If the contractor of the construction contract cannot be deemed to have provided or fulfilled the construction for the delivery of the building to the contractor, whether the contractor is liable to delay the payment of the construction contract to the contractor (negative)

Articles 536 and 665(1) of the Civil Act

Supreme Court Decision 2002Da43370 Decided October 25, 2002 (Gong2002Ha, 2866) Supreme Court Decision 2014Da36702, 36719 Decided June 24, 2015

Plaintiff (Law Firm Open, Attorneys Park Jung-jin et al., Counsel for the plaintiff-appellant)

Scenic Housing Corporation

Supreme Court Decision 2018Da221553 Decided July 24, 2018

Suwon District Court Decision 2018Na73522 decided January 30, 2020

The part of the judgment of the court below against the plaintiff is reversed, and that part of the case is remanded to Suwon District Court. The remaining appeal by the plaintiff is dismissed.

The grounds of appeal are examined.

1. Regarding ground of appeal No. 1

After remanding, the lower court determined, on the grounds indicated in its reasoning, that: (a) the Defendant’s claim for the payment of the construction price payable against EFC Co., Ltd. (hereinafter “EFC”) was KRW 5,766,369,021; and (b) the Defendant’s total amount of KRW 205,000,000 paid from the purchaser of some of the instant buildings, was paid as the payment for the construction price, and thus, should be deducted from the Defendant’s claim for the payment of the construction price.

Examining the record in accordance with the relevant legal principles, the lower court’s determination following the remand was based on the purport of the Supreme Court’s judgment and did not err by misapprehending the legal doctrine on res judicata.

2. As to the grounds of appeal Nos. 2 and 3

After remanding the case, the lower court rejected the Plaintiff’s additional claim for payment on the ground that: (a) stated in the audit report of the 2009 fiscal year 2009, that the Defendant still remains liable for payment equivalent to KRW 38,938,982,00 for the Defendant; (b) stated in the report of the administrator’s investigation prepared in the Defendant’s rehabilitation procedure that the Defendant’s claim for payment of the unpaid construction cost amounting to KRW 15,06,458,00 for the NAC is included; (c) the Defendant’s payment order for seeking the unpaid construction cost against NAPC was finalized; and (d) the financial institution, the creditor of NAC, also did not raise an objection to the Defendant’s exercise of the right of retention; and (b) based on the evidence submitted by the Plaintiff, it is insufficient to acknowledge that the remaining

Examining the record in accordance with the relevant legal principles, the lower court did not err by failing to exhaust all necessary deliberations or by misapprehending the legal doctrine on the subject of a lawsuit seeking confirmation, etc. after remanding the case, which affected the conclusion of the judgment.

3. As to the fourth ground for appeal

A. According to the reasoning of the judgment below, the court below rejected the Plaintiff’s assertion that, after remanding, the Defendant’s possession of the instant building including the instant store constitutes a secured claim for the right of retention for the instant store, as seen earlier, since it is the exercise of the right of retention, it cannot be deemed that the contractor failed to perform the duty of delivery of the building and the delay damages for the construction price related to simultaneous performance should be excluded from the secured claim.

B. However, the lower court’s determination is difficult to accept as it is. The reasons are as follows.

(1) The remuneration for a contract shall be paid simultaneously with the delivery of the completed object (Article 665(1) of the Civil Act). Meanwhile, in cases where both obligations are simultaneously performed in a bilateral contract, even if one of the parties’ obligations becomes due, the obligor is not liable for the delay of performance even if the other party’s obligation is not performed until the other party’s obligation is performed. Such effect does not necessarily result in the claimant’s exercise of the right of defense for simultaneous performance. Therefore, in cases where the contractor cannot be deemed to have offered or performed the obligation to deliver the building to the contractor by the closing date of the fact-finding proceedings, it cannot be said that the contractor is liable for the delay of performance with respect to the obligation to deliver the building (see, e.g., Supreme Court Decisions 2002Da4370, Oct. 25, 2002; 2014Da36702, 36719, Jun. 24, 2015).

(2) According to the records, the defendant alleged that "at any time, when the appropriate construction cost, such as the transfer of the housing units in line with the progress of the sale by each unit of the building of this case, was paid, the delivery of the building was carried out at any time, and such intention was made public, so the defendant's provision of performance may be deemed as continuing, since the contract was made public." However, there was no evidence to acknowledge that the defendant, the contractor, was performing, providing or performing the building of this case, and there

C. Nevertheless, without examining whether the Defendant performed, provided, or performed the construction of the building of this case, the lower court determined that damages for delay on the claims for the payment of unpaid construction price shall be included in the secured claim of the lien. In so doing, it erred by misapprehending the legal doctrine on delayed liability for the payment of the construction price and the scope of the secured claim of the lien in the simultaneous performance relationship, thereby affecting the conclusion of the judgment. The ground of appeal assigning this error has merit

4. Conclusion

Therefore, the part of the judgment below against the plaintiff is reversed, and that part of the case is remanded to the court below for further proceedings consistent with this Opinion. The remaining appeal by the plaintiff is dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Ahn Jae-chul (Presiding Justice)