‘I gave it to you as an investment, but please return the money you borrowed.’ Court says, “Plaintiff must prove the fact of the loan.”

Plaintiff claims, “The 40 million won transferred was a loan, and the money received in return was interest.”
Seoul Central District Court Judge Kim Young-soo said, “There is no proof such as a loan certificate, and irregular and irregular payments are profits.”

A ruling was made that the amount remitted from an acquaintance cannot be considered a loan if there is no document proving the fact of the loan, such as an IOU, and it is in the nature of an investment.

On October 17, Judge Kim Young-soo of the Seoul Central District Court's Civil Division 71 issued a ruling dismissing the plaintiff's claim in a lawsuit claiming rental money filed by Mr. A, in his 60s, against his acquaintance B.

In September 2023, Mr. A received an investment proposal from Mr. B, whom he had always known. Mr. B persuaded Mr. A that his acquaintance, Mr. C, had a good investment case. Mr. A, who accepted the offer, transferred 40 million won to Mr. B, and on the same day, Mr. B re-delivered the amount to Mr. C. Afterwards, Mr. A received approximately 1.5 million won from Mr. C on three occasions.

The problem began to arise when Mr. C failed to pay due to worsening profitability. Accordingly, Mr. A filed a loan claim lawsuit against Mr. B, claiming that 40 million won was lent to Mr. B, who was investing, and that Mr. B has an obligation to repay it.

At this trial, Mr. A emphasized that he sent the amount directly to Mr. B's account and argued that the 1.5 million won given by Mr. C was merely a portion of the investment proceeds received as loan interest.

However, Mr. B’s position was different. Mr. B refuted that the 40 million won should be viewed as an ‘investment’ rather than a loan. He claimed that there were no documents to prove the loan, such as an IOU, and that the 1.5 million won was money received in exchange for investment profits, not loan interest.

Judge Kim Young-soo of the Seoul Central District Court, who heard this case, ruled against the plaintiff and ruled in favor of Mr. B.

Judge Kim Young-soo pointed out the reasons for the ruling as follows: “No documents such as an IOU were prepared to confirm the existence of the return of principal or interest agreement, the fact that the plaintiff did not specifically claim the contents of the agreement regarding interest rate or interest amount, and the fact that the defendant transferred the entire amount to Mr. C as soon as he received the plaintiff’s money.”

Judge Kim Young-soo continued, saying, “The plaintiff also received 1.5 million won from Mr. C,” and ruled, “Considering that the amount received was not constant and the timing of receipt was not regular, it is difficult to regard it as interest.”

Bae Jun-mo, a lawyer at Daeryun Law Firm (Liuhan) who represented the defendant B in this lawsuit, explained, "If you want to claim that you borrowed money, you must also prove that fact. Mr. A initially claimed that there was no set date for the return of the principal, but changed his statement to say that he would receive it back with the proceeds a year later." He added, "Taking all of these facts together, it appears that the court did not determine it to be a loan."
 

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