In a lawsuit over a Suwon officetel built by IPARK Hyundai Development Company (formerly HDC Hyundai Development Company, hereafter "Hyundai Development Company"), the court recognized liability for damages of about 2.5 billion won. A key issue was whether liability could be pursued for items after the defect liability period had expired, and the court broadly recognized responsibility by easing the burden of proof on the developer.
According to legal sources on the 6th, the Seoul Central District Court Civil Division 34 (Presiding Judge Kim Chang-mo, senior judge) ruled on the 24th that "Hyundai Development Company shall pay 2,526.8 million won to the developer" in a lawsuit filed by "Nobel & Ant" against Hyundai Development Company for settlement of construction costs and damages.
The two companies signed a contract in Nov. 2014 to build an officetel and neighborhood living facilities in Suwon, Gyeonggi Province, and the building was completed in Jan. 2018, with occupants moving in.
However, defects such as exterior wall cracks and water leaks occurred one after another, and the developer filed suit, claiming the contractor's shoddy construction was responsible.
The court said, "Hyundai Development Company failed to follow the design drawings or constructed poorly, causing the defects."
Hyundai Development Company argued that it could not be held liable for some items. It said there was insufficient evidence that defects in items with a 1–2 year defect liability period under the Framework Act on the Construction Industry occurred within that period.
The Enforcement Decree of the Framework Act on the Construction Industry sets different defect liability periods by type of work. Among specialized works, interior construction, tile, and window installation are covered for up to 1 year, while civil engineering and heating/cooling and ventilation, gas, and smoke exhaust systems are covered for up to 2 years.
The court held that Hyundai Development Company must compensate even for items with a 1–2 year defect liability period. In principle, the developer as plaintiff must prove that the defects occurred within the liability period, but it is difficult for a developer or building owner lacking expertise to pinpoint the exact time each defect occurred.
The court found that this should be examined through other evidence. Specifically, it said, "It appears the developer and building owners repeatedly requested repairs for defects discovered immediately after move-in," and stated, "It is reasonable to view each defect as having occurred within the liability period."
However, it did not recognize the entire repair cost. Considering that about five years had passed until the first appraisal after completion, during which the building naturally aged, the court limited the scope of liability to 75% of the defect repair cost. It also reflected the difficulty of clearly distinguishing construction defects from performance degradation over time.
Hyundai Development Company said it will decide whether to appeal after reviewing the written judgment.
Meanwhile, Nobel & Ant, founded in 1996 as a workbook and educational teaching aids company, made a full-fledged entry into real estate development in 2012 by purchasing land in Gwanggyo New Town in Suwon.