Bank Islam Malaysia Berhad v Mohd Nasir bin Saat & Ors

Appellant(s): Bank Islam Malaysia Berhad

Respondent(s):

• Mohd Nasir Bin Saat
• Sabaruddin Bin Mohamed Alias
• Mohd Sabbri Bin Md Yudin

• YA Datuk Supang Lian
• YA Datuk Dr Shahnaz Binti Sulaiman
• YA Dato' Amarjeet Singh a/l Serjit Singh

• The appellant bank disbursed a housing loan facility to a customer for the purchase of a property, relying on a valuation report prepared by the respondent valuers which assessed the property's market value at RM5.9 million.
• After the customer defaulted without paying a single instalment, the bank obtained a fresh valuation which was RM1.4 million lower, and subsequent retrospective valuations by other firms similarly assessed the property at significantly lower values.
• Following an internal investigation into the discrepancy, the bank sued the valuers for negligence, negligent misstatement and breach of contract, seeking losses of RM1,180,144.50 after the property was eventually sold at auction for less than the disbursed amount.

• Whether the bank's contractual approval of the loan amount to the customer, made prior to instructing the valuers, precluded it from later attributing its losses to the valuation report.
• Whether the valuers breached the professional standard of care expected of an ordinarily competent valuer, and what test should be applied where valuers differ in their assessment of market value.
• Whether the bank's claim was time-barred under section 6(1)(a) of the Limitation Act 1953, and whether the discoverability principle or the COVID-19 Act 2020 limitation extension could assist the bank despite non-pleading of the latter.

• The Court of Appeal held that the bank had approved the specific loan amount in a binding Letter of Offer before instructing the valuers, and could not later shift blame to the valuers once the customer defaulted, especially where approval was based on the bank's own assessment of the customer's repayment capacity.
• The Court affirmed the applicable test for professional negligence in valuation as being whether the valuer exercised the skill and care of an ordinarily competent member of the profession, and found the valuers had followed proper methodology (including use of JPPH data and comparable gated/guarded properties), so mere divergence in valuation figures did not establish negligence; the Court also upheld the finding that the bank's internal inquiry breached natural justice by excluding the valuer who conducted the assessment.
• The Court held the claim was time-barred under the Limitation Act 1953, as the cause of action accrued, at the latest, upon discovery of the valuation discrepancy in late 2014, well before the suit was filed in December 2020, and declined to consider the COVID-19 Act limitation extension as it had not been pleaded; the appeal was accordingly dismissed with costs of RM15,000 to each respondent.