August 2017
Although issuing a land use zoning certificate has characteristics of exercising government power, still if a party cannot prove the specific causal relationships between the issuance of such certificate and damage, the right to claim damages hardly exists(Taiwan)
Angela Wu
The Tainan Branch of the Taiwan High Court rendered the 104-Shang-Guo-7 Civil Decision of December 10, 2015 (hereinafter, the "Decision"), holding that although issuing a land use zoning certificate has characteristics of exercising government power, still if a party cannot prove the specific causal relationships between the issuance of such certificate and damage, the right to claim damages hardly exists.
According to the facts underlying this Decision, the Appellant asserted as follows when filing the complaint: The land at issued was zoned as a land reserved for public infrastructure. However, Appellee Hsinying District Office erroneously recorded the land at issue as "residential district" in its urban planning land usage zoning certificate as issued. As a result in November 2010, the Appellant lent NT$2 million to the owner of the land at issue, who was not a party to the litigation, in November 2010 due to its reliance on such record and the maximum mortgage at issue was established. Subsequently, the Appellant stated it would participate in the distribution with respect to the incident of compulsory enforcement of the land at issue. However, since there was still no buyer even during the auction in which the price was reduced following the special auction procedure, the Appellant asserted that it sustained a loss of NT$2 million and filed this complaint in accordance with Article 2, Paragraph 2 and Article 9, Paragraph 1 of the National Compensation Law.
Under Article 2, Paragraph 2 of the National Compensation Law, the state shall be liable for damages if government employees willfully or negligently infringed the freedom or rights of a citizen in the discharge of their duties or the exercise of government authority. The "exercise of government authority" refers to the public law act of a government employee in exercising the ruling function of a state agency. According to the Decision, such public law act not only includes intervention in the people's freedom and rights through directives or compulsion but also may extend to a payment act conducted to fulfill a state mission. Therefore, the scope is no longer limited to traditional administrative intervention and also includes simple ruling acts in the course of service administration such as factual public law acts of providing information. Therefore, the Appellee's act of issuing a land use zoning certificate is a factual public law act to provide information and reflects the characteristics of an act to exercise government authority. In addition, the Appellee did not deny the obvious fault in the erroneous record in the land usage zoning certificate, either. Therefore, the civil servant affiliated with the Appellee did engage in an illegal and negligent act in the performance of his duty and the exercise of government authority.
However, it was pointed out in the Decision that the right to claim national compensation requires the occurrence of damage and the fact of responsibilities and certain causal relationships between the two. According to the Decision, common trading practices show that the Appellant should have considered many reasons when assessing if the loan was to be provided and should not have just relied on a land use zoning certificate in order to make a decision. In addition, there were also many reasons for the fact that there was no buyer to purchase the land at issue such as the overall economic condition or the prevalent wait-and-see attitude in the trading market, and the attractiveness to buyers was not solely affected by the zoning information about the land at issue. Moreover, the Appellant's mortgage at issue was not removed because of the unsuccessful auction, and the claim still existed. Not only the Appellant could still satisfy the claim based on other assets of the owner of the land who was not a party to the litigation, but also this did not rule out the possibility to auction the land at issue again in the future. Therefore, it was difficult to establish the causal relationships between the issuance of the land use certificate by the civil servant affiliated with the Appellee and the Appellant's lending to the owner of the land who was not a party to the litigation. Therefore, the original trial court lawfully rendered a decision against the Appellant, and the appeal was rejected.
The Tainan Branch of the Taiwan High Court rendered the 104-Shang-Guo-7 Civil Decision of December 10, 2015 (hereinafter, the "Decision"), holding that although issuing a land use zoning certificate has characteristics of exercising government power, still if a party cannot prove the specific causal relationships between the issuance of such certificate and damage, the right to claim damages hardly exists.
According to the facts underlying this Decision, the Appellant asserted as follows when filing the complaint: The land at issued was zoned as a land reserved for public infrastructure. However, Appellee Hsinying District Office erroneously recorded the land at issue as "residential district" in its urban planning land usage zoning certificate as issued. As a result in November 2010, the Appellant lent NT$2 million to the owner of the land at issue, who was not a party to the litigation, in November 2010 due to its reliance on such record and the maximum mortgage at issue was established. Subsequently, the Appellant stated it would participate in the distribution with respect to the incident of compulsory enforcement of the land at issue. However, since there was still no buyer even during the auction in which the price was reduced following the special auction procedure, the Appellant asserted that it sustained a loss of NT$2 million and filed this complaint in accordance with Article 2, Paragraph 2 and Article 9, Paragraph 1 of the National Compensation Law.
Under Article 2, Paragraph 2 of the National Compensation Law, the state shall be liable for damages if government employees willfully or negligently infringed the freedom or rights of a citizen in the discharge of their duties or the exercise of government authority. The "exercise of government authority" refers to the public law act of a government employee in exercising the ruling function of a state agency. According to the Decision, such public law act not only includes intervention in the people's freedom and rights through directives or compulsion but also may extend to a payment act conducted to fulfill a state mission. Therefore, the scope is no longer limited to traditional administrative intervention and also includes simple ruling acts in the course of service administration such as factual public law acts of providing information. Therefore, the Appellee's act of issuing a land use zoning certificate is a factual public law act to provide information and reflects the characteristics of an act to exercise government authority. In addition, the Appellee did not deny the obvious fault in the erroneous record in the land usage zoning certificate, either. Therefore, the civil servant affiliated with the Appellee did engage in an illegal and negligent act in the performance of his duty and the exercise of government authority.
However, it was pointed out in the Decision that the right to claim national compensation requires the occurrence of damage and the fact of responsibilities and certain causal relationships between the two. According to the Decision, common trading practices show that the Appellant should have considered many reasons when assessing if the loan was to be provided and should not have just relied on a land use zoning certificate in order to make a decision. In addition, there were also many reasons for the fact that there was no buyer to purchase the land at issue such as the overall economic condition or the prevalent wait-and-see attitude in the trading market, and the attractiveness to buyers was not solely affected by the zoning information about the land at issue. Moreover, the Appellant's mortgage at issue was not removed because of the unsuccessful auction, and the claim still existed. Not only the Appellant could still satisfy the claim based on other assets of the owner of the land who was not a party to the litigation, but also this did not rule out the possibility to auction the land at issue again in the future. Therefore, it was difficult to establish the causal relationships between the issuance of the land use certificate by the civil servant affiliated with the Appellee and the Appellant's lending to the owner of the land who was not a party to the litigation. Therefore, the original trial court lawfully rendered a decision against the Appellant, and the appeal was rejected.
