Kenny & Good Pty Ltd v MGICA (1992) Ltd

In Kenny & Good Pty Ltd v MGICA (1992) Ltd, the High Court of Australia considered a dispute concerning a property valuation. The plaintiff, Kenny & Good Pty Ltd, had obtained a valuation from MGICA (1992) Ltd for a property that was to be used as security for a loan. Kenny & Good subsequently suffered losses due to a fall in the property market after entering into the loan transaction based on the valuation provided by MGICA.

The central legal issues before the High Court were the scope of a valuer's duty of care, the principles governing the assessment of damages for negligent misrepresentation and misleading or deceptive conduct, and specifically, whether a valuer's liability to a financier extended to losses arising from a subsequent fall in the property market. The court was required to determine the appropriate test for remoteness of damages in such circumstances, considering whether contractual principles of remoteness applied.

The High Court reasoned that the principles of contract law were the proper approach for assessing damages in cases where a valuer's negligent valuation causes loss to a party for whom the valuation was made, irrespective of whether that party was in a direct contractual relationship with the valuer. The court held that a valuer is generally liable only for losses that a reasonable person would consider to flow naturally from the negligent valuation or that were within the contemplation of the parties. This confines damages to the difference between the amount lent and the amount that would have been lent based on a true valuation, along with foreseeable consequential expenses and losses. Crucially, the court determined that such damages do not typically include losses resulting from subsequent market declines.

The appeal was dismissed, and the parties were ordered to pay costs.