Elanor Funds Management Ltd v Alceon Group Pty Ltd

Parties, documentary evidence and witnesses 9 I commence with the applicant. 10 Elanor is the responsible entity of the Elanor Investment Fund which is a registered managed investment scheme operated pursuant to a trust. Units in the trust form part of stapled securities that are listed on the Australian Stock Exchange. It is a corporation within the Elanor Investors Group which conducts an investment and funds management business. 11 Mr Blake McNaughton since July 2019 has been employed by Elanor as an executive director within the office of the chief executive officer. Mr McNaughton holds a Bachelor of Commerce with majors in information systems management and management. As at August 2017, he had in excess of five years' experience in analysing potential investments and in determining investment yields in order to identify investment opportunities for Elanor. 12 Mr Michael Baliva is employed by Elanor as its co-head of real estate, a position he has held since 2014. Mr McNaughton reported to Mr Baliva as to the outcome of the assessments that he made concerning a prospective acquisition of the Centre by Elanor. Mr Baliva's primary role was to report to Elanor's board in relation to the proposed acquisition, and following the board resolution, his role was to negotiate the purchase terms, including the purchase price. He performed this work in conjunction with Mr McNaughton. 13 Mr Alexander (Sandy) Hamilton in August 2017 was employed as the regional director for investment advisory services by CBRE. He is experienced in performing due diligence investigations for investors buying or selling multi-tenanted properties, including regional and sub-regional shopping centres in Australia. In August 2017, he was engaged by Mr McNaughton to undertake a due diligence assessment in relation to the Centre for Elanor. 14 Ms Anna-Maree Coco has extensive experience in managing shopping centres in Queensland. Between May 2016 and November 2017, she was employed by Savills (QLD) Pty Ltd (Savills) as the on-site property manager at the Centre. Savills in turn was engaged by Alceon as manager of the Centre pursuant to an agreement dated 19 December 2015. 15 Mr Paul Kwan is a registered valuer and is the head of valuation and advisory at Knight Frank Valuation and Advisory, Queensland. He was first engaged by Mr McNaughton on 21 August 2017 to prepare a valuation of the Centre for mortgagee purposes. Pursuant to that engagement, and a letter of instruction from the Bank of Queensland, he produced a market valuation report dated 6 September 2017 pursuant to which he calculated the market value of the Centre at $55.25 million exclusive of GST assuming a capitalisation rate of 7%. He was again engaged by Mr McNaughton on 2 September 2021 to prepare a "retrospective indicative valuation" of the Centre on the assumption that nine of the food court tenancies were vacant at a total gross annual rental loss of $701,448. Pursuant to that engagement, Mr Kwan on 15 September 2021, provided some "draft calculations" which valued the Centre at $52.5 million assuming a capitalisation rate of 7% and which he later revised on 17 September 2021, following correspondence with Mr McNaughton, to $51 million assuming a capitalisation rate of 7.75%. 16 Later on 12 December 2022, Mr Kwan was engaged as an independent expert witness for Elanor by its solicitor and in that capacity authored his expert report dated 22 December 2022. In it he expresses the opinion that the market value of the Centre as at 1 November 2017 was $49 million exclusive of GST assuming a capitalisation rate of 7.25%. 17 Mr Matthew Gwynne is a chartered accountant who was engaged by Elanor's solicitors to undertake a review of the respondents' expert accounting report prepared by Mr Bradley Hellen, who in turn undertook a financial reconciliation of rental charges paid and received by each of the Food Court Tenants together with a reconciliation of incentives, abatements and security deposits. Mr Gwynne prepared an expert report dated 21 June 2023. 18 I deal next with the respondents' witnesses. 19 Mr Frenil Shah is a director of CPRAM and holds degrees in management studies and financial management. Alceon engaged CPRAM pursuant to the terms of an investment management agreement dated 13 December 2012, pursuant to which CPRAM acted on behalf of Alceon as an asset manager in the day-to-day management and administration of the Centre. In 2017 he acted as the portfolio manager for CPRAM in relation to four shopping centres, including the Centre. Mr Shah's responsibilities extended to supervising centre managers and liaising with external contractors and consultants. In particular, as portfolio manager he was responsible for the oversight of day-to-day management and administration of the Centre, financial analysis and reporting as well as direct liaison with the tenants. Specifically in relation to the Centre, Mr Shah supervised a leasing manager, Mr Carrigan, an analyst, Mr Song and a junior analyst, his brother, Mr Neil Shah. It was on his recommendation that Alceon engaged Savills as the property manager for the Centre. 20 Mr Oliver Sicouri is the founding director of CPRAM. He holds a law degree, is admitted as a solicitor and barrister and is also a licensed real estate agent. 21 Ms Fiona Hansen is a qualified chartered accountant and a senior managing director for the valuation practice FTI Consulting. She was jointly engaged by the solicitors for the respondents as an expert witness in relation to the undertaking of financial due diligence investigations. Pursuant to that engagement, she prepared an expert opinion report dated 28 April 2023. 22 Mr Bradley Hellen, as I have noted, was engaged by the respondents' solicitors to undertake accounting reconciliations of rental charged to and paid by the Food Court Tenants between December 2016 and October 2017. In addition, his engagement extended to a reconciliation of security deposits and bank guarantees, tenancy arrears reports, the commencement date of relevant leases and a reconciliation of various incentives as provided to the Food Court Tenants. Mr Hellen prepared an expert witness report dated 3 May 2023. 23 Mr Michael Goran is a qualified and registered valuer and a senior valuer of the firm Field & Kaye. He was jointly engaged, together with another valuer Mr Field, to prepare a market valuation of the Centre as at 1 November 2017. He is one of the authors of the report prepared in consequence dated 26 May 2023. Based on the assumptions contained in the report, Mr Goran and Mr Field concluded that the market value of the Centre was $57 million exclusive of an added development potential value of $1,700,000 assuming a capitalisation rate of 7.25%. Ultimately, only Mr Goran gave evidence before me. 24 The expert accountants and valuers, pursuant to case management orders, attended a conference before a Registrar of the Court for the purpose of conferring and producing joint expert reports as set out at Pt 7 of the Expert Evidence Practice Note (GPN-EXPT). Mr Hellen and Mr Gwynne produced a joint report dated 30 June 2023 and Mr Kwan and Mr Goran produced a joint report dated 28 June 2023. Save for separate cross-examination of Mr Kwan on issues relating to his independence, the accounting and valuation expert evidence was given concurrently. 25 In addition, the parties prepared an extensive court book of documents, initially comprising approximately 5,300 pages, which was then supplemented with hundreds of pages of further documentation during the course of the trial. Faced with such a large amount of documentation, I required each counsel to prepare a tender list, limited only to the documents relied on by each party. At the commencement of each oral closing submission, the tender list of each party was received as identifying and comprising only the documents relied upon, which I then received into evidence. In proceeding in this way, I made it clear to all counsel that I would not refer to any document in the court book, or the separate tender bundles, that is not referred to in the tender lists.

Issues on the pleadings 26 Elanor opened its case in accordance with the issues as framed in its Amended Statement of Claim dated 19 June 2023. By the conclusion of the trial, it abandoned a number of contentions there pleaded. As I explain in these reasons, how the applicant's case evolved is important in resolving the issues. The claim essentially concerns nine Food Court Tenants at the Centre and whether they were in rental arrears, the commencement dates of the leases for those tenants, the expected passing base rent of the Centre and the extent to which individual Food Court Tenants had received incentives that were not disclosed in documents produced to Elanor during the due diligence period. 27 The Food Court Tenants in issue are: (1) Dizzy Dukes, an American style bar and grill; (2) Burrito Bar, a Mexican restaurant; (3) Bel Cibo, an Italian restaurant; (4) Mass Nutrition, a supplier of fitness supplements; (5) Kebab Express, a fast food outlet; (6) Sushi Kuni, a Japanese style fast food outlet; (7) Mumbai Blues, referred to as Mumbai Blue in some documents, an Indian restaurant; (8) Thai Me Down, a Thai restaurant; and (9) Redcliffe Noodle Kitchen, an Asian noodle restaurant. 28 These were not the only food tenancies in the Centre at the time, but each was situated in the Centre's casual dining precinct and were proximate to each other. Some of these tenancies had external access. The tenancy occupation percentages at the Centre were: Component Area (sqm)* % of Total Woolworths 3,941 39% Mini-Majors (2) 1,646 16% Specialty Shops (28) 2,831 29% Kiosks (5) 107 1% ATMs (3) 3 0% Basement Tenants (8) 134 1% Office & Legal (8) 1,342 13% Total (approximate) 10,004 100%

29 The Information Memorandum depicted the location of each Food Court Tenant within the Centre and expressly stated the Centre net operating income (fully leased) at $4,230,309 and the net operating income (passing) at $3,870,759 each per annum. Net passing income is a term of art amongst valuers. It is an annualised calculation based on the net rental that is received at a point in time. In this case the Information Memorandum expressly stated that the passing income "reflects the tenancy information forecast to 30 June 2017 and is based upon estimated expenditure as shown in the FY17 Budget. A detailed tenancy schedule is available in the online data room." 30 Elanor contends that the data room contained copies of leases for each of the Food Court Tenants, Incentive deeds for seven of those tenants (excluding Bel Cibo and Sushi Kuni) and a document for each month between December 2016 and July 2017 in the form of a Tenant Arrears Report. As will become apparent from these reasons, many more documents were contained in the data room. However, a primary contention of Elanor (opened on its case), is that the Tenant Arrears Reports "did not identify any of the [Food Court Tenants] as being in arrears for any amount" and further that no other arrears report nor any other documents were provided which recorded tenancy arrears between December 2016 and July 2017, save for the report of July 2017 which recorded total arrears in that month of $2,957.05 for five tenancies that are not the subject of complaint by Elanor. 31 Elanor also relies on the content of a discussion between Mr Hamilton and two employees from his office, and Mr Shah on 30 August 2017 (the 30 August Meeting) during which, and in answer to questions put to him, it is said Mr Shah did not identify any of the Food Court Tenants as having outstanding arrears, or being in receipt of abatements or incentives beyond those disclosed in the relevant Incentive deeds or otherwise as having any adverse issues in relation to sales, the ability to pay rent or to satisfy other obligations under their leases. There is significant dispute as to the content of the discussion at that meeting. 32 Based on the disclosed information, Elanor pleads that the passing base rent per annum and the outstanding abatements as set out in the tenancy schedule and the outstanding incentive schedules was: Tenant Passing Base Rent Outstanding Incentives/Abatements - Outstanding Incentive Schedule Outstanding Incentives/Abatements - October Incentive Schedule $p.a. Dizzy Dukes $119,191.00 $24,957 comprising an abatement of $4,991.31 per month until 14 February 2018 $17,470 comprising an abatement of $4,991.31 per month until 14 February 2018 Burrito Bar $80,618.00 Bel Cibo $71,939.70 Mass Nutrition $46,385.64 Kebab Express $40,000.00 $2,500 comprising an abatement of $1,667.67 per month until 31 October 2017 Sushi Kuni $90,956.25 Mumbai Blues $48,529.50 $8,088 comprising an abatement of $2,022.06 $4,957 comprising an abatement of $2,022.06 per month until 14 per month until 14 January 2018 January 2018 Thai Me Down $54,600.00 $6,825 comprising an abatement of $2,275 per month until 14 December 2017 $3,302 comprising an abatement of $2,275 per month until 14 December 2017 Redcliffe Noodle Kitchen $43,262.00

33 The Elanor pleading then moves to the central allegations of falsity that each of the Food Court Tenants between December 2016 and 1 November 2017 at various times were in arrears in paying the rent and in discharging other obligations under their leases and further, had received incentives and other benefits that were not disclosed in the leases and incentive deeds. The pleading in this respect is very detailed and is a matter that I focus on when finding the material facts. 34 The misleading conduct claim is pleaded by reference to a number of express and implied representations together with a misleading conduct case anchored by a failure to disclose relevant matters. The pleading is quite complex and detailed. Parts of it were abandoned by the time of closing submissions. With due deference to the pleading ability of Mr Fernon for Elanor, the claim as framed in opening the case may be reduced to the following contentions of express or implied misleading conduct. Representations that: (1) The passing base rent per annum for each tenant listed in the tenancy schedule was correct (Passing Base Rent representation); (2) The amount of rent actually payable to Alceon between May and 1 November 2017 was the rent specified in each lease less any adjustment under an incentive deed (Rent Representation); (3) The outstanding incentive schedules were correct (Outstanding Incentive Schedule Representation); (4) The Incentive deeds were a correct and complete record of all abatements and incentives (Incentive Representations); (5) The Food Court Tenants with Incentive deeds had been invoiced for rent and other charges since the rent commencement date in each incentive deed and had paid those amounts (Commencement Date Representation); (6) The Tenant Arrears Reports, including a further arrears report for October 2017, were correct and complete statements of all amounts not paid by each of the Food Court Tenants in the month corresponding to the report period and that all other invoiced amounts had been paid in full (Arrears Representations); and (7) The rent that Elanor should expect to receive from tenants was in accordance with the passing Base Rent Representation and or the Rent Representation (Rental Return Representation). 35 Elanor's case shifted at the point of closing submissions. It abandoned the claims of undisclosed rental arrears for Kebab Express, Thai Me Down and Mass Nutrition; abandoned the Commencement Date Representation claims in relation to Bel Cibo, Sushi Kuni and Mass Nutrition and abandoned the express representation misleading conduct claims relating to: (1) the Passing Base Rent Representation, (2) the Rent Representation, (3) the Outstanding Incentive Schedule Representation and (4) the Incentive Representations. 36 In consequence, that leaves for determination as issues on the pleading that the express or implied representations were misleading or deceptive or likely to mislead or deceive in three respects being claims (5), (6) and (7). The pleading of these claims received significant attention in the respondents' closing submissions and for that reason I set them out. 37 First, at [44] of the Further Amended Statement of Claim (FASOC): (e) the Food Court Tenants subject to an incentive deed had been invoiced for rent and other charges since the rent commencement date listed in their respective incentive deed and had paid rent and other charges since the rent commencement date listed in their respective incentive deed (Commencement Date Representation); Particulars The Commencement Date Representation is partly express and partly implied. (i) In so far as it is express, it arises from the content of the Leases in respect of the rent commencement dates and rent due subject to the incentive deeds and Tenants Arrears Reports. (ii) In so far as it is implied, it arises from the circumstances in which such documents were provided in the absence of any other document or information to advise the commencement dates had not been deferred. (iii) In so far as it was oral, it arises from the matters and conversations pleaded in paragraphs 25 and 26 above. 38 Second: (f) The Tenant Arrears Reports and the October Arrears Report were correct and complete statements of all amounts which had not been paid by the Food Outlet tenants in the corresponding month for that report from all previously rendered invoices and that all amounts in invoices rendered in the months prior to the month of the respective report had otherwise been paid in full by the tenants of the respective Food Outlets (Arrears Representations); Particulars The Arrears Representations are partly express, partly implied and partly oral. (i) In so far as they are express, they are contained in the Tenant Arrears reports and the October Arrears Report. (ii) In so far as they are implied, they arises from the circumstances in which the Tenant Arrears Reports and the October Arrears Report were provided and absence of any other document or information of a similar nature for different periods or difference [sic] tenants being provided. (iii) In so far as they are oral, they arise from the matters and conversations pleaded in 25 and 26 above. 39 Third: (g) the rent that Elanor should expect to receive from tenants was in accordance with the Passing Base Rent Representation and/or the Rent Representation (Rental Return Representation); Particulars The Rental Return Representation is implied and arises from the content of the Passing Base Rent Representation and the Rent Representation together with the content of each of the representations referred to in 44 of this claim. 40 By the time of closing submissions, Elanor's case as to why it is said that each of the remaining representations were incorrect, contained material omissions or understated the true quantum of arrears for the Food Court Tenants, reduced to three subparagraphs in the FASOC at [46]: (e) The Commencement Date Representation was incorrect and contained material omissions in respect of the Food Court Tenants. Particulars (i) Dizzy Dukes' rent commencement date was allegedly deferred from 14 May 2017 to 1 June 2017 and it did not pay rent and other charges due from July 2017 (see paragraph 42 (h) in relation to Dizzy Dukes). (ii) Burrito Bar's rent commencement date was allegedly deferred from 1 March 2017 to 14 May 2017 and it did not pay rent and other charges from the date of rent commencement set out in its incentive deed (see paragraph 42 (d) and (e) in relation to Burrito Bar). (iii) Mass Nutrition's rent commencement date was allegedly deferred from 1 April 2017 to 1 May 2017 and it did not pay rent and other charges from the date of rent commencement set out in its incentive deed (see paragraph 42 (d) and (e) in relation to Mass Nutrition. (iv) Kebab Express' rent commencement date was allegedly deferred from 30 April 2017 to 1 June 2017 and it did not pay rent and other charges from the date of rent commencement set out in its incentive deed (see paragraph 42 (d) and (e) in relation to Kebab Express). (v) Mumbai Blues' rent commencement date was alleged [sic] deferred from 14 April 2017 to 1 May 2017 and it did not pay rent and other charges from the date of rent commencement set out in its incentive deed (see paragraph 42 (d) and (e) in relation to Mumbai Blues). (vi) Thai Me Down's rent commencement date was allegedly deferred from 14 June 2017 to 1 July 2017 and it did not pay rent and other charges from the date of rent commencement set out in its incentive deed (see paragraph 42 (d) and (e) in relation to Thai Me Down). (vii) Red Noodle Kitchen's rent commencement date was allegedly deferred from 14 May 2017 to 25 June 2017 and it did not pay rent and other charges from the date of rent commencement set out in its incentive deed (see paragraph 42 (d) and (e) in relation to Red Noodle Kitchen). (f) Further, or in the alternatively, the Arrears Representations were incorrect and understated in respect of the Food Outlets; Particulars (i) See paragraph 42. The Food Court Tenants subject to incentive deeds were not paying rent until deferred dates which had the effect that the Tenants Arrears Reports did not provide evidence of those tenants paying rent by the date it was due and not being in arrears (see the particulars to paragraph 46 (e)). (g) by reason of the matters pleaded in sub-paragraphs in (a) to (f) above, the Rental Return Representation was incorrect and overstated in respect of the Food Outlets. Particulars See paragraph 42. 41 Turning next to the misleading conduct by omission case, it has two remaining elements. First, Elanor contends that it had a reasonable expectation that the respondents would have disclosed any arrears of more than 30 days owed by any of the Food Court Tenants within the period December 2016 to October 2017 and that the failure to do so gave rise to a reasonable expectation by Elanor that none of the Food Court Tenants were in arrears for more than 30 days during that period. This aspect of the case is labelled in the pleading as the Conduct. Secondly, in relation to Dizzy Dukes, Burrito Bar, Mass Nutrition, Kebab Express, Mumbai Blues, Thai Me Down and Red Noodle Kitchen, Elanor had a reasonable expectation that if the rent commencement date was later than that set out in each incentive deed, the respondents would have disclosed to it that fact and that if there were rental arrears for August, September or October 2017 that fact would also have been disclosed. The failure to disclose these matters was, in the particular circumstances, misleading or deceptive or likely to mislead or deceive Elanor. This is labelled in the pleading as the Deferral Conduct. 42 In reliance on each and every one of the three remaining representations, the Conduct and the Deferral Conduct, Elanor contends that it entered into the Option Agreement, exercised the call option and entered into and ultimately performed the Sale Contract. In the event that Elanor had known that the impugned representations and or conduct was incorrect or "omitted material information" then Elanor would have paid less than the purchase price to acquire the Centre or, if that had not "been possible" it would not have entered into the Sale Contract and would not have purchased the Centre. By the time of closing submissions, however, Elanor did not press the alternative price (alternative transaction) case. Mr Fernon for Elanor assented to a proposition that I put to him that, on the evidence, if Elanor had known the true position that would have materially affected the purchase price calculation that Mr McNaughton undertook with the result that Alceon would not have accepted a price less than $55.25 million. Thus, this is a no transaction case: Hughes-Holland v BPE Solicitors [2018] AC 599; Wyzenbeek v Australasian Marine Imports Pty Ltd (in liq) [2019] FCAFC 167; 272 FCR 373 at [105]-[109] (Rares, Burley and Anastassiou JJ). 43 To establish that the representations, Conduct and Deferral Conduct were misleading or deceptive, Elanor pleads in detail what it contends was the true position, primarily by reference to business records made available to it after settlement of the sale and which are set out in detail in an affidavit of Mr McNaughton made on 9 December 2022. That portion of his affidavit was admitted into evidence not as proof of the facts there summarised, but as limited to his understanding of the records. The records are in evidence. What those records establish is the subject of detailed evidence from the accountants and submissions from counsel that I resolve later in these reasons. 44 Finally on the loss or damage question (s 236 of the ACL), Mr Fernon accepts that in order to succeed, Elanor must prove that the price paid for the Centre was more than its true value at the time of purchase and reliance is placed on the expert evidence of Mr Kwan. He also accepts that the principle in Potts v Miller (1940) 64 CLR 282 guides the approach to the assessment of damages, but of course is not to be regarded as the test pursuant to s 236. The correct approach is to award an amount for damages which best accords with the remedial purpose of the ACL: Murphy v Overton Investments Pty Ltd [2004] HCA 3; 216 CLR 388; Henville v Walker [2001] HCA 52; 206 CLR 459 (Henville). Elanor does not contend that it suffered detriment in a more general way: cf Harvard Nominees Pty Ltd v Tiller [2020] FCAFC 229; 282 FCR 530 at [72]-[76] (Lee, Anastassiou and Stewart JJ). 45 The respondents join issue in their pleadings on the material questions of misleading or deceptive conduct, reliance, damage and damages. They also rely on positive defences. Alceon draws attention to several of the express statements in the Information Memorandum including that no representation or warranty was made as to the accuracy of the net operating income (fully leased) or net operating income (passing) representations. Alceon accepts that there were construction delays in undertaking the project to remodel the casual dining precinct, which delays consequentially impacted on the ability to provide possession to six of the Food Court Tenants in accordance with the lease commencement dates. As a result, Alceon agreed to defer the rent commencement dates, corresponding with the respective periods of delay. On its case, this fact was known to Elanor during the due diligence period. In a detailed way, Alceon pleads to each of the rental arrears, lease commencement and incentive contentions of Elanor by way of positive assertion. In particular, and in answer to Elanor's claim that the Tenancy Arrears Reports did not relevantly disclose any arrears for Food Court Tenants, Alceon pleads that the arrears reports "represented that the rental arrears of the tenants referred to in those reports were as stated in the reports as at the date upon which the reports were printed" and in consequence do not bear the objective construction of Elanor. 46 Alceon pleads in the alternative that if it engaged in misleading or deceptive conduct, then CPRAM is a concurrent wrongdoer within the meaning of ss 87CB and 87CD of the Act. Recognising the difficulty of how that could be so when CPRAM was Alceon's agent, Mr Henry abandoned this defence by the time of his closing submission. 47 In material respects CPRAM's defence corresponds with that of Alceon where issue is joined with the claims made by Elanor, although, and in considerably more detail, CPRAM responds to each of the contentions made by Elanor in relation to the arrears position, the lease commencement dates and the incentives provided to each of the Food Court Tenants. On the reliance question, CPRAM pleads that Elanor had access to the data room and the ability to undertake its own due diligence, did so by itself and by retaining Mr Hamilton as a consultant, was experienced in undertaking due diligence of commercial properties (in particular shopping centres) and places reliance upon the terms of the Sale Contract to the effect that the due diligence material may include estimates and projections which may not be correct and that Elanor had examined for itself and had satisfied itself of all relevant matters during the due diligence period. Further, CPRAM contends that a motivating factor for Elanor was the development potential of the Centre in the form of a mixed residential and commercial use. In that context, CPRAM contends that if the representations were made and the conduct engaged in was misleading or deceptive then they were immaterial in the context of the Centre's overall value, including its anticipated value as a result of its development potential. 48 CPRAM relies on two proportionate liability defences. One, that Alceon is a concurrent wrongdoer by reason of the matters pleaded by Elanor against it and the other, that CBRE is a concurrent wrongdoer in that it failed to make sufficient inquiries during the due diligence in breach of its duty to exercise reasonable care pursuant to its engagement with Elanor. Finally, CPRAM pleads that if Elanor suffered loss and damage, then it contributed to that damage within the meaning of s 137B of the Act by failing to undertake and/or investigate matters which a reasonable person in the position of Elanor would have undertaken in the circumstances. In this regard, CPRAM places particular reliance upon the expert evidence of Ms Hansen.

