The Supreme Court rendered the 103-Tai-Shang-2680 Civil Decision of December 25, 2014 (hereinafter, the "Decision"), holding that the original project contractor had in fact withdrawn and the project site had been taken over by the owner who promised project payment to a subcontractor. Therefore, the parties can certainly be deemed to have agreed to enter into a new project contract. The subcontractor can certainly request the project payment at issue from the owner.
According to the facts underlying this Decision, the Appellee in this matter asserted that the Appellant and Feng Chuang Co., who is not a party to this lawsuit, had entered into a contract on the project at issue, and that the Appellee was a subcontractor of a subcontracted project. With respect to the appropriation of project payment, the Appellee was not willing to continue the construction in early 2008 when Feng Chuang Co. was in financial trouble. To ensure continued construction, the Appellant decided to make project payment to all subcontractors under Appellant's own supervision beginning with the 24th Phase and to have the Appellant provide work instructions, supervise, order work from and pay subcontractors, while Feng Chuang Co. would withdraw from the construction of the project at issue and only served as a nominal contractor. Therefore, the Appellee requested project payment from the Appellant.
According to the Decision, the so-called "supervised payment" in project practices is commonly seen when a contractor can hardly continue the construction due to financial difficulties. To ensure the contractor's solvency so that the subcontractors are willing to continue their subcontract, the owner makes project payment directly to the subcontractors when project payment is calculated and made. To ensure that subcontractors are willing to continue the construction because they can be compensated for their work, the agreement on supervised payment does not affect the separate project contract created between the owner and a subcontractor with respect to a portion of the project. Therefore, it was held in the Decision that Feng Chuang Co., the original contractor of the project at issue, had in fact pulled out and that the Appellant took over the project site in March 2008 and promised to make project payment to the Appellee. The Appellee also carried out the construction at the Appellant's instructions rather than under the guidance or supervision of Feng Chuang Co. Further, the Appellee conducted the water and electricity construction and construction works after October 2008 under the Appellant's instruction, which were beyond the construction scope that Feng Chuang Co. originally covered. Therefore, the two parties were deemed to have agreed to the creation of a new project contract, and the Appellee's request that the project payment at issue be made by the Appellant is well-grounded. Hence, the Appellant's appeal was rejected.