Bank Islam Malaysia Berhad v 1. ) Mohd Nasir Bin Saat (WA-22NCvC-810-12/2020)

MOHD NASIR BIN SAAT (NO. K/P: 580802-03-5453) (Yang Menjalankan Amalan Penilaian Di Atas Nama dan Gaya Nasir Sabaruddin & Associates pada masa yang material)

SABARUDDIN BIN MOHAMED ALIAS (NO. K/P: 610713-06-5209) (Yang Menjalankan Amalan Penilaian Di Atas Nama dan Gaya Nasir Sabaruddin & Associates pada masa yang material)

MOHD SABBRI BIN MD YUDIN (NO. K/P: 600109-03-5055) …DEFENDAN-DEFENDAN) 14/08/2024 10:59:13 WA-22NCvC-810-12/2020 Kand. 67 JUDGMENT Introduction 1. The Plaintiff claim against the Defendants is for losses suffered in disbursing a housing loan to a customer in reliance of a valuation report prepared by the Defendants.

The Plaintiff alleges that the valuation report contained a negligent misstatement in overvaluing the property leading to the Plaintiff to disburse the loan applied by the customer.

The Plaintiff is financial institution whereas the 1st and 2nd Defendants practiced as valuers under the name of Gaya Nasir Sabaruddin & Associates and the 3rd Defendant was a valuer at the firm ( all 3 Defendants are to be collectively referred to as the

The matter proceeded to a full trial where the Plaintiff called 5 witnesses and the Defendants called 3 witnesses. Both side relied also on the documents contained in the Bundle of Documents filed on the direction of the Court. Brief facts 5. On an application by a customer Jemey bin Sudin (“customer”) the Plaintiff had issued a letter of offer for a sum of RM4,353,639.50 dated 16/5/2013 for the purchase of a three storey luxury detached house at No. 46, Jalan Chempaka, Bluwater Estate, Mines Resort City ,Seri Kembangan, Selangor (“the property).

In furtherance of the letter of offer, the Defendants’ firm, a panel of Valuers of the Plaintiff since 1/7/2006, was instructed on 21/5/2013 to prepare a valuation report of the said property.

On 23/7/2013 the Plaintiff was given a valuation report by the Defendants valuing the property at RM5.9 million. The basis used in valuing the property based on the report was comparable sale transactions at 3 different areas nearby the said property.

Based on the valuation the Plaintiff had proceeded to disburse the amount of loan as stated in the Letter of Offer to the customer with the normal terms and conditions.

The customer defaulted in the repayment of the said loan in breach of the loan agreement. The Plaintiff then took steps to auction the property. For this purpose on 23/7/2013 the Plaintiff appointed IPC Island Property Consultation Sdn Bhd (“IPC”) to prepare a valuation report for the purpose of auction.

On 26/11/2014 the Plaintiff received a valuation report dated 15/11/2014 submitted by IPC which valued the property at RM4.5 million.

Noting the big difference in valuation between the Valuation firm and IPC the Plaintiff held an internal inquiry on 7/1/2015. From the outcome of this inquiry the Plaintiff concluded that the property was grossly overvalued by the Defendants and this amounted to misrepresentation and/ or negligence on the part of the

Further facts showed that the property was eventually auctioned off after 9 unsuccessful auction for an amount of RM 2,391,480. The Plaintiff as a follow up had also appointed 2 other valuation firm i.e. PPC International Sdn Bhd and Mod Nor & Partners to value the property. Both had valued the Property at RM 4.5 million and RM4.3 million respectively.

Based on above background of facts the Plaintiff had filed this claim for the losses suffered by the Plaintiff as a result of the over valuation by the Defendants causing the Plaintiff to lose RM1,180,144.50 which the Plaintiff now demand the Defendants to pay them.

The Defendants denied negligence and misstatement and contended that the valuation was done according to normal valuation practice as well as followed the standard guidelines for valuing the property. Letter of offer/Letter of instruction 15. In determining the claim against the Defendants the Court first considered the letter of offer issued by the Plaintiff to the customer on 16/5/2013. It can be noted that the letter of offer together with the conditions attached not only approved the loan to finance the property on the application of the customer, but also approved a specific amount of the loan.

What is glaring about the letter of offer is that not only the loan was approved but also a specific sum was approved even before the appointment and instructions to the Defendants to value the property. The letter of instruction to the Defendants was only given on 21/5/2013 17. When one of the Plaintiff’s witness was questioned on why the sum of the loan was approved before the valuation of the property the reply was that this was a normal practice of the Plaintiff to avoid any delay in processing the application for the loan.

