A $10 million valuation helped secure a $4.25 million private loan over a coastal Queensland development site. Eighteen months later, receivers sold the land for $1.65 million, GST inclusive, and one lender was left with a net principal loss of $1.1 mil.
The Supreme Court of Victoria has held that Plan B Properties could recover that loss from the valuer, Bruce Clisdell, together with statutory interest. But the court dismissed Plan B’s misleading-conduct claim against the mortgage broker’s representative, Angela Simonetta.
The dispute began with a proposed six-month loan to fund the purchase and development of Lot 1 at Cape Gloucester, on the Whitsunday Coast. The borrower planned a 21-lot subdivision. A syndicated group of private lenders advanced $4.25 million, secured by a first registered mortgage. Plan B contributed $1.5 million.
Before the loan settled, Simonetta sent investors material that included Mr Clisdell’s valuation. It assessed the land’s “as is” market value at $10 million, exclusive of GST, using a hypothetical-development approach. The proposal presented a loan-to-value ratio of about 42 per cent and described the security as low risk.
That was a striking number beside the original purchase contract, which showed the borrower was acquiring the land for $3.7 million. The explanation offered was that the newly approved subdivision had changed the picture.
It did not unfold as planned. The borrower did not repay the loan when it fell due in December 2022. Receivers were later appointed and the property was marketed for sale as a 13.73-hectare redevelopment site.
A valuation obtained for the receivers in July 2023 reached a very different conclusion. It acknowledged the 21-lot approval, but said upgrading the adjoining gravel road to a sealed standard would involve significant cost. The valuer considered the project’s viability highly uncertain and assessed the land’s highest and best use as a prestige residence or a two-to-three-lot subdivision. The resulting value was $1.55 million, exclusive of GST.
After an advertising campaign by two well-known agents, the property sold for $1.65 million, GST inclusive. Plan B then pursued the valuer and Simonetta. Its claim against the mortgage-broker company, Australian Secured & Managed Mortgages P/L was stayed because the company was in liquidation.
An interlocutory judgment was entered against Clisdell in the absence of any defence. In assessing damages, Justice Michael Osborne accepted that his $10 million opinion conveyed not just a number, but that it had been reached on reasonable grounds and with due care and skill.
The court found it to be a gross overvaluation. The later sale price and the receivers’ valuation pointed to a methodological error. In particular, the 21-lot development assumption depended on a viability assessment that did not withstand scrutiny.
Judgment was entered against Clisdell for $10.1 mil plus interest from the start of the proceeding to judgment.
An acknowledgement in the loan summary required Plan B to state that the valuation was acceptable and accurately described the property’s current value. That did not change the outcome.
Plan B argued against Simonetta, that, by sending the valuation, repeating the $10 million figure and using it to calculate the LVR in the loan material, the broker had adopted or endorsed the valuation.
The court rejected that argument. A mortgage broker known not to have valuation expertise was, in these circumstances, passing on the opinion of an identified professional valuer. The absence of an express disclaimer did not alter the context: a recipient would understand that the specialist opinion was Clisdell’s, not that of Ms Simonetta.
