City Pacific Ltd (in liq) v CBRE

ne Pty Ltd [1983] 3 NSWLR 221 Commercial Banking Co of Sydney v R H Brown & Co (1972) 126 CLR 337 Coris and Investments Ltd v Druce & Co [1978] 2 EGLR 86 Derring Lane Pty Ltd v Fitzgibbon (2007) 16 VR 563; [2007] VSCA 79 Dunn v Hanson Australasia Pty Ltd (2017) 12 ACTLR 138 Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241 Fitzwood Pty Ltd v Unique Goal Pty Ltd (in liquidation) [2001] FCA 1628 Flemington Properties Pty Ltd v Raine & Horne Commercial Pty Ltd (1997) 148 ALR 271; [1997] FCA 788 Genworth Financial Mortgage Insurance Pty Limited v Hodder Rook & Associates Pty Limited [2010] NSWSC 1043 Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435; [2013] HCA 1 Gould v Vaggelas (1985) 157 CLR 215; [1985] HCA 75 Hann Nominees Pty Ltd v National Australia Bank Ltd [2000] FCA 454 Hawkins v Clayton (1988) 164 CLR 539 Henville v Walker (2001) 206 CLR 459; [2001] HCA 52 HTW Valuers (Central QLD) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640; [2004] HCA 54 Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd (2013) 247 CLR 613 I & L Securities Pty Limited v R S Melloy Pty Limited [2002] QSC 306 Interchase Corporation Ltd v ACN 010 087 573 Pty Ltd [2003] 1 Qd R 26 Israel v Foreshore Properties Pty Limited (in liq) (1980) 30 ALR 631 Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999)199 CLR 413; [1999] HCA 25 Kestrel Holdings Pty Ltd v APF Properties Pty Ltd (2009) 260 ALR 418 Khoury v Coffey Projects (Australia) Pty Ltd [2015] NSWCA 371 Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70; [1990] HCA 31 Lloyd v Grace, Smith & Co [1912] AC 716 Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705; [2001] NSWCA 305 MGICA (1992) Ltd v Kenny & Good Pty Ltd (1996) 140 ALR 313; [1996] FCA 766 Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388 O3 Capital Pty Limited v WY Properties Pty Limited (2016) 49 WAR 517; [2016] WASCA 82 Perre v Apand Pty Ltd (1999) 198 CLR 180; [1999] HCA 36 Pine River Pty Ltd v Scorda [2001] WASC 105 Propell National Valuers (WA) Pty Ltd v Australian Executor Trustees Limited (2012) 202 FCR 158; [2012] FCAFC 31 Roads & Traffic Authority of NSW v Dederer (2007) 234 CLR 330; [2007] HCA 42 Robinson v 470 St Kilda Road Pty Ltd (2018) 263 FCR 572 Ross v Cook [2009] NSWSC 671 Ryan Wealth Holdings Pty Ltd v Baumgartner (2018) 131 ASCR 236; [2018] NSWSC 1502 Salomon v Salomon & Co Ltd [1897] AC 22 Segal t/as Segal Litton & Chilton v Fleming [2002] NSWCA 262 Singer & Friedlander Ltd v John D Wood & Co [1977] 2 EGLR 84 Spencer v Commonwealth of Australia (1907) 5 CLR 418 Ta Ho Ma Pty Ltd v Allen [1999] NSWCA 202 Tepko Pty Ltd v Water Board (2001) 206 CLR 1; [2001] HCA 19 Tomasetti v Brailey (2012) 91 ATR 531 Trade Credits Ltd v Baillieu Knight Frank (NSW) Pty Ltd (1985) Aus Torts Rep 69 Wallace v Kam (2013) 250 CLR 375 Wardley Australia Limited v Western Australia (1992) 175 CLR 514; [1992] HCA 55 Winnote Pty Ltd v Page (2006) 68 NSWLR 531; [2006] NSWCA 287 Texts Cited: C Lockhart, The Law of Misleading or Deceptive Conduct (2019, 5th ed, Lexis Nexis Butterworths) K Mason, J W Carter and G J Tolhurst, Mason and Carter's Restitution Law in Australia (2008, 2nd ed, LexisNexis Butterworths) Category: Principal judgment Parties: City Pacific Ltd (in liq) (First Plaintiff) Martha Cove Marina Pty Ltd (in liq) (Second Plaintiff) CBRE (V) Pty Ltd (First Defendant) Christopher Nicodimou (Second Defendant) Representation: Counsel: J C Giles SC with B G Curtin (Plaintiffs) D A Lloyd SC with V Bulut (Defendants)

Solicitors: Banton Group (Plaintiffs) Kennedys Law (Defendants) File Number(s): 2015/251608

INTRODUCTION

1. HIS HONOUR: By a further amended statement of claim ("FASOC") filed in Court on 4 September 2019, City Pacific Ltd (in liq) ("City Pacific") and Martha Cove Marina Pty Ltd (in liq) ("Martha Cove") (collectively, "the plaintiffs") brought a claim for damages against CBRE (V) Pty Ltd ("CBRE") and Christopher Nicodimou, a certified practising valuer formerly employed by CBRE (collectively, "the defendants"). There is no issue that CBRE was liable for Mr Nicodimou's conduct. The plaintiffs are now in liquidation.

OVERVIEW

1. The plaintiffs' claim arose out of valuation reports, prepared by the defendants of Lot S17 (also known as stage S6 and 2H, being initially 239 and subsequently 233 marina berths) ("the Marina"), which formed part of the Martha Cove Development on the Mornington Peninsula in Victoria. (The Marina was also interchangeably referred to in documentation and by the parties as "the Martha Cove Property", "Lot S17" and "the Marina lot"). The reports also contained valuations of the following properties: Lots S22, S23 and S24 on Plan of Subdivision 435310J, which were part of the Martha Cove Development (collectively, "the Other Properties"). However, the valuations of the Marina are what were in issue in the present proceedings.
2. Three valuation reports were prepared with respect to the Marina and the Other Properties, namely: 1. the "Valuation Report prepared for City Pacific Limited of Martha Cove Marina & Commercial Centre", dated 18 May 2006, and provided by CBRE to City Pacific on 30 June 2006 ("the June Valuation"); 2. the "Valuation Report prepared for MCD (Aust) Pty Ltd ("MCD") on behalf of Indigo (Martha Cove Harbour Precinct Land Owner) Pty Ltd of Martha Cove Marina & Commercial Centre", dated 30 January 2007, and provided by the Indigo Group to City Pacific on or about 16 March 2007 ("the Indigo Valuation"); and 3. the "Valuation Report prepared for MCD (Aust) Pty Ltd ("MCD") on behalf of Indigo (Martha Cove Harbour Precinct Land Owner) Pty Ltd of Martha Cove Marina & Commercial Centre", dated 30 January 2007, and provided by the Indigo Group to City Pacific on 26 June 2007 ("the Amended Indigo Valuation").
3. The relevant valuations for the purposes of the plaintiffs' claim were the June Valuation and the Amended Indigo Valuation (which shall hereinafter be referred to as, collectively, "the valuations"). I shall return to the contents of those valuations, and the entities mentioned therein, below.
4. The Marina has never been transferred to Martha Cove and the vendor has failed to repay any of the Martha Cove Property Monies. Consequently, Martha Cove has been unable to repay the debt it owed to City Pacific.
5. The plaintiffs contended that the valuations: 1. failed to adopt an appropriate valuation methodology for a freehold marina lot and grossly overvalued the Marina. The valuations were prepared on a gross realisation of individual leasehold berths basis which did not provide advice of market value of the Marina; 2. were prepared and published in breach of the duties owed to the plaintiffs and constituted misleading or deceptive conduct; and 3. were not the product of due care and skill, did not have a reasonable basis and consequently conveyed misleading or deceptive representations.

DRAMATIS PERSONAE

1. The parties provided a joint dramatis personae, which relevantly detailed the key companies/entities, individuals, together with an agreed glossary, which is incorporated into the following summary.

The Plaintiffs

1. As mentioned at the outset, City Pacific and Martha Cove are the plaintiffs. This next section introduces both corporations, together with the relevant and related entities associated with the plaintiffs.

City Pacific

1. City Pacific was a financial services company, the business of which included mortgage backed securities and other forms of property funding.
2. The principal activity of City Pacific was to act as the responsible entity of a number of registered managed investment schemes, including the City Pacific Mortgage Trust ("CPMT"). City Pacific also made various investments in its own right.

City Pacific Mortgage Trust

1. The CPMT was established on 13 July 1999. It invested in property secured by registered first mortgage. As mentioned above, City Pacific was the manager and responsible entity, specifically from 13 July 1999 to 7 July 2009.
2. The CPMT was referred to by different names between 1999 and 2009, as follows: 1. "City Pacific First Mortgage Trust", between 13 July 1999 and 6 December 2007; 2. "City Pacific First Mortgage Fund", between 7 December 2007 to 12 August 2009; and 3. "Pacific First Mortgage Trust", from 13 August 2009.
3. The Public Trustee of Queensland ("PTQ") was the custodian of the CPMT.

CP1 Ltd

1. City Pacific was the parent entity of CP1 Limited ("CP1"). CP1 was a subsidiary and controlled entity of City Pacific and the owner of all of the issued share capital of Marina Cove Pty Ltd ("Marina Cove").

Marina Cove Pty Ltd

1. City Pacific was a related party of Marina Cove. As mentioned above, Marina Cove was a wholly-owned subsidiary of CP1. It was the registered proprietor of the Marina and Other Properties prior to 18 July 2006. Marina Cove Pty Ltd was deregistered on 25 March 2019.

Indigo Pacific Capital Limited

1. City Pacific was a related party of Indigo Pacific Capital Limited ("IPC").
2. Liquidators were appointed for City Pacific on 28 August 2009.

Martha Cove

1. Martha Cove is the second plaintiff. It was a wholly-owned subsidiary of City Pacific. It was also the purchaser of the Marina under the Contract of Sale dated 8 October 2007. (Hence, the description of the "Martha Cove Property" being commonplace as a reference to the Marina).
2. Liquidators were appointed for Martha Cove in 23 October 2009.

The Defendants

1. CBRE and Mr Nicodimou are the defendants.

CBRE

1. CBRE was one of Australia's largest commercial real estate services companies, offering services including property management, valuation and advisory services, residential and retail sales and leasing, debt and structured finance, institutional and international investment.

Mr Nicodimou

1. Mr Nicodimou was a certified practising valuer from at least 2006 to 2008. He was an employee of CBRE from at least 2006 to November 2008.

The Indigo Group

1. The expression "Indigo group" as used in the proceedings, was not intended to convey the existence of a legal entity or commercial connotation. It was adopted by the parties as a "shorthand" adjectival term; as a means to describe three companies that had "a loose commercial affiliation". Those companies were as follows: 1. Indigo (Martha Cove Marina Land Owner) Pty Ltd ("ILO"); 2. Indigo (Martha Cove Harbour Precinct Land Owner) Pty Ltd ("IHPO"); and 3. Indigo Pacific Capital Limited ("IPC").

ILO

1. ILO was, relevantly, the registered proprietor of the Marina from 18 July 2006 to 21 July 2015.
2. It was also the trustee of the following trusts: 1. The Neilson Martha Cove Marina Loan Owner Trust; and 2. The Truce Martha Cove Marina Land Owner Trust.
3. It was deregistered on 18 November 2018.

IHPO

1. IHPO, relevantly, was the registered proprietor of the Other Properties from 18 July 2006 to 15 January 2014.
2. It was the trustee of the following trusts: 1. The Neilson Martha Cove Harbour Precinct Land Owner Trust; and 2. The Truce Martha Cove Harbour Precinct Land Owner Trust.
3. It was deregistered on 16 November 2014.

IPC

1. IPC was a public company which specialised in providing funding to property developments. Its business included lending money to IHPO and ILO, but IPC did not have any ownership interest in those two companies.
2. As mentioned earlier, it was a related party of City Pacific.
3. The IPC was deregistered on 25 December 2016.

Australian Property Institute

1. The Australian Property Institute ("API") was an industry recognised organisation for property professionals in Australia which, together with the Property Institute of New Zealand: 1. represents the interests of more than 11,000 property specialists throughout Australia and New Zealand; and 2. issues annual manuals (including Practice Standards) setting out the duties, responsibilities and professional standards of members of the Australian Property Institute and of the Property Institute of New Zealand.
2. Reference was made to API Practice Standards and API Guidance Notes in these proceedings.

MCD (Aust) Pty Ltd

1. MCD (Aust) Pty Ltd ("MCD") was a property advisory company which instructed CBRE to prepare valuations "on behalf of Indigo group". I will return to the role of MCD in the context of the Indigo and Amended Indigo Valuations.

Key Individuals

1. In addition to the multitude of relevant entities, the factual matrix of these proceedings was complicated by the number of "key individuals" that held and/or changed positions within one or more of the abovementioned entities. As such, the key individuals, together with their respective roles at relevant times, are summarised in the below in tabular form, by reference to the following groupings: 1. the plaintiffs; 2. liquidators of the plaintiffs; 3. the Indigo Group; and 4. MCD.

The Plaintiffs Individual Role(s) James Finucan Director and Company Secretary of Martha Cove from 20 July 2006 to the date of the hearing. Company Secretary of City Pacific from 1 August 2006 to the date of the hearing. General Counsel of City Pacific from about 2006 to 2008. Robert Friggi Manager Commercial Lending - Victoria of City Pacific in about September 2007. Matt Gillam Assistant Lending Manager of City Pacific from about 8 August 2005 to July 2006. Lending Manager of City Pacific from about July 2006 to November 2008. Will Hattingh Development Executive of City Pacific in about November 2007. Steven Johnstone Corporate Treasury Manager of City Pacific from about 2007. Steve Mackay Group Executive - Administration of City Pacific from about 2005 to 2007. Company Secretary of City Pacific between 12 July 2001 and 1 August 2006. Executive Director of IPC from about 2006 to 2008. Managing Director and Company Secretary of IPC from about 2007 to 2008. Director of IPC from 17 February 2005 to 5 October 2012. Steve McCormick Group Executive - Property Development Finance of City Pacific from about July 2006 to July 2009. Director of City Pacific from 20 June 2008 to 27 July 2009. Adam Purss Chief Financial Officer of City Pacific from about 2006 to 2008. Garry Sladden Group Executive - Operations at City Pacific in about 2007. Phillip Sullivan Director of IPC between 17 February 2004 and 16 September 2005. Director of Martha Cove between 5 July 2006 and 5 December 2008. Director of City Pacific between 8 August 1997 and 12 November 2008. Managing Director and Chief Executive Officer of City Pacific from about 2006 and 2008. Angela Tinson Solicitor for City Pacific and Martha Cove from about 2006 to 2009. Peter Trathen Director of City Pacific from 16 September 2005 to 20 June 2018.

Liquidators of the Plaintiffs Individual Role(s) Simon Cathro The sole liquidator of City Pacific and Martha Cove from 8 May 2017 to the date of the hearing. Andrew Wily Joint Liquidator of City Pacific between 28 August 2009 and 19 April 2017. Joint Liquidator of Martha Cove between 23 October 2009 and 19 April 2017.

The Indigo Group Individual Role(s) Michael Kelly Chief Financial Officer of Indigo group in about 2007. Terry Lambert Solicitor for ILO in about 2006. Steve Mackay Group Executive - Administration of City Pacific from about 2005 to 2007. Company Secretary of City Pacific between 12 July 2001 and 1 August 2006. Executive Director of IPC from about 2006 to 2008. Managing Director and Company Secretary of IPC from about 2007 to 2008. Director of IPC from 17 February 2005 to 5 October 2012. Mitch Neilsen Director of IHPO from 26 June 2006 to 19 October 2009. Director of ILO from 26 June 2006 to 18 November 2018. Phillip Sullivan Director of IPC between 17 February 2004 and 16 September 2005. Director of Martha Cove between 5 July 2006 and 5 December 2008. Director of City Pacific between 8 August 1997 and 12 November 2008. Managing Director and Chief Executive Officer of City Pacific from about 2006 and 2008. Laurence Truce Director of IHPO from 26 June 2006 to 16 November 2014. Director of ILO from 26 June 2006 to 18 November 2018.

MCD Individual Role(s) Bart O'Callaghan Victorian Manager of MCD as at 14 February 2007.

TERMINOLOGY

1. As mentioned above, as part of their joint dramatis personae, the parties produced an agreed glossary of terms. It is convenient, at this juncture, to set out some of those terms.

"As If Complete"

1. A valuation of a property in which it is assumed that any proposed work on the property is already complete at the date of inspection and reflects the market at that date.

"As Is"

1. A valuation of a property in its current physical condition, use, and zoning at the date of inspection.

"Berth"

1. A designated location in a port or harbour used for mooring vessels when they are not at sea.
2. To that definition it may be added, a "freehold berth" is a berth subject to freehold ownership. A "leasehold berth" is a berth subject to a lease.

"Capitalisation methodology"

1. A valuation methodology which involves converting the property's income stream into a capital value estimate through a capitalisation process.

"Gross Realisation"

1. The sum of the market values of the individual units which a property can achieve over a specified selling period, assuming an orderly sale, between willing buyers and willing sellers, in arm's length transactions, after proper marketing, wherein the parties acted knowledgably, prudently and without compulsion.

THE EVIDENCE

1. The evidence in the proceedings was voluminous and primarily consisted of the following documents: 1. Amended Evidentiary Statement of Simon Cathro, Liquidator of the plaintiffs, dated 4 July 2017 (Ex 7); 2. Supplementary Evidentiary Statement of Simon Cathro dated 6 July 2018 (Ex 8); 3. Part E of the Court Book, which consisted of 12 volumes, described as a "chronological bundle", and included material from 11 June 1999 through to 17 June 2019 (Ex 9); 4. Defendants' Tender Bundle (Ex 10); 5. Joint Key Documents Bundle (Ex 11); 6. Affidavit of Douglas Robert Lane dated 5 July 2018, together with exhibit DLR-3 (Ex 12); 7. Affidavit of Douglas Robert Lane dated 19 February 2019, together with exhibit DLR-4 (Ex 13); 8. Affidavit of Michael Wright dated 5 October 2018, together with exhibit MW-1 (Ex 14); 9. Affidavit of Michael Wright dated 5 October 2018, together with exhibit MW-1 (Ex 15) (notwithstanding the repeated date and exhibit description, Ex 14 and 15 were two different documents); 10. ANZ Valuation Guidance Note 2: "Valuations for Mortgage Loan Security Purposes" (Revised February 2006) (Ex 16); 11. Affidavit of Robert Gordon dated 4 October 2018, together with exhibit RG-1 (Ex 17); and 12. Affidavit of Robert Gordon dated 2 August 2019, together with exhibit RG-2 (Ex 18A).
2. At the hearing Mr Lane, Mr Wright and Mr Gordon, the expert witnesses, provided oral evidence via concurrent evidence. I will turn to a summary of the expert evidence in the course of my considerations after setting out the factual background.
3. In considering the lay evidence given by each party, it is important to bear in mind the respective positions of the parties. The plaintiffs are in liquidation and bring these proceedings by their liquidator, Mr Cathro. Mr Cathro has put in evidence of the documents available to him. The plaintiffs did not call any of their former officers. As was common ground, and stated by counsel for the defendants on a number of occasions, Mr Cathro in his capacity as liquidator of City Pacific had sued some of those officers in separate proceedings. Jones v Dunkel has no application to the position of the plaintiffs, the former directors and employees of City Pacific are not in the same camp as the companies in liquidation: see, by analogy, Australian Securities and Investments Commission v Hellicar (2012) 247 CLR 345 at [254] and [265] (per Heydon J).

SUBMISSIONS

1. The Court had the benefit of detailed and comprehensive written submissions prepared by counsel for the plaintiffs, Mr J C Giles SC with Mr B G Curtin, and the defendants, Mr D A Lloyd SC with Ms V Bulut. Their written submissions are as set out below: 1. Plaintiffs' Outline of Closing Submissions dated 20 September 2019, which consisted of 296 paragraphs (78 pages); 2. Defendants' Outline of Closing Submissions dated 14 October 2019, which consisted of 151 paragraphs (45 pages); and 3. Plaintiffs' Outline of Closing Submissions in Reply dated 21 October 2019, which consisted of 93 paragraphs (22 pages).

Introduction

1. During the course of proceedings the parties were requested to identify agreed facts and to crystallise factual matters that were in dispute. In relation to agreed matters, there was produced, at an earlier stage, an agreed statement of facts. Later in the proceedings, a document was prepared which set out, in part, those parts of the plaintiffs' written submissions providing a factual background with respect to which the defendants agreed.
2. As to the disputed matters, the defendants response to the plaintiffs factual submissions contained notations as to some factual issues which was supplemented by a more substantial document, from the defendants, setting out nine factual controversies. The plaintiffs objected to that document on the basis it did not conform with the agreement reached between the parties to identify the parties' positions with respect to the factual background by reference to the plaintiffs' written submissions and also because the document did not properly represent all relevant factual controversies.
3. The following discussion of the factual background proceeds upon the large measure of agreement as to the factual background, which agreement conforms with the Court's view of the evidence, together with the resolution of factual controversies (except to the extent those controversies are dealt with in the consideration section of this judgment). In adopting that approach, I proceeded upon the basis that, regardless of the disconformity of the document produced by the defendants with arrangements entered at the final day of hearing, the Court should grapple with those issues so far as they represented, as they did, various factual contests over which the parties joined issue in the course of the proceedings. In other words, regardless of the form of the document and its timing, the issues raised were squarely before the Court and should be dealt with, although the document does not deal with all of the factual controversies laying between the parties. Those broader range of issues are also addressed in the following discussion, albeit in the context where the utility of the approach earlier envisaged by the Court was diminished to some degree by the approach adopted by the defendants.

CBRE Quality Assurance Procedures

1. In about January 2006, Mr Nicodimou signed a document entitled "Quality Assurance Procedures for Mortgage Security Valuations", acknowledging CBRE's mandatory procedures for mortgage security valuations.

