One Law Partners, LLC represented the defendants in litigation involving confirmation of nonexistence of debt and claims for restitution of unjust enrichment arising from a lending relationship, successfully defending against the plaintiff’s claims for the return of funds in their entirety and obtaining a favorable judgment through a counterclaim recognizing approximately KRW 85 million in loan principal together with the full amount of delay damages.

 

The clients were involved in lending money on multiple occasions to an acquaintance with whom they had maintained a longstanding relationship, and members of the clients’ family also provided loan funds. The transactions were conducted not only through bank transfers but also through cash deliveries, and the debtor repeatedly acknowledged the borrowing and repayment obligations by executing promissory notes and written repayment acknowledgments.

However, the debtor failed to repay the borrowed funds by the agreed deadline and subsequently began asserting that no actual borrowing had occurred or that the existence of any debt could not be established. The debtor further alleged that the clients had coercively demanded repayment and that issues involving unjust enrichment and embezzlement had arisen in connection with certain monetary transactions and credit card use.

Accordingly, the debtor filed a lawsuit against two of the clients seeking confirmation that approximately KRW 100 million in loan debt did not exist, while also asserting claims for restitution of unjust enrichment and damages.

One Law Partners, LLC represented the defendants in defending against the plaintiff’s claims and, at the same time, filed a counterclaim on behalf of the family member who was the actual creditor, seeking payment of the outstanding loan balance of approximately KRW 85 million.


2. Key Issues

The first issue was whether the lending of funds delivered in cash and the remaining outstanding debt could be proven.

In this case, a substantial amount of money had been delivered in cash, and the loan funds had been withdrawn from accounts held in the names of several family members. As a result, it was difficult to clearly identify the actual lending relationship based solely on bank transaction records. It was therefore important to determine whether a loan agreement had been formed, identify the actual creditor, and establish the amount of outstanding debt through a comprehensive review of cash withdrawal records, promissory notes, written repayment acknowledgments, and related materials.

The second issue was whether the legal effect of the promissory notes and written repayment acknowledgments executed by the debtor could be recognized.

The plaintiff argued that the promissory notes and acknowledgments had been executed under duress or mistake and that the varying creditors and debt amounts stated in the documents rendered the underlying lending relationship unreliable. To respond to these arguments, it was necessary to comprehensively examine the circumstances surrounding the execution of each document, their contents, the source of the funds, and the repayment arrangements in order to assess the evidentiary value of the dispositive documents and the legal effect of the debtor’s acknowledgment of indebtedness.

The third issue was whether the plaintiff’s claims for restitution of unjust enrichment and damages were legally sustainable.

The plaintiff alleged that the clients were obligated to make restitution based on the fact that the plaintiff had made greater payments through account transactions and based on allegations concerning withdrawals of funds and credit card use. However, the issues were whether the mere transfer of money could establish unjust enrichment without legal grounds and whether objective evidence existed to support allegations of embezzlement or other unlawful conduct.


3. Key Response Strategy

One Law Partners, LLC first analyzed the banking records of the clients and their family members, organized the timing and amounts of cash withdrawals, and compared those records with the contents of the promissory notes and written repayment acknowledgments. In particular, the firm focused on the multiple promissory notes and repayment acknowledgments executed by the debtor and demonstrated that the debtor had repeatedly acknowledged both the borrowing of funds and the outstanding debt amount.

The firm also secured written statements confirming the circumstances under which family members had provided the funds, thereby clearly establishing ownership of the loan claim, and filed a counterclaim seeking recovery of the entire outstanding loan amount.

With respect to the plaintiff’s claim for restitution of unjust enrichment, the firm emphasized that a mere difference in account transaction amounts is insufficient to establish unjust enrichment and that the plaintiff bears the burden of proving that the payments were made without legal grounds.

In relation to the plaintiff’s allegation that the clients had unlawfully withdrawn and embezzled certain funds, the firm applied for a court order compelling the submission of financial transaction information from financial institutions and obtained records concerning the issuance, payment, and endorsement of checks. Through these materials, the firm demonstrated that the plaintiff personally endorsed the checks and converted some of them into cash, thereby undermining the credibility of the embezzlement allegations.

The firm further argued that, given the existing financial relationship between the parties and the circumstances surrounding the delivery and use of the credit card, the card usage could not be conclusively characterized as lacking legal grounds.

As a result, the court found that the written repayment acknowledgment executed by the plaintiff constituted a dispositive document that settled the parties’ prior creditor-debtor relationship and definitively confirmed the outstanding loan principal.

The court further concluded that there was insufficient evidence to establish that the acknowledgment had been executed under duress or mistake and that inconsistencies in certain details among the promissory notes and acknowledgments did not, by themselves, negate the legal validity of the documents.

The court also determined that it was difficult to find evidence of unjust enrichment without legal grounds or unlawful conduct such as embezzlement with respect to the plaintiff’s claims for restitution and damages. Accordingly, the court dismissed all of the plaintiff’s claims for the return of funds and ordered payment to the counterclaim plaintiff of approximately KRW 85 million in loan principal together with the full amount of delay damages at an annual rate of 12%.


4. Significance of the Case

This case demonstrates that even where funds are delivered in cash and direct transfer records are insufficient, the existence of a loan claim can be established through a comprehensive review of promissory notes, written repayment acknowledgments, and related financial transaction records.

In particular, the case is significant in showing that where a debtor has repeatedly executed documents promising repayment of borrowed funds, the legal effect of such documents will not be denied merely because the debtor later claims that they were signed under duress or mistake, provided that the authenticity of the documents is established. The case also involved obtaining objective check transaction records through a court order compelling the submission of financial transaction information and effectively refuting the plaintiff’s allegations of embezzlement and unjust enrichment on that basis.

One Law Partners, LLC successfully protected the clients’ property rights by fully defending against the plaintiff’s claims for restitution of unjust enrichment and damages while simultaneously securing recognition, through a counterclaim, of the entire outstanding loan amount and all delay damages.

This case is significant in that it achieved both a successful defense and debt recovery in a complex dispute involving personal financial transactions through the evidentiary value of dispositive documents and a litigation strategy centered on objective financial records.


-
Byoung-Joo Kim, Attorney | bjkim@onelawpartners.com
-
Public Relations Team, One Law Partners, LLC | pr@onelawpartners.com