〈Case in which the issues were whether unjust enrichment was established where the head of a regional housing association under the Housing Act received remuneration without any association rules or resolution of the general meeting, and whether the payment of such remuneration constituted performance of a non-existent obligation in conformity with moral obligation〉[Gong 2024Ha, 1766]

【Holding】

[1] The ownership relationship of the property of a housing association established under the Housing Act (= collective ownership by all members) and the method of managing and disposing of such property

[2] In the case of so-called performance-based unjust enrichment, where one party makes a certain performance according to his or her own will and then claims its return on the ground that the performance lacked legal cause, whether the performance itself constitutes the benefit of the recipient of the performance and the loss of the performer (affirmative)

[3] The standard for determining whether a performance conforms to moral obligation in the case of performance of a non-existent obligation in conformity with moral obligation under Article 744 of the Civil Act, and who bears the burden of proof (= the recipient of the performance) / Whether it can be concluded that such an act of performance constitutes performance of a non-existent obligation in conformity with moral obligation merely because the performance of the non-existent obligation was made on the basis of a void agreement in violation of mandatory law or an unlawful act committed intentionally or by gross negligence on the part of the other party (negative)

[4] In a case where B, the head of regional housing association A, enacted regulations on the payment of officers' salaries at the board of directors of association A and received remuneration accordingly, and association A sought return of unjust enrichment against B, alleging that B had arbitrarily received remuneration without any remuneration regulations or resolution of the general meeting, the Court held that the payment of remuneration by association A lacked legal cause, and yet B obtained a benefit by receiving it, thereby causing association A to suffer a loss equivalent to the remuneration, and that the payment of the remuneration by association A to B cannot be regarded as performance of a non-existent obligation in conformity with moral obligation

【Summary of Decision】

[1] The property of a housing association established under the Housing Act belongs to the collective ownership of all its members; the management and disposal of collectively owned property must follow the association rules if the rules so provide, and, absent such association rules, must be made by a resolution of the general meeting of members; and an act made without going through such procedures is void.

[2] Article 741 of the Civil Act provides that “a person who, without legal cause, obtains a benefit from another person's property or services and thereby causes loss to that other person shall return that benefit.” In the case of so-called performance-based unjust enrichment, where one party makes a certain performance according to his or her own will and then claims its return on the ground that the performance lacked legal cause, the performance itself constitutes the benefit of the recipient of the performance and the loss of the performer.

[3] In the case of performance of a non-existent obligation in conformity with moral obligation under Article 744 of the Civil Act, whether a performance conforms to moral obligation is determined, from an objective standpoint, according to whether the recipient's retaining the performance as it is accords with the legal sentiment of ordinary people, and the burden of proof in this regard lies with the recipient of the performance; and where the performance of the non-existent obligation was made on the basis of a void agreement in violation of mandatory law or an unlawful act committed intentionally or by gross negligence on the part of the other party, one must not hastily conclude that such an act of performance constitutes performance of a non-existent obligation in conformity with moral obligation.

[4] In a case where B, the head of regional housing association A, enacted regulations on the payment of officers' salaries at the board of directors of association A and received remuneration accordingly, and association A sought return of unjust enrichment against B, alleging that B had arbitrarily received remuneration without any remuneration regulations or resolution of the general meeting, the Court held as follows: for association A to pay remuneration to B, its head, out of the association's property, there must be association rules or a resolution of the general meeting; the provision of association A's rules concerning officers' remuneration, unlike in the case of paid employees, did not impose an obligation to pay remuneration to officers but merely stated that remuneration may be paid in accordance with remuneration regulations, yet the general meeting, which had the authority to enact remuneration regulations, did not enact any; therefore, the payment of remuneration by association A lacked legal cause, and yet B obtained a benefit by receiving it, thereby causing association A to suffer a loss equivalent to the remuneration; and, in light of the following — that, in light of the provisions on regional housing associations, a high degree of public character is required of a regional housing association; that B, as the head of association A, represents association A and oversees all of the association's affairs, and such a relationship between association A, an unincorporated association, and B, its representative organ, is the same as the legal relationship between a mandator and a mandatary, and the Civil Act provides that a mandate is in principle a gratuitous contract; that the purpose of having the members determine matters concerning officers' remuneration at the general meeting is to prevent the harm of officers pursuing personal gain in connection with their own remuneration and thereby to protect the interests of the association, its members, and its creditors; that the original rules of association A, in providing for officers' remuneration, did not impose on association A an obligation to pay remuneration to officers but merely stated that remuneration may be paid in accordance with remuneration regulations, and the general meeting did not enact any remuneration regulations, whereas B, as the head of the association, after the original rules were enacted, convened a board of directors together with one other director, enacted the above ineffective regulations on the payment of officers' salaries, resolved on the specific amount of remuneration B would receive, and then received remuneration pursuant to that resolution from the date of authorization for establishment of the association onward; and that the lower court relied on the fact that the above regulations on the payment of officers' salaries were enacted at the board of directors on the basis of the original rules as a ground for its determination that the above payment of remuneration conformed to moral obligation, but the original rules were never put into effect because they were deleted by a resolution of an extraordinary general meeting before their scheduled effective date, namely the date of authorization for establishment of the association — the payment of the remuneration by association A to B cannot be regarded as performance of a non-existent obligation in conformity with moral obligation.

【Referenced Statutes】

[1] Articles 275 and 276 of the Civil Act, Article 2 of the Housing Act [2] Article 741 of the Civil Act [3] Article 744 of the Civil Act [4] Articles 275, 276, 680, 681, 686, 741, and 744 of the Civil Act, Articles 1 and 2 of the Housing Act, Article 20(1), Article 20(2) subparagraph 5, and Article 20(3) of the former Enforcement Decree of the Housing Act (before amended by Presidential Decree No. 30146 on October 22, 2019), Article 7(5) subparagraph 1 of the former Enforcement Rule of the Housing Act (before amended by Ordinance of the Ministry of Land, Infrastructure and Transport No. 624 on May 31, 2019)

【Referenced Precedents】

[1] Supreme Court Decision 2011Da7628, July 25, 2013 (Gong 2013Ha, 1563)
[3] Supreme Court Decision 2015Da218723, April 12, 2016

(Source: Supreme Court Decision 2024Da257362, October 8, 2024 [Return of Unjust Enrichment] > Comprehensive Legal Information, Precedents)