The Draft Valuation

1. On about 10 March 2006, Mr Nicodimou provided Mr Sullivan of City Pacific with a copy of a draft valuation of a number of properties within the Martha Cove Development, including the Marina. The draft valuation was titled: "A Valuation Report prepared for City Pacific Limited Of Stages 2A - H, S7, S8 & 3, 4A-C, 5, 6, Martha Cove Safety Beach VIC 3004" ("the draft valuation") and dated 9 February 2006.
2. In s 1.1 of the draft valuation, the defendants recorded the instructions they had received from City Pacific dated 27 February 2006, being, relevantly, to assess the "Current Market Value 'As Is'" and the "Gross Realisation 'As if Complete'" of the Marina for "first mortgage security purposes". Section 1.1. is extracted below: 1.1 Instructions We refer to written instructions received from Mr Matt Gillam, City Pacific Limited, dated 27 February 2006 requesting us to undertake a valuation of the freehold interest of the subject property for first mortgage security purposes. Specifically we are to assess the following: 1. Current Market Value "As Is" acknowledging the permit, approved plans, pre-sales and Quantity Surveyor verification of Costs (Rider Hunt) and the Gross Realisation "As if Complete" for each Stages 2A-H, 57, S8, 3 and Stages 4A-C, 5, 6. We enclose herewith a copy of the Letter of Instruction, refer Appendix I. (The "copy of the Letter of Instruction" was not annexed with the draft valuation).
3. The draft valuation responded to express instructions to value the Marina on a gross realisation basis.
4. At some stage prior to 25 May 2006, Marina Cove became the registered proprietor of the Marina and the Other Properties. As earlier mentioned, City Pacific was the ultimate parent company of Marina Cove.
5. On about 28 April 2006, Marina Cove provided various documents to Mr Neilsen at IPC, including feasibility reports for the Marina and Other Properties, in connection with a proposed sale of those properties to the Indigo group. The defendants disputed the relevance of this fact to the proceedings, but did not appear to dispute its occurrence.
6. It is apparent that it was anticipated that the purchase by the Indigo group was to be funded by a loan by City Pacific in its capacity as responsible entity of the CPMT. In the events which occurred, Marina Cove also provided vendor finance. Although that is part of the factual setting, the vendor finance does not inform the analysis. The purchaser repaid Marina Cove in about August 2007.

The Letter of Instruction for the June Valuation: The Valuation Retainer

1. By letter dated 25 May 2006, addressed to Mr Nicodimou, City Pacific engaged CBRE to provide a valuation report in respect of the Marina and the Other Properties for mortgage security purposes in accordance with "City Pacific Limited Valuation Guidelines" ("the Valuation Retainer"). The Valuation Retainer expressly stated that the valuation report was to be relied upon by City Pacific and PTQ as custodian for the CPMT.
2. The purpose of the valuation, expressly stated in the letter, was that City Pacific was considering funding, by loan, the acquisition by an Indigo group company of the Marina and Other Properties. The following facts are not controversial: 1. the letter expressly referred to a valuation for mortgage security purpose (the "re" of the letter); 2. the letter stated that the valuation be of, inter alia, the Marina, drawing no distinction between the Marina and the Other Properties in terms of that which was to be valued; and 3. the letter stated that the valuation was to be "as is".
3. At the outset, the Valuation Retainer stated: It is essential that you use and undertake procedures, processes, enquiries and examinations that would reasonably be expected of a registered valuer to determine market value of the property. City Pacific Limited will place considerable reliance on your valuation in assessing whether the loan proceeds. [Emphasis added.]
4. As to that initial instruction, the plaintiffs contended that the reference to "procedures, processes, enquiries and examinations that would reasonably be expected of a registered valuer to determine market value of the property" is informed by the API Practice Standards and the expert evidence before this Court. Reference, in that respect, was made to Practice Standard 1, in particular, para 4.0, which is extracted below: 4.0 SALE IN ONE LINE OR SINGLE TRANSACTION Where a valuation is undertaken of multiple properties in one development the sum of individual values must not be reported as the value of the development, but if aggregated must be reported as the total gross realisation. A Sale In One Line valuation must be based on the assumption of a single transaction for the total holding or a sale in one line to one buyer.
5. The effect of that standard, it was correctly submitted, "is that a gross realisation analysis is not to be stated as a valuation of separate properties". That requirement, it was further contended by counsel for the plaintiffs, was consistent with the suggestion ultimately made by Mr Wright that a gross realisation might be an integer in a valuation, but otherwise tells one little or nothing about the market value of a property. That evidence is extracted below (T112.48-115.20): GILES: Just coming back to paragraph 39 and the valuation of May 2006, do you accept that the valuation of May 2006 was not a valuation of a freehold interest in lot S17? WITNESS WRIGHT: I do agree. GILES: Do you also agree that it did not express the market value of the 239 lots if traded in one line? WITNESS WRIGHT: Correct. GILES: And one would say the same about the 2007 valuation. That is, it was not a valuation of a freehold interest in lot S17? WITNESS WRIGHT: That's right. GILES: And it did not tell you what the market value of the then 233 berths were if sold in one line? WITNESS WRIGHT: That's right. GILES: And that's because if sold in one line you would not expect the market value to equate to the sum of 239 individual sales? WITNESS WRIGHT: Correct.

Offers of finance

1. In about June 2006, Marina Cove agreed to sell the Marina and the Other Properties to the Indigo group.

The Indigo Loan Facility

1. After exchanging preliminary offers, on 22 June 2006, City Pacific, in its capacity as the responsible entity of the CPMT, offered to provide a facility of $27.84 million to the Indigo Group for the purposes of acquiring the Marina and the Other Properties ("the Indigo Loan Facility").
2. The parties provided the following agreed definition of the Indigo Loan Facility: Deed of loan between the PTQ, acting as agent for City Pacific in its capacity as the responsible entity of the CPMT, ILO and IHPO in the amount of $27.84 million for the purposes of acquiring the Marina and the Other Properties dated 30 June 2006.

The Indigo Mezzanine Facility

1. On the same day, Marina Cove offered to provide a facility of $6.88 million to the Indigo Group to assist with the purchase of security, expenses and interest costs associated with the Indigo Loan Facility ("the Indigo Mezzanine Facility").
2. The parties provided the following agreed definition of the Indigo Mezzanine Facility: Deed of loan between Marina Cove, ILO and IHPO in the amount of $6.88 million for the purposes of assisting with the purchase of security, expenses and interest costs associated.
3. Both offers were subject to the provision of security by the Indigo group, including mortgages over the properties, and to a satisfactory valuation for mortgage security purposes being obtained.
4. The offers did not commit City Pacific; its commitment to lend on the terms suggested being subject to its determination that the security was of sufficient value.
5. The Indigo Group accepted the offers on 26 June 2006. City Pacific's commitment to lend remained subject to, inter alia, satisfactory valuations of the security.

Factual Controversy: Conversations (if any) between Mr Nicodimou and Mr Gillam between 26 and 29 June 2006

1. The plaintiffs contended that between 26 and 29 June 2006, in connection with the proposed sale and finance of the Marina and the Other Properties, Mr Gillam and Mr Nicodimou exchanged emails and had discussions pursuant to which Mr Gillam requested that the assessment of market value and the valuation for the Marina and Other Properties be increased.
2. Conversely, the defendants submitted that there was no evidence before the Court as to the contents of any discussions between Mr Nicodimou and Mr Gillam. The Court can only proceed, it was submitted, on the basis of the contents of the emails which were in evidence. Those emails are extracted below.
3. On 26 June 2006 at 6.08pm, Mr Nicodimou sent an email to Mr Gillam, which stated: Hi Matt, got your phone message. I will look into further over night, but I can move the S17 (239 berths) to $20,845,000 ex GST which is $22,929,000 inc GST. The original figure of $26,185,000 was inclusive of GST. I have reviewed the figure down as a result of the higher outgoings that you sent me as compared with my evidence. Also I have moved the commercial centre value up from $10,000,000 up to $12,500,000 which now gives a land value of $2,500,000. Last time I did not report a land value, just an as [sic] if complete value, based on a build out for the commercial. I also noticed that S17 does include some waterside houses. If the S17 figure is still a problem then I can always apportion the value a bit differently so more goes towards S17 (ie inc some the waterside apaprtments [sic]). PS the apportionment of uses to each Lot is roughly mine as you did not have a map or PS for each Lot. Let me know of your thoughts. [Emphasis added.]
4. On 27 June 2006 at 9.03am, Mr Gillam responded by email to Mr Nicodimou, which stated: I'll give you a call mid morning if that's ok Chris - I've just got a couple of pressing matters to attend to before I can get my head back into this! The main thing I'll be wanting to know is where the original figure of $23.8 exc came into play as that is what we were counting on/relying on to get us over the line. I'll discuss with you in an hour or so. [Emphasis added.]
5. Later on 27 June 2006 at 1.36pm, Mr Gillam sent a further email to Mr Nicodimou ("the Further 27 June 2006 Email"), which stated: Hi Chris, Further to this; The total value we need to achieve is $34,800,000 exclusive of GST. This can be apportioned in any manner but this is a critical figure [Original emphasis]. The contract suggests all parcels are being sold under this figure but this is to be expected given the relationship we have with the Indigo Group, hence the Vendor Finance arrangement being undertaken by Marina Cove Pty Ltd. The purchase price exclusive of GST is $30,473,000 with GST of $1,252,172.88 on top of this. Contract prices were set a reasonable time ago and whilst they are arms length, they have been discounted. The commercial land apportionment could be raised if you are comfortable with an overall value of $12,500,000. A land content of $4,000,000 would not be unreasonable? I assume there would have had to have been a land content included in an 'as if complete' value of $9,090,909 exc GST? CPPM had originally assumed from a land/building split - $3,000,000/$6,090,909. Would this then allow you to place a figure of $22,000,000 exc GST on the Marina berths without compromising your evidence to any severe degree? Give me a call to discuss in need. [Emphasis added.]

Factual Controversy: Mr Nicodimou's knowledge of the relationship (if any) between City Pacific and the Indigo Group in 2006

1. The plaintiffs contended that the Further 27 June 2006 Email informed Mr Nicodimou of the relationship between City Pacific and the purchaser (at that time). The text relied upon in the Further 27 June 2006 emailed was: … The contract suggests all parcels are being sold under this figure but this is to be expected given the relationship we have with the Indigo Group, hence the Vendor Finance arrangement being undertaken by Marina Cove Pty Ltd.
2. The defendants submitted that the email speaks for itself. At its highest, it tells of a relationship but not the nature of extent of that relationship.
3. In the absence of Mr Nicodimou being called to give evidence, it is difficult to see how significant weight can be attached to a statement of Mr Gillam to Mr Nicodimou as to the relationship between City Pacific and the Indigo Group. As to this second factual controversy, I accept the submission of the defendants. At its highest, the Further 27 June 2006 Email, in particular the passage relied upon by the plaintiffs, indicates that a relationship existed as at that time but does not sustain an inference as to Mr Nicodimou's knowledge of the nature or extent of such a relationship as at that time.

The Significance of the Further 27 June 2006 Email

1. The plaintiffs advanced the following submissions as to the significance of the Further 27 June 2006 Email: 1. While it does not reflect well on Mr Gillam's competence (he appears more interested in the deal rather than value), he was not the decision maker. That Mr Gillam was not the decision maker only emphasised the need for a valuation which accorded with instructions, and the instructions recorded in the valuation. 2. The email informed Mr Nicodimou of the relationship between City Pacific and the purchaser. That relationship was one foundation of Mr Wright's evidence (in the "Reply Report" referred to below) to the effect that he thought it usual that the purchaser had the June Valuation, and demonstrates that acting reasonably the defendants ought to have expected that the Amended Indigo Valuation would be shared with City Pacific.
2. In contrast to the first contention, the defendants relied on the course of correspondence between City Pacific and Mr Nicodimou between 25 May 2006 (the date of the Valuation Retainer) and when the June Valuation was completed as evidencing a change in instructions.
3. In reply to that contention that plaintiffs submitted: 31. There are numerous problems with that theory, and this email demonstrates one of those problems. Directing attention to higher outgoings to the Marina owner is prima facie inconsistent with a valuation involving tallying up potential sale prices of long-term leases. Taking outgoings into account is a proper analysis, either of capitalising net income or a discounted cashflow. The present point is that this correspondence does not convey the meaning for which the defendants contend.
4. Further, even if the Court accepted the defendants' submission, the plaintiff submitted, such a fact would not diminish the plaintiffs' case for the following reasons: 1. The June Valuation was expressly stated to be in response to the instruction contained in the Valuation Retainer. A reader of the June Valuation may reasonably have understood that statement to be accurate. One reason why a valuation usually incorporates the letter of instruction (in this case, the Valuation Retainer) is so that a reader is left in no doubt as to the basis of the valuation. Put another way, publication of the valuation conveys that the valuation was prepared in accordance with the attached instructions and not on some other basis. 2. Taken at its highest the correspondence might be understood as consistent with an "as if complete" valuation rather than an "as is" valuation. The correspondence does not contemplate: 1. something other than a market valuation; or 2. a valuation of the individual berths rather than the freehold Marina lot. As already identified, the communications are consistent with the proper approach to valuation using capitalised income or a discounted cash flow (see the 26 June 2006 email, extracted above, referring to taking outgoings into account). 1. There appears to have been telephone conversations between Mr Gillam and Mr Nicodimou. As mentioned above, Mr Nicodimou was to give evidence in the defendants' case but chose not to. No inference should be drawn in the defendants' favour. Instead, it may be readily inferred that instructions were not expressly altered. Afterall, had Mr Nicodimou given evidence it may be expected that he would (whether in chief or in cross-examination) give evidence about, inter alia: 1. why the Valuation Retainer was attached to the June Valuation if instructions had been changed; 2. the use he was making of costs in his valuation exercise; and 3. his conversations with Mr Gillam. In his public examinations, Mr Nicodimou gave evidence that: 1. he had prepared the June Valuation in accordance with the Valuation Retainer (see examination before Senior Deputy Registrar Bellach on 9 May 2016); 2. that he had taken the costs into account in his valuation exercise (see examination before Senior Deputy Registrar Brown on 11 May 2016); and 3. that he did in fact have conversations with Mr Gillam (see examination before Senior Deputy Registrar Brown on 11 May 2016).

June Valuation

1. On 30 June 2006, Mr Nicodimou sent an email to Mr Gillam attaching the final signed June Valuation. The Valuation Retainer and Valuation Guidelines were annexed to the June Valuation (see Appendix I to the June Valuation). There is no express statement of any different instruction.
2. The June Valuation valued the Marina and the Other Properties as at 18 May 2006 for a total assessed value of $34.8 million (excluding GST). The June Valuation was comprised as follows: 1. Lot S17 (239 leasehold berths) - $22.5 million GST exclusive on a "Gross Realisation - 'As if Complete'" basis; 2. Lots S22 and S24 - $8.8 million GST exclusive on a "Current Land Value As Is" basis; and 3. Lot 23 - $3.5 million GST exclusive on a "Current Land Value As Is" basis.
3. The "client" listed on the June Valuation was City Pacific.
4. In light of the contentions raised by the plaintiffs in these proceedings, it is necessary to set out particular aspects of the June Valuation.
5. The June Valuation is divided into seven broad areas: 1. Introduction; 2. Site Details; 3. Property Description; 4. Market Commentary; 5. Sales Evidence for "As Is" Values; 6. Valuation Rationale; and 7. Contact Details.
6. In addition to those topics, the June Valuation included a "Valuation Summary"; "Assumptions, Disclaimers, Limitations & Qualifications"; and Appendices I-VI.
7. In written submissions, the parties made particular reference to the contents appearing within Introduction, Property Description, Sales Evidence for "As Is " Values, and Valuation Rationale. Reference was also made to the disclaimers included within the report. The relevant passages are extracted below.

Introduction

1. Section 1.1 is extracted below: 1.1 Instructions We refer to written instructions received from Mr Matt Gillam, City Pacific Limited, dated 25 May 2006 requesting us to undertake a valuation of the leasehold and freehold interest of the subject property for first mortgage security purposes. Specifically we are to assess the following: 1. Current Market Value "As Is" acknowledging the permit, approved plans for each Stages Lot Si 7 (As If Complete), Lot S23, Lot S22 and S24 on Plan of Subdivision PS435310J (Stages S7, SS, 2H, S6). We enclose herewith a copy of the Letter of Instruction, refer Appendix I.
2. The definitions of "Market Value", "Gross Realisation" and "As If Complete" adopted in the June Valuation appear at s 1.6, see below: 1.6 Market Value Definition The Australian Property Institute (API) has adopted the international definition of Market Value, namely: "Market Value is the estimated amount for which an asset should exchange on the date of valuation between a willing buyer and a willing seller in an arm's length transaction, after proper marketing, wherein the parties had each acted knowledgeably, prudently and without compulsion". We also provide the following definition of 'Gross Realisation' and 'As if Complete' which are in accordance with the API Guidelines: "Gross Realisation at the date of valuation is the sum of the Market Values of the individual units which a property can achieve over a specified selling period, assuming an orderly sole, between willing buyers and willing sellers, in arms length transactions, after proper marketing, wherein the parties acted knowledgeably, prudently and without compulsion." "The Value 'As If Complete' assessed herein is the Market Value of the proposed improvements as detailed in the report on the assumption that all construction has been satisfactorily completed in all respects at the date of this report. The valuation reflects the valuer's view of the market conditions existing at the date of the report and does not purport to predict the market conditions and the value at the actual completion of the improvements because of the time lag. Accordingly, the 'As If Complete' valuation must be confirmed by a further inspection by the valuer, initiated and instructed by the lender, on completion of improvements. The right is reserved to review, and if necessary, vary the valuation in this report if there are any changes in relation to the project itself or in the properly market conditions and prices."

Property Description

1. At s 3.1, the land that was subject to the valuation was set out. Under the heading "Overall Proposal" the following appeared: Martha Cove is a unique waterfront residential community combining an integrated boat harbour and commercial development currently under construction. The total estate is set on 94 hectares of land with 17 hectares of waterways with direct access to Port Phillip Bay. It is intended that on completion there will be 1,173 residential dwellings, 786 marina berths, 200 dry berths, commercial and retail precincts and tourist accommodation. The development will be released in 6 stages over 4 years. Stages 1 and 2 are currently for sale and includes a mix of waterfront apartments and harbour side apartments/townhouses.
2. An extract appears below:
3. Section 3.2 is titled "Development Timeline". The section confirms that CBRE "have been provided with a detailed development timeline for the subject development", which "form part of Stage 2". Following a table that sets out the timing for development from Stage 2 to Stage 6, the following is recorded: Development of Martha Cove is well advanced with the waterway complete up to Precinct 2A. At the time of inspection much of the infrastructure associated with Stage 2 was underway with some internal roads complete. The revetment wall associated with Precincts S6 and 2H were under construction. As indicated in the above table from the date of valuation a number of the stages identified have commenced. The final completion date is expected in October 2008 assuming the current timing. Our assessment of the value of the subject site is critical that this timing be maintained and advised that our assessment be referred back in the event of any variation.

Sales Evidence for "As Is " Values

1. Section 5.2.1 provided: 5.2.1 Conclusion - Berths "As If Complete" Therefore based on the above sales evidence of leasehold berths we have adopted a wet berth value of $55,000 to $187,500 per berth varying on size and width for the subject. Leasehold Marina Berths Lot 517 (Stage 2H 56) Our estimates of present day value are based on current market knowledge and are exclusive of GST.
2. Section 5.5 is extracted below: 5.5 Summary of Assessed Values We have summarised below our assessments for the individual components above. Lot S22 and 524 (44 Waterside Apt) $ 8,800,000 Lot S17 (239 Leasehold Berths) $22,500,000 (As If Complete) Lot 523 (Retail Site) $ 3,500,000 TOTAL ASSESSMENT $34,800,000

We have adopted a total assessed value of $34,800,000 excluding GST.

Valuation Rationale

1. Sections 6.1 and 6.2 appear below: 6.1 Introduction In arriving at our opinion of the market value of the subject site we have relied on the direct comparison approach having regard to comparable sales particularly within the subject development and current economic conditions. 6.2 Assessment Summary We have summarised below our assessments for the individual components above. Lot S22 and 524 (44 Waterside Apt) $ 8,800,000 Lot S17 (239 Leasehold Berths) $22,500,000 (As If Complete) Lot 523 (Retail Site) $ 3,500,000 TOTAL ASSESSMENT $34,800,000

We have adopted a total assessed value of $34,800,000 excluding GST.

1. It may be noted that the valuation amount of $22.5 million, with respect to Lot S17, appears consistently throughout the June Valuation.

The Disclaimers

1. Two disclaimers appeared in the June Valuation, which attracted significant controversy in the context of the parties' respective cases vis-à-vis reliance (particularly in the context of the Amended Indigo Valuation, which will be set out below). The relevant disclaimers are found on page vi and s 1.4 of the valuations.
2. The disclaimer on page vi appears next to the heading "Assumptions, Disclaimers, Limitations & Qualifications". It is extracted below: Assumptions, Disclaimers, Limitations & Qualifications: This valuation report is provided subject to the assumptions, qualifications, limitations and disclaimers detailed throughout this report which are made in conjunction with those included within the Assumptions, Qualifications, Limitations & Disclaimers section located at the beginning of this report. Reliance on this report and extension of our liability is conditional upon the reader's acknowledgement and understanding of these statements. This valuation is for the use only of the party to whom it is addressed and for no other purpose. No responsibility is accepted to any third party who may use or rely on the whole or any part of the content of this valuation. The valuer has no pecuniary interest that would conflict with the proper valuation of the property. The assessment of the individual values assumes the development is completed to a satisfactory standard as at the date of valuation having regard to market evidence existing at the time, and does not purport to represent values at any future point in time. [Emphasis added.]
3. Section 1.4 is also described as a disclaimer. Under the heading, "Extension of Liability & Confidentiality", the following appears: This report may only be relied upon by City Pacific Limited, The Public Trustee of Queensland ACF the City Pacific Mortgage Trust for first mortgage security purposes. This confidential document is for the sole use of persons directly provided with it by CB Richard Ellis. Use by, or reliance upon this document by anyone other than City Pacific Limited, The Public Trustee of Queensland ACF the City Pacific Mortgage Trust is not authorised by CB Richard Ellis and CB Richard Ellis is not liable for any loss arising from such unauthorised use or reliance. This document should not be reproduced without our prior written authority.
4. I will return to the plaintiffs' contentions as to the alleged misleading and deceptive representations within the June Valuation at a separate juncture in the context of a consideration of the relevant issues in dispute.

