Bao Tien Hao Housing Brokerage Ltd.

Case:

Supreme Administrative Court dismissed the appeal of administrative litigation by Bao Tien Hao Housing Brokerage Ltd. with regard to the Fair Trade Law

Key Words:

housing brokerage, information concealment, advantageous position

Reference:

Supreme Administrative Court Judgment (98) Pan-Tzu No. 1281

Industry:

Real Estate Agencies (6812)

Relevant Laws:

Article 24 of the Fair Trade Law

Summary:

1. The Appellee (Fair Trade Commission), based on the investigation initiated from a complaint by the public, determined that in December 2004 the Appellant (Bao Tien Hao Housing Brokerage Ltd.) failed to disclose to the seller-principal that a potential buyer, Hsin Wan Tang, was willing to purchase the land at a higher price and has paid NT$300,000 as the negotiation deposit. The Appellant's behavior of making the seller to sell the land at a lower price through the Appellant was deceptive and sufficient to affect the trading order. The Appellee determined that the Appellant violated Article 24 of the Fair Trade Law and therefore, in accordance with the forepart of Article 41 of the same law, ordered the Appellant to immediately cease the unlawful act starting from the next day after its receipt of the disposition decision and imposed an administration fine of NT$500,000 in its Disposition Kung Ch'u Tzu No. 095119 of July 28, 2006. The Appellant was dissatisfied and filed for an administrative appeal which was dismissed. It later filed for administrative litigation.

2. The Appellant entered into a Real Estate Agency Agreement with the complainant on November 29, 2004. The complainant entrusted the Appellant to market the complainant's parcels No. 481 and 482-1 for a sales price at NT$18.6 million and No. 482 for NT$11.3 million. Later on December 9 of the same year, the potential buyer, Hsin Wan Tang, intended to purchase the parcels No. 481 and 482-1 for NT$85,000 per ping (total around NT$24 million). Tang later signed a negotiation deposit slip with and delivered the negotiation deposit of NT$300,000 to the Appellant requesting the Appellant to negotiate the sales price with the complainant. The Appellant knew the prices offered by both parties to the sale and that Hsin Wan Tang offered NT$5.4 million more than the sales price provided by the complainant. However, the Appellant failed to comply with its obligations as a broker to truthfully deal and coordinate with both parties to the trade. To the contrary, the Appellant signed another Real Estate Agency Agreement with the complainant for a total sales price of NT$27.6 million for all three parcels, No. 481, 482, and 482-1. In between, the Appellant was in contact with two potential buyers, namely the original potential buyer, Hsin Wan Tang, and Kuan Wu, who was the nephew of the Appellant's representative. Had the complainant learned about the fact that Hsin Wan Tang was willing to purchase the parcels located at No. 481 and 482-1, Section OO, Ta-Chia Township, Taichung County for NT$24 million back on December 9, 2004, the complainant would definitely not have entered into a new contract with the Appellant on January 2, 2005 to sell all three parcels for as low as NT$27.6 million and drastically decrease his own profits by passing on Tang's offer of extra NT$5.4 million. With the new total sales price set forth in the second Real Estate Agency Agreement, the third parcel, No. 482, could be sold for only NT$3.6 million after deducting the offer of NT$24 million (the parcel was actually sold for NT$3,260,000, i.e. less than NT$30,000 per ping). The second Real Estate Agency Agreement provided a sales price that was NT$7.7 million lower than the original sales price for parcel No. 482 set forth in the original agreement signed by the complainant on November 29, 2004. The parcels No. 481 and 482-1 were sold for NT$85,000 per ping whereas No. 482 was sold for less than NT$30,000 per ping. The price difference was almost tripled for these adjacent parcels and against the seller's interest. The Appellant's statements that it did not conceal any trade information and that the seller consented to the deal were inconsistent with the general rule of thumb. Accordingly, it was determined in the original disposition decision that the Appellant used its advantageous market position in holding the information obtained through its business to deceive the complainant and conceal the information regarding the negotiation deposit receipt signed by the potential buyer and the payment of such negotiation deposit. Such behaviors were against the real estate brokerage's ethics that put emphasis on information transparency and truthfulness and therefore culpable from the perspective of commercial ethics. As a result, these activities constituted deceptive conducts sufficient to affect the trading order in violation of Article 24 of the Fair Trade Law. The original decision and disposition are hereby upheld and the Appellant's case dismissed.

Appendix:
Bao Tien Hao (in transliteration) Housing Brokerage Ltd.'s Uniform Invoice Number: 16682446

Summarized by Lai, Chia-Ching; supervised by Lee, Wen-Show