The Full Court of the Federal Court of Australia has confirmed
that (at least with respect to determining the liability of a
valuer who undertakes a valuation as at a certain date) it is
inappropriate for an expert retrospective valuer to take account of
sales (and one can assume any other data) subsequent to the
relevant valuation date.
As outlined on page 189 of the September 2011 edition of this
journal, this case arose from a loan transaction whereby a lender
lent slightly more than $1.22 million to a borrower secured by a
This loan was in reliance upon a valuation by the valuer, who
valued the property at $1.6 million. The borrower defaulted and was
unable to repay the mortgage debt, so the lenders sued the valuer.
One of the issues that fell for determination was how to resolve
divergent expert retrospective valuation opinions.
The lender's expert had considered and analysed evidence of
comparable sales that had occurred before the date of the
valuation. However, the valuer's expert had considered and
analysed these sales both before and after the date of the subject
At first instance (Australian Executor Trustees Limited v
Propell National Valuers (WA) Pty Ltd  FCA 522), the
court held that it was inappropriate for an expert to take into
account 'hindsight' information/evidence. As a result, the
court was unable to rely upon the valuer's expert. The court
therefore found that the subject valuation was negligent and
misleading and deceptive.
On appeal, the valuer argued that it was permissible, when
determining the value of a property at a specific earlier time, to
have regard to sales of properties comparable to the subject
property that were sold subsequent to the relevant valuation
Ultimately, this argument was not successful.
The court accepted that, in some circumstances, particularly
where the relevant issue for determination is the actual value of
the land at a particular date, it may be prudent to take into
account hindsight information/evidence. Circumstances where this
might be appropriate could include the valuation of property at a
relevant time for land tax purposes or for the assessment of estate
duty, a valuation for the purpose of rental, or a determination of
the value of the land at the time of compulsory resumption for the
purposes of assessing compensation payable.
However, where a claim relates to the conduct of a valuer at a
particular time (including where a focus is on the task undertaken
by the valuer and the valuation produced in light of the exercise
of the valuer's judgment at that particular time), including
conduct which is relevant to a claim for negligence or in respect
of misleading or deceptive conduct, later events are of no
The relevant question is whether, as at the valuation date, a
competent valuer could have described a specific value (or
thereabouts) to a specific property. Expert evidence in such
proceedings must only be relevant to the determination of that
question, to which hindsight can play no part.
Accordingly, the appeal was dismissed by the majority judges
(Stone and Collier JJ).
However, Gilmour J dissented, finding that subsequent comparable
sales might be relevant to establish loss or damage in a case, as
well as determining whether allegations of misleading and deceptive
conduct, or negligence, are made out. Gilmour J arrived at this
conclusion by placing significant importance on the way in which
the case was run.
In this case, the lender had argued that the market value of the
property was not $1.6 million as at the valuation date. That being
so, evidence of comparable sales both before and after the
valuation date ought to have been admissible as they were relevant
to proving market value as at the valuation date.
Although there was a 2:1 split between the judges, this case
reinforces the general rule that, when conducting an expert
retrospective valuation in respect of proceedings that have alleged
negligence and/or misleading and deceptive conduct against a valuer
who has provided a valuation as at a specific date, regard must not
be had to comparable sales that have occurred after the date of the
subject valuation. This decision therefore remains consistent with
other decisions, such as HTW Valuers (Central Qld) Pty Ltd v
Astonland Pty Ltd (2004) 217 CLR 640.
This publication is intended as a general overview and
discussion of the subjects dealt with. It is not intended to be,
and should not used as, a substitute for taking legal advice in any
specific situation. DLA Piper Australia will accept no
responsibility for any actions taken or not taken on the basis of
DLA Piper Australia is part of DLA Piper, a global law firm,
operating through various separate and distinct legal entities. For
further information, please refer to www.dlapiper.com
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