Kuo Yang Construction Co., Ltd.

Case:

Key Words:

Kuo Yang Construction Co., Ltd., construction project of Southern California, mezzanine design, building use

Reference:

Fair Trade Commission Decision of September 30, 2009 (the 934th Commissioners' Meeting), Disposition Kung Ch'u Tzu No. 137

Industry:

Real Estate Investment Industry (6811)

Relevant Laws:

Article 21(1) of the Fair Trade Law

Summary:

1. This case originated from a complaint saying that: At the time when selling the construction project of Southern California (i.e. Tahiti Ocean View District), Kuo Yang Construction Co., Ltd. (hereinafter referred to as Kuo Yang) provided the decoration design, flyers and model home, which was of the mezzanine design and furnished with home bedding sets. Kuo Yang also advertised in the Apple Daily that the construction in question could be used as family vacation homes. However, the building use was actually for the general services industry, general offices, general retail industry, etc, and not for residential use. Kuo Yang therefore violated Article 21(1) of the Fair Trade Law.

2. Upon investigation it was found that the decoration pictures of the "Interior Design 29 Yong Chuang Interior Design Work Plan" provided at the sales site of Southern California could sufficiently cause the general consumers into believing that the construction in question could be legally constructed with a mezzanine to increase the indoor use of space. However, the Public Works Bureau of Taipei County said that in the attachment to the usage license of Southern California, the marked summary of the building did not indicate any application for the mezzanine design. A person who constructs the mezzanine design without an application will violate Article 77(1) of the Building Act and be subject to a penalty, correctional measure, or filing supplementary application as set forth in Article 91(1)(ii) of the same law. Therefore, Kuo Yang violated Article 21(1) of the Fair Trade Law by employing false, untrue, and misleading representations in its "Interior Design 29 Yong Chuang Interior Design Work Plan" to promote its construction project of Southern California.

3. Additionally, a bedroom design in the mezzanine area was shown in the interior design work plan and model home of the Southern California. The flyer also expressed a concept of "living in Southern California with metro right downstairs" and contained descriptions of public facilities as included in the construction project, such as "Family Art Hall," "Swimming Pool and Gym," "Elite Business Center" (fully-equipped conference center when working at home…). The advertisement contents as a whole tried to express the superior facilities and amenities in terms of living at Southern California. Such contents were sufficient to lead the general consumers into believing that the building in question could be for the residential use. In accordance with Article 73(2) of the Building Act, a building shall be used pursuant to the approved usage classification; in case of alteration of usage class or other alteration to the originally approved usage, usage alteration license shall be applied. If a building is not used as approved, the Urban Planning Act is violated and the violator can be subjected to a penalty and be ordered to demolish, reconstruct, or cease using the building or restore the building to its original state pursuant to Article 79 of the same law. It was found that the usage license of the Southern California showed that the original base usage was registered to be for industrial use, mainly for "general services industry, general offices, and general retail industry." But the usage as indicated in the advertisement was on the contrary to what was being approved. It is difficult for the consumers to learn about the violation of relevant building laws from the contents of the advertisement. Purchasers could face the risk of being fined if they fail to use the building in accordance with the approved usage classification. There was a considerably large disparity between the content represented by the advertisement in this case and the perception of the general consuming public. Such disparity was beyond the point that could be accepted by the general public. As a result, Kuo Yang was found to be in violation of Article 21(1) of the Fair Trade Law, imposed with an administrative fine of NT$1,500,000, and ordered to cease the unlawful act.

Appendix:
Kuo Yang Construction Co., Ltd.'s Uniform Invoice Number: 11603817

Summarized by Wang, Horng-Shiuan; Supervised by Hsu, Hung-Jen