Todd Hadley Pty Ltd v Lake Maintenance (NSW) Pty Ltd (No 2)

In *Todd Hadley Pty Ltd v Lake Maintenance (NSW) Pty Ltd (No 2)*, the New South Wales Court of Appeal considered a separate question concerning the accrual of a cause of action for professional negligence against a valuer. The plaintiff, Todd Hadley Pty Ltd, had obtained a valuation from the defendant, Lake Maintenance (NSW) Pty Ltd, for mortgage security purposes. The mortgaged property was subsequently sold for significantly less than the valuation. The central dispute revolved around when the plaintiff sustained loss or damage, which is a prerequisite for a cause of action in negligence to accrue for the purposes of limitation periods.

The legal issues before the Court of Appeal were whether the plaintiff's cause of action against the valuer accrued at the time of entering into the contract for the sale of the mortgaged property, or only when it became reasonably ascertainable that the lender would be unable to recover the shortfall from the mortgagor under their personal covenant. This question was critical to determining whether the plaintiff's claims were statute-barred.

The Court of Appeal reasoned that for a claim in negligence against a valuer, loss or damage is sustained when the plaintiff enters into a transaction in reliance on the negligent valuation, and that transaction results in a financial detriment. In this instance, the plaintiff entered into the contract for the sale of the mortgaged property on 23 May 2012. The Court held that by this date, the plaintiff had sustained loss or damage because the property's value, as represented by the valuation, was demonstrably higher than the price it was contracted to be sold for, and this difference represented a financial detriment. The Court applied the principle that the accrual of a cause of action for negligent valuation occurs when the lender enters into the loan agreement or, as in this case, a transaction related to the security, and it is evident that the security is worth less than the amount advanced or that the lender has suffered a financial detriment.

Consequently, the Court of Appeal answered the separate question in the affirmative, finding that the plaintiff did sustain loss or damage by the time of entering into the contract for the sale of the property on 23 May 2012, with the result that the plaintiff's claims against the defendant were statute-barred. The Court ordered that the proceedings be dismissed with costs, with a stay of 14 days to allow the defendant to seek to vary this order.