Whether the representative of a non-corporate group is liable to assert and prove the other party's bad faith as to the validity of transactions and restrictions on the power of representation in violation of the articles of incorporation (=a non-corporate company)

Articles 59, 60, 68, and 275 of the Civil Act; Article 288 of the Civil Procedure Act

[Plaintiff-Appellant] Plaintiff 1 and 1 other (Law Firm Doz., Counsel for plaintiff-appellant)

Han Bank Co., Ltd. (Law Firm Shin & Yang, Attorney Yellow-chul et al., Counsel for defendant-appellant

Defendant’s representative council (Law Firm Taedong, Attorney Lee Lee-soo, Counsel for defendant-appellant)

Seoul High Court Decision 2005Na3641 Delivered on December 8, 2005

The appeal is dismissed. The costs of appeal are assessed against the defendant.

The grounds of appeal are examined (to the extent of supplement in case of supplement submitted after the expiration of the period).

1. As to the validity of the conclusion of the construction contract and the assignment of the contract price

A. According to the relevant provisions of the former Housing Act (amended by Act No. 7757 of Dec. 23, 2005) and the Enforcement Decree of the Housing Act, occupants shall autonomously manage multi-family housing or manage housing to a housing management operator, and occupants shall organize a council of occupants' representatives within one month from the date when a project undertaker receives a request (Article 43(2) and (3) of the former Housing Act). The council of occupants' representatives shall organize a council of occupants' representatives (Article 50(1) of the Enforcement Decree of the Housing Act), which shall be comprised of representatives elected in proportion to the number of households by Dong (the representative by Dong) (Article 50(1) of the Enforcement Decree of the Housing Act), the council of occupants' representatives shall make a resolution with the consent of a majority of the members (Article 51(1) of the Enforcement Decree of the Housing Act, the amended by Presidential Decree No. 19356 of Feb. 24, 2006 shall have the proviso to Article 51(1) of the Enforcement Decree of the Housing Act.

In addition, according to the management rules of the apartment in this case (hereinafter “management rules”), the council of occupants’ representatives shall be comprised of the representatives of one building (Articles 15(1) and 16(1) of the management rules), the council of occupants’ representatives shall be comprised of the representatives of one building (Articles 15(1) and 16(1) of the management rules), the determination or alteration of the budget and business plan of management expenses, the standards for usage fees of incidental facilities, the determination or alteration of the method of imposing fees therefor, and the determination of specific standards for the maintenance and operation of heating facilities in the complex shall require the consent of the majority of the representatives of each building (Article 18(1) and (2) of the management rules). The council of occupants’ representatives shall be held with attendance of

Considering the above provisions and Article 51 (1) of the Enforcement Decree of the Housing Act that the resolution of the council of occupants' representatives under Article 51 (1) of the Enforcement Decree of the Housing Act is directly related to the property interests of the occupants, even if the council of occupants' representatives is possible to be comprised of the persons currently elected, the matters provided for in Article 51 (1) of the Enforcement Decree of the Housing Act and Article 18 (1) of the Management Rules shall be determined only with the consent of a majority of the representatives of each building elected under Article 50 (1) of the Enforcement Decree of the Housing Act and Article 16 (1)

B. The court below held that the council of occupants' representatives, which is composed of the representatives of each building currently elected, can adopt a resolution on the instant construction contract with the non-party corporation, on the premise that the non-party corporation entered into the instant construction contract with the non-party corporation to install automatic temperature control systems for heating systems for each household and consented to the transfer of the claim for construction price, on the premise that it is the resolution of the council of occupants' representatives as stipulated in Article 18(1) of the Management Rules.

In order to reduce heating costs in apartment complexes, concluding a contract for installation works for automatic temperature control and to pay the construction cost to the bond transferee cannot be deemed to be the resolution of the management body meeting prescribed by the Act on the Ownership and Management of Aggregate Buildings, and it shall be deemed to be one of the resolution of the management body meeting prescribed by Article 18(1) of the above management rules. Therefore, the court below's decision is just and there is no error of law as to the resolution of the management body meeting of the council of occupants' representatives

However, as seen above, the matters stipulated in Article 18 (1) of the Management Rules can only be resolved with the consent of a majority of the representatives of each building only when the majority of the total number of representatives of each building is approved. Thus, the judgment of the court below that can be resolved with the consent of the majority of the members is erroneous. However, even in the case where the representative of a non-corporate association has conducted external transactions in violation of the articles of association, etc. regarding the restriction on the power of representation, if the other party to the transactions knew or could have known such restriction on the power of representation, if the other party to the transactions were valid, and if the other party to the transactions knew or could have known such restriction, the other party to the transactions must assert or prove such fact (see, e.g., Supreme Court Decision 2002Da64780, Jul. 22, 2003). Thus, the decision of the court below that the plaintiff who is the other party to the consent to the transfer of the transfer of the transfer of this case must be decided with the approval of the transfer of this case.

2. As to whether there is a false conspiracy, false representation, or expression of intent of deception

The defendant's assertion that the expression of consent to the assignment of claims of this case was made in collusion with the plaintiff, or that the plaintiff's expression of intent by deception is erroneous in the fact-finding that belongs to the exclusive jurisdiction of the fact-finding court, and it cannot be a legitimate ground of appeal, and it cannot be viewed that the judgment below violated the rules of evidence or logical and empirical rules and exceeded the limits of the free evaluation

3. Conclusion

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Shin Hyun-chul (Presiding Justice)