Two Central Otago valuers have been fined by the Valuers Registration Board for co-signing a valuation without investigating it further.
Following an investigation by the Valuers Registration Board, Ken Goldfinch, of Wanaka, and Malcolm Moore, of Alexandra, were found to have readdressed a client's valuation to DBR Property Financiers Ltd in 2008 without reconsidering the original $1.5 million assessment.
Instead, Mr Goldfinch and Mr Moore inserted a warning into the report stating the market had changed.
The board imposed costs of $10,000 each on Mr Moore and Mr Goldfinch, and fined Mr Moore, the senior practitioner, $5000 for co-signing the valuation without investigating it further.
The board heard the case in May last year, and released to the Otago Daily Times yesterday two related decisions which found that while Mr Goldfinch was guilty of a "gross overvaluation", there was no indication he had intended to mislead and that by issuing the warning he was trying to be helpful.
His actions were not necessarily reckless, but he had displayed a level of indifference by departing from accepted standards requiring a valuer to give careful consideration to sales evidence, the board held.
Of Mr Moore's actions, the board said: "Confirming the valuation with merely a note of warning given months later, without an amendment to value, portrays, in the opinion of the board, indifference and an abuse of privilege. It was relied upon by DBR, who appear to have suffered financially as a result."
DBR Property Financiers complained in October 2008 that the $1.5 million valuation on an 8ha Tarras property should be more like $800,000.
The company had lent money on the property, which was recently sold at a mortgagee sale.
Mr Goldfinch prepared the valuation in March 2008 for Tarras developer Whetu TeHiwi.
In August 2008, Mr TeHiwi asked the report be readdressed to DBR Property Financiers with Mr Moore as a co-signator.
The valuers' warning said property market conditions had changed, the number of residential and lifestyle sales had significantly reduced, values were down, the original report had not been updated and they had not been instructed to include a current market assessment.
Two retrospective valuations presented to the board revealed significant differences in opinion.
The board said it was concerned the property may have been difficult to value, given limited sales evidence in the area.
There were three sales in 2007 (one property in Luggate-Cromwell Rd and two in Kane Rd near Lake Hawea) and one at Sandflat Rd in March 2008, which was unlikely to have been known to Mr Goldfinch when he prepared his report. Independent valuer Bruce Passmore, of Wanaka, giving evidence to the board, acknowledged the difficulties with sales history and said a greater than normal variation of up to 30% could be anticipated in the circumstances.
Another independent valuer, Warwick Guild, of Dunedin, used a different method to come up with a land value per hectare. He also said the 2008 market was in a changing state.
The board said Mr Guild's approach appeared to have led to a land value below that which could be fairly ascribed to the property.
Mr Goldfinch's valuation ended up 46% higher than Mr Passmore's valuation, but he agreed in evidence the value should have been $1.22 million, on the sales evidence. Mr Moore submitted it was an overvaluation, but not a gross overvaluation.
The board said Mr Goldfinch's land valuation was the same as Mr Passmore's but he gave insufficient consideration to the value of other components of the property, such as the swimming pool and vehicle barn.
Mr Moore had inspected the property in the past, but had not reinspected it before co-signing Mr Goldfinch's valuation four months later.
When approached for comment yesterday, Mr Goldfinch said the circumstances were "indicative of the difficult market we were working in at the time".
Mr Moore said the original report was done early in 2008 and at the request of the finance company was subsequently readdressed later that year.
"They had been warned it was out of date and they ignored that warning.
"It was long after that the complaint came in ... We were not valuing to order. Whetu requested it for the current market value at that time."
Valuers Registration Board decision
Property: 723 Ardgour Valley Rd, Tarras.
Description: 8ha lifestyle block with renovated family home, swimming pool and barn.
Owner in 2008: Whetu TeHiwi (house since sold in mortgagee sale).
Finance company: DBR Property Finances Ltd.
Moore and Percy valuation: $1.5 million (excl GST).
Alternative retrospective valuations prepared for Valuer-general.
-Bruce Passmore, Wanaka: $1.03 million (incl GST).
Warwick Guild, Dunedin: $750,000 (excl GST).
Complaint: Property grossly over-valued.
Outcome. - $10,000 costs order against valuers Ken Goldfinch and Malcolm Moore
$5000 fine order against Mr Moore
