Supreme Court: "Waterworks Construction Charges Are the Responsibility of the Land Developer"

[Asia Economy Reporter Baek Kyunghwan] A ruling has been made that the cost of water facility construction incurred when building public rental housing in urban development projects should be borne by the project implementer, not the construction company.

On the 23rd, the Supreme Court's First Division (Presiding Justice Kim Seonsu) announced that it upheld the lower court's ruling in favor of plaintiff, housing construction company A, in a lawsuit against the Daegu Metropolitan City Waterworks Headquarters Eastern Office Chief, which challenged the imposition of a waterworks causative party charge.

Since December 2015, company A had been conducting a project to build public housing after purchasing part of the land in the Daegu Sinseo Innovation City district from the Korea Land and Housing Corporation (LH), the land development project operator.

However, a problem arose when A applied for water supply construction necessary for the housing complex to the Daegu Waterworks Headquarters Eastern Office in June 2017. The Daegu Waterworks Headquarters approved A's water supply construction application but imposed a waterworks causative party charge of 220 million KRW.

Company A argued that it was not responsible for the charge and that the Waterworks Headquarters' imposition was illegal.

The first trial ruled in favor of the Waterworks Headquarters, stating that as the housing construction business operator who built a facility that uses a large amount of tap water, i.e., the housing complex, A was responsible for paying the charge.

However, the second trial judged that the waterworks causative party charge was the responsibility of LH, not A, and invalidated the Waterworks Headquarters' order to impose the charge. The second trial court reasoned that the cause of the charge, "the establishment or expansion of water facilities," occurred during the land development process, not the housing construction, so the charge should be imposed on LH, the land development project operator.

The Waterworks Headquarters appealed, but the Supreme Court dismissed the appeal. The court stated, "The party obligated to pay the waterworks causative party charge is LH, and the imposition of the charge on A, who is not the obligated party, is seriously and clearly defective and therefore invalid."

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