The primary facts 49 The parties managed to agree a somewhat narrow and limited set of facts in the form of the Statement of Agreed Facts dated 6 July 2023. Regrettably a large number of facts which ultimately were not in issue between the parties were not referred to in that document, despite case management orders that I made and which required the legal representatives for the parties to attend before a registrar of the Court in order to agree uncontentious facts. However, by the time of the trial, and the involvement of counsel, the territory of factual dispute narrowed considerably. To the extent that the Statement of Agreed Facts remains of utility in resolving the issues, I record the following. 50 On 13 December 2012, Alceon and CPRAM entered into an investment management agreement. By it, establishment of the unregistered managed investment scheme known as the Bluewater Trust is recorded. CPRAM accepted appointment as one of the joint managers of the trust. Its duties included identification of intended trust acquisitions, management of trust assets (including asset level strategy), budgeting, forecasting, reporting and oversight of day-to-day asset management and administration of trust assets. It was also tasked with identification of opportunities for the disposal of trust assets. 51 Alceon was registered as proprietor of the Centre by transfer on 3 April 2013 for a consideration of $41,750,000. Alceon entered into a property management agreement with Savills on 19 November 2015. By it, Savills accepted an appointment to provide each of the services in respect of the Centre as set out at schedule 2 to the agreement. The scope of services included the general administration of each of the tenancies by collecting rent, holding security deposits, ensuring compliance with tenant obligations, maintaining a tenancy schedule, maintaining tenancy files and financial management. In particular, the financial management obligation extended to the preparation of a monthly statement of monies received and expenses incurred, the issue of monthly invoices to tenants for rental payable and other charges, the collection of rent and charges and review of rental arrears. Savills also accepted an obligation to provide monthly financial management reports for the Centre. Savills operated a reporting system known as the MRI Management System (MRI) in order to comply with its financial management and reporting obligations to Alceon. Importantly, Alceon and CPRAM did not have the ability to make changes within MRI, but CPRAM could generate reports from it. 52 For the nine Food Court Tenants, leases were entered into between May 2017 and 1 November 2017 as follows: (a) a lease of shop T02-03 which, according to the lease terms, commenced on 1 April 2017. This lease was granted to TGS Kuber Pty Ltd trading as Dizzy Dukes Bar and Grill; (b) a lease of shop T04 which, according to the lease terms, commenced on 1 March 2017 granted to Kailash Corporation Pty Ltd trading as Burrito Bar; (c) a lease of shop T05 commencing on 1 May 2016 granted to Tushaan Enterprises Pty Limited trading as Bel Cibo; (d) a lease of shop T07A which, according to the lease terms, commenced on 1 April 2017 granted to Mass Nutrition Chermside Pty Ltd; (e) a lease of shop T07C which, according to the lease terms, commenced 1 April 2017 granted to Queensland Employment Services Pty Ltd trading as Kebab Express; (f) a lease of shop T28A commencing on 15 February 2015 assigned to Gorani Pty Ltd trading as Sushi Kuni pursuant to an assignment of lease with effect from 30 April 2017; (g) a lease of shop T29 which, according to the lease terms, commenced on 1 March 2017 granted to TGS Kuber Pty Ltd, trading as Mumbai Blues; (h) a lease of shop T30 which, according to the lease terms, commenced on 1 May 2017 granted to Thai Me Down Pty Ltd; (i) a lease of shop T32 which, according to the lease terms, commenced on 1 April 2017 granted to Ms Jie Liu trading as Redcliffe Noodle Kitchen. 53 In August 2017, Elanor engaged CBRE to undertake financial due diligence in relation to the Centre. Between 18 August 2017 and 15 September 2017, Alceon and CPRAM provided Elanor and its representatives, including CBRE, with access to the data room for that purpose. The data room was electronically maintained. Within it were contained copies of (amongst other things): (a) leases for the Food Court Tenants; (b) the Incentive deeds; and (c) the Tenant Arrears Reports. 54 CBRE and Elanor were each able to make inquiries regarding the tenants and the financial position of the Centre through a question-and-answer facility in the data room. The Tenant Arrears Reports did not identify any of the Food Court Tenants as being in arrears for any amount. In addition to the material contained in the data room, on 27 October 2017, Minter Ellison lawyers on Alceon's behalf provided to Elanor's solicitor a Tenant Arrears Report for the month of October 2017 (October Arrears Report) and a document comprising an outstanding incentive schedule as at 31 October 2017. These documents did not disclose any arrears for the Food Court Tenants. 55 I now record my findings on material facts based on the evidence. In late 2016, CPRAM recommended to Alceon that the casual dining precinct of the Centre be upgraded to create a new restaurant precinct in the expectation of securing new food tenants. This project formed a portion of a broader strategy for the Centre, designed to attract a range of new tenants. The recommendation was accepted and work commenced in late 2016. Progress was delayed. The works did not complete until late June 2017. The evidence does not permit a more precise finding. Certainly, the works were complete by the date of commencement of the last deferred tenancy commencement, which was Thai Me Down on 1 July 2017. 56 Alceon appointed the real estate firms Stonebridge Property Group and CBRE to market the Centre for sale. By no later than 2 May 2017, the Information Memorandum had been prepared for that purpose. It invited expressions of interest by 30 May 2017. The Information Memorandum was sent to Mr McNaughton by email on 2 May 2017. Seven summary points were made in the email, including "significant future mixed-use potential", a matter that was prominently emphasised in the content of the document. The Information Memorandum references the availability of leases and associated documents in the data room. Mr McNaughton was provided with access to the data room on 10 May 2017. He commenced inspecting documents in it on 11 May 2017. There is a data room log which records who accessed the data, when, for how long and what was viewed. Documents could be downloaded and printed, either individually or in bulk. Initially, the data room comprised folders of information, indexed as follows: (1) Key Campaign Documents: including the Information Memorandum, trade area analysis reports and financial reports including a tenancy schedule; (2) Title and Transaction Documents: including draft sale contract with schedules and statutory reports; (3) Leases and Security: including copies of leases and lease variation documents, bank guarantees, security deposit register, disclosure statements and Incentive deeds; (4) Income information: including the Tenancy Arrears Reports, information concerning other income, for example licenses and signage income, monthly rental invoices for the period January to May 2017 and a detailed income & expenditure budget for the Centre for the 2018 financial year; (5) Outgoings information: including audited outgoings statements, budgets, rate notices, recovery letters for the 2017 and 2018 financial years and audited promotional fund statements; (6) Plans and Surveys: including miscellaneous contractual documents, survey plans and as built construction drawings, architectural drawings and mechanical and electrical drawings; (7) Building: including development approvals, certificates and a fitout guide; (8) Turnover: including monthly turnover data for various tenancies between March to July 2017, with separate audited turnover statements for Woolworths for the 2014, 2015 and 2016 financial years; (9) Insurance: including certificates of currency and claims history; (10) Value Add Potential: including a mixed-use development assessment report prepared by Urbis, a development approval for commercial spaces, a development approval for the casual dining precinct and a set of mixed use development schemes prepared by the architectural firm Bureau Proberts; and (11) Leases, Tenancy & Security: including further incentive deeds. 57 The data room log records that Mr McNaughton performed a bulk download of all of the documents in the data room on 18 May 2017 comprising 484 documents totalling 786.2 MB and another bulk download on 23 May 2017 comprising 486 documents totalling 786.3 MB. Mr McNaughton did not thereafter access the data room until 21 August 2017 when he undertook a further bulk download of 628 documents totalling 1 GB. Thereafter, on various days, he accessed the data room to view specific documents until 2 November 2017. Just what he viewed and for what purpose was the subject of considerable cross-examination which I return to when addressing the issues of misleading or deceptive conduct and reliance. 58 Elanor first submitted an expression of interest to purchase the Centre on 30 May 2017 for $54.75 million in the form of a letter signed by Mr Baliva. Expressly it assumed the annual fully leased and passing net operating income as $4,230,309 and $3,870,759 respectively "per the information provided" which is a reference to each of those figures in the Information Memorandum. It required Alceon to grant a rental income guarantee equivalent to 2 years' gross market rent for any tenancy that was vacant as at the settlement date. It requested the grant of an exclusive dealing period of 20 business days during which Elanor would conduct due diligence to its satisfaction and negotiate in good faith to agree and execute a contract of sale. This expression of interest was stated to expire on 2 June 2017. Little evidence was given in chief as to how Elanor calculated this purchase price. Mr McNaughton mentions the submission of this expression of interest in his affidavit of 9 December 2022, but does not explain the process of calculation of the purchase price, in contrast with the particularity with which he deals with how he calculated the price in the second expression of interest that Elanor submitted. 59 In cross-examination Mr McNaughton accepted, and I find accordingly, that when the expression of interest was submitted on 30 May 2017 he knew that the Food Court Tenants in the casual dining precinct had not commenced to trade, that this area was "a work in progress" and that he made no inquiries as to whether any of the Food Court Tenants outside of the casual dining precinct had commenced to trade. He accepted that he knew at that time that Food Court Tenants in the casual dining precinct may or may not have commenced trading and may or may not fall into rental arrears. He accepted that he did not know whether any of the Food Court Tenants outside of the casual dining precinct were or were not in arrears at that time. It was then put to Mr McNaughton that, in submitting the first expression of interest, Elanor was prepared to pay $54.75 million and assume the risk that the Food Court Tenants may fall into rental arrears. Although Mr McNaughton did not accept that proposition for the reason that the offer was subject to due diligence, I find that it was the case that in calculating the price of $54.75 million, Elanor did so without interrogating the risk that one or more of the Food Court Tenants may subsequently fall into rental arrears. That finding logically flows from the sequence of events and that Mr McNaughton did not consider this question before 30 May 2017. Whether the arrears position would have been the subject of investigation, had the expression of interest been accepted, is another matter. 60 Sometime between 30 May and early August 2017, Alceon entered into a conditional contract with another prospective purchaser for a price of $57 million, which contract failed to complete, which facts are summarised in the valuation report of Mr Kwan dated 6 September 2017. Thereafter, Mr McNaughton and Mr Baliva met with Mr Gartland of Stonebridge at which time Elanor was invited to submit a further expression of interest to purchase the Centre. Either immediately following the meeting or shortly thereafter, Mr Baliva inspected the Centre with Mr Gartland, although his evidence did not describe what he observed. 61 Following his inspection of the property, Mr Baliva reviewed the Information Memorandum with Mr McNaughton. Mr McNaughton then undertook certain calculations in order to derive a purchase price for the Centre. At that time Mr McNaughton had more than five years' experience in analysing potential investments and in determining an appropriate investment yield. He derived a yield of 7%, in part based upon yield information disclosed for comparable sales in a database that he had access to. There is a difference in those comparable sales between initial yield and core market yield. As explained by Mr McNaughton, initial yield is based on the passing rent and core market yield is based on the fully leased market rent. In those comparable sales the initial yield is within the range of 5.57% at the lower end and 8.97% at the upper end. On the assessment undertaken by Mr McNaughton, the majority of comparable sales revealed initial yields of 6.5% or less. Despite that comparable sales information, Mr McNaughton considered that the Centre should be purchased at a higher yield for a number of reasons: the reported sales for Woolworths were less than what might be expected, the Centre faced an increased risk of competition, the Woolworths lease was due to expire (subject to the exercise of any options) in 2028, the catchment area for the Centre was limited by its proximity to the coast and was relatively small in comparison with other centres and the purchase price that Alceon wanted (in excess of $50 million) was comparatively high with a corresponding increased risk of investment. 62 Having derived the yield figure, Mr McNaughton applied it to the net operating passing income. He used a figure of $3,907,170 which differs from the figure in the Information Memorandum of $3,870,759. Mr McNaughton could not recall why he used a different figure in his evidence-in-chief. What is now clear is that this is the same as the figure for total passing net operating income disclosed in a revised statement of financial figures for the Centre that was emailed to Mr McNaughton on 2 August 2017. As expressly recorded in that document the figure, indeed each of the figures contained therein, are based on a financial summary and projection as at 1 December 2017. In order to calculate the purchase price, Mr McNaughton divided $3,907,170 by 7 and then multiplied by 100 to calculate an amount of $55,816,714. From that figure he then subtracted $500,000 on account of his estimate of the expected future capital expenditure, based on 1% of the purchase price, as was his practice. Having deducted that sum, the price reduced to $55,316,714 which he then rounded down to $55.25 million. 63 Something more needs to be said about the revised financial figures that were provided on 2 August 2017. The covering email to Mr McNaughton attached an Excel spreadsheet with a series of tabs. One was labelled "Bluewater Square turnover figures" divided as between the various tenants which included information about whether a tenant had reported trading data and if so, the month of the first report. Some comments were also recorded in relation to relevant tenants. 64 The effect of that data is accurately summarised in a table contained in the closing submissions of Alceon: Food court Tenant Trading data reported? Month commenced reporting trading Comments? Sushi Kuni Yes July 2015 N/A Bel Cibo Yes June 2016 N/A Dizzy Dukes Yes June 2017 Yes, "14 days of actual trading converted to full month" Burrito Bar Yes May 2017 Yes, "Disruption in trade as Dizzy Dukes fitting out" Mumbai Blues Yes June 2017 Yes, "12 days of actual trading converted to full month" Mass Nutrition No N/A N/A Kebab Express No N/A N/A Thai Me Down No N/A N/A Redcliffe Noodle Kitchen No N/A N/A

