Plaintiff (Law Firm Sejong, Attorneys Kim Jong-soo, Counsel for the plaintiff-appellant)

Defendant (Attorney Lee Im-soo, Counsel for defendant-appellant)

March 6, 2009

Jeju District Court Decision 2004Gahap2133, 2004Gahap2140 decided Dec. 6, 2007

1. The part against the plaintiff (Counterclaim defendant) corresponding to the money ordered to be paid additionally below among the part against the principal lawsuit of the judgment of the court of first instance shall be revoked.

The Defendant-Counterclaim Plaintiff (Counterclaim Defendant) shall pay to the Plaintiff (Counterclaim Defendant) 5% per annum for KRW 8,02,500 and for KRW 3,802,500 from October 4, 2003 to May 13, 2009; and for KRW 20% per annum for KRW 4,200,000 from the next day to the date of full payment; and for KRW 5% per annum from December 7, 2007 to May 13, 2009; and for KRW 20% per annum from the next day to the date of full payment.

2. Revocation of a counterclaim to a judgment of the first instance.

The defendant-Counterclaim plaintiff's counterclaim is dismissed.

3. The remaining appeal by the plaintiff (Counterclaim defendant) against the principal lawsuit is dismissed.

4. The total costs of the lawsuit shall be ten minutes by aggregating the principal lawsuit and the counterclaim, and such nine minutes shall be borne by the Plaintiff (Counterclaim Defendant) and the remainder by the Defendant (Counterclaim Plaintiff).

5. The portion of money under paragraph (1) above may be provisionally executed.

The principal lawsuit: The defendant (the plaintiff Counterclaim; hereinafter referred to as the "the defendant") shall pay to the plaintiff (the counter-defendant; hereinafter referred to as the "Plaintiff") 737,986,925 won and 30,000 won among them, 5% per annum from October 4, 2003 to the date of the first instance judgment, 20% per annum from the following day to the date of the full payment, 707,986,025 won, an amount equivalent to 20% per annum from the date following the first instance judgment to the date of full payment, and shall pay the amount equivalent to 3,876,170 won per annum from January 10 to the date of final judgment from the date of final judgment.

Counterclaim: The plaintiff shall pay to the defendant 10,857,49 won and the amount equivalent to 5% per annum from the day following the service of a copy of the counterclaim to the day of a judgment of the court of first instance, and 20% per annum from the next day to the day of full payment.

Of the part against the principal lawsuit of the first instance judgment, the part against the plaintiff shall be revoked. The defendant shall pay to the plaintiff 5% per annum from October 4, 2003 to the date of the first instance judgment; 20% per annum from the next day to the date of the first instance judgment; 664,986,096,00 won per annum from the next day to the date of full payment; and 20% per annum from the date of the first instance judgment to the date of full payment; and shall pay 3,876,170 won per annum from January 10 to the date of final judgment (the plaintiff filed an appeal and stated the same as the purport of the appeal, but the scope of objection against the plaintiff shall be deemed to have lost the part against the plaintiff of the first instance judgment among the amounts sought from the claim).

Counterclaim: Revocation of the counterclaim of the judgment of the court of first instance, and the defendant's counterclaim is dismissed.

A principal lawsuit and a counterclaim shall be deemed simultaneously.

1. Basic facts

A. Conclusion of a contract for construction;

On June 5, 2003, the Plaintiff entered into a contract with the Defendant for the construction of one unit of neighborhood living facilities and one unit of multi-household housing (hereinafter “instant building”) on the ground of the fourth-story area above ground (hereinafter “instant construction”) in Jeju-si, Jeju-si, ○○○-dong (hereinafter the parcel number omitted), with respect to the construction of the construction work (hereinafter “instant construction work”) from June 10, 2003 to January 10, 2004, the construction cost of KRW 525,00,000 on the same day (hereinafter “instant contract”). The Plaintiff paid KRW 30,000,000 on the same day, and the main contents are as follows:

(1)Payments (specific engineers and articles 19 to 21): 30,000,000 on the date of contract, 100,000,000 on the date of the construction, and 100,000,000 on the date of the construction, and on the date of the construction, on the date of the construction, of the construction, for the construction of the fourth floor concrete; 100,000,000,000 on the date of the construction; and

(ii)Correction of inappropriate work (Article 17): If there are parts unsuitable for the design during the work executed by the contractor, the contractor may request the correction thereof, and the contractor shall comply without delay.

(3) Compensation for delay (Article 27): When the contractor fails to complete the work within the completion period, he shall pay to the contractor the amount calculated by multiplying the contract price by the rate of compensation for delay (the rate of compensation for delay in the contract in this case shall be 0.1%) on the contract by the number of days delayed.

