Valcorp Australia Pty Ltd v Angas Securities Ltd: Proportionate Liability and Negligent Valuation

The appeal of Valcorp Australia Pty Ltd (Valcorp) against a finding of contributory negligence was today dismissed by the Full Federal Court of Australia in Valcorp Australia Pty Ltd v Angas Securities Limited [2012] FCAFC 22.

This case is an appeal against the verdict of the primary judge in Angas Securities v Valcorp Australia [2011] FCA 190 where the negligent valuation of Valcorp resulted in 3 lenders, one of which was Angas Securities Limited (Angas), providing security for a loan in which the mortgagees later defaulted.

The primary judge held that the giving of the valuation contravened s 51 of the Trade Practices Act and was Misleading and Deceptive Conduct, as well as s 56 of the Fair Trading Act 1987 (SA). All 3 lenders were held 25% contributory negligent for failing to make proper enquiries about the borrowers’ ability to service the loan.

All the lenders were entitled to loss of opportunity damages in relation to the lost commercial opportunity, being the interest and fees they would have made had they been able to lend to other borrowers.

The Full Court ruled that even though the standard of the valuation and conduct of the valuer “fell below standard of reasonably competent valuer”, as the lenders did not carry out adequate inquiries as to the borrower’s abilities to repay the loan, they confirmed that the lenders were liable for contributory negligence.

The Full Court upheld the apportionment of the responsibility for loss between the valuer and each lender, as well as Valcorp, by its grounds of appeal and proposed orders, not inviting the Court to come to a different assessment of the value of the lost opportunity.

For more information or to read the text of the case, please click here.

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