The Court does see any logic in this reply as the Defendants managed to prepare the valuation report in a period of 2 months as the valuation report was handed to the Plaintiff on 23/7/2013. In the Court’s view there is no gross delay in the submission of the valuation report by the Defendants 19. Could not the Plaintiff have waited for 2 months before issuing the letter of offer? Even if it was necessary to issue the letter of offer there was no conceivable reason to quantify the loan at that stage. The amount of loan could have been approved conditionally awaiting the valuation of the property.

In the Court’s view the conduct of the Plaintiff in issuing the letter of offer with the amount of the loan specified and which was executed by both the Plaintiff and the customer binds the Plaintiff and the customer to a valid enforceable contract.

This is clear from the reading of section 2 of the Contracts Act 1950 which defines and interprets the formation of a binding agreement. Section 2 (a) to (e) provides as follows: In this Act the following words and expressions are used in the following senses, unless a contrary intention appears from the context-

when one person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to the act or abstinence, he is said to make a proposal;

when the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted: a proposal, when accepted, becomes a promise;

the person making the proposal is called the "promisor" and the person accepting the proposal is called the "promisee";

when, at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing, something, such act or abstinence or promise is called a consideration for the promise;

every promise and every set of promises, forming the consideration for each other, is an agreement;

In this case when the customer applied for a loan to finance the purchase a property he could be said to make a proposal to the Plaintiff. When the Plaintiff issued the letter of offer stating the amount approved the Plaintiff is said to have signified its assent to the proposal.

The letter of offer states that the offer is subject to the Syariah concept of Tawarruk. The only condition stated in signifying its assent to the proposal of the customer is that the Plaintiff will buy from the broker and sell to the customer on agreed sale price “harga jualan” which sum of money will be credited into the customers “Financial Payable Account” to be repaid by the customer on terms agreed.

It is clear that the amount of loan agreed is not based upon the valuation of the property but on the agreed “harga jualan” between the Plaintiff and the customer. The amount which represent the “harga jualan” in the letter of offer is the amount of financed by the Plaintiff which is stated as RM4, 353,639.50.

The Court regard the instruction to the Defendants to value the property by the Plaintiff after approving a specific sum a mere whitewash just to complete the formalities. This is clear from the letter issued by the Plaintiff instructing the Defendants to prepare the valuation of the property as well orally informing the Defendants the amount of loan which had been approved.

The Defendant confirmed in evidence in Court that they had already been informed by the Plaintiff on the amount agreed to be financed by the Plaintiff to the customer. In other words it is fair, in the Court’s view to infer that the instructions to the Defendants was to tailor the value of the property according to the amount already approved.

In short in this case the Court finds that the Plaintiff’s practice of approving an amount of loan and only then instructing for a valuation of the property is not only unethical but an imprudent commercial practice.

In short the Plaintiff are the author of their own misfortune for the losses suffered. This Machiavellian practice of the Plaintiff in not properly assessing an application by a customer is what led to the losses suffered by the Plaintiff and not that of any negligence or misstatement by the Valuation Firm.

This fact itself is sufficient to dismiss the Plaintiff’s claim against the Defendants The valuation by the Valuation Firm 30. However for purpose of completeness the Court next considered whether the Defendants were negligent or have made a misrepresentation when valuing the property.

The Plaintiff contends that the Defendants in valuing the property must comply with the Malaysian Valuation Standards issued by the Board of Valuers, Appraisers and Estate Agents, Malaysia and other valuation standards by recognized professional bodies.

The Court notes that all the other valuation firms have Defendants and the difference between the valuations done by the other valuation firm as well as the Plaintiff’s own internal valuers and the valuation of the Defendants is substantial.

At the outset the Court rules that the internal inquiry Defendants firm was negligent and had made a misrepresentation is untenable and unfounded. It is clear that during the inquiry the Defendants firm was not given an opportunity to explain the basis of its valuation. This is especially so when the 3rd Defendant who carried out the valuation of the property was asked to leave the inquiry on the flimsy ground that he no longer worked with the Defendant firm. The Defendant firm therefore lost an opportunity to explain the basis of the valuation and were condemned before being given a full right of hearing. This goes against the principle of natural justice.

The Court also notes that the Defendants had used the criteria to value the property by comparing the last sales transactions done at the nearby area of the property. The other valuers agree that this criteria conforms to the guidelines in valuing the property. The Court therefore finds the criteria used by the Defendant in valuing the property does not breach any rules or guidelines and is proper method to value the property.

It also agreed amongst the valuers it is not necessary to inspect the property from inside in coming to a valuation. In this case the Court notes that the valuers were not given an access inside the property. The Court finds that what had determined the valuation of the property is its location.