(4) Cancellation of a contract by a contractor (Article 31): A contractor may cancel or terminate a contract in whole or in part where it is obvious that he/she may not complete the project within the completion date due to a cause attributable to the contractor's liability, or where he/she deems that the contract cannot achieve the purpose due to the contractor's breach of the contract terms

(5) Cancellation of a contract of a contractor (Article 32): Where a period of suspension of work exceeds 50/100 of the period of construction under the contract due to a cause attributable to the contractor, the contractor may cancel or terminate the whole or part of the contract, where the contractor deems it impracticable for the contractor to appropriately perform the project due to the failure of the contract without justifiable cause.

(6) When a contract is terminated (Article 33): When the contract is terminated due to a cause attributable to the contractor or the contractor, the contractor and the contractor shall settle the amount of the completed construction without delay, and may claim compensation from the other party when damage is incurred due to the cancellation or termination of the contract.

(b) Occurrence of a defect;

The Defendant completed the ground-breaking and wing work during the instant construction, and completed the installation work of underground water tank and underground water tank retaining wall on August 5, 2003. In doing so, the Defendant did not comply with the interval of steel bars and the length of e-mail specified in the construction book and did not fully cover concrete, and caused a hole of 1.7m x 1.0m in the retaining wall of the underground water tank.

C. Circumstances leading to the discontinuance of the instant construction

(1) On August 8, 2003, the Plaintiff requested Nonparty 1, the supervisor of the instant construction, to state his opinion on the completion of the instant construction within the construction period, which violated the standards of the Ministry of Construction and Transportation. On August 10, 2003, the Plaintiff requested the Defendant to “the suspension of the instant construction until Nonparty 1, the supervisor, arrives at the arrival of his response.” On August 14, 2003, the Defendant requested the Plaintiff to “the suspension of construction until Nonparty 1, the supervisor, arrives at the Plaintiff’s request, and the suspension of construction has occurred several times, and even after the occurrence of the problem of the suspension of construction, it is necessary to extend the construction period. As various difficulties are anticipated during the completion of the instant construction within the construction period, the Plaintiff would offer a proposal to reduce and settle the instant construction at the present time.” The notification reached the Plaintiff on August 16, 2003.

(2) On August 19, 2003, the Plaintiff respondeded to the Defendant to the effect that “the Defendant consented to the Defendant’s request for compromise, and to find out whether the instant construction works are defective,” and on August 25, 2003, the Defendant notified the Plaintiff of the purport that “the Plaintiff was conducting a safety inspection on the portion pointed out by the Plaintiff as defective construction, and dealt with it according to the result of the safety inspection, and that “the construction settlement is also defective at the time when all the problems are resolved.”

(3) On August 13, 2003, Nonparty 1 respondeded to the Plaintiff on August 13, 200 to the effect that “the photograph sent by the Plaintiff alone is uncertain, but there is no big problem in construction when comprehensively considering the site and the work executor’s opinions.” However, on August 21, 2003, Nonparty 1 notified the Defendant of the purport that “In performing construction of underground reinforced concrete during the instant construction, part of the retaining wall was constructed without confirmation by the supervisor, and there is an objection against this. Therefore, on August 31, 2003, the Defendant notified Nonparty 1 of the purport that “the construction of underground reinforced concrete during the instant construction should be executed after consultation with the supervisor, and it cannot be deemed reasonable to accept the request for reconstruction in accordance with the result.”

D. The plaintiff's rescission of contract

On September 1, 2003, the Plaintiff issued a notice to the Defendant on September 1, 2003 that “if the Defendant acknowledges the defective construction, the supplementary construction work shall be conducted, the site agent shall be replaced, the construction work shall be suspended for a period of one month in winter, the construction contract deposit shall be paid, and if it does not recognize the defective construction work, the contract and the related Acts and subordinate statutes shall be dealt with in accordance with the conditions prescribed by the relevant Acts and subordinate statutes,” but the Plaintiff did not reach an agreement. On October 2, 2003, the Plaintiff offered that “the Defendant shall terminate the instant construction work on August 14, 2003, and the Plaintiff shall collect all the materials and expressed that the Plaintiff agreed on August 19, 2003, and the Defendant’s act constitutes the grounds for rescission (Article 31) of the contract of this case, and thus, the contract of this case shall be rescinded to the Defendant on March 10, 2003.”

E. Appraisal of the result executed by the Defendant

(1) Around August 14, 2003, the Defendant discontinued construction works and collected equipment, etc. at the site. At the time of the completion of the said steel scrap, the ground-breaking, tamp, and part columns during the instant construction works were constructed by the Defendant, and the construction is no longer progress thereafter, so far.

