[1] Whether the status of a provisional director remains effective until a provisional director is dismissed, where a defect exists in the appointment of a provisional director by the competent administrative agency under the former Social Welfare Services Act but such defect is not serious and clear (affirmative)

[2] In a case where the competent administrative agency, while appointing a temporary director of a social welfare foundation, stated the term of office as “not later than the appointment of a permanent director,” whether the status of a temporary director is lost due to the automatic expiration of the term of the temporary director’s term of office (negative), and in such a case, the time when the status of the temporary director is lost (=the time when the temporary director’s dismissal is taken by the competent administrative agency)

[3] In a case where an administrative agency did not explicitly express the expression of intent to be necessarily accompanied by an administrative disposition, but it conforms to the abstract intent of the administrative agency and the other party can be seen as including the said expression of intention explicitly in the administrative disposition (affirmative)

[4] Whether the previous provisional director dismissal disposition shall be deemed to be included in the administrative agency’s acceptance of a report on the appointment of a regular director of a social welfare foundation (affirmative in principle)

[1] The former Social Welfare Services Act (amended by Act No. 1097, Aug. 4, 201; hereinafter “former Social Welfare Services Act”) only provides for the grounds and procedures for appointment of temporary directors (Article 20(2) and does not provide for the scope of duties, term of office, dismissal procedures, etc. However, as the competent administrative agency has the authority to appoint temporary directors, it shall be deemed that temporary directors may be dismissed at any time if it is deemed that the grounds for appointment of temporary directors are eliminated or that it is inappropriate to allow the pertinent temporary directors to continue to perform their duties.

The appointment of a provisional director by the competent administrative agency under the former Social Welfare Services Act constitutes an administrative disposition. Therefore, even if there is a defect in the appointment of a provisional director, such defect shall not be deemed null and void as long as it is so serious and clear, and the status of a provisional director shall continue to exist until a temporary director is dismissed.

[2] According to Article 20(2) of the former Social Welfare Services Act (amended by Act No. 10997, Aug. 4, 2011), a temporary director of a social welfare foundation is an institution that is appointed to fill a vacancy in the event that the normal operation of the foundation is difficult due to the vacancy of directors, so in principle, he/she shall hold office only until a regular director is appointed. However, in order to clarify the temporary director’s term of office, the competent administrative agency may determine the term of office as one year or two years, for example, when appointing temporary directors. However, in appointing temporary directors, stating the term of office “before a new director is appointed” as “before a new director is appointed” is a so-called “legal officer” which states, as a matter of course, the matter derived from the interpretation of the relevant law, and cannot be deemed as an “the original meaning attached according to the intention of the administrative agency. After the appointment of a new director, the effect of the temporary director’s term of office automatically terminates and the effect of the temporary director’s status becomes lost after the appointment.

[3] Article 24(1) of the Administrative Procedures Act provides that, when an administrative agency takes a disposition, it shall be done in writing in a case where there is a special provision in other Acts and subordinate statutes, except in a case where it is necessary to process promptly or where a matter is insignificant. This is to ensure clarity of the content of the disposition and to prevent dispute over the existence of the disposition and to protect the rights and interests of the other party to the disposition. As such, in a case where an administrative agency takes a disposition in writing, in principle, in a case where the administrative agency conducts the disposition. However, in a case where the language of the written disposition alone is unclear, the content of the disposition may be interpreted differently from the language of the written disposition, taking into account various circumstances, such as the details and purpose of the disposition and the attitude of the other party after the disposition. In particular, even if an administrative agency did not explicitly state clearly the intention that it must be accompanied as a matter of course in the course of rendering an

