Yi Yi Construction Co., Ltd.

Taipei High Administrative Court (2017)

Case:

Taipei High Administrative Court overruled administrative litigation filed by Yi Yi Construction over the FTC's decision

Keyword(s):

Presale home, advertising, floor plan

Reference:

Taipei High Administrative Court (2017) Su Tzu No. 54

Industry:

Real Estate Development Activities (6700)

Relevant Law(s):

Articles 21(1) of the Fair Trade Law

Summary:

1. On Mar. 9, 2016, the defendant (FTC), after an investigation, concluded that the plaintiff Yi Yi Construction Co., Ltd. had adopted a false and misleading representation with regard to the use and content of its product that gave rise to the result of affecting transaction decision in violation of Paragraph 1 of Article 21 of the Fair Trade Law, by marking the statutory parking spaces, balconies and terraces as part of the interior space, such as the living room, kitchen, bedroom and bathroom on the floor plans for A5, A10, B1, B3 and B6 units, as well as by indicating bedrooms, bathrooms, terraces and balconies could be built on the statutory vacant lot, in an advertisement posted on Taichung.housetube.tw for its "Yuan Shan Shui" presale home project. Therefore, the FTC imposed an administrative fine of NT$1.2 million via Disposition Kung Ch'u Tzu No. 105126 dated Nov. 17, 2016. The plaintiff found the sanction unacceptable and filed this administrative litigation.
2. On the floor plans in the advertisement described above, the plaintiff used dotted lines to mark the statutory parking spaces, balconies and terraces as part of the living room, kitchen, bedroom and bathroom; it also marked the statutory vacant lot with dotted lines to indicate bedrooms, bathrooms, terraces and balconies could be built thereon without mentioning at all its intention to act according to Article 39 of the Building Act to apply for an approval to change the floor plans. Later in its statement made on Apr. 29, 2016 and the statement record dated Jul. 7, 2016, the plaintiff again did not disclose its intention to apply for changes of floor plans according to Article 39 of the Building Act. In other words, the plaintiff's contestation that the dotted lines on the floor plans were part of a "schematic of legal changes that can be made in the future" could not be accepted. Even if the plaintiff had really filed an application for changes of its building use license, the competent authority would not have necessarily given approval on the application. Consumers could have been misled to believe the areas marked with dotted lines on the floor plans were legal and made purchases. That meant the advertisement had put consumers in a position with the "risk of facing fines for violating the Building Act." Apparently, that was not what consumers could foresee while they bought the homes. In other words, the advertisement had indeed involved use of "a representation or symbol to cause concerns about misunderstanding or erroneous decisions of the general or the relevant public" specified in Point 6 of the Fair Trade Commission Disposal Directions on Handling Cases Governed by Article 21 of the Fair Trade Law.
3. According to Article 42 of the Fair Trade Law, the competent authority may impose on an enterprise in violation of Article 21 an administrative penalty no less than NT$50,000 and no more than NT$25 million. The original sanction of NT$1.2 million in this case was determined according to the type of violation committed by the plaintiff (construction of structures inconsistent with the floor plans approved and false description of the legality of the floor plans in the advertisement), the business capital of the plaintiff and its sales in the three recent years, the fact that the housing project at issue included 14 units and the sale revenues reached approximately NT$134.88 million. The sanction was not excessively heavy or inconsistent with the principle of proportionality.
4. As described above, the original sanction was not against the law. The plaintiff's appeal for revocation of the original sanction was ungrounded and therefore overruled by the court.