(2) Results of the appraisal by Nonparty 2 of the first instance trial appraiser

(A) Although the Defendant’s construction of the steel length is somewhat short of the size stipulated in the design documents, it may be used as it is without any error in structural safety.

(B) However, in the case of the ground beams, the height difference reaches 9§¯, which makes it impossible to construct the first floor on a flat basis, and the height of the first floor is 28cm higher than the design drawing. The steel bars of the columns are different from the design drawing in their location, not only from the design drawing but also from the steel bars.

(C) Therefore, it is reasonable that the remainder other than the mat portion (hereinafter “the remainder”) is reconstructed and reconstructed. The removal cost is KRW 7,300,829.

(3) Results of the appraisal by Nonparty 3 of the first instance trial appraiser

The total construction cost, which is the sum of the construction cost executed by the Defendant and the construction cost incurred in completing the construction work and the non-execution part, is KRW 1,082,059,616, and the construction cost for the twits and twits is KRW 54,000,000,000, which is the sum of the construction cost executed by the Defendant.

F. On the other hand, when the contract of this case is terminated, the time period for the plaintiff to start the construction of this case after selecting a new construction company and removing the remaining parts, such as underground table, is 20 days.

[Ground of recognition] A without any dispute, Gap's evidence 1, 2, 4, 5, 7 through 15, Eul's evidence 1-1, 2, 4-2, 3, and 6, Gap's evidence 3-1 through 4, the result of each appraisal by non-party 1 and 2, and the purport of the whole pleadings

2. The parties' assertion

A. Summary of the plaintiff's assertion

(1) The contract of this case was rescinded due to the defendant's cause attributable to the defendant. (1) The defendant is obligated to pay the plaintiff the amount equivalent to the rent of this case from January 10, 2004 to January 9, 2007, the amount of damages equivalent to the rent of 143,625,580, and the rent of this case from January 10, 2007 to January 10, 2007, the amount of damages equivalent to the rent of this case from January 10, 2007 to January 143, 2004, the amount of damages equivalent to the rent of this case from January 10, 2007 to January 3, 87, and the amount of damages equivalent to the rent of this case from January 10, 2007 to the fixed date of the judgment of this case.

(2) The damages sought by the Plaintiff are damages equivalent to the increase in the estimated construction cost due to price increase and the amount of rents. This is the damages caused by the Plaintiff’s failure to resume construction works for several years depending on the necessity of preserving the site by filing a counterclaim to seek payment of the construction cost in bad faith, even though the Defendant’s right to demand remuneration was invalidated due to the construction site without settlement of the weather and high level. Even if this cannot be acknowledged as damages due to cancellation of the contract, the above acts by the Defendant constitute tort, and thus, the Defendant shall compensate the Plaintiff for the said damages.

B. Summary of the defendant's assertion

The Plaintiff is obligated to pay 40,857,499 won to the Defendant as remuneration for the part executed by the Defendant. If the Plaintiff offsets the Plaintiff’s claim for the return of the down payment against the claim for the said construction price, the Plaintiff would eventually pay the Defendant KRW 10,857,499 (=40,857,499-30,000), and further, even if the contract of this case was rescinded due to the Defendant’s cause attributable to the Defendant, the damages that the Plaintiff may seek to the Defendant are limited to the liquidated damages stipulated in the contract

3. Determination

A. Whether the contract of this case was rescinded

On August 5, 2003, when the defendant performed the construction of underground and underground water tank 20. Among the instant construction works, there was a hole of 1.7m x 1.0m in the underground water tank retaining wall as determined by the construction drawing. The plaintiff demanded reconstruction. At the time of the instant construction contract, "the contractor may demand correction if there is any part inappropriate for the design drawing, and the contractor shall without delay comply with the plaintiff's reconstruction request." On August 14, 2003, the plaintiff proposed the other and settlement of the instant construction work to the plaintiff on August 14, 200, and the above proposal was not sufficient to cover concrete as determined by the construction drawing, and the plaintiff merely notified the defendant of the removal of the construction drawing and the above order after August 19, 203, and it was not likely that the plaintiff's removal of the construction drawing and the above order reached 100m in its entirety.

(b) Claim for the principal lawsuit concerning the return of the down payment and claim for a counterclaim concerning the payment of construction price.

(1) As seen earlier, as long as the instant contract has been lawfully rescinded, the Defendant is obligated to return the down payment of KRW 30,000,000 to the Plaintiff as its reinstatement.