[4] According to Article 18(5) of the former Social Welfare Services Act (amended by Act No. 10997, Aug. 4, 201) and Article 10 of the former Enforcement Rule of the Social Welfare Services Act (amended by Ordinance of the Ministry of Health and Welfare No. 147, Aug. 3, 2012), the competent administrative agency shall, upon receiving a report on appointment of a regular director from a social welfare foundation, examine whether the pertinent executive was appointed through a lawful resolution by the board of directors based on the minutes of the board of directors, resume, non-existence of a special relationship, etc., submitted by the relevant social welfare foundation, and take measures to accept the appointment of a regular director. Ad hoc director is a principle of holding office until a regular director is appointed to fill the vacancy of the director. Thus, the appointment of a regular director and the dismissal of the previous temporary director should be carried out simultaneously. Therefore, barring any special circumstance where a new appointed director and the previous temporary director temporarily exist, acceptance of a report on appointment of a regular director by the competent administrative agency should be deemed dismissed for the previous temporary director.

[1] Article 20 (2) and (3) of the former Social Welfare Services Act (Amended by Act No. 10997, Aug. 4, 2011; see Article 22-3 (1) and (4) of the current Act); Article 1 of the Administrative Litigation Act / [2] Article 20 (2) and (3) of the former Social Welfare Services Act (Amended by Act No. 10997, Aug. 4, 201; see Article 22-3 (1) and (4) of the current Act); Article 1 of the Administrative Litigation Act / [3] Article 24 (1) of the Administrative Procedures Act / [4] Article 18 (5) (6) of the former Social Welfare Services Act (Amended by Act No. 10997, Aug. 4, 201); Article 18 (1) of the former Enforcement Rule of the Social Welfare Services Act (Amended by Act No. 10997, Aug. 4, 2011)

[1] Supreme Court Decision 90Nu5313 Decided May 28, 1991 (Gong1991, 1784), Supreme Court Decision 2012Da40332 Decided June 13, 2013 (Gong2013Ha, 1195) / [2] Supreme Court Decision 92Nu1728 Decided March 8, 1994 (Gong194Sang, 1195) / [3] Supreme Court Decision 2009Du18035 Decided February 11, 2010 (Gong2010Sang, 57564 decided June 15, 2018)

Plaintiff 1 and one other (Law Firm LLC, Attorneys Lee In-bok et al., Counsel for the plaintiff-appellant)

Social Welfare Foundation Catus Korea (Attorney Il-il et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2017Na2005431 decided August 23, 2017

All appeals are dismissed. The costs of appeal are assessed against the defendant.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Whether the status of the previous temporary director is extinguished due to a report on the appointment and dismissal of the regular directors by the competent administrative agency on acceptance (ground of appeal No. 1)

A. The key issue is whether the status and authority of the previous temporary director is extinguished finally in the situation where the head of Gangnam-gu, on February 18, 2009, the head of Gangnam-gu did not make a report on the appointment of and acceptance for regular directors against the defendant and did not explicitly take a measure to dismiss the previous temporary directors.

B. (1) The former Social Welfare Services Act (amended by Act No. 1097, Aug. 4, 2011; hereinafter “former Social Welfare Services Act”) provides for the supplementation of executives and employees of a social welfare foundation as follows: A social welfare foundation shall have at least five directors including the representative director and at least two auditors (Article 18(1)); where a social welfare foundation appoints or dismisses executives, it shall report the appointment or dismissal to the Minister of Health and Welfare without delay as prescribed by Ordinance of the Ministry of Health and Welfare (Article 18(5)) (Article 18(5)). If a vacancy occurs in the office of directors or auditors, it shall be filled within two months (Article 20(1)); where a social welfare foundation fails to fill the vacancy within the said period, it shall appoint temporary directors upon the request of interested parties or ex officio (Article 20(2)).

The former Enforcement Rule of the Social Welfare Services Act (amended by Ordinance of the Ministry of Health and Welfare No. 147, Aug. 3, 2012; hereinafter “former Enforcement Rule of the Social Welfare Services Act”) provides that when a social welfare foundation intends to report the appointment and dismissal of executive officers, it shall submit to the competent authority a written report on the dismissal of executive officers under [attached Form 10] accompanied by a copy of the meeting minutes of the board of directors where the appointment or dismissal of the relevant executive officer is resolved, a written acceptance of appointment or dismissal of executive officers, a resume, and a relationship between executive officers with each other (Article 10).

