Background
Our client, a frozen food manufacturer, purchased a factory site together with a workshop, cold store and offices, agreeing to lease and use them until the balance of the purchase price was paid. Our client filled the cold store with inventory, including roasted sweet potatoes and processed sweet potato products. Then, shortly before the balance payment date, a fire that began in the building's distribution board destroyed the workshop and cold store completely and reduced the entire stored inventory to ashes. Worse, as summer approached the burnt frozen food drew insects and odors and generated complaints from the neighborhood, so that our client had to pay to dispose of it as waste. Changchun represented the client in claims against the seller-landlord for damages and termination of the contract.
The Obstacle — A Head-On Clash Over "Whose Fault Was It?"
In fire cases, a tenant is easily disadvantaged where the point of ignition and the locus of responsibility are unclear. The landlord duly argued that "the fire broke out while the tenant was using the premises, so it is the tenant's responsibility," and that it was "caused by the tenant's renovation work." The key questions were ① within whose sphere of control and management the fire originated, and ② what legal basis existed for holding the landlord responsible.
How Changchun Helped — Building the Case From the Point of Ignition to the Structure of Liability
Working from objective materials including the fire scene investigation report, Changchun (attorneys Jaesun Yoon, Donghwan Shin and Hyunwoo Joo) argued the following with precision.
Establishing the cause of ignition: the fire investigation identified the point of ignition as inside the distribution board fixed to the building, and the cause as an electrical factor arising from moisture and foreign matter (a short circuit through tracking). That is a defect within the landlord's sphere of control and management, forming part of the building's structure.
The law of landlord liability: a landlord is under a duty to keep the leased property in the condition necessary for use and enjoyment (Civil Act art. 623). We invoked the Supreme Court's principle that where a fire arises from a defect in electrical equipment installed by the building owner and forming part of the building's structure, responsibility lies with the landlord and the tenant cannot be held liable for failure to return the property (Supreme Court, Aug. 29, 2017, 2017Da227103, among others). We also framed liability for a defect in the installation or maintenance of a structure — the distribution board (Civil Act art. 758).
Proving the landlord's neglect of management: we established liability by pointing to the landlord's failure to pay the electrical safety manager's fees, which caused the safety management service contract to terminate automatically; the illegal extensions that narrowed the gaps between buildings and allowed the fire to spread widely; and the fact that the landlord had kept staff on site until immediately before the fire and was in substance the party occupying and managing the building.
Blocking the other side's rebuttal: as to the claim that "the tenant's renovation work was to blame," we broke the causal link by showing that the workers had unplugged the wiring before leaving on the day of the fire, and that the scene investigation found nothing unusual about that electrical equipment.
Comprehensive calculation of loss: we framed the loss item by item, with supporting evidence for each — not only the destroyed inventory but the value of renovation work completed, pallet racks and forklifts, waste disposal costs, the cost of using a replacement cold store, and the wages and dormitory costs of staff hired in reliance on normal operations — and also sought termination for impossibility of performance (Civil Act art. 546) and restitution of the down payment and interim payments already made.
In fire damage claims, what decides the case is less the fact that "a fire occurred" than how the point of ignition, the sphere of control and management, and the law of liability are connected. Changchun analyzed the fire investigation materials page by page to build the structure of the landlord's liability from every angle, and is gathering every element of the scattered loss in its effort to make our client whole. (Outcomes may differ depending on the facts of each matter.)