[1] Purport of Article 8(2) of the former Act on Registration of Credit Business, etc. and Protection of Finance Users / Where an obligor directly pays brokerage fees to a loan broker and a credit service provider receives notarized fees from an obligor, whether the obligor constitutes deemed interest under the said provision, and whether the credit service provider is deemed to have deducted the same advance interest (affirmative)

[2] The method of determining whether the interest rate exceeds the limited interest rate under the former Act on Registration of Credit Business, etc. and Protection of Finance Users in cases where the interest rate is deducted, and the loan principal that the debtor has to pay at the time of maturity where the excess exists

[1] The purpose of Article 8(2) of the former Act on Registration of Credit Business, etc. and Protection of Finance Users (amended by Act No. 11544, Dec. 11, 2012; hereinafter “former Credit Business Act”) is to prevent evasion of the law used by credit service providers as a means of evading the above Act by collecting money from the debtor under the pretext of honorariums, discounts, fees, mutual aid funds, interest in delay, advance interest, etc. Thus, if it is related to monetary lending between the credit service provider and the debtor regardless of the pretext and can be seen as the consideration for monetary lending, it shall be regarded as interest. Therefore, even if a credit service provider paid the consideration for brokerage (hereinafter “mediation commission”) directly to a loan broker, it constitutes a mutual aid agreement between the loan provider and the debtor. Rather, if a credit service provider had a loan broker receive a brokerage commission directly from the debtor and did not pay such brokerage commission to the loan broker, it shall be deemed that the credit service provider’s interest related to the loan service provider’s loan agreement constitutes interest under Article 8(2) of the former Credit Business Act.

In addition, in light of the purport of Article 8(2) of the former Credit Business Act, if a creditor receives notarial fees from a debtor, it also constitutes interest under Article 8(2) of the former Credit Business Act, and the credit service provider shall be deemed to have deducted the same amount of interest in advance.

[2] In cases where prior interest is deducted, whether the amount exceeds the limited interest rate prescribed by the former Act on Registration of Credit Business, etc. and Protection of Finance Users (amended by Act No. 11544, Dec. 11, 2012; hereinafter “former Credit Business Act”) shall be determined based on the interest rate under the limited interest rate for the period from the date of loan to the date of maturity, excluding the amount of prior interest deduction, based on the amount actually received by the debtor. If the amount of prior interest deduction (including the amount of interest actually paid by the debtor, if any) exceeds the result of such determination, the amount in excess shall be determined based on whether the amount of prior interest deduction exceeds the amount. However, the amount in excess shall not be determined based on the aforementioned legal principle as to the amount in excess of the amount in advance by the debtor’s prior interest rate under Article 8(4) of the former Credit Business Act (amended by Act No. 9344, Jan. 21, 2009).

[1] Article 8(1) and (2) of the former Act on Registration of Credit Business, etc. and Protection of Finance Users (Amended by Act No. 11544, Dec. 11, 2012); Article 5(2) and (3) of the former Enforcement Decree of the Act on Registration of Credit Business, etc. and Protection of Finance Users (Amended by Presidential Decree No. 22298, Jul. 21, 2010; Article 5(4) of the current Enforcement Decree of the Act on Registration of Credit Business, etc. and Protection of Finance Users) / [2] Article 8(1), (2), (3), and (4), and Article 11-2(2) of the former Act on Registration of Credit Business, etc. and Protection of Finance Users (Amended by Act No. 11544, Dec. 11, 2012); Article 5(2) and (4) of the former Enforcement Decree of the Act on Registration of Credit Business, etc. and Protection of Finance Users (Amended by Presidential Decree No. 225810, Feb. 28, 98, etc.)

