Plaintiff (Attorney Hwang Young-hun et al., Counsel for the plaintiff-appellant)

Defendant

January 8, 2009

Changwon District Court Decision 2007Gadan63396 Decided August 26, 2008

1. Of the judgment of the court of first instance, the part against the Plaintiff (Counterclaim Defendant) corresponding to the money ordered to pay the principal lawsuit below shall be revoked.

The Defendant-Counterclaim Plaintiff (Counterclaim Defendant) shall pay 12,942,235 won to the Plaintiff (Counterclaim Defendant) and 20% interest per annum from February 6, 2009 to the date of full payment.

2. Of the judgment of the court of first instance, the part against the Plaintiff (Counterclaim Defendant) regarding the counterclaim is revoked, and the Defendant (Counterclaim Plaintiff)’s counterclaim claim corresponding to the revoked part is dismissed.

3. The remaining appeals by the Plaintiff (Counterclaim Defendant) and the incidental appeal by the Defendant (Counterclaim Plaintiff) are dismissed, respectively.

4. The total cost of a lawsuit shall be borne by the Plaintiff (Counterclaim Defendant) and the remainder, respectively, by the Plaintiff (Counterclaim Plaintiff).

5. The payment portion of paragraph (1) may be provisionally executed.

1. Purport of claim

A. Main suit: The Defendant (Counterclaim Plaintiff; hereinafter “Defendant”) pays 80,632,00 won to the Plaintiff (Counterclaim Defendant; hereinafter “Plaintiff”) and 20% interest per annum from the first instance judgment to the date of full payment.

B. Counterclaim: The plaintiff shall pay 39,520,000 won to the defendant and 20% interest per annum from January 5, 2008 (which appears to have been written in writing on January 7, 2008 of the counterclaim) to the service date of the duplicate of the counterclaim of this case; and 5% interest per annum from the following day to the day of full payment.

2. Purport of appeal

A. Main suit: The part against the plaintiff falling under the following among the part concerning the main suit of the judgment of the court of first instance shall be revoked. The defendant shall pay to the plaintiff 22,582,93 won and 20% interest per annum from the day of the decision of this case to the day of full payment.

B. Counterclaim: Revocation of the part concerning the counterclaim of the judgment of the court of first instance. The defendant's counterclaim is dismissed.

3. Purport of incidental appeal;

The part against the defendant falling under the following part of the counterclaim of the judgment of the first instance shall be revoked. The plaintiff shall pay to the defendant 20,590,667 won and 5% interest per annum from January 5, 2008 to August 26, 2008 and 20% interest per annum from the next day to the day of full payment.

A principal lawsuit and a counterclaim shall be deemed simultaneously.

1. Basic facts

The following facts are either in dispute between the parties or in relation to Gap evidence 2, Gap evidence 1 through 3, Gap evidence 3-1 to 6, 7, Eul evidence 5, Gap evidence 8-1 to 4, Eul evidence 12-1 to 4, Eul evidence 13-1 and Eul evidence 13-2.

A. On July 22, 2005, the non-party 1, the implementer and seller of the non-party 1, who was the operator and the non-party 1, the operator of the non-party 2 underground floor and the ○○○○○○○, the fiveth floor of the ground (hereinafter “instant commercial building”) located in Kimhae-si (number omitted), leased the non-party 1, 144, 62.64 square meters of the instant commercial building (hereinafter “instant lease contract”) among the instant commercial buildings to the Defendant (hereinafter “instant store”). The main contents of the said lease contract are as follows.

【○○ lease contract】

Article 2 (Methods for Payment by Leaseer)

(1) Eul (Lessee and the defendant) shall pay 60 million won of a rental deposit to Gap (Lessee and non-party 1) as follows:

Down payment of KRW 30 million on July 22, 2005, remainder of KRW 30 million, and KRW 30 million on August 15, 2005;

(2) Monthly rents shall be 2.4 million won per day (excluding value-added tax).

