[1] Whether a lessor may refuse a lessee's request for renewal of the contract in a case where the lessor is in arrears at any time during the period of lease of a commercial building subject to the Commercial Building Lease Protection Act to reach the rent for three minutes (affirmative)

[2] In a case where an agreement is made to assume an amount equivalent to the value-added tax on rent, whether the lessee bears the amount equivalent to the value-added tax on unjust enrichment equivalent to the rent due to the continuous possession after the termination of the lease contract (affirmative in principle)

[1] Article 10-8 of the Commercial Building Lease Protection Act (hereinafter “Commercial Building Lease Protection Act”) provides that a lessor may terminate a contract on the grounds of a lessor’s delay in rent. On the other hand, Article 10-8 of the Commercial Building Lease Protection Act provides that a lessor may refuse a lessee’s request for the renewal of a contract with the maturity of the lease term by stating otherwise that “the lessor has a cause of delinquency in paying rent to the amount equivalent to the three period rent” (Article 10(1)1 of the Commercial Building Lease Protection Act). The purport of the provision is that a lease relationship is based on the trust between the parties, and thus, it does not allow the extension of a lease relationship by a lessee’s unilateral intent to the extent that the lessor fails to pay rent for three months in arrears during the previous lease term.

In light of the language and purport of the above provisions, if there is a delay in the payment of the rent for a period of three (3) minutes at any time during the lease term, the lessor may refuse the request for renewal of the contract, and the lessee is not obliged to pay a delay for three (3) minutes at the time of exercising the right to request renewal of the contract.

[2] If a lessee continues to use a building even after the termination of a contract, and the lessor also deducts the amount equivalent to the future rent from the supply of services subject to value-added tax, it constitutes the supply of services subject to value-added tax. Thus, if there is an agreement that the lessee bears the amount equivalent to the value-added tax on rent, barring any special circumstance, the amount equivalent to the value-added tax on unjust enrichment equivalent to the rent paid for the continuous possession

[1] Articles 10(1)1 and 10-8 of the Commercial Building Lease Protection Act / [2] Articles 105 and 741 of the Civil Act, Articles 11 and 31 of the Value-Added Tax Act

[1] Supreme Court Decision 2012Da58975 Decided July 24, 2014 / [2] Supreme Court Decision 2002Da38828 Decided November 22, 2002 (Gong2003Sang, 154)

Plaintiff 1 and one other (Law Firm Sejong, Attorneys Kim Jae-ap et al., Counsel for the plaintiff-appellant)

Defendant (Law Firm LLC, Attorneys Gyeong-Gyeong et al., Counsel for the defendant-appellant)

Changwon District Court Decision 2019Na59513 decided July 17, 2020

All appeals are dismissed. The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

1. Regarding ground of appeal No. 1

A. Article 10-8 of the Commercial Building Lease Protection Act (hereinafter “Commercial Building Lease Protection Act”) provides that a lessor may terminate a contract on the grounds of a lessor’s delay in lease. On the other hand, Article 10-8 of the Commercial Building Lease Protection Act (hereinafter “the Commercial Building Lease Protection Act”) provides that a lessor may refuse a lessee’s request for the renewal of a contract with the maturity of the lease period by stating that “where a lessor has a overdue interest in the amount equivalent to the rent for the three period,” the said lessor shall be deemed to have expired (Article 10(1)1 of the Commercial Lease Protection Act). The purport of the provision is that a lease relationship is based on the trust between the parties, and thus, it does not allow the extension of a contract relationship by the lessee’s unilateral intent even if the lessor has failed to pay the rent for three months in arrears during the previous lease period (see Supreme Court Decision 2012Da5875, Jul. 24, 2014).

In light of the language and purport of the above provisions, if there is a delay in the payment of the rent for a period of three (3) minutes at any time during the lease term, the lessor may refuse the request for renewal of the contract, and the lessee does not necessarily have to have the delay in payment for three (3) minutes at the time of exercising the right to request renewal of the contract.

B. On the grounds indicated in its reasoning, the lower court determined that, on the grounds indicated in its reasoning, the lessor, who is the lessee, was in arrears for three months until the Defendant pays part of the overdue rent on September 8, 2017, the Plaintiffs were entitled to refuse the Defendant’s request for renewal of the contract, and that the lease of this case terminated on August 31, 2018, which is the last day of the agreed period. Examining the reasoning of the lower judgment in light of the foregoing legal doctrine, the lower court did not err in its judgment by misapprehending the legal doctrine on the grounds for refusing the renewal of the contract, contrary

2. Regarding ground of appeal No. 2

A. If a lessee continues to use a building even after the termination of a contract, and the lessor also deducts the amount equivalent to the future rent from the supply of services subject to value-added tax, barring any special circumstance, the amount equivalent to the value-added tax for unjust enrichment equivalent to the rent paid for the continuous possession after the termination of the lease contract should also be borne by the lessee (see Supreme Court Decision 2002Da38828, Nov. 22, 2002, etc.).

B. In the same purport, the lower court determined that the Defendant should bear an amount equivalent to the value-added tax as well as the unjust enrichment equivalent to the rent corresponding to the rent incurred by continuing possession after the termination of the lease agreement, on the grounds that the Defendant agreed to pay the amount equivalent to the value-added tax on the monthly rent separately. Such determination by the lower court is based on the legal doctrine as seen earlier.

3. Conclusion

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 Park Jung-hwa (Presiding Justice)