OCBC Bank (Malaysia) Berhad v 1. ) Wong Yee Leck 2. ) Abdul Rahim Abdul Rahman 3. ) Rahim & Co. Chartered Surveyors Sdn. Bhd. 4. ) Loo Kung Hoe 5. ) RAHIM & CO (JOHOR) SDN. BHD

Case Significance

A bank's professional-negligence claim against a property valuer for overvaluation, turning on the Malaysian Valuation Standards requirement to disclose all registered transactions on title, including an auction price.

This High Court decision concerns a professional-negligence claim brought by a bank against a firm of property valuers, alleging that a negligent overvaluation of a property caused the bank loss. Banks rely on independent valuations to fix the security value against which they lend, so a valuation that overstates a property's worth can leave the lender under-secured when the borrower defaults and the security is realised for far less than the reported figure. The claim required the Court to examine the standard of care owed by a professional valuer to a lender that commissions or relies on the valuation, and whether that standard had been breached.

The core of the dispute lay in the application of the Malaysian Valuation Standards (MVS). The Court's reasoning turned on the principle that the MVS do not discriminate between different kinds of transaction: so long as a transaction has been registered on the title of the subject property at the land registry, it must be stated and disclosed in the valuation. In particular, where the property had previously been the subject of an auction, the auction price is a registered transaction that a competent valuer must take into account and disclose, rather than pass over in favour of a higher figure. A failure to disclose and weigh such a transaction goes directly to the reliability of the valuation and to the question of negligence.

The case thus placed the valuer's methodology under scrutiny against the professional standards that govern it, asking whether the omission of a relevant registered transaction — the auction price — from the valuation fell below the standard of a reasonably competent valuer and exposed the bank to the loss it claimed. The judgment is a useful illustration of the duty a valuer owes to a lending bank and of how the Malaysian Valuation Standards require all registered transactions on the title, including an auction price, to be disclosed in a valuation.