(2) On the other hand, in the case of the contract for construction works, such as the contract for construction works in this case, where the contract is terminated under the condition that the contract is not completed, the construction work has been considerably advanced, which causes significant social and economic losses to the original contractor, and the contract for construction works shall be deemed null and void. In such a case, the contractor is liable to deliver the completed part to the contractor as it is in the condition that the contract is rescinded and the contractor is liable to pay the remuneration equivalent to the part delivered to the contractor in consideration of the original cost. Unless there are special circumstances, the amount of the remuneration shall be the amount calculated at the rate of the final and high rate at the time of the discontinuance of the construction work by the contractor based on the total construction cost agreed between the parties concerned, and the ratio of the completed cost shall be the ratio of

In the instant case, from among the parts executed by the Defendant, the construction cost of the ground-breaking and the part of the set that does not require reconstruction is KRW 54,00,00,00 and the total construction cost of the construction cost of the 1,082,059,616 was recognized prior to the fact that the whole construction cost required for the completion of the instant construction work is the cause of the 1,082,059,616. As such, the fixed height rate of the construction cost as of August 14, 2003 when the Defendant ceased the instant construction work, shall be 4.9% [=54,00,000 (the ground-off and set-off construction cost) / 1,082,059,616 (total construction cost) 】100, and the small number of construction cost to be paid by the Plaintiff to the Defendant shall be 26,197,500 won [=525,000,000 (Agreement] x4.9%)

(3) However, the defendant's above claim for the construction price and the plaintiff's claim for the repayment of the down payment are all due date of October 3, 2003, which is the date of rescission of the contract of this case. Thus, both claims of the plaintiff and the defendant were set off on the same day after they reached the due date. On September 6, 2007, the fact that the defendant stated an application for modification of the purport of the counter-claim on September 5, 2007, stating that the above two claims should be set off at the fourth day of the court of first instance, which was clearly recorded on September 5, 2007, the above claim for the construction price was extinguished within the extent equivalent to the plaintiff's claim for the above down payment, retroactively from October 3, 2003, which is the set-off date, and thus, the defendant is obligated to pay to the plaintiff the above down contract price of KRW 26,197,500,000 after deducting the above down payment amount of KRW 30,5002,5000,000.

(4) The plaintiff unilaterally interrupted the plaintiff's request for the suspension of construction and intentionally conceals defective construction works, and then filed a counterclaim for the payment of the construction cost in bad faith despite the expiration of the right to demand the payment of the construction cost, and as a result, the plaintiff failed to resume construction for several years due to the necessity to preserve the site, and as a result, losses were incurred due to the increase in the estimated construction cost and the amount of rent. In light of these circumstances, the defendant's claim for the construction cost as a counterclaim is in violation of the principle of good faith or constitutes an abuse of rights. However, as seen below due to the defendant's defective construction and waiver of construction, the damages equivalent to the removal cost and the amount of compensation for delay can not be acknowledged for the following reasons. The plaintiff's failure to resume the construction work in this case for several years cannot be seen as having been caused by the defendant's fault, and even if the defendant's claim for the construction cost in this case was made contrary to the principle of good faith, it cannot be viewed as abuse of rights.

(c) Claim of a principal lawsuit against the removal cost of the remainder, such as underground beams;

(1) In general, if a construction work has been considerably advanced, but it is impossible to maintain the completed part of the construction work, and the contract is not beneficial to the contractor, the contractor shall remove the completed part of the contract as the obligation to restore it to its original state. According to the result of the appraisal as seen earlier, it is difficult for the contractor to pay damages for delay at the rate of 7,300,829 won from the date of cancellation of the contract of this case to December 7, 2007, which is the day following the first instance court's decision, to pay damages for delay at the rate of 20% per annum from the date of termination of the contract of this case to December 7, 2007, which is the day after the date of termination of the contract of this case.

(d) Claim for damages.

(1) Criteria for calculating damages

(A) First, since the Plaintiff sought compensation for damages due to the rescission of the contract in this case for the increase in the expected construction cost and the amount of damages equivalent to the rent, the agreement on compensation for delay is an agreement on the liquidated damages for which the obligor is liable to compensate for damages in the event of default (see Supreme Court Decision 2000Da9215, Jan. 10, 2003, etc.) and the parties can only claim the estimated amount of compensation exceeding the estimated amount of compensation due to special circumstances, as well as ordinary damages, unless there is any special agreement. Such agreement on compensation for delay applies even in cases where the contract is rescinded due to the contractor's causes attributable to the contractor and the subcontractor completes construction again by selecting the contractor and completing construction work (see Supreme Court Decision 2004Da39511, Apr. 28, 2006). Thus, the Plaintiff did not have any evidence to claim compensation for delay exceeding the agreed damages to the Defendant under the agreement in this case.

