[Edaily Reporter BAEK JU-A ] DL E&C CO., LTD.(375500)has secured a final victory in the Supreme Court in a 18-year-long dispute over construction costs with City One (Chairman Cha Jun-young), the developer of the Paju Unification Park project. The principal amount of the construction payment alone totals approximately 522.9 billion won, and when combined with long-term accumulated late payment damages, the actual amount to be recovered is expected to exceed 1 trillion won.

According to legal circles on the 30th, the Second Division of the Supreme Court (Presiding Justice Oh Kyung-mi) dismissed City One’s appeal on the 16th in a lawsuit filed by DL E&C CO., LTD. against City One seeking payment of construction costs and other claims, thereby upholding the lower court’s ruling in favor of the plaintiff.

As a result, City One is now required to pay DL E&C CO., LTD. construction costs totaling well over 1 trillion won.

Specifically, the trial court ruled that the principal amount City One must pay was 518.4 billion won. The appellate court, the 6-1 Civil Division of the Seoul High Court (Presiding Judge Park Hae-bin), dismissed all of City One’s appeals and also upheld the additional claim of approximately 4.5 billion won that DL E&C CO., LTD. had filed during the appeal proceedings. As the Supreme Court upheld the second-instance ruling in its entirety, the principal amount City One must pay increased to approximately 522.9 billion won. Based on the contractual interest rates and late payment penalty rates specified in the judgment for each debt, the interest accrual dates for some debts date back to 2009–2010, and with a maximum annual late payment penalty rate of 17% applied, the total amount actually payable is estimated to exceed 1 trillion won.

The Paju Tongil Dongsan Condo Development Project is a project to build a tourist accommodation facility comprising 1,265 units, ranging from three basement levels to 15 stories above ground, near the Shinsegae Simon Premium Outlet in Tanhyeon-myeon, Paju, Gyeonggi Province. DL E&C CO., LTD. signed a construction contract with City One in 2006 for 412.5 billion won and began construction in 2007.

However, the project came to a standstill in 2008 when condo sales effectively failed amid the global financial crisis and a real estate market downturn. With the pre-sale subscription rate remaining at around 9% and no final contracts being signed, DL E&C CO., LTD. suspended construction in December 2008, when the project was about 33% complete. Since then, the site has been left abandoned for nearly 18 years.

In 2020, DL E&C CO., LTD. filed a lawsuit against City One, seeking a total of 573.1 billion won in construction payments, indemnification under a joint and several guarantee, and loans. Cha Jun-young, Chairman of City One, filed a counterclaim seeking damages of approximately 530 billion won, arguing that DL E&C CO., LTD. had suspended construction by violating its obligation to complete the project. DL E&C CO., LTD. countered that it could not continue construction because the developer had effectively abandoned the condo sales, leaving the company unable to receive payment for the construction work.

The key issues were whether DL E&C CO., LTD. bore a duty to complete the project regardless of whether the units were sold, and whether the suspension of construction constituted a breach of contract.

From the first instance through the appellate court, the courts ruled in favor of DL E&C CO., LTD.

The Supreme Court explained, “Based on the interpretation of the construction contract, it cannot be deemed that the contractor bears an obligation to complete the project within the construction period regardless of the status of unit sales or the payment of construction fees,” adding, “If the contractor can no longer reasonably expect to receive a substantial portion of the construction fees as agreed, even if it continues the work, it may refuse to fulfill the obligation to continue construction under the defense of uncertainty provided for in the Civil Code.”

The court further ruled, “Since the pre-sales campaign failed, it has become highly uncertain whether the plaintiff would receive payment for the construction work even if the project were completed,” and concluded, “Requiring the plaintiff to continue performing the construction work in this case would be contrary to the principles of fairness and good faith.”

The court also rejected City One’s argument that the statute of limitations had expired on the claim for construction payment. The Supreme Court ruled that “exercising the defense of uncertainty does not alter the due date of the counterparty’s debt,” holding that the lower court had not misapplied the law.

It is reported that DL E&C CO., LTD. has already initiated seizure proceedings against assets and real estate held in Chairman Cha’s personal name. With this Supreme Court ruling finalizing the enforcement order, the processes of compulsory execution and debt recovery are expected to accelerate.

However, the actual amount recovered will depend on whether the debtor’s assets can be secured. According to City One’s 2025 audit report recently disclosed, the external auditor, Jeongdong Accounting Firm, refused to issue an audit opinion, stating, “Due to the departure of key personnel and other factors, the financial statements and notes were not submitted in a timely manner, and accounting records and related materials were incomplete, making it impossible to assess the fairness of the financial statements.” Furthermore, as of the end of last year, City One had assets of 133.2 billion won and liabilities of 637.9 billion won, resulting in total equity of minus (-) 504.7 billion won, placing the company in a state of complete capital impairment.