Judgement of the Supreme Court on July 28, 1964 (MINSHU18-6-1220)
- The landlord canceled the lease contract and demanded vacation of the rental house because of four-months’ non-payment of the rent. The Supreme Court denied validity of the cancellation judging that there was not untruthfulness that dissolves the relationship of mutual trust between the parties of the lease agreement.
Circumstances of the case which the court denied the dissolution of mutual trust relationship despite 4 months’ non-payment
- The lender suddenly changed the amount of demand and made the tenant confused;
- The rent based on the related law was lower than the lender’s demand and the amount of non-payment was a small sum;
- The non-payment of the rent was the first time in 18 years since the tenant began to live in the rental house;
- As the lender denied to fix the roof broken by a typhoon, the tenant fixed it paying larger amount of money than the non-payment, but the tenant did not demand reimbursement of the cost until the lender filed a lawsuit;
- The tenant thought that he can deny paying the rent until the lender reimburse the repair cost of the roof;
- It was natural that the tenant without legal knowledge did not assert a set-off against the claim of rent using the claim of the repair cost reimbursement.
- This is the leading case which showed that the validity of lease contract cancellation based on non-payment of the rent would be denied if there are circumstances that the non-payment does not dissolve the relationship of mutual trust between the parties of the lease agreement (”Non-dissolution of mutual trust” principle).
- In this case, there were special circumstances that the tenant could set off the claim of the rent using the claim of the repair cost reimbursement.