65 Mr McNaughton recalled the spreadsheet when cross-examined as to its content but disputed it as a reliable record as to when those tenants commenced trading. On his evidence it is the tenancy schedule, being that tab on the Excel spreadsheet, which is the reliable source of that information. Similar turnover reports for March 2017 were available in the data room and were viewed by Mr McNaughton. Mr McNaughton gave similar evidence to that effect in answer to a number of questions put to him in cross-examination. On his evidence the turnover data is not a reliable indicator of the commencement of a tenancy because it depends upon the accuracy of the reporting of the tenant, which accuracy cannot be assumed in the case of small operators. He described these as "mum and dad operators" who sometimes prefer cash sales which are not subsequently disclosed. 66 Whilst that fact may impact on the quantum of the reported turnover, I do not find Mr McNaughton's explanation to be satisfactory. The Food Court Tenant leases were in standard form. By cl 3.2 each tenant was obliged to "keep complete and accurate accounting records" of all transactions relating to the leased premises including data relevant to gross sales. Not later than seven days after the end of each calendar month, the tenant was obliged to give to Alceon a statement in reasonable detail of the gross sales for the previous month. By cl 3.3, Alceon had the right to inspect and have audited the tenant's records. I find that the turnover data was a reliable indicator as to whether tenants had or had not commenced to trade because it was provided in satisfaction of a lease obligation. Logically the commencement of trading would be reflected in a monthly gross sales amount reported by each of the Food Court Tenants to Alceon. Correspondingly, the absence of a reported amount points strongly to the conclusion that a tenant had not commenced trading or at least should have invited further inquiry. 67 It is also of note that when Mr Baliva provided the revised financial figures to Mr McNaughton by email of 9 August 2017 he said: "Could you run this asset as a new syndicate at 50% LVR. Price indicated is $57.5m with 2-year income guarantee." Mr McNaughton accepted in cross-examination that he understood that he was being requested to calculate a price of around $57.5 million in order to submit a competitive expression of interest. 68 I return to the methodology of Mr McNaughton's calculation. He was aware that there were five vacant tenancies at the time, which he accounted for by including a condition in the letter of offer requiring Alceon to provide a rental income guarantee equivalent to two years' gross market rent for any vacant tenancy as at the settlement date. Having completed his calculations, he discussed them with Mr Baliva. Apart from stating in his evidence-in-chief that "we reviewed" the calculations, he did not say what was done or discussed. Mr Baliva in his evidence-in-chief provides some detail of what was discussed with Mr McNaughton. In substance, Mr McNaughton advised that he had been through the Information Memorandum and had reviewed comparable sales. Based on those inquiries he had determined that a 7% investment yield was appropriate. Mr Baliva accepted that assessment and agreed with Mr McNaughton's methodology. The result of this meeting was that Mr Baliva signed and caused to be delivered an expression of interest addressed to Mr Gartland at Stonebridge dated 16 August 2017. The letter reads: Dear Philip, Bluewater Square Offer Elanor Investors Group (ENN) is pleased to submit an Offer to acquire the below Property in accordance with the terms outlined below: Property: Bluewater Square Shopping Centre (Shopping Centre) Anzac Avenue, Redcliffe QLD 4020 Vendor: Alceon Group ATF Bluewater Trust Purchaser: Elanor Funds Management Limited (or nominee) Purchase Price: $55,250,000 (Fifty five million, two hundred and fifty thousand dollars) Offer Assumptions: The offer assumes: 1. The annual Fully Leased and Passing Net Operating Income is $4,266,720 and $3,907,170 respectively per the information provided 2. The Vendor will grant the Purchaser a rental income guarantee equivalent to two (2) years gross market rent (as assessed by the Purchaser) for any tenancies which are not subject to a lease at the date of settlement. This guarantee will be held in a trust account managed by the Purchasers solicitor 3. Budgeted Outgoings are appropriate to operate and maintain the Property to a competitive standard and are consistent with operating cost benchmarks for similar properties 4. Plant & Equipment has been maintained to a high standard and no material capital expenditure will be required to either replace or extend its useful life 5. All outstanding leasing incentives, fit-out contributions, rental abatements, and other capital commitments, will remain the responsibility of the Vendor and be adjusted in the Purchaser's favour at settlement 6. All bank guarantees and or security deposits required under the leases will be in place at Settlement and novated across to the Purchaser. There will be an adjustment in favour of the Purchaser for any outstanding bank guarantees or security deposits not provided at Settlement Exclusivity Period: The Vendor will grant the Purchaser an exclusive dealing period of 20 business days, during which period the Purchaser will: 1. conduct Due Diligence to its satisfaction, with the Vendor providing full co-operation and access to the Purchaser and or its consultants; and 2. negotiate in good faith to agree and execute contracts and other relevant agreements. Deposit: 5% of Purchase Price at exchange of contracts. Settlement: 30 business days following exchange of contracts, or earlier subject to the Purchaser providing 10 business days' written notice to the Vendor. Offer Expiry: This Offer will expire on Friday 25 August 2017 Acceptance: Please confirm the Vendors' acceptance of the terms outlined in this letter by signing below and returning a copy to the Purchaser General Terms: This Offer is not intended to and does not create legally binding or enforceable obligations between the parties. We look forward to the vendor's acceptance and proceeding with the acquisition of the Property in accordance with the terms outlined in this Offer. 69 Alceon accepted those terms, and on 18 August 2017 the parties entered into the Heads of Agreement which relevantly provided as follows: (1) A purchase price of $55.25 million "as a going concern"; (2) The annual fully leased and passing net operating income was $4,266,720 (as at 1 December 2017) and $3,907,170 (as at 1 December 2017) respectively per the information provided. (3) The vendor would grant to the purchaser a rental income guarantee equivalent to two (2) years' gross market rent (as per financials provided as at 1 December 2017) for any tenancies which are not subject to a lease at the date of settlement. This guarantee would be held in a trust account managed by the purchaser's solicitor. (4) All outstanding leasing incentives, fit-out contributions, rental abatements, and other capital commitments would remain the responsibility of the vendor and be adjusted in the purchaser's favour at settlement. (5) All bank guarantees and or security deposits required under the leases would be in place at settlement and novated across to the purchaser. There would be an adjustment in favour of the purchaser for any outstanding bank guarantees or security deposits not provided at settlement. (6) Alceon granted to Elanor an exclusive dealing period of 20 business days commencing on 21 August 2017 and expiring on Friday, 15 September 2017 during which the purchaser would: (a) Conduct due diligence to its satisfaction, with the vendors providing full cooperation and access to the purchaser and or its consultants; and (b) Negotiate in good faith to agree and execute contracts and other relevant agreements. 70 Expressly, the Heads of Agreement did not create a binding legal relationship between the parties, save as to the exclusive dealing period and a clause concerned with confidentiality. 71 Each of Mr McNaughton and Mr Baliva had access to the data room throughout the due diligence period. Although he described his role following the signing of the Heads of Agreement as limited to coordinating consultants to undertake due diligence, the data room log records that Mr McNaughton very extensively accessed documentation in the data room during the entirety of the due diligence period and thereafter until 1 November 2017, which was the date of settlement of the Sale Contract. It is notable that within the due diligence period his access included viewing documents relating to the mixed-use development potential of the site, the Urbis town planning assessment for redevelopment, including the favourable mixed use zoning pursuant to the local council planning scheme, several architectural montages of a compliant mixed-use development, the monthly turnover data for July 2017 and a tenancy arrears schedule for July 2017 (July Arrears Report) which he viewed on 28 August and 30 October 2017. Following expiry of the due diligence, Mr McNaughton did review other tenancy arrears schedules for May and June 2017, but not until 30 October 2017. 72 In mid-August 2017, Mr McNaughton spoke with Mr Hamilton with the purpose of retaining him to undertake a due diligence assessment. He requested the submission of a written proposal with a fee estimate, which he received on 21 August 2017. Amongst other matters, Mr Hamilton offered a "financial and tenancy due diligence service" which included "comparison of the net income provided by the vendor with our revised estimate of the sustainable net income". Pursuant to the scope of works, Mr Hamilton advised that he would undertake "a critical review of all income and expenditure" to cover a number of issues including: a review of the commercial aspects of the lease agreements and audit of the tenancy schedule, the identification of any clause in the lease "that may have an impact on the income stream", review of the trading performance of the property including the major tenants and each individual tenant, review and comment "upon the current arrears report", the undertaking of a SWOT analysis, the identification of "'problem' tenants" by analysis of arrears reports and the undertaking of a check of rental and other charges due under each lease with the charges depicted on monthly invoices. CBRE offered to do all of this work for a fee of $50,000 plus GST. Mr McNaughton accepted the proposal. On 21 August 2017, he sent an email to Mr Hamilton attaching a financial pack of relevant information. 73 Mr McNaughton also contacted Mr Kwan on 21 August 2017, first by telephone and then by confirming email. He provided the financial information received from Stonebridge and the Information Memorandum and requested a valuation proposal. The email continued: Could you kindly provide a valuation proposal. Because we will be buying in a standalone syndicate (as opposed to ERF), we will probably be casting the net a little wider than usual on the debt sourcing, so do let me know if there are any banks who you are not on the panel of. 74 Mr McNaughton explained the acronym ERF is a reference to a listed real estate trust on the Australian Stock Exchange. Mr McNaughton received a fee proposal from Mr Kwan later that day, which he accepted. 75 The engagement of Mr Hamilton did not conclude the inquiries that Mr McNaughton undertook. The Information Memorandum referenced the existence of a report from Bureau Proberts Architects, comprising a site analysis and montages of a range of mixed-use development schemes that may be approved on the site. This report was included in the data room within a folder marked "Value Add Potential". This report is in the form of a site analysis, its context, the extent of surrounding development and use together with an analysis of the development potential, particularly having regard to the views towards the ocean obtainable from a multilevel residential development constructed above the Centre. The report contained a number of residential options for development by reference to setbacks and heights, each being compliant with the provisions of the planning scheme. The data room log records that Mr McNaughton first viewed this report on 21 August 2017, before viewing it again on 23 and 24 August, 4 and 13 September and 13 October 2017. On the same day he also viewed another report in the same folder in the data room authored by the town planning firm Urbis. That report is in the form of a letter addressed to Alceon dated 27 April 2017. It contains a site analysis, identifies the relevant zoning and planning controls, examines the use and development requirements of the planning scheme for acceptable outcomes (i.e. not involving the exercise of the discretion to grant or to refuse approval) and provides an analysis of one of the options for development identified in the Bureau Roberts report. The conclusion is that 'Option 3' complied with the provisions of the planning scheme for a development of a total of 85 residential units over five levels whilst retaining the existing commercial aspects of the Centre. The maximum height of 25.5m complied with the planning scheme. In the summary to that report the author said: The recently endorsed Moreton Bay Regional Planning Scheme 2016 offers the owner of Bluewater Square the opportunity to implement a Code Assessable mixed-use development for 85 units. A review of the mixed-use Option 3 scheme prepared by Bureau Proberts indicates the scheme having a maximum height of 25.5m, would be subject to Code Assessment. Option 3 also meets the relevant provisions for setbacks, car parking and site cover. 76 On 23 August 2017, Mr McNaughton emailed the author of the Urbis report, Ms Sophie Lam. He stated: "I would like to have a call please to discuss, as we too believe there is good medium to long term potential to develop the site into a mixed use [sic] scheme." On the same day, Mr McNaughton sent an email to Mr Stewart Pentland at the Moreton Bay Regional Council. Omitting formal parts, he said: Confidentially we are in exclusive due diligence to acquire the Bluewater Square shopping centre in Redcliffe. From the current zoning, Bluewater Square would appear to have strong medium to long term prospects to be redeveloped into a mixed-use project. I understand that Moreton Bay Regional Council is undergoing some strategic planning when it comes to zoning and development. Given your role as Head of Planning at Moreton Bay Regional Council, would we be able to have a phone call to learn more about how the strategic planning may effect [sic] Bluewater Square in the future. 77 Mr McNaughton received a response from Ms Amy White of the Council on 24 August 2017. Further emails were exchanged and ultimately Mr McNaughton and Mr Baliva attended a pre-lodgement meeting with Ms White on 5 September 2017, by telephone. Ms White prepared a comprehensive note of the matters discussed. It discloses that she summarised the planning scheme controls, pointed out the relevant development and use clauses relevant to the "Option 3" referred to in the Bureau Proberts and Urbis reports, highlighted the strategic development intent provisions of the zoning overlay and relevantly commented as follows: The proposal is generally consistent with the intended role of the Seaside Village precinct as a higher order centre. In its current form the proposal reflects a mixed use, high density residential development. Further information is required to determine how the proposed streetscape treatment ensures Sutton Street is provided as a vibrant main street for the centre's shopping business, commercial and community uses. 78 Ms White also provided advice as to what documentation would be required in order to lodge a development application and the fees applicable. Mr McNaughton and Mr Baliva also met with Ms Lam on 25 August 2017, but what was discussed at that meeting was not explored in the evidence, save for an email that Ms Lam sent to Mr McNaughton and Mr Baliva at 5.06 pm that day, where she explained the car parking ratio requirements for short term accommodation. Mr McNaughton had further external correspondence on 25 August 2017, this time to Mr Greg Malempre at the firm Location IQ and relevantly said: As part of your research on Bluewater Square, can you report on the number of hotels/hotel rooms/occupancy etc. on the peninsula? If we build above the shopping centre it may make more sense to build some resi [sic] and some service apartments. Given car park ratios this may also be what we need to do. 79 Subsequently, on 8 September 2017, Mr McNaughton received the report from Mr Malempre. It is an independent centre and market review with analysis arranged as: (1) review of the regional and local context of the site; (2) a benchmarked summary of the Centre's composition and performance; (3) definition of the trade area and review of current and projected population and retail spending levels; (4) review of the socio-economic profile of the Centre trade area; (5) identification of customer segments; (6) review of the current and future competitive environment; (7) analysis of current estimated market share; and (8) a detailed analysis of projected sales for the Woolworths tenancy. 80 Within the report there is a section dealing with estimated sales for various tenancies, including estimates of sales for seven of the Food Court Tenants based on information provided by Elanor, where sales data was not available. In addressing the "ultimate potential assessment" the report identifies a number of key issues including: "the specialty component of the shopping centre currently includes a high proportion of independent traders which perform moderately". A recommendation is made that Elanor should "consider greater promotion and more national brands for the food catering offer", by reference to a number of well-known national retailers. 81 I pause at this point to observe that Mr McNaughton in his evidence-in-chief did not disclose the inquiries that he made in relation to the Bureau Proberts report, the Urbis report or his contact with the Moreton Bay Regional Council. This is surprising in light of the fact that CPRAM pleaded in its defence that if the impugned representations were made, they were immaterial in the context of the overall value of the property including the development potential of the site by reference to the Urbis and Bureau Proberts reports. Further on the question of reliance, CPRAM pleaded that Elanor was motivated to acquire the Centre because of its potential for re-development, in particular as emphasised in the Information Memorandum. I return to this point in my analysis and findings relating to the issues of misleading or deceptive conduct and reliance. 82 Resuming the sequence of material events, the July Arrears Reports was produced and printed on 25 August 2017 and was then made available in the dataroom. This, on the case of Elanor is a very significant document. 83 I reproduce it: 84 According to the data room log, Mr Hamilton viewed this report on 27 August 2017 and again on 29 August 2017, when he printed it. Mr McNaughton viewed the document on 28 August and 30 October 2017. Just what objective meaning was conveyed by this report in context is a central issue in this proceeding which I address in my analysis of the misleading conduct claim. 85 On 28 August 2017, Mr Kwan requested a copy of the Heads of Agreement and received it from Mr McNaughton. Much was made, at least initially, in the cross-examination of Mr Kwan to the effect that by receiving this information he knew the valuation figure that was required by Alceon in order to support the purchase of the Centre. However, it subsequently emerged (and I accept) that the standard form instructions from the Bank of Queensland to his firm required that he sight and have regard to any relevant sales contract, and I accept Mr Fernon's submission that this component of the cross-examination proceeded on a false basis. 86 At some time prior to 28 August 2017, Mr McNaughton contacted Mr Stephen Schneider of the firm Colliers by way of inquiry as to whether Colliers would, in the event of the acquisition proceeding, manage the Centre for Elanor. Without being prompted, Mr Schneider visited the Centre on 28 August 2017 at 3.40 pm and provided a report by email to Mr McNaughton at 4.16 pm. Under the heading "Retailer and Performance" he observed: At 3:40 the Centre is very quiet, would think with school pick up the Centre would be busier Woolworths looks fresh with new fitout - not very busy Internal common area retailers - one vacancy next to What's Hot Donut King and lean green kitchen extremely quiet - no customers for 20 minutes Sushi kiosk closing at 4pm Juice kiosk closed - possible vacancy. Level 1 commercial looks to be ok with traffic flow to that level Good mix of food and services internally External tenancies mainly food retailers. All food retailers extremely quiet with a vacancy next to Thai restaurant Restaurants not all trading - only opening for lunch and dinner Potentially too much food - not enough traffic / customers to support the two precincts Australia Post should be internal to pull traffic - post boxes could remain in current location. 87 Mr McNaughton accepted in cross-examination that based on this information he was aware, during the due diligence period, that the Food Court Tenants were quiet, at least on the day and at the time of the inspection and that there were insufficient customers to support the two food precincts at the Centre. 88 On 30 August 2017, Mr Hamilton and two of his colleagues Ms Brunninghausen and Ms Levene, met with Mr Shah at the Centre for the 30 August Meeting. Only Mr Hamilton gave evidence as to what was discussed, by reference to a contemporaneous file note. Mr Shah disputes Mr Hamilton's recollection. This evidence is very controversial and forms a material component of the misleading conduct claim. I return to it in more detail later in these reasons. 89 On 7 September 2017, Mr Kwan sent an email to Mr McNaughton and Mr Baliva and attached draft calculations "based on the information provided to date for your review". The calculations adopted an adjusted net annual income of $3,801,936 and to it applied alternative yields of 6.50%, 6.75% and 7% which, after further "below the line adjustments" respectively valued the Centre at $57,713,832, $55,547,486 and $53,535,880. In that analysis Mr Kwan adopted a value of $55.25 million. A point which that analysis demonstrates is that relatively minor alterations to the yield assumption has the effect of producing very large differences in the value of the Centre. For example, at a yield of 6.5%, the capitalised value is $58,491,329. At a yield of 6.75% the capitalised value is $56,324,984, a difference of $2,166,345 before the application of the below the line adjustments, by reason of only a 0.25% alteration to the capitalisation rate. In each case the adjustments applied by Mr Kwan are the same. Mr McNaughton responded to Mr Kwan's draft calculations approximately one hour after receipt. He said: Thanks Paul. Will take a detailed look tomorrow. On a quick pass, we'd rather the cap rate be higher and have less below the line adjustments (e.g. CapEx). 90 A few minutes later, Mr Kwan responded to the effect that he noted the comment and would "look at what rates we might be able to adjust. I've got a few negative reversions in there and might have another look at the outgoings." Mr McNaughton did not wait to receive revised figures from Mr Kwan before meeting with Mr Baliva on 8 September 2017. In his evidence-in-chief, he said: On or about 8 September 2017 I attended a meeting with Mr Baliva. We reviewed the documentation provided through the Due Diligence, including the Due Diligence Reporting documents and the Valuation Figures from Mr Kwan. From those documents together we prepared the transaction approval checklist (Approval Checklist) and the investment overview (Investment Overview). The Approval Checklist included a checklist of the due diligence for the Centre including the structure of the purchase, legal checklist as to the sale contract, fund and asset level financial forecasts, financial due diligence, valuation outcome and property management proposals. The Investment Overview included details about the Centre, its valuation, income, size and turnover. The Approval Checklist and the Investment Overview made up the report to be provided to the Board (Report). 91 A matter that attracted considerable attention during Mr McNaughton's cross-examination is how it was that review was undertaken and the board papers prepared without the benefit of any finalised report from Mr Hamilton or Mr Kwan. I return to this topic later in these reasons. At this point I record that Mr Baliva had no independent recollection of this meeting. The board report was finalised and presented as part of an agenda with supporting documentation prior to 9 September 2017, which is the date on which the first director, Mr Moss, signed a circulating resolution to authorise the purchase of the Centre. The other directors, Mr Bedbrook and Mr Willis, signed the resolution on 10 and 11 September 2017, respectively. It is not possible to make a finding of fact as to when the fourth director, Mr Ampherlaw signed the document, but he did so in September 2017. 92 The checklist and supporting documentation provided to the board recorded, amongst other things the following: (1) The financial due diligence being undertaken by Mr Hamilton was a work in progress: (2) The demographic due diligence prepared by Location IQ was complete; (3) The valuation of the Centre by Mr Kwan was a work in progress, noting that "draft numbers received which support purchase price"; (4) The council zoning and town planning investigations were complete; and (5) The architectural scheme proposals prepared by Bureau Proberts were complete. 93 The board papers also attached an investment overview, prepared for the purpose of submission to prospective investors. There are portions of that document which attracted considerable attention in the course of the cross-examination of the applicant's witnesses. Relevantly the document stated the following: • Acquired at a 7.7% fully leased yield (7% passing) representing a discount to prevailing market yields … • Medium development potential into a mixed use scheme given favourable zoning (27 m (9 storeys) across majority of 1.356 ha site), new transport infrastructure and picturesque coastal location; … • Forecast Total Return (if property were to be sold at end of year three and excluding any development potential of additional floor space given favourable planning regime): Base IRR: 12.0% p.a Target IRR: 14.0% p.a … • The Manager will review exit/liquidity strategies within an investment horizon of approximately 3 years, subject to the Manager's discretion. 94 Further, an entire page of the document is devoted to the development potential of the site as follows: 95 I return to the board's circulating resolution, which assumed prominence in the cross-examination of Mr McNaughton and Mr Baliva. I set it out as follows: Circular Resolution of Elanor Investors Limited (ACN 169 308 187) and Elanor Funds Management Limited (ACN 125 903 031) as responsible entity of Elanor Investment Fund (ARSN 169 450 926) (together "Elanor") DIRECTORS Paul Bedbrook Glenn Willis William Moss Nigel Ampherlaw Acquisition of Bluewater Square Shopping Centre Following completion of appropriate due diligence, Elanor Funds Management Limited intends to acquire Bluewater Square Shopping Centre at Redcliffe, Queensland (the "Transaction") on behalf of the Bluewater Square ("Syndicate"), a single asset shopping centre fund The purchase price for the Bluewater Square Shopping Centre has been agreed at A$55,250,000, and will be completed under a Property Contract between the Vendor (Alceon Group ATF Bluewater Trust) and the Syndicate. In completing the Transaction, the Syndicate is required to enter into certain transaction documents, including debt financing arrangements if required, and other documents ("Documents"). An Elanor Board Transaction Approval Checklist is attached to this resolution, and a draft copy of the Syndicate overview has also been attached. Allotment Sub Committee Following the exchange of contracts in respect of the properties and the arrangement of debt financing for the Fund, it is also necessary to establish an Allotment Sub-Committee in order to allot equity in the fund to investors, to enable completion of the Transaction. The Allotment Sub-Committee will be responsible for the process of issuing and allotting equity securities in the Fund, including: • finalising the total number of members to be entered on the Fund register; • authorising the issue of units to members; • issuing members the relevant certificates and ancillary correspondence; and • maintaining and updating the unit register on an ongoing basis as required. Resolution Following the Directors' discussion of the Transaction and review of the relevant material provided by management, including the attached ENN Board Transaction Due Diligence Checklist and fund overview, the Directors RESOLVED to approve the establishment of the Syndicate and to proceed with the acquisition of Bluewater Square Shopping Centre, subject to finalisation [sic] any required financing arrangements, raising the required equity capital, and completion of all Transaction Documents in a form satisfactory to Elanor. It was also RESOLVED that Glenn Willis (Director) and Symon Simmons (Company Secretary) are authorised to do all things (including, without limitation, executing under hand or seal and delivering any acknowledgment, agreement, certificate, consent, deed, document, instrument, letter, notice, novation, supplement, variation and waiver) in connection with or in relation to the acquisition of Bluewater Square Shopping Centre by the Syndicate, and to the extent necessary, the directors ratify all prior execution of documents by them. It was further RESOLVED to establish an Allotment Sub-Committee, comprising Glenn Willis and Symon Simmons to finalise equity allocations, allotments and approve final alottees in the Syndicate.

