Successful Defense in a Construction Payment Lawsuit by Asserting Defect Repair Costs

One of the most frequent legal disputes that arise in the course of building or facility construction is the issue of non-payment of construction costs.

In this case, the plaintiff, who had performed power-generation facility construction, claimed payment of construction costs and additional construction costs from the defendant, in response to which the defendant filed a counterclaim for damages on the ground of construction defects and asserted set-off. Our Your Legal Team represented the defendant's side (the counterclaim-plaintiff) and achieved the result of defending against a substantial portion of the plaintiff's excessive claim and having part of the counterclaim upheld.

The core issues in this case were as follows.

• Whether the claim for payment under the construction contract was appropriate

• Whether there was a prior agreement on the additional construction work

• Whether the constructed facilities were defective and the possibility of damages

• The assertion of set-off of the construction costs through the counterclaim damages claim

(1) Recognition of the claim for damages in lieu of defect repair

Based on the appraisal results regarding the structural defects that arose after completion of the construction, we proved that the defects were construction defects going beyond mere usage problems. The court accepted this argument and recognized approximately 70% of the total defect-repair costs as damages.

• Defendant 1: approximately KRW 150 million

• Defendant 2: approximately KRW 88 million

(2) Success of the set-off defense against the construction-cost claim

In particular, in this case, we succeeded in greatly reducing the liability to pay the construction costs by setting off part of the plaintiff's claim for construction costs against the damages claims held by the defendants.

• Defendant 1: the plaintiff's claim dismissed in full

• Defendant 2: only a partial amount recognized (approximately KRW 31 million)

(3) Defense against the dispute over the authenticity of the additional construction costs

The plaintiff claimed additional payment on the basis of an agreement on payment of additional construction costs separate from the contract, but we contested its credibility by raising objections regarding the circumstances of the document's preparation and the use of the seal. Although the court recognized the authenticity of the document, the key point is that we nonetheless succeeded in the set-off on the basis that the defect-repair costs exceeded it.

• In construction-cost claim lawsuits, merely asserting that the construction was completed is not enough; whether there are construction defects can be a key defensive element.

• The party that ordered the construction must document any additional costs that arise during construction and, at the same time, secure construction inspection and appraisal materials in preparation for future disputes.

• Conversely, a construction company may find its legal grounds weakened if it claims additional payment without records and written confirmation of oral agreements or arbitrarily changed construction items.

Because construction-cost disputes are a complex tangle of technical issues and legal interpretation, an experienced law firm's response strategy is essential. In this case, Your Legal Team responded meticulously on multiple fronts, including proving defects through an appraiser, constructing the logical structure of the set-off defense, and contesting the authenticity of the agreement, thereby leading to a substantive victory.

If you are troubled by a construction-cost dispute, consult with Your Legal Team right now.

With our extensive experience in disputes and outstanding legal analysis, we will protect your precious rights.