The Taiwan High Court rendered the 107-Chung-Shang-682 Civil Decision of December 19, 2018 (hereinafter, the “Decision”), holding that the calculation of a base rent should be based not only on the declared land value of the base but also on the location of the base and should be compared with the rents for adjacent lands, and it is not necessarily required to set the base rent at ten percent annual interest on the total declared land value, which should be the highest standard.
According to the facts underlying this Decision, the Appellee asserted as follows. The land at issue he managed had been occupied without authorization by the superficies at issue on the land over which the Appellant had factual disposal right, and the Appellant had also benefitted from unjust enrichment equivalent to rents. Therefore, a complaint was filed in accordance with the first part of Paragraph 1 of Article 767 and Article 179 of the Civil Code to compel the Appellant to demolish the superficies at issue and to pay for the unjust enrichment equivalent to the rents for the past five years. The original trial court ruled partially in favor of the Appellee. Dissatisfied, the Appellant appealed.
According to this Decision, the rent for leasing a base to construct a building in cities and municipalities should not exceed 10% annual interest on the total declared value of the land in accordance with Article 105 of the Land Law, to which Article 97 shall apply mutis mutandis. In addition, the amount of a base rent should be based not only on the declared land value of the base but also on the location of the base, the degree of prosperity in terms of industry and commerce, the economic value of the base used by the lessee and a comparison with the rents for neighboring lands. It is not necessarily required to set the rent at the 10% annual interest on the total declared value of the land, which should be the highest standard. The Supreme Court’s Tai-Shang-3071 Decision of 1977 also serves as a good reference.
It was further pointed out in this Decision that the amount equivalent to the rent which the Appellant was requested by the Appellee to return could not substantiate the reasonable amount of rent for leasing the land at issue to construct a building. Therefore, it was appropriately proposed to reference the above provision of the Land Law to set the amount. With respect to the land at issue, its land category is construction and the land is located in the back of Section 5 of Chunghsiao East Road in the Hsinyi District of Taipei City near the Yungchun Station of the MRT Bannan Line, the Yungchun Market, and a public children’s home with neighboring buildings mostly three to four-story apartments, comprehensive amenities, convenient transportation and prosperous commercial activities. In addition, the land at issue occupied by the Appellant was used for residential purposes as evidenced with a land registration transcript, the transcript depicting a survey conducted by the original court and photographs. In this Decision, the court considered the above circumstance and held that the value which should be repaid by the Appellant and which should be equivalent to the rent should be appropriately calculated by a 5% annual interest on the total declared land value of the land at issue under Article 97 of the Land Law. Since the original decision was not found to be unlawful or erroneous, the Appellant’s appeal was rejected.