Sale of the Marina to Indigo

1. On about 29 June 2006, a proposal in relation to the Indigo Loan Facility was prepared. The proposal was titled: "Proposal - Variation/Extension of Loan". An extract of that proposal appears below:
2. That proposal referred to a valuation date of 18 May 2006 and a property value of $34.8 million, which details correspond with the June Valuation. That proposal adopted the June Valuation. Further, City Pacific at that stage, it was contended, was expressly acting in reliance on the June Valuation.
3. The sale of the Marina and Other Properties occurred, financed by City Pacific as responsible entity for the CPMT and by vendor finance from Marina Cove. On the same day, the sale of the Marina and Other Properties occurred, financed by City Pacific as responsible entity for the CPMT and by vendor finance from Marina Cove. A number of documents were executed effecting the sale of the Marina and the Other Properties, including: 1. contract of sale for the sale of the Marina to ILO for a purchase price of $21,203,000 (excluding GST), including the Berth Infrastructure Payment of $3,251,728.82 (excluding GST); 2. contract of sale for the sale of the Other Properties to IHPO for a total purchase price of $9,270,000 (plus GST). (It may be noted that whilst the presence of different buyers is part of the factual narrative to these proceedings, that fact is of no significance to the outcome of the ultimate issues in dispute).
4. On 30 June 2006, a number of documents effecting the Indigo Loan Facility and the Indigo Mezzanine Facility and associated security were also executed, including: 1. a mortgage given by ILO to PTQ over the Marina; and 2. a mortgage given by IHPO to PTQ.
5. The effect of those transactions, when completed, relevantly was that ILO acquired the Marina, funded by PTQ as custodian of the CPMT. Marina Cove provided mezzanine finance, secured by a second ranking mortgage.
6. As to the issues concerning the operation of s 601FS of the Corporations Act 2001 (Cth) vis-à-vis the rights, obligations and liabilities of former responsible entities, I will return to those contentions at a separate juncture in the context of the consideration of the issues in dispute.

Indigo Valuation

1. By early 2007, ILO was looking to sell or refinance the Marina.
2. By letter of instruction dated 14 February 2007, MCD on behalf of the Indigo group engaged CBRE "to update the Valuation for Martha Cove Activity Centres for the Marina Lot S17 and the apartments at Lots S22, and 24 to reflect Current Market Value "As Is" acknowledging the permit, approved plans for each Lot S17, Lot S23, Lot S22 and S24 on Plan of Subdivision PS435310J (Stages S7, S8, 2H, S6 of the Martha Cove Master Plan" ("14 February 2007 Letter").
3. That letter of instruction is extracted in full below: Dear Chris Re: Martha Cove Activity Centre Revision of Land Valuation Commission Confirmation MCD Australia on behalf of Indigo Group, confirm your commission to update the Valuation for Martha Cove Activity Centres for the Marina Lot S17 and the apartments at Lots S22, and 24 to reflect Current Market Value "As Is" acknowledging the permit, approved plans for each Lot S17, Lot S23, Lot S22 and S24 on Plan of Subdivision PS435310,1 (Stages S7, S8, 2H, S6 of the Martha Cove Master Plan)". We request that you proceed with the completion of this report and issue a draft copy to our offices via email as soon as possible. We agree to reimburse you upon the completion and issue of this report for the agreed fee of $25,000 plus GST. We trust the above is concise and await your report. Yours faithfully MCD (Aust) Pty Ltd Bart O'Callaghan Victorian Manager
4. On 16 March 2007, Mr Nicodimou provided MCD with a valuation report in response to the above instructions, and which expressed an opinion as to market value as at 30 January 2007. That valuation report was titled: "A Valuation Report prepared for MCD AUSTRALIA ON BEHALF OF INDIGO (MARTHA COVE HARBOUR PRECINCT LAND OWNER) PTY LTD Of "Martha Cove Marina & Commercial Centre" Lot S17, Lot S23, Lot S22 and S24 on Plan of Subdivision PS435310J "Martha Cove" Safety Beach VIC 3936" and dated 30 January 2007 ("the Indigo Valuation"). The relevant letter of instruction is extracted below: Dear Mr O'Callaghan, Valuation Report - City Pacific Land Portfolio Lot S17, S23, S22, S24, on PS435310J, Martha Cove In accordance with instructions received, we enclose 2 bound originals and a PDF version on CD of our valuation report in relation to the abovementioned property, together with our account for professional fees to the agreed amount. Please note our terms of payment are 14 days net. We thank you for this instruction and if we can be of further assistance, please do not hesitate to contact us. Yours sincerely CB Richard Ellis (V) Pty Ltd Chris Nicodimou

Introduction

1. The relevant instructions provided to CBRE by MCD commissioning the valuation were set out at s 1.1, extracted below: 1.1 Instructions We refer to written instructions received from Mr Bart O'Callaghan, Victorian Manager, MCD Australia, dated 14 February 2007 requesting us to undertake a valuation of the leasehold and freehold interest of the subject property for first mortgage security purposes on behalf of Indigo (Martha Cove Harbour Precinct Land Owner) Ply Ltd. Specifically we are to assess the following: 1. Current Market Value "As Is" acknowledging the permit, approved plans for each Stages Lot S17 (As If Complete), Lot S23, Lot 522 and S24 on Plan of Subdivision PS435310J (Stages S7, S8, 2H, S6). We enclose herewith a copy of the Letter of Instruction, refer Appendix I.
2. The definitions of "Market Value", "Gross Realisation" and "As If Complete" appeared again at s 1.6. The definitions adopted for the purposes of the June Valuation were repeated in the Indigo Valuation.

Property Description

1. At s 3.1, the land that was subject to the valuation was set out. Under the heading "Overall Proposal" the following appeared: Martha Cove is a unique waterfront residential community combining an integrated boat harbour and commercial development currently under construction. The total estate is set on 94 hectares of land with 17 hectares of waterways with direct access to Port Phillip Bay. It is intended that on completion there will be 1,173 residential dwellings, 786 marina berths, 200 dry berths, commercial and retail precincts and tourist accommodation. The development will be released in 6 stages over 4 years. Stages 1 and 2 are currently for sale and includes a mix of waterfront apartments and harbour side apartments/townhouses.
2. . An extract appears below:
3. Section 3.2 is titled "Development Timeline". The section confirms that CBRE "have been provided with a detailed development timeline for the subject development", which "form part of Stage 2 and Stage 3". Following a table that sets out the timing for development from Stage 2 to Stage 6, the following is recorded: Pursuant to the above development program development of Martha Cove is well advanced with the waterway complete up to Precinct 2G. At the time of inspection much of the infrastructure associated with Stages 1 and 2 was complete with internal roads complete. The revetment wall associated with Precincts S6 and 2H is also complete which includes the Inland Harbour comprising the 233 leasehold berths. As indicated in the above table from the date of valuation a number of the stages identified have commenced. The final completion date is expected in 2008/2009 assuming the current timing. Our assessment of the value of the subject site is critical that this timing be maintained and advised that our assessment be referred back in the event of any variation.

Sales Evidence for "As Is" Values

1. Relevantly, at ss 5.2.1 and 5.5, the following appeared: 5.2.1 Conclusion - Berths "As If Complete" Therefore based on the above sales evidence of leasehold berths we have adopted a wet berth value of $72,000 to $300,000 per berth varying on size and width for the subject. Our estimates of present day value are based on current market knowledge and are exclusive of GST. … 5.5 Summary of Assessed Values We have summarised below our assessments for the individual components above. Lot S22 and 524 (44 Waterside Apt) $ 8,800,000 Lot S17 (239 Leasehold Berths) $27,700,000 (As If Complete) Lot 523 (Retail Site) $ 3,500,000 TOTAL ASSESSMENT $40,000,000

We have adopted a total assessed value of $40,000,000 excluding GST.

Valuation Rationale

1. Sections 6.1 and 6.2 appear below: 6.1 Introduction In arriving at our opinion of the market value of the subject site we have relied on the direct comparison approach having regard to comparable sales particularly within the subject development and current economic conditions. 6.2 Assessment Summary We have summarised below our assessments for the individual components above. Lot S22 and 524 (44 Waterside Apt) $ 8,800,000 Lot S17 (239 Leasehold Berths) $27,700,000 Lot 523 (Retail Site) $ 3,500,000 TOTAL ASSESSMENT $40,000,000

We have adopted a total assessed value of $40,000,000 excluding GST.

1. It may be noted that the valuation amount of $27.7 million, with respect to the Marina (namely, Lot S17), appears consistently throughout the Indigo Valuation.
2. For completeness, it may be noted, there is a discrepancy between the timeline of the date of the letter of instruction annexed to the valuation and the date of valuation, with the latter preceding the former. This discrepancy was not the subject of any submissions and not appear to impact upon the resolution of the issues in dispute.

Factual Controversies: The Indigo Valuation

1. I now turn to three particular factual controversies raised with respect to the Indigo Valuation, which concerned the following: 1. Mr Nicodimou's knowledge of the relationship (if any) between City Pacific and the Indigo Group in 2007; 2. Mr Nicodimou's knowledge of the instructions given to CBRE by MCD; and 3. The version of the Indigo Valuation which was provided by CBRE to MCD on 16 March 2007.

Factual Controversy: Mr Nicodimou's knowledge of the relationship between City Pacific and the Indigo Group in 2007

1. As to Mr Nicodimou's knowledge of the relationship between City Pacific and the Indigo Group as at 2007, the plaintiffs relied upon their submissions with respect to Mr Nicodimou's knowledge as at 2006 and, furthermore, the content of the letter of instruction dated 14 February 2007. Turning to the letter, the plaintiffs highlighted the first line of the letter, which stated: "MCD Australia on behalf of Indigo Group, confirm your commission to update the Valuation for Martha Cove Activity Centres for the Marina Lot S17…" (emphasis added). It was contended that such words confirm that it was expressly communicated to Mr Nicodimou that it was the Indigo Group that engaged CBRE to provide a valuation of the Marina.
2. Additionally, in consideration of this controversy, Mr Nicodimou's appreciation for a relationship may also be inferred by the subject line of his letter address to MCD: "Valuation Report - City Pacific Land Portfolio".
3. In written submissions, the plaintiffs also submitted: 44. … Objectively the defendants also knew that the Indigo group had the June Valuation, as that which was requested was an "update" of that valuation. Further, the requested valuation, sought by the landowners, was for mortgage lending purposes which objectively meant that IHPO was likely to share the valuation with counterparties to proposed transactions. For IHPO to do so was consistent with market practice, as demonstrated by Mr Wright's evidence, being that a valuer would expect IHPO was likely to share the valuation with counterparties to possible transactions involving the land.
4. The relevant part of Mr Wright's evidence at the hearing, relied upon in the preceding submission, is extracted below (see T109.35-110.31): GILES: In that circumstance you're telling his Honour it's not surprising that the May 2006 valuation had been passed from one to the other? WITNESS WRIGHT: Correct. GILES: That's something which, in your experience in the industry occurs? WITNESS WRIGHT: Yes. GILES: That is, related entities, even if on the other side of transactions, will share valuations? WITNESS WRIGHT: Yes. GILES: That's something that you've seen happen in the industry quite often? WITNESS WRIGHT: Yes. GILES: You've seen that happen with your reports? WITNESS WRIGHT: Yes. GILES: And as an expert valuer, you would expect when you publish a report that it may well be shared by the address with, amongst others, the counterparty to the transaction? WITNESS WRIGHT: Yes. GILES: And you would expect the counterparty to the transaction to rely upon it? WITNESS WRIGHT: I can't say. GILES: But you'd certainly expect the counterparty to the transaction to read it? WITNESS WRIGHT: Yes. GILES: If you were doing a valuation for a borrower which is expressed to be for mortgage purposes, you would expect the borrower to share that with the lender? WITNESS WRIGHT: Yes. GILES: And you would expect that the lender may rely upon it? WITNESS WRIGHT: Yes.

Mr Nicodimou's knowledge of the instructions given to CBRE by MCD

1. As to Mr Nicodimou's knowledge of the instructions given to CBRE by MCD, the plaintiff's contended that, objectively, the defendants knew that the Indigo Group had the June Valuation, as that what was requested in the 14 February 2007 Letter was an "update" of that valuation.
2. The defendants submitted that there was no evidence that the "Indigo group" had the June Valuation, nor was there any evidence as to what was being sought to be "updated".
3. I accept the submission advanced by the plaintiffs for the following reasons: 1. The language of the 14 February 2007 Letter plainly indicates that the valuation being commissioned by CBRE is an "update" to "the Valuation for Martha Cove Activity Centres for the Marina…". The earlier valuation by CBRE was the June Valuation. The Court has not been pointed to the evidence of any alternative valuation that the reference to an "update" could concern. Further, the subject line of the letter of instruction is "Valuation Report - City Pacific Land Portfolio". It follows that the subsequent valuation commission is an update of the June Valuation which also concerned the City Pacific Land Portfolio (namely, the Marina and the Other Properties). 2. The 14 February 2007 Letter was addressed to Mr Nicodimou on behalf of CBRE. I do not consider that the defendants can properly sustain opposition to this fact when faced with clear objective evidence: Mr Nicodimou is the addressee of the letter of instruction, and he subsequently confirms receipt of the instructions in his letter dated 16 March 2007. Finally, he ultimately produces the Indigo Valuation, which makes reference to and annexes the 14 February 2007 Letter as the relevant letter of instruction.

The version of the Indigo Valuation which was provided by CBRE to MCD on 16 March 2007

1. The plaintiffs contended that, on 16 March 2007, CBRE provided MCD with the Indigo Valuation, as defined in the FASOC.
2. The defendants' position was that the evidence before the Court did not reveal what version of the valuation was enclosed with the letter dated 16 March 2007. That is, whether it was the "Indigo Valuation" (as defined in the FASOC), the "Amended Indigo Valuation" (as defined in the FASOC) or some other variation.
3. In light of the letter of instruction annexed to the Indigo Valuation, the inference to be drawn is that the Indigo Valuation was provided with the letter dated 16 March 2007.

Establishment of Marina Trust and purchase of the Marina

1. From about May 2007, City Pacific began investigating the possibility of setting up a Marina Trust to buy various marinas, including the Marina. As to City Pacific's knowledge of the value of the Marina, at that time, the plaintiffs contended such knowledge was derived from the June Valuation. It was further contended that neither of the defendants had told City Pacific that the June Valuation was other than a valuation at market value, or that it was other than a valuation which expressed an opinion that the Marina would hold value, as expressly requested, over the 3 to 5 years from mid-2006 (the time of the June Valuation). I will return to this issue below, in the context of representations made by the defendants.
2. In June 2007, City Pacific and representatives of the Indigo Group began negotiating an option for the proposed Marina Trust to buy the Marina for approximately $30 million. That appears to be the price ILO was prepared to negotiate.
3. On 13 June 2007, Mr Kelly, CFO of the Indigo Group, sent an email to Mr Nicodimou providing information in relation to a valuation of the Marina ("the 13 June 2007 Email"), which was in the following terms: Hello Chris, Attached is the following: • Some comments on the points we discussed briefly on the phone about what is being valued, and what functions / capabilities were required to have a marketable marina and be able to effectively sell various lease products. Also some commentary about extra lengths that have been achieved through some reconfiguration and reclassification of marina berths; • A lease sales forecast set out in the cashflow worksheet in the attached All Sales Master file; and • Outline of the marketing strategy for selling the leases. By tomorrow I expect to be sending you: • Comment from the marina operator supporting the attached lease sales projections from the marina; • Engineer certification regarding the minor reconfiguration and reclassification of the berths; • Lawyer signoff regarding the minor reconfiguration and reclassification of the berths. Would you please give me a call re likely timing of completion of a draft valuation. We really need to have the valuation completed by 22 June. Thanks for your help. Michael
4. The email attached an excel spreadsheet, which consisted of several "worksheets". The file was titled: "Martha Cove Marina All Sales Master" ("the All Sales Master file"). Whilst express reference was made to a "cashflow worksheet" within the All Sales Master file, the file consisted of the following spreadsheets (or worksheets): 1. Residential Sales Target Tracker; 2. Sales / Rental Status by Volume; 3. Allocations by Stage ("the Allocations sheet"); 4. Martha Cove Marina Cashflow; 5. Summary of Martha Cove Marina Offerings (current as at June 2007) ("the Offering Model"); 6. Analysis of Offerings (GST exclusive); and 7. Base Rates for Mono Hull Marina Berths. (The All Sales Master file formed part of Ex 9. In light of the size of the individual spreadsheets, they are not extracted in this judgment, but I have had read and had regard to the same).

The Amended Indigo Valuation

1. The Amended Indigo Valuation was also prepared by the defendants, and the date of valuation is stated to be "30 January 2007" and in response to MCD's letter of instruction dated 14 February 2007. It contains very few changes to the Indigo Valuation. Notwithstanding an acceptance by the defendants that both the Indigo Valuation and the Amended Indigo Valuation were produced by the defendants, the defendants contended that "the evidence before the Court does not permit the Court to conclude with any level of confidence which of the Indigo valuations was prepared first". For reasons that I will set out below, I have found that the Indigo Valuation was produced first and the Amended Indigo Valuation second.
2. On the plaintiffs' case, which I accept, the Amended Indigo Valuation was not a fresh valuation report prepared by the defendants but rather merely some amendment made to the Indigo Valuation. It bares the same title and date of valuation as the Indigo Valuation, and makes reference to the same letter of instruction from MCD dated 14 February 2007 (that appears in at Appendix I of the Indigo Valuation). The plaintiffs submitted that "very few changes" are incorporated into the Amended Indigo Valuation save for "the valuation is adjusted reflecting the changed configuration referred to in Mr Kelly's 13 June email". The bulk of the paragraphs remain the same and, most notably, as already mentioned, the client and date of the valuation remained unchanged.
3. For the purpose of these plaintiffs' claim, the relationship between the Amended Indigo Valuation and the June Valuation is of greater significance. Following an outline of the relevant components of the Amended Indigo Valuation, I will return to the principal factual controversy, namely, the characterisation of the Amended Indigo Valuation as an update of the June Valuation.
4. Under the heading "Valuation Summary", the valuation for the Marina was provided on a "Gross Realisation 'As If Complete'" basis: $27.3 million.
5. The client listed on the Amended Indigo Valuation was "MCD Australia on behalf of Indigo (Martha Cove Harbour Precinct Land Owner) Pty Ltd". CBRE charged $25,000 (plus GST) for the valuation.

Introduction

1. The relevant instructions informing the valuation report for the Amended Indigo Valuation appear at s 1.1 and are extracted below: 1.1 Instructions We refer to written instructions received from Mr Bart O'Callaghan, Victorian Manager, MCD Australia, dated 14 February 2007 requesting us to undertake a valuation of the leasehold and freehold interest of the subject property for first mortgage security purposes on behalf of Indigo (Martha Cove Harbour Precinct Land Owner) Pty Ltd. Specifically we are to assess the following: 1. Current Market Value "As Is" acknowledging the permit, approved plans for each Stages Lot S17 (As If Complete), Lot S23, Lot S22 and S24 on Ran of Subdivision PS435310J (Stages S7, S3, 2H, S6). We endow herewith a copy of the Letter of Instruction, refer Appendix I.
2. The definitions of "Market Value", "Gross Realisation" and "As If Complete" appeared again at s 1.6. The definitions adopted for the purposes of the June Valuation and Indigo Valuation were repeated in the Amended Indigo Valuation. In my view, s 1.1 demonstrates that the defendants were instructed to provide a current market value "as is" valuation for the Marina (and, for completeness, the Other Properties) and its express purpose was "for first mortgage security purposes".

Property Description

1. At s 3.1, the land that was subject to the valuation was set out. Under the heading "Overall Proposal" the following appeared: Martha Cove is a unique waterfront residential community combining an integrated boat harbour and commercial development currently under construction. The total estate is set on 94 hectares of land with 17 hectares of waterways with direct access to Port Phillip Bay. It is intended that on completion there will be 1,173 residential dwellings, 786 marina berths, 200 dry berths, commercial and retail precincts and tourist accommodation. The development will be released in 6 stages over 4 years. Stages 1 and 2 are currently for sale and includes a mix of waterfront apartments and harbour side apartments/townhouses.
2. An extract appears below:
3. Section 3.2 is titled "Development Timeline". The section is a repetition of what appears in s 3.2 of the Indigo Valuation. It confirms that CBRE "have been provided with a detailed development timeline for the subject development", which "form part of Stage 2 and Stage 3". Following a table that sets out the timing for development from Stage 2 to Stage 6, the following is recorded: Pursuant to the above development program development of Martha Cove is well advanced with the waterway complete up to Precinct 2G. At the time of inspection much of the infrastructure associated with Stages 1 and 2 was complete with internal roads complete. The revetment wall associated with Precincts S6 and 2H is also complete which includes the Inland Harbour comprising the 233 leasehold berths. As indicated in the above table from the date of valuation a number of the stages identified have commenced. The final completion date is expected in 2008/2009 assuming the current timing. Our assessment of the value of the subject site is critical that this timing be maintained and advised that our assessment be referred back in the event of any variation.

Sales Evidence for "As is" Values"

1. Under the heading, "Sales Evidence for "As is" Values", at s 5.2.1, the following appeared: 5.2.1 Conclusion - Berths "As If Complete" Therefore based on the above sales evidence of leasehold berths we have adopted a wet berth value of $72,000 to $250,000 per berth varying on size and width for the subject. Our estimates of present day value are based on current market knowledge and are exclusive of GST.
2. At s 5.5, the following appeared: 5.5 Summary of Assessed Values We have summarised below our assessments for the individual components above. Lot S22 and S24 (44 Waterside Apt) $8,800,000 Lot S17 (233 Leasehold Berths) $26,000,000 Lot M3 (Retail Ste) $3,500,000 TOTAL ASSESSMENT $38,300,000

We have adopted a total assessment value of $38,300,000 excluding GST.

Valuation Rationale

1. Under the heading "Valuation Rationale", the following appeared at ss 6.1 and 6.2: 6.1 Introduction In arriving at our opinion of the market value of the subject site we have relied on the direct comparison approach having regard to comparable sales particularly within the subject development and current economic conditions. 6.2 Assessment Summary We have summarised below our assessments for the individual components above. Lot S22 and S24 (44 Waterside Apt) $8,800,000 Lot S17 (233 Leasehold Berths) $26,000,000 (As If Complete) Lot M3 (Retail Ste) $3,500,000 TOTAL ASSESSMENT $38,300,000

We have adopted a total assessment value of $38,300,000 excluding GST.

