The court ruled that the plaintiff's practice of approving loan amounts before property valuation is imprudent, leading to self-inflicted losses and dismissing the claim against the defendants for negligence.

JUDGMENT

Akhtar Tahir J

Introduction

[1] The Plaintiff claim against the Defendants is for losses suffered in disbursing a housing loan to a customer in reliance of a valuation report prepared by the Defendants.

[2]The Plaintiff alleges that the valuation report contained a negligent misstatement in overvaluing the property leading to the Plaintiff to disburse the loan applied by the customer.

[3] The Plaintiff is financial institution whereas the 1st and 2nd Defendants practiced as valuers under the name of Gaya Nasir Sabaruddin & Associates and the 3rd Defendant was a valuer at the firm (all 3 Defendants are to be collectively referred to as the Defendants")

[4] The matter proceeded to a full trial where the Plaintiff called 5 witnesses and the Defendants called 3 witnesses. Both side relied also on the documents contained in the Bundle of Documents filed on the direction of the Court .

Brief Facts

[5] On an application by a customer Jemey bin Sudin ("customer") the Plaintiff had issued a letter of offer for a sum of RM4,353,639.50 dated 16 May 2013 for the purchase of a three storey luxury detached house at No. 46, Jalan Chempaka, Bluwater Estate, Mines Resort City ,Seri Kembangan, Selangor ("the property).

[6] In furtherance of the letter of offer, the Defendants' firm, a panel of Valuers of the Plaintiff since 1 July 2006, was instructed on 21 May 2013 to prepare a valuation report of the said property.

[7] On 23 July 2013 the Plaintiff was given a valuation report by the Defendants valuing the property at RM5.9 million. The basis used in valuing the property based on the report was comparable sale transactions at 3 different areas nearby the said property.

[8] Based on the valuation the Plaintiff had proceeded to disburse the amount of loan as stated in the Letter of Offer to the customer with the normal terms and conditions.

[9] The customer defaulted in the repayment of the said loan in breach of the loan agreement. The Plaintiff then took steps to auction the property. For this purpose on 23 July 2013 the Plaintiff appointed IPC Island Property Consultation Sdn Bhd ("IPC") to prepare a valuation report for the purpose of auction.

[10] On 26 November 2014 the Plaintiff received a valuation report dated 15 November 2014 submitted by IPC which valued the property at RM4.5 million.

[11] Noting the big difference in valuation between the Valuation firm and IPC the Plaintiff held an internal inquiry on 7 January 2015. From the outcome of this inquiry the Plaintiff concluded that the property was grossly overvalued by the Defendants and this amounted to misrepresentation and/ or negligence on the part of the Defendants.

[12] Further facts showed that the property was eventually auctioned off after 9 unsuccessful auction for an amount of RM2,391,480. The Plaintiff as a follow up had also appointed 2 other valuation firm i.e. PPC International Sdn Bhd and Mod Nor & Partners to value the property. Both had valued the Property at RM4.5 million and RM4.3 million respectively.

[13] Based on above background of facts the Plaintiff had filed this claim for the losses suffered by the Plaintiff as a result of the over valuation by the Defendants causing the Plaintiff to lose RM1,180,144.50 which the Plaintiff now demand the Defendants to pay them.

[14] The Defendants denied negligence and misstatement and contended that the valuation was done according to normal valuation practice as well as followed the standard guidelines for valuing the property.

Letter Of Offer/Letter Of Instruction

[15] In determining the claim against the Defendants the Court first considered the letter of offer issued by the Plaintiff to the customer on 16 May 2013. It can be noted that the letter of offer together with the conditions attached not only approved the loan to finance the property on the application of the customer, but also approved a specific amount of the loan.

[16] What is glaring about the letter of offer is that not only the loan was approved but also a speci