The Defendants, as estate valuers, breached their duty of care and professional standards, resulting in gross overvaluation and subsequent financial loss to the Plaintiff.

(After Full Trial)

Introduction

[1] This is a case when an estate valuer entrusted by a financial institution provided a valuation way above the market value and thereby causing tremendous losses to the financier.

[2] The Plaintiff is a financial institution incorporated in Malaysia and was approached by a company known as Becom Construction Sdn Bhd ("the Borrower") for a Term Loan and Overdraft facility to finance the subject property of this suit.

[3] The First Defendant ("D1") is a firm of estate valuers and, at the material time, was part of the Plaintiff's panel of estate valuers until 19 December 2016. D1 was appointed by the Plaintiff to conduct a valuation of the subject property as security for the Borrower's financing facility.

[4] The Second Defendant ("D2") was an employee and a former director of D1. He was employed as a valuation assistant in 1994, promoted to valuation executive in 2000, and became a registered valuer in 2009. He ceased to be under employment of D1 in 2016.

The Dispute

[5] Through a Letter of Appointment dated 11 July 2014 ("the LOA"), the Plaintiff appointed D1 to conduct a valuation of a double storey detached house held under PM2259, Lot 1090, Mukim of Tanjong Minyak, District of Melaka Tengah, State of Melaka ("Property").

(i). The valuation of the Property was a condition precedent to the Plaintiff's financing facility to the Borrower.

(ii). The financing facility of RM2.2 million was offered to the Borrower on 1 July 2014 as part of a refinancing exercise. The Property was charged as security to the Plaintiff.

[6] Around 22 July 2014, the Defendants prepared and furnished a valuation report ("the Defendant's Valuation Report") to the Plaintiff. The Property was valued at RM2.2 million as at 14 July 2014. Following the valuation, on 8 October 2014, the facility agreement and security documentation were executed.

[7] The financing facility was then disbursed to the Borrower on 24 November 2014. Not too long later, on 3 June 2015, the Plaintiff initiated a claim against the Borrower and the two guarantors in Johor Bahru High Court where a judgment-in-default was entered on 27 July 2015. The Plaintiff attempted to recover the defaulted amount through numerous failed auctions from 5 February 2016 to 4 December 2017 but was unsuccessful. The Property was eventually sold at a public auction held on 12 February 2018 for RM572,000.00.

[8] After deducting the nett proceeds of sale received from the auction of the Property, the amount due and owing by the Borrower to the Plaintiff was RM2,541,454.01 as at 31 March 2020.

[9] Around the end of 2018, the Plaintiff engaged C H Williams Talhar & Wong Sdn Bhd ("C H Williams") to conduct a fresh formal valuation of the Property to ascertain its market value as at 31 July 2014. On 25 February 2019, C H Williams provided its valuation report to the Plaintiff stating that the market value of the Property for financing purposes as at 31 July 2014 was only RM900,000.00.

[10] On 18 June 2020, two separate letters of demand were sent to D1 and D2 respectively through the Plaintiff's solicitors where it outlined the Plaintiff's demand for a payment of the sum of RM1.3 million, being the difference between the Defendants' valuation of RM2.2 million and the true market value of the Property as of July 2014 (RM900,000.00). This demand was not heeded by the Defendants.

[11] On 1 July 2020, the Plaintiff commenced this action to seek damages amounting to RM1.3 million from the Defendant