[1] Supreme Court Decision 2009Do11576 Decided May 13, 2010 (Gong2012Sang, 610), Supreme Court Decision 2010Do1258 Decided March 15, 2012 (Gong2012Sang, 610), Supreme Court Decision 2010Do2060 Decided December 27, 2012 / [2] Supreme Court Decision 93Da23459 Decided November 23, 1993 (Gong194Sang, 177), Supreme Court Decision 2006Da1943 Decided August 25, 2006, Supreme Court Decision 2012Da56245, 56252 (Gong2013, 1022) Decided May 9, 2013

Plaintiff (Counterclaim Defendant, Re-Counterclaim Plaintiff)

Defendant (Counterclaim Plaintiff, Counterclaim Defendant) (Law Firm Sejong, Attorneys Exclusive-law et al., Counsel for the plaintiff-appellant)

Seoul Central District Court Decision 2013Na19358, 19365, 19372 Decided February 19, 2014

The part of the judgment of the court below concerning the principal lawsuit and counterclaim shall be reversed, and that part of the case shall be remanded to the Panel Division of the Seoul Central District Court. The remaining appeals shall be dismissed.

The grounds of appeal are examined (to the extent of supplement in case of any statement in the supplemental appellate brief not timely filed).

1. On May 19, 2010, as to the balance of obligations under the loan agreement as of May 19, 2010

A. 1) Article 8(1) of the former Act on the Registration of Credit Business, etc. and Protection of Finance Users (amended by Act No. 11544, Dec. 11, 2012; hereinafter “former Credit Business Act”) provides that “where a credit service provider lends a loan to an individual or a small corporation prescribed by Presidential Decree, the interest rate shall not exceed the rate prescribed by Presidential Decree within 50/100 per annum.” Paragraph (2) of the same Article provides that “in calculating the interest rate under paragraph (1), the credit service provider receives a loan, regardless of its name, such as honorarium, discount, fee, mutual aid, overdue interest, and substitute payment, it shall be deemed that all is interest rates that are prescribed by Presidential Decree.” Paragraph (3) of the same Article provides that “Where a credit service provider concludes a loan contract in violation of paragraph (1), the credit service provider shall not receive interest rates exceeding the interest rate prescribed by Presidential Decree No. 20/100” and Paragraph (2) of the same Article provides that “if it exceeds the interest rate prescribed by Presidential Decree No. 210/2, the loan service provider shall be appropriated.

2) The purport of Article 8(2) of the former Credit Business Act is to prevent evasion of the law used by a credit service provider as a means to collect money from an obligor under the name of honorariums, discounts, fees, mutual aid funds, interest in installments, interest in advance, etc. If, regardless of the pretext, it is related to lending and borrowing of money between a credit service provider and an obligor and can be seen as a consideration for lending and borrowing of money. Therefore, the credit service provider’s deduction from a loan in advance constitutes a mutual aid for interest (see, e.g., Supreme Court Decisions 2009Do11576, May 13, 2010; 2010Do1258, Mar. 15, 2012). Thus, even if an obligor directly pays brokerage fees to a loan broker, it constitutes interest under Article 8(2) of the former Credit Business Act if the credit service provider had a loan broker receive direct brokerage fees from an obligor, and it did not pay such brokerage fees to the obligor.

Furthermore, in light of the purport of Article 8(2) of the former Credit Business Act, if a creditor receives notarial fees from an obligor, it also constitutes interest under Article 8(2) of the former Credit Business Act, and the credit service provider shall be deemed to have deducted the same amount of interest in advance (see, e.g., Supreme Court Decision 2010Do2060, Dec. 27, 2012).

Meanwhile, whether the interest rate exceeds the limited interest rate stipulated in the former Credit Business Act shall be determined on the basis of the interest rate for the period from the date of loan to the date of repayment, excluding the prior interest deduction amount, based on the amount actually received by the debtor. If the amount of prior interest deduction (including the amount of interest actually paid by the debtor, including the amount of interest that has been paid by the due date) exceeds the result of such determination, the excess amount shall be the principal of the loan which the debtor has to pay to the prior interest before the due date (see Supreme Court Decisions 93Da23459, Nov. 23, 1993; 2006Da19443, Aug. 25, 2006) / [see, e.g., Supreme Court Decision 2006Da194543, Nov. 25, 2006; 205Da15484, Jan. 24, 2009).

