BUSAN — A court has sided with Busan's Haeundae District in a dispute over a nearly 500 million won ($360,000) long-term development strategy study that the district canceled over plagiarism and poor performance. The court also rejected the contractor's claim that it had completed 77.61% of the work, clearing the way for the district to recover about 185 million won ($133,000) in advance payments, progress payments and contract deposits.
The Busan High Court on the 10th overturned a lower court ruling and dismissed the contractor's claim in a debt non-existence case appealed by the district, Haeundae District said on the 16th. The ruling addressed whether a contracting agency may terminate an agreement and recover payments already made when the quality and originality of the deliverable fall short.
The contract at issue was the "Haeundae 2040 Vision and Strategy for the Next 20 Years" project, pursued from 2020 to 2022 under the district's seventh elected administration. At about 500 million won, it was the largest research contract the district had commissioned.
After the eighth elected administration took office, the district concluded that the deliverable was of poor quality and that parts of it resembled existing reports, and it notified the contractor that the agreement was terminated. It demanded the return of 50 million won in advance payments and about 110 million won in progress payments, along with payment of about 24.68 million won in contract deposits.
The contractor argued the termination was improper, said it had performed 77.61% of the total work and filed suit seeking a declaration that it owed nothing on the advance payments, progress payments or contract deposits. The lower court found the termination itself justified but ruled for the contractor, saying it was difficult to conclude that the entire deliverable was of no use to the district.
The appeals court found that the work was not completed by the final deadline even though the contract period had been extended twice, and that no reasonable justification for the delay could be found. It pointed in particular to an appraisal by the Korea Copyright Commission, which found that the interim report bore substantial similarity across all sections to existing long-term development plans from Gwacheon and Seongnam in Gyeonggi Province and from Suseong District in Daegu, with high literal similarity in much of the text.
The court also found insufficient grounds to accept the contractor's claimed 77.61% completion rate, noting that the ultimate purpose of the contract was to produce a final report following public hearings and opinion surveys. It therefore found that the agreement had been lawfully terminated due to the contractor's own fault, and rejected the contractor's argument that it had no obligation to return the advance and progress payments. The court also ruled that the contract deposits belonged to the district.
The ruling confirmed that in public research contracts, simply having produced part of a report is not enough to establish a completion rate, and that the substantive quality and originality of the final deliverable under the contract are what matter. The district can now recover about 185 million won. It expects the ruling to strengthen oversight of substandard contract work and accountability in budget execution.
"This ruling is significant because it corrects the practice of paying contract fees in full even when the work was not properly performed, and prevents the waste of residents' hard-earned tax money," District Mayor Kim Sung-soo said.
