Whether the overdue rent, etc. is naturally deducted from the lease deposit without a separate declaration of intention, such as deduction prior to the termination of the lease contract (negative), and whether the lessor may deduct the overdue rent, etc. from the lease deposit by declaring the intention of deducting the overdue rent, etc. from the lease deposit before the lease contract is terminated or delivered (affirmative)

Article 618 of the Civil Act

Supreme Court Decision 2005Da8323, 8330 Decided September 28, 2005 (Gong2005Ha, 1677) Supreme Court Decision 2012Da49490 Decided September 27, 2012 (Gong2012Ha, 1744) Supreme Court Decision 201Da49608, 49615 Decided February 28, 2013 (Gong2013Sang, 557)

Plaintiff (Counter-Defendant) 1 and one other (Law Firm Name, Attorneys Choi Yoon-ap et al., Counsel for the plaintiff-appellant)

Defendant-Counterclaim (Law Firm Cheong, Attorneys Park Jae-hwan et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2015Na2019894, 2041211 decided October 8, 2015

All appeals are dismissed. The costs of appeal are assessed against the Defendant (Counterclaim Plaintiff).

The grounds of appeal are examined.

1. The lease deposit is a security for the rent and other lessee’s obligation arising from the time when the lease contract is terminated to the time when the lessee delivers the object (see, e.g., Supreme Court Decisions 2005Da8323, 8330, Sept. 28, 2005). Even if the lease deposit is paid to the lessor, the lessor may freely choose whether to cover the rent, etc. in arrears from the lease deposit while the lease contract is in progress. Thus, even though the rent in arrears, etc. is not naturally deducted from the lease deposit without any separate declaration of intention, such as deduction prior to the termination of the lease contract, the lessor may deduct the rent in arrears, etc. from the lease deposit even before the lease contract is terminated or delivered (see, e.g., Supreme Court Decisions 2012Da49490, Sept. 27, 2012; 201Da49608, Feb. 28, 2013).

2. The record reveals the following facts.

A. Under the premise that the instant lease contract was concluded on May 25, 2013, and terminated on March 27, 2014, the Plaintiff (Counterclaim Defendant; hereinafter “Plaintiff”) filed a claim against the Defendant (Counterclaim Plaintiff; hereinafter “Defendant”) for overdue rent and damages for delay from July 25, 2013 to March 27, 2014, which were two months after the date of conclusion of the contract.

B. The first instance court: (a) concluded the instant lease agreement on June 22, 2013, and terminated on February 28, 2014; (b) the Defendant lost possession of the instant building on or around March 3, 2014; (c) the Defendant is jointly and severally liable with the co-defendant of the first instance court and the Nonparty, who is a co-Lessee of the instant building, or to pay rent, etc. from August 23, 2013 to March 3, 2014, which was two months after the date of conclusion of the contract, to each of the Plaintiffs, who lost possession of the instant building; and (d) determined that the Nonparty was additionally liable to pay unjust enrichment equivalent to the rent from the date of completion of delivery of the instant building; and (c) rejected the Defendant’s assertion that the lease deposit cannot be claimed as a legal brief, other than the complaint or counterclaim, and that it was a set-off against set-off against the Defendant’s claims for refund of deposit deposit, which is a lessor.

C. The Defendant appealed against this, and the Defendant filed a counterclaim at the lower court. However, on August 18, 2015, the lower court rendered a ruling of recommending reconciliation between the Plaintiffs and the Nonparty to the effect that “the Nonparty shall pay KRW 100,835,407 to the Plaintiffs and delay damages therefrom,” and the said KRW 100,835,407, supra, was deducted from KRW 200,835,407, including the rent that occurred between August 23, 2013 and June 30, 2015.

Meanwhile, the Plaintiffs did not receive the instant building until the date of closing argument in the lower court.

3. After finding the facts as stated in its reasoning, the lower court rejected the Defendant’s counterclaim on the ground that the instant lease agreement was lawfully terminated on or around February 28, 2014 by the Plaintiffs’ declaration of termination, and barring any special circumstance, the Defendant, barring any special circumstance, maintained the first instance court which partially accepted the Plaintiffs’ claim for the principal lawsuit on the grounds that the Defendant is obligated to pay the rent, etc. from August 23, 2013 to March 3, 2014, while the Plaintiffs may deduct the rent, etc. from the lease deposit, etc. from the lease deposit, the lease deposit to be returned to the Defendant and the Nonparty is entirely extinguished by the deduction of the said rent, etc. against the Nonparty.

4. A. Examining the reasoning of the lower judgment in light of the aforementioned legal principles and records, the lower court’s aforementioned determination is justifiable, and contrary to what is alleged in the grounds of appeal, the lower court did not err by misapprehending the legal doctrine regarding the deduction of lease deposit

B. The defendant, in the grounds of appeal, accepted the plaintiff's principal claim for the payment of rent, etc. against the defendant, and rejected the defendant's counterclaim claiming the payment of lease deposit against the plaintiffs, the court below erred by misapprehending the order of reasons or the principle of equality.

However, examining the reasoning of the lower judgment in light of the aforementioned legal principles and the record, the lower court determined that the Plaintiffs’ claim for rent, etc., seeking payment against the Defendant as the principal claim was based on the premise that, as seen above, the remaining portion remains after deducting the entire deposit from the claims, such as rent, etc., arising between August 23, 2013 and June 30, 2015, which were incurred by the Plaintiffs from the time when the instant building was returned to the Defendant and the Nonparty, the joint lessee, who was the joint lessee prior to the return of the said building. Therefore, this cannot be deemed as a inconsistent reasoning, and it cannot be deemed that there was an error of violating the principle of equality

C. Meanwhile, the allegation in the grounds of appeal that the lower court erred by misapprehending the legal doctrine on the validity of a set-off in an indivisible claim relationship is about the lower court’s assumptive and additional judgment. As long as the lower court’s aforementioned determination is justifiable, the legitimacy of this part of the judgment does not affect the conclusion of the judgment, and thus, the allegation in the grounds of

5. Therefore, all appeals are dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kwon Soon-il (Presiding Justice)