B. According to the reasoning of the lower judgment and the record, the Plaintiff (Counterclaim 1, Counterclaim 2, hereinafter referred to as the “Plaintiff”) asked Nonparty 1 to find out the location of the loan. Nonparty 1, Nonparty 2, and Nonparty 2, the Plaintiff, on May 19, 2010, sent KRW 90,000 to Nonparty 2, 00 to Nonparty 1 and Nonparty 2, the Plaintiff paid KRW 00,000 per annum 36% per annum, and 49% of the interest rate for the Defendant’s loan contract (hereinafter referred to as the “instant loan contract”). Nonparty 2, the Plaintiff was also present at Nonparty 1 and Nonparty 2, the Plaintiff received KRW 90,00,00 from Nonparty 2, and the Plaintiff received KRW 00 under the name of Nonparty 1, 00,000, and the Plaintiff was also issued 00,000,000 won to Nonparty 2 under the name of Nonparty 1 and Nonparty 2.

Examining the above facts in light of the legal principles as seen earlier, since 1,50,000 won paid to a certified judicial scrivener is naturally borne by the Plaintiff or is cost of creating a security right under Article 5(3)1 of the former Enforcement Decree of the Credit Business Act, it does not constitute interest under Article 8(2) of the former Enforcement Decree of the Credit Business Act. However, considering the circumstance where the Plaintiff paid to Nonparty 1 and Nonparty 2 a sum of KRW 7,600,000 ( + KRW 3,600,000 + KRW 4,000) under the pretext of introduction, and the relationship between Nonparty 1,2 and the Defendant, it cannot be deemed that it was paid regardless of the Defendant. Rather, the Defendant would have received a brokerage fee directly from the Plaintiff under the pretext of introduction, and the Defendant did not pay it to himself. Thus, even if the Plaintiff paid it to Nonparty 1 and Nonparty 2 as the intermediary fee under the former Credit Business Act, it constitutes a type of 00,000 won, which is directly related to the Plaintiff’s loan business.

Therefore, the sum of 8,60,00 won (7,60,000 won + 1,00,000 won + 81,40,000 won (90,000 - 8,600,000 won) was actually paid to the Plaintiff. Based on the above, interest rate of 49% per annum for the period from May 19, 2010 to August 18, 2010 under the former Credit Business Act was 9,971,50,500 (81,40,000,000 x 3/12 per annum) was 80,000,000 won and 80,000 won, -405,000 won prior to the loan amount of 80,505,000 won and interest rate of 90,705,000 won and interest rate of 90,705,0000 won and interest rate of -405,205,7000

Nevertheless, the lower court calculated the debt balance of the instant loan agreement and determined the Plaintiff’s principal claim and the Defendant’s counterclaim on the premise that the said KRW 8,600,000 does not constitute interest under Article 8(2) of the former Credit Business Act. In so doing, the lower court erred by exceeding the bounds of the principle of logic and experience and the principle of free evaluation of evidence, or by exceeding the bounds of the principle of free evaluation of evidence, thereby adversely affecting the conclusion of the judgment. The allegation in the grounds of appeal is with merit within the aforementioned scope

2. On September 4, 2006, concerning the claim for restitution of unjust enrichment relating to the loan agreement as of September 4, 2006

In light of the records, the court below is just in rejecting the plaintiff's counterclaim and counterclaim based on the judgment that the plaintiff's claim for return of unjust enrichment against the defendant relating to the loan agreement as of September 4, 2006 did not exist, and it did not err by exceeding the bounds of the principle of free evaluation of evidence against logical and empirical rules or by misapprehending the relevant legal principles, contrary to what is alleged in the grounds of appeal

3. Conclusion

Therefore, the part of the judgment of the court below concerning the principal lawsuit and counterclaim shall be reversed, and that part of the case shall be remanded to the court below for a new trial and determination, and the remaining appeal shall be dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kwon Soon-il (Presiding Justice)