Article 3 (Term of Lease Contract)

1. The term of this lease shall be three years (36 months) from the date of the open market in the Ireland designated by Gap (hereinafter referred to as "the date of commencement of business"): Provided, That it shall be extended for one year if no written notice from either of the parties to the termination of the lease is given 30 days prior to the expiration of the lease contract.

Article 5 (Rents)

(1) The monthly rent referred to in Article 2 (2) shall be calculated on the basis of the date of commencement of the business designated by Gap. The number of days shall be calculated on the basis of the number of days in the month, and the monthly rent shall be calculated on the basis of the date of commencement of the business in the case of opening the store after

(2) B shall pay the monthly rent prescribed in Article 2 (2) to the designated account notified before and after the salesroom occupants by the 25th day of each month.

(3) Where Eul fails to pay a monthly rent, the late payment charge equivalent to 5 percent of the monthly rent shall be paid on a daily basis from the designated date of payment to the actual payment date.

(4) In any of the following cases, Eul shall pay a monthly rent under Article 2 (2):

(A) A’s temporary closure or closure due to the circumstances of B, and B’s temporary closure order in violation of this Agreement or its management regulations;

B) Where B does not order the leased object to B after the termination of this contract even after the termination thereof

Article 7 (Use of Leaseed Objects)

(2) Upon the expiration of the term of this lease, Eul has completed the surrender and restoration of the object of this lease to Eul, and the landlord shall refund the rental deposit under Article 2 (1) to the lessee.

Article 16 (Termination of Contract and Penalty)

(1) In any of the following cases, A may immediately cancel or terminate a lease agreement without prior peremptory notice:

(f) Where an intermediate payment of rental deposit and any balance are not paid within 30 days from the prescribed due date of payment, or the monthly rent, management expenses, and taxes and public charges are overdue for at least two months;

(3) If the contract is terminated within the contract period due to a cause or cause attributable to paragraph (1) (A) through (l) or (b) after the date of the designation of tenant deposit, B shall pay in cash the amount equivalent to 10% of the total amount of the lease deposit to A as penalty. In such cases, the refund of the lease deposit shall be made after the completion of the surrender and restoration of the leased object, a new lease contract with a third party is concluded, and the full amount of the lease deposit

Article 23 (Transfer of Ownership)

(1) Where A enters into a sales contract for the leased object and transfers its ownership to a purchaser, A shall automatically succeed to the purchaser without taking measures, such as a separate contract modification, and B shall not raise any objection thereto.

(2) In the case of paragraph (1) of this Article, the rental deposit which a buyer has paid or has to pay to A under this lease agreement shall be converted into part of the balance of the purchase price that the buyer has to pay to A and settled alternatively.

When transferring ownership to a purchaser, A shall lose his / her responsibilities and effects on all matters related to the lease agreement with B.

Article 27 (Commencement of Business and Compensation for Delay)

(1) The starting date of business of this building shall be March 12, 2005.

(Matters under special agreement: B shall be commenced on or before August 15, 2005)

Article 28 (Other Matters)

(3) All charges, etc. incurred in the use, management and maintenance of a building, such as transportation, environmental improvement charges and special repair reserve funds, imposed on the main building after saleroom occupants, shall be borne.

(5) Expenses incurred in interior walls, ceilings, floors, entrance doors, etc. and repair (including paintings) of leased objects shall be borne, in principle, by Section B.

B. In accordance with the above lease agreement, the Defendant paid the lease deposit to Nonparty 1, and around August 15, 2005, operated a sports alet store with the trade name, “Yeong Gei Kim-dok,” which was handed over the instant store.

C. After February 16, 2005, the Plaintiff purchased the instant store from Nonparty 1, and around July 22, 2005, the Plaintiff succeeded to the rights and obligations of the instant lease agreement from Nonparty 1.