(2) As such, the former Social Welfare Services Act only determines the grounds for and procedures for appointment of temporary directors (Article 20(2) and (3) and does not stipulate the scope of duties, term of office, dismissal procedures, etc. However, as the competent administrative agency has the authority to appoint temporary directors, it should be deemed that temporary directors may be dismissed at any time when determining that the grounds for appointment of temporary directors are eliminated or that it is inappropriate to allow the pertinent temporary directors to continue to perform their duties.

An act of selection and appointment of a provisional director by a competent administrative agency under the former Social Welfare Services Act constitutes an administrative disposition. Therefore, even if a defect exists in the appointment of a provisional director, it shall not be deemed null and void as a matter of course unless the defect is serious and clear (see, e.g., Supreme Court Decision 2012Da40332, Jun. 13, 2013). The status of a provisional director remains valid until a temporary director is dismissed (see Supreme Court Decision 90Nu5313, May 28, 191).

(3) According to Article 20(2) of the former Social Welfare Services Act, the temporary directors of a social welfare foundation hold office only until regular directors are appointed, in principle, inasmuch as the organization is selected and appointed to fill the vacancy caused by the vacancy of directors. However, in order to clarify the temporary directors’ term of office, the competent administrative agency may determine the term of office as one year or two years, for example. However, when appointing temporary directors, setting the term “before regular directors are appointed” as a "legal officer” is a so-called "legal officer" which states, as a matter of course, matters derived from the interpretation of the relevant law, and cannot be deemed as an "administrative disposition assistant officer" with the original meaning attached according to the intention of the administrative agency (see Supreme Court Decision 92Nu1728, Mar. 8, 1994). Only on the ground that the temporary directors were appointed after the end of the term of office, the effect of which the temporary directors lose their status after the expiration of the term of office of the temporary directors becomes void, and only the appointment of the competent administrative agency is dismissed.

(4) Article 24(1) of the Administrative Procedures Act provides that, when an administrative agency takes a disposition, it shall be done in writing, except as otherwise expressly provided for in other Acts and subordinate statutes or in a case where it is necessary to process the administrative agency promptly, and in principle, to protect the rights and interests of the other party to the disposition by ensuring the clarity of the content of the disposition and preventing disputes over the existence of the disposition. Thus, in cases where an administrative agency takes a disposition in writing, in principle, whether the administrative agency has made the disposition must be confirmed in accordance with the language and text of the disposition. However, where the language and text of the disposition alone is unclear, the content of the disposition may be interpreted differently from the language and text of the disposition (see Supreme Court Decision 2009Du18035, Feb. 11, 2010). In particular, even if an administrative agency did not explicitly state the intention that the administrative agency must necessarily be accompanied as a matter of course, if it conforms to the abstract intent of the administrative agency and the other party can also be known, it can be seen as including the above declaration of intention.

(5) According to Article 18(5) of the former Social Welfare Services Act, Article 10 of the former Enforcement Rule of the Social Welfare Services Act, etc., the competent administrative agency, upon receiving a report on appointment of a regular director from a social welfare foundation, shall examine whether the relevant executive was appointed through a lawful resolution of board of directors, based on the minutes, resumes, non-existence of a special relationship, etc. submitted by the relevant social welfare foundation, and shall take measures to repair the report after examining whether the relevant executive was in a special relationship with the contributor. Since temporary directors, in principle, hold office only until a regular director is appointed to fill the vacancy of directors, the appointment of a regular director and the dismissal of the former temporary directors shall be conducted simultaneously. Therefore, barring any special circumstance where a new regular director and the former temporary director temporarily exist, the competent administrative agency’s disposition to accept the report on appointment of a regular director of a social welfare foundation shall be deemed to include a declaration of intention to dismiss the previous temporary director on the ground that

C. According to the reasoning of the lower judgment, the following circumstances are revealed.

(1) On August 23, 199, the Defendant is a social welfare foundation established for the purpose of welfare projects for the elderly at home. The Defendant’s directors around June 2006, consisting of eight persons including Nonparty 1 and the Plaintiffs, who are directors. Of these, the Defendant dismissed the Plaintiffs and appointed five new directors. Accordingly, the Plaintiffs filed an application for provisional disposition of suspending the performance of duties against the five new directors, and the Defendant rendered a provisional disposition of citing the application.

