Valuers? Liability : the impact of torts reform in Queensland

Historically there has been a correlation between the economic cycles and litigation in the area of professional negligence relating to valuers. Negligence actions have principally been instigated by financiers for valuations prepared during more buoyant economic times but where there has been a subsequent loss due to a reduction in property value. More specifically during periods of economic downturn such as 1982 to 1983 and 1990 to 1998 there has been an increased focus by academic writers on professional negligence as it relates to property valuers. Based on historical trends it is anticipated that the end of an extended period of economic prosperity such as has been experienced in Australia, will once again be marked by an increase in litigation against valuers for professional negligence. However, the context of valuers liability has become increasingly complex as a result of statutory reforms introduced in response to the Review of the Law of Negligence Final Report 2002 (“the IPP Report”), in particular the introduction of Civil Liability Acts introducing proportionate liability provisions. This paper looks at valuers’ liability for professional negligence in the context of statutory reforms in Queensland and recent case law to determine the most significant impacts of recent statutory reform on property valuers.

Intent behind payments determines impact on assessment of damages

In Zheng v Cai (2009) 261 ALR 481 the High Court had to determine whether voluntary payments made to the appellant by a third party were to be taken into account when assessing a claim for damages for personal injury.

Assessment of damages for property damage

In Gagner Pty t/as Indochine Café v Canturi Corporation Pty Ltd (2009) 262 ALR 691, the assessment of damages awarded for the rectification work to the premises of the respondent was in issue. The appellant operated a restaurant above the respondent’s jewellery store in Sydney. When the kitchen of the restaurant flooded, water escaped causing damage to the jewellery store’s fit-out. The escape of the water was held to be due to the negligence of persons for whom the appellant was vicariously liable. The trial judge awarded damages, measured by the amount required to return the premises as close as was possible to the condition prior to the flood damage as well as an allowance for interruption to the business for 10 days. The 10 day allowance reflected the number of days the store would have been closed for if it was to be returned to its previous condition. The evidence was that the flooding has only affected approximately 10% of the floor area of the store. However, instead of having work carried out to bring the premises back to its condition as before the water damage, the respondent closed the business for 29 working days for a complete internal refurbishment – at a cost substantially more than simple rectification. On appeal it was argued that the trial judge had assessed the damages incorrectly as by undertaking a complete refurbishment had the effect that the respondent did not suffer any loss as a consequence of the negligence in relation to the fit-out. It was asserted that the claim for damages was in the circumstances a claim for betterment. It was also argued that the damages should not include a component for GST. Campbell JA gave reasons, with Macfarlan JA and Sackville AJA agreeing.

Uncetainty in claiming damages for defects in property

In Project Management Company No 2 Pty Ltd v Cushway Blackford & Associates Pty Ltd [2011] QCA 102 the appellant sought leave to join its parent company party (Project Management Company No 1) as a plaintiff to the proceedings and to amend its statement of claim. It was argued that the parent company had suffered the loss claimed in the proceedings, rather than the appellant. Rule 69(1)(b)(ii) of the Uniform Civil Procedure Rules 1999 (Qld) allows a court at any stage of the proceeding to order that ‘a person whose presence before the court would be desirable, just and convenient to enable the court to adjudicate effectually and completely on all matters in dispute connected with the proceeding’ be include as a party. To determine this issue, the Court of Appeal had to review the law relevant to the proceedings – a claim in negligence for pure economic loss, in particular, the principles espoused by the High Court in Bryan v Maloney(1995) 182 CLR 609 and Woolcock Street Investments Pty Ltd v CDG Pty Ltd (2004) 216 CLR 515.