17 June 2021
The Supreme Court rendered the 109-Tai-Shang-909 Decision of December 17, 2020 (hereinafter, the “Decision”), holding that if only the favorable or unfavorable part of a witness’ testimony is taken as the basis for factual determination, it is against the logical rule, and it can hardly be concluded that the decision does not violate laws and regulations.
According to the facts underlying this Decision, the Appellant (Company X) asserted that after it completed the project at issue under a contract with the Appellee (Company Y), the Appellee refused to make the construction payment on the ground of defect. A, its Chief Financial Officer and not a party to this lawsuit, subsequently entered into an agreement with the Appellant on behalf of the Appellee (hereinafter, the “Agreement at Issue”), agreeing to make the remaining construction payment of NT$5.8 million. Therefore, the Appellant requested that the Appellee pay NT$5.8 million pursuant to the Agreement at Issue. The Appellee contended that there was no additional portion in the project at issue, and the Appellee only owed a construction payment of around NT$2.39 million. In addition, the Appellee never authorized A to sign the Agreement at issue, which was a document created in the course of the negotiation between the parties and was not valid since it had never been approved by B, the Appellee’s legal representative. Even if the Agreement at Issue were valid, the Appellant would have no right to claim payment from the Appellee since the Appellant had failed to finish the project and conduct the repair pursuant to the agreement.
According to the Decision, the testimony of a witness should be generally determined based on the entire contents of the statement from the beginning to the end in order to form an inner conviction. If only the favorable or unfavorable part of the testimony is taken as the basis for factual determination, the logical rule would be violated, and it can hardly be concluded that the decision so rendered does not violate laws or regulations.
Moreover, according to the Decision, Witness A testified that B had instructed A to make an appointment with C, the Appellant’s legal representative, to negotiate the construction payment for the project at issue. Before the negotiation, a meeting was conducted with B, who provided a range of amount to A. After successfully negotiating NT$5.8 million with C, A reported this to B by phone. It was only then that B agreed to sign the agreement. An employee would not do anything without the boss’s approval. The agreement was typed up by Assistant D. Witness D also testified that before the agreement was signed, there was a discussion meeting in B’s office and B gave a number and asked the finance people to negotiate. It should be the case that A reported first and signed the agreement after obtaining B’s approval. A typed up the agreement. If that is true, it is questionable whether the amount and payment time set forth in the agreement had not been approved by B? Without examining this in detail, the original trial court partially extracted from A’s and D’s testimonies, which suggested that it was communicated during the negotiation that B’s approval would be required, and elected to conclude that since B did not agree to the payment, the Agreement at Issue was not binding on the Appellee, and further made a determination unfavorable to the Appellant. This is certainly legally inappropriate. Therefore, the appeal arguments criticizing the original decision for erroneous application of laws and regulations and requesting its reversal are not groundless.
For further information, please contact:
Frank Sun, Lee Tsai & Partners
lawtec@leetsai.com