D. While the Defendant delayed the payment of monthly rent from March 2006, on July 20, 2007, the Defendant paid KRW 13 million to the Plaintiff on July 20, 2007. On October 16, 2007, the Plaintiff sent to the Defendant a certificate of the content that “In the event that it does not, it would terminate the instant lease contract,” the Defendant would not pay the monthly rent that was pushed down within the said period, and on November 9, 2007, the Defendant would terminate the instant lease on the ground that the said monthly rent was overdue.”

E. On January 5, 2008, the Defendant suspended the business in the condition that the instant store left a string with the exception of clothes, etc., but collected all the strings remaining in the instant store on May 1, 2008 and delivered the instant store to the Plaintiff.

2. Judgment on the plaintiff's main claim

A. Determination on the unpaid rent and the portion of claim for damages due to illegal occupation, etc.

(1) Unpaid rent

(A) According to the above facts, the instant lease agreement was lawfully terminated on November 9, 2007, when the Plaintiff’s declaration of intention to terminate the contract was delivered to the Defendant on the grounds of the Defendant’s delinquency in payment of rent for at least two months, and barring any special circumstance, the Defendant is obligated to pay the Plaintiff the rent that occurred from March 2006 to November 9, 207, barring any special circumstance.

(B) On February 2006, the defendant filed a claim against the plaintiff for a reduction of the monthly rent on the ground that the rent was not reasonable, due to the increase or decrease in the public burden on the leased object and other changes in economic conditions. Thus, the monthly rent for the store of this case was reduced to 2.2 million won from March 2006 to 2.2 million under Article 628 of the Civil Act. However, to recognize a claim for the increase or decrease in rent under Article 628 of the Civil Act, there must be a significant change in circumstances that served as the basis for calculating the rent at the time of the lease contract. However, to recognize the claim for the increase in rent under Article 628 of the Civil Act, there should be a significant change in circumstances that served as the basis for calculating the rent at the time of the lease contract, and there is insufficient evidence to acknowledge that there was a significant change in circumstances as alleged above. Thus, this part of the defendant's assertion is without merit.

(2) Damages caused by illegal possession

The Defendant, after the termination of the lease, continued possession of the instant store and delivered the instant store to the Plaintiff on May 1, 2008, on which May 1, 2008, and the Plaintiff agreed to perform the Defendant’s obligation to deliver the instant store and restore the said store to its original state in accordance with Article 7(2) at the time of the lease lease agreement. As seen above, the Defendant’s possession of the instant store after the termination of the lease agreement shall be deemed an illegal possession without title even if it did not use or profit from the said lease. The amount of damages shall be the rent of the instant store. The Defendant is obligated to pay the Plaintiff the amount equivalent to the rent from November 10, 207 to May 1, 2008, which is the day following the termination of the lease agreement due to illegal possession (the Plaintiff claimed damages from unjust enrichment or illegal possession, and as long as the claim for damages is recognized as above, the portion of the claim for unjust enrichment due to illegal possession shall not be considered).

(3) Contract delay fees;

(A) Finally, as at the time of the instant lease agreement, Article 5(3) of the above agreement provides that if the Defendant delays the monthly rent, the Defendant shall pay the late payment charge equivalent to 5% of the monthly rent by calculating the late payment charge (hereinafter “instant late payment charge agreement”) on a daily basis. Therefore, barring any special circumstance, the Defendant is obligated to pay to the Plaintiff the amount recognized in paragraphs (1) and (2) above in addition to the agreed late payment charge, barring any special circumstance.

(B) As to this, the Defendant asserts that the above late payment charge agreement should be invalidated or excessively reduced as a juristic act against the social order absolutely unfavorable to the lessee who is the economically weak, but the fact that the late payment charge agreement in this case requires the lessee to pay the late payment charge if he delays the monthly rent to the lessee, it is difficult to view it as a juristic act contrary to the good morals and other social order, and there is no evidence to acknowledge it otherwise, and therefore, this part of the Defendant’s assertion is without merit.

