to the scope of liability for damages where reconstruction is required due to defects, which affected the conclusion of the judgment. The ground of appeal assigning this error is with merit.

2. Conclusion

Therefore, without further proceeding to decide on the remainder of the grounds of appeal, the part against the plaintiff in the judgment of the court below is reversed to the extent that the plaintiff seeks as the purport of appeal, and all part of the amount of money as stated in the order against the defendants and the damages for delay thereof are remanded to the court below for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of

Justices Lee Ki-taik (Presiding Justice)