Civil judgment regarding Ch'iao Hsien Shih Company's claim for damage from Swiss Beauty Trading Co., Ltd.
Chinese Taipei
Case:
Civil judgment regarding Ch'iao Hsien Shih Company's claim for damage from Swiss Beauty Trading Co., Ltd.
Key Words:
defame business reputation, triple damage
Reference:
1998 Supreme Court Civil Judgment (87) T'ai Shang Tzu No. 1717
Industry:
Import trading (5601)
Relevant Laws:
Articles 22, 31, and 32 of the Fair Trade Law; Articles 184 and 185 of the Civil Code
Summary:
According to Ch'iao Hsien Shih Beauty Co., Ltd. (the appellant):
Lin Feng Ch'un (the appellee), using the name of Swiss Beauty Trading Co., Ltd. (SBT), continuously published false newspaper advertisements alleging that "a certain business in the trade is advertising and dumping (SBT's) old products...," "...For the past few months, a certain party has published false advertisement in the name of GLYCEL to purchase long overdue products and then sell them...," "...Its attempt to deceive the consumer and members of the beauty trade is obvious...," (and asking the consumer) "...not to be cheated...." Since the appellant was the only party selling the (aforementioned) inventory, it is obvious that the appellee purposely targeted the appellant in the aforesaid advertisements. As a consequence of the defaming advertisement, the appellant suffered a loss of NT$2,483,121 on its 1995 net sales in comparison with that for 1994. The appellant therefore filed a complaint claiming that SBT pay NT$7,449,363, i.e. triple damage based on torts and Articles 31 and 32 of Fair Trade Law (FTL) and that the appellee be held jointly liable for the damages as claimed, as well as interest.
The high court found in favor of the appellee regarding the appellant's claim for damage. The high court held that the facts regarding the appellee's advertisement as presented by the appellant were established by the notices published in Min Sheng Daily and a German professional beauty magazine. Therefore, the high court affirmed the district court's judgment that the appellee is in violation of the FTL and shall be sentenced to 40 days of detention and that SBT shall be fined NT$40,000 for which the appellee is jointly liable. With regard to the appellant's claim for damages, the appellant admitted that it promoted its sales at 60% off during 1995. Therefore, if the sales of NT$5,462,919 represented sales at 60% off, the full-price net sales would have reached as high as NT$13,657,297 which is higher than the net sales for 1994. Obviously the reduction of net sales was due to discounted sales rather than a reduction of sales volume resulting from defamation. In addition, the appellant's net sales for 1994 was NT$7,946,040 with a net loss of NT$5,349,798; its net sales for 1995 was NT$5,462,919 with a net loss reduced to NT$4,797,766. These figures were established by the (company's) tax returns. It is clear that the appellant's losses were reduced due to the decline in net sales. It has not suffered any loss due to the reduction of sales volume. Accordingly, the high court found to dismiss the appellant's claim in this portion as the appellant could not establish that its alleged loss was due to defamation.
The admission of facts by the court shall not be contrary to the principles of reason, experience and evidence. The high court acknowledged that for 1995 the appellant earned the net sales of NT$5,462,919 as a result of 60%-off discount sales during the whole year while the net sales for the previous year was NT$7,946,040. According to the appellant, the general distributership agreement it entered into with Po Lin Ta (H.K.) International Corporation (Po Lin Ta) duly expired after June 30, 1994 and Po Lin Tan entered a new general agency agreement with SBT effective from July 1, 1994. Because Po Lin Ta refused to buy back the sizable inventory then held by the appellant, the appellant had the inventory advertised and sold at discounted prices so as to minimize its losses. It appears that after the general distributorship agreement expired, the appellant voluntarily discounted the price of the inventory and put them on sale for the purpose of reducing its losses. If it is true that the appellant started the discount sale in 1994, then: what was the discount? What was the quantity of products sold at the discount? What was the quantity of sales for 1994 and 1995? Answers to these questions relate to the issue of whether the appellant suffered sales loss due to the alleged defamation. The judgment rendered by the high court, failing to look into this aspect, found that the reduction of the appellant's original net sales income for 1995 (i.e. absent the 60% discount) was actually higher than the net sales income for 1994 because the actual net sales income for 1995 was a result of the discount sale instead of the alleged defamation. Such findings are considered to lack foundation. In addition, finding the appellant's net sales income/net profit loss for 1994 and 1995 being NT$ 7,946,040/5,349,798 and NT$ 5,462,919/4,797,766 respectively, the high court jumped to the conclusion that although the net sales income was reduced in 1995, the net profit loss was correspondingly reduced as well for the same year. Then can we likewise conclude that because the net sales income: loss ratio for 1994 was lower than that for 1995, the appellant has not suffered any loss? Undoubtedly, failing to address this point, the high court without foundation concluded that the appellant's loss was reduced by the reduction of sales and that the appellant thus has not suffered loss due to the reduction of sales. Such findings are contrary to the principles of reason, experience and evidence. Furthermore, the high court, finding that (a) the appellant's net sales income for 1995 was reduced as a result of the discount sale "rather than the reduction of sales (due to the alleged defamation)," (b) the appellant's loss was reduced due to the reduction of net sales income so the appellant has not suffered losses "due to the reduction of sales", contradicts reason and is against the law.
In conclusion, the appeal is partially grounded. The portion of the high court judgment dismissing the appellant's other claims and the bearing of the court cost is revoked and remanded to the high court.
Summarized by Chen, Huei-Ping
Appendix:
Swiss Beauty Trading Co., Ltd.’s Uniform Invoice No.: 84767604