Leased building lost to fire: insurance-sharing agreement upheld for the landlord

Background

Our client leased part of their own building to a tenant for use as a restaurant. A fire of unknown cause destroyed most of the leased space, making it unusable, and the client demolished the building and rebuilt. After the fire, the two parties signed an agreement concerning the insurance payouts, but disputes later arose over the deposit, a loan, and how the insurance money should be shared. The tenant first sued for about ₩140 million, including the deposit, and the client responded with a counterclaim (a claim brought back against the plaintiff in the same lawsuit).

The issue

The tenant claimed to have signed the agreement to give the client half of the fixtures insurance proceeds while it was still blank, and that the client had filled in the terms without authority. Whether that agreement was valid was the central issue. The parties also disputed whether the repair-cost settlement and cash loan the tenant alleged actually existed, and how much unpaid rent and fire-related loss could be deducted from the deposit.

Our approach

We submitted the agreement the tenant had personally signed and sealed, along with supporting materials, and counterclaimed for half of the fixtures insurance proceeds the tenant had received. We also argued that unpaid rent and the loss from being unable to lease the space after the fire should be deducted from the deposit, and disputed that the repair-cost settlement and cash loan the tenant relied on had ever existed.

The court's reasoning

The court applied Supreme Court precedent that a document whose signature and seal the signer admits is presumed to have been signed in completed form, and that rebutting this requires a reasonable explanation and evidence. Pointing to where the signature was placed, the certificate of seal attached to the agreement, and its consistency with another confirmation submitted to the insurer, the court rejected the blank-signature claim. It dismissed the repair-cost settlement claim for lack of evidence, noting the costs appeared to have been for the tenant's own business, and did not recognize the alleged cash loan. Unpaid rent and rent-equivalent loss for the restoration period were deducted from the deposit. However, demolition and waste-disposal costs were not deductible, and one amount transferred by bank was recognized as a loan.

Outcome

The court ordered the tenant to pay the client about ₩135 million, half of the fixtures insurance proceeds, plus late-payment interest. What the client owed the tenant was reduced from the roughly ₩140 million claimed to about ₩61 million, consisting of the deposit after deductions and part of the loan. The tenant was ordered to bear three-quarters of the litigation costs and the client one-quarter.

What this case means

After an unexpected event such as a fire, the deposit, insurance money and other sums that have changed hands easily become entangled. A signed and sealed agreement is not easily set aside even if one party later claims to have signed a blank page. Putting the settlement terms in writing soon after an incident and keeping the related records matters.

This is the outcome of an individual case and does not guarantee the same result in similar matters. Some facts have been generalized to protect the parties involved.