The Taipei High Administrative Court ruled that the Kua Niu Tsu Real Estate Brokerage Co. violated the Fair Trade Law

Taiwan

Case:

The Taipei High Administrative Court ruled that the Kua Niu Tsu Real Estate Brokerage Co. violated the Fair Trade Law

Key Words:

real estate brokerage trade, mediation fee, written offer

Reference:

Taipei High Administrative Court Judgment (89) Su Tzu No. 1819

Industry:

Real Estate Brokerage Industry (6812)

Relevant Law:

Article 24 of the Fair Trade Law

Summary:

1. The plaintiff is engaged in the real estate brokerage trade. An employee of the plaintiff, Wu Meng-kui, represented the plaintiff in real estate brokerage trade with potential homebuyer and complainant Tzeng Mao-lung. On 6 December 1999, Mr. Wu requested that the complainant pay a mediation fee of NT$30,000. The complainant then gave Mr. Wu a personal check for NT$30,000. Mr. Wu, however, failed to inform the complainant that the adoption of Ministry of the Interior standardized written offer forms was required for real estate transactions and that the complainant was not required to pre-pay the mediation fee. The defendant, the Fair Trade Commission (FTC), had previously rendered a finding that the plaintiff's action was sufficiently deceptive to affect the trading order and therefore in violation of Article 24 of the Fair Trade Law. The FTC, pursuant to Article 41 of the Fair Trade Law, imposed a fine of NT$250,000 and ordered the plaintiff to cease the aforementioned unlawful practice within one day of receiving written notice of the FTC's findings. The plaintiff subsequently appealed the findings but the appeal was rejected. The plaintiff then filed an administrative appeal.

2. Disposition and Grounds by the Taipei High Administrative Court were as follows:

The contents of the complainant's affidavit clearly state that at the time of the signing of the homebuyer's offer, the plaintiff's employee, Wu Meng-kui, did not inform the complainant, Tzeng Mao-lung, that he could elect to use a Ministry of the Interior standardized written offer form that would not require pre-payment of the mediation fee. Also, during the course of the defendant's investigation, the witnesses Wu Meng-kui and Tzeng Chung-lung testified that the plaintiff company does not use a blank contract or written offer form format that resumes the gist of the Ministry of the Interior's standardized form. These statements are further evidence of the truth and validity of the complainant's statement. Although the plaintiff stated: "The employee in question, Wu Meng-kui, most certainly orally informed the complainant, Tzeng Mao-lung, of his option not to pre-pay the mediation fee as per the spirit of the Ministry of the Interior's written offer form." Wu Meng-kui testified that: "Although the company does not use a blank contract format containing the gist of the Ministry of the Interior version, hanging on the wall of the office is a 'comparison chart of the Ministry of the Interior offer form and (our) homebuyer's offer form.'" He added that employees always explain in detail the differences between the two forms to potential clients so that they may make their own independent choice (of which form to use). Further investigation revealed that the chart in question was, in fact, still hanging on the office wall of the plaintiff. The print on the chart, however, was exceedingly small and it seems unlikely that the plaintiff's staff would bring clients over to the wall so as to explain the differences between the two forms during business talks. In any case, the written offer form was signed in the office of the complainant, making it all the more unlikely that Wu Meng-kui had explained in detail all the differences between the Ministry of the Interior version and the plaintiff's version of the homebuyer's offer form. Furthermore, the legal system is extremely sophisticated. Even in written form, the relative merits and demerits of the two written offer forms would not necessarily be clearly explained. Thus, how could it be expected that the plaintiff's employee would be able to make such a detailed oral explanation to clients? In any case, relative to the merits and demerits, if the mediation fee is already received, the plaintiff is then in an advantageous position financially and with respect to any legal disputes that may arise in the future. In the absence of any written directive and based upon common sense and general experience, it is difficult to believe that the plaintiff's employee would be willing and able to clearly elucidate to the client the relative merits and demerits of the two different versions of the written offer form. The plaintiff's claim that although the company does not have a copy of the Ministry of the Interior's written offer form, its employees do orally explain the differences between the ministry version and that used by the company runs counter to common sense and is difficult to accept as fact.

With regard to this case, the complainant stated in his initial complaint that had he been aware that he could elect not to pre-pay the mediation fee he would not have signed the check. It can be judged from this initial statement that the plaintiff took advantage of its dominant position with regard to legal information (knowledge that the complainant could avoid pre-payment of the mediation fee by electing to use the Ministry of the Interior written offer form) and market information (a more in-depth understanding than the complainant of the prospective homebuyer's desire to conduct a transaction) yet failed to comply with the defendant's prior directive (the 383rd Commissioners' Meeting of 16 February 1999, which advised real estate brokers that they were required to inform potential clients of their right to elect to use the Ministry of the Interior's written offer form). The complainant was not informed and transacted business with a trading counterpart who had withheld critical facts concerning the transaction, making the provisions of Article 24 of the Fair Trade Law applicable in this case. In summation, the actions of the plaintiff were obviously "deceptive practices sufficient to affect the trading order," a clear violation of Article 24. The punitive action taken by the defendant pursuant to Article 41 of the Fair Trade Law was clearly appropriate in light of the evidence, and the administrative court ruled that the lower court's decision was not unreasonable. The plaintiff's petition for the rescinding of the lower court's decision and punishment was found to be without merit and was rejected.

Appendix: Kua Niu Tsu Real Estate Brokerage Co.'s Uniform Invoice Number: 96955854

Summarized by Lai, Chia-Ching;

Supervised by Wang, Rong-Ging