This is where there is a disagreement between the valuers and the Defendants. The other valuers allege that that the Defendants had used the wrong locations to make a comparison of the last sales transactions done. As the property is situated at Bluwater Estate comparison should be done on properties in this location rather than other locations.

In this case the Defendants had used the technique of Comparison Method to compare the completed sales transactions done at 3 locations as stated in their report. The properties used as comparison were No 1, Jalan Kinta 2B, Heritage Mines Resort City, No 165, Jalan Kuda Emas 2, County Height Parade, Serdang and No. 33 Jalan Pelangi Chinta, Country Heights , Kajang.

The property for which the loan was given is situated at No.46, Jalan Chempaka, Bluwater Estate, Mines Resort City, 43000, Seri Kemabangan, Selangor. The Plaintiff contends that the Defendants had not complied in determining the value of the property based on the relevant portion of “Approaches to Valuation” from the 4th Edition of the Malaysian valuation Standard.

PCC International Sdn Bhd which were appointed by the Plaintiff on 20/6/2013 had made comparisons to 3 properties all at Bluwater Estate and the sale transactions of all 3 properties were 2 at RM3.5 million and 1 at RM2.4 million. PPC ‘s valuation was RM4.5 million.

The valuation done by Mod Nor & partners was also done on comparison method of properties in Bluwater Estate and their valuation was RM4.3 million.

The Valuation department of the Plaintiff meanwhile made 2 valuations on 20/6/2013 and 4/11/2014 at RM4.4 million and 4.3 million respectively.

In their evidence the Defendants admitted that to make any comparison of recent sales they are dependent on the data obtained from JPPH for which they have to buy. That is the only source of information as to the recent sales. The Court rules this is an accepted practice amongst valuers. The Defendants have therefore not breached any rules in making use of this data.

The Defendants also explained that from this data they chose the comparison which best suited to the type of the residential area and the concept of the residential area. The Court notes that a common feature between the properties that were compared with and the property in Bluwater is that the residential area emphasizes security by being exclusively guarded and gated. The properties which the Defendants used as comparisons in the Court’s view was appropriate and proper in terms of the type of property as well as location. In the Court’s view the Defendants have not breached any rules as to valuation.

Further the Court rules that there is no necessity for recent sales in the same area that need to be compared with. Suffice if the property compared are in the vicinity. The whole area in the vicinity has to be looked at and not confined the comparison to one residential area.

In this case the Court rules that the Defendants were neither negligent nor had made a misstatement in the Valuation report although they might have been induced to value the property higher to satisfy the Plaintiff’s own promise to the customer as to the amount of financing approved. Any losses suffered by the Plaintiff?

From their own evidence and admission the Plaintiff suffered no losses even if they could prove negligence of the Defendant. As a security the property was charged to the Plaintiff which was registered on 11/4/2014. On the default of the customer the Plaintiff exercised their charge options and auctioned the property. The property was finally auctioned off at a higher price than the amount disbursed to the customer. So where is the loss?

The Plaintiff contends that they would have not disbursed the amount of loan as applied by the customer if not for the bloated valuation by the Defendant. This is a misnomer as the evidence shows that the Plaintiff had already specified the amount of loan approved even before directing the Defendant to value the property. Time limitation 48. As the Plaintiff’s claim is based on the Defendant’s negligence and misstatement leading them to disburse the amount of loan to the customer, in the Court’s view the claim should have been filed from the date of disbursement on 28/3/2014 or at the latest when it was discovered that the customer had failed to pay the instalment and a notice to terminate the loan agreement was given on 14/5/2014.

Even if the date of the IPC report which was received by the Plaintiff on 28/11/2014 is taken into account the Plaintiff by filing this case only in December 2020 has clearly breached the time limit of 6 years as specified in section 6(1) (a) of the Limitation act 1953. Conclusion 50. Based on the findings of Court the Court rules that the Plaintiff’s claim is misconceived and baseless and therefore dismisses the same with a cost of RM100, 000. Dated: 13.8.2024 sgd DATO’ HAJI AKHTAR BIN TAHIR Judge High Court of Malaya, Kuala Lumpur PARTIES For the Plaintiff: Nama Peguamcara: Muhammad Ali Redha Tetuan Yusfarizal Aziz & Zaid Unit 01-26 & 01-27, Maxim Citylights Sentul, No. 25 Jalan Sentul Perdana, 51000 Kuala Lumpur. For the Defendant: Nama Peguamcara: Rafidah Abdul Rahman Tetuan Khairul Hanafi & Associates No. 351-1, Jalan Bandar Senawang 1, Pusat Bandar Senawang, Senawang, 70450 Seremban, Negeri Sembilan.