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2017 (Ju) 84

2017.12.18
2017 (Ju) 84
Minshu Vol. 71, No. 10
Judgment on a case where it was judged that the chairperson of the board of directors elected from among the directors themselves may be dismissed from the post of chairperson by agreement of a majority of the directors at a condominium association whose bylaws provide that: (i) the chairperson of the board of directors shall be a manager as referred to in the Act on Building Unit Ownership, etc.; (ii) the directors on the staff shall include the chairperson of the board of directors; and (iii) the appointment and dismissal of staff members shall require a resolution of the general meeting.
Case of a principal action seeking declaratory judgment of invalidity of the general meeting’s resolution and of a cross action seeking declaratory judgment of the status of a director of the association
Judgment of the First Petty bench, quashed and remanded
Fukuoka High Court, Judgment of October 4, 2016
At a condominium association whose bylaws provide that (i) the chairperson of the board of directors shall be a manager as referred to in the Act on Building Unit Ownership, etc., (ii) the directors on the staff shall include the chairperson of the board of directors, and (iii) the appointment and dismissal of staff members shall require a resolution of the general meeting, while providing that (iv) directors shall be elected at a general meeting from among the members of the association, and (v) the chairperson of the board of directors shall be elected from among the directors themselves, the chairperson of the board of directors, who was elected from among the directors themselves, may be dismissed from the post of chairperson by agreement of a majority of the directors based on the provisions of the bylaws that the chairperson of the board of directors shall be elected from among the directors themselves.
Article 3 and Article 25, paragraph (1) of the Act on Building Unit Ownership, etc.



Act on Building Unit Ownership, etc.

(Association of Unit Owners)

Article 3 All of the unit owners together may organize an association to manage the building, its grounds, and its ancillary facilities and, pursuant to the provisions of this Act, may hold meetings, establish bylaws, and assign a manager. The same shall apply when a common element that should clearly be provided for the common use of only some of the unit owners (hereinafter referred to as a "partial common element"), will be managed by such unit owners.

(Appointment and Dismissal)

Article 25 (1) Unit owners may, except as otherwise provided for in the bylaws, appoint or dismiss a manager by resolution at a meeting.
Of the judgment of prior instance, the part related to the appellee’s principal action is quashed.

For the part referred to in the preceding paragraph, this case is remanded to the Fukuoka High Court.
The second point of the reasons for the petition for acceptance of final appeal filed by the counsels for the appeal, NAKAJIMA Shigeki et al.



1. An outline of the facts and other circumstances confirmed by the court of prior instance is as follows:

(1) The appellant is the management association of a condominium called “Y” located in Kurume-shi, Fukuoka (hereinafter referred to as the “Condominium”) and is the association consisting of all unit owners of the Condominium as referred to in the first sentence of Article 3 of the Act on Building Unit Ownership, etc. (hereinafter referred to as the “Unit Ownership Act”).

The appellee is a unit owner of the Condominium.

(2) The Condominium’s management bylaws established by the appellant (hereinafter referred to as the “Bylaws”) contain the following provisions in summary:

a. As its staff, the management association shall have directors, including the chairperson and vice chairperson(s) of the board of directors, as well as an auditor(s) (Article 40, paragraph (1)). The directors and auditor(s) shall be elected at a general meeting from among the association members (paragraph (2) of the same article), and the chairperson and vice chairperson(s) of the board of directors shall be elected from among the directors themselves (paragraph (3) of the same article). The appointment and dismissal of staff members shall require a resolution of the general meeting (Article 53, item (xiii)).

b. The chairperson of the board of directors shall represent the management association and shall supervise its business (Article 43, paragraph (1)). The chairperson of the board of directors shall be a manager as referred to in the Unit Ownership Act (paragraph (2) of the same article).

c. The chairperson of the board of directors shall hold an ordinary general meeting once annually within three months after the commencement of a new fiscal year (Article 47, paragraph (3)). If he/she deems it necessary, the chairperson of the board of directors may convene an extraordinary general meeting at any time subject to a resolution of the board of directors (paragraph (4) of the same article). A general meeting shall be convened by issuing notice stating the date, time, place and purpose of the meeting to the association members at least two weeks prior to the scheduled date of the meeting (Article 48, paragraph (1)).

d. If an association member requests convocation of a general meeting by stating the purpose of the meeting and with the consent of association members corresponding to at least one-fifth of the total number of association members and to at least one-fifth of the total number of voting rights, the chairperson of the board of directors shall, within two weeks, issue notice of convocation of an extraordinary general meeting scheduled to be held on a date within four weeks after his/her receipt of such request (Article 49, paragraph (1)). If the chairperson of the board of directors fails to issue such notice as referred to in the said paragraph, the association member who made the request as referred to in the said paragraph may convene an extraordinary general meeting (paragraph (2) of the same article).

e. The directors shall constitute the board of directors and shall be responsible for the business of the management association in accordance with the regulations established by the board of directors (Article 45, paragraph (1)). The board of directors shall be convened by its chairperson (Article 57, paragraph (1)). The provisions of Article 48 shall apply mutatis mutandis to the procedure for convocation of a meeting of the board of directors (Article 57, paragraph (3)). The quorum for a meeting of the board of directors shall be one half of the directors, and resolutions of the board of directors shall be passed by a majority of the directors present (Article 58, paragraph (1)).