(c)1) However, the late payment agreement of this case constitutes an agreement to pay a lessor additional money if the lessee fails to perform his/her obligation under the instant lease agreement, which is presumed to be an estimate of damages pursuant to Article 398, Section 4, of the Civil Code, and thus, the court may reduce the estimated amount of damages where the estimated amount of damages is unreasonably excessive in accordance with Article 398, Section 2, of the Civil Code.

2) In the instant case, it is reasonable to view that the purpose and content of the instant lease agreement, the motive in which the amount of damages is scheduled, the business performance, form, and business size of the instant commercial building is the amount equivalent to the interest on the overdue rent that the Plaintiff suffered due to the Plaintiff’s failure to receive the rent from the Defendant. In addition, the Defendant’s obligation to pay the rent to the Plaintiff is set at 20% per annum per annum in the Act on Special Cases Concerning the Promotion, etc. of Legal Proceedings, as monetary liability, the Defendant’s obligation to pay the rent to the Plaintiff shall be set at 20% per annum. Thus, the instant late payment charge agreement is unfairly excessive in light of the size of the amount of

B. Determination on the claim part of value-added tax

(1) Where there is a separate agreement between the parties to the transaction to bear the value-added tax, an entrepreneur may seek a payment equivalent to the value-added tax from the person who receives the supply pursuant to the agreement (see Supreme Court Decision 2003Da49153, Feb. 13, 2004). Since there is no dispute between the parties that the Defendant agreed to pay the amount equivalent to the value-added tax pursuant to the instant lease agreement to the Plaintiff, the Defendant is liable to pay the amount equivalent to the value-added tax accrued until May 1, 2008 when the store was delivered to

(2) Furthermore, while the Plaintiff is seeking the payment of the above amount equivalent to the value-added tax, Article 2(2) of the instant lease agreement provides that “monthly rent shall be KRW 2.4 million per day (excluding value-added tax).” Article 5(3) provides that “the late rent shall be the late rent equivalent to 5% per month of the monthly rent,” and does not provide for any provision on whether the amount of the value-added tax is included in the value-added tax, time and late payment charge. Therefore, it is difficult to view that the amount equivalent to the value-added tax is included in the monthly rent stipulated in the contract delay fee of this case, and there is no other evidence to acknowledge it.

C. Judgment on the claim of money under Article 16 (3) of the instant lease agreement

(1) Article 16(1) and (3) of the above contract at the time of the instant lease agreement provides that the Defendant shall pay to the Plaintiff an amount equivalent to 10% of the total amount of the lease deposit in the event that the instant lease agreement is terminated due to the Defendant’s delinquency in payment of monthly rent for not less than 2 months. The Plaintiff’s termination of the instant lease agreement on the ground that the Defendant’s delinquency in payment of monthly rent for not less than 2 years is as seen above. Therefore, barring any special circumstance, the Defendant is obligated to pay the Plaintiff KRW 6 million, which is the amount equivalent to 10% of the lease deposit, to the Plaintiff.

(2) In regard to this, the defendant argues that Article 16 (3) of the Act on the Regulation of Terms and Conditions constitutes a standardized contract which imposes unfairly excessive damages on the customer, and that it is null and void pursuant to Article 8 of the Act on the Regulation of Terms and Conditions. However, in light of the relationship with the late payment charge agreement, etc. as mentioned above, its contents and the process of conclusion, etc., the above Article 16 (3) is prescribed to secure the performance of the defendant's obligation, and it shall be deemed as a penalty agreement, and it shall not be deemed as an estimate for the amount of damages as stipulated in Article 8 of the Act on the Regulation of Terms and Conditions, and there is no evidence that can be viewed as a clause that imposes unfairly excessive damages on the customer,