(B) Furthermore, the Plaintiff seeks selective compensation for damages caused by the Defendant’s tort, which is an increase in the expected construction cost and the amount of damages equivalent to rents. As seen earlier, the Defendant’s failure to reach an agreement on the discontinuance of construction at the time of the discontinuance of construction at the construction site of this case, and that it was not settled. However, there is no ground to acknowledge that the Defendant filed a counterclaim to seek the payment of construction cost in bad faith even though the Defendant’s right to claim remuneration was invalidated or the Defendant did not have the right to claim remuneration, and it is difficult to evaluate such discontinuance of construction as an illegal act. Accordingly, this part of the Defendant’s assertion premised on the fact that the discontinuance of construction constitutes a tort is without merit.

(C) Therefore, the amount of damages that the Plaintiff may claim against the Defendant is limited to the liquidated damages stipulated in the instant contract. However, as in the instant case, where a contractor suspends construction without completing the construction within the construction period and the completion of the construction is delayed as a result of the rescission of the contract, compensation for delay shall accrue from the day following the date of completion of the contract, but such termination period shall be calculated by multiplying the construction period by the estimated rate of the remainder of the construction period except for the expiration period of the original contract by the contractor’s order for the suspension of construction or for other reasons for cancellation (it shall not be when the contract was de facto cancelled) and the contractor may request another contractor to complete the construction (see, e.g., Supreme Court Decision 96Da2306, Mar. 26, 199).

(2) Calculation of damages

However, the Plaintiff and the Defendant agreed to pay to the Plaintiff the penalty for delay calculated by multiplying the contract amount by the rate of 1/100 for delay and the number of delayed days when the Defendant did not complete the construction work within the construction completion period, as of January 10, 204 at the time of the instant construction site. The Defendant sent a notice to the Plaintiff on August 14, 2003, stating that the Plaintiff would offer other construction works and settle accounts, and that the notice reached the Plaintiff on August 16, 2003, and that the period required for the Plaintiff to request other business operators to perform the construction work is 20 days, and the Plaintiff may not be deemed to have immediately rescinded the instant contract after 20 days from the date when the Defendant received notice of proposing other construction works and settle accounts from the Defendant on August 16, 2003. As such, the completion period of the penalty for delay x 20% from the date of completion to the date of 200 days from August 16, 2003 to the date of completion x 14.6% of the instant construction period (i.

Therefore, the defendant is obligated to pay to the plaintiff damages for delay at 39,900,000 won (=525,00,000 won x 1/100 x 76 days) and 35,700,000 won, which is the part cited by the court of first instance among them, at the rate of 20% per annum from December 7, 2007 to the date following the judgment of first instance, as the plaintiff seeks, for delay damages at the rate of 20% per annum from December 7, 2007 to the date of full payment, and for 4,200,000 won, which is the part ordering additional payment at the remaining court of first instance, from December 7, 2007 to May 13, 2009, which is the date following the judgment of first instance, to each of the late payment damages at the rate of 5% per annum as stipulated by the Civil Act and 20% per annum from the date following the judgment of first instance.

E. Sub-committee

Ultimately, the defendant is obligated to pay to the plaintiff 51,003,329 won [part of the unclaimed down payment] + 7,300,829 won + 39,900,000 won (expenses for removal of remaining parts, such as the earthlight) + 3,802,50 won] and damages for delay from the following day to May 13, 2009 to the date of full payment (5% per annum from October 4, 2003 to May 13, 2009; 20% per annum from the following day to the date of full payment (7,30,829 won + 35,70,000 won) until the date of full payment; 20% per annum from the following day to the date of full payment until December 7, 2007 to the date of full payment; 4,200,0000 won until May 31, 207.

4. Conclusion

Therefore, the plaintiff's claim of the principal lawsuit is justified within the scope of the above recognition, and all of the plaintiff's remaining principal claim and the defendant's counterclaims are dismissed. Since the judgment of the court of first instance which has different conclusions is unfair, each of the appeals against part of the plaintiff's main lawsuit and the counterclaim against the plaintiff's main lawsuit shall be accepted, and the part against the plaintiff who ordered payment of the above additional part of the part against the main lawsuit of the judgment of the court of first instance shall be revoked and the payment of the above amount shall be ordered to the defendant, and the part against the counterclaim against the judgment of the court of first instance shall be revoked and the defendant's claim for counterclaim shall be dismissed. Since the remaining part against the main lawsuit of the judgment of the court of

Judges Kim Jong-sik (Presiding Judge)