Alauddin Mohd Sheriff CJ (Malaya):

[1] The records before us disclose the following facts. One Lim Tian Huat ("Lim") intended to take a loan from the appellant to set up a marble factory. Lim however had no prior business record which made it difficult for him to secure a loan. Lim approached his friend Kong Siew Ken ("Kong") for assistance in securing the loan. Kong applied for a loan from the appellant in his own name and offered Lim's landed property as security. The property is described as HS(D) 9411, 9412 & 9414, PTD NO 4052, 4053 and 4055 in Mukim Paloh, District of Kluang, Johor ("the Property").

[2] Tan Liew Lin ("Tan") was a friend of both Kong and Lim. Kong instructed Tan to approach the respondent for a valuation of the Property.

[3] The respondent company is a property valuer. It's managing director, Ng Heng Cheong ("Ng") is a registered valuer. At the material time, the other registered valuer in the respondent's employ was one Long Tian Chek ("Long"). The respondent also employed an assistant at that time identified only as "Teo".

[4] Tan's initial contact was with Ng. The actual valuation was conducted by Long who was assisted by Teo. Teo was shown the Property by Tan and Lim, which appeared to be 3 units of shop-lots which were 70% completed. At that time the Property could not be identified by their titles. Relying on Tan and Lim's identification of the Property, Long issued a valuation report which was dated 21 January 1985 ("the Valuation Report").

[5] The appellant extended an offer for the loan to Kong on 17 October 1985. This offer was never accepted by Kong and was cancelled by the appellant. The appellant then issued a fresh offer to Kong on 2 April 1986. This was the offer which was accepted and led to the loan from the appellant to Kong.

[6] The appellant's own evidence is that it was unreasonable for the appellant to rely on the Valuation Report in issuing the second offer. Further, and this is also material to the appeal, the Valuation Report in any event contained an effective disclaimer of liability.

[7] The respondent valued the forced sale value of the Property at RM325,000. When Kong defaulted on the loan, the appellant commissioned a valuation from CH Williams, Talhar & Wong Sdn Bhd for the purpose of foreclosure proceedings ("the second Valuation"). This second valuation disclosed that the Property was in fact vacant land, with a forced sale value of only RM51,000.

[8] The appellant sued the respondent. The claim is founded on negligence. The appellant alleged that the respondent had negligently prepared the Valuation Report for the Property which was relied on by the appellant in granting the loan to Kong.

[9] The amount loaned to Kong to finance the purchase of the Property was RM100,000. Part of the consideration for the loan was a charge over the Property in favour of the appellant. The appellant alleged that it could not recover the loan amount and outstanding interest from Kong.

[10] In the Valuation Report, the Property was valued by the respondent at RM408,000 (forced sale at RM325,000) on the basis that on it were 3 units of double-storey shophouses which were 70% completed.

[11] Although the appellant did not complete foreclosure of the Property at the time of trial, it contended, based upon the second valuation dated 2 August 1990, that a foreclosure would only recoup RM51,000 as the Property was a vacant plot of land.

[12] On this basis, the appellant contended that the respondent was liable to the appellant for negligence.

[13] The learned High Court Judge found the respondent liable to the appellant for negligence. On the evidence submitted at the trial the amount outstanding from Kong to the appellant as at 20 September 1999 was RM445,585.10. This is the quantum of damages awarded to the appellant by the High Court as special damages.

[14] Dissatisfied with the above decision, the respondent appealed to the Court of Appeal. The Court of Appeal decided that there was no duty of care