Isa Samad’s Litigation Case : Valuer’s Right, Lawyer’s Wrong? – the Basic Concepts of Market Value

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The lawyer for FGV Holdings Bhd’s former chairman Tan Sri Mohd Isa Abdul Samad today disputed the credibility of the surveyor who valued two luxury condominiums at the centre of the company’s lawsuit against Mohd Isa.

Lawyer Mavinthra Jothy Thillainathan argued that Foo Gee Jen, the group managing director of property consultancy firm C H Williams Talhar & Wong Sdn Bhd, had not provided substantial basis to the court as to how he arrived at the tabulations and figures in his valuation of the two condominium units at The Troika, KLCC.

The condominium units are the main subject matter of FGV’s civil suit against Mohd Isa and the company’s former president and group CEO Datuk Mohd Emir Mavani Abdullah.

FGV claims that the condominium units were bought at an inflated price but the Lawyer argues that the property was valued lowly. The lawyer stated that the valuer took data from the property valuation department and “condensed” it in a report. And the lawyer claims that it is not an expert report, which he cross-examined Foo.

Firstly a little bit about Sr Foo Gee Jen: – He is one of the earliest practicing valuers in Malaysia, with decades of experience in the valuation industry. A respectable and reputable Valuer, he holds among the following honors:-

  • Board Member of the Board of Valuers, Appraisers, Estate Agents and Property Managers Malaysia (BOVAEP) since 2013
  • President of the Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector Malaysia (PEPS) 2016-2018
  • Fellow of the Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector Malaysia (PEPS)
  • Vice President FIABCI Malaysia Chapter 2016-2018
  • Honorary Advisor to the Real Estate and Housing Developers’ Association Malaysia (Malacca Branch) since 1996
  • Member of the National Real Estate Research Coordinator (NAPREC) Panel of Experts – Real Estate Management Services for the term 2013/2014

Source: CBRE-WTW Official Website

Foo, a chartered surveyor, was appointed by FGV in 2018 to assess the market value and market rental of the Troika units for the purpose of litigation.  In fact, valuation experts are regulated strictly which they are not to have any conflict of interests and this is certainly not the first time an expert like Sr Foo Gee Jen to had testified in Courts, for even larger and more serious forms of cases.

Following his assessment, a valuation report was produced and it has been tendered as evidence in court.

In his testimony, Foo said that the market values of the Troika units were ascertained based on the Comparison Approach.

According to Foo, the Comparison Approach entails analysing recent transactions and asking prices of similar properties in and around the locality for comparison purposes with adjustments made for differences in location, time, size, level, tenure, title restrictions, if any, and other relevant characteristics to arrive at the market value.

In his valuation report, Foo valued the first unit at RM3.3 million as at September 2014, but it was bought by FGV at RM5.13 million during the same time. Meanwhile, the second unit was valued at RM2.2 million, but was bought at RM3.28 million at that time.  

Foo added that the information for all the comparables to arrive at his valuation were obtained from the Valuation and Property Services Department as well as his company’s own database.

Source: The Edge Markets

Why the Dispute came about & Concepts of Market Value:- Purchase Price does not reflects Market Value

According to the Malaysian Valuation Standards, a by-law adopted by practicing valuers in Malaysia empowered by the Valuers, Appraisers, Estate Agents and Property Managers Act 1982, it is crucial to note that a purchase price does not necessary reflects market value. Market value could change according to market volatility, and at the same time, purchase price can be easily manipulated. For instance, a property can exchange at a higher price, benefiting certain party when monies are paid into the seller’s account. Such inflated “transacted price” are recorded as a consideration of determining Market Value however, the entire market (for instance the similar units in the vicinity or same building) must be considered. As mentioned in an article by Forbes on the “Differences Between Value and Price”, the most important distinction between price and value is the fact that price is arbitrary and value is fundamental. For example, consider a person selling gold bars for $5 a piece. The price of those gold bars is, in this instance, $5. It’s an arbitrary amount chosen by the seller for reasons known only to them. Yet, in spite of the fact that those gold bars are priced at $5, their value is so much more. This applies to Garbage being purchased at a hundred dollars, or an overly inflated price of property.

Source: Extracted from Critical Malaysia, Forbes, Malaysia Valuation Standards

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