A lender sued a valuer for negligence. The court held that the valuation was outside the range which could properly have been arrived at by a competent valuer. The valuer failed to appear. When the borrower went into default, the lender obtained possession and could only obtain a price significantly less than the valuation. The lender’s expert witness said that the lack of detailed sales analysis, the statement of incorrect land areas of comparable sales, and the minimal description which was given of existing improvements, highlighted an improper approach which had led to the adoption of a value which was above actual market levels and did not reflect reasonable conduct on the part of an expert valuer.
The court held that the valuation was substantially outside the range which could properly have been arrived at by a competent valuer. The court noted that:
Merely because a valuation falls outside a range may not of itself be sufficient to establish negligence. … In the present case the valuation is so far removed from the true value of the property that I am satisfied that the defendants were negligent in preparing and providing it. In that regard, I have taken into account the expert evidence as to the various shortcomings in the methodology adopted in the preparation of the valuation. I am mindful of the fact that a valuation of land, even when carried out by a trained, competent and careful professional, is one which may not admit of a precise conclusion. Courts have adopted a figure in a range of 10-15% of the true figure as constituting an area or a range within which a valuation may not be negligent. Of course a valuation within that range can still be negligent in a given case. The more important observation in the present case is that even if one were to apply that range, the valuation was way beyond it.
The court found the valuer negligent.
The court also found the valuation misleading and deceptive. The court found that the lender would not have loaned the funds had the valuer not been negligent and gave judgment for the lender.
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