[1] The degree of defects subject to a lawsuit for revocation of a resolution under Article 42-2 of the Act on the Ownership and Management of Aggregate Buildings, and whether a resolution that can be revoked due to the grounds for revocation under the said provision is valid unless the resolution is revoked by a lawsuit for revocation filed within the exclusion period (affirmative)

[2] In a case where the management body meeting of the management body established under Article 23 of the Act on the Ownership and Management of Aggregate Buildings approves the previous resolution as it is or the second resolution to appoint an officer at the management body meeting re-owned after the resolution to appoint an officer was passed, whether the new management body meeting can be deemed as an independent ground for invalidation (negative in principle)

[1] The introduction of a lawsuit for revocation of a resolution by the Act on the Ownership and Management of Aggregate Buildings (hereinafter “Aggregate Buildings Act”) does not distinguish the defect of the resolution by the management body meeting from the procedure of convocation, method of resolution, and whether the contents of resolution are the defect. If the defect is minor, the validity of the resolution by the management body meeting can be settled as soon as possible through the lawsuit for revocation of the resolution, and thereby, stability in legal relations among the sectional owners. In a case where the defect is a serious defect in the procedure or contents of the resolution which would be attributable to the degree that the resolution becomes null and void, the establishment of a lawsuit for revocation of the resolution by the management body meeting would be to ensure the rights of the sectional owners by seeking nullification of the resolution through a lawsuit for invalidation confirmation under the general civil law or by allowing

Therefore, in light of the purport and purpose of the Act on the Ownership and Management of Aggregate Buildings to reasonably regulate legal relations among sectional owners, i.e., “where a procedure for convening an assembly or a method of resolution violates Acts and subordinate statutes or regulations, or where the contents of resolution violate the Acts and subordinate statutes or regulations” or “where the contents of resolution violate the Acts and subordinate statutes or regulations,” it is reasonable to deem that such defect is a defect to the extent that it does not reach a serious defect that would be attributable to the invalidity of the resolution, and that the resolution that can be revoked due to such a ground for revocation is valid unless it is revoked by a lawsuit for revocation of resolution filed within the exclusion period stipulated in Article 42-2 of the Act on the Ownership and Management of Aggregate Buildings. On the other hand, the issue of whether the period of exclusion has lapsed is a matter of the court’s ex officio examination

[2] In a case where the management body meeting of the management body of an aggregate building established under Article 23 of the Act on Ownership and Management of Condominium Buildings accepts the previous resolution or re-satisfys the re-satisfys at the management body meeting which re-satisfyed after the resolution of appointment of executive officers was adopted, barring special circumstances such as where the resolution of the management body meeting which re-satisfyed even if the initial resolution of appointment of executive officers is null and void, is deemed null and void due to defects, the reason called a management body meeting convened by an unentitled person after the initial resolution of the management body meeting which was null and void, and thus, cannot be deemed as an independent reason for invalidation in principle. If such a resolution is deemed null and void, it would result in confusion in legal relations and significantly undermine legal stability.

[1] Article 42-2 of the Act on the Ownership and Management of Aggregate Buildings / [2] Articles 23, 23-2, and 31 of the Act on the Ownership and Management of Aggregate Buildings

[2] Supreme Court Decision 2011Da69220 Decided January 27, 2012 (Gong2012Sang, 333)

○○○○ Apartment Self-Governing Operations Association (Law Firm KON-ro, Attorneys Park Jin-jin, Counsel for the plaintiff-appellant)

Defendant 1 and one other (Attorney Park Sung-sung, Counsel for the defendant-appellant)

Seoul Central District Court Decision 2017Na91327 decided September 12, 2018

The judgment below is reversed, and the case is remanded to the Seoul Central District Court.

The grounds of appeal are examined.

1. On March 10, 2017, at the general meeting of the Plaintiff, who is a management body under the Act on Ownership and Management of Condominium Buildings (hereinafter “Aggregate Buildings Act”), the lower court determined that the resolution of selecting the Nonparty as the representative of the Plaintiff (hereinafter “advance resolution”) was invalid, since it did not satisfy the quorum, and that the resolution of ratification of the preceding resolution at the general meeting of March 9, 2018 (hereinafter “advance resolution”) was made on the grounds that it cannot be deemed that the Nonparty, who was elected as the representative by the preceding resolution, was convened by the Nonparty, and thus, was made by the lawful convening authority.

2. However, we cannot agree with the judgment of the court below for the following reasons.

A. As to a resolution of the general meeting of shareholders, the Commercial Act provides that “when the contents of the resolution of the general meeting violate the Acts and subordinate statutes or the articles of incorporation, or when the contents of the resolution violate the provisions of the general meeting of shareholders” due to the grounds for cancellation of the resolution, “if the contents of the resolution of the general meeting violate the provisions of the Acts and subordinate statutes,” it may be contested as a lawsuit for cancellation of the resolution (Article 376 of the Commercial Act) with respect to the convocation procedure, method of the resolution, defects in the contents of the resolution, etc., by means of a lawsuit for invalidity of the resolution (Article 380 of the Commercial Act) and a lawsuit for confirmation of non-existence of the resolution (Article 380 of the Commercial Act). However, as to the resolution of the general meeting of a corporation or non-corporate group of shareholders under the Civil Act, such procedures are not separately provided for therein, it may be asserted that the resolution of the general meeting of shareholders is invalid through a lawsuit for nullification of invalidity of the contents of the resolution, or as a preliminary resolution in a lawsuit for other legal relations.