1. It may be noted that the valuation amount of the Marina (namely, Lot S17) is represented inconsistently throughout the Amended Indigo Valuation as either $27.3 million or $26 million. In particular, both ss 5.2.1 and 6.2 describe the valuation by reference to an "As If Complete" basis but include the two different amounts. The $27.3 million figure is the arithmetically correct figure: the source of the $26 million figure is not apparent.
2. As to the differences between the Indigo Valuation and the Amended Indigo Valuation, the plaintiffs appropriately relied upon the summary appearing in the expert report of Mr Lane dated 18 February 2019 ("the Lane Reply Report") at para 7.1, as an accurate reflection of the differences, which is extracted below: 7.1 In response to paragraph 5.1 of your instruction I have reviewed Mr Nicodimou's further valuation dated 30 January 2007 at tabulation 212 of your briefing folder, (I D;MAR.704,011,3038), and note that it has some minor differences when compared with another version of the same report, and which was provided in your original briefing material at tabulation 3 (Reference CBR.001.001.0163). Part E, E-3385 I summarise the minor differences as follows; (i) Change in Appendix (page iii). (ii) Change in valuation in original report from $27.7M, down to $27.3M in subsequent report (page VI). (iii) Change in tabulation of berth configuration, but very minor (page 17). (iv) The four bar chart (residential new supply), at page 26 of the original report, has been repositioned to page 27 of the subsequent report. (v) Clause 5.2 Marina berths (leasehold), first paragraph changes description with regard to option terms (page 31). (vi) The table summary headed 'Conclusion-Berths "As if complete", in the original report changes to conclude a value from $27.7M in the original report down to $27.3M in the subsequent report (page 34). I further note, that in the subsequent report, the value reported in respect of Lot S17 at $27.3M on a GST Exclusive basis at page vi and again at clause 5.2.1 at page 34, is in contrast, being higher than the lower figure of $26M exclusive of GST reported at clause 5.5 in the same report at page 36 and again at clause 6.2 page 37. This difference in reported figures appearing at the front of the report in contrast to the rear, is not a difference which appeared in the original report wherein the figures at the front and the rear of the report were held the same at $27.7M.

The Disclaimers

1. Two disclaimers within the Amended Indigo Valuation attracted significant controversy in the context of the parties' respective cases vis-à-vis reliance. The relevant disclaimers are found on page vi and s 1.4 of that valuation.
2. The disclaimer on page vi appears next to the heading "Assumptions, Disclaimers, Limitations & Qualifications". It is extracted below: Assumptions, Disclaimers, Limitations & Qualifications: This valuation report is provided subject to the assumptions, qualifications, limitations and disclaimers detailed throughout this report which are made in conjunction with those included within the Assumptions, Qualifications, Limitations & Disclaimers section located at the beginning of this report. Reliance on this report and extension of our liability is conditional upon the reader's acknowledgement and understanding of these statements. This valuation is for the use only of the party to whom it is addressed and for no other purpose. No responsibility is accepted to any third party who may use or rely on the whole or any part of the content of this valuation. The valuer has no pecuniary interest that would conflict with the proper valuation of the property. The assessment of the individual values assumes the development is completed to a satisfactory standard as at the date of valuation having regard to market evidence existing at the time, and does not purport to represent values at any future point in time. (It shall hereinafter be referred to as "the first disclaimer").
3. Section 1.4 is also described as a disclaimer. Under the heading, "Extension of Liability & Confidentiality", the following appears: This report may only be relied upon by Indigo (Martha Cove Harbour Precinct Land Owner) Ry Ltd for first mortgage security purposes. This confidential document is for the sole use of persons directly provided with it by CB Richard Ellis. Use by, or reliance upon this document by anyone other than Indigo (Martha Cove Harbour Precinct Land Owner) Pty Ltd is not authorised by CB Richard Ellis and CB Richard Ellis is not liable for any loss arising from such unauthorised use or reliance. This document should not be reproduced without dour prior written authority. (It shall hereinafter be referred to as "the second disclaimer").
4. As to the first disclaimer, the plaintiffs submitted: The first disclaimer is contractual, unilaterally framed and cannot extend to a non-contracting party (City Pacific and Martha Cove) particularly when the defendants were on notice that the valuation was to be used by third parties (the valuation is not to be characterised as a meaningless exercise, particularly as CBRE charged $25,000 plus GST for the valuation): BT Australia at 236-7. [Footnotes omitted.]

Contact with Nicodimou

1. On 25 June 2007, Mr Gillam and Mr Nicodimou exchanged emails regarding "an indicative rate p/sqm" for the land in the Marina. The exchange, which consists of a series of short emails sent and received within a relatively short time frame, is outlined below: 1. At 3.23pm, Mr Gillam sent the following message to Mr Nicodimou: We have some Commercial Waterfront land of approx 2.2Ha, no retail that we will eventually get revalued 'officially'. In the meantime I need to pick your brains! I need an indicative rate p/sqm off you please...? Are you able to give me a very rough figure? 1. At 3.22pm (it is unclear why the timing of the latter received email appears to have be sent prior), Mr Nicodimou sent the following message to Mr Gillam: "Matt where in Martha Cove is it and what is going on it and does it have approval?". 2. At 3.28pm, Mr Gillam sent the following message to Mr Nicodimou: At this stage it has approval as marina hardstand and 200 berth dry dock facility (stack). It is Stage 3 at Martha Cove. 1. At 5.49pm, Mr Nicodimou sent the following message to Mr Gillam: As long as it is in the UGB portion of stage 3 it should be $150-200 per sqm.
2. On 26 June 2007 at 8.41am, Mr Gilliam forwarded his 25 June 2007 email exchange with Mr Nicodimou to the following City Pacific representatives: Ms Amanda Aitken, Mr Johnstone and Mr Donaldson; together with the following message: Guys, Nicodimou's response below...remember we did say rough...his figures equate to anywhere between $3.3 and $4.4M...! Bear in mind the last time Stage 3 was valued the 200 berths alone were valued at $15,000 each (200 x $15,000 = $3M), not including any of the surrounding land so I would be leaning towards a figure of around $4M. Happy to hear your thoughts. Cheers, Matt Gillam
3. On 27 June 2007, Mr McCormick sent an email to Mr Nicodimou with the subject line "Please ring me asap". In the email he stated: "[n]eed to talk to you asap, can you ring me this arvo please". The plaintiffs contended that plainly the conversation was about valuing the Marina. There is no other reason apparent from the evidence and Mr Nicodimou has not given evidence to contradict that inference. It may be inferred that he could say nothing to the contrary. Whilst I accept that, if such a conversation eventuated, the inference sought to be drawn by the plaintiffs appears to be sound, the plaintiffs have not pointed to any evidence to support a basis for finding that Mr Nicodimou did, in fact, make a subsequent telephone call to Mr McCormick upon receipt of the email. As such, little weight can be attached to that specific inference.

Factual Controversies: Amended Indigo Valuation

1. At this juncture I turn to deal with three factual controversies with respect to the Amended Indigo Valuation. They are as follows: 1. when CBRE prepared or published the Amended Indigo Valuation and when it was provided to MCD; 2. whether Mr Nicodimou admitted to having known that the Indigo Valuation or the Amended Indigo Valuation would be provided to and relied on by City Pacific; and 3. whether the Amended Indigo Valuation was an "update" of the June Valuation.
2. Turning to the alleged timing of the Amended Indigo Valuation, the plaintiffs contended that the Amended Indigo Valuation was prepared and, subsequently, provided by CBRE sometime after the 13 June 2007 email. That submission is supported by a comparison of the information included and attached to that email, which included information as to berth configurations and lease terms, which same information, it was contended, appeared in ss 3.1, 5.2 and 5.2.1 of the Amended Indigo Valuation. Particular attention was given to the Excel spreadsheet (see tabs "Allocations" and "Offering Model") attached to the email.
3. As to the issue of the date of preparation or publication, in written submissions the plaintiffs' submitted: 241. … Further, to the extent the date of preparation or publication is relevant, the evidence is that the Amended Indigo Valuation was published some time after 16 March 2007 (the date of publication of the Indigo Valuation), and therefore it was less than 6 months old at the time of reliance. That is because, as explained above, the Amended Indigo Valuation relied on the more current berth layout. Further, there is evidence that suggests that the Amended Indigo Valuation was in fact published in June 2007 albeit by reference to a value as at 30 January 2007, and was therefore less than 1 month old at the time of reliance. The evidence is that Mr Nicodimou prepared the Amended Indigo Valuation in mid-June 2007 by reference to changes to the Marina after the valuation date of 30 January 2007.
4. As to the same, the defendants submitted: 86. The submission made by the plaintiffs that the Amended Indigo Valuation was "published" in June 2007 (at PWS [241]) ought be rejected. First, there is no evidence to point (one way or another) when the Amended Indigo Valuation was provided to MCD and, indeed, whether it was provided before the Indigo Valuation. Second, whilst further information was provided by Mr Kelly (Indigo Group) to Mr Nicodimou on 13 June 2007, including information about "extra lengths", contrary to the plaintiffs' submission, the extra lengths were not reflected in the Amended Indigo Valuation - and so much is clear from Mr Kelly's email to Mr Purss (which attached the Amended Indigo Valuation), which stated that the valuation did not consider "the additional marina lengths". In any event, the Amended Indigo Valuation is clearly stated to be valuing the property as at 30 January 2007, irrespective of when it was "published". Reliance on that valuation some 5 to 9 months later is not reasonable on the authorities. [Footnotes omitted.]

Whether Mr Nicodimou admitted to having known that the Indigo Valuation or the Amended Indigo Valuation would be provided to and relied on by City Pacific

1. As to whether Mr Nicodimou "admitted" to having known the Indigo Valuation or the Amended Indigo Valuation would be provided to and relied upon by City Pacific, in the absence of Mr Nicodimou being called in these proceedings, the plaintiffs relied upon his evidence in earlier public examinations.
2. The plaintiffs, in this respect, relied upon transcript from a public examination conducted on 9 May 2016 in matter number 2015/371848 (T44.4-44.24), which is extracted in part below: Q. Did you understand that this valuation was to be prepared and relied upon by the first mortgagee? A. Privilege. This valuation is prepared for first mortgage security basis so therefore, yes. Q. Anyone who provided any funds by way of a first mortgage to Indigo Pacific could rely upon this valuation? A. Privilege. Not anybody. As it states in the extension of limiting liability and confidentiality, it's a confidential document for the use of the persons directly provided with it. Use or reliance upon this document by anyone other than Indigo is not authorised by CB Richard Ellis. Q. But if it was provided for the purposes of securing a first mortgage to purchase a property, it could be relied upon by them? A. Privilege. The process is that that first mortgagee would have to come to CB Richard Ellis and request an extension. That's what that is saying. It's not an open invitation for first mortgagees across the country. Q. Who did you understand the first mortgagee to be? A. Privilege. I don't - as best as I can recall, and as confident as I can state in this valuation report, it may be City Pacific. It may be someone else that Indigo perhaps might be seeking mortgage funds from on a first mortgage basis. I cannot answer that.
3. The plaintiffs further relied upon transcript of a public examination conducted on 11 May 2016 in matter number 2015/371848 (T40.7-40.34), which follows: Q. As at May 2007 had you had any discussions with officers of City Pacific and officers of Indigo as to the value of the marina? A. Privilege. I was preparing a valuation for them. Q. Your answer to my question, yes? A. Privilege. My valuation report is the spoken report of my value. Q. As at May 2007 did you have discussions with officers of City Pacific and 15 Indigo as to the value of the marina? A. Privilege. I cannot recall the dates, the times of any discussions with them, other than to say I provided a valuation report. Q. At any stage prior to providing your valuation, did you advise of officers of City Pacific and officers of Indigo, that the value of the marina was $27.7 million? A. Privilege. I cannot recall dates and times of any conversations that we had, I'm sorry. Q. Having read through your email, that's set out at the bottom of page 2495, is it more likely than not that you did have such a conversation at that time in relation to the value being 27.7? A. Privilege. It seems as though there were potentially discussions, as to related only to the value, I can't draw that conclusion. I can't come to that 30 conclusion, I'm sorry. Q. But is it possible that there were discussions with officers of City Pacific and Indigo in relation to the value being 27.7 as at May 2007? A. Privilege. It may well be possible.

Whether, in the lead up to signing the Key Terms Agreement on or about 29 June 2007, Mr Nicodimou corresponded with Mr Gillam and Mr McCormick regarding the Marina.

1. As to the factual controversy vis-à-vis whether in the lead up to signing the Key Terms Agreement (set out below) on or about 29 June 2007, Mr Nicodimou corresponded with Mr Gillam and Mr McCormick regarding the Marina, the plaintiffs relied upon the above email correspondence from 25 to 27 June 2007 (extracted above).
2. Whilst accepting the existence of the emails, the defendants contended both groups of emails were exchanged regarding the "Martha Cove Development", as opposed to "the Marina" specifically. Further, it was submitted there was no evidence before the Court as to whether that telephone call, requested by the 27 June 2007 email, took place or, if it did, the substance of that call. As to that latter submission, I repeat my finding set out earlier with respect to the same.
3. As to the differentiation sought to be drawn by the defendants between the Martha Cove Development and the Marina, in my view, it does not advance the position of the defendants very far. As stated at the outset of the judgment, the Marina forms part of the Martha Cove Development; which is not a controversial statement.
4. Thus, in the broad, I accept that in the lead up to the signing of the Key Terms Agreement, which I will turn to below, Mr Nicodimou had engaged in correspondence with Mr Gillam. The contents of the 25 June 2007 emails with Mr Gillam provide insight as to the substance of part of those discussions, which, as identified by the respective parties, focused more broadly upon the Martha Cove Development (as opposed to the Marina specifically). However, as to the content of any discussion with Mr McCormick with respect to the same, in the absence of evidence of a phone call or a reply to the 27 June 2007 email, there is not enough material before the Court to reach a conclusion as to the nature of telephone conversation sought to be had with Mr Nicodimou by Mr McCormick (if it ever, in fact, eventuated). However, the inference is available that Mr McCormick was seeking to discuss an issue with respect to the Martha Cove Development with Mr Nicodimou.

Agreement to Purchase the Marina

1. As mentioned above, on 26 June 2007, Ms Tinson sent an email to Mr Lambert attaching a draft Put and Call Option Deed and Contract of Sale for the Marina. Ms Tinson forwarded that email and its attachments to Mr Donaldson, Mr Finucan, and Mr Sullivan of City Pacific and to Mr Mackay of IPC.
2. On about 28 June 2007, City Pacific prepared a short due diligence report ("the due diligence report"). The report twice referred to the $27.3 million valuation. The relevant extracts appear below: Martha Cove Marina Development Stage 2H Based on the asking price of $30,000,000 plus acquisition cost and allowing for the assumptions made, the yield on the investment in year 1 is 2.25% excluding and trustee and management fees. In year 2, with improved assumptions on berth fees and occupancy rates and including fees to trustee and management, the yield increases to 6.85% and 7.84% in year 3. The yields are based on the assumptions being realistic and achievable in the given time frame. Staged 2H has been fully developed with over 2900 metres of marina, it has 233 berths varying in length form 9 metres to 30 metres and has the capacity to provide fuel sales. Based on the marina being fully leased it has a valuation from CBRE of $27,300,000 plus GST. (Please see attached) Many assumptions have been made to come up with the above value, These assumptions require further research to confirm they are achievable. The concerns and risks are that the asset has no occupancy and the time frame to achieve the assumptions is uncertain. Although the marina currently is unoccupied, it needs no further development and is a turn key operation. The yield once fully operational and the said assumption achieved will need to be significantly higher than average to compensate for the lower yield in the formative years of establishing the business. … Assumptions & Facts • The asset currently has zero occupancy and the time it will take to achieve the desired occupancy levels is uncertain.. • Based on an independent valuation the marina is valued $27,300,000. … [Emphasis added.]
3. The plaintiffs submitted, correctly in my view, that an analysis of City Pacific's due diligence report supports the following factual conclusions: 1. City Pacific sought a copy of the Amended Indigo Valuation. That conclusion, it was submitted, is supported by the reference to "an independent valuation" and, in particular, the repeated reference to the valuation provided in the Amended Indigo Valuation, namely, $27.3 million. 2. Further, by reliance upon that valuation, it may be inferred that City Pacific understood the Amended Indigo Valuation to be a valuation of the Marina at $27.3 million despite the incorrect figure which appears in places in the valuation (being a reference to the valuation of $26 million, which also features in that report). 3. The language of the due diligence report also is to the effect that City Pacific understood it to be a valuation of "market value" of the Marina, not an exercise of tallying up the payments by lessees that might be expected for leases of each berth. Reference, in this respect, was made to the language: "[b]ased on the marina being fully leased it has a valuation…". Read alone that language shows an understanding of the valuation to be market value on the identified assumption. Further, so much is beyond argument once the context is understood, context being demonstrated by the feasibility report attached to the due diligence report. The purchase was not based on realising all the leasehold interests, but ultimately for a marina fund which would own and operate the Marina. The total amount to be achieved selling and then leasing long term leases was not only irrelevant to, but was inconsistent with that business model.

Key Terms Agreement

1. On 29 June 2007, Mr Finucan on behalf of City Pacific and Lawrence Truce on behalf of ILO signed a letter containing the key terms of the sale and purchase of the Marina for $30 million ("the Key Terms Agreement"), and City Pacific paid the Call Option Fee of $2.1 million to or at the direction of ILO as required by the Key Terms Agreement.
2. As at the time of the Put and Call Option Agreement, drafting of some of the minor parts of the Contract for Sale of the Marina had not yet been completed. As such, by a letter dated 29 June 2007, addressed to Mr Sullivan, Managing Director of City Pacific, Mr Truce sought confirmation as to the "the major terms" of the contract, which appear below: Sale Price: $30,000,000.00 plus of GST if applicable Deposit: $ 2,100,000.00 (we acknowledge that the call option fee would form the deposit) Residue: $27,900,000.00 plus of GST if applicable Payment of Residue: within 7 days after the Day of Sale.
3. Mr Finucan provided confirmation on behalf of City Pacific by signing the letter. At this juncture, the defendants sought that the Court note the following about the sale price of $30 million: 1. it "reflected the indicative price given on 25 June 2007, [which was] before the Amended Indigo Valuation was provided to City Pacific (by Indigo)"; 2. it was "$2.7 million greater than the valuation in the Amended Indigo [Valuation]"; and 3. it was "$7.5 million greater than the valuation in the June Valuation". Whilst those facts do not appear, on their face, to be controversial, it is not entirely clear how such facts assist the defendants' case.
4. On 3 July 2007, Ms Tinson sent an email to representatives of City Pacific attaching, inter alia, the draft Put and Call Option Deed and Contract of Sale for the Marina, and sought instructions on changes requested by "Indigo" (this reference, it may accepted, was a reference to ILO). In written submissions the plaintiffs noted that the Put and Call Option was in fact executed later than it was dated. However, it was submitted that the circumstances did not impact upon the resolution of the issues in dispute. I accept that submission. On 9 July 2007, Mr Purss sent an email to Mr Sullivan summarising his understanding of the agreement with ILO for the purchase of the Marina. That email is extracted below: Phil, In summary, my understanding of the Martha Cove Marina transaction with Indigo Group is as follows, subject to my view relating to holding/operating costs below: Sale price: $30m, no GST as a going concern Contract Date: 29 June 2007 Deposit: $2.1m, paid 29 June Settlement: 100 days from contract date My view on holding/operating costs etc: • Indigo meet holding/operating costs until settlement • Funds received on long term leases are adjusted for at settlement on a pro rata basis, ie, if Indigo sold a 20 year lease 6 months prior to settlement, CPL receive cash relating to the remaining 19.5 years of the lease. Please advise your thoughts on the above & will instruct Gadens to flow through the appropriate changes to the agreements. Regards, Adam Purss

The Put and Call Option Deed

1. On 17 July 2007, City Pacific and ILO exchanged revised drafts of the draft Put and Call Option Deed. On about 23 July 2007, City Pacific and ILO executed the Put and Call Option Deed, and inserted the effective date of the document, being 29 June 2007.
2. The Put and Call Option, relevantly, provided: 1. In consideration of City Pacific paying a call option fee of $2.1 million to ILO, ILO granted City Pacific (or its nominee) (see cl 9.1) an option to purchase the Marina (cl 2). City Pacific irrevocably released the Call Option Fee to ILO but if the call option was validly exercised, the Call Option Fee became the deposit payable by the purchaser under the contract (cll 4.1-4.2). 2. City Pacific was entitled to exercise the call option at any time until 5.00pm on the call option expiry date, being the day 100 days after the date of the Put and Call Option (cl 3.1). 3. At the time of exercise of the call option, ILO and City Pacific were deemed to have entered into a contract for sale of land for the sale of the property on the terms of the attached contract and promised to immediately exchange copies of that agreement. Failure to exchange was not to affect the validity of the contract created by the exercise of the option and the contracts were deemed to have been exchanged at the time of exercise of the option (cl 7). 4. City Pacific could nominate a person to exercise the call option (cl 9.1). On nomination, all references in the Put and Call Option and Contract for Sale to City Pacific were to be taken as references to the nominee. The effect was that the option fee, as deposit, was taken as between ILO, City Pacific and the nominee (Martha Cove) to be a payment for Martha Cove's benefit.
3. The plaintiffs also contended that "payment of the option fee and the entry into the Put and Call Option was in reliance on the June Valuation as updated by, and also in reliance on, the Amended Indigo Valuation". I will return that issue.
4. On 8 August 2007, Ms Tinson sent an email to Mr Finucan attaching a revised draft contract of sale for the Marina, and sought instructions on changes requested by Indigo.
5. On 7 September 2007, Mr Purss sent an email to Robert Friggi at City Pacific, copying Mr Johnstone, attaching a number of documents including the Amended Indigo Valuation and the Put and Call Option Deed. The email stated: "[a]ttached is a val[uation] dated Feb 07 & the acquisition agreement regarding the Martha Cove Marina which CPL will acquire from Indigo Group… Steve J is liaising with CBA who we expect will put forward a term sheet, but we were also hoping that you may be able to source funding through your contacts". The plaintiffs submitted: "That the valuation was being circulated is consistent with reliance by City Pacific and Martha Cove". Again, I will return to that issue.

Negotiation of further deposit and execution of Contract of Sale

1. On 3 October 2007, Mr Mackay sent an email to Mr Purss, which stated: If we can get a $2 million advance on the marina to Indigo Private as discussed earlier that would be very good, but Indigo Pacific is also going to run into a hole of about $2.5 million over the next 30 days. If we get $2.5M of the $4M CPPF investment back we are looking OK. Is this possible?
2. On the same day, Mr Purss responded by email to Mr Mackay, which stated: "The $2m should be ok, I'll need to catch up with Phil on the CPPF investment".

