The purpose of Article 20-2(1)2 of the Private School Act, which provides for “when serious obstacles to operating the school due to a dispute between executives, etc.,” as one of the grounds for revocation of the approval of taking office of a school foundation, and the standard for determining whether it falls under such grounds / In the case of an executive officer under special circumstances, such as presenting a serious compromise and concession proposal to prevent the occurrence of a dispute between executives, and actively endeavoring for arbitration, whether approval of taking office constitutes grounds for revocation

Article 20-2(1)2 of the Private School Act provides that one of the cases where the competent authorities may revoke the approval of taking office of a school juristic person. The main purpose of the above provision is to “when a serious obstacle to the operation of a school is caused by a dispute between executives, etc. due to a dispute among executives, etc.” In the event that a dispute between executives of a school juristic person and a serious obstacle to the operation of a school arises due to a prolonged strike by the board of directors, such as a director or auditor of the school juristic person, which has caused a serious obstacle to the operation of the school, the competent authorities intervene in the dispute and resolve the dispute as soon as possible, thereby achieving the public interest purpose of the normalization of the operation of the school. Therefore, in the event that the dispute between executives of the school juristic person and the objective circumstance is recognized, the competent authorities may request the school juristic person concerned to correct the dispute and provide the school juristic person with an opportunity to normalize the operation of the school, and without complying with a request for correction, the competent authorities may revoke the approval of taking office of all executives involved in the dispute (see Article 20-2(2).

However, in the case of an officer under special circumstances, such as presenting a strong compromise and concession proposal to prevent such dispute, and actively endeavoring for arbitration, it cannot be deemed that the dispute itself was involved or related to the officer. Therefore, it is natural that it does not constitute grounds for revocation of approval of taking office.

Private School Act Article 20-2 (1) 2

Plaintiff 1 and 3 others (Law Firm Ham et al., Counsel for the plaintiff-appellant)

Seoul Special Metropolitan City Superintendent of Education (Attorney Jeon Young-soo et al., Counsel for the defendant-appellant)

Seoul High Court Decision 2017Nu39350 decided June 14, 2017

The judgment below is reversed and the case is remanded to Seoul High Court.

The grounds of appeal are examined.

1. As to the ground of appeal on the non-voting of the board of directors for a long time and on the disability in school operation (as to the ground of appeal No. 1-A, B, C and 7 of the original judgment)

A. Article 20-2(1)2 of the Private School Act provides that one of the cases where the competent authorities may revoke the approval of taking office of a school juristic person. The main purpose of the above provision is to achieve the public interest purpose of normalization of school operation by resolving disputes between the executives of the school juristic person and the occurrence of a serious obstacle to the operation of the school as soon as possible through the intervention of the competent authorities in cases where a dispute between the executives of the school juristic person and the occurrence of a serious obstacle to the operation of the school is recognized, the competent authorities may request the school juristic person to correct the dispute and resolve the dispute on their own and by giving an opportunity to normalize the operation of the school, and without complying with the request for correction, the competent authorities may revoke the approval of taking office of all the executives involved in the dispute at the stage of exercising discretionary authority (see Article 20-2(2) main sentence of the Private School Act). Therefore, whether a dispute between the executives, such as a cause for revocation, may only cause a serious obstacle to the exercise of discretionary authority.

However, in the case of an officer under special circumstances, such as presenting a strong compromise and concession proposal to prevent such dispute, and actively endeavoring for arbitration, it cannot be deemed that the dispute itself was involved or related to the officer. Therefore, it is natural that it does not constitute grounds for revocation of approval of taking office.

B. The court below held that: (a) of the instant disposition grounds: (b) holding the board of directors for a long time due to conflict among the directors (the grounds for provisional disposition of Article 1); (b) causing administrative trouble in academic affairs due to non-elections (the grounds for disposition No. 1-b); (c) delaying the board of directors' meeting on the accounting and settlement of accounts of school foundations (the grounds for disposition No. 1-c.); and (iv) filling vacancy officers (the grounds for disposition No. 7); (b) holding the board of directors' meeting on the premise that all the plaintiffs should be responsible for the failure to hold the board of directors' meeting; (c) while Nonparty 1, etc. in conflict with the plaintiffs refused to attend the board of directors' meeting or refusing to seal the minutes of the board of directors' meeting, most of the plaintiffs agreed to attend the board of directors to deliberate and resolve on the important matters of the school foundation; (d) holding the board of directors' meeting including Nonparty 2 who is an agent of the board of directors; and (e) at that time, there was no finalized whether Nonparty 1 is an executive officer.

C. However, it is difficult to accept the judgment of the court below for the following reasons.

1) According to the reasoning of the lower judgment and the evidence duly admitted, the following circumstances are revealed.

① The cause of the dispute between the Plaintiffs and Nonparty 1, etc. was derived from Nonparty 1, etc., despite of Nonparty 1, etc. having a problem of Nonparty 2’s executive status, the Plaintiffs sought to force Nonparty 2 to participate in the board of directors.

② Since then, the court made a final decision that Nonparty 2’s status as executive officer was not recognized, which eventually revealed that Nonparty 1, etc.’s filing of a problem was justifiable.

③ It is difficult to find out the circumstances that the Plaintiffs presented the advanced compromise and concession proposal to Nonparty 1, etc., or endeavored to communicate with arbitration in order to prevent or resolve disputes.

2) Examining these circumstances in light of the legal principles as seen earlier, it is difficult to view that Nonparty 1, etc.’s failure to attend the board of directors as an appropriate behavior, but it is reasonable to view that both the Plaintiffs and Nonparty 1, etc. caused a dispute between the Plaintiffs and the Plaintiffs, and all the Plaintiffs were related to such dispute, and it constitutes grounds for revoking approving taking office, which is “when a dispute between executives causes a serious obstacle to school operation”.

Therefore, the court below should have examined whether the defendant's approval of taking office is recognized as deviation or abuse of discretion in light of all the circumstances, such as the degree of contribution to the plaintiffs' dispute, based on the premise that the grounds for each disposition are recognized.

D. Nevertheless, the lower court determined that the remaining grounds for each disposition do not recognize the grounds for the cancellation of taking office against the Plaintiffs were unlawful on the sole basis of the remaining grounds for the revocation of taking office. In so determining, the lower court erred by misapprehending the legal doctrine on the cancellation of taking office under Article 20-2(1)2 of the Private School Act, thereby failing to exhaust all necessary deliberations, thereby adversely affecting the conclusion of the judgment. The grounds for appeal assigning this error are with merit.

2. As to the ground of appeal on the title of qualification for chief director (the ground of appeal No. 3 Disposition in the original judgment)

The lower court determined that, insofar as the Plaintiff 1 was in the position of acting as the chief executive officer who is entitled to exercise the president’s authority, even if he did an act under the name of the chief executive officer without indicating that he was acting as the chief executive officer, it cannot be deemed that he misrepresented

Examining the relevant legal principles, the lower court’s determination is justifiable, and contrary to what is alleged in the grounds of appeal, there were no errors by misapprehending the legal doctrine on misrepresentation of qualification.

3. Conclusion

Therefore, without further proceeding to decide on 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

Justices Lee Ki-taik (Presiding Justice)