In brief: A disgruntled landlord or tenant can
report a valuer to the Australian Property Institute
(API) to take disciplinary action against the
valuer, if the valuer is believed to have engaged in professional
What you need to know:
Disciplinary action can be taken against a valuer who has
failed to carry out professional duties with competence.
A valuer needs to ensure that it sets out in detail the steps
in its reasoning in determining a valuation, to minimise any
prospect of any claim of a breach of professional duties being
In our July e-Alert, Valuers beware – invalid rental
valuation upheld by Supreme Court, we alerted you to the Supreme
Court of Victoria decision in which we acted for Ladro Greville
St Pty Ltd (Tenant), which sought to have a
valuation set aside. The valuation was set aside by VCAT and the
decision upheld in the Supreme Court of Victoria.
The Tenant (without our legal representation) issued a complaint
to the API against the valuer on grounds including a breach of the
API's Code of Professional Conduct.
The valuer had an opportunity to respond to the claim and
importantly advised the API that the valuer had advised both
parties that they could provide submissions from independent
valuers, which neither party chose to do. Further, the valuer
highlighted that the decision at VCAT (which was upheld by the
Supreme Court of Victoria), which set aside the valuation, did not
hear evidence from the valuer who was not given the opportunity to
participate in the VCAT hearing.
The API committee found that the valuer had engaged in a breach
of the Code of Conduct based essentially upon relevant parts of the
VCAT judgement and the Supreme Court of Victoria judgement, which
levelled criticism of the valuation. Essentially, the criticism was
that the valuer had failed to set out the steps in his reasoning to
arrive at the market rent determination. Further, in using a
trading profits methodology, in which the valuer had determined
that the business should achieve a 26% increase in gross annual
turnover, the valuer had failed to specify how a 26% increase in
gross annual turnover was possible and had not provided adequate
calculations to justify the valuer's reasoning.
The API committee imposed the following sanctions against the
the valuer to undertake 30 CPD points training within 12
the valuer refunds the fees paid by the Tenant;
the valuer pays to the API an amount of $3,000 towards the cost
of the investigation and the hearing; and
the report is to be published on the API's website.
If a valuation is set aside (which rarely happens), it seems
that the API will rely heavily upon the determination made by VCAT,
and if applicable, the Supreme Court of Victoria. In such
circumstances, it seems that a valuer will be sanctioned if the
valuation has been set aside and a complaint is made by the
landlord and/or tenant. In order to avoid any such complaint being
made, it is important that valuers set out the steps taken in
arriving at a market rent valuation and not to make any assumptions
in the valuation without adequately explaining the reasons. As
mentioned in our July e-Alert, we strongly recommend that valuers
insist upon the parties providing a survey of the premises, to
which both parties agree and can be relied upon by the valuer.
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.Madgwicks is a member
of Meritas, one of the world's largest law firm
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