The Contract of Sale

1. On about 8 October 2007, City Pacific nominated Martha Cove to exercise the call option under the Put and Call Option Deed, and Martha Cove exercised the call option and entered into the Contract of Sale (dated 8 October 2007) to buy the Marina for $30 million.
2. Relevantly, it may be observed: 1. the parties acknowledged that a deposit of $4.1 million had been paid by Martha Cove and released to ILO (Special Condition 4), reflecting the increased deposit referred to in the emails between Mr Mackay and Mr Purss; and 2. Martha Cove replaced City Pacific in all respects and was obliged to pay the balance of the purchase price, being $25.9 million, 30 days after the date of the contract (Special Condition 12, Particulars of Sale).
3. Two further points may be observed, which are contrary to some of the statements made in later documents: 1. the Contract of Sale was completely negotiated by 8 October 2007 as a signed copy was delivered by City Pacific on that day; and 2. the effect of the Put and Call Option was that the Contract of Sale was binding without further exchange on delivery of the notice.
4. On 10 October 2007, City Pacific paid the Further Deposit of $2 million to or at the direction of ILO as required by the Contract of Sale. The defendants accept that "City Pacific (on behalf of Martha Cove Marina) paid an additional $2,000,000 to ILO … as a further deposit and/or as part of the consideration for the acquisition of the [Marina]". The defendants submitted that the sum "was immediately released to the vendor".

Further payment to ILO

1. On 2 November 2007, Mr Purss sent an email to Mr Finucan, Mr Johnstone, Mr McCormick and Will Hattingh of City Pacific stating that City Pacific (meaning Martha Cove the contracting party) would not be in a position to complete as bank finance had not been obtained, and that the CBA and the valuer (namely, CBRE) were waiting on information from ILO. That email stated: I confirm that we will not be in a position to settle the Martha Cove Marina transaction next week due to the following: We are yet to receive all requested information from Indigo Group to enable calculation of settlement adjustments, including copies of certain lease agreements, confirmation of settlement dates of certain leases, details and supporting information of holding costs required to be adjusted for at settlement; and Bank finance is not yet available as both the bank and valuer have been very tardy in this instance despite repeated follow up. The valuer has indicated that the valuation will not be available prior to 9 November. Given the bank will require at least 2-3 weeks for the documentation process I suggest settlement be delayed until 30 November at the earliest.
2. On 22 November 2007, Mr Johnstone and Mr Purss exchanged emails regarding obtaining finance from CBA for the purchase of the Marina. In reply to an enquiry from Mr Purss on that date, concerning an update as to progress with CBA on the Martha Cove Marina debt, Mr Johnstone stated: Mark at CBA came into meet with me yesterday afternoon to discuss all the immediate financing requirements and where we stand. 1. Martha Cove Marina: Mark will have a copy of the valuation today which will come in at just over $25m. He has informed me that they may lend to $13m which is going to leave us well short on our estimates. Can we possibly provide indigo with a further payment to buy more time and have CBRE revisit the valuation with input from Steve Mackay etc. 2. CP1: Mark has informed me that he has been given a[n] approval to provide CP1 with a $12m facility, to increase this would require approval much further up the chain of command. The person that needs to approve a larger amount is currently away and won't be back in the office until the 3rd of Dec. 3. Breakwater. I have made contact with St George and they are coming in to discuss next week. Will is providing me with some numbers as the marina currently stands and forecasts based on stage 2 & 3. What are your thoughts?

Factual Controversy: The entity that agreed to pay a further deposit of $7 million to ILO on 28 November 2007

1. Notwithstanding a Joint Statement of Fact that "City Pacific" paid the further amount of $7 million, a dispute remained as to which entity agreed to pay the deposit.
2. The plaintiffs contended that on about 23 November 2007, Martha Cove and ILO agreed that Martha Cove would make a further part payment of $7 million to ILO on account of the purchase price for the Marina. The plaintiffs relied on an email correspondence chain between Mr Kelly to Mr Purss, dated 27 November 2007, which relevantly stated: Hi Adam, Further to the meeting that Phil and Steve had with Laurie and Mitch last Friday, I'm just confirming the amounts and timing of payments out of part proceeds from the marina sale to fund specific settlements. Would you please pay $4.2m into the following account so that it is cleared funds in the account by Thursday morning.… Would you please pay $0.985111 into the following account so that it is cleared funds in the account by Thursday morning.… I understand that you and Steve have already organized for payment of approx $1. 815 m of the marina related proceeds to be paid to Link Market Services by 28 November. Would you please confirm by email that all is in hand. Thanks very much for your help. Regards, Michael.
3. In reply to Mr Kelly's email, Mr Purss "confirm[ed] the funds will be transferred tomorrow".
4. The plaintiffs further relied upon the correspondence between Mr Mackay to Ms Carla Avery, on 28 November 2007. At 9.14am, Ms Avery sent the following communication: Hi Steve $7M is coming into Indigo to cover the below payments from CPL and then the funds are being sent from Indigo. Can you let me know how I should treat this in IPC's accounts. I know the $1.815 just gets coded to Dividends but I wasn't sure about the $7M, $4.2M & the $0.985M. Thanks Kind Regards Carla Avery
5. In reply to that email at 10.22am, Mr Mackay sent the following: Hi Carla, It's a total of $7 million made up of the $4,200,000 plus $1,815,000 plus $985,000. The $7 million received is to be treated as a repayment of the Martha Cove Marina loan. The $985,000 is a loan to Indigo Palm Beach and the $4,200,000 is a loan to Indigo Bourke Street. Regards, Steve Mackay
6. On the plaintiffs' case, City Pacific made the payment on behalf of Martha Cove. It was further submitted: 76. … That payment reflects the ex-contractual dealings of the parties, and the contingencies which continued to govern their dealings. Further, the payment, from the perspective of Martha Cove being towards the purchase price, would have been repayable had the Contract of Sale been terminated (there being a total failure of consideration for the payment) and loss was contingent on whether the sum was repaid by ILO or the sale completed or, as came to be contemplated, on-sale to a third party took place. From the perspective of City Pacific its right was against Martha Cove and loss only accrued once Martha Cove failed to make good that obligation, in effect when it did not pay if called on to do so.

Events after 28 November 2007

1. In early 2008, CBA appointed PPB Pty Ltd ("PPB") as an investigating accountant to City Pacific. Following the appointment of PPB, City Pacific and ILO joined together to pursue the sale of the Marina to Anne Street Partners Ltd ("ASP"). To the extent the defendants have contended that the events after 28 November 2007 are not relevant, I reject that submission and find the events are relevant as factual background.
2. On about 6 May 2008, City Pacific entered into a term sheet for the sale of a number of assets, including the Marina, to ASP. On about 30 September 2008, the Marina Mortgage was transferred from PTQ to City Pacific.
3. On 25 June 2009, Trilogy Funds Management Ltd replaced City Pacific as the responsible entity of the CPMT.
4. On 28 August 2009, liquidators were appointed to City Pacific, and on 23 October 2009, liquidators were appointed to Martha Cove. The Contract of Sale was not terminated. At that stage the money payable by Martha Cove to City Pacific remained outstanding, and Martha Cove's ability to repay uncertain because of the uncertainty surrounding either purchase of the Marina, or sale to a third party.
5. On 20 May 2015, ILO transferred the Marina to Denarke Pty Ltd for a purchase price of $12,946,693. The Martha Cove Property Monies were never repaid, and have been lost. ILO is now deregistered. It is admitted that ILO and Martha Cove are incapable of repaying those monies.

ISSUES IN DISPUTE

1. As mentioned at the outset, the claims brought by the plaintiffs in the FASOC can be grouped broadly into two categories: 1. the representation case; and 2. the duty case.
2. The parties produced a joint statement of 19 issues ("the Joint Statement") which relevantly provided the parties' respective positions as to the representation and duty case, with respect to the June and Amended Indigo Valuations, as well as set out the issues in dispute with respect to defences and damages.
3. Prior to turning to an outline of the parties' positions with respect to each issue, the 19 issues in dispute are outlined seriatim below:

June Valuation 1. Did CBRE and Mr Nicodimou make the representations conveyed by the June Valuation (the Valuation Representations) alleged in paragraph 28 of the FASOC? 2. Were the Valuation Representations misleading or deceptive or likely to mislead or deceive?

Amended Indigo Valuation 1. Did CBRE and Mr Nicodimou make the representations conveyed by the Amended Indigo Valuation (the Continuing Representations and the Market Value Representations) alleged in paragraphs 28A and 28B of the FASOC? 2. Were the Continuing Representations and/or the Market Value Representations misleading or deceptive or likely to mislead or deceive?

June Valuation 1. Did CBRE and Mr Nicodimou owe one or both of City Pacific and Martha Cove a duty of care? 2. What was the content of the duty of care? 3. Did CBRE or Mr Nicodimou breach the duty of care?

Amended Indigo Valuation 1. Did CBRE and Mr Nicodimou owe one or both of City Pacific and Martha Cove a duty of care? 2. What was the content of the duty of care? 3. Did CBRE or Mr Nicodimou breach their duty of care? 4. Is CBRE or Mr Nicodimou entitled to rely on the disclaimer in the Amended Indigo Valuation to excuse either or both of them from liability?

Reliance and Causation 1. Did City Pacific and/or Martha Cove rely on the June Valuation and the Valuation Representations in engaging in the conduct alleged at one or more of paragraphs 31-37 of the FASOC? 2. Did City Pacific and/or Martha Cove rely on the Amended Indigo Valuation and the Continuing Representations and the Market Value Representations in engaging in the conduct alleged at one or more of paragraphs 31-37 of the FASOC? 3. Was the conduct referred to in issue 12 and 13 (and the subsequent loss of the Martha Cove Property Monies) caused by any misleading conduct or breach by CBRE or Mr Nicodimou?

Defences 1. Is any cause of action relied on by the plaintiffs time-barred by any limitation period? 2. Should any damages awarded to the plaintiffs be reduced (including to nil) because: 1. the plaintiffs failed to mitigate their loss; or 2. of any contributory negligence of the plaintiffs? 1. What, if any, effect does proportionate liability legislation have on any orders for damages which the Court may make against one or more of the defendants? 2. Is the cause of action brought by the first plaintiff maintainable in light of s 601FS Corporations Act 2001 (Cth)?

Damages 1. What, if any, damages should be awarded to the plaintiffs?

1. The numbering system adopted by the parties, as to the identification of the issues, will be maintained throughout this judgment (namely, "Issue 1" through to "Issue 19").
2. I now turn to an outline of the parties' positions with respect to each issue, noting that I will return to a consideration of the parties' submissions as to each issue at a separate juncture.

Representation Case

1. The plaintiffs contended that the defendants made a series of representations by providing both the June Valuation (Issues 1 and 2) and the Amended Indigo Valuations (Issues 3 and 5). An outline of the parties' positions, in that respect, follows.

June Valuation - Issues 1 and 2

1. As to representations made in the context of the June Valuation (Issue 1), the position of the plaintiff is that by providing the June Valuation on 30 June 2006, CBRE and Mr Nicodimou made the following representations to City Pacific: 1. City Pacific (and its subsidiaries) could rely on the June Valuation in order to determine whether to make an investment in relation to the Marina, including by way of a loan to fund the purchase of the Marina. 2. The Marina was worth the value ascribed to it in the June Valuation and that this represented the market value of the property. 3. The June Valuation was based on reasonable grounds and was a reliable opinion of the value of the Marina. 4. The opinion as to the value of the Marina reasonably could be relied upon for the purpose of deciding whether to make an investment in relation to the Marina, including by way of a loan to fund the purchase of the Marina. 5. The June Valuation had been conducted in accordance with the Valuation Retainer, including City Pacific's valuation guidelines enclosed with the Valuation Retainer. 6. The defendants had exercised reasonable skill, care and diligence in undertaking the June Valuation and in expressing the opinions in the June Valuation. (Those six alleged representations shall hereinafter be referred to, collectively, as "the Valuation Representations").
2. The defendants admit the Valuation Representations were made, save for the representations listed above at (1) and (5).
3. As to whether the Valuation Representations were misleading or deceptive or likely to mislead or deceive (Issue 2), the plaintiffs submitted that the Valuation Representations were misleading because the June Valuation was not: 1. based on reasonable grounds; 2. a reliable opinion of the value of the Marina; and 3. the product of due care and skill.
4. The defendant contended, with reliance upon its defence to the duty case (specifically the question of breach), that the Valuation Representations were neither misleading or deceptive or likely to mislead or deceive. In further support of that position, the defendant submitted that the June Valuation plainly set out the basis upon which the valuation was provided. The plaintiffs have adduced no reliable expert evidence that the June Valuation was defective. They have adduced no lay evidence that a reasonable person in the position of the plaintiffs would have been misled by the clear statements in the valuation.

Amended Indigo Valuation - Issues 3 and 4

1. Turning to representations made in the context of the Amended Indigo Valuation (Issue 3), the plaintiffs' position is that by providing the Amended Indigo Valuation, CBRE and Mr Nicodimou made the following representations: 1. the market value of the Marina was not less than the value provided in the June Valuation; 2. the June Valuation was based on reasonable grounds and was a reliable opinion of the value of the Marina; 3. the Amended Indigo Valuation was based on reasonable grounds and was a reliable opinion of the value of the Marina; 4. the opinion as to the value of the Marina in the Amended Indigo Valuation and/or the June Valuation could be relied upon for the purpose of deciding whether to make an investment in relation to the Marina, including by way of a loan to fund the purchase of the Marina or the purchase of the Marina; 5. the defendants had exercised reasonable skill, care and diligence in undertaking the June Valuation and in expressing the opinions in the June Valuation; and 6. the defendants had exercised reasonable skill, care and diligence in undertaking the Amended Indigo Valuation and in expressing the opinions in the Amended Indigo Valuation. (Those six representations shall hereinafter be referred to as "the Continuing Representations").
2. The plaintiffs also contended that by providing the Amended Indigo Valuation, CBRE and Mr Nicodimou made two further representations: 1. the value of the Marina had increased from the valuation in the June Valuation; and 2. the Market Value of the Marina as at 30 January 2007 was $27,300,000, (Those two representations shall hereinafter be referred to as "the Market Value Representations").
3. As to whether the Continuing Representations and/or the Market Value Representations were misleading or deceptive or likely to mislead or deceive (Issue 4), the plaintiffs contended they were. The plaintiffs position, in that respect, was that the two groups of representations were misleading because the June Valuation and the Amended Indigo Valuation were not: 1. based on reasonable grounds; 2. a reliable opinion of the value of the Marina; and 3. the product of due care and skill.
4. The defendants deny that they made any of the Continuing Representations or Market Value Representations to the plaintiffs. Further, as to the contention that such representations were misleading and/or deceptive, the defendants relied upon its submissions vis-à-vis the June Valuation (in particular its submissions dealing with the question of breach). It was also submitted that the Amended Indigo Valuation plainly set out the basis upon which the valuation was provided.

Duty Case

1. The plaintiffs contended that the defendants owed a duty of care to the plaintiffs with respect to both the June Valuation (Issues 5, 6 and 7) and the Amended Indigo Valuation (Issues 8, 9, 10 and 11). I now turn to a summary of the parties' respective positions as to the duty case.

June Valuation - Issues 5, 6 and 7

1. Commencing with the June Valuation, the plaintiffs contended that the defendants owed a duty of care to City Pacific, which duty was admitted by the defendants (Issue 5). In supplementation of that admission, the defendants stated that the duty was owed "at the time the June Valuation was prepared and provided to City Pacific".
2. As to the content of that duty of care (Issue 6), the defendants accept the summary of general principles provided by the plaintiff at paras 203-205 of the plaintiffs' closing submissions, which summary has been adopted later in this judgment.
3. Finally, as to the issue of breach (Issue 7), the plaintiffs' position is that both CBRE and Mr Nicodimou breached the duty of care, which breach is denied by the defendants.

Amended Indigo Valuation - Issues 8, 9, 10 and 11

1. As to whether a duty existed in the context of the Amended Indigo Valuation (Issue 8), the plaintiffs' position was that a duty of care was owed by the defendants to City Pacific and Martha Cove. In the alternative, the plaintiffs' position was that the defendants owed a duty of care to City Pacific. The defendants denied that a duty of care was owed by either CBRE or Mr Nicodimou to City Pacific or Martha Cove.
2. As to the content of the duty (Issue 9), the plaintiffs' repeated their position adopted with respect to the June Valuation, directing reference to paras 204-205 of the plaintiffs' closing submissions. As to the issue of breach (Issue 10), the plaintiffs submitted that CBRE and Mr Nicodimou breached their duty of care.
3. In light of the defendants position, with respect to Issue 8, it was contended that the issue of content and breach of duty do not arise. However, in the event the Court found that a duty did arise, the defendants relied on its written submissions addressing the question of breach.
4. Finally, as to whether CBRE or Mr Nicodimou were entitled to rely on the disclaimer in the Amended Indigo Valuation to excuse either or both of them from liability (Issue 11), the plaintiffs submitted that there was no entitlement. In contrast, the defendants submitted that there was an entitlement.

Reliance and Causation

1. The parties positions as to the issues of reliance and causation were made jointly under the heading "Representation and duty cases". Each issue referred to the conduct set out in paras 31-37 of the FASOC, which the plaintiffs allege was "caused by breaches and contraventions". For convenience, those paras are extracted below: Conduct caused by breaches and contraventions 31. City Pacific, in reliance on: a. all material parts of the June Valuation; and/or b. the Amended Indigo Valuation; and/or c. the Valuation Representations; and/or d. the Continuing Representations; and/or e. the Market Value Representations, entered into an agreement with ILO, by which: f. ILO granted to City Pacific (or its nominee) an option (Call Option) to purchase the [Marina]; and g. City Pacific agreed to pay to ILO (or to fund its nominee Martha Cove Marina to pay to ILO) from 30 July 2007 to the Call Option Expiry Date an amount equal to the Holding Costs less Revenue, as those terms were defined in the Deed. Holding Costs was expressly defined to include interest incurred on all loans, including the Indigo Loan Facility, attributable to funding ILO's ownership of the [Marina]. (Put and Call Option Deed (Deed)). 32. On or about 29 June 2007, City Pacific (on behalf of Martha Cove Marina). paid to ILO or, alternatively, IPC as agent for ILO, $2,100,000 pursuant to clause 2 of the Deed or, alternatively, the agreement referred to in paragraph 31 above (Call Option Fee). 33. On or about 8 October 2007, in reliance on: a. all material parts of the June Valuation; and/ or b. all material parts of the Amended Indigo Valuation; and/ or c. the Valuation Representations; and/ or d. the Continuing Representations; and/ or e. the Market Value Representations, Mr Philip Keith Sullivan and Mr James Timothy Finucan on behalf of City Pacific and Martha Cove Marina executed, pursuant to the Deed or, alternatively, the agreement referred to in paragraph 31 above, a Call Option Nomination Notice and a Notice of Exercise of Call Option whereby Martha Cove Marina, m, nominee for City Pacific, irrevocably exercised the Call Option over the [Marina] (Call Option Exercise Notice). 34. Upon the exercise of the Call Option by way of the Notice of Exercise of Call Option, the Call Option Fee became the deposit for the acquisition of the [Marina] pursuant to clause 4.2 of the Deed or, alternatively, the agreement referred to in paragraph 31 above. 35. On or about 10 October 2007 City Pacific (on behalf of Martha Cove Marina) paid an additional $2,000,000 to ILO and/or IPC (as agent for ILO) as a further deposit and / or as part of the consideration for the acquisition of the [Marina] (Further Deposit). 36. On or about 28 November 2007 City Pacific (on behalf of Martha Cove Marina) paid an additional $7,000,000 to ILO and/ or IPC (as agent for ILO) in consideration for the acquisition of the [Marina]. 37. The Call Option Fee, the Further Deposit and the $7,000,000 payment were paid as part consideration for the acquisition of the [Marina] (collectively, the Martha Cove Property Monies).

June Valuation - Issue 12

1. As to the issue of reliance in the context of the June Valuation (Issue 12), the plaintiffs' position is that City Pacific and/or Martha Cove relied upon the June Valuation and the Valuation Representations in engaging in the conduct alleged at one or more of paras 31-37 of the FASOC (extracted above).
2. The defendants denied that such reliance occurred and, further, contended that "the plaintiffs have not established factual reliance or, if they have (which is denied), any such reliance was not reasonable".

Amended Indigo Valuation - Issue 13

1. As to the issue of reliance in the context of the Amended Indigo Valuation (Issue 13), the plaintiffs' position is that City Pacific and/or Martha Cove relied upon the Amended Indigo Valuation and the Continuing Representations and the Market Value Representations in engaging in the conduct alleged at one or more of paras 31-37 of the FASOC (extracted above).
2. The defendants denied that such reliance occurred and, once again, contended that "the plaintiffs have not established factual reliance or, if they have (which is denied), any such reliance was not reasonable".

Misleading and Deceptive Conduct - Issue 14

1. As to whether the conduct referred to in Issues 12 and 13 (and the subsequent loss of the Martha Cove Property Monies) was caused by any misleading conduct or breach by CBRE or Mr Nicodimou (Issue 14), the plaintiffs adopted an affirmative position. The defendants disputed the position taken by the plaintiffs.

Defences

1. Issues 15 to 18 were grouped under the heading "Defences" and traversed the following topics: limitation period(s), reduction to damages, proportionate liability legislation and the application of s 601FS of the Corporations Act.

Limitation Period(s) - Issue 15

1. As to whether any cause of action relied on by the plaintiffs was time-barred by any limitation period (Issue 15), the plaintiffs answered no. However, that answer was qualified by the following statement: "however, the analysis differs for City Pacific and Martha Cove and it is possible that the answer to this question differ for each plaintiff".
2. The defendants position was that both plaintiffs are impacted by a time-bar in light of limitation periods. In this respect, the defendants provided a detailed outline of their position, which is set out below: 1. The claim is statute-barred based on the pleaded allegations. If the plaintiffs are entitled to depart from the pleaded case on this issue, despite abandoning their amendment application, the claim is still statute barred. 2. As in Winnote Pty Ltd v Page (2006) 68 NSWLR 531 ("Winnote") at 543, the Court should look to "the substance of the matter and not the formal framework that may have been artificially erected by the plaintiff in an endeavour to gain juridical advantage". 3. The substance of the matter is that City Pacific paid over money and legal fees either directly or via its subsidiary Martha Cove at various times in mid to late 2007 for the purpose of acquiring the property. The High Court of Australia stated in HTW Valuers (Central QLD) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640 ("Astonland") at 654-655 that in such circumstances time commences to run "the day after entering the contract…or the day after completing that contract". 4. In accordance with the decisions in Winnote and Astonland, time commenced to run from when the plaintiffs paid money in legal fees for the purpose of acquiring the right to purchase the Marina, or from when they entered into the contract to do so.

Reduction to Damages - Issue 16

1. Issue 16 posed the following question: Issue 16: Should any damages awarded to the plaintiffs be reduced (including to nil) because: (a) the plaintiffs failed to mitigate their loss; or (b) of any contributory negligence of the plaintiffs?
2. The plaintiffs' answer with respect to both questions was "no". In the event the Court found the defendants are liable for damages, the defendants position was that a reduction in the award of damages should occur.
3. I will return to the parties submissions as to the respective defences of failure to mitigate and contributory negligence at a separate juncture.