96 On 11 September 2017, Mr Kwan emailed Mr McNaughton and Mr Baliva and attached "re-cut" calculations for the Centre "based on a softer cap rate after re-visiting some of the associated metrics elsewhere within our modelling." One of the attachments comprised a capitalisation valuation commencing with an adjusted net core income of $3,855,294. To that figure, Mr Kwan applied three capitalisation rates of 6.75%, 7% and 7.25% to derive capitalised core values of $57,115,463, $55,075,625 and $53,176,466, respectively. To those figures he then undertook certain below the line adjustments to derive a market valuation of $57,182,236, $55,142,398 and $53,243,238, respectively, to which he then adopted a value of $55.250 million (based on a capitalisation rate of 7%) which, it will be recalled, was the purchase price offered by Elanor and accepted by Alceon. The calculations are marked as drafts. 97 Mr McNaughton responded to Mr Kwan by email at 1.53 pm on 11 September 2017. He said: Looking better. I note the rental guarantee will be approx. $360k p.a. for 2 years on the 'below the line adjustments' on the CapVal page it is much less? I am also trying to get to the bottom of the sustainability of the $133k electricity profit. You are capping it at 25%, whereas for Gladstone Square it was 20%. 98 To this Mr Kwan replied by email as follows: Weren't sure how the rental guarantee was going to be provided so have modelled as an off-set against our adopted assumptions. If it going to determined as a lump-sum value we can adopt this as well once the documentation has been confirmed. The 25% cap rate on Electricity considers it being uncertain in its sustainability and hence more risky. Once you are satisfied with the current level is sustainable or otherwise, happy to adjust it down to 20%. Dependent on the amount sometimes as well. 99 On 12 September 2017, CBRE emailed a draft analysis to Mr McNaughton and Mr Baliva. The document comprised a number of summary financial tables, without analysis. Later, on 15 September 2017, CBRE provided a draft report to Mr McNaughton, which coincides with the conclusion of the due diligence period. Also, on that day Alceon and Elanor formally entered into the Option Agreement which, if exercised, required the parties to enter into the Sale Contract attached to it. The Sale Contract commenced with the standard contract for the sale of commercial land and buildings approved by the Queensland Law Society and the Real Estate Institute of Queensland together with a considerable number of additional and special conditions. 100 On 18 September 2017, CBRE finalised and delivered its due diligence report to Elanor. The report commences with a statement of the agreed scope of works and relevantly provides: 1. Introduction We refer to instructions issued by Elanor Investors Group to undertake due diligence investigations in connection with the proposed acquisition of Bluewater Square, a neighbourhood shopping centre located in Redcliffe, Queensland. The agreed scope of works is as follows: Lease agreements A review of the commercial aspects of all lease agreements, enabling us to: • audit the tenancy schedule; • note unusual clauses in leases (e.g. exclusivity, break clause); and • identify clauses that may have an impact on the income stream. Summaries of the lease agreements with the following tenants will be provided: • Woolworths • Healthworks Retail Sales Performance Review the trading performance of the: • total property; • major tenant; and • individual tenants. Rents Track rents from lease commencement dates to ensure that all rent reviews have been correctly implemented. Identify rents that may not be sustainable. Leasing incentives Summarise incentives granted in recent leasing transactions. Percentage Rent Estimate the likely percentage rent based on current sales information and compare this with the estimates provided by the vendor. Other income Review the sustainability of sources of income other than rentals and if necessary recommend adjustments. Recoverable outgoings Review the outgoings budget and identify items that have potential for significant variation. Outgoings recoveries Check the basis upon which outgoings are recovered, having regard to the terms of the lease agreements. Non recoverable expenses Review allowances made by the vendor for non recoverable expenses and if necessary recommend adjustments. After-hours costs Check where after-hours expenses have been allocated (i.e. within the main outgoings budget or in a separate budget). Review the process for the recovery of after-hours costs, having regard to the terms of lease agreements. Arrears Review and comment upon the current arrears report. SWOT Analysis An overview of the key strengths, weaknesses, opportunities and threats associated with the asset. "Problem" tenants Identify potential "problem" tenants by analysing various information sources, including: • arrears reports; • comments from tenant by tenant review with Asset Manager; • high occupancy cost ratios; and • significant declines in sales. Security (e.g. bank guarantees) Provide a summary comparing the security required by the lease agreements with what has actually been provided by each tenant. Rental and other charges Undertake a check of rental and other charges due under the lease agreements with the charges shown on monthly invoices. Promotion fund Summarise status of promotion fund, including committed obligations and projected balance at completion date. 101 Section 2 of the report lists the information considered including leases, the Stonebridge Financial Pack as at 1 December 2017, the July Arrears Report, and the May 2017 tenant invoices. There is no mention of any other tenancy arrears reports. Within the report it is noted that: We have been provided with the May 2017 tenant invoices and have checked the rent, outgoings and promotion fund charges against the amounts shown on our tenancy schedule. The invoiced amounts appear to reflect the amounts due and payable under the lease agreements. 102 Section 5 of the report is a SWOT analysis. The strengths identified include the existing lease to Woolworths, the recently upgraded external casual dining precinct and the likely primary sector trade area population growth of 1% per annum forecast to 2036. Identified weaknesses include a reference to the fact that "several tenants" have experienced sales decreases of 5% or more in the past year. Under opportunities, it is mentioned that there is: "potential for strong population growth in the immediately surrounding area if DA approved apartment developments proceed". Under threats it is said: "the trading performance of the new external restaurant precinct is unproven and it remains to be seen if it will provide the hoped for increase in sales and customer traffic." 103 Section 7 of the report comprises a tenancy review "based upon our review of the information provided in discussions with the Asset Manager", which is a reference to the 30 August meeting. No issue is raised in that analysis with the performance of any of the Food Court Tenants, although they are dealt with in section 8: Review of Retail Sales Performance. The nine Food Court Tenants are mentioned with a high level of analysis by comparing occupancy costs per square metre and sales per square metre of the Centre as a whole with benchmarks published by Urbis. The result is that the occupancy costs and sales for the Centre are each lower than the benchmarks. Section 11 notes that CBRE "have been provided with an arrears report dated July 2017" which disclosed there "was a credit of $2,957.05 and there were no significant arrears dated 30 days or over". That statement is incorrect: the report records arrears in that sum, not prepayments. 104 Section 12 of the report is concerned with tenancies at risk. Sushi Kuni is the only one of the Food Court Tenants mentioned, because of its occupancy cost ratio of 28.1%. The leasing incentives are reviewed in section 13 in detail in appendix 1 and summarised as: Tenant Lease start date Fitout contribution Rent Free Rent abatement 2-3, Dizzy Dukes Bar and Grill 01/04/2017 $270,000 01/04/2017-14/05/2017 (gross rent) 15/05/2017-14/02/2018 $4,991.31 per month 4, Burrito Bar 01/03/2017 n/a 01/03/2017 - 13/04/2017 (gross rent) n/a 4A, Cignall 23/01/2017 $50,000 23/01/2017 - 12/02/2017 (gross rent) 13/04/2017 - 12/04/2017 $1,416.67 per month 7A, Mass Nutrition 01/04/2017 $10,000 1 month gross rent 1 month base rent n/a 7C, Kebab Express 01/04/2017 $90,000 01/04/2017-30/04/2017 (gross rent) 01/05/2016-31/10/2017 $1,666.67 per month 27, Meat-ing Place 15/05/2017 n/a 15/05/2017-11/06/2017 (gross rent) 12/06/2017-11/06/2018 $2,500 per month 29, Mumabi Blues 01/03/2017 $110,000 01/03/2017-14/04/2017 (gross rent) 15/04/2017-14/01/2018 $2,022.06 per month 30, Thai Me Down 01/05/2017 $68,000 01/05/2017-14/06/2017 15/06/2017-14/12/2017 $2,275 per month (gross rent) 32, Redcliffe Noodle Kitchen 01/04/2017 $35,000 (refurbishment) 01/04/2017-14/05/2017 (gross rent) n/a K3, Lean Green Kitchen 01/06/2016 $70,000 01/06/2016-30/06/2016 (gross rent) $833.33 pcm to 31/05/2018 $416.66 pcm to 31/05/2019

105 On 21 September 2017, the Bank of Queensland instructed Mr Kwan to prepare a valuation for its purposes as mortgagee. Elanor accepted the obligation to pay for it "as standard practice" according to Mr McNaughton. The instruction required Mr Kwan to make all of his inquiries independently and to value the Centre "as is" by adoption of the capitalisation and discounted cash flow methods. Mr Kwan's valuation is dated 6 September 2017, the instructing party is described as originally Mr McNaughton on behalf of Elanor and subsequently the Bank of Queensland. The dating of this valuation is odd as it predates the instruction from the bank, but no point was made about that in evidence or submissions. The valuation is expressed as one for first mortgage security purposes only. Mr Kwan determined the market value at $55.250 million. The report proceeds on the basis that market value is in accordance with the highest and best use of the Centre, but Mr Kwan did not ascribe any additional value as a separate item for any re-development potential of the site. The report records an instruction that Mr Kwan should assume that the two-year rental guarantee pursuant to the Sale Contract had been agreed in the sum of $650,000. 106 As might be expected, there is a comparable sales analysis. Two valuation methodologies are set out: the capitalisation of net market income and the discounted cash flow (DCF) of the Centre. On the former, Mr Kwan adopted a capitalisation rate of 7% and applied it to an estimated net income of $3,841,683 per annum, to produce a capitalised value in perpetuity of $54,881,186. He then made certain adjustments by way of additions and subtractions to derive a capitalised value of $55,312,250. On his DCF analysis, he derived a market value of $55,061.46. Having approached the valuation in that way he adopted the figure of $55,250,000. 107 On 28 September 2017, Mr McNaughton requested and received a copy of the valuation provided by Mr Kwan to the Bank of Queensland, having paid the invoice for it on 26 September 2017. 108 On or about 23 October 2017, Elanor exercised the call option and the parties then entered into the Sale Contract. During the trial, some emphasis was placed in certain special clauses in the Sale Contract. The clauses are: (1) The buyer acknowledges that it has not relied, and does not rely, on any representation or warranty of any nature made by or on behalf of the seller, the seller's solicitor or the agent other than those expressly set out in this contract: cl 3(b); (2) The buyer acknowledges that the seller has made available and disclosed to the buyer on or before the option date all relevant due diligence material: cl 5(a); (3) The buyer acknowledges that subject to special condition 33, the seller makes no representation or warranty as to the accuracy or otherwise of the information contained in the due diligence material: cl 5(b)(i); (4) The buyer acknowledges that the seller has not conducted its own independent inquiries and investigations into information in the due diligence material prepared by third parties: cl 5(b)(ii); (5) The due diligence material may include statements, estimates and projections that reflect various assumptions which may or may not be correct and does not purport to contain all of the information the buyer may require: cl 5(b)(iv); (6) The seller does not warrant or represent that any lease will be in force on settlement or that the provisions of each lease have been complied with: cl 10.4(c) and (d); (7) The seller warrants to the buyer as at the option date and to the best of the seller's knowledge, information and belief based on due inquiry, but without independent verification that the tenancy schedule is correct (as at the date of the tenancy schedule) in all material respects, the outstanding incentive schedule is correct (as at the date of the outstanding incentive schedule) in all material respects and that all questions and answers are given in good faith: cl 33.1. 109 The respondents do not contend that one or more of these clauses operates to displace liability for misleading or deceptive conduct. Rather, the clauses are emphasised as part of the entire context within which the asserted misleading and deceptive conduct is to be viewed. Elanor's claims do not extend to breach of any of these contractual warranties by Alceon, which may be explained by cl 33.2 which is to the effect that warranty claims were required to be made in writing within 6 months after the date of settlement and the maximum liability of Elanor is capped at 1.5% of the purchase price. 110 On 27 October 2017, Alceon's solicitor provided to Elanor's solicitor a copy of the October Arrears Report together with an outstanding incentive schedule as at 31 October 2017. That arrears report mentions five tenants of which the only one of the Food Court Tenants is Burrito Bar. For it, an amount of $11,022.85 is shown as current - that is, outstanding for less than 30 days. The report is dated 27 October 2017 and refers to an amount of $3,000 paid as the "last payment" made by Burrito Bar on 26 October 2017. The Sale Contract settled, and Elanor became the registered proprietor of the Centre by transfer dated 1 November 2017. The evidence did not include any calculations undertaken by the solicitors to derive the final settlement figures. 111 Following settlement, a number of the Food Court Tenants either fell into arrears in the payment of rent and outgoings and vacated or abandoned their leases, in consequence of which Elanor resumed possession. The evidence of Mr McNaughton, which I accept, is: (1) Burrito Bar vacated its lease in January 2018, Elanor resumed possession and terminated the lease. As at 30 June 2018, $43,572.73 was outstanding; (2) The owner of Thai Me Down sought to surrender its lease on 30 June 2018. Elanor refused. Subsequently, Elanor terminated the lease for breach with effect from 30 June 2019; (3) Elanor terminated the Sushi Kuni lease for breach on 4 February 2019; (4) The proprietor of Bel Cibo was placed into liquidation on 12 April 2019, the liquidator disclaimed the lease and thereafter Elanor resumed possession; (5) Elanor terminated the Dizzy Dukes lease for breach on 26 April 2019; (6) Elanor terminated the Mumbai Blues lease for breach on 26 April 2019; (7) Kebab Express ceased to trade from its leased premises on 16 March 2020 and by May 2021 was in arrears in the amount of $230,600.34; (8) Redcliffe Noodle Kitchen surrendered its lease on or about 20 June 2020 owing an amount of $76,718.68 for arrears; and (9) Mass Nutrition surrendered its lease on 30 June 2018. 112 In the submissions of Mr Fernon, emphasis was placed on these post settlement facts as "throw[ing] light on the real value of the Centre" by reference to Kizbeau Pty Ltd v WG & B Pty Ltd (1995) 184 CLR 281 at 291 (Brennan, Deane, Dawson, Gaudron and McHugh JJ), which distinguishes between events that arise from the inherent nature of the asset acquired and those explicable by extraneous events. An interesting question that may have arisen in this proceeding on the assessment of the damages claim is why, if that is so, Elanor did not lead any evidence as to when the vacated tenancies were leased to other tenants and upon what terms. Non-specific evidence was given by the valuer Mr Goran during the concurrent expert evidence session to the effect that when he inspected the Centre in May 2023, each of the food court tenancies was leased. 113 In his evidence-in-chief, Mr McNaughton in considerable detail undertook a retrospective analysis of the business records made available to him after settlement and prepared a reconciliation which, on his view, demonstrated that particular Food Court Tenants were in arrears at particular points in time, had or had not paid security deposits and/or received incentives beyond those disclosed in the Incentive deeds. Objection was taken to this evidence which was resolved on the agreed position that I would receive it as only relevant to Mr McNaughton's understanding. I address the question whether Elanor has made out its case of misleading or deceptive conduct, by reference to the incorrect or incomplete nature of the documents made available to it during the due diligence and of the answers said to have been provided by Mr Shah, in my detailed consideration of the misleading or deceptive conduct claims.

Principles 114 I commence with a short summary of the principles which are not controversial between the parties. Whether conduct is misleading or deceptive or likely to mislead or deceive is to be determined objectively having regard to all relevant circumstances: Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60; 218 CLR 592 (Butcher) at [39] (Gleeson CJ, Hayne and Heydon JJ) and [108]-[109] (McHugh J). Although McHugh J dissented in the result in Butcher what his Honour said in those paragraphs is authoritative and particularly relevant to this case, which in part was: Section 52 applies to a wide range of conduct. Confining "conduct" in s 52 to "representations" is to ignore the ordinary meaning of "conduct"… The question whether conduct is misleading or deceptive or is likely to mislead or deceive is a question of fact. In determining whether a contravention of s 52 has occurred, the task of the court is to examine the relevant course of conduct as a whole. It is determined by reference to the alleged conduct in the light of the relevant surrounding facts and circumstances. It is an objective question that the court must determine for itself. It invites error to look at isolated parts of the corporation's conduct. The effect of any relevant statements or actions or any silence or inaction occurring in the context of a single course of conduct must be deduced from the whole course of conduct. Thus, where the alleged contravention of s 52 relates primarily to a document, the effect of the document must be examined in the context of the evidence as a whole. The court is not confined to examining the document in isolation. It must have regard to all the conduct of the corporation in relation to the document including the preparation and distribution of the document and any statement, action, silence or inaction in connection with the document. (Footnotes omitted.) 115 As a first step it is necessary to identify with precision the conduct alleged by Alceon that is said to be misleading or deceptive: Google Inc v Australian Competition and Consumer Commission [2013] HCA 1; 249 CLR 435 (Google Inc) at [89]-[93] (Hayne J). The provision is not limited to misrepresentations, but conduct is not misleading unless in all the circumstances it induces (or is capable of inducing) error in, relevantly, Elanor and its agents. That proposition extends to conduct that has a tendency to lead Elanor into error: Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd (1982) 149 CLR 191 at 198 (Gibbs CJ); Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54; 250 CLR 640 (TPG) at [39] (French CJ, Crennan, Bell and Keane JJ); Google Inc at [92] (Hayne J). 116 In this case the conduct relied on was directed specifically to Elanor and its consultant CBRE where the distinction summarised by O'Bryan J in Australian Securities and Investments Commission v Dover Financial Advisers Pty Ltd [2019] FCA 1932 at [99] applies: In assessing whether conduct is likely to mislead or deceive, the courts have distinguished between two broad categories of conduct, being conduct that is directed to the public generally or a section of the public, and conduct that is directed to an identified individual. As explained by the High Court in Campomar, the question whether conduct in the former category is likely to mislead or deceive has to be approached at a level of abstraction, where the Court must consider the likely characteristics of the persons who comprise the relevant class of persons to whom the conduct is directed and consider the likely effect of the conduct on ordinary or reasonable members of the class, disregarding reactions that might be regarded as extreme or fanciful (at [101]-[105]). In Google Inc v ACCC (2013) 249 CLR 435, French CJ and Crennan and Kiefel JJ (as her Honour then was) confirmed that, in assessing the effect of conduct on a class of persons such as consumers who may range from the gullible to the astute, the Court must consider whether the "ordinary" or "reasonable" members of that class would be misled or deceived (at [7]). In the case of conduct directed to an identified individual, it is unnecessary to approach the question at an abstract level; the Court is able to assess whether the conduct is likely to mislead or deceive in light of the objective circumstances, including the known characteristics of the individual concerned. However, in both cases, the relevant question is objective: whether the conduct has a sufficient tendency to induce error. Even in the case of an express representation to an identified individual, it is not necessary (for the purposes of establishing liability) to show that the individual was in fact misled… 117 Of course, whether Elanor was in fact led into error because of the conduct is a necessary further element to be established pursuant to s 236 of the ACL, where the inquiry does not turn on objective reasonableness: Sykes v Reserve Bank of Australia (1998) 88 FCR 511 at 517 (Heerey J) and at 521 (Sundberg J). 118 On the misleading conduct by silence case, Elanor relies on the summary of the relevant principles in Addenbrooke Pty Ltd v Duncan (No 2) [2017]) FCAFC 76; 348 ALR 1 (Addenbrooke) at [482]-[483] (Gilmour and White JJ), which Alceon accepts as applicable to this case. The summary is: On our understanding, the principles concerning misleading or deceptive conduct by nondisclosure or silence which emerge from the authorities and which are pertinent in the present appeal may be summarised as follows: (a) conduct involving silence or nondisclosure may, in some circumstances, constitute misleading or deceptive conduct; (b) in considering whether conduct is misleading or deceptive, silence or nondisclosure is to be assessed as a circumstance like any other; (c) mere silence without more is unlikely to constitute misleading or deceptive conduct. However, remaining silent will constitute misleading or deceptive conduct if the circumstances are such as to give rise to a reasonable expectation that, if some relevant fact does exist, it will be disclosed; (d) the existence or otherwise of such a reasonable expectation is to be determined objectively; (e) it is not possible to categorise all of the circumstances in which a reasonable expectation of disclosure may arise. Such circumstances may exist when either the law or equity imposes a duty of disclosure, when a statement conveying a halftruth only is made (see Winterton Constructions Pty Ltd v Hambros Australia Ltd (1992) 39 FCR 97; 111 ALR 649 at [75]), when the representor has undertaken a duty to advise, when a representation with continuing effect, although correct at the time it was made, has subsequently become incorrect, and when the representor has made an implied representation; (f) in considering whether a party engaged in commercial dealing may have a reasonable expectation that a fact, if it exists, will be disclosed, it is to be remembered that it will often be the case that one party to a commercial dealing has more knowledge about a relevant matter than the other and yet will not, in accordance with ordinary commercial expectations, be guilty of misleading or deceptive conduct in failing to make that knowledge known to the other. Ultimately, as indicated at the commencement of this reference to the principles, the determination of whether a failure to disclose a matter is misleading or deceptive requires an examination of all the circumstances. If in the circumstances, assessed objectively, a representee would have been entitled to expect or infer (have a reasonable expectation) that an undisclosed matter would be disclosed, that may well constitute misleading or deceptive conduct: Clifford v Vegas Enterprises Pty Ltd [2011] FCAFC 135 at [198]. 119 CPRAM emphasises that in commercial negotiations between arms-length parties, silence by one party "will not be readily found" to be misleading and the statutory provision does not impose an obligation to volunteer information which may assist a counter-party: Lam v Ausintel Investments Australia Pty Ltd (1989) 97 FLR 458 at 475 (Gleeson CJ); Miller and Associates Insurance Broking Pty Ltd v BMW Australia Finance Ltd [2010] HCA 31; 241 CLR 357 (Miller) at [22] (French CJ, Kiefel J). That Elanor was an experienced and sophisticated investor capable of making its own inquiries and assessments is relevant: Miller at [91] (Heydon, Crennan and Bell JJ). 120 Acknowledging that all relevant conduct must be considered in context, necessarily the inquiry is framed and controlled by Elanor's remaining pleaded case. It is necessary to pay careful attention to each of the representations that Elanor relies on as establishing the conduct of the respondents which as a whole is said to have been misleading or deceptive or likely to mislead or deceive. In proceeding in this way, I am mindful that it is an error to separately examine the effect of each representation or failure to disclose, without considering the conduct as a whole: Butcher at [39] and [109]; TPG at [25]. Nonetheless to make sense of this case, I commence with the individual claims.

Was the Commencement Date Representation made? 121 This is pleaded as an express and an implied representation. Elanor contends that a representation was expressly made to it that each of the Food Court Tenant subject to the Incentive deeds had been invoiced for rent and other charges since each date of commencement listed in each of the Incentive deeds and had paid those amounts. The express representation is pleaded as written and oral. The written representation is identified as each of the leases "in respect of the rent commencement dates and rent due subject to the incentive deeds and Tenant Arrears Reports". The oral representation is the statements made, or information not disclosed, by Mr Shah at the 30 August Meeting. It will be recalled that Elanor abandoned this claim in relation to Bel Cibo, Sushi Kuni and Mass Nutrition. 122 It is common ground that the recorded and actual commencement dates for the Food Court Tenants were: Tenant Lease Incentive Deferred Until Commencement Date Bel Cibo 1 May 2016 Tenant in place Not changed Burrito Bar 1 March 2017 14 April 2017 14 May 2017 Dizzy Dukes 1 April 2017 15 May 2017 1 June 2017 Kebab Express 1 April 2017 1 May 2017 1 June 2017 Mass Nutrition 1 April 2017 1 May 2017 Not changed Mumbai Blues 1 March 2017 15 April 2017 1 May 2017 Redcliffe Noodle 1 April 2017 15 May 2017 25 June 2017 Kitchen Sushi Kuni 15 February 2015, assigned 30 April 2017 Tenant in place Not changed Thai Me Down 1 May 2017 15 June 2017 1 July 2017