(3) At the appellant’s extraordinary general meeting held in January 2013, ten staff members, including the appellee, were elected. At the appellant’s board of directors’ meeting held in March of the same year, the appellee was elected as the chairperson of the board of directors from among the directors themselves.

(4) At the appellant’s ordinary general meeting held in August 2013, five new staff members were elected in addition to the ten staff members mentioned in (3) above.

At the appellant’s board of directors’ meeting held in September 2013, it was decided, in the presence of thirteen out of the fifteen staff members, that a meeting of the board of directors would be held on October 20 of the same year, whose topic would be determination of the posts of the staff members, including the new ones.

(5) However, on October 10, 2013, the appellee issued notice of convocation of an extraordinary general meeting in his capacity as the chairperson of the board of directors, without passing a resolution of the board of directors, in order to refer to the general meeting a proposal whose placement on the agenda of the general meeting had been opposed by other directors. Under these circumstances, at the appellant’s board of directors’ meeting held on October 20 of the same year, a resolution was passed, in the presence of eleven (i.e., ten directors and one auditor) out of the fourteen staff members excluding the appellee, to elect person A as the chairperson of the board of directors to replace the appellee and to change the appellee’s post from the chairperson of the board of directors to a director, by agreement of ten directors in accordance with Article 40, paragraph (3) of the Bylaws (hereinafter referred to as the “Board Resolution”).

(6) On May 18, 2014, the appellant’s association member requested, with the consent of such proportion of association members as required by Article 49, paragraph (1) of the Bylaws, that the appellee and A convene an extraordinary general meeting whose purpose was, among other things, to dismiss the appellee from the post of director pursuant to the same paragraph. Then on June 1 of the same year, the appellee issued, under the name of the chairperson of the board of directors, notice of convocation of an extraordinary general meeting which was stated to be held on June 13 of the same year. However, the association member who made the aforementioned request for convocation alleged that the aforementioned notice of convocation was invalid because it violated Article 48, paragraph (1) of the Bylaws, and the association member convened an extraordinary general meeting under Article 49, paragraph (2) of the Bylaws.

At the appellant’s extraordinary general meeting held on July 5, 2014 in response to the convocation issued by the aforementioned association member, a resolution to, among other things, dismiss the appellee from the post of director (hereinafter referred to as the “General Meeting Resolution”) was passed. At the appellant’s board of directors’ meeting held on the same date, person B was elected as the chairperson of the board of directors.

(7) At the appellant’s ordinary general meeting held in August 2014 in response B’s convocation, a resolution to elect staff members was passed. At the appellant’s board of directors’ meeting held in September of the same year, a resolution to elect person C as the chairperson of the board of directors was passed (hereinafter the aforementioned resolution of the general meeting and the aforementioned resolution of the board of directors are referred to as the “Other Resolutions”).

2. In the principal action of this case, the appellee seeks a declaratory judgment against the appellant that the Board Resolution, the General Meeting Resolution and the Other Resolutions are invalid. As the grounds for the alleged invalidity of the Board Resolution, the appellee alleges that the content of and the procedure for the resolution violated the Bylaws.

3. Based on the facts and other circumstances described above, the court of prior instance ruled as follows in summary, accepting the request for a declaratory judgment that the Board Resolution, the General Meeting Resolution and the Other Resolutions are invalid.

(1) While the Bylaws provide that the chairperson of the board of directors, who shall be a manager as referred to in the Unit Ownership Act (Article 43, paragraph (2)), shall be elected from among the directors themselves (Article 40, paragraph (3)), these are not provisions on dismissal of the chairperson of the board of directors. The Bylaws also provide that the chairperson of the board of directors shall be on the staff of the management association (paragraph (1) of the same article), and that the dismissal of staff members shall require a resolution of the general meeting (Article 53, item (xiii)). Based on these provisions and others, it should be understood that it is not permitted to dismiss the chairperson of the board of directors on the grounds of Article 40, paragraph (3) of the Bylaws. From this follows that the Board Resolution to change the appellee’s post from the chairperson of the board of directors to a director is invalid since it violates the Bylaws.