Proportionate Liability Legislation - Issue 17

1. As to the effect (if any) of proportionate liability legislation upon orders for damages against one or more of the defendants (Issue 17), the position of the plaintiffs is that proportionate liability does not apply.
2. Turning to the defendants position, the defendants accept that the concurrent wrongdoers defence overlaps with the contributory negligence defence to the extent that the actions of Mr Sullivan and/or Mr Finucan are, through the principles of attribution, actions of the plaintiffs.

Section 601FS Corporations Act

1. As to whether the cause of action brought by the first plaintiff is maintainable in light of s 601FS of the Corporations Act, the position of the parties was once again in opposition.
2. The plaintiffs' position was that the cause of action was maintainable. It was submitted that City Pacific's claims were not part of CPMT's scheme property for the purposes of s 601FS. Further, City Pacific also carried on business and made investments in its own right and used its own money to make each of the First, Second and Third Payments comprising the Martha Cove Property Monies.
3. The defendants contended that the cause of action brought by the first plaintiff was not maintainable. It was submitted that on the evidence, (at least) $9 million of CPMT funds was advanced by City Pacific for the acquisition of the Marina.

Damages

1. As to what damages should be awarded to the plaintiffs (Issue 19), the plaintiffs position is extracted below: Recognising that the plaintiffs cannot recover twice, the Court should award City Pacific or Martha Cove damages in the total amount of $11.1 million (being the total of the First, Second and Third Payments), or alternatively in the amount of one or more of those payments (that is $2.1 million paid on 29 June 2007; $2 million paid on 10 October 2007; and $7 million paid on 28 November 2007). In each case, the plaintiffs also claim interest, costs and interest on costs. This is addressed at paragraphs 292-296 of the PCS.
2. The defendants position is that the plaintiffs are not entitled to any damages.

Relevant Principles

1. The principles of liability for misleading and deceptive conduct are, for present purposes, the same for each statutory provision relied upon by the plaintiffs and are discussed in Ryan Wealth Holdings Pty Ltd v Baumgartner (2018) 131 ASCR 236; [2018] NSWSC 1502 ("Baumgartner") as follows (at [574]-[575]): [574] Section 42 of the FTA (NSW) (like its TPA analogue) is contravened if the acts, omissions, statements and/or silence of the defendant, taken as a whole and considered in light of all relevant circumstances, are misleading or deceptive or are likely to mislead or deceive: Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304; [2009] HCA 25 ("Campbell") at [102], Butcher v Lachlan Elder Realty Pty Ltd (2004) 218 CLR 592; [2004] HCA 60 ("Butcher") at [104]. Conduct is misleading if it induces, or is capable of inducing, error (Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 198; Rhone-Poulenc Agrochomie SA v UIM Chemical Services Pty Ltd (1986) 12 FCR 477 at 490-491; Campbell at [25]; Butcher at [111]), and is likely to mislead or deceive where there is a real (or not remote) chance or possibility that the conduct will have that effect (Global Sportsman Pty Ltd v Mirror Newspapers Pty Ltd (1984) 2 FCR 82 at 87). [575] Whether conduct has a tendency to lead into error is an objective question of fact to be determined on the basis of the conduct of the defendants as a whole viewed in the context of all relevant surrounding facts and circumstances: Campbell at [102], citing Butcher at [109]. The inquiry is an objective one, the focus being on the objective tendency of the conduct to induce an erroneous assumption on the part of a hypothetical individual, but taking into account the respective positions of the parties, including such matters as their knowledge of each other from previous dealings and their respective familiarity with the subject matter: Sutton v AJ Thompson Pty Ltd (In Liq) (1987) 73 ALR 233 at 240. The objective nature of this inquiry means that a finding that conduct is misleading or deceptive is not avoided merely because a plaintiff could, by proper inquiries, have discovered the misleading or deceptive conduct: Butcher at [111]; Henjo Investments Ply Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR 546.
2. Conduct is misleading or deceptive, or likely to mislead or deceive, if it has a tendency to lead into error. Thus, there must be a sufficient causal link between the conduct and the error on the part of persons exposed to it: Australian Competition and Consumer Commission v TPG Internet Pty LTD (2013) 250 CLR 640; [2013] HCA 54 ("TPG Internet") at [39]. It is at that stage of the enquiry that the conduct of, or the carelessness of the person or persons to whom the representation is made is taken into account. As was stated in TPG Internet (at [39]): [39] Whether speaking of representations to the public at large or in negotiations between parties of equal bargaining power and competence, the quoted observations in Puxu and Miller go to the characterisation of conduct as misleading or deceptive.

Issue 1 - Did CBRE and Mr Nicodimou make the representations conveyed by the June Valuation (the Valuation Representations) alleged in para 28 of the FASOC?

1. The plaintiffs alleged that, by providing the June Valuation, the defendants made the Valuation Representations (as defined in para 28 of the FASOC), and that those representations were misleading or deceptive in contravention of s 52 of the TPA, s 12DA of the Australian Securities and Investments Commission Act 2001 (Cth) ("the ASIC Act"), or s 18 of the Australian Consumer Law ("ACL") (each contains the same prohibition but apply to conduct in relation to different subject matter).
2. I accept the submission of the plaintiff that the relevant prohibition for the purpose of these proceedings is that contained in s 12DA of the ASIC Act for the following reasons: 1. Section 12DA of the ASIC Act differs from the operation of s 52 of the TPA by specific reference to misleading of deceptive conduct in relation to financial services. 2. Section 12BAA(7)(k) of the ASIC Act provides that the definition of "financial products" includes credit facilities. It was submitted that the definition of credit facilities includes loans as per the Regulations referred to in the ASIC Act. 3. Section 12BAB(1) of the ASIC Act defines "financial service" as including the provision of product advice. The provision of "financial product advice", as per s 12BAB(5)(a) of the ASIC Act, includes a recommendation or a statement of opinion that is intended to, or objectively will, influence the acquisition or disposal of financial products.
3. Ultimately, the prohibition that applies does not inform the analysis. Section 12DA is a prohibition on a "person" engaging in conduct of the identified quality, and consequently applies to each of the defendants. The defendants also admitted that, if the TPA creates the prohibition which applies, then Mr Nicodimou is subject to the extended application of that Act because he communicated (engaged in the relevant conduct) by telephone and email attracting the extended operation of the TPA (beyond corporations) by s 6 of the TPA.
4. The plaintiffs alleged relevantly that, by providing the June Valuation, the defendants made the Valuation Representations as follows: 1. City Pacific (and its subsidiaries) could rely on the June Valuation in order to determine whether to make an investment in relation to the Marina, including by way of a loan to fund the purchase of the Marina; 2. the Marina was worth the value ascribed to it in the June Valuation and that this represented the market value of the Marina; 3. the June Valuation was based on reasonable grounds and was a reliable opinion of the value of the Marina; 4. the opinion as to the value of the Marina reasonably could be relied on for the purpose of deciding whether to make an investment in relation to the Marina, including by way of a loan to fund the purchase of the Marina; 5. the June Valuation had been conducted in accordance with the Valuation Retainer, including the Valuation Guidelines; and 6. the defendants had exercised reasonable skill, care and diligence in undertaking the June Valuation and in expressing the opinions in that valuation.

Issue 2 - Were the Valuation Representations misleading or deceptive or likely to mislead or deceive?

1. The defendants recognised, in this respect, that the essential point of difference between the parties was whether there was a departure from the exercise of reasonable care by the defendants to adopt an "as if complete" gross realisation methodology in valuing the Marina (the defendants' case is that there was very little difference between the issues of breach of duty of care and the question of whether representations were misleading or deceptive).
2. From this point, the defendants advanced two primary submissions: 1. The expert evidence was central to the determination of Issue 2 (and other issues). It was submitted Mr Lane's evidence for the plaintiffs' should not be accepted. In the absence of reliable evidence from Mr Lane, the Court essentially is invited by the plaintiffs to review the valuations itself and form a view as to whether a party in the position of City Pacific would have been misled. It was submitted the Court does not have the benefit of any evidence led by the plaintiffs of anyone who was, in fact, misled by the valuations. 2. The June Valuation and the Amended Indigo Valuation plainly set out the basis upon which the valuation was provided. That is, the methodology adopted was precisely the methodology which City Pacific (in the case of the June Valuation) - a highly sophisticated and experienced party - asked to be adopted in the amended instructions provided on 1 June 2006. It is, therefore, unsurprising that in providing an "update" (i.e. the Amended Indigo Valuation), the same methodology was adopted.
3. Thus, as to the essential difference between the parties, as the defendants described it, the defendants' broadly submitted that the June Valuation did precisely what it said it was going to do - provide an "as if complete" gross realisation value for Lots S22, S23 and S24. It was submitted that the client, City Pacific, by what it had asked for in the email exchange between Mr Gillam and Mr Nicodimou on 1 June 2006, altered the instructions given in the letter dated 25 May 2006. City Pacific was a highly sophisticated party which, particularly in light of the evidence of the draft valuation, knew precisely what was conveyed by the June Valuation. There was no evidence led by the plaintiffs to the contrary, and it is for the plaintiffs to prove that the defendants breached the duty they owed to City Pacific. It may also be noted that the plaintiffs contended the June Valuation was obtained by City Pacific for the purposes of the 2006 transaction, as set out above. No loss is pleaded as a result of that transaction.

Mr Lane

1. It is appropriate to commence consideration of the representation case of the parties, in this respect, by assessing the expert evidence.
2. The defendants' case with respect to Issue 2 proceeds upon the basis that there is little difference between the issues of breach of duty of care and the issues of whether representations were misleading or deceptive. The defendants also contended that expert opinion was central to the determination of this (and other issues). However, it was contended that the expert opinion of Mr Lane should not be accepted (and, therefore, the plaintiff had failed to discharge their onus with respect to the representation case). The challenge to the expert opinion of Mr Lane by the defendants was based upon the following contentions: 1. in forming his opinion, Mr Lane was not provided with or did not understand critical information, including the email exchanges between Mr Gillam and Mr Nicodimou on 1 June 2006, nor the February 2006 valuation; 2. Mr Lane did not know, and was not told, of the sophistication of City Pacific or, indeed, the business of City Pacific; 3. in criticising Mr Nicodimou's methodology, Mr Lane had regard to numerous guides, publications and information which post-dated Mr Nicodimou's valuation. In cross-examination, Mr Lane properly conceded that it is of fundamental importance, in preparing reports of the kind he prepared, to only take into account material that was available to the valuer. Mr Lane did not do so and his error in this regard is critical; and 4. in light of the above, Mr Lane's evidence and his critique of Mr Nicodimou's methodology should be rejected.
3. I do not accept those criticisms of Mr Lane's evidence. I do not consider the defendants have succeeded in challenging Mr Lane's evidence. I generally prefer Mr Lane's evidence to Mr Wright's evidence, except to the extent that Mr Wright made concessions consistent with Mr Lane's evidence.
4. As will be discussed below, these criticisms need to be understood, in part, in the light of my finding that both the Valuation Representations and the Continuing and Market Value Representations are expressed as identifying market value, including by reference to instructions to perform a market valuation (in contradistinction to a gross realisation approach). To that may be added my overall favourable impression of Mr Lane's evidence, directed as it were to practical and common sense approach to the evaluation question.

Mr Wright

1. It is true, as the plaintiffs submitted, that Mr Wright made a number of concessions, some of which have been earlier referred to in this judgment. The list prepared by the plaintiffs in this respect is, in my view, correct. That list is as follows: 1. Mr Wright conceded that it was his experience in the valuation industry, and his expectation, that valuation reports were shared between related entities and counterparties to proposed transactions, even if those parties were on the other side of a transaction, and that those counterparties would read those valuations. Further, Mr Wright accepted that, if he was preparing a valuation for a borrower which is expressed to be for mortgage purposes, he would expect the borrower to share the valuation with the lender and for the lender to rely on the valuation. 2. Mr Wright conceded that neither the June Valuation nor the Amended Indigo Valuation tells the reader anything about the current market value of the Marina (despite, it may be interpolated, being expressed as doing so) because those reports adopt the gross realisation approach, and do not take into account the time period over which berths are sold or the costs associated with such sale. That passage of Mr Wright's evidence was follows: GILES: Do you also agree that it did not express the market value of the 239 lots if traded in one line? WITNESS WRIGHT: Correct GILES: And one would say the same about the 2007 valuation. That is, it was not a valuation of a freehold interest in lot S17? WITNESS WRIGHT: That's right. GILES: And it did not tell you what the market value of the then 233 berths were if sold in one line? WITNESS WRIGHT: That's right. GILES: And that's because if sold in one line you would not expect the market value to equate to the sum of 239 individual sales? WITNESS WRIGHT: Correct. GILES: One reason for that is you would not expect 239 individual sales to happen at the same time? WITNESS WRIGHT: Yes. GILES: What you would expect is, if 239 berths were to be, whether they were sold or leased, that would occur over a period of time? WITNESS WRIGHT: Yes. GILES: And if you were valuing those 239 berths to be sold in one line you'd have to take into account the holding costs, time cost and money? WITNESS WRIGHT: Yes. GILES: And perhaps many other costs? WITNESS WRIGHT: Yes. … GILES: Does that mean that you do accept that the 2006 report does not tell one anything about the market value of lot S17? WITNESS WRIGHT: Not that I can see. GILES: Similarly, the 2007 report, which in fairness I should let you have a look at, which is behind tab 7, that's at page E3960, that report tells the reader nothing about the current market value of lot S17 as at the date of that report, does it? WITNESS WRIGHT: Correct. 1. Mr Wright explained that in order to ascertain the market value of the Marina either in 2006 or 2007, his primary valuation methodology would be the direct comparison methodology, but Mr Wright conceded that there were "limited" comparable sales of marinas in 2006, and none in 2007. 2. Mr Wright conceded that in order to ascertain the market value of the Marina either in 2006 or 2007, the capitalisation methodology was an appropriate methodology, at least as a check method, because one class of potential buyers would be investors who would be interested in the likely income and costs of the Marina. 3. Mr Wright conceded that Yarra's Edge and Pier 35, which he regarded as comparable to the Marina, enjoy a superior location from a valuation perspective. Mr Wright acknowledged that, in using those two marinas as comparable, the valuation of the Marina would need to be reduced to reflect that fact. 4. Mr Wright accepted that a valuer using freehold berth sales to value leasehold berths would need to discount the freehold prices and, if the freehold sale was associated with a house and land package, the valuer have to be careful to apportion the purchase price.

Mr Gordon

1. The defendants relied on the evidence of Mr Gordon, a professional expert witness. Mr Gordon prepared an expert report dated 4 October 2018 ("the Gordon Report"), and a supplemental report dated 2 August 2019 ("the Supplemental Gordon Report"). The Supplemental Gordon Report largely corrects a substantial number of errors in the Gordon Report and does not advance the analysis.
2. In the Gordon Report, Mr Gordon addressed six questions. His answers to questions 1 to 3, relating to the Indigo Loan Facility and the Indigo Mezzanine Facility, are not relevant to the proceedings and can be ignored. Following the Court's rulings on evidence on the balance of the report, Mr Gordon's answer to question 4, paras 137-139 of Question 6 and his concluding opinion at paras 140-142 remain in evidence.
3. In answer to Question 4, Mr Gordon failed to identify and apply any meaningful standard or criteria of reasonableness or prudence against which to assess the conduct of City Pacific. Mr Gordon's answer to that question went no higher than a series of conclusory statements about the conduct of City Pacific. Further, in cross-examination, when Mr Gordon was asked to identify that standard or criteria, he was unable to do so. For the same reasons, Mr Gordon's evidence in paras 137 to 139 and his conclusions in paras 140 and 141 are problematic. In Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705, Heydon JA observed (at [59]) that the prime duty of experts in giving opinion evidence is to "furnish the trier of fact with criteria enabling evaluation of the validity of the expert's conclusions". Without an identifiable standard of reasonableness, Mr Gordon's evidence can attract little weight.
4. Finally, Mr Gordon's opinion in paras 2 and 141 that City Pacific's conduct caused it to suffer loss is not a proper matter for expert evidence and should also be given little weight: Australian Securities and Investments Commission v Vines (2003) 48 ACSR 291 at [28] (per Austin J).
5. In my view, Mr Gordon's evidence attracts little weight.
6. From this starting point, reference may then be made to aspects of Mr Lane's oral evidence, which I accept as part of his expertise, as a pre-cursor to returning to the resolution of Issue 2. Those aspects are as follows: 1. Mr Lane's evidence was that the leasehold gross realisation approach adopted by Mr Nicodimou in the June Valuation and the Amended Indigo Valuation did not inform the reader of the market value of the Marina. In Mr Lane's opinion, the leasehold gross realisation approach gave the reader an estimate of the total price that may be obtained for the leasehold berths, however, it failed to inform the reader of the costs that must be incurred in order to achieve that figure. Those costs were legal costs, holding costs, the cost of risks and other costs such as time, value of money or interest. 2. Mr Lane pointed out that Pier 35 (a marina relied on by Mr Nicodimou as providing broadly comparable sales evidence but considered by him and Mr Wright to be inferior) was a superior marina, and not comparable to the Marina, because Pier 35 is located on the Yarra River just outside the Melbourne CBD and in a protected waterway, whereas the Marina is well outside Melbourne and not within a protected waterway. In accepting Mr Lane's statement in this respect, I have had regard to the fact that Mr Lane essentially spent his career working in Victoria and that the market in Victoria was different to that in NSW. 3. Mr Lane explained that he used a capitalisation approach instead of a comparable sales approach because he did not find adequate comparable sales in Victoria (Pier 35 being sufficiently different). Further, Mr Lane pointed out that, in his opinion, it was not appropriate to consider the sale of marinas in other states, such as NSW, because the warmer weather conditions in those states enable a longer boating season and, therefore, marinas in those states attract greater demand and are not comparable.

Issue 3 - Did CBRE and Mr Nicodimou make the representations conveyed by the Amended Indigo Valuation (the Continuing Representations and the Market Value Representations) alleged in paragraphs 28A and 28B of the FASOC?

1. Turning to whether the defendants made the Continuing and Market Value Representations, the defendants relied upon their case vis-à-vis duty (to which I will return to more comprehensively when considering Issues 8-11 below).
2. Broadly speaking, the defendants contended that they did not owe a duty of care to the plaintiffs in preparing the Amended Indigo Valuation. The defendants, in that respect, relied upon the following factual premises that were said to distance the plaintiffs from the defendants: 1. the valuation was requested by MCD on behalf of the Indigo Group; 2. ILO was the "owner" of the Marina, as opposed to a "lender" or prospective "purchaser"; 3. the valuation was not addressed to the plaintiffs; 4. the plaintiffs do not allege that the defendants provided the valuation to them; and 5. the valuation was provided to City Pacific by the Indigo Group - and not the defendants.
3. I note before some turning to other factors of the defendants case that, whilst it is not contentious that ILO was the owner of the Marina, the plaintiffs submitted that the Amended Indigo Valuation was requested by IHPO, the owner of the Other Properties, not ILO, the owner of the Marina. It was contended, in that respect, the defendants' submissions proceeds upon a false premise.
4. The defendants further contended that the Court should not make the following findings as "there is no evidence" to sustain the following factual conclusions: 1. the defendants knew when the valuation was commissioned or prepared that the plaintiffs had any interest as potential purchasers of the Marina; 2. it may be inferred that CBRE or Mr Nicodimou knew that the report had been or would be provided to City Pacific; 3. the letter of instruction from MCD to CBRE was ever provided to City Pacific; and 4. the plaintiffs paid for it or ever asked for it to be assigned to them.
5. The defendants also contended that no duty was owed because: 1. the Amended Indigo Valuation was prepared in February 2007; and 2. at that time: 1. the defendants did not know or should not have known that the plaintiffs were members of a class of persons who might reasonably rely on the valuation; and 2. the defendants did not know or should not have known that it was likely that the plaintiffs would rely on the valuation to enter into the transaction of the kind that the plaintiffs entered into.

Continuing Representations

1. I accept the submission of the plaintiffs that the Continuing Representations as pleaded (at para 28A(b), (d) and (e) of the FASOC) were made when the defendants provided the Amended Indigo Valuation, without qualification, in response to an express instruction to "update" the June Valuation. It is that conduct which is misleading. For ease of reference, I extract the relevant paragraphs below: (b) The June Valuation was based on reasonable grounds and was a reliable opinion of the value of the Marina; (d) The opinion as to the value of the Marina in the June Valuation and/or the Amended Indigo Valuation could be relied on for the purpose of deciding whether to make an investment in relation to the Marina, including by way of a loan to fund the purchase of the Marina or the purchase of the Marina; (e) The defendants had exercised reasonable skill, care and diligence in undertaking the June Valuation and in expressing the opinions in that valuation;
2. For the reasons explained in paragraphs earlier in this judgment, the Amended Indigo Valuation contained the representations (and distribution or publication of it constituted misleading or deceptive conduct) to a broader class of persons than the addressee. Hence, the Amended Indigo Valuation did not cease to speak to the plaintiffs because it was addressed to someone else. In any event, I have found, the defendants knew or were on notice that the Amended Indigo Valuation was to be provided to, and relied on by, City Pacific.

Market Value Representations

1. I will return to this issue in the discussion of the duty case, but for present purposes I observe the defendants owed the plaintiffs a duty of care in preparing the Amended Indigo Valuation as, prior to providing the Amended Indigo Valuation to a company in the Indigo Group, the defendants either knew, or ought to have known, that a company within the Indigo Group would provide the Amended Indigo Valuation to the plaintiffs (or members of a class including the plaintiffs) and that members of that class would act or rely on the Amended Indigo Valuation in connection with some matter of business or of serious consequence, such as purchasing the Marina or funding the purchase of the Marina.
2. Further, it was reasonable in all the circumstances for the plaintiffs to rely upon the Amended Indigo Valuation. The nature of the valuation, the circumstances in which it was provided, the expertise of the defendants and the fact that the defendants held themselves out as expert valuers and were engaged on that basis, all point to it being reasonable for the plaintiffs to rely upon the Amended Indigo Valuation. Further again, in the present circumstances, in light of the defendants' knowledge as to the likely use of the Amended Indigo Valuation and the limited utility of the valuation absent third party reliance, and that it was prepared by a reputable firm for reward, the disclaimers (to the extent they impact the representation case) do not negative a duty to exercise reasonable care in preparing the opinion.
3. In the result I answer Issue 3 in the affirmative, but note I will return to the consideration of duty more fully below.