D. Ultimately, the Defendant’s overdue rent and late payment charge, damages equivalent to the rent, value-added tax, penalty amount, and penalty amount, ① the sum of overdue rent and value-added tax, and late payment charges incurred from March 2006 to July 20, 2007 by the Plaintiff who was paid 13 million won from the Defendant, shall be deducted from the sum of overdue rent and value-added tax, and late payment charges from the sum of overdue rent and late payment charges until July 20, 207, ② the sum of rent, value-added tax, late 9 November 2007, ③ the sum of the late rent, value-added tax, and late 205, ③ the sum of the late 50 days from November 10, 207 to May 10, 2007, ③ the sum of the above late 207, 207, 207, 2067, 207, 206, 207, 207, 2506, 206, 27, 25, 206

E. Meanwhile, there is no dispute between the parties regarding the part that the Plaintiff deducts the lease deposit amount of KRW 60 million which the Defendant already received from the Defendant, and thus, the above amount of KRW 60 million should be deducted in the order of late payment, value-added tax, and rent of KRW 12,942,235 (=72,942,235 - 60,000) from the above amount.

F. Therefore, the Defendant is obligated to pay 12,942,235 won and 20% interest per annum from February 6, 2009 to the date of full payment, which is the date of the instant judgment, to the Plaintiff, unless there are special circumstances.

3. Determination as to the defendant's assertion and counterclaim

A. Defendant’s assertion and claim of beneficial cost

(1) The Defendant, a development service agency company of the instant commercial building, has increased the objective value of the instant store by paying KRW 10 million to Nonparty 2, a corporation for the development services of the instant commercial building, for the following reasons: (a) the Plaintiff has a duty to pay the said KRW 10 million to the Defendant with beneficial cost reimbursement; and (b) the Plaintiff has asserted that the Plaintiff is liable to pay the said KRW 10 million to the Defendant.

(2) The statement of evidence Nos. 10 and 10 alone that the defendant increased the objective value of the store of this case by performing the construction of 10 million won with the expenses of KRW 10 million, and it is not sufficient to recognize that the value of the building of this case is currently existing on November 9, 2007 at the time when the lease is terminated, and there is no other evidence to acknowledge this otherwise. Even if it is a domestic affairs, as seen above, the defendant waived the right to claim reimbursement of useful expenses by providing that "the expenses for interior walls, ceiling, floor, entrance, etc. of the leased object shall be borne by the defendant in principle" under Article 28 (5) of the lease agreement of this case, as seen above, the defendant shall be deemed to have waived the right to claim reimbursement of useful expenses. Accordingly, any mother or any part of this part of the defendant'

B. Defendant’s claim for refund of lease deposit

The defendant asserts that the amount of the above lease deposit amount of KRW 60 million paid to the plaintiff on July 20, 2007, KRW 13 million paid from the plaintiff on July 20, 2007, and KRW 10 million as stated in the above paragraph (a) shall be refunded from KRW 83 million to January 5, 2008, deducting the aggregate of the monthly rent of KRW 53,606, and KRW 666 from March 2006 to January 5, 2008, and the remainder of KRW 29,393,334, and delay damages shall be refunded. However, as seen above, the above portion of the claim is not recognized, the plaintiff is obligated to pay the above lease deposit amount of KRW 60 million to the defendant, and the above amount is less than the remainder of the claim amount of the plaintiff after deducting the above KRW 13 million as seen in the above part of the claim. Thus, the counterclaim claim is without merit.

4. Conclusion

Therefore, the plaintiff's claim of the principal lawsuit shall be accepted within the scope of the above recognition, and the remainder of the claim shall be dismissed for lack of merit, and the defendant's counterclaim shall be dismissed for lack of merit. Since the part of the judgment of the court of first instance different from this conclusion is unfair, the plaintiff's appeal shall be accepted, the principal lawsuit shall be revoked, the payment of the money shall be ordered, the part against the plaintiff shall be revoked, and the defendant's counterclaim claim corresponding to the revoked part shall be dismissed.

Judges Choi Jae-man (Presiding Judge)