Damages for negligent valuation

Press, 26 April 1979, Page 7

Damages for negligent valuation

Damages of $13,204 are to be paid by Dalgety New) Zealand, Ltd. to Norman: Francis Barrett, a sign manufacturer, for the com-' pany's negligent valuation of j a 25ha property near the Sign of the Kiwi for mort-| gage purposes. Mr Justice Bain has ruled in a reserved; decision given in the Supreme Court. Evidence was given at the, ■ defended hearing of the] [claim early in March that! Mr Barrett advanced $12,000! [to Gerald O’Farrell for one: [year at 14 per cent on se-i ■ curity of a first mortgage; lover the 25ha block which; had been valued by employ-' :ees of Dalgety at $20,600. ■ • However, O’Farrell, who has been described as a land, developer, went bankrupt! and Mr Barrett called up the; •mortgage. He made exten-j Isive efforts to sell the pro-; iperty, but all he received! was a tentative offer from] • the Lands and Survey Department to purchase it (some time in the future for | a reserve at a price of! !$6310. [ Mr C. B. Atkinson apipeared for Mr Barrett, who [claimed $15,000 from Dalge[tys, and Mr A. J. Forbes for • •the defendant company (which denied liability. I[ In his judgment his •: Honour said that Mr Barrett •j claimed damages for losses ■[alleged to be attributable to (Dalgety’s negligence in its I professional capacity as a -•specialist in rural and urban Jland valuation. II The valuation of the land >[was carried out by Dalgetys I at the request of O'Farrell /who then advertised in a ‘■newspaper for money to be advanced on first mortgage

at 14 per cent a year. Mr i Barrett approached O’Farrell's solicitors and;’ said he was prepared to ad- s vance $12,000 which would: oe arranged through his so-’ licitor, MV A. K. Archer. it Dalgety’s valuation of;; 520.600 for the land overh which the mortgage was to! i be taken was forwarded tol< Mr Archer, and it was seen! to be adequate as evidence 1 of the worth of the security]offered. On the face of it the 1 $12,000 mortgage repre-i, sented 60 per cent of the assessed value. Only one instalment of i interest- was paid by O'Farrell who also defaulted; in the repayment of the; principal. O’Farrell was adjudicated bankrupt. Attempts: to sell the land through Dal-[ getys and later Wrightsonsfailed, after Mr Barrett had. brought the property at| mortgagee’s sa.e through the! Registrar of the Supreme! Court. His was the only bid' and he bought in at $lO,OOO. j The only interest shown] in the property was by the] Lands and Survey Depart-! ment which said it would be] willing to purchase it for $6310 when funds became available. Mr Barrett had been em-[ barrassed by his ownership'; of the land ,in more ways] than one. The property was' substantially infested with! noxious weeds. Fines for: failing to eradicate the weeds,] and work to eradicate them] as well as payment of rates! had cost him a considerable' amount. “It is anticipated that: O’Farrell's bankruptcy will: return nothing to Mr Bar-|

rett. and it appears that the [losses on his original in-, • vestment will be severe,”! said his Honour. : The issues in the action; [were whether Dalgetys owed! a duty of care to Mr Barrett ‘ [and if so. was there a derelic-: •tion from that duty amount-! ■ ing to negligence requiring' [damages. [ His Honour held that Mr Barrett and his solicitor • were entitled to rely on the valuation report of Dalgetys. [A duty of care was owed to them although the report had been compiled for! O'Farrell. Dalgety’s valuers had [ [failed to take into account a! : number of factors affecting ! the worth of the land. There! [was evidence that the erec-; I tion of a house on the lots I [as single entities was impos-j Isible because of town and l [country planning restrictions! • which prohibited building; [permits on this rural land [on other than economic agri-, [cultural units which none, of i these lots were. ! There were also building •I and improvement restrictions on the property im- '• posed by the Summit Road • Protection Act, 1963. which [prohibited the erection of ■! residences up to a certain /[distance from the road. ; [ Evidence was given by a ‘ valuer called by Mr Barrett •[that his assessment of the '‘worth of the property was ■ [56240 which, if accepted as i[being commensurate with a •■1974 assessment, would y.nake a $20,600 valuation at [that time grossly excessive. t[ He was of the opinion. 1! said his Honour, that com-' ■|petent and respected as Dal-

getys' valuers were, according to the evidence, they [were negligent in their gross 1 [over-estimation of the value of the property. They had ■ given insufficient attention to the restrictions of i residences both by ■ law and bv the to[pography because of rocky :outcrops and other features. “The legal restrictions were easily ascertainable by the sort of inquiry required of a competent valuer, but i they were overlooked in breach of their professional • duty of care. Mr Barrett is [thus entitled to damages •from Dalgetys to comipensate him for the loss he [sustained by relying on the ■defendant’s negligent valuation,” said his Honour.