(2) As for the General Meeting Resolution, the requirements under Article 49, paragraph (2) of the Bylaws were not met, since the appellee, who is not, as described above, found to have been dismissed from the post of the chairperson of the board of directors by the Board Resolution, duly issued notice of convocation of an extraordinary general meeting in his capacity as the chairperson of the board of directors in response to a request for convocation of a general meeting made under Article 49, paragraph (1) of the Bylaws. Therefore, the General Meeting Resolution is invalid because the convocation procedure for the extraordinary general meeting at which the General Meeting Resolution was passed was defective. This makes the Other Resolutions also invalid, since the General Meeting Resolution’s validity is a prerequisite for the Other Resolutions’ validity.

4. However, the court of prior instance’s rulings described above are not acceptable, for the following reasons:

(1) a. The Unit Ownership Act provides that all unit owners may together organize an association to manage the building and other facilities and, pursuant to the provisions of the said act, may hold meetings, establish bylaws, and assign a manager (Article 3). The act also provides that unit owners may, except as otherwise provided for in the bylaws, appoint or dismiss a manager by a resolution at a meeting (Article 25, paragraph (1)). It is then understood that the Unit Ownership Act leaves the decision of whether or not a manager may be dismissed by a method other than a resolution at a meeting and, if yes, the decision on the method for such dismissal, to the bylaws which are autonomous rules established based on the intentions of unit owners.

b. In the meantime, the Bylaws provide that (i) the chairperson of the board of directors shall be a manager as referred to in the Unit Onership Act (Article 43, paragraph (2)), (ii) the directors on the staff shall include, among others, the chairperson of the board of directors (Article 40, paragraph (1)), and (iii) the appointment and dismissal of staff members shall require a resolution of the general meeting (Article 53, item (xiii)), while providing that (iv) directors shall be elected at a general meeting from among the members of the association (Article 40, paragraph (2)), and (v) the chairperson of the board of directors shall be elected from among the directors themselves (paragraph (3) of the same article). These provisions are understood as: positioning the post of chairperson of the board of directors as one of the posts to be taken by directors; and leaving, in principle, the decision on who to take the post of chairperson of the board of directors to the directors elected at a general meeting, who shall elect the chairperson from among themselves. It should then be understood that the intention of these provisions is to leave to the directors elected at a general meeting: dismissal, by agreement of a majority of the directors, of the chairperson of the board of directors who was elected by the directors from among themselves; and election of another director as the chairperson of the board of directors. This understanding should be considered consistent with the reasonable intent of the unit owners who established the Bylaws. The fact that the Bylaws require a resolution of the general meeting to dismiss staff members does not preclude this interpretation.

c. Therefore, it is appropriate to understand that at the appellant whose bylaws contain the provisions as described in b. above, the chairperson of the board of directors, who was elected from among the directors themselves, may be dismissed from the post of chairperson by agreement of a majority of the directors based on Article 40, paragraph (3) of the Bylaws.

(2) Let us apply the above arguments to this case. According to the facts and other circumstances described above, the Board Decision, which was passed at the appellant’s board of directors’ meeting held on October 20, 2013, dismissed the appellee, who had been elected as the chairperson of the board of directors by the directors from among themselves, from the post of the chairperson and changed his post to a director by agreement of ten directors present based on Article 40, paragraph (3) of the Bylaws. The Court cannot find that the content of this resolution violates the Bylaws.

5. For the reasons described above, the court of prior instance’s ruling described in 3 (1) above, which is inconsistent with the above arguments, contains illegality that obviously affects its judgment. In addition, the court of prior instance’s ruling described in 3 (2) above, which found that the Board Resolution is invalid and that the appellee’s post was not changed from the chairperson of the board of directors to a director, based on which finding the General Meeting Resolution was found invalid and the Other Resolutions based on the General Meeting Resolution were found invalid, also contains illegality that obviously affects the court of prior instance’s judgment. The relevant reason for the petition for acceptance of final appeal is well-grounded in that it is consistent with the above arguments, and the part of the judgment of prior instance which relates to the principal action should inevitably be quashed. For that part, the Court remands this case to the court of prior instance in order to have it further and fully hear the case as to whether or not the procedure for the Board Resolution was defective, among other things.

Accordingly, the Court unanimously decides as set forth in the main text.
Justice OTANI Naoto

Justice IKEGAMI Masayuki

Justice KOIKE Hiroshi

Justice KIZAWA Katsuyuki

Justice YAMAGUCHI Atsushi
(This translation is provisional and subject to revision.)