Issue 4 - Were the Continuing Representations and/or the Market Value Representations misleading or deceptive or likely to mislead or deceive?

1. Overall, the following propositions advanced by the plaintiffs are sound with respect to the Amended Indigo Valuation as to both forms of representations made (and, it may be noted, apply equally to the June Valuation; noting the sections on the Amended Indigo Valuation below, correspond to the equivalent section in the June Valuation): 1. The valuation is expressly said to be as to "market value" (see s 1.1); explained (see ss 1.6, 6.1 and 6.2 (I do not consider the reference to the "Summary of Assessed Values" in s 5.5 alters that conclusion). 2. The valuation, without explanation, combined different conceptual bases for different parts of the property. The Marina was valued on a gross realisation basis while the Other Properties were valued conventionally (see s 5.5, ss 6.1 and 6.2).The reader was entitled to understand the integers to reach a total value were all of the same general character and all, in the circumstances, to be market value. 3. Gross realisation does not represent present value. Nor does it represent value over the next three to five years as was required. 4. The valuation approach is inconsistent with API Standard 1 paragraph 4.0, the letter of instructions and "market value" as defined in the valuation and the expert evidence.
2. As I have found, the Amended Indigo Valuation was based on and "updated" the June Valuation. In my view, the contraventions identified in relation to the June Valuation should result in a finding that the defendants engaged in misleading conduct in relation to the Amended Indigo Valuation with respect to the Continuing Representations. My earlier findings with respect to a failure to adopt an appropriate valuation methodology and a failure to explain and cross-check the methodology apply with equal force here. Further, for the same reasons as provided earlier, and having regard to Mr Lane's evidence, the defendants grossly overvalued the market value of the Marina as at the valuation date of 30 January 2007. Mr Lane concluded that, as a result of adopting an incorrect methodology, CBRE ascribed a value to the Marina that was twice the figure that should have been reported or, at the very least, was misleading (I have earlier discussed why the Marina was overvalued, even if the defendants methodology was appropriate).

Conclusion: Representation Case

1. For the foregoing reasons, the valuations in the Amended Indigo Valuation were misleading or deceptive. Publication or distribution by the defendants of the valuations constituted misleading or deceptive conduct. They were prepared and published in contravention of s 12DA of the ASIC Act and/or s 52 of the TPA.

Relevant Principles

1. Before addressing the duty case, it is convenient to address the proper law governing the plaintiffs' negligence case in relation to both the June Valuation and the Amended Indigo Valuation. It is common ground between the parties that the law of Victoria governs these claims and, in particular, the Wrongs Act 1958 (Vic). That issue only arises in relation to the tort claim, the misleading conduct claims arises under Commonwealth legislation.
2. In the present case, the defendants' alleged negligence has several interstate elements, as follows: 1. the Marina was located in Victoria; 2. the defendants were located in Victoria, prepared the valuations in Victoria and communicated those valuations from Victoria; and 3. the plaintiffs were located in Queensland and received and acted on the valuations in Queensland, although that last proposition depends on the level of generality at which the concept of "acted on" is described. While the actions were directed by people located in Queensland, and importantly the payment of money was directed from Queensland the Marina which was acquired was located in Victoria.
3. In Baumgartner, the Court summarised the principles that are applicable in deciding the proper law where a tort has several interstate elements (at [861]-[863]): [861] In John Pfeiffer, the High Court decided that the law of the place of the commission of the tort (or lex loci delicti) should be applied as the law governing all questions of substance to be determined in a proceeding arising from a tort which has interstate elements. The Court further decided that laws that bear upon the existence, extent or enforceability of remedies, rights and obligations should be characterised as substantive and not as procedural laws (at [102]). These include the application of any limitation period, whether barring the remedy or extinguishing the right and all questions about the kinds of damage, or amount of damages that may be recovered: John Pfeiffer at [100]. [862] Hence, the lex loci delicti will determine the law that is applicable to the plaintiff's negligence claim. So much was common ground between the parties. [863] The common law test for determining the place of the tort is "to look back over the series of events … and ask … where in substance did this cause of action arise?": Distillers Co (Biochemicals) Ltd v Thompson [1971] AC 458 at 468; Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 ("Voth") at 567; Dow Jones & Co Inc v Gutnick (2002) 210 CLR 575; [2002] HCA 56 ("Dow Jones") at [43]. This approach has been described as ascertaining, in a common sense way, what is the place of "the act on the part of the defendant which gives the plaintiff his cause for complaint": Jackson v Spittall (1870) LR 5 CP 542 at 552, see also Voth at 567.

Issue 5 - Did CBRE and Mr Nicodimou owe one or both of City Pacific and Martha Cove a duty of care?

1. The plaintiffs' submissions as to whether CBRE and Mr Nicodimou owed a duty of care with respect to the June Valuation may, in light of the foregoing analysis, be readily accepted.
2. The defendants admitted that CBRE owed a duty to City Pacific in relation to the June Valuation. They also admitted that Mr Nicodimou owed a duty, although the content of that duty was subject to some likely immaterial dispute. However, as they deny owing a duty to City Pacific and Marina Cove in relation to the Amended Indigo Valuation, it is convenient to here identify why the admission of a duty is correct.
3. The starting point is the principles governing the imposition of a duty of care in relation to the provision of information or advice. The authorities recognise that the duty is imposed in relation to prevention or avoidance of economic loss, and that care is taken in imposing a duty to avoid economic loss. In ABN Amro, the Full Court summarised the applicable principles as follows (at [573]-[578]) (some internal references omitted): [573] … First, for there to be a duty to exercise reasonable care in making a statement or giving advice: (1) the speaker must realise, or the circumstances must be such that the speaker ought to have realised, that the recipient of the information or advice intends to act on that information or advice in connexion with some matter of business or serious consequence; and (2) the circumstances must be such that it is reasonable in all the circumstances for the recipient to seek, or to accept, and to rely upon the utterance of the speaker… [574] In respect of the second limb, the nature of the subject matter, the occasion of the interchange, and the identity and relative position of the parties as regards knowledge (actual or potential) and relevant capacity to form or exercise judgment will all be included in the factors which will determine the reasonableness of the acceptance of, and of the reliance by the recipient upon, the words of the speaker: Tepko at 16-17 [47]. It is important to recognise that the list is not exhaustive. [575] Second, proof of the criteria at [573] and [574] above establishes an assumption of responsibility or known reliance (or the converse, vulnerability), sufficient for a duty to be imposed. [576] Additional, but related, points about the criteria … should be noted. A duty of care is imposed whether the information or advice is given in response to a request or volunteered... [577] Further, a duty is also imposed where the information and advice is communicated to an identifiable class of people if the criteria identified in Tepko are established: Esanda Finance at 252 (Brennan CJ) and 302 (Gummow J) … It is not necessary that the person making the statement know the identity of the persons who may rely on it and suffer loss... Next, the fact that the person making the statement or giving the advice has some special expertise is consistent with (although not always necessary for) the imposition of the duty... [578] … [C]entral to the analysis required by the identified criteria is the purpose for which the statement is made or the advice is given. A recipient of information or advice is owed a duty by the speaker if (a) that recipient is part of a class to whom the statement or advice is directed and (b) reliance on the statement or advice by a member of the class is consistent with the substance of the purpose for which the statement is made or advice given...

Issue 6 - What was the content of the duty of care?

1. A valuer's liability in contract will be governed by the terms of the valuer's retainer, including the instructions given to the valuer. That contract, similarly, informs the duty in tort.
2. The content of a valuer's duty of care is informed by the instructions given to the valuer: Kenny & Good Pty Ltd v MGICA (1992) Ltd (1999) 199 CLR 413 ("Kenny & Good") at [58] (per McHugh J) and [116] (per Kirby and Callinan JJ). Those instructions can include instructions to comply with particular guidelines or practice standards, such as the API Guidelines: Genworth Financial Mortgage Insurance Pty Limited v Hodder Rook & Associates Pty Limited [2010] NSWSC 1043 at [53] (per Einstein J).
3. A valuer may owe a duty of care to a person on whose account, or for whose benefit and use, it prepares a valuation. The standard of care imposed is that of the ordinary skilled person exercising and professing to have the skills of the valuer performing such work: Adelaide Bank Limited v DTS Property Services Pty Ltd [2008] NSWSC 1328 at [5] (per McDougall J). Irrespective of whether a valuer's duty arises in tort or contract, the valuer's duty is to take reasonable care as a trained professional valuer to give a reliable informed opinion on the open market value of the land in question at the date of valuation: I & L Securities Pty Limited v R S Melloy Pty Limited [2002] QSC 306 ("I & L Securities") at [134] (per Ambrose J).
4. The significance of the breach of retainer is not that a separate claim is pursued for breach of contract. As time runs from breach in a contract case it is accepted that the contract claim is statute barred. Rather, the retainer informs duty and breach of the retainer informs the inquiry as to breach of duty in relation to the June Valuation.
5. Under the terms of the Valuation Retainer, admitted on the pleadings, CBRE made at least four relevant promises. 1. CBRE promised to perform a market valuation. 2. CBRE promised to provide "at least one check method" in support of its primary valuation rationale or methodology. 3. CBRE promised to include a "statement of suitability of security for Mortgage purposes". 4. CBRE promised to "comment on the ability of the property to hold its value over a period of 3-5 years".
6. Those provisions constitute the answer to the Issue 6 as they constitute the relevant content of the duty of care with respect to the June Valuation.

Issue 7 - Did CBRE or Mr Nicodimou breach the duty of care?

1. The defendants' case as to breach of duty, as earlier noted, substantially overlapped with the case brought with respect to misleading and deceptive conduct. Nonetheless, and without repeating the earlier references to the defendant's case, the primary proposition advanced by the defendants, in this respect (apart from contending that it was not correct to say that a gross realisation valuation tells one little or nothing about market value), was as follows: 1. There is no duty on the part of an advisor "to advise his client, or the person to whom he owes a duty of care, what the client or that other person already knows": Fitzwood at [175]. 2. The contemporaneous documents, most particularly the email exchange between Mr Nicodimou and Mr Gillam on 1 June 2006 (referred to above), clearly establish that Mr Gillam was perfectly well aware that the Marina was to be valued on an "as if complete" basis. Mr Gillam was not unsophisticated - at that time he was the Assistant Lending Manager of City Pacific. City Pacific was a diversified financial services company and the responsible entity of four managed investment schemes which provided finance, investment products and services with a strong focus on the property sector operating through three business units. During the 2006 financial year, City Pacific's property development and management division maintained a direct or indirect involvement in a 3. $2 billion plus pipeline of major leisure oriented property projects in high growth regions, on the eastern seaboard. As was properly conceded by Mr Lane (with whom Mr Wright agreed on this issue), City Pacific had a high degree of sophistication; 4. The June Valuation itself made it clear that the Marina was valued on a gross realisation as if complete basis: see for example page vi of that valuation. A distinction was clearly drawn in the valuation itself between the approach to the valuation of Lots S22, S23 and S24 on an "as is" basis, and the valuation of the Marina on a gross realisation as if complete basis. 5. The plaintiffs have elected to call no evidence from the officers of City Pacific to answer the obvious inference available from the documents - that City Pacific knew and understood exactly the methodology adopted in the June Valuation with respect to the Marina.
2. The standard of care and breach of duty of care are governed by s 48 of the Wrongs Act.

Issue 8 - Did CBRE and Mr Nicodimou owe one or both of City Pacific and Martha Cove a duty of care?

1. For a duty to a third party recipient to be recognised, the valuer must know that the third party was a member of a class of person who might reasonably rely upon the valuation: see for example Kestrel Holdings at [94]; Tepko at [47]. Further, it is plain that this must be known at the time the valuation is prepared.
2. Further, as noted above, it is settled that it would be unreasonable to hold a valuer liable for reliance on a stale valuation: Ta Ho Ma at 25-26. As with the June Valuation, the Amended Indigo Valuation stated: 1. "This valuation report is provided subject to the assumptions, qualifications, limitations and disclaimers detailed throughout this report…"; and 2. Under "Assumptions, Disclaimers, Limitations & Qualifications", it stated, Valuation Subject to Change: Premise 1 - Real estate values vary from time to time in response to changing market circumstances and it should, therefore, be noted that this valuation is based on available information as at the date of valuation. No warranty can be given as to the maintenance of this value into the future. It is, therefore, recommended that the valuation be reviewed periodically.
3. The defendants submitted that the Amended Indigo Valuation was prepared by the defendants in response to a request by MCD to Mr Nicodimou bearing a date 14 February 2007 (the contents of that request being unknown to the plaintiffs). The valuation was dated 30 January 2007. It was submitted that the letter of instruction made it clear that MCD was acting on behalf of the Indigo Group. As noted, there was no evidence to suggest that, at the time the defendants were asked to prepare that valuation, they had in contemplation that the plaintiffs were in the position of a prospective purchaser or might rely upon the valuation for their own purposes.
4. It was also contended, in the circumstances, that there was no basis to recognise a duty on the part of the defendants to a person in the position of the plaintiffs. The interest of the vendor was very different to the interest of a potential purchaser. Recognition of a duty owed by a valuer retained by a vendor to a prospective purchaser, it was contended, was likely to impose an impossible burden on the valuer.
5. The defendants further submitted that the Amended Indigo Valuation was stale by October and November 2007. The defendants contended that the Amended Indigo Valuation was said to be valuing the property as at 30 January 2007. To the extent that the Amended Indigo Valuation was an "update" to the June Valuation, the June Valuation included the same premise regarding the absence of any warranty as to the maintenance of the value of the property.

Issue 9 - What was the content of the duty of care?

1. A valuer may owe a duty of care to a person on whose account, or for whose benefit and use, it prepares a valuation. The standard of care imposed is that of the ordinary skilled person exercising and professing to have the skills of the valuer performing such work: Adelaide Bank Limited v DTS Property Services Pty Ltd [2008] NSWSC 1328 at [5] (per McDougall J). Irrespective of whether a valuer's duty arises in tort or contract, the valuer's duty is to take reasonable care as a trained professional valuer to give a reliable informed opinion on the open market value of the land in question at the date of valuation: I & L Securities at [134] (per Ambrose J).
2. Having resolved the Issue 8 in the affirmative, there was no basis identified, in my view, to treat the content of the duties, with respect to the Amended Indigo Valuation differently to those found for the June Valuation and I answer the issue raised accordingly.

Issue 10 - Did CBRE or Mr Nicodimou breach their duty of care?

1. The defendants contended that their submissions as to the absence of a duty apply with equal force to the question of breach. It was submitted that in that respect the case that there was a breach of duty in the preparation of the Amended Indigo Valuation should be rejected.
2. The defendants further contended that the plaintiffs' case for breach based upon the Amended Indigo Valuation was adversely affected by their inability to identify the risk of harm or the reasonable precautions that should have been taken in a case where the valuation was commissioned and prepared for the party on "the other side of the transaction".
3. The plaintiffs' correctly contended that the defendants breached their duties by failing to take precautions against the identified risk of harm (see FASOC at paras 27E and 27F). They relied upon their contentions as to the Continuing Representations and the Market Value Representations.
4. I also agree with the plaintiffs' response to the defendants' submission as to a failure to identify the risk or reasonable precaution because the valuation was commissioned and prepared for the party "on the other side of the transaction", proceeded on a false premise that the Amended Indigo Valuation was commissioned and prepared by the owner/vendor for the Marina.
5. In light of the above finding that the defendants did owe the plaintiffs a duty of care, and having regard for the otherwise conflation in the plaintiffs' case of the representation case and the duty case with respect to the Amended Indigo Valuation, it follows that my earlier conclusions with respect to the Continuing Representations and the Market Value Representations apply with equal force in answer to this issue. In that light I find the defendants breached their duties by failing to take precautions against the identified risks of harm per the pleadings in the FASOC at paras 27E and 27F (which were manifest in the findings as to the Continuing Representations and the Market Value Representations).
6. I answer Issue 10 in the affirmative with respect to both CBRE and Mr Nicodimou.

Issue 11 - Is CBRE or Mr Nicodimou entitled to rely on the disclaimer in the Amended Indigo Valuation to excuse either or both of them from liability?

1. As earlier mentioned, the defendants relied upon the disclaimer set out in
2. s 1.1.4 of the Amended Indigo Valuation. They contended that this reliance was not based in contract but related to the duty question. That was posed in terms of an issue: would the defendants owe a duty to someone outside those identified in the disclaimer clause in the valuation?
3. It was contended that the Amended Indigo Valuation could not be relied upon unless the "third party" sought and obtained authorisation and that consideration is relevant to both the duty question and reasonable reliance.
4. Again, as earlier mentioned, the defendants relied upon BT Australia.
5. The defendants' contended that, even if the plaintiffs' submission that an inference can be drawn that the defendants intended that, in addition to IHPO, the Amended Indigo Valuation to be used by and relied on by ILO and City Pacific were accepted (a proposition resisted by the defendants), that had no effect in the present circumstances. City Pacific did not obtain (nor use), to the extent that it was used, the Amended Indigo Valuation in 2007 as a mortgagee in the 2006 transaction. As earlier mentioned, it was contended that the plaintiffs' obtained the report in circumstances where they were a member of a different class, namely, purchaser.
6. I have earlier discussed various considerations with respect to misleading conduct and breach.
7. I agree with the submissions of the plaintiffs that the first disclaimer is contractual, unilaterally framed and cannot extend to a non-contracting party (namely, City Pacific and Martha Cove), particularly when the defendants were on notice that the valuation was to be used by third parties (the valuation is not to be characterised as a meaningless exercise, particularly as CBRE charged $25,000 plus GST for the valuation: BT Australia at 236-7.
8. There is merit in the plaintiffs' submission as to the second disclaimer. The first and second sentences limit use of the valuation to use by an identified company for first mortgage security purposes. In circumstances in which that identified company owned only part of the land and was not a lender, that sentence must be understood as being a permission to use the valuation by providing it to lenders for the purpose of obtaining finance. That must extend to the lender relying on it, otherwise the permitted use is contentless. The third sentence is a contractual limitation between addressee and valuer.

Reliance and Causation

1. Before turning to the issues with respect to reliance and causation, I will deal with some general topics. These topics are canvassed in Issues 12, 13 and 14. Each issue referred to the conduct set out in paras 31-37 of the FASOC, which the plaintiffs allege was "caused by breaches and contraventions". For convenience, those paragraphs are extracted below: Conduct caused by breaches and contraventions 31. City Pacific, in reliance on: a. all material parts of the June Valuation; and/or b. the Amended Indigo Valuation; and/or c. the Valuation Representations; and/or d. the Continuing Representations; and/or e. the Market Value Representations, entered into an agreement with ILO, by which: f. ILO granted to City Pacific (or its nominee) an option (Call Option) to purchase the Martha Cove Property; and g. City Pacific agreed to pay to ILO (or to fund its nominee Martha Cove Marina to pay to ILO) from 30 July 2007 to the Call Option Expiry Date an amount equal to the Holding Costs less Revenue, as those terms were defined in the Deed. Holding Costs was expressly defined to include interest incurred on all loans, including the Indigo Loan Facility, attributable to funding ILO's ownership of the Martha Cove Property. (Put and Call Option Deed (Deed)). 32. On or about 29 June 2007, City Pacific (on behalf of Martha Cove Marina). paid to ILO or, alternatively, IPC as agent for ILO, $2,100,000 pursuant to clause 2 of the Deed or, alternatively, the agreement referred to in paragraph 31 above (Call Option Fee). 33. On or about 8 October 2007, in reliance on: a. all material parts of the June Valuation; and/or b. all material parts of the Amended Indigo Valuation; and/or c. the Valuation Representations; and/or d. the Continuing Representations; and/or e. the Market Value Representations, Mr Philip Keith Sullivan and Mr James Timothy Finucan on behalf of City Pacific and Martha Cove Marina executed, pursuant to the Deed or, alternatively, the agreement referred to in paragraph 31 above, a Call Option Nomination Notice and a Notice of Exercise of Call Option whereby Martha Cove Marina, m, nominee for City Pacific, irrevocably exercised the Call Option over the Martha Cove Property (Call Option Exercise Notice). 34. Upon the exercise of the Call Option by way of the Notice of Exercise of Call Option, the Call Option Fee became the deposit for the acquisition of the Martha Cove Property pursuant to clause 4.2 of the Deed or, alternatively, the agreement referred to in paragraph 31 above. 35. On or about 10 October 2007 City Pacific (on behalf of Martha Cove Marina) paid an additional $2,000,000 to ILO and/or IPC (as agent for ILO) as a further deposit and / or as part of the consideration for the acquisition of the Martha Cove Property (Further Deposit). 36. On or about 28 November 2007 City Pacific (on behalf of Martha Cove Marina) paid an additional $7,000,000 to ILO and/ or IPC (as agent for ILO) in consideration for the acquisition of the Martha Cove Property. 37. The Call Option Fee, the Further Deposit and the $7,000,000 payment were paid as part consideration for the acquisition of the Martha Cove Property (collectively, the Martha Cove Property Monies).

Issue 12 - Did City Pacific and/or Martha Cove rely on the June Valuation and the Valuation Representations in engaging in the conduct alleged at one or more of paras 31-37 of the FASOC?