123 What do the leases provide? As I have noted, each is in common form. By way of example, I reference the lease for Dizzy Dukes. On the cover page the term of the lease is recorded as commencing on 1 April 2017, expiring on 31 March 2024. The lease was signed for the tenant and Alceon on 9 and 29 March 2017, respectively. Item 9 of the information table contained in the schedule repeats the commencement date. The grant of lease states that the tenant has the right to use the premises and the common areas from the commencement date. The demise begins on the commencement date. Clause 2.1 obliges the tenant to pay the base rent from the commencement date by equal consecutive monthly instalments in advance payable on the first day of each month during the term. Clause 4 requires the tenant to pay an outgoings contribution for each financial year of the term by 12 equal monthly instalments in advance payable on the first day of each month. Clause 5.1 obliges the tenant to pay a promotion contribution during the term in the same manner and at the same time as the base rent. Clause 9.1 requires the tenant to give to the landlord the bank guarantee at least seven days before the commencement date. Clause 11 obliges the tenant to only use the demised premises for the purposes of the permitted use. By cl 17.1, subject to the tenant complying with the lease, the tenant may peacefully enjoy the premises during the term. 124 The incentive deed for Dizzy Dukes is undated. Recital B records that the tenant "occupies the premises as tenant under the lease". The commencement date is 1 April 2017. Clause 2.1 specifies a fit out contribution of $270,000 which by cl 2.3 the landlord will pay to the tenant within 30 days of the last to occur of a number of events, including the commencement date or completion by the tenant of the fit out works. Clause 3 specifies a rent-free period from 1 April 2017 to 14 May 2017, during which the tenant is not required to pay any amount of base rent, the promotion levy or the outgoings contribution. Clause 4 provides for a rent abatement commencing on 15 May 2017 and ending on 14 February 2018. The rent abatement amount is $4,991.31 per month. The effect of cl 4.2 is to reduce the base rent payable in each month by the abatement amount. There is no clause in this deed which displaces the commencement date pursuant to the lease. 125 There is nothing in the lease or the incentive deed which expressly represents that Dizzy Dukes "had been invoiced for rent and other charges since the commencement date" which is the pleading relied upon by Elanor. Nor is there any representation in these documents that if Dizzy Dukes had been invoiced in that way, then it had paid those amounts since the commencement date. 126 Elanor also relies upon the Tenants Arrears Reports as making good this representation, a term defined in the pleading as each arrears report that was in the data room for the period December 2016 to July 2017. The immediate difficulty with that case is that whilst reports for that period were in the data room, it is only the July Arrears Report that was viewed by both Mr McNaughton and Mr Hamilton and his assistants. On the face of that document it does not convey any information as to when Alceon had commenced to charge any of the five tenants referenced (The Lucky Charm, Australia Post, Redcliffe Electoral Office, Commonwealth Bank of Australia or The Healthy Weigh) for any amount payable under any of those leases: more so it does not convey any information about the date of invoicing and the payment of amounts due by any other tenant, in particular the nine Food Court Tenants in issue. 127 The implied representation is framed as "aris[ing] from the circumstances in which 'such documents'" (which is a reference to the leases, the incentive deeds and the Tenant Arrears Reports) "were provided in the absence of any other document or information to advise the commencement dates had not been deferred". That implication is not made out. The June and July 2017 monthly turnover reports were in the data room. In cross-examination, Mr McNaughton accepted that on 28 August 2017 he viewed the monthly turnover data for July 2017, although his focus was upon the reported sales data for Woolworths. He also received the updated financial information from Stonebridge on 2 August 2017. The documents disclose that Burrito Bar did not report sales until May 2017, Dizzy Dukes and Mumbai Blues did not report sales until June 2017 and Mass Nutrition, Kebab Express and Redcliffe Noodle Kitchen did not report any sales until July 2017. Additionally, in the comments column to the updated financial information under the tab "monthly turnover", there are notes that: Dizzy Dukes as at June 2017 had only reported 14 days of actual trading; Burrito Bar had commenced to trade in May 2017, having suffered disruption caused by the fitting out of the Dizzy Dukes tenancy; and Mumbai Blues had reported only 12 days of actual trading in June 2017. 128 When cross-examined about these documents, Mr McNaughton maintained that reliance should only be placed on the lease commencement date as modified pursuant to the incentive deeds in order to determine the actual commencement date of trading for each tenancy. Necessarily, that subjective opinion of Mr McNaughton is not relevant in determining whether Elanor was objectively misled by implication. It is also the case that the monthly turnover data is other information that was made available to Elanor relevant to the commencement date of each tenancy, contrary to the pleading of the implication. 129 Mr Hamilton's evidence was to the effect that when he undertook his due diligence, he was aware that tenants would only report sales data "when they start occupation" by which he accepted he meant when a tenant begins to trade. He was aware that "there could be any number of reasons" which may delay the commencement of trading of a tenant in a shopping centre. He was aware that the casual dining precinct was newly established, and he accepted that it is common for tenants to be delayed in securing access because of building work, including fit out work undertaken by other tenants. 130 The Location IQ report that Mr McNaughton received on 8 September 2017, in the analysis of the Centre composition and performance to 30 June 2017, noted that sales had been estimated for Thai Me Down, Dizzy Dukes, Redcliffe Noodle Kitchen, Mass Nutrition, Kebab Express, Burrito Bar and Mumbai Blues, as none of these tenants had reported sales in the relevant period. Mr McNaughton accepted in cross-examination that these estimates were contained within the information provided by Elanor to Location IQ. Mr McNaughton accepted that there were at least two reasons why these tenants may not have reported sales: either they had not commenced trading or had only recently done so. To that he added a third, that tenants had failed to report sales. The difficulty with that evidence is that a failure to report sales is a breach of each lease, which ought objectively to have excited inquiry by Elanor as to why the sales had not been reported and if there were no reported sales to 30 June 2017 by these tenants, then objectively it is evidence that trading had not commenced, despite the rent commencement dates in each lease as relevantly modified by an incentive deed. 131 The Information Memorandum expressly disclosed to Elanor from the outset that, as at 2 May 2017, the upgrade to the casual dining precinct was a work in progress, expected to be completed in May 2017, with Food Court Tenants "expected to begin trading by the end of June 2017." When that is read with the monthly sales data for June and July 2017, the absence of reported sales for a number of the Food Court Tenants is objectively inconsistent with the implication that Elanor frames. Further the rent commencement dates (adjusted in accordance with the incentive deeds) for Dizzy Dukes (15 May), Burrito Bar (14 April), Kebab Express (1 May), Mumbai Blues (15 April), Thai Me Down (15 June) and Redcliffe Noodle Kitchen (15 May) each pre-date the expected trading commencement date in the Information Memorandum, which raises a further difficulty to acceptance of Elanor's case that the Commencement Date Representation was objectively misleading. 132 These are not the only difficulties that Elanor faces. Mr Hamilton accepted in evidence that it was common for landlords to agree to a deferral of the date for charging rent until the actual commencement of trading, despite the obligation to pay rent as expressed in a lease. The data room included a folder of monthly rental invoices for the period January-May 2017. There were no tax invoices for Dizzy Dukes, Kebab Express, Mumbai Blues or Redcliffe Noodle Kitchen for May 2017. Mr McNaughton could not recall whether he looked at the tax invoices and accepted that he could have requested the provision of more up-to-date tax invoices but did not do so. Objectively, the absence of tax invoices for rental is probative that trading had not commenced. 133 It did not matter to Elanor that the rent commencement dates may have been deferred beyond the dates specified in the leases and the incentive deeds, as Alceon is the party that suffered a loss in rent to the settlement date. Further, the deferred rent commencement dates the subject of Elanor's complaint affected six of the nine Food Court Tenants and where the periods varied between two and six weeks. Pursuant to the Sale Contract, the cost of any further extended incentives beyond the settlement date was required to be adjusted in Elanor's favour. In the context of the acquisition of the Centre comprising, it will be recalled, a Woolworths supermarket as the anchor tenant, two mini-majors, 28 specialty shops, and eight commercial tenancies, these deferrals were objectively immaterial. 134 The commencement date oral representation case turns on the discussion between Mr Shah, Mr Hamilton and his two assistants at the 30 August Meeting. At trial I required viva voce evidence to be adduced in relation to materially disputed conversations and events and to that extent the narrative contained in the affidavits made by the witnesses was not received. Elanor's pleading of the oral representations of Mr Shah is: On 30 August 2017: (a) Alexander Hamilton asked Frenil Shah about the trading and rental performance of each of the tenants of the Property; and (b) in response Mr Shah did not identify any of the tenants of the Food Outlet as: (i) having outstanding arrears; (ii) receiving any abatements or incentives beyond those disclosed in the Incentive deeds; or (iii) having any issue in respect of their respective sales, their ability to pay rent or to satisfy their other obligations under their respective leases. 135 In his evidence-in-chief, Mr Hamilton commenced with acknowledging his obvious difficulty in recalling the words used and the content of the discussion that occurred six years earlier. He said that the meeting took place in a coffee shop at the Centre, which he regarded as unusual as such meetings for reasons of confidentiality ordinarily take place in an office. After introductions, his evidence continued: Yes?---So essentially, I would have said that - thank you for your time - for meeting with us. We've had about a week to go through the data room, and there's a lot of information in there that we've already obtained. We're not here to go over information that's already in the data room. We're trying to get some background to the numbers and the documents and, you know, anecdotal evidence of what's going on in the shopping centre. Yes?---And in order to do that, we would like to go through tenant by tenant and ask for your feedback on anything that you can - you know, that may be out of the ordinary or of interest, and I've given a few examples in the affidavit which - I haven't got the right page in front of me but - - - HIS HONOUR: No, no, no. I don't want you looking at the affidavit. I want to just hear it in your own words?---Yes. So essentially, things like how are the tenants trading, do they have a history of arrears, do they need more or less space, are they likely to renew their lease when their lease expiry comes round - those are the sort of questions, and the idea is to give a few pointers of the sort of things we're interested in, but what would normally happen is that that would draw out any other discussion points or points of interest. So - - - MR FERNON: And you identified a number of matters, including are there any - I think you meant are there any arrears - are there any matters - do you recall, in answer to those questions, that you put what, if anything, Mr Shah said in respect of - now, when I say the Food Court Tenants, do you - there's nine tenants that have been the subject of your report. Do you know what I'm talking about?---Yes. Yes. Do you recall what it was that Mr Shah replied to you when you went through each of those tenants, as you say, in respect of the Food Court Tenants on those matters?---Well, I - we had one of my colleagues taking notes. There were no notes. My recollection is there was no information given unless it's noted in that document of the record of the meeting. When you say, "no information given" - - -?---Well, there might have been no issues would be a typical response. Is it in response to the questions that you asked?---Yes. 136 Mr Hamilton was then taken to a contemporaneous typed file note, prepared by an assistant of Mr Hamilton who was present at the meeting, which he confirmed accorded with his recollection of the matters discussed. The document was obviously pre-prepared, by the adoption of a number of headings corresponding to the various tenancies. Below each heading, in some cases, there is a note which, on the case of Elanor, records a relevant response by Mr Shah to a related question. Thus, in commencing with Woolworths, there is a note that: Sales are down due to other Woolworths opening nearby - an old Woolworths that was upgraded. Never paid percentage rent - so rent unlikely to change at rent review in 2018. 137 There is no relevant response recorded for any of the Food Court Tenants. That concluded the evidence-in-chief from Mr Hamilton on this point. Neither of his assistants were called to give evidence. There is, however, the content of Mr Hamilton's due diligence report which I accept is a contemporaneous record. The report notes that Mr Hamilton met with "the asset manager" and in the section dealing with average sales per square metre, there is a note that: The Asset Manager was unable to give any specific reasons for the declines in sales, but should this trend continue there is a greater likelihood that these businesses will start to incur arrears or seek rent abatements. 138 That comment did not relate to the Food Court Tenants. In that part of the report dealing with the tenancy review, there is a reproduction of the information contained in the file note. There is no reference to anything that Mr Shah said about Food Court Tenants and there is no further mention in the document of any other information provided directly by Mr Shah at the meeting. Of course, this is not to overlook Elanor's submission that the absence of any adverse reference in consequence of the meeting with Mr Shah, is logically probative of the fact that Mr Shah did not disclose matters of that character. 139 Mr Hamilton was extensively cross-examined as to his recollection of the meeting. He accepted that although the turnover data and arrears reports for each of the Food Court Tenants between December 2016 and July 2017 was in the data room, he only looked at the July Arrears Report. He accepted that he knew by reference to the July 2017 turnover data that six out of 14 tenants in the food sales category had reported sales of three months or less to 31 July 2017. He was also aware that the turnover data which he examined was based on a projection to 1 December 2017. This evidence of Mr Hamilton provides context to his evidence-in-chief that his purpose in meeting Mr Shah was "to get some background to the numbers…anecdotal evidence of what's going on…" understood by reference to the limited data that he had examined. 140 Mr Hamilton explained that he did not ask separate questions of Mr Shah relevant to trading performance for each tenant because he had that information from the reviewed documents and that is what he relied on. He would ask a generic question, designed to elicit anything extra from Mr Shah. He further accepted that when he asked questions concerning tenant arrears, he was seeking information as to the current position, not historic arrears, although later in his evidence he appeared to contradict this answer by insisting that he was interested in receiving information about historical arrears. He then qualified the answer in response to a question from me as to whether he was interested in historical arrears stating: …No. If there were historical arrears. That if they're very new tenants and they hadn't started paying rent, there wouldn't be any historical arrears. There wouldn't be any arrears. 141 Mr Hamilton also denied the direct proposition that he did not ask Mr Shah whether there were any issues in respect of each tenant. 142 Mr Shah also gave viva voce evidence as to what was discussed at the 30 August meeting. He said the meeting lasted for between 60 and 90 minutes. He said there was discussion about vacancies in the Centre: approximately three shops, a kiosk, an office suite and an ATM. He said that Mr Hamilton asked questions about each of these vacancies and whether anyone had expressed interest in taking them up. He was asked questions about the connection of water and gas to the tenancies. Following this there was a discussion in relation to outgoings, in particular the expenses of running the Centre. He accepted that Mr Hamilton phrased his questions by reading from notes. He said the discussion ranged across questions relating to other income generated by the Centre, such as for signage and storage. He said that he was asked "a whole bunch of questions" relating to other types of income. Mr Hamilton was asking questions about discrepancies between the tenancy schedule in the data room, the lease documents and the actual commencement date of the leases of particular shops. He was asked about expiry dates of leases and rent review dates. Some of the questions he could not answer because he did not have the information to hand, however, Mr Hamilton could put relevant questions in a formal way through the data room. A notable aspect of Mr Shah's evidence is that he did not purport to give evidence as to the actual words used either by Mr Hamilton or by himself during the meeting, which doubtless is understandable by reason of the effluxion of time. 143 In cross-examination he accepted the importance of historical arrears reports to a purchaser in assessing the relative risk of the Centre, but at least initially he only provided arrears reports from March and April 2017 in the data room. Those reports were supplemented following a specific request that was made by a prospective purchaser. He gave unsatisfactory evidence in my view that he did not wish to "speculate" as to why a purchaser would require additional arrears reports, despite accepting that they would provide more information. He claimed not to have ever examined the arrears reports that were placed in the data room. He said that he was not "curious" about their content. When pressed as to whether he was concerned to ensure that material made available in the data room was not misleading, he initially answered that he could not confirm what material he had examined but then said that he did not review "each and every document" that was provided. 144 Turning to the specifics of the 30 August Meeting, he denied that Mr Hamilton at the outset stated that he intended to ask a series of questions in relation to each of the tenants. He denied that he was asked to comment on the trading performance of the tenants. He denied that he was asked about whether there was a history of tenant arrears. He denied that he was asked about whether tenants were likely to renew leases. He denied being asked questions in relation to each of the tenants listed in the file note of Mr Hamilton. Upon being taken to the file note, he said that he had made his own notes of the meeting but no longer had them. There is no reference in his affidavit evidence-in-chief to the fact of preparing any notes. He said that they existed in the form of a notebook that he had "probably" disposed of within two or three months of the meeting. He accepted that despite the absence of notes and the effluxion of time, nonetheless he had a detailed recollection from recall, not reconstruction, of the matters discussed. 145 He maintained that Mr Hamilton did not ask him direct questions in relation to the trading performance of each of the Food Court Tenants and responded that if he had done so, he would have referred Mr Hamilton to the material in the data room. The extent of Mr Shah's recall of what was discussed at this meeting is highlighted by evidence that he gave in relation to a question about the floor area of a particular tenancy. Mr Shah stated that he had been asked to comment on the discrepancy between a survey plan area of 25m² and a statement on the tenancy schedule that the area was 27m². Objectively, this evidences an extraordinary ability on the part of Mr Shah to recall evidence about a discussion that occurred in August 2017 in minute detail and without the assistance of any contemporaneous note. This causes me to doubt his reliability. 146 I have no hesitation in accepting Mr Hamilton as an objective witness of the truth who gave reliable evidence to the best of his recollection as to what was discussed at the 30 August Meeting with Mr Shah. From observation, Mr Hamilton was a careful and measured witness who Alceon accepts "was plainly a witness of the truth" and suffered from no partiality in the proceeding. In contrast, Mr Shah was an unimpressive witness who was not forthcoming in his evidence. I find that his evidence was not reliable where it conflicts with that of Mr Hamilton and with contemporaneous documents. On many occasions he avoided giving simple answers to direct questions, often requesting simply expressed questions be repeated. His evidence that he never looked at the monthly tenancy arrears reports, despite being included on the emails from Ms Coco which attached them, strains credulity: Mr Shah was the individual from CPRAM who had the primary responsibility for portfolio management of the Centre and with it performance of the agreement between Alceon and CPRAM. He also denied discussing the content of those monthly reports with Ms Coco, despite her evidence, which I accept, that she did so. 147 Mr Shah also gave unimpressive and incredulous evidence about an amount of $13,750 credited to the account of Dizzy Dukes on 20 April 2017, described as an unapplied receipt on the Tenant Arrears Report for May 2017. Mathematically, by reference to other business records, this sum represented a part payment of the security deposit of $41,250. The balance of $27,500 was paid on 20 April 2017. Despite being faced with this compelling evidence, Mr Shah insisted that the tenant had simply paid rent in advance - a proposition that sits uncomfortably with the fact that the incentive deed deferred the rent commencement date to 15 May 2017 and there were further deferrals, caused by the upgrading work, to 1 June 2017. Mr Shah's evidence that $13,750 was a pre-payment of rent cannot be accepted in the light of the contemporaneous business records. 148 Overall, and by careful observation of the evidence of Mr Shah given over some hours, I formed the negative impression that he was unwilling to give evidence that he perceived contrary to the interests of the respondents. 149 I am of course mindful of the well-known observations of McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 318-319 as to the fallibility of memory over time and the degree of precision required to prove that what was said was contextually misleading or deceptive in this case. It must be said that the evidence of Mr Hamilton lacked specificity but is corroborated by the fact that no adverse observation in relation to the Food Court Tenants is recorded in the note of the meeting or mentioned in his due diligence report. Accordingly, I find that Mr Hamilton asked questions of Mr Shah designed to elicit background information as to the operation of the Centre that was not apparent from the documentation disclosed in the data room. He commenced by asking a series of general questions relating to whether a tenant was trading, was there a history of arrears, whether more or less space was required and whether it was likely that a tenant would renew a lease. For the Food Court Tenants he did not receive any negative information, or at least information sufficiently material to be recorded in the notes of the meeting and included in his due diligence report. To this extent I find that Mr Shah did not identify any single Food Court Tenant as having outstanding rental arrears as at 30 August 2017 and this element of the applicant's pleading is made out. However, the evidence is not sufficient to enable me to find that Mr Shah did not identify any Food Court Tenant in receipt of abatements or incentives beyond those discussed in the Incentive deeds or having any other generalised "issue" in relation to sales, the ability to pay rent or the ability to satisfy obligations under their respective leases. The generalised nature of that pleading extends much further than the evidence of Mr Hamilton. 150 My finding on that specific issue does not of itself establish this aspect of the misleading conduct claim as the failure by Mr Shah to identify any of the Food Court Tenants as having outstanding rental arrears as at 30 August 2017, cannot be viewed divorced from the entirety of the conduct between Elanor, Alceon and CPRAM between May 2017 when the first expression of interest was submitted and 9 September 2017 when the director's circulating resolution to acquire the Centre was first signed. It is also necessary that Elanor proves that there were outstanding amounts owing by Food Court Tenants as at 30 August 2017, which I address separately. It is necessary to pay particular regard to the remaining pleaded representations, the other information that was available to Elanor and what was taken into account by it as material to its decision-making commencing with the second expression of interest on 16 August 2017. These matters are necessarily intertwined with my consideration of the Arrears Representations, the Rental Return Representation, the failure to disclose case and whether Elanor has established that the Conduct was, to adopt the language of its case, incorrect, understated or contained material omissions. 151 However, the evidence of Mr Hamilton does not support a finding that the Commencement Date Representation is made out as it is limited to the finding at [147] that none of the Food Court Tenants were in arrears of rent as at 30 August 2017. On the evidence, Elanor has not established that Mr Shah represented to Mr Hamilton that the Food Court Tenants had been invoiced for rent or other charges since the commencement date recorded in each lease and incentive deed and had paid those amounts. 152 Accordingly, the Commencement Date Representation as pleaded is not made out.