(2) On June 29, 2007, the head of Gangseo-gu Seoul Special Metropolitan City (hereinafter “the head of Gangseo-gu”) who is an administrative agency having jurisdiction over the defendant, appointed five provisional directors on the ground that the performance of duties by five of the defendant directors was suspended on June 29, 2007, by setting the order of priority of the first, second, third, third, third, fourth, fourth, fifth and fifth, fifth, fifth and fifth, and the provisional directors are appointed until a regular director is appointed after the term of office of the provisional directors. However, if the main decision of the provisional disposition case becomes final and conclusive, the provisional directors equivalent to the number of the directors to be returned from the junior officer are retired.

(3) The decision confirming that each resolution by the board of directors who appointed five new directors in the principal case of the above provisional disposition decision is null and void was rendered on July 19, 2007, and became final and conclusive around that time, the Plaintiffs recovered their status as directors.

On the other hand, Nonparty 7 died on November 15, 2006, and Nonparty 8 resigned on December 15, 2006. Thus, the above judgment became final and conclusive, and only Nonparty 1 and the plaintiffs became final and conclusive.

(4) On December 29, 2008 and January 29, 2009, the Defendant attended the meeting of Nonparty 1 and the temporary directors Nonparty 2, Nonparty 3, and Nonparty 4; Plaintiff 2 passed a resolution on the reappointment of directors; Plaintiff 1 passed a resolution on the reappointment of directors; Plaintiff 2, Nonparty 2, Nonparty 3, and Nonparty 4, who are temporary directors, were appointed as regular directors; Nonparty 9, Nonparty 10, and Nonparty 11 as directors; and Nonparty 1 as representative directors.

On February 13, 2009, the Defendant reported to the head of Gangnambuk-gu, the appointment and dismissal of executive officers that consist of Nonparty 1, Nonparty 2, Nonparty 2, Nonparty 3, Nonparty 4, Nonparty 9, Nonparty 10, and Nonparty 118. The head of Gangnam-gu notified the Defendant on February 18, 2009 that he/she would accept the above report, and entrusted the registration of retirement of five temporary directors to the competent registry office on February 20, 2009.

(5) The Plaintiffs filed a lawsuit to nullify the appointment of a director against the Defendant on December 29, 2008 and January 29, 2009, and all of the above resolution of the board of directors was declared invalid due to the defect in the convocation procedure and confirmed on March 15, 2012. Accordingly, on November 26, 2012, the registration of the appointment of a director against Nonparty 1, Nonparty 2, Nonparty 2, Nonparty 3, Nonparty 9, Nonparty 10, and Nonparty 11 was cancelled, and the registration of the restoration of the appointment of a provisional director was completed against Nonparty 2, Nonparty 3, Nonparty 5, and Nonparty 6 (excluding Nonparty 4 before the judgment became final and conclusive).

(6) On July 17, 2012, the Defendant passed a resolution to appoint Nonparty 9, Nonparty 10, and Nonparty 12 as a director at the board of directors present at the meeting of Nonparty 1, Nonparty 2, and Nonparty 3 (hereinafter “the first board of directors resolution”). On March 22, 2016, the Defendant passed a resolution to appoint Nonparty 1 as a representative director, Nonparty 9, Nonparty 10, Nonparty 12, and Nonparty 14 as a director at the meeting of the board of directors present at the meeting of the board of directors (hereinafter “the second board of directors resolution”).