1. The defendants stated at the outset of their submissions two propositions of principle which may be readily accepted, namely: 1. the plaintiffs must prove that that they relied on the June Valuation (for the 2007 transaction) as a matter of fact: Lloyd v Grace, Smith & Co [1912] AC 716; Briess v Woolley [1954] AC 333; Commercial Banking Co of Sydney v R H Brown & Co (1972) 126 CLR 337; and 2. if the plaintiffs establish factual reliance, they also must establish that their reliance upon the June Valuation (for the 2007 transaction) was reasonable: Tepko at [47].
2. As to the principles of reasonableness, Gleeson CJ, Gummow and Hayne JJ stated in Tepko as follows (at [47]): [47] The statement of principle by Barwick CJ in Mutual Life & Citizens' Assurance Co Ltd v Evatt regained vitality after the consideration in Shaddock of the reasoning of the majority in the Privy Council in the Evatt litigation. In his judgment, Barwick CJ referred to various features of the special relationship in which the law will import a duty of care in utterance by way of information or advice. They were restated by Brennan J in San Sebastian Pty Ltd v Minister. Two of the points made by Barwick CJ are of immediate significance for this appeal. The first is the statement that: … the speaker must realize or the circumstances be such that he ought to have realized that the recipient intends to act upon the information or advice in respect of his property or of himself in connexion with some matter of business or serious consequence. The second is that: … the circumstances must be such that it is reasonable in all the circumstances for the recipient to seek, or to accept, and to rely upon the utterance of the speaker. The nature of the subject matter, the occasion of the interchange, and the identity and relative position of the parties as regards knowledge actual or potential and relevant capacity to form or exercise judgment will all be included in the factors which will determine the reasonableness of the acceptance of, and of the reliance by the recipient upon, the words of the speaker. [Footnotes omitted.]
3. The defendants submissions then traversed some factual areas previously the subject of discussion in this judgment, which for convenience I will briefly summarise: 1. It would be unreasonable to hold a valuer liable for reliance on a stale valuation. The valuation may be stale after six months (Ta Ho Ma at 25-26) but may be shorter such as in the present case when the property value was under construction. A sophisticated client would not rely upon a valuation that is more than a year old where the property being valued is being developed. The June Valuation did not state that the value of the property would hold for 3-5 years. 2. By mid to late 2007, the June Valuation, which identified the date of valuation as 18 May 2006, was clearly stale. This was so because: 1. the June Valuation and the Amended Indigo Valuation actually valued different properties because of the improvements between June 2006 and June 2007; and 2. the Amended Indigo Valuation valued the freehold and leasehold interests. To the extent that City Pacific relied on the June Valuation in 2007 (which has not been proved), such reliance was plainly unreasonable. 1. Further, it is no answer to the defendants' case, as the plaintiffs submitted, that the June Valuation was not stale in mid-2007 because the letter of instruction from City Pacific, under "Valuation Report Content where applicable", sought "comment on the ability of the property to hold its value over a period of 3-5 years". The June Valuation did not state that the value of the property would hold for 3-5 years. To the contrary. 2. The defendants contended that the Court should not accept that the Amended Indigo Valuation was an update of the June Valuation such that the two valuations would be read together and relied upon together. I have earlier rejected that contention. 3. As to notions of futility it was submitted that it is obvious that the June Valuation was clearly not an exercise in futility. The June Valuation was obtained and presumably relied upon by City Pacific to enter into the 2006 transaction - which is irrelevant on the pleaded case on reliance and loss. The Amended Indigo Valuation was obtained (and paid for) by Indigo Group, being the vendor for the 2007 transaction which, at the time is was sought (February 2007) did not contemplate City Pacific being the purchaser or the other side of the transaction. City Pacific did not come onto the scene until late June 2007, well after the Amended Indigo Valuation was sought by MCD or provided by CBRE. I have earlier rejected that contention. 4. The defendants contend that any reliance was not reasonable. Mr Gordon gave opinion evidence which is heavily critical of the conduct of the plaintiffs in June-November 2007. The plaintiffs have adduced no expert evidence in answer to Mr Gordon's opinion evidence. Mr Gordon's evidence is that the conduct of City Pacific between June and November 2007 was imprudent and unreasonable. That is the antitheses of reasonable reliance.

Issue 13 - Did City Pacific and/or Martha Cove rely on the Amended Indigo Valuation and the Continuing Representations and the Market Value Representations in engaging in the conduct alleged at one or more of paras 31-37 of the FASOC?

1. The defendants contended that the plaintiffs could not establish factual reliance with respect to the Amended Indigo Valuation, notwithstanding that they provided an opinion that the Marina was valued at $27.3 million (exclusive of GST) in order to pay the Call Option Fee to secure the right to enter a contract to acquire the Marina for $30 million.
2. The defendants also contended that the plaintiffs' reliance upon the due diligence report and the payment on 10 October 2007 (namely, the further deposit, which was the Second Payment of the Martha Cove Property Monies) were misplaced. Four reasons were stated in this respect: 1. it is not known who prepared that document, for what purpose, nor to whom it was disseminated. The plaintiffs elected to call no evidence to elucidate these matters; 2. at its highest, the document merely refers to the Amended Indigo Valuation (twice); 3. immediately after the Amended Indigo Valuation is referred to for the first time, the document states, "Many assumptions have been made to come up with the above value. These assumptions require further research to confirm they are achievable. The concerns and risks are that the asset has no occupancy and the time frame to achieve the assumptions is uncertain"; and 4. the document lists the following, under "Risks", "There is no independent valuation or industry assessment of revenue expectations".
3. In this context it was submitted that these factors tell against a proposition that City Pacific relied upon the Amended Indigo Valuation to enter into the Put and Call Option on the next day before any further research was undertaken.
4. As to reasonableness, it was contended that it was not reasonable to rely on a valuation of about $27 million to acquire the right to acquire a property of $30 million, and further, by the time of the exercise of the option in October 2007, the Amended Indigo Valuation was eight months old and was stale. The same contention was made with respect to the November 2007 payment (being a reference to the Third Payment of the Martha Cove Property Monies).
5. It was further contended that the plaintiffs' submission that the Amended Indigo Valuation was published in June 2007 should be rejected. I have earlier indicated my rejection of the defendants' submissions in that respect.

Issue 14 - Was the conduct referred to in issue 12 and 13 (and the subsequent loss of the Martha Cove Property Monies) caused by any misleading conduct or breach by CBRE or Mr Nicodimou?

1. Causation in negligence is to be approached by reference to s 51 of the Wrongs Act. That analysis invokes consideration of both factual causation and the scope of liability.
2. It is appropriate at this juncture, and in the light of the latter discussion of contributory negligence and damages, to briefly recap some of the central factual considerations as follows: 1. On 25 May 2006, the Valuation Retainer was entered into between City Pacific and CBRE. 2. On 22 June 2006, City Pacific offered the Indigo Loan Facility. 3. Between 26 and 29 June 2006, Mr Gillam requested Mr Nicodimou increase the assessment of market value and the valuation of the Marina and the Other Properties. On 27 June 2006, Mr Gillam emailed Mr Nicodimou indicating that he needed to achieve a valuation figure for the Marina and the Other Properties of $34.8 million. 4. On 30 June 2006, the June Valuation was forwarded to Mr Gillam. On the same day, a proposal in relation to the Indigo Loan Facility was prepared. 5. On 16 March 2007, the Indigo Valuation was provided by Mr Nicodimou to MCD. 6. In June 2007, negotiations for an option for the proposed Marina Trust to buy the Marina for $30 million began. On 25 June 2007, ILO sent via their solicitor an email to City Pacific setting out terms for an option to purchase the Marina. 7. On 26 June 2007, City Pacific received the Amended Indigo Valuation, which was understood to constitute a valuation of $27.3 million (as at 30 January 2007). On the same day, a draft Put and Call Option and Contract for Sale of the Marina were provided to City Pacific. 8. On 29 June 2007, ILO and City Pacific executed the Key Terms Agreement, whereupon the Call Option Fee was paid (a deposit of $2.1 million, which was the First Payment of the Martha Cove Property Monies). 9. On 2 October 2007, it is clear from internal communications within City Pacific that City Pacific was sourcing funds from CBA who required a new valuation. 10. On 8 October 2007, City Pacific nominated Martha Cove as its nominee under the Put and Call Option, Martha Cove exercised the call option and entered into the Contract for Sale to buy the Marina for $30 million. This involved the payment of a $4.1 million deposit. On 10 October 2007, City Pacific on behalf of MCD paid the further deposit of $2 million (the Second Payment of the Martha Cove Property Monies). 11. On 28 November 2007, City Pacific on behalf Martha Cove, paid a total of $7 million to ILO (the Third Payment of the Martha Cove Property Monies), as part payment of the purchase price on the Marina. 12. During 2008, City Pacific and ILO joined together to pursue the sale of the Marina to ASP. 13. On 28 August 2009, liquidators were appointed to City Pacific, and on 23 October 2009, liquidators were appointed to Martha Cove. The Contract of Sale was not terminated. At that stage the money payable by Martha Cove to City Pacific remained outstanding. 14. On 20 May 2015, ILO transferred the Marina to Denarke Pty Ltd for a purchase price of $12,946,693. The Martha Cove Property Monies were never repaid, and have been lost. ILO is now deregistered, and it is admitted that ILO and Martha Cove are incapable of repaying those monies.

Conclusion: Reliance and Causation

1. City Pacific and Martha Cove relied upon the June Valuation and the Amended Indigo Valuation and the Valuation Representations, Continuing Representations and Market Value Representations in engaging in the conduct referred to in the FASOC at paras 31-37 and such conduct was caused by the misleading conduct of the defendants and their breach of duty.
2. It follows that an affirmative answer must be given to the question raised by Issue 14.

DEFENCES

1. Issues 15 to 18 were grouped under the heading "Defences" and traverse the following topics: 1. limitation period(s) (Issue 15), 2. reduction to damages (Issue 16), 3. proportionate liability legislation (Issue 17), and 4. the application of s 601FS of the Corporations Act (Issue18).
2. I shall deal with each issue in turn under this heading.

Issue 15 - Is any cause of action relied on by the plaintiffs time-barred by any limitation period?

1. It is convenient to recap the positions of the parties, albeit with some repetition, in this respect.
2. As to whether any cause of action relied on by the plaintiffs was time-barred by any limitation period (Issue 15), the plaintiffs answered no. However, that answer was qualified by the following statement: "however, the analysis differs for City Pacific and Martha Cove and it is possible that the answer to this question differ for each plaintiff".
3. The defendants contended that the plaintiffs' claims are time-barred because the plaintiffs first suffered loss more than 6 years before the proceedings were commenced on 27 August 2015. In that respect the defendants relied upon s 5 of the Limitation of Actions Act 1958 (Vic), and/or s 263(2) of the Australian Consumer Law, and/or ss 12GF(2) and 12GM(5) of the ASIC Act and/or s 82 of the TPA and/or s 1041I(2) of the Corporations Act.
4. The defendants' position is thus, that both plaintiffs are impacted by a time-bar in light of limitation periods. In this respect, the defendants provided a detailed outline of their position, which is set out below: 1. The claim is statute-barred based on the pleaded allegations. If the plaintiffs are entitled to depart from the pleaded case on this issue, despite abandoning their amendment application, the claim is still statute-barred. 2. As in Winnote at 543, the Court should look to "the substance of the matter and not the formal framework that may have been artificially erected by the plaintiff in an endeavor to gain juridical advantage". 3. The substance of the matter is that City Pacific paid over money either directly or via its subsidiary Martha Cove at various times in mid to late 2007 for the purpose of acquiring the property. The High Court of Australia stated in Astonland at 654-655 that in such circumstances time commences to run "the day after entering the contract… or the day after completing that contract". 4. In accordance with the decisions in Winnote and Astonland, time commenced to run from when the plaintiffs paid money for the purpose of acquiring the right to purchase the Marina, or from when they entered into the contract to do so.
5. The defendants bear the onus of establishing that actual and measurable loss first occurred outside the limitation period: Segal t/as Segal Litton & Chilton v Fleming [2002] NSWCA 262 at [27] (per Hodgson JA; Handley JA and Young CJ in Eq agreeing). Importantly, there must be objective evidence of loss having occurred prior to the limitation date, not only the risk of loss: Wardley Australia Limited v Western Australia (1992) 175 CLR 514 ("Wardley") at 529; Winnote at [41] (per Mason P).

Issue 16 - Should any damages awarded to the plaintiffs be reduced (including to nil) because: (a) the plaintiffs failed to mitigate their loss; or (b) of any contributory negligence of the plaintiffs?

(a) Mitigation

1. The defendants submissions in this respect were relatively short and dependent upon the evidence of Mr Gordon. Those submissions are extracted below: 136. The plaintiffs have an obligation to mitigate their loss in both tort and the statutory causes of action: Richardson v Schultz (1980) 25 SASR 1 at 19; Hellyler Drilling Co v MacDonald Hamilton & Co Pty Ltd (1983) 51 ALR 177 at 192. The plaintiffs "cannot be said to have really incurred any loss which might have been avoided by his taking such steps as a reasonably prudent man in his position would have taken to avoid further loss to himself": Sherson & Associates v Bailey (2001) Aust Torts Rep 81-591 at [77]. 137. The reasonable steps which ought to have been taken plaintiffs to avoid the loss are those stated by Mr Gordon. Mr Gordon identifies the imprudent steps that were taken by City Pacific, including:56 (a) Entering into a binding financial commitment without sufficient funding; (b) Agreement to a larger than normal contract deposit; (c) Allowing the release of deposit funds to a vendor; (d) Delaying the settlement of a financial contract without adequate documentation; and (e) Payment of $7 million outside of the terms of a contract without documenting the basis of that payment. 138. By failing to take (obvious) steps "as a reasonably prudent man in his position would have taken", the plaintiffs cannot be said to have incurred the pleaded loss. 139. There was no challenge to the substance of Mr Gordon's opinion and the Court ought to accept his expert opinion, which is plainly correct.
2. I do not consider those submissions can be sustained for two reasons.
3. First, I have found that Mr Gordon's evidence should be given little or no weight. Secondly, I agree with the submissions of the plaintiffs that it is difficult to conceptualise what the plaintiffs should have done once the various payments had been made.
4. In terms of failure to mitigate, the evidence discloses that the plaintiffs acted with the object of avoiding loss including by keeping the purchase on foot and attempting on-sales of the Marina.

(b) Contributory negligence

1. The defendants written submissions with respect to this submission were as follows: 140. If there is any liability, the defendants allege that the plaintiffs are guilty of contributory negligence. The matters set out above in respect to the failure to mitigate defence are repeated. 141. As is made plain by s 63 of the Wrongs Act, the Court may make a reduction of 100% if the Court thinks it just and equitable to do so, with the result that the claim for damages is defeated. As pleaded in the Defence at [46], should the Court (notwithstanding the above submissions) find that liability has been established, it would be appropriate for the Court to reduce the damage by 100% on the basis of the plaintiffs' conduct, such is the cavalier nature of their behaviour and the causal potency of their failures. 142. The relevant principles regarding apportionment are well known having been stated by the High Court in Podrebersek v Australian Iron and Steel Pty Ltd (1985) 59 ALJR 492 at 494.
2. Reference should also be made in this respect to some other aspects of the defendants' submissions as follows: 34. On 28 November 2007, the plaintiffs allege that "City Pacific (on behalf of Martha Cove Marina) paid an additional $7,000,000 to ILO…in consideration for the acquisition of the Martha Cove Property": FASOC [35]. That payment was not required under the Deed or the contract. That is, this part of the consideration was paid before completion where City Pacific had no contractual obligation to make the payment. 35. At the time the decisions were being made by City Pacific to pay the Martha Cove Property Monies, on 3 October 2007, the officers of City Pacific knew that the Indigo Group was in serious financial difficulty, because they were told that "Indigo Pacific is also going to run into a hole of about $2.5 million". … 49. The plaintiffs' pleaded case on factual reliance on the June Valuation appears at FASOC [31]-[36]. The reliance on the June Valuation pleaded at FASOC [31]-[36] is, with respect, a most adventurous case. That case appears to involve the following propositions: … (d). City Pacific relied upon the June Valuation (from 2006) in late June 2007, which as noted above included a representation that the value of the Martha Cove Property was $22,500,000 exclusive of GST, to enter into the Put and Call Option Deed (the Deed) with ILO; (e). that Deed involved City Pacific having the option to require ILO to enter into contract to sell the Martha Cove Property for the sum of $30,000,000, that is, $7,500,000 more than the June Valuation figure; (f). the June Valuation was not only relied upon to enter into that Deed, but also to pay the Call Option Fee of $2,100,000, the $2,000,000 on 10 October 2007 as a "further deposit" to ILO, and on 28 November 2007 to pay over an additional $7,000,000 to ILO in part consideration for the acquisition of the Martha Cove Property, which sum was not legally required under the Deed or the contract … [Footnotes omitted.]

Issue 17 - What, if any, effect does proportionate liability legislation have on any orders for damages which the Court may make against one or more of the defendants?

1. The defendants' primary position was that Phillip Sullivan and James Finucan were concurrent wrongdoers, although they accepted that the concurrent wrongdoers defence overlapped with the contributory negligence defence to the extent that the actions of Mr Sullivan and/or Mr Finucan, through the principles of attribution, the actions of the plaintiffs.
2. The alternative submission of the defendants involved reliance upon the concurrent wrongdoer defence to the extent that the actions of Mr Sullivan and/or Mr Finucan involved breaches by them of their obligations to one or other or either of the plaintiffs. It was said that this defence was set out in the commercial list statements and the evidence of Mr Gordon.
3. I accept the contentions of the plaintiff that, to the extent the defence is raised, it is unsustainable for a number of reasons. This is because: 1. the actions of Mr Sullivan and Mr Finucan are the actions of the plaintiffs and the proportionate liability provisions relied on by the defendants do not apply to require or permit apportion of liability between a company and its officers or employees: see Robinson v 470 St Kilda Road Pty Ltd (2018) 263 FCR 572, following Dunn v Hanson Australasia Pty Ltd (2017) 12 ACTLR 138 and Tomasetti v Brailey (2012) 91 ATR 531; 2. the defendants have failed to identify, much less lead any credible evidence to prove, the basis of the defence; 3. to the extent the defendants rely on the Commercial List Statement, that document is not in evidence and in any event the allegations in that document are not capable of constituting admissions by either of the plaintiffs: Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 at 85-6 (per Mason CJ and Brennan J) and 98 (per Gaudron and McHugh JJ); and 4. Mr Gordon's evidence has been given little or no weight.
4. It follows that the answer to Issue 17 is that proportionate liability legislation does not have an effect on any orders for damages the Court will make against one or more of the defendants.

Issue 18 - Is the cause of action brought by the first plaintiff maintainable in light of s 601FS Corporations Act 2001 (Cth)?

1. Section 601FS of the Corporations Act provides as follows: (1) If the responsible entity of a registered scheme changes, the rights, obligations and liabilities of the former responsible entity in relation to the scheme become rights, obligations and liabilities of the new responsible entity. (2) Despite subsection (1), the following rights and liabilities remain rights and liabilities of the former responsible entity: (a) any right of the former responsible entity to be paid fees for the performance of its functions before it ceased to be the responsible entity; and (b) any right of the former responsible entity to be indemnified for expenses it incurred before it ceased to be the responsible entity; and (c) any right, obligation or liability that the former responsible entity had as a member of the scheme; and (d) any liability for which the former responsible entity could not have been indemnified out of the scheme property if it had remained the scheme's responsible entity.
2. The defendants contended that the cause of action brought by the first plaintiff is not maintainable. It was submitted that on the evidence, (at least) $9 million of CPMT funds was advanced by City Pacific for the acquisition of the Marina. It was submitted that when City Pacific advanced the Martha Cove Property Monies, it did so in its capacity as a responsible entity of the CPMT. Reliance was placed on the evidence of Mr Cathro that City Pacific's principal activity was to act as the responsible entity of three registered managed investment schemes, one of which was CPMT (it was then contended by the defendants that City Pacific was replaced as reasonable entity of the fund by Trilogy Funds Management Limited on 25 June 2009 such that the rights of City Pacific become the rights of Trilogy Funds Management Limited as at that date).
3. It was contended that the evidence did not show that City Pacific used its own funds to pay the Martha Cove Property Monies but rather the payment of $2 million on the 7 October 2007 was transferred from CPMT and the further payment of $7 million on 7 November 2007 was "redeemed" from CPMT to cover "MCM Settlement".
4. It was contended, therefore, that City Pacific did not have standing to bring the claim against the defendants as they did not suffer the pleaded loss.

Issue 19 - What, if any, damages should be awarded to the plaintiffs?

1. In the FASOC, the plaintiff relevantly claimed the following relief: 1. damages under s 82 of the TPA; and/or s 236 of the Australian Consumer Law; alternatively, 2. damages pursuant to s 12GF of the ASIC Act; 3. damages pursuant to s 1041I of the Corporations Act; 4. general damages; 5. interest pursuant to s 100 of the Civil Procedure Act; 6. costs; and 7. interest on costs pursuant to s 101(4) of the Civil Procedure Act.
2. Having established the causes of action in damages for tort and under s 52 of the TPA and its analogues, damages may be awarded to put the plaintiff in the position they would have been in if the relevant wrongs had not occurred.
3. With respect to misleading and deceptive conduct, the appropriate approach to damages in this case is to identify what the plaintiffs have suffered by way of prejudicial disadvantage in consequence of altering their position by reason of the breach of the relevant statutory provisions as I have found: Henville v Walker (2001) 206 CLR 459; [2001] HCA 52 at [132] (per McHugh J). In any event, the measure of the plaintiffs' loss at law and under statute are in this case relevantly identical.
4. The case for damages in this respect focused upon: 1. the First Payment to ILO as required by the Key Terms Agreement; 2. the Second Payment to ILO on 2 November 2007 as required by the Contract of Sale; and 3. the Third Payment to ILO in part payment of the purchase price for the Marina on 28 November 2007 by City Pacific on behalf of Martha Cove.
5. The position of the plaintiffs with respect to damages was stated thus. Recognising that the plaintiffs cannot recover twice, the Court should award City Pacific or Martha Cove damages in the total amount of $11.1 million (being the total of the First, Second and Third Payments), or alternatively in the amount of one or more of those payments (that is $2.1 million paid on 29 June 2007; $2 million paid on 10 October 2007; and $7 million paid on 28 November 2007). In each case, the plaintiffs also claim interest, costs and interest on costs.
6. The basis upon which the claims were made in that respect were correctly and succinctly expressed. The Martha Cove Property Monies had been lost and ILO was deregistered. Martha Cove is incapable of paying the Martha Cove Property Monies to City Pacific. It was claimed, therefore, that damages should primarily represent the sum of the First Payment, Second Payment and Third Payment, as earlier mentioned, in the total amount of $11.1 million.

CONCLUSION

1. The Court has determined that Martha Cove is time-barred under the statutory provisions specifying limitation periods as earlier specified in this judgment. City Pacific should have an award of damages from the defendants who are liable for the losses occasioned by the payment of the Martha Cove Property Monies, apportioned 60% for City Pacific and 40% for the defendants for contributory negligence of City Pacific with respect to the Third Payment.
2. The Court has not heard the parties on interest and costs. In the result, the Court proposes to make orders for the plaintiffs to provide short minutes of order reflecting this judgment. If there is an agreed position as to interest or costs that position may be reflected within the short minutes of order. The Court will make provision to resolve any dispute, as to interests and costs in the following orders. In the event, the Court will receive submissions on both interests and costs in accordance with those orders.

ORDERS

1. The Court makes the following orders: 1. The plaintiffs shall file and serve within 14 days of the date of this judgment short minutes of order reflecting this judgment. 2. The plaintiffs shall file and serve within 28 days of this judgment any submissions and evidence as to any disputed question as to interest and costs together with the terms of any orders proposed with respect to those disputed matters. 3. The defendants shall file and serve any submissions and evidence in reply as to any disputed questions, together with the terms of any proposed orders in that respect, within 14 days after being served with the submissions and evidence in (2) above. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 05 May 2021