Were the Arrears Representations made? 153 The focus of this claim is upon the Tenant Arrears Reports which, it will be recalled, is a reference to the reports for the period December 2016 to July 2017 in the data room and the October Arrears Report that was provided to Elanor's solicitor on 27 October 2017. The conduct alleged is a rolled-up plea. It is useful to break it into the constituent elements. Thus, these reports: (1) "were correct and complete" in recording all amounts not paid by the Food Court Tenants "in the corresponding month" of each report for all prior rendered invoices; and (2) "all amounts" in rendered invoices in the months prior to the month of the report had otherwise been paid in full. 154 As I have observed, by the time of closing submissions, Elanor conceded that this claim cannot succeed for Kebab Express, Thai Me Down and Mass Nutrition. Elanor accepts that there were no arrears for these tenants, which leaves six tenants to be considered. Another matter that may be dealt with at the outset is that the claim framed by reference to the October Arrears Report cannot succeed because that report was provided shortly prior to settlement of the Sale Contract and could not have led Elanor into any anterior error inducing any of its decisions to acquire the Centre. Although Elanor conjunctively pleaded that in reliance on the conduct it entered the Option Agreement, exercised the call option and completed the Sale Contract, no evidence was led as to what recommendation would have been put to the board between 15 September 2017, when the Option Agreement was entered into, and 1 November 2017, when settlement of the Sale Contract occurred, relating to options to withdraw from the transaction. Nor was evidence adduced as to what steps would have been taken, including after the call option was exercised on 23 October 2017, about the likely risks that Elanor may have faced in seeking to withdraw, including litigation that it may have then faced. The only evidence from Mr McNaughton was to the effect that he would have recalculated the purchase price before the second expression of interest, resulting in a lower figure, and in that event the transaction would not have proceeded. Just what decision the board may have made in any number of hypotheticals following entry into the Heads of Agreement on 18 August 2017 was not addressed: cf Jadwan Pty Ltd v Rae and Partners (a firm) [2020] FCAFC 62; 278 FCR 1 at [487]-[530] (Bromwich, O'Callaghan and Wheelahan JJ). 155 Similarly with the Commencement Date Representation, Elanor pleads that this conduct was express made in writing, was implied and was oral. The express representations are framed as "contained in the Tenant Arrears Reports…". According to the data room log, Mr McNaughton downloaded bulk documents from the data room on 18 and 23 May and 21 August 2017. Specifically, he viewed the July Tenant Arrears Report on 28 August and 30 October 2017. He viewed the monthly turnover data for July 2017 on 28 August and 19 and 20 September 2017. In his evidence-in-chief, Mr McNaughton said that he reviewed the documents that he downloaded in bulk on 31 October 2017 including the Tenant Arrears Reports between December 2016 and June 2017. Later he reviewed the July Arrears Report, having received an email alert to the effect that it had been uploaded to the data room, on 26 August 2017. He was not cross-examined on this evidence. 156 However, from the outset the data room only included Tenant Arrears Reports for March and April 2017. On or about 21 June 2017, additional reports were printed and uploaded to the data room for December 2016 and January, February, and May 2017. A further report for June 2017 was printed on 25 July 2017 and then placed in the data room. The March, April and June 2017 arrears reports did not identify any of the Food Court Tenants as being in arrears, indeed none of the Food Court Tenants are listed. It is not necessary to interrogate the content of the December 2016, January, February, and May 2017 reports as Elanor accepts that these reports record the arrears position as at the date of printing, and not as at the close of each month and therefore "provide no additional arrears information" in relation to those months. If there had been arrears, then on the case of Elanor that fact ought to have been disclosed in the March, April and June 2017 reports. 157 The data room activity reports disclose that Mr Hamilton, and his assistants, only examined the July Arrears Report, which fact Mr Hamilton conceded in cross-examination despite what he had said in his affidavit evidence-in-chief. 158 On its face the July Arrears Report does not disclose arrears by any of the Food Court Tenants. There can be put to one side, Kebab Express, Thai Me Down and Mass Nutrition which as Elanor now concedes were not in arrears. The question is whether by omission (assuming for the moment that other Food Court Tenants were in arrears) the July Arrears Report conveyed that it was a correct and complete statement of all amounts which had not been paid by the six remaining Food Court Tenants from all previously rendered invoices or, as the alternative case is put, that "otherwise" the six Food Court Tenants had paid in full all amounts due as invoiced prior to July 2017. Elanor's submission is the July Arrears Report reflected the position for each of the tenants as at 31 July 2017. Despite the anomaly between the print date of the report (25 August 2017) and the period to which it relates (July 2017) Elanor submits that it should not be construed as representing the arrears position as at the print date as the July Arrears Report is an important document likely to be viewed by a prospective purchaser in undertaking the due diligence to purchase a shopping centre where there are multiple tenancies. Elanor accepts that if a person makes assumptions about information that is disclosed, or representations made "that are not reasonable" then "there may not be a sufficient causal connection between the conduct and the error on the part of the recipient": TPG Internet at [39]. Elanor submits: A document can be textually accurate but contextually misleading or deceptive. So much is obvious if one considers the facts of this case, where the arrears reports provided are said to reflect the position at the date of printing, when the heading of the document, the allocation of arrears to current, 30 days, 60 days etc and the circumstances in which the documents are provided, being to disclose historical arrears, suggest that they report arrears at the close of the relevant month to which the report relates. In such circumstances, it is not a defence to a claim that such reports were misleading or likely to mislead for the Respondents to say that the document was an accurate or true statement of arrears. The document in this example may be textually correct, but contextually misleading. That is why conduct needs to be judged in all the circumstances. 159 The respondents agree that the conduct relied upon must be considered in all the circumstances: indeed that proposition is central to their respective cases. Alceon emphasises the following matters. First, the report records a last payment date for each tenant which varies between 7 and 21 August 2017. In each case the amount of the last payment and the date of payment is recorded. When this is considered with the date of 25 August 2017 at 16.21, that is recorded on the bottom of each page the "obvious inference" is that the report set out the arrears position as at the date and time that it was generated. Thus, so the submission runs, Elanor misunderstood the meaning of the report. In any event, Alceon submits that Elanor has failed to prove that there were arrears for the other six Food Court Tenants as at 31 July 2017. 160 CPRAM, similarly to the submissions made by Alceon, submits that the arrears report "provided point-in-time information" sourced from MRI as to the arrears position for a particular tenant. If amounts were outstanding, but had been paid late (i.e. before the time of generation of the report), that fact was not recorded. The fact that the report records last payments which post date the month of the report: "clearly begs the question, how could the reports then be purporting to show point-in-time information for the last day of the month in question?". 161 In my view the July Arrears Report was ambiguous. If the report purports to be a record of all arrears to 31 July 2017, then what is the point of recording a last payment date and an amount thereafter? Further, what is the point of the date of 25 August 2017 and the time of printing, if objectively the document is a "correct and complete" statement of all amounts "which had not been paid" by any of the Food Court Tenants for amounts previously invoiced? 162 The July Arrears Report is not a document that was authored by Alceon or CPRAM. It is an agreed fact that neither Alceon nor CPRAM had the ability to make changes within MRI, but CPRAM had the ability to generate reports from it. For the July Arrears Report, each page has the Savills logo, the mark "Head Office" and the notation "produced by smart (Savills Management Accounting & Reporting Tools)" together with the copyright symbol asserting ownership by Savills. Although the respondents do not seek to make out a case to the effect that either simply passed on information prepared by a third person and without representing the truth or accuracy of that information, a component of the entire circumstances of this case concerns Elanor's knowledge as to the provenance of this information and its accuracy. Mr McNaughton in his second affidavit of evidence-in-chief explains that he did not seek an accounting audit of "the financial material" because it was prepared on the basis that Savills were managing the property and used their own financial and management reporting systems. According to Mr McNaughton: "Savills is a globally recognised and reliable property management company. Its existence in managing the Centre was a form of primary audit that I considered Elanor could rely upon." His evidence then continued: …[I]n my experience, when documents, reports or ledgers for instance are generated by property management software system of a globally renowned company such as Savills, it is assumed that those documents, reports or ledgers are reconciled and cross-checked with other relevant documents, reports or ledgers in that system. Accordingly, in my experience it is reasonable to take those documents, reports or ledgers at 'face-value' and not take steps verify [sic] the source documents that those documents, reports or ledgers were based upon. 163 In cross-examination, Mr McNaughton was taken in detail to various sub-clauses contained in the special conditions of the Sale Contract at cl 5, which I have mentioned above. His attention was directed to the buyer acknowledgement to the effect that the seller "makes no representation or warranty as to the accuracy or otherwise" of the due diligence material, that the seller has not conducted its "own independent inquiries and investigations into information in the due diligence material prepared by third parties" and that the buyer warrants that it has "examined and satisfied itself" in relation to all matters contained in the due diligence material. It was then directly put to Mr McNaughton that Elanor accepted the risk as to whether or not the information prepared by Savills was reliable or alternatively accurate to which he answered: …. We accepted the risk. No. We were working on the assumption that it was accurate. That's right. So if it wasn't, you are accepting the risk that it wasn't? --- I guess so. Yes. … Mr McNaughton, Elanor could have, if it chose to do so, could have undertaken a due diligence of the accuracy of the financial information or material that Savills had regarding the Centre? --- If time, cost and industry practice permitted, then - yes. But you didn't even turn your mind to that, did you? --- No. 164 Mr Hamilton also gave evidence to the effect that he relied upon the accuracy of the Savills documentation and assumed the risk that the information might not be accurate. 165 Two points flow from this evidence. One, the objective meaning of the two page July Arrears Report, which I have concluded was ambiguous on its face, must be considered in the context that it was a component of a large amount of information that was made available to Elanor during the due diligence period as contained in the data room. Within that documentation, there was available to Elanor monthly rental tax invoices for the period January until May 2017, tenant recovery letters for the financial year 2017, outgoings recovery records for the financial year 2018 and the monthly turnover data for the period March to July 2017. Elanor did not examine the detail of this documentation and made no attempt to reconcile amounts charged with amounts paid. The Savills records included detailed monthly reconciliations of amounts charged to and paid by each tenant and, although these documents were not made available in the data room, no request was made by Elanor or Mr Hamilton for the provision of this type of information. Moreover, through the question-and-answer facility in the data room, Elanor could have asked a simple question to the effect: Is the July Arrears Report a correct and complete statement of all rental arrears for each tenancy to 31 July 2017? Similarly, through that facility, Elanor could have sought clarification as to the difference between the print date and the last payment date on the July Arrears Report and the period to which it relates. 166 The other is that there is considerably more evidence to the effect that Elanor was not lead into error by the July Arrears Report because it took the risk that one or more, or indeed all, of the Food Court Tenants may be in arrears and may not ultimately be complying with their payment obligations pursuant to the leases or whether the Food Court Tenants were in arrears was immaterial to its decision-making. What must be considered in this case is the knowledge and characteristics of Elanor "so far as it relates to the content and circumstances of the conduct": Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; 238 CLR 304 at [26] (French CJ). I return to this point, following my analysis of each of the claims of Elanor as pertinent to the entire context of the conduct alleged. 167 The second Arrears Representation is pleaded as an implication: the circumstances in which the Tenant Arrears Reports were provided and the absence of any other document of a similar nature for different periods or tenants. This pleading is difficult to understand and was not elaborated upon in Elanor's closing submissions. It does not add to the express representation said to be conveyed by the arrears reports and self-evidently the implication cannot be inconsistent with the objective meaning of those reports. In my view the implied representation contention takes Elanor's case no further than the express representation case. 168 Thirdly, there is the oral representation claim that is founded on what Mr Shah said and did not say during the 30 August Meeting. As I have found, Mr Shah did not identify any of the Food Courts Tenant as having arrears of more than 30 days during that meeting, but it does not follow from that finding that his conduct was, in all of the circumstances, misleading or deceptive or likely to mislead or deceive, which point I return to later in these reasons.

Was the Rental Return Representation made? 169 The pleading is that the rent that Elanor "should expect to receive from tenants" was in accordance with the Passing Base Rent Representation and/or the Rent Representation. This is particularised as implied, arising from each of those representations and the content of each other pleaded representation, to the extent now maintained. Despite the abandonment of these two representation claims, these terms must be understood as having the respective meanings in cl 33.1 of the special conditions to the Sale Contract and the attached tenancy schedule (passing base rent representation) and cll 16.13 and 33.1 when read with the outstanding incentive schedule which is schedule 4 to the Sale Contract. I emphasise that these two representations claims as pleaded are confined by these clauses in the Sale Contract and do not have a more general meaning. They are not to be confused with the net operating income (fully leased) or the net operating income (passing) as referred to in the Information Memorandum stated as at 30 June 2017. 170 Dealing first with the passing base rate representation, the lease schedule attached to the Sale Contract is dated as at 15 September 2017. It lists each tenant of the Centre by name and shop reference. It has columns for the commencement date, the expiry date and any options applicable to the leases. The final column is marked "passing base rent $ pa" and then follows an annual amount for each tenant. Alceon accepts that it provided the contractual warranty by reference to the tenancy schedule, including that it represented that the tenancy schedule was correct in all material respects. However, the problem for Elanor, which is also emphasised by CPRAM, is that it has not adduced evidence that the passing base rent payable as at 15 September 2017 differed from the amounts shown in the tenancy schedule. I accept that submission, together with the additional point that is made for CPRAM that the rental abatements or credits that were applied to one or more of the Food Court Tenants are simply irrelevant to the calculation of the annual passing base rent as at 15 September 2017. For these reasons, this representation was not misleading or deceptive. 171 For the same reason, the Rent Representation claim is not made out as it is also a reference to cl 33.1 of the Sale Contract and the tenancy schedule which records the total amount of rent payable by each tenant as at 15 September 2017. No representation is made about the amount of rent actually payable between May 2017 and 1 November 2017.

Did the respondents engage in misleading conduct by non-disclosure? 172 Careful attention is required to the way in which this claim is pleaded as the form and content of the pleading make comprehension difficult. The first component is in two parts. One that "by reason of the matters pleaded in paragraphs 19 to 26 and 35, 36 and 40" of the FASOC, Elanor had a reasonable expectation that the respondents would have disclosed to it "if any of the Food Court Tenants were in arrears of more than 30 days during the period December 2016 to October 2017". The other, that the failure of the respondents to disclose the matters at [46(a)-(g)] of the FASOC "gave rise to a reasonable expectation" on its part that "none of the Food Court Tenants were in arrears of more than 30 days during the period December 2016 to October 2017". 173 Paragraphs [19] to [26] of the FASOC concern the access granted by Elanor to the documents in the data room between 18 August and 15 September 2017, as well as the 30 August Meeting. The Tenant Arrears Reports for the period December 2016 to July 2017 are mentioned, and the July Arrears Report is emphasised. Paragraphs [35] and [36] reference provision of the October Arrears Report and the October incentive schedule provided to Elanor's solicitor on 27 October 2017. As I have explained, the October documents are simply irrelevant to the decision-making of Elanor to enter into the Sale Contract, and no attempt has been made to lay out a case in the evidence as to what would have been done to end that contract in the event that relevant information had later been disclosed and that Elanor had been misled. Paragraph [40] is a reference to the passing base rent per annum in the tenancy schedule and to the outstanding incentive schedule, each as attached to the Sale Contract. 174 Elanor fails to explain how these documents gave rise to a reasonable expectation that the fact of arrears of more than 30 days by any of the Food Court Tenants between December 2016 and October 2017, would have been disclosed to it. The fact is that Elanor had the benefit of the due diligence material and period of investigation, was itself a sophisticated investor and engaged Mr Hamilton as an experienced person in the undertaking of due diligence assessments, particularly for shopping centres. It was open to Elanor throughout the due diligence period to seek more documents and to ask specific questions. Relevantly, it did neither. 175 Elanor's closing submission draws attention to the decision of the NSW Court of Appeal in Midcoast County Council t/as Midcoast Water v Reed Constructions Australia Pty Ltd [2011] NSWCA 268 at [50]-[51] where Meagher JA, with the concurrence of Beazley and Basten JJA observed: The fact that in particular circumstances a person had the opportunity to but did not take steps which might or would have corrected a misapprehension or wrong assumption can be relevant to an inquiry as to whether conduct which includes silence should be characterised as misleading or deceptive…… It may also be relevant to an inquiry as to whether loss or damage has been suffered by that conduct…. However, the outcome of each of these inquiries is fact dependent and it certainly does not follow, if a person does not make an inquiry which he or she could or might otherwise have made, that the conduct should not be characterised as misleading or deceptive or that any damage or loss was not suffered by such conduct. It is unnecessary to consider further this argument of Midcoast Water because, even if accepted, it does not affect the outcome of the appeal. (Citations omitted.) 176 That case did not concern an expression of interest, an exclusive dealing period, the provision of documents for the purpose of undertaking a due diligence assessment or a sophisticated property investor. To establish that, Elanor had a reasonable expectation that it would receive specific disclosure as to any of the Food Court Tenants being in arrears for more than 30 days throughout the period from December 2016 to October 2017, considerably more is required beyond the facts relied on. Alceon was obliged to answer questions put to it through the question-and-answer facility in the data room. A wrong answer may have exposed it to liability. However, in the circumstances of this case, Elanor has not established that Alceon as the contracting party or CPRAM as its agent were obliged in the "commercial negotiations to volunteer information which will be of assistance to" Elanor: Miller at [22] (French CJ and Kiefel J). 177 The second component of this claim is even more difficult to understand. It is contended that by reason of the matters pleaded in paragraph 42 of the FASOC by multiple combinations of facts relating to lease commencement dates, rental deferrals under incentive deeds and further undisclosed commencement date deferrals, that Elanor had a reasonable expectation that Alceon and or CPRAM would have (in summary) disclosed: (1) If the rent commencement dates for Dizzy Dukes, Burrito Bar, Mass Nutrition, Kebab Express, Mumbai Blues, Thai Me Down and Red Noodle Kitchen was later than set out in the incentive deed for each tenant (Deferred Tenants); (2) If there were rental arrears for months after July 2017 and until October 2017 together with the details of any arrears incurred by the Deferred Tenants between August and October 2017; and (3) If any of the Food Court Tenants had failed to provide a bank guarantee or alternative security prior to the commence dates of their leases. 178 To this there is added a further pleading that the failure by Alceon and/or CPRAM to make disclosure of the actual rent commencement dates (where the arrears reports had shown that they had paid all rent and other charges due since the commencement date listed in their respective incentive deeds and where arrears reports for August, September and October 2017 were not provided) then these matters gave rise to a reasonable belief by it that the rent commencement dates were in accordance with each of the Incentive deeds and that none of the deferred tenants were in rental arrears from the commencement dates listed in the Incentive deeds. 179 In all there are 21 separate contentions in this component of the pleading spread across seven separate tenants. The pleading is convoluted and unsatisfactory: more so where no attempt is made by Elanor in closing submissions to explain it. Elanor makes the generalised submission that none of the deferred rental commencement dates were recorded in writing between the parties and were not otherwise disclosed in the data room. From that premise, Elanor submits that: In those circumstances, it was reasonable to expect that, when the due diligence was being undertaken and none of the leases, incentive deeds or other documents disclosed that deferral of rent commencement dates, that such matters would be expressly brought to the attention of Elanor or Mr Hamilton. This would enable all other information in the Data Room, in particular the arrears reports, to be assessed in circumstances where more limited operations had occurred than had otherwise been disclosed. It was also reasonable to expect Alceon to provide additional arrears reports for August and September and October 2017 when, without notice and contrary to the terms of the leases and the incentive deeds, it varied the terms of such deeds to defer the rent commencement dates. 180 CPRAM in its closing submission pinpointed the problem with this claim: This pleading is unclear. No causal link is pleaded as to how the allegations referred to in the particulars to paragraph 42 would lead to the expectations pleaded in paragraphs 46E(a) - (c) that rental deferments should be disclosed, that any "rental arrears" following July 2017 would be disclosed and that if there were "rental arrears" for the tenants following 2017 that they would be disclosed. There is also the oddity of the pleaded expectation that rental arrears for September 2017 and October 2017 would be disclosed, despite the fact that the board having on 9 September 2017 resolved to enter into the transaction to purchase the Centre and Elanor was bound by the P&CO executed on 15 September 2017. 181 I agree with that submission. It is also the case that rent was deferred only for six Food Court Tenants for between two weeks and one month, save for Redcliffe Noodle Kitchen where deferral was six weeks and six days. Alceon suffered the loss of any deferred rent to the date of settlement. Thereafter, it was required to adjust on settlement the cost of any incentive that operated after 1 November 2017 pursuant to cl 16.13 of the Sale Contract. In those circumstances, Elanor has not established the reasonable expectation that it relies on.

Which misleading conduct claims fail at the outset? 182 In summary, when examined individually, I have concluded that the pleaded representations are not in several respects made out and nor is the conduct by silence case. In summary the case of Elanor: (1) Fails on the express, implied and oral Commencement Date Representations claims; (2) Relies on reading the ambiguous July Arrears Report in one particular way as conveying the express representation that it was a correct and complete statement of all amounts not paid by the Food Court Tenants in the month of July 2017 from all previously rendered invoices and that all amounts invoiced in any prior month had otherwise been paid in full. That claim is not pressed for Kebab Express, Thai Me Down or Mass Nutrition. That is a lot to read into that document, for the six remaining Food Court Tenants and it would be an error to accept the applicant's case on this point by paying attention only to this report without examining all of the relevant circumstances; (3) Fails on the implied Arrears Representations claim; (4) To a limited extent is made out on the oral Arrears Representations claim in that Mr Shah at the 30 August Meeting, when asked relevant questions about tenancy arrears, did not identify any Food Court tenant as having any arrears as at 30 August 2017, noting that this claim is not pressed for Kebab Express, Thai Me Down or Mass Nutrition; (5) Fails on the Rental Return Representation case; and (6) Fails on the non-disclosure case.

