Valuer not liable for loss caused by intervening act

Hay Property Consultants Pty Limited v Victorian Securities Corporation Limited [2010] VSCA 247

Introduction

In this case, the Victorian Court of Appeal decided an appeal from a County Court judgment where a lender was awarded damages for loss said to have been caused by a negligent over-valuation of properties by the defendant valuers. The case was brought at common law and for misleading conduct proscribed by the Trade Practices Act (Cth) ('TPA') and Fair Trading Act (Vic).

The valuers had valued properties at $800,000 and said that the properties were suitable security "up to a loan ratio of 65%" (that is, $520,000). On that basis, the lender lent $520,000 to borrowers secured by mortgages over the properties. After the borrowers defaulted, but before the lender took possession of the properties, the properties were deliberately damaged by an unknown person. The properties were then sold for $380,000 plus GST, resulting in a loss to the lender.