However, Article 42-2 of the Act on the Ownership and Management of Aggregate Buildings, amended by Act No. 1155, Dec. 18, 2012; enacted as of June 19, 2013, provides that "where the procedures for convening a general meeting or method of resolution violates Acts and subordinate statutes or regulations, or where the contents of resolution violate the Acts and subordinate statutes or regulations," and "where the sectional owner is entitled to file a lawsuit for cancelling a resolution within six months from the date on which the sectional owner becomes aware of the resolution of the general meeting, and within one year from the date of resolution," newly established Article 42-2 of the Act on the lawsuit for cancelling a resolution. This provision appears to be referring to the form and contents of Article 376(1) of the Commercial Act on the lawsuit for cancelling a general meeting of shareholders, unlike the grounds for cancelling the resolution of the general meeting of shareholders, and the Act on the Ownership and Management of Aggregate Buildings does not have any provision on the lawsuit for confirming invalidity or non-existence of the resolution.

If the sectional ownership relationship is established with respect to a building under the Aggregate Buildings Act, a management body is established with the aim of carrying out the business of managing the building and its site and its accessory facilities as members of all sectional owners (Article 23(1)); the management body shall exercise or perform its duties with the care of a good manager necessary for common interests with respect to the management and use of the building (Article 23-2); the affairs of the management body shall be performed by the resolution of the management body meeting except for the matters delegated to the manager by the Aggregate Buildings Act or the regulations (Article 31); and the regulations and the resolution of the management body meeting shall be effective against the special successor of the sectional owner; and the possessor shall have the same obligation with respect to the use of the building, its site or its accessory facilities according to the regulations or the resolution of the management body meeting (Article 42). The Aggregate Buildings Act stipulates in detail the timing, method, resolution of the management body meeting, resolution method, voting right and its effect, etc. taking into account that the resolution of the management body meeting may have a considerable influence

In full view of these circumstances, the introduction of a lawsuit for revocation of a resolution by the Aggregate Buildings Act does not distinguish the defect of the management body meeting's resolution procedure, method of resolution, and whether or not the defect is the defect of the contents of resolution. If the defect is minor, the validity of the resolution by the management body meeting can be settled as soon as possible through the lawsuit for revocation of the resolution, thereby stabilizing the legal relations among the sectional owners. However, if the defect is a serious defect in the process or contents of the resolution which is not attributable to the degree that it would be invalidated, the introduction of a lawsuit for revocation of the resolution by the management body meeting's resolution would be intended to ensure the rights of the sectional owners by seeking nullification of the resolution through a lawsuit for nullification confirmation under the general civil law

Therefore, in light of the purport and purpose of the Act on the Ownership and Management of Aggregate Buildings to reasonably regulate legal relations among sectional owners, i.e., “where a procedure for convening an assembly or a method of resolution violates Acts and subordinate statutes or regulations, or where the contents of resolution violate the Acts and subordinate statutes or regulations” or “where the contents of resolution violate the Acts and subordinate statutes or regulations,” it is reasonable to deem that such defect is a defect to the extent that it does not reach a serious defect that would be attributable to the invalidity of the resolution, and that the resolution that can be revoked due to such a ground for revocation is valid unless it is revoked by a lawsuit for revocation of resolution filed within the exclusion period stipulated in Article 42-2 of the Act on the Ownership and Management of Aggregate Buildings. On the other hand, the issue of whether the period of exclusion has lapsed is a matter of the court’s ex officio examination

Meanwhile, in a case where the management body meeting of the management body established under Article 23 of the Multi-Family Building Act accepts the previous resolution or re-satisfys the resolution, even if the original resolution was null and void, barring special circumstances, such as where the resolution of the management body meeting held again is deemed null and void due to a defect in the existing resolution of the management body meeting, the reason that is called a management body meeting convened by an unentitled person after the resolution of the management body meeting was adopted by the new management body meeting cannot be deemed as an independent reason for invalidation in principle. If this is deemed null and void, it would result in a confusion in legal relations and significantly impairing legal stability (see, e.g., Supreme Court Decision 201Da6920, Jan. 27, 2012).

B. Review of the reasoning of the lower judgment and the record reveals the following facts.

1) According to the Plaintiff’s bylaws, the president, a representative, shall attend a majority of sectional owners and elect them with the consent of a majority. At the ordinary meeting, only 27 members who fall short of the majority among 63 sectional owners, attended a meeting and passed a prior resolution to select the Nonparty as the representative of the Plaintiff.

2) As above, the Nonparty, who was elected by the preceding resolution, once again convened and opened a general meeting of the Plaintiff, adopted a resolution following the ratification of the preceding resolution with the consent of 28 members among the participants present at the meeting of 42 of the 63 sectional owners.

C. Examining these facts in light of the legal principles as seen earlier, it is reasonable to view that the prior resolution made by 27 persons less than a majority among 63 sectional owners attend and the Nonparty’s representative election is invalid due to a serious defect in the method of resolution, but there is no sufficient deliberation as to such circumstances. Furthermore, even if the prior resolution that elected the Nonparty as representative was invalid due to a defect, so long as the subsequent resolution was adopted at the general meeting convened by the Nonparty for ratification of the prior resolution, the subsequent resolution cannot be deemed null and void solely on the ground that such subsequent resolution was made at the general meeting convened by the non-party.

The lower court determined that the previous resolution was null and void without examining and determining whether Article 42-2 of the Aggregate Buildings Act applies to the previous resolution, whether the defect in the method of resolution is a serious defect, or whether it is merely a defect to the extent that it does not have a serious defect. Furthermore, the lower court determined that the subsequent resolution was null and void only on the ground that it was not a resolution by the general meeting held by a legitimate convening authority. In so determining, the lower court erred by misapprehending the legal doctrine on the defect and effect of the resolution, lawsuit for revocation of resolution, etc., and failing to exhaust all necessary deliberations, thereby adversely affecting the conclusion

3. Therefore, without examining the remaining grounds of appeal, the judgment of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Noh Tae-tae (Presiding Justice)