La Trobe Capital and Mortgage Corporation Ltd v ACE Insurance Ltd [2008] NSWSC 1303

New South Wales Supreme Court

CITATION : La Trobe Capital and Mortgage Corporation Ltd v ACE Insurance Ltd [2008] NSWSC 1303

HEARING DATE(S) : 4 November 2008

JUDGMENT DATE : 10 December 2008

JURISDICTION : Common Law Division

JUDGMENT OF : Hislop J

DECISION : (1) I grant leave to the plaintiff to commence proceedings against the defendant within 7 days by filing a statement of claim in the form of Exhibit A herein. (2) The defendant is to pay the plaintiff's costs of the application.

LEGISLATION CITED : Trade Practices Act Law Reform (Miscellaneous Provisions) Act, 1946

Tzaidas v Child [2004] NSWCA 252; (2004) 61 NSWLR 18 CASES CITED : The Owners - Strata Plan No. 50530 v Walter Construction Group Limited [2007] NSWCA 124; (2007) 14 ANZ Ins Cases 61-734 Kenny & Good Pty Limited v MGICA (1992) Pty Limited [1999] HCA 25; (1999) 199 CLR 413

PARTIES : La Trobe Capital and Mortgage Corporation Limited (Plaintiff) ACE Insurance Limited (Defendant)

FILE NUMBER(S) : SC 12168/08

COUNSEL : R. Darke SC (Plaintiff) G. Curtin (Defendant)

SOLICITORS : Kells The Lawyers (Plaintiff) Gilchrist Connell (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

HISLOP J

Wednesday 10 December 2008

12168/08 LA TROBE CAPITAL AND MORTGAGE CORPORATION LIMITED v ACE INSURANCE LIMITED

JUDGMENT

Background 1 On 2 August 2002 the plaintiff advanced the sum of $1,260,000 secured by first mortgage over a property at 41 Sproule Road, Illawong. The purchase price of the property was $1.8 million. In or about January 2003 the mortgagor defaulted. In July 2003 the plaintiff, as mortgagee, obtained possession of the property. On 16 October 2003 the property was passed in at auction with the highest bid being $1,240,000. Ultimately the property was sold in April 2004 for $1,120,000, as a result of which a loss of $446,570 was allegedly sustained by the plaintiff. 2 In June 2002 REA Australasia Pty Limited ("REA") had provided a valuation of the property to the plaintiff for its use in connection with the then proposed loan. The valuation was prepared by Mr Wehbe. That valuation valued the property at $1,800,000. The plaintiff asserts the true market value of the property was significantly overstated in the valuation. The plaintiff contends that, acting partly in reliance upon that valuation, it advanced the sum of $1,260,000 secured by the first mortgage over the property. It further contends that REA, in providing the valuation acted negligently, engaged in conduct which was misleading or deceptive or likely to mislead or deceive in contravention of s 52 of the Trade Practices Act and was in breach of contract thereby causing the loss allegedly sustained by the plaintiff. 3 Subsequent valuations were obtained. The plaintiff obtained a valuation from United Valuers Pty Limited ("United") dated 15 August 2003 in which the property was valued at $1.8 million. The valuation was prepared by Mr Wehbe. There was no evidence of any other valuations by United. On 28 November 2003 a valuation was obtained from Egan National Valuers (NSW) assessing the market value of the property at $1,250,000. It assessed the market value as at 22 July 2002 at $1,050,000. A valuation obtained from Craig Miller Pty Limited on 20 January 2005 valued the property as at 22 June 2002 at $1.1 million. 4 REA went into voluntary liquidation on 26 March 2003. It was deregistered on 1 November 2003. It was reinstated to the register in 2007 to enable the plaintiff to make a claim upon it in respect of the plaintiff's alleged loss. 5 REA was insured under a professional indemnity policy issued by the defendant. The plaintiff sought leave to commence an action against the defendant pursuant to s 6 of the Law Reform (Miscellaneous Provisions) Act, 1946 to recover its loss. The application was opposed by the defendant.