Has Elanor established falsity? 183 To establish that the Arrears Representations were objectively likely to lead into error, Elanor pleads that they were "incorrect and understated". 184 The evidence relied on to prove this proposition commences with the very detailed particularisation of what Elanor says was the true position for each of the Food Court Tenants at [42] of the FASOC. In turn this relies on a large body of evidence in the form of Savills records, emails and other documents cross-referenced to paragraphs [99]-[221] of the first affidavit of Mr McNaughton, which paragraphs it will be recalled were admitted into evidence as relevant only to the understanding of Mr McNaughton. The documents are in the court book and form part of the tender of Elanor. Fortunately, I am relieved of performing the tedious and time-consuming task of individually reconciling those documents to make findings of fact, as two accountants have undertaken a reconciliation and produced a joint expert report. Despite that report, in certain aspects, Elanor invites interrogation of some of the underlying documents which, on its submission, do not establish some of the assumptions made by the respondents' expert, Mr Hellen and to that extent submits that findings should be made in accordance with the source documents. 185 Mr Hellen was engaged jointly by the respondents to undertake four reconciliations: (1) a reconciliation of the total rental charges paid and received; (2) a reconciliation of the rent paid (including any charges and applicable levies) by each Food Court Tenant the end of each month, identifying and explaining any arrears; (3) a reconciliation of: (1) the total incentives and abatements for each of the Food Court Tenants as per the Incentive Deeds; and (2) the total incentives and abatements received by and/or applied to each of the Food Court Tenants; (4) a reconciliation of any security deposits paid. 186 He was also instructed to consider and comment on: (1) Whether any Food Court Tenants received an abatement of rent (including any outgoings or other charges) or incentive above or beyond that provided for in their respective Incentive Deeds. If so identify and explain the amount; (2) the extent to which any Food Court Tenant was in arrears in the period December 2016 to October 2017; (3) As well as consider the Tenant Arrears report and comment on: (i) What the Tenant Arrears Reports purported to represent; and (ii) In light of the reconciliations you have performed, whether the Tenant Arrears Reports accurately recorded what they purported to represent. 187 In response, Mr Hellen prepared a report dated 3 May 2023. In section 2, he set out his summary findings as follows: 2 SUMMARY OF FINDINGS 2.1. Summary and Conclusions Tenant Ledgers and Arrears 2.1.1 Based on the information available to me, in Section 6 of my Report I have reconstructed the total rental charges paid and received and the balance at the end of each month from December 2016 to October 2017. Details of those amounts for each tenant is set out on Schedule 1 and is summarised in the table below: Tenant Sch. Rent and Other Non-Cash Cash Balance as at Charges Credits Receipts 31 October 17 Bel Cibo 2.1 118.945.11 11,454.10 124,189.53 0.00 Burrito Bar 3.1 85,036.17 27,586.22 46,427.10 11,022.85 Dizzy Dukes 4.1 116,062.94 55,706.91 60,356.03 0.00 Kebab Express 5.1 24,464.66 9,166.69 15,297.97 0.00 Mass Nutrition 6.1 35,532.42 17,008.07 18,524.35 0.00 Mumbai Blues 7.1 45,979.43 23,716.00 22,263.43 0.00 Redcliffe Noodle Kitchen 8.1 30,368.37 4,243.88 26,124.49 0.00 Sushi Kuni 9.1 133,670.83 2,029.73 141,871.65 0.00 Thai Me Down 10.1 25,393.47 10,010.00 15,383.47 0.00

2.1.2 In relation to Burrito Bar and Sushi Kuni, I have provided a Scenario A and B due to: • Non-cash credits that Burrito Bar was entitled to at the commencement of its lease, but which were not applied until September 2017. • The balance of the security deposit for the original (previous) operator of Sushi Kuni was not refunded but applied to the arrears of that tenant. Whilst the lease was assigned effective 30 April 2017, the monies were not allocated to the tenant ledger until September 2017. In each instance, • Scenario A reflects what was actually recorded in Savills' MRI system, and • Scenario B reflects the impact of applying either the non-cash credit or the balance of the security deposit to the month it would appear to properly relate to. Total Incentives and abatements 2.1.3 In Section 7 of my Report I reconciled: (1) the total incentives and abatements for each of the Food Court Tenants as per the Incentive deeds; and (2) the total incentives and abatements received by and/or applied to each of the Food Court Tenants. 2.1.4 My analysis indicates that the Food Court Tenants did not receive non-cash credits in excess of their entitlements under the Incentive Deed. 2.1.5 The timing of when the non-cash credits were applied to the tenant's ledgers was not always strictly in accordance with the terms of the Incentive Deeds. However, this would appear to have been to the disadvantage of the tenants rather than the landlord. Security deposits and bank guarantees 2.1.6 In Section 6 of my Report I accounted for all security deposits in the process of my reconstruction of the rental accounts. 2.1.7 I am satisfied that all security deposits and bank guarantees were paid or evidence submitted by 31 October 2017. 2.1.8 My review of the ledger provided by Savills indicates that a deposit for Redcliffe Noodle Kitchen of $744 has been omitted. Tenant Arrears Reports 2.1.9 The Tenant Arrears Reports provide a detailed current status of all amounts invoiced and not paid by the tenant (account balance) including the arrears position. 2.1.10 These reports are a snap shot of the tenant's account, taking into account information recorded up to the date the report is printed and not necessarily for an entire month. 2.1.11 Based on the Tenant Arrears Reports I examined, they appear to accurately record what they purport to represent. 188 Mr Hellen was instructed to make certain assumptions which are controversial and which arise from his analysis of the end of month MRI reports together with copies of bank statements. As explained by Mr Hellen, in order to allocate cash receipts to tenant accounts he relied upon certain comments, in the form of annotations to the documents, applied by Mr Neil Shah which identified and allocated various receipts. Mr Neil Shah did not give evidence and the submission of Mr Fernon is that I should not make findings of fact that rest on those untested assumptions where there is a dispute. 189 Mr Gwynne was engaged by Elanor not to undertake an independent reconciliation similar to Mr Hellen, but to review and comment upon the rental arrears calculations and analysis of Mr Hellen. In response, Mr Gwynne produced a report dated 21 June 2023. His summary analysis in section 2 is: 2.0 SUMMARY 2.1 Based on my review of the Hellen Report and of the documentation at BH-1, I note the following: Bel Cibo 2.2 Mr Hellen incorrectly allocated the Security Deposit when calculating rental arrears which causes his calculation at paragraph 6.2.1 of his report to incorrectly record Bel Cibo as being in advance in September 2017 & October 2017. 2.3 In addition, I cannot identify the source of 2 payments allocated by Mr Hellen in his calculation. Burrito Bar 2.4 Mr Hellen's calculation in paragraph 6.3.2 is supported by the documentation at BH-1. 2.5 I note that the arrears position in September 2017 is after an allowance for non-cash credits which were raised in October 2017. Dizzy Dukes 2.6 There is a difference of the arrears calculations at paragraph 6.4.1 of the Hellen Report and as per the Documentation at BH-1. This is due in part to the allocation of part of the security deposit to rent and other payments the source of which is not clear. Kebab Express 2.7 Mr Hellen incorrectly allocated the Security Deposit when calculating rental arrears which causes his calculation at paragraph 6.5.1 of his report to incorrectly record Kebab Express as being in advance. The documentation at BH-1 indicates that by October 2017, Kebab Express was up to date. Mass Nutrition 2.8 The table at paragraph 6.6.1 of the Hellen Report does not correctly record Mr Hellen's analysis at schedule 5.1. 2.9 I otherwise note that Mr Hellen's analysis at Schedule 5.1 is in line with the documentation at BH-1 Mumbai Blue 2.10 Mr Hellen incorrectly allocated the Security Deposit when calculating rental arrears which causes his calculation at paragraph 6.7.1 of his report to incorrectly record the extent to which Mumbai Blue was in advance. IN [sic] addition his calculation of advance includes a payment the source of which cannot be identified. Redcliffe Noodle Kitchen 2.11 Mr Hellen's calculation of the advance position of Redcliffe Noodle Kitchen includes payments allocated to rent however the source of those payments is not evident in the documentation at BH-1. Therefore the advance position calculated by him might be overstated. Thai Me Down 2.12 Mr Hellen's calculation at 6.10.1 is in line with the documentation at BH-1 Sushi Kuni 2.13 Mr Hellen's calculation at paragraph 6.9.3 is in line with the documentation at BH-1. 2.14 I note that his calculations include the application of the security deposit of the prior operator of Sushi Kuni to clear arrears, some of which were accrued by the new operator. 190 Mr Hellen and Mr Gwynne attended a joint expert conclave before a registrar of this Court, and in consequence produced a joint experts' report dated 30 June 2023. They reached significant agreement in relation to a number of disputed issues. Through their discussion, Mr Hellen made certain adjustments to the schedules of his report relating to Bel Cibo, Kebab Express, Mumbai Blues and Redcliffe Noodle Kitchen. An important matter that the experts agreed upon is recorded in the joint report: In respect of all the Food Court tenants, the only significant differences between the Experts is in respect of the timing of recording of transactions. 191 I was impressed by the professionalism, the degree of cooperation and the obvious significant amount of work that Mr Hellen and Mr Gwynne applied and undertook in the discharge of their duty as independent and impartial expert witnesses in this proceeding. The joint expert report cuts through the considerable minutiae of documentation that each expert was instructed to review and was reproduced in the court book. The joint report attaches nine schedules, one for each of the Food Court Tenants. A number of important matters were agreed in the schedules or in concurrent evidence. Importantly and in summary: (1) No tenant was in rental arrears as at 31 October 2017 save for Burrito Bar in the amount of $11,022.85; (2) Kebab Express, Thai Me Down and Mass Nutrition were not in any arrears at any time between December 2016 and October 2017; (3) Redcliffe Noodle Kitchen was not in arrears before 31 July 2017. There is a difference of view thereafter. On Mr Hellen's analysis, this tenant was in credit in the amount of $17,856.25 in September 2017 and in credit in the amount of $10,293.43 in October 2017, but overall, there is agreement that the tenant balance in accordance with the MRI reports is nil between December 2016 and October 2017. There is an unexplained difference of $10,293.43 between Mr Hellen's assessment of cash received and the cash applied according to the Savills records. 192 Before I turn in more detail to the joint expert report and the concurrent evidence, it is important to understand the explanation for the remaining differences between Mr Hellen and Mr Gwynne. The evidence of Mr Hellen was: MR HELLEN: Your Honour, Mr Gwynne's instructions were to look at the differences between my report and the Savills report, so, really, all of the comments and the differences are always going to be between my report and my findings and the Savills findings - - - HIS HONOUR: I see. MR HELLEN: - - - and those variances are the reasons why they differ, and that's what we've worked on together. HIS HONOUR: Do you agree with that, Mr Gwynne? MR GWYNNE: That's correct, your Honour. HIS HONOUR: All right. MR GWYNNE: And those variances are why they differ. 193 This emphasises the point made earlier: Mr Hellen undertook a complete reconciliation, whereas Mr Gwynne examined the work of Mr Hellen and compared it with the MRI records. 194 Dealing with each of the remaining Food Court Tenants, the joint analysis reveals the following. 195 For Bel Cibo, the MRI records show the tenant in arrears in each month between December 2016 and September 2017. The arrears amount as at July 2017 is $16,271.53, which reduces to $10,242.95 as at September 2017. In contrast, Mr Hellen allocated an amount of $22,687 to the security deposit which left an arrears balance of $4,216.42 in July 2017 reducing to $3,368.58 as at August 2017, in contrast to the Savills arrears amount of $10,142.58 as at August 2017. The reason for the difference as explained by Mr Gwynne relates to a payment of $10,764.70, which was received on 28 April 2017, but not allocated in the Savills records until May 2017, with a due date of 28 April 2017. In contrast, Mr Hellen allocated this payment in the month of receipt. Mr Hellen agreed with Mr Gwynne's explanation for the point of difference, explaining further that the bank statement that he viewed disclosed receipt of the funds on 28 April 2017, and on that basis, he allocated the payment to that month rather than the following month, which is when the payment appears in the Savills records. 196 I note however, that there is a material dispute about whether an amount of $12,000 recorded as a payment in December 2016, which in fact was received on 28 November 2016. Based on a notation made by Mr Neil Shah, Mr Hellen allocated this entire amount to Bel Cibo in December 2016. In contrast an amount of $6,000 is allocated in January 2017 in the Savills records. In Mr Gwynne's view, the difference of $6,000 related to another tenancy that is not in issue in this proceeding - Montezuma's. When Mr Hellen was taken to these documents he accepted that $6,000 "definitely" should be allocated to Bel Cibo, but explained that "through a painstaking process of going through all of the other documentation - and there was no other $6,000, we needed $6,000 to balance it - we used that $6,000 to balance it." A little later, Mr Hellen explained that he had worked through "all of the documentation available over a very long period of time" and in consequence did his best to allocate payments "when they were most likely to have occurred". For most of those payments he had evidence to support his allocations, but ultimately as to this difference of $6,000 he said that the position was "unclear". He then emphasised a point that he made earlier in his evidence that Savills records are "very messy". 197 Ultimately, Elanor carries the onus of proof to demonstrate that this additional $6,000 should not be allocated to the arrears account of Bel Cibo and that in consequence, I should find that the arrears position as at July 2017 was $16,271.53 and should not be adjusted by crediting an amount of $12,000 in order to reduce it to $4,271.53, which is very close to the figure derived by Mr Hellen of $4,216.42. I am not satisfied on the evidence that the Savills records are sufficiently accurate to establish the fact of arrears for Bel Cibo in the amount contended by Elanor. What is clear from Mr Hellen and Mr Gwynne's analysis is that amounts were received, but not allocated in MRI correctly in the month of receipt. Mr Hellen undertook an extensive reconciliation of the Savills records by reference to primary source documents, such as the bank statements and tax invoices, and I prefer his comprehensive analysis to the more limited task that Mr Gwynne performed without interrogating the correctness of the Savills records. The arrears position as at July 2017 was $4,216.42. 198 For Burrito Bar, the joint reconciliation of the experts reveals that as at July 2017 this tenant was in credit in the amount of $14,782.10, which deteriorated to an arrears of $11,022.85 by October 2017. According to the Savills records there was a zero balance in July 2017, and then an arrears of $11,022.85 in October 2017. The July balance difference is explained by a non-cash credit that was ultimately applied against the rent to September 2017, but which was not posted until October 2017. Mr Hellen maintained his view that credits raised in October 2017 should be taken into account in the period to which they relate, in this case September 2017. On closer analysis, Mr Hellen explained that some of those credits appeared to relate to March to May 2017, although in the documents available to him he was not able to "work it out" with precision. Once again, to the extent that there remains a difference between Mr Hellen and Mr Gwynn's analysis, I prefer Mr Hellen's evidence and I find accordingly because of the thoroughness of the reconciliation that he undertook and the fact that he did not work from the assumption that the MRI records were correct. As at July 2017 Burrito Bar was in credit in an amount of $14,471.59. 199 There are significant differences in the joint analysis for Dizzy Dukes. For July 2017, Mr Hellen calculates that this tenant was in credit in the amount of $27,265.28, which by October 2017 reduced to nil. According to the Savills records, the tenant was in arrears in the amount of $2,889.17 in July 2017, which increased to an arrears of $28,606.92 in September 2017 but which then became a nil balance as at October 2017. The tenant was required to pay a security deposit of $41,250. On 20 April 2017, Savills received a bulk deposit to its bank account of $87,510.52 on behalf of Dizzy Dukes and Mumbai Blues. Of this amount, following a reconciliation of the cash receipts records, Mr Hellen allocated $27,500 and $2,664.45 to the rent account of Dizzy Dukes. 200 In contrast, Mr Gwynne initially identified two payments that were received in February and April 2017 of $13,750 and $27,500, in total $41,250. In Mr Gwynne's opinion, Mr Hellen should not have allocated the sums identified by him to rent. In oral evidence, Mr Hellen explained that when he first undertook his analysis, he assumed that because the amounts of $13,750 and $27,500 totalled the amount of the security deposit, that it should be allocated to the security account. However, on analysis of other documentation, he identified payments in September 2017 of $2,513.82, $11,327.76 and $2,600 which ought to have been applied to the security deposit but were not receipted as such. Mr Hellen then went to the tenant arrears report for Dizzy Dukes for April 2017 which records a last payment of $27,500 as having been made on 20 April 2017. This is the amount that he had initially believed was a part payment of the security deposit. In contrast, that document distinguishes between this payment and the security deposit amount by way of a bank guarantee in the sum of $41,250. 201 Mr Hellen next drew attention to a contemporaneous email sent by Mr Neil Shah to Ms Coco on 26 September 2017 which recorded, amongst other things, an amount of $11,250 received from Dizzy Dukes, in which Mr Shah directed to be transferred to the security deposit account. Mr McQuade drew Mr Gwynne's attention to an email sent by a Mr Chaubal of Dizzy Dukes to Ms Coco on 18 September 2017, which attached a bank receipt for payment of $15,000 for the bank guarantee. He then identified other payments recorded in email correspondence on 22 and 25 September 2017 in the further sums of $15,000 and $11,250, in order to make up the total payment of $41,250 to the bank guarantee. Mr Gwynne accepted that these amounts should be allocated to the security deposit, which leaves for allocation the earlier amounts identified by Mr Hellen of $27,500 and $2,664.45 paid on 20 April 2017. I find in accordance with the evidence of Mr Hellen that these amounts should have been allocated to rent. 202 The result is that I accept the reconciliation of Mr Hellen that Dizzy Dukes was not in arrears at any point between December 2016 and October 2017 in contrast to the arrears recorded in the Savills records. 203 At this point in the conclave, I asked Mr Hellen and Mr Gwynne to respond to a general question concerning the accuracy of the monthly Tenant Arrears Reports produced from MRI. My question, and the answer given by each expert, was: HIS HONOUR: Given - and this is a general question but, given these discrepancies, which you gentlemen have identified, what confidence, if any, do you place on the monthly tenant arrears teports as accurately stating the arrears position? MR HELLEN: Your Honour, I don't think it does. HIS HONOUR: Mr Gwynne. MR GWYNNE: Well, that certainly highlights an issue in the allocation of that 27,500, your Honour, and whether it should be security deposit or rent ... HIS HONOUR: I see. Well, your view about the confidence one can place on the monthly Tenant Arrears Reports has been accurate. MR GWYNNE: Well, that certainly - the inference I would make there is that there's some confusion, so it may well be inaccurate. 204 That answer, together with the earlier evidence of Mr Hellen that the Savills records are "very messy" leads me to find that I should not conclude that any of the Food Court Tenants were in arrears of rent within the period December 2016 to October 2017, unless those records are consistent with the expert evidence, in particular that of Mr Hellen. 205 Kebab Express is the next tenant and may be shortly dealt with. Despite the Savills records, which record that this tenant was in credit in July 2017 in the amount of $4,396.68 (and there is no entry for any other month), the actual amount of the credit balance in July 2017 was $7,785.01 and there was a nil balance in each of the months of August, September and October 2017, which is the joint position of the experts. This finding further highlights the unreliability of the Savills records. 206 Mass Nutrition may also be briefly dealt with. The Savills balance is a credit of $5,041.67 in July 2017 and no arrears for any month from December 2016 to October 2017. The experts agree but do note another error in the Savills records. Although $5,041.67 was paid in February 2017, it was not allocated to the tenant account until July 2017. 207 Mumbai Blues is next. Mr Hellen's reconciled balance for July 2017 is an amount of $3,164.63 in arrears, which by October 2017 improved to a credit amount of $8,864.01. In contrast, the Savills records disclose arrears for July 2017 of $8,847.96 and a nil balance in October 2017. In explanation of the differences, Mr Hellen said that he could not be "absolutely certain" but, by the time he had undertaken a complete reconciliation for this tenant, he had $8,864.01 leftover, which he then applied to the October 2017 balance. Mr Gwynne pointed out that this amount was allocated in accordance with a narration on a bank statement from Mr Neil Shah, and the amount does not appear at all in the Savills records. On that basis, Mr Gwynne questioned the assumption made by Mr Hellen. In response Mr Hellen said that it was "very curious" that the amount annotated by Mr Shah was exactly the same amount as the excess sum that he calculated. In resolving this item, I am not satisfied that Elanor has discharged its onus of proving the accuracy of the Savills records. I accept the evidence of Mr Hellen, that having undertaken a complete reconciliation, there is an amount outstanding which he applied to rent. The point is that the Savills records do not explain the difference. 208 Redcliffe Noodle Kitchen is marked as "not known" on the Savills records for the period December 2016 until July 2017. And then in August 2017, the rent account is shown in arrears in the amount of $6,302.87, reducing to an arrears of $5,606.34 in September 2017. In contrast, Mr Hellen calculates that the tenant was in credit in the amount of $16,654.01 in May 2017, and remained in credit, with the balance reducing each month, until October 2017 when the credit was $10,293.43. Mr Hellen explained that the final credit was allocated by him to rental, because it was money that was left over in consequence of his reconciliation, although he did rely on the identification by Mr Neil Shah of two payments of $16,654.01 and $14,063.91 as relating to this tenant. Mr Gwynne points out that he was not able to identify any documentation which supports these allocations. My finding is that despite the fact that Mr Hellen placed some reliance upon the identification of two amounts by Mr Neil Shah, the basis of which was not established in evidence given by him, I am not satisfied that Elanor has established the arrears balances as recorded in the Savills records for August and September 2017 because of my overall finding that these records are not reliable. In any event, the joint position of the experts is that there were no arrears in July 2017, and none before that month. 209 For Sushi Kuni, Mr Hellen substantially revised his initial calculations in the course of the joint expert conclave. He presented two scenarios for this tenant, although when the entire period between December 2016 and October 2017 is analysed and reconciled, the experts agree that the ultimate balance is nil. He adopted different scenarios because there was a change in the tenant, although not the name of the restaurant. The tenant left in April 2017 and the lease was assigned. In any event, as at July 2017, Mr Hellen on the first scenario calculates a credit amount of $12,333.20 and on the second an arrears amount of $11,802.83, in comparison with the arrears amount of $21,088.72 recorded in MRI. However, by September 2017, Mr Hellen calculates that the tenant was in advance on either scenario in the amount of $17,687.64, in contrast to the Savills records which record a credit of $1,613.19. A reason for the differences was identified by Mr Gwynne in that in September 2017 the balance of the previous tenant's security deposit was applied by Mr Hellen which resulted in the alteration from an arrears in the second scenario to a credit. 210 I find for Sushi Kuni, that there were arrears of rental in April, May, June, July and August 2017, but regular payments were being made such that the arrears total did not materially increase within that period: according to the second scenario of Mr Hellen the amount fluctuated between $15,708.59 and $11,139.78 and according to the Savills records the amounts were between $15,708.69 and $19,942.61. What is clear is that despite those arrears, by September 2017 the tenant was in credit on either analysis and, by October 2017, the balance was nil. 211 Thai Me Down is the final tenant. There is no material difference between the experts, save for a timing issue. Mr Hellen has this tenant in credit in the amount of $6,176.50 between February and July 2017, reducing to a nil balance between August and October 2017. The Savills records do not record any amount outstanding prior to July 2017, a credit of $6,176.50 in that month and thereafter a nil balance to October 2017. 212 Where there are material differences between the experts, Elanor also relies on the evidence of Ms Coco together with a large number of documents that are referenced in the first affidavit of Mr McNaughton at paragraphs [99]-[220]. Within that bundle there is contained individual tenant ledger accounts, emails between Food Court Tenants or their representatives and persons responsible for the management of the Centre, tenancy arrears reports for the period December 2016 until October 2017, the Savills receivables ledger and correspondence sent by Savills to various tenants in relation to the asserted arrears position. Elanor contends that, without discrimination, all of this documentation comprises financial records within the meaning of s 286 of the Corporations Act 2001 (Cth) which pursuant to s 1305 have prima facie evidentiary status. 213 There are difficulties with that submission. Section 286 is concerned with financial records which correctly record and explain corporate transactions, financial position and performance so that true and fair financial statements may be prepared and audited. It is doubtful that correspondence between Savills and the various Food Court Tenants relating to claimed rental arrears are financial records within the meaning of this provision. It has been held that transaction documentation such as source material are not accounting records for the purposes of financial reporting as required under the Corporations Act: Van Reesema v Flavel (1992) 7 ACSR 225 (King CJ, Bollen and Prior JJ); Australian Securities and Investments Commission v ABC Fund Managers Ltd [2001] VSC 383; 39 ACSR 443 at [46] (Warren J). Financial records are an inclusively defined term at s 9 which refers to invoices, receipts and orders, documents of "prime entry" and working papers and other documents that are needed to explain the methods by which financial statements are made and adjusted. 214 I am prepared to accept that individual tenancy receivables ledgers are financial records within this provision, together with the tenancy arrears reports. But I do not accept that correspondence between Savills and individual tenants relating to asserted rental arrears, claimed payments and requests for extensions are financial records. The statutory obligation is to keep written financial records that correctly record and explain the transactions, financial position and performance of a company. The provision does not in my view extend to consequential correspondence, which may have been based on information contained in the financial records, nor does it extend to more general correspondence between Savills and individual Food Court Tenants. Correspondence of that character in my view is of a different character to the categories of documents defined as financial records in the Corporations Act. 215 There is significant evidence from Mr Hellen, portions of which are agreed by Mr Gwynne, to the effect that the Savills tenancy arrears reports and individual tenancy receivables ledgers contain material errors. That is demonstrated by my findings above in relation to the arrears position of each of the Food Court Tenants in accordance with the reconciliation undertaken by Mr Hellen. Additionally, Mr Hellen in his expert report of 3 May 2023, identifies numerous instances where money received was not allocated to a tenant ledger in a timely way, the timing of non-cash credits applied to a tenant ledger was not always strictly in accordance with the Incentive deeds, some deposits were omitted entirely, some amounts required for security deposits, bank guarantee requirements and fit out contributions were not recorded in the receivables ledgers for some tenants, Savills did not raise charges or rent free amounts to individual tenant ledgers and some rent abatement amounts were not applied in even monthly amounts. All of this is detailed in paragraphs 2.1.2, 2.1.5, 2.1.8, 2.3.8, 7.5.4 and the analysis that comprises the schedules to the report. 216 In some respects, Mr Hellen revisited and adjusted components of that schedule in his revised schedule that is attached to the joint expert report. Those alterations do not support the overall proposition that the tenant receivables ledgers were accurately maintained by Savills. And it is from those ledgers that the tenancy arrears reports were generated, and the correspondence about asserted arrears was composed. I accept the evidence of Mr Hellen, who succinctly summarised by his overall comment that the Savills accounts "are very messy". It follows that the prima facie evidence status of the Savills records as comprising financial records, is displaced. 217 It follows from my findings in relation to each of the Food Court Tenants based on the joint expert report and concurrent expert evidence and my conclusion to reject the prima facie evidentiary status of some of the Savills documentation, that I reject Elanor's submission that I should go behind entries in the joint expert report, accept components of the evidence of Mr Gwynne or otherwise have regard to and make findings in accordance with the Arrears Schedule analysis prepared by counsel , which is an annexure to the closing submission of Elanor. 218 In conclusion, the result of all of my findings is that of the nine Food Court Tenants, as at 31 July 2017, only 3 were in arrears: Bel Cibo with arrears of $4,216.42, Mumbai Blues with arrears of $3,164.63 and Sushi Kuni which on one scenario was in credit but on the alternative was in arrears in the amount of $11,802.83. I am not satisfied that Elanor has established for the six remaining Food Court Tenants in issue that as at July 2016, there were arrears of more than 30 days for rental or other amounts payable under the leases. 219 Thus, to that extent Elanor has established that the arrears position differed from the July Arrears Report, which brings one back to the basal claim of Elanor: has it established objectively that the Arrears Representations is made out by reference to that report and the oral conduct of Mr Shah in not disclosing that there were rental arrears as at 30 August 2017? This requires analysis of all of the relevant circumstances.