D. Examining these circumstances in light of the aforementioned legal doctrine, the following conclusion is derived.

(1) On December 29, 2008 and January 29, 2009, the Defendant: (a) appointed eight directors on the board of directors, who held on December 29 and January 29, 2009, submitted the minutes of each board of directors’ meeting, appointment and dismissal report, non-existence of a special relationship, and resume to the head of Gangwon-do; and (b) on February 13, 2009, the head of Gangnam-do reported the appointment and dismissal of officers, and determined that the appointment and dismissal of a regular director was resolved; (c) requested the competent registry office to accept a report on appointment and dismissal of a provisional director on February 18, 2009; and (d)

On June 29, 2007, the head of Kangbuk-gu decided the term of office of temporary directors on the appointment of 5 temporary directors as “before the appointment of permanent directors is made.” While the Defendant reported the appointment on February 13, 2009, it included Nonparty 2, Nonparty 3, and Nonparty 4 who were temporary directors, it is difficult to propose that he/she concurrently holds the position of temporary directors and the status of regular directors.

(2) Comprehensively taking account of the aforementioned circumstances, a report on the appointment of a regular director by the head of Gangnam-gu to the Defendant on February 18, 2009 and the repair disposition shall be deemed to include a declaration of intent to dismiss the temporary director appointed on June 29, 2007 (replacement disposition). Accordingly, the authority of the temporary directors including Nonparty 2 and Nonparty 3 shall be deemed to have been extinguished definitely.

Therefore, insofar as Nonparty 2 and Nonparty 3 attend a temporary director and appoint Nonparty 9, Nonparty 10, and Nonparty 12 as a director does not have the effect of the Defendant’s first resolution by the board of directors, and the first resolution by the board of directors is null and void, so long as the first resolution by the board of directors is null and void, the second resolution by the board of directors held by Nonparty 9, Nonparty 10, and Nonparty 12

E. The lower court, on the premise that the status of a provisional director automatically terminates even without a separate dismissal disposition if the grounds for the appointment of a provisional director cease to exist, on February 18, 2009, determined that the status and authority of a provisional director became final and conclusive, and accordingly, the first and second resolution by the board of directors was null and void.

The judgment of the court below was erroneous in the misapprehension of the legal principles on the temporary dismissal disposition of a social welfare foundation, but the conclusion that the North Korean head of Gangnam-gu, on February 18, 2009, issued a report on the appointment of a regular director to the defendant and accepted him/her on February 18, 2009 that the status and authority of a temporary director has extinguished

2. Where a resolution by the board of directors appointing regular directors is invalidated, whether the previous provisional directors’ authority is retroactively restored (ground of appeal Nos. 2 and 3)

A. The gist of this part of the grounds of appeal is as follows. When the board of directors who appointed a regular director becomes null and void through a court decision, the previous provisional director’s authority extinguished due to the appointment of a regular director is retroactively restored. The current Seoul Special Metropolitan City Mayor, the current competent administrative agency, did not accept the Plaintiffs’ request for appointment of a new provisional director for the same reason. On the sole ground that the Seoul Special Metropolitan City Mayor, which was the head of Gangnam-gu, which was the competent administrative agency at the time of 2009, determined that the previous provisional director’s authority was extinguished finally and conclusively, the lower court erred by misapprehending the legal doctrine on the retroactive effect of invalidation, or by focusing on the intent of the competent administrative agency at the time of 200

B. However, as seen above, inasmuch as the head of Gangwon-do deemed that the appointment report of a regular director to the Defendant on February 18, 2009 and the dismissal disposition on the appointed temporary director on June 29, 2007 was included in the repair disposition, this part of the ground of appeal on the premise that there was no valid provisional director dismissal disposition, is without merit, without further review.

3. Conclusion

The Defendant’s appeal is dismissed in entirety as it is without merit, 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.

Justices Lee Dong-won (Presiding Justice)