A civil judgment concerning Ch'ang Fa Company's claim for damages from Fu Mao Company
Chinese Taipei
Case:
A civil judgment concerning Ch'ang Fa Company's claim for damages from Fu Mao Company
Key Words:
discriminatory treatment; call for bids
Reference:
1997 Supreme Court Civil Judgment (86) T'ai Shang Tzu No. 3557
Industry:
Building refurbishing industry (4800)
Relevant Laws:
Articles 19(ii), 31, and 32(1) of the Fair Trade Law, Article 184 of the Civil Code
Summary:
Ch'ang Fa Construction Limited Company (the appellant) claimed that Fu Mao International Limited Company (the appellee) had previously caused a third party, the Kaohsiung City Cultural Center Administrative Department (hereinafter "Kaohsiung CCAD"), to specify by name two brands of equipment to be supplied as a condition of an open call for bids on the Building Structure Improvements and Special Equipment Refurbishment Project (hereinafter "the Project at Issue") and to require that the winning bidder furnish within 10 days of the award a Certificate of Intent to Supply the Products (hereinafter "Certificate of Intent") signed and issued directly by the manufacturers themselves as a condition for signing the contract. Otherwise, the winning bidder would be disqualified from the bidding, its bid deposit would be confiscated, and it would further be suspended from bidding on any projects of the Kaohsiung City Government and agencies and schools under its jurisdiction for one (1) year.
The equipment specified by brand name was a mainframe controller and a lighting system by a British company Strand Lighting and a sound mixing console of Soundcraft Europa of Soundcraft, also a British company.
The bidding was participated by four companies, including the appellant and the appellee. The award went to the appellant, which bid the amount of NT$149.79 million.
The appellant claimed that it subsequently contacted the aforesaid manufacturers' sole agent in Chinese Taipei, namely the appellee, to arrange for purchase of the aforesaid equipment and to procure the Certificates of Intent.
The appellee refused to comply on the grounds that the appellant had been attempting to "rig" the bidding. Consequently, the appellant was disqualified by the Kaohsiung CCAD, its bid deposit was confiscated, and its bidding rights were suspended for one (1) year.
The appellant claimed the appellee had deliberately and unjustifiably subjected it to discriminatory treatment and deceptive and demonstrably unfair acts adversely affecting the trading order, and caused it more than NT$30 million in damages. It asked the court to order the appellee to pay NT$10 million in damages plus interest for delay pursuant to the provisions of Articles 31 and 32(1) of the Fair Trade Law (FTL) and Article 184 of the Civil Code. (The original court of jurisdiction had already judged against the appellant's request exceeding the aforesaid amount.)
In defense, the appellee argued that the appellant's overtures regarding purchase of the equipment at issue had been made in hopes of colluding on the bidding process. The appellee further argued that it was unaware of any genuine intent by the appellant to purchase equipment from it. In addition, it claimed that it was neither the manufacturer of the equipment at issue nor the general agent in Chinese Taipei, and was thus unable to furnish a manufacturer-signed Certificate of Intent, and so played no part in any damages suffered by the appellant.
The original judgment of the Hight Court held as follows:
The appellee did not contest the fact that the appellant had been disqualified from the bidding and suffered confiscation of its bid deposit by the Kaohsiung CCAD on the grounds of failure to furnish a manufacturer-signed Certificate of Intent as required by the terms of the bidding.
Although the Fair Trade Commission (FTC) found the Kaohsiung CCAD's requirement of manufacturer-signed Certificates of Intent for specified brand name products to be an act in violation of Article 19(ii) of the FTL prohibiting discriminatory treatment without justifiable cause, the FTC did not impose sanctions on the appellee. The FTC opinion therefore provides scant basis for concluding that the appellee caused the Kaohsiung CCAD to engage in said act.
In addition, the FTC did not confirm that the Kaohsiung CCAD had violated the FTL by specifying individual brand names. Thus, sale by the appellee of products of the specified brands would not be sufficient grounds to accuse the appellee of collusion with the Kaohsiung CCAD.
Moreover, it was recorded in the FTC disposition that the appellee is not the general agent of Soundcraft in Chinese Taipei. The evidence submitted by the appellant in this regard - Strand Lighting's Asian region distribution network - showed that the appellee is a Chinese Taipei distributor. It is not the general agent, nor is it the manufacturer, so naturally it would be unable to supply a manufacturer-signed Certificate of Intent.
According to a reply letter from the Kaohsiung CCAD and the CCAD's own internal documentation, the appellant, after winning the bidding, was not only unable to furnish the manufacturer-signed Certificates of Intent for the equipment at issue, but also unable to furnish similar Certificates of Intent from manufacturers for the provision of seats, slings, curtains, and customized articles required for refurbishment of the reflecting panel, and was therefore disqualified by the Kaohsiung CCAD. That is to say, even had the appellant obtained manufacturer-signed Certificates of Intent for the equipment at issue, it still would have undergone disqualification and confiscation of its bid deposit. The appellee thus clearly played no part in the confiscation of the appellant's bid deposit.
Furthermore, the appellant could produce no evidence beyond a photocopy of a faxed letter. The appellant's assertions that it had previously faxed purchase order of the equipment at issue to the appellee, etc., thus have little credibility. The fax merely listed equipment by name, without any other content concerning purchase arrangements. What is more, the appellant had never on any occasion sent personnel to contact the appellee. One Hsieh Hung-wen had contacted Kao Chih-wei on the appellant's behalf, but Kao Chih-wei is the manager of the appellee's design department and has no responsibility for business matters. Clearly, the appellant failed to fully express its intention to make purchases from the appellee. Even failure by the appellee to respond in writing could hardly be construed as malicious refusal to sell.
The appellant called a witness, Hsu Hui-teh, to prove it had purchased the equipment at issue from the appellee. However, Hsu's testimony, - that the appellant had telephoned him, but he had not gotten in contact with the appellee, etc. - provides scant support for the appellant’s claim.
No justification therefore exists for the appellant's claim for damages from the appellee pursuant to Articles 31 and 32(1) of the FTL. The evidence submitted by the appellant also fails to demonstrate that the appellee, either deliberately or negligently, unlawfully injured the rights of the appellant, so there likewise exists no justification for the appellant's claim for damages from the appellee pursuant to Article 184 of the Civil Code.
As far as the appellant's request for the forwarding of the relevant case files from the FTC, meeting minutes from the Kaohsiung CCAD, and record of inward remittance of the bid deposit from the Bank of Kaohsiung, those materials either were previously forwarded by the respective entities to the court of first instance or are irrelevant to the case, and thus need not be forwarded. The remaining arguments and evidence fall outside the scope of discussion as they have no bearing on the final judgment.
The judgment against the appellant by the court of first instance is therefore upheld by the Hight Court in regard to the aforesaid allegations.
Upon review, the opinion rendered in the original judgment of the Hight Court was found to be legally sound. In the appeal it was argued by the appellant, with reference to the ex officio admission of evidence and establishment of facts, that the part of the original judgment concerning the aforesaid allegations contravened the law. This argument is groundless and should be dismissed. The court costs of the appeal to the Supreme Court fall upon the appellant.
Summarized by Chen, Hwei-Ping
Appendix:
Ch'ang Fa Construction Limited Company’s Uniform Invoice
Number: 11337847
Fu Mao International Limited Company’s Uniform Invoice No.:
07505130