The overall contextual circumstances 220 Elanor's case focuses upon the July Arrears Report and the answers of Mr Shah, and in doing so with respect commits the error of narrowly examining each as a representation in isolation without considering the entire course of relevant conduct between the parties commencing on 2 May 2017, when Mr McNaughton received the Information Memorandum, and ending on 9 September 2017, when the first director signed the circulating resolution to proceed with the acquisition. What McHugh J said in Butcher at [109] (extracted above) as to the importance of considering all of the facts and circumstances is important in this case. 221 I begin this part of my analysis with whether the representations were likely to lead Elanor into error? There is considerable evidence that Elanor took the risk that the Food Court Tenants, individually or as a group, may fail. The commencing point is the Information Memorandum that was emailed to Mr McNaughton on 2 May 2017. It makes express reference to the casual dining precinct floorplan. It provides an explanation of the work that Alceon "is undertaking" by way of improvement to the casual dining area, that a range of food court operators "have been secured" and that the upgrade was expected to be completed in May 2017, with the new retailers expected to be trading by the end of June 2017. Mr Hamilton emphasised each of those facts in his due diligence report and went considerably further. He noted that there were five vacancies based on the tenancy schedule forecast to 1 December 2017. He specifically noted as a threat to the trading performance of the new external restaurant precinct, that it was unproven and that it remained to be seen if it would provide "the hoped for increase in sales and customer traffic". He included an analysis of tenancies at risk, including Sushi Kuni. His report attaches a tenancy schedule analysis as at 1 December 2017. It is based on estimates. 222 Mr McNaughton received a set of updated financial figures by email on 2 August 2017 from Stonebridge. That document makes it clear that four out of the nine Food Court Tenants had not reported sales for the reason that they had not commenced to trade. Five of the Food Court Tenants there recorded had not commenced trading either in May or June 2017 and there is a notation for one that disruption was caused by fit out works. For two, it is noted that the trading period was very brief, either 12 or 14 days of actual trading from which a monthly projection had been prepared. A further document supplied on that day comprised the updated financial summary of the Centre overall with figures forecast to 1 December 2017, including a forecast for the updated total passing net operating income of $3,907,170. Elanor well knew that this was a forecast figure, based on estimates and for that reason might not have been achieved. 223 On 28 August 2017, Mr McNaughton received an email from Mr Schneider of Colliers containing his report on a walk around the Centre that was undertaken that afternoon. He noted that the Centre "is very quiet", that "all food retailers extremely quiet", that some restaurants were not trading and that others were only open for lunch and dinner. His overall impression was that there were "potentially too much food - not enough traffic/customers to support the two precincts". 224 Mr Hamilton, who it must be recalled was an agent of Elanor at the time, accepted in cross-examination that it may take up to 12 months of trading performance to determine whether a newly opened food court tenant was at risk, and that it is very hard to tell from "a couple of months trading figures" whether a newly opened food court tenant would subsequently be at risk. Mr Hamilton accepted that trade data was available in the data room when he undertook his due diligence, and that it disclosed that six out of 14 tenants in the food catering category had sales of three months or less. He accepted that he was aware that the upgrade of the casual dining precinct was anticipated to be complete either in May or June 2017. He accepted that it is very common for building works to be delayed, and that explains why a tenant can be given a rent-free period. Importantly he accepted that he could not identify whether a tenant was at risk of falling into subsequent arrears from one or two months of figures. He said: "it's very hard to tell from a couple of months" and that it may take up to one year to make a judgment on that question. 225 In contrast on this point Mr McNaughton disputed the substance of Mr Hamilton's evidence. He answered "not necessarily" to the question that it would be: "impossible to confidently predict the likelihood of whether a tenant is going to fall into arrears going forward" from a couple of months trading data. He maintained his earlier evidence which questioned the reliability of tenant sales data for small operators, who may take cash out of the business for tax purposes or who may simply choose not to report the actual trading position. He insisted that he only pays regard to the arrears reports to determine whether tenants are in fact paying rent. On his analysis all that he needs to know in order to make an assessment about the likelihood of subsequent default is first, the terms of each lease and second, the arrears reports. 226 I reject this evidence of Mr McNaughton. Not only is it inconsistent with the clear and logically probative evidence of Mr Hamilton, an individual who is very experienced in undertaking due diligence assessments - particularly so for shopping centres, but on the objective question of whether the conduct was misleading or deceptive or likely to mislead or deceive, Elanor is and was at the time a sophisticated commercial property investor. Its officers, Mr McNaughton and Mr Baliva, were very experienced in commercial property transactions. Elanor was provided with access to the data room, together with the question-and-answer facility through which it, and its advisors, could ask specific questions in the event that the information provided was considered insufficient, or ambiguous. No relevant additional questions were asked in relation to the conduct that is claimed to have been misleading or deceptive. Mr McNaughton accepted that he was aware that in the establishment of the content of a data room, the first step required is that the vendor assesses what categories of documents will be included and the time period. Mr McNaughton was aware that additional documents could be requested, as was Mr Hamilton. No relevant requests were made. 227 I reject as implausible Mr McNaughton's evidence that the monthly trade data could not usefully be assessed in order to determine whether a tenant had or was likely to fall into rental arrears. If the tenant is not reporting monthly sales, I find that is a relevant indicator that the tenant is not trading, or not trading very well, and is therefore at risk of rental default. 228 I am not satisfied on the evidence of Mr McNaughton that one can objectively make an informed assessment about the likelihood of a tenant defaulting, by reference only to the terms of each lease and the Tenant Arrears Reports. 229 Mr McNaughton calculated the price and caused Elanor's first expression of interest to be submitted to Alceon on 30 May 2017, in the amount of $54.75 million without making any inquiry about tenant performance or rental arrears. Following rejection of that offer he knew that Elanor had to offer more if it sought to acquire the Centre. Mr McNaughton then set about recalculating the offer price. What is clear is that he based his calculations on the adjusted net passing income rental of $3,907,170 which is the revised amount estimated to 1 December 2017 contained within the updated financial information that he received on 2 August 2017. Expressly and unambiguously, that figure was an estimate based on an assumption that each of the tenancies, save for the five vacant tenancies, would be paying their required rental and outgoings contributions on 1 December 2017. Those estimates did not represent that this amount would be received on 1 December 2017. Having calculated the purchase price by the mechanism of dividing by the yield and multiplying by 100, Mr McNaughton derived a primary purchase price of $55,816,714, from which he then deducted an estimate for future capital expenditure of $500,000, the outcome of which he "rounded down" to $55.25 million. He took that figure and those calculations and discussed each with Mr Baliva. 230 The discussion between Mr McNaughton and Mr Baliva occurred on, or shortly before, 8 September 2017, prior to conclusion of the due diligence period and without the benefit of Mr Hamilton's completed due diligence report. He did so having had the benefit of his discussion with and an oral report from Mr Hamilton on 6 September 2017. What is apparent, is that Mr McNaughton was determined to "press ahead" with the making of a formal recommendation to Elanor's board to acquire the Centre, without being in receipt of the finalised due diligence report from Mr Hamilton. The same observation applies to the finalised valuation report of Mr Kwan which was not provided to Mr McNaughton until 28 September 2017, although I accept that as early as 7 September 2017 Mr Kwan had provided draft calculations to Mr McNaughton. That does not, however, detract from the haste with which Mr McNaughton proceeded to finalise a recommendation to the board for Elanor to acquire the Centre for a very substantial price which is clearly a relevant contextual matter in assessing whether the conduct of Mr Shah in not identifying any of the Food Court Tenants as being in arrears at the 30 August Meeting was objectively misleading or deceptive and whether that conduct in combination with the ambiguous nature of the July Arrears Report was misleading or deceptive. 231 Mr McNaughton made extensive inquiry of the Moreton Bay Regional Council about the redevelopment potential of the Centre, a point which was emphasised in the report to the board. That potential was highlighted in the Information Memorandum. Indeed, it was a prominent and central aspect of the Information Memorandum. Mr McNaughton knew from that document that the Redcliffe Town Centre had been identified for medium and high density residential development, the local government area was the third largest in Australia with a population set to exceed 500,000 by 2031, and that the site had potential for a mixed-use redevelopment in accordance with the Urbis and Bureau Proberts reports. 232 This information caused Mr McNaughton to make direct inquiries of the Moreton Bay Regional Council and Urbis for the purpose of confirming the town planning controls and the redevelopment potential of the site. If six Food Court Tenants had been disclosed as having rental arrears of more than 30 days as at July 2017, that information in the context of a proposed purchase exceeding $55 million and with an annual potential net rental return from all of the tenants of $4,230,309 per annum with significant redevelopment potential, in my view was objectively immaterial. On the assumption that these six tenants were in default, and were paying no rent whatsoever, then according to the evidence of Mr McNaughton, the amounts that he would have deducted from the passing net rent calculation that he undertook are stated in the schedule to the report of Mr Hamilton. For the six tenants now in issue, the base rent payable by each is recorded as: Dizzy Dukes $119,191, Burrito Bar $80,618, Bel Cibo $71,940, Sushi Kuni $90,956, Mumbai Blues $48,530 and Redcliffe Noodle Kitchen $43,262. In total, $454,497. 233 However, as Mr McNaughton further explains, he would not have deducted the total amount of rental payable by the Food Court Tenants in perpetuity. His approach would have been to "add back" the rental from three of the nine Food Court Tenants. Of course, that evidence now proceeds on the incorrect assumption that nine Food Court Tenants were in arrears as at July 2017. However, objectively viewed, $454,497 of rent that might not have been received in the 12-month period, accepting that one or more of the tenancies would most likely have been relet, is an immaterial figure when measured against an annual potential net income in excess of $4 million, or a passing net income of approximately $3.9 million. 234 Mr McNaughton admitted that he did not make any inquiries as to whether any of the Food Court Tenants outside of the casual dining precinct had commenced trading as at 30 May 2017. He said that his approach was to use the income number in the Information Memorandum, to which he then applied a yield. The inference that I draw from this evidence is that Mr McNaughton calculated the purchase price by applying a yield figure to the net passing income, itself based on a forecast as at 1 December 2017, and was unconcerned to inquire as to whether any particular one of the Food Court Tenants was or was not in rental arrears in July 2017. 235 Further, as I have found, Mr McNaughton assumed the accuracy of the Savills records, and in particular the July Arrears Report. He chose not to undertake any due diligence as to the accuracy of the data contained therein. 236 Mr McNaughton in his evidence-in-chief stresses that if he had been aware that one or more of the Food Court Tenants had fallen into rental arrears for a period of more than 30 days, then he would have investigated the position of historic arrears in more detail. Having undertaken that task, he would then make a judgment as to whether the tenant was at risk of abandoning a lease. If that conclusion was reached, he would rule out the rental income from the passing income for the centre. In particular, he emphasised a tenant with a history of rental arrears of more than 30 days would likely cause him to remove the rental for that tenant from his calculations. Of course, that is subjective evidence given by Mr McNaughton on the reliance question. However, I draw attention to it for another purpose. As I have already explained in these reasons, I accept the joint expert accounting evidence of Mr Hellen and Mr Gwynne that none of the Food Courts Tenant were in arrears as at 31 October 2017, save for Burrito Bar in the amount of $11,022.85. 237 Thus, when the entirety of the period to the date of settlement is examined, if there were arrears as at July 2017 for more than 30 days for the eight other Food Court Tenants, any arrears amounts were cleared within three months. Objectively therefore it is difficult to conclude that an arrears amount for a tenant at a single time point was misleading in context. 238 It is also the case that the July Arrears Report and the failure of Mr Shah to disclose any tenancy arrears for Food Court Tenants, must be viewed against the considerable amount of information that was made available to Elanor during the due diligence period. Access was provided to the tax invoices, which, had they been examined, would have disclosed that there were no tax invoices for Dizzy Dukes, Kebab Express, Mumbai Blues and Redcliffe Noodle Kitchen and that only Burrito Bar, Bel Cibo and Sushi Kuni had been charged rent for May 2017. That information was inconsistent with the deferred dates for the commencement of these leases in accordance with the incentive deeds. Examination of this material would have put Elanor on further inquiry. Questions could have been asked; for example, as to why this discrepancy existed and more specific questions could have been asked about rental arrears. The monthly tenancy schedules, which reported whether the tenants had commenced to trade and if so when, as I have found, objectively conveyed that these tenants, together with Burrito Bar and Thai Me Down had either not commenced to trade in accordance with the deferred lease commencement dates in the Incentive deeds, or had commenced trading later than as provided for in those deeds. It also disclosed the limited trading activity for these tenants.

Summary of my findings on misleading conduct 239 From my detailed findings, the following summary is apposite. Elanor was a sophisticated investor, had the benefit of the knowledge and experience of Mr McNaughton, Mr Baliva and Mr Hamilton. It was an experienced acquirer of real estate assets, including shopping centres. Its purpose in acquiring the Centre was to obtain a forecast revenue return for its investors by holding the Centre for the benefit of the investors for three years, during which a mixed-use redevelopment scheme would be developed to maximise the coastal views and site potential. No tenancy risk assessment for the Food Court Tenants was undertaken prior to submission of the first expression of interest on 30 May 2017 for $54.75 million. From the moment that expression of interest was rejected in early June 2017, Elanor knew that to acquire the property it would be required to offer more than $55 million. 240 When Mr McNaughton formulated the second expression of interest price in early August 2017, he was aware of the risk that one or more of the Food Court Tenants may subsequently be in rental arrears. It is not rational to suppose that Elanor believed that there would be no subsequent tenant rental arrears in the event that it purchased the Centre. It was also aware that at the time of the second expression of interest and during the due diligence period that at least seven of the nine Food Court Tenants were unproven traders in that they had either not commenced, or had only shortly commenced, to trade. This information was plainly disclosed in the financial information package that was received by Mr McNaughton on 2 August 2017. That the food court was being redeveloped was also disclosed in the Information Memorandum and the report made by Mr Schneider to Mr McNaughton following his visit to the Centre on 28 August 2017. Also, if Elanor had interrogated the tax invoices that were available in the data room, then it would have been noticed that there were no invoices for four of the Food Court Tenants and that only three had been invoiced for May 2017. 241 Mr McNaughton was particularly interested in the zoning of the Centre and the redevelopment potential. He made detailed enquiries of the Moreton Bay Regional Council and of a town planner with the firm Urbis. As I explain in more detail when dealing with the reliance question, I am satisfied that the redevelopment potential of the site was a material motivation which drove the purchase of the Centre by Elanor, in order to enhance the value of the managed asset. 242 Throughout the due diligence period, Elanor had available to it all of the documentation in the data room. No relevant questions were asked through the question-and-answer facility and no additional documents were sought for the purpose of resolving the obvious ambiguities that were apparent on the face of the July Arrears Report. 243 Elanor was aware, by reason of the knowledge of its agent Mr Hamilton, of the likely trading performance of the Food Court Tenants and therefore that the risk of default could not be assessed "from a couple of months trading figures". This is a risk which attended the transaction. 244 Mr McNaughton and Mr Baliva jointly prepared the recommendation to the board to acquire the Centre without having received the completed financial due diligence report from Mr Hamilton or the finalised valuation report from Mr Kwan. Viewed in the context of the considerable due diligence inquiries that Mr McNaughton undertook in relation to the redevelopment potential of the site, this strongly indicates that whether nine, or one of nine, Food Court Tenants were or were not in arrears as at 31 July 2017 was immaterial to his decision-making. Moreover, the quantum of the rental payable by the Food Court Tenants was approximately 10% of the total gross net income potential of the Centre. And, placed into correct context, the risk profile of the nine Food Court Tenants, in a centre comprising 49 tenancies, anchored by a Woolworths supermarket, confirms the immateriality of the conduct relied upon by Elanor. 245 When all of these circumstances are taken into account and properly considered, I am not satisfied that Elanor has established that in context the July Arrears Report was misleading or deceptive in relation to the arrears position of three of the Food Court Tenants and nor has it established that the answers given by Mr Shah to Mr Hamilton, or more correctly the failure by Mr Shah to disclose the arrears position for ultimately three tenancies, was misleading or deceptive conduct or conduct that was likely to mislead or deceive within the meaning of s 18 of the ACL. 246 The claim fails for this reason. Of course, my conclusion makes it unnecessary that I proceed to make findings about reliance, damage and damages. However, these issues were the subject of very considerable evidence and argument before me and I consider it desirable, in the interests of efficiency, to proceed to determine each of these issues in the event that I am wrong in my conclusion on the question of misleading or deceptive conduct.

Reliance 247 Elanor pleads that in reliance "on each and every one" of the representations, the Conduct and or the Deferral Conduct, it entered into the Option Agreement, exercised the call option and performed the Sale Contract. It then pleads that had it known that the representations, the Conduct or the Deferred Conduct "were incorrect and omitted material information" then either it would have paid less to purchase the Centre or would not have entered into the Sale Contract. It is essential that Elanor proves that it suffered damage (not damages) because of the impugned conduct: s 236 ACL. 248 For the reasons that I have given, one can put aside the reliance claim concerning exercise of the call option and performance of the Sale Contract, as Elanor led no evidence as to what recommendation would have been made to the board, and what decision might have been taken thereafter, if what it now says was the true position had been disclosed following the successful submission of the second expression of interest on 16 August 2017and the exercise of the call option on 23 October 2017, at which point Elanor became contractually bound to acquire the Centre. 249 The only subjective evidence on reliance is from Mr McNaughton. It is concerned with the period prior to the making of the recommendation to the board to proceed with the transaction, that is prior to 8 September 2017. In substance his evidence is that if he had known that one or more of the Food Court Tenants were at risk during the due diligence period, then he would have performed a recalculation of the purchase price by removing those tenants from the net passing income, adjusting the capitalisation figure to reflect a higher degree of risk and by adding back some of the expected rental, on the assumption that three tenancies would likely be relet within 12 months. In those circumstances, he would have discussed the recalculated position with Mr Baliva and would not have progressed the recommendation to the board that the Centre be acquired at the price stated in the second expression of interest. Further, Mr McNaughton would have discussed his recalculated purchase price with Mr Baliva, with the consequence that a new, and lower, expression of interest may have been submitted. In the event that the new offer was rejected, he would not have progressed a report to the board to acquire the Centre at the price stated in the second expression of interest. In those circumstances, and in his experience, the board would not have proceeded to consider the purchase of the Centre and the transaction would have concluded at that point. 250 I exercise caution in relation to this evidence of Mr McNaughton for the well-known reason that retrospective hypothetical evidence of that character is unreliable because it is self-serving: Barnes v Forty Two International Pty Ltd [2014] FCAFC 152; 316 ALR 408 at [184] (Beach J, with whom Siