Halisbwyn Pty Ltd t/as Mantach Whitmore Valuations v APF Properties Pty Ltd [2010] HCATrans 106 (23 April 2010)

Last Updated: 28 April 2010

[2010] HCATrans 106

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Hobart No H10 of 2009

B e t w e e n -

HALISBWYN PTY LTD ACN 17 064 825 341 T/AS MANTACH WHITMORE VALUATIONS

Applicant

and

APF PROPERTIES PTY LTD ACN 095 297 019

Respondent

Application for special leave to appeal

GUMMOW J
HAYNE J

TRANSCRIPT OF PROCEEDINGS

AT MELBOURNE ON FRIDAY, 23 APRIL 2010, AT 9.59 AM

Copyright in the High Court of Australia

MR P.J. RIORDAN, SC: If the Court pleases, I appear with my learned friend, MR C.G.K. MADDER, for the applicant. (instructed by DLA Phillips Fox)

MR M.E. O’FARRELL, SC: If the Court pleases, I appear with my learned friend, MS A.L. VALENTINE, for the respondent. (instructed by Ware & Partners)

GUMMOW J: Yes, Mr Riordan.

MR RIORDAN: If the Court pleases, the applications for leave to appeal against what we contend are two errors of the courts below that held that the valuer owed duties to a purchaser when he was not aware, was not told, was not aware, was deliberately withheld, that the purpose of the valuation was to enable the determination of the purchase price under proposed contracts of sale.

HAYNE J: Is the unstated premise for that branch of the argument that the value differs according to why you are asked?

MR RIORDAN: We say two things about that. One, we say that does not affect the duty. Two, it affects the preparedness to take on the responsibility, that fact, and, three, yes, it certainly affects the losses that might arise from it.

HAYNE J: So the premise is that a valuer values a property differently according to why he is asked to value it, is that right?

MR RIORDAN: No, I think I avoided that question. I think I said that that does not affect the determination. Your Honour will push me into my - - -

HAYNE J: No, I simply want to know what the premise for the argument is, Mr Riordan.

MR RIORDAN: Yes, that is right. I will deal with the second and then I will try to answer more directly. The real answer to your Honour’s question, we say that it is not relevant for the determination of duty. The second, we say, in those same circumstances it is contended, or the court held, or the court below in fact, held the valuer made the implied representation to the unknown purchaser and that representation was misleading and deceptive in contravention of section 52 of the Trade Practices Act. The fact that the valuer was never told or never knew that the purpose of his valuation was to determine the price is not in contention. That was plain on the evidence. We contend that that withholding of the purpose of the valuation is fatal to an argument therefore that the valuer owes a duty of care to the purchaser, plainly as well as the vendor as will be contended, in this case would not have been in issue because the vendor, or at least the owner, who the valuer believed he was acting for.

The Full Court held, as did the trial judge, that it was sufficient that the valuer knew that his valuation would be relied upon in a serious business matter. That finding was at application book 164. That was in reliance on what was said in the decision of this Court in Tepko adopting what, in particular, was said by Sir Garfield Barwick in MLC v Evatt. We say that is not in accordance with what the learned Chief Justice said in that case. We say it is not in accordance with the authorities on valuation and it is not in accordance with what we would contend is common sense. If I could come back to the question of what the authorities have been in this case.

We say that by way of analogy, if a barrister is briefed by a solicitor to provide an advice on quantum, for example, in a personal injury matter, provides the advice believing he is acting for the plaintiff for these purposes, that he communicates that to the solicitor unbeknownst to him, in fact, he is being briefed for the purpose of determining as between the plaintiff and the defendant what the quantum of the claim should be settled at, whether that is by way of an expert determination or otherwise, when it turns out that that is, in fact, what he has been briefed for, and that the defendant says that the advice was negligent, the assessment was negligent, we say he is entitled to respond to the claim by the defendant by saying, “I might have been negligent but I did not owe you a duty to the defendant. I did not assume responsibility for losses that you might suffer by reason of your reliance on my advice in these circumstances given that it was not communicated”.

We contend that this is precisely the position in this case and, really, it is what I relied, with respect, in answering your Honour Justice Hayne’s question. We say that the barrister could be asked – it could be said to the barrister, “But you know that in fact – does your advice depend on whether you are acting for the plaintiff or the defendant in the assessment?”, and the answer would come back in the first instance, “It does not affect the question of duty because I have never assumed there is”. But probably more specifically, although not necessarily, you would say, “Well, I accept, I certainly more readily accept instructions of the plaintiff for the purposes of giving advice than I might when acting for a defendant”. Of course, that is what underlies this case. In this case the valuer accepted information from the owner for whom he thought he was acting on the basis he was providing the valuation on the instructions of the value.

The other critical difference which I touched on in the valuation context, of course, the consequence of acting effectively as the determiner or determining a purchase price as opposed to acting for, for example, a financier, is significant. We say that the authorities have all made it clear with respect to valuers in particular and more generally that it is critical that the valuer does know the purpose of the valuation. In the sense that it has been valued by a financier, whether it can be relied upon by a purchaser and vice versa, we say that it has always been identified as critical; in the accounting context similarly. Your Honour Justice Gummow has dealt with Credit Alliance and the United States cases, Chief Justice Brennan dealt with it in Esanda and the accountant question in the Interchase case, Justice McPherson, all identified – in the Interchase case it was a case of a valuer who was acting to determine the value between two parties and it was critical in determining that he had a duty of care in so carrying out that valuation that he knew that that is the purpose for which he was carrying out that valuation.

In terms of Derring Lane, Kenny & Good and a number of other cases – I mentioned the United States and the matters that Justice Gummow dealt with in Esanda – but in England in Smith v Bush – this is referred to on our reply statement – it is touched on there that the line of authorities developed, that when a valuation has been given to a financier in limited circumstances of not very expensive domestic houses that might be okay for the purchaser to rely upon that, then there might be a duty owed but that has always been considered the high-water mark and it was always based on the fact of the practice in the United Kingdom of purchasers seeing and relying upon the valuations.

The second matter, your Honour, which we say has not previously been dealt with by this Court is this question of whether, as the trial judge held, it can be said that the expression of – the trial judge correctly held that the expression of a professional opinion can carry with it an implied representation that the opinion is honest and based on reasonable grounds; that much is well established. We say that what has not been considered, though, is to whom that representation is made. What are the limits of that representation? We say it cannot be unlimited. We seek to demonstrate that by an extreme example. I receive a recommendation from a stockbroker to buy some shares which I read in a professional context, take no notice of it and throw it in the rubbish bin, somebody picks it up from the rubbish bin, sees that it has been made by a reputable broker and decides to rely upon it, claiming no duty of care, some would say that the Trade Practices Act section 52 obviates the need for duty of care, therefore, the implied representation is sufficient to allow anybody to rely upon such a section as a – or a contravention of section 52.

GUMMOW J: Do you challenge the statement of principle by the Full Court at paragraph 108 on page 164 of the application book?

MR RIORDAN: Yes, we do, your Honour. We say that avoids the need – let me be clear about this, because that is what we say is the essential point about which we seek leave. They say all you need to know is that it is a matter of business or serious consequence. We say that is not enough. We rely upon the example of the barrister that I gave a moment ago. A barrister being briefed by the plaintiff would think there was a matter of serious consequence to give a proper assessment. However, we say it is not enough then when it turns out that his opinion is being relied upon by the other side. So that is the essential challenge and what we say this appeal would turn upon whether or not in the circumstances Chief Justice Brennan is correct in Esanda.

The line of authorities, some of which I will mention, that I say almost without exception that say it is not enough for a valuer to know that his valuation will be relied upon and for that to be foreseeable, rather, those who can rely upon it must be those who have been identified and the purpose of the valuation, at least broadly, has been identified, and when they are contradictory, as in purchaser, vendor, we say very different considerations apply.

So the second principle we say, your Honour, is in the same circumstances of the barrister who might be said that he does not owe a duty of care to the defendant in those circumstances who could it be said that nonetheless would be liable by reason of the implied representation under the Trade Practices Act or Fair Trading Act, we would say, although this has not been a matter of consideration by this Court or any other court as we can find, but we would say such implied representation would not extend to persons other than those persons within the professional contemplation of the barrister giving the advice.

So, although it is well established that section 52 does not require a duty of care to be established, we would contend that nonetheless the implied representation is not made to the world there are limits to it and the limits would be similar if not identical to those persons to whom the professional duty would be owed. In the circumstances, your Honour, our contention is that the Full Court by holding that the valuer was liable for a valuation for the plaintiff’s losses arising from the use of the valuation which was never contemplated, never communicated, is beyond the extent of liability as it is recognised in this country, the UK or the USA. If the Court pleases.

GUMMOW J: Thank you. We do not need to call on you, Mr O’Farrell.

We are not satisfied there are sufficient prospects of success on either of the proposed grounds of appeal appearing in the application book at pages 198 and 199 to warrant a grant of special leave. In particular, we do not see any error of principle in the reasons of the Full Court of the Federal Court of Australia. Special leave is refused with costs.

MR RIORDAN: If the Court pleases.

AT 10.13 AM THE MATTER WAS CONCLUDED