For the second time in a fortnight the Full Federal Court has issued an important ruling concerning valuation negligence claims.
In Propell National Valuers (WA) Pty Ltd v Australian Executor Trustees Limited [2012] FCAFC 31 (20 March 2012) the Full Court affirmed the position that in a proceeding against a valuer for negligence or breach of the Trade Practices Act (now the Competition and Consumer Act 2010), it is impermissible for evidence to be led by either litigant as to comparable sales post the date of the impugned valuation.
Collier J, who wrote the leading judgement of the majority summarised the position in these terms:
“Where a claim relates to the conduct of the valuer at a particular time, which conduct is relevant in respect of a claim for negligence or in respect of s 52 of the Trade Practices Act, later events are of no relevance. In this case the question was whether, as at 3 April 2007, a competent valuer could have ascribed a value of $1.6 million or thereabouts to 95 Curtin Avenue. Expert evidence in these proceedings was only relevant in respect of that question, and hindsight played no part.
None of the cases to which the appellants refer, commencing chronologically with Daandine, supports the proposition that in determining a claim pursuant to s 52 of the Trade Practices Act and for breach of duty in respect of a sales valuation, the Court ought have regard to evidence of subsequent comparable sales. In all of the cases upon which the appellants relied the relevant issue for determination was the actual value of the land at the particular date, allowing the benefit of hindsight, and not the competency of a valuation ascribing a value to that land. It was in that context that subsequent sales were relevant.”
The issue assumed importance in the appeal as the valuers sought to rely on sales post the date of the valuation to support their proposition that the valuation ascribed to the relevant property for mortgage security purposes was neither negligent or misleading. Nevertheless, there seems scope to expect that an application for leave to appeal to the High Court may be contemplated. Gilmour J, in a dissenting judgement, was of the view that given that the negligence of the valuers was pleaded to arise from the fact that their valuation did not fall within the acceptable “bracket” of 15% either side of market value and the market value was substantially less than that attributed, it was permissible to lead evidence of comparable sales post the date of the relevant valuation.
For the moment, however, the position at law is that in valuation negligence actions, evidence as to post- dated comparable sales is inadmissible. Whether the High Court might be persuaded to further consider the issue remains to be seen.
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