For the second time in a fortnight the Full Federal Court has
issued an important ruling concerning valuation negligence
In Propell National Valuers (WA) Pty Ltd v Australian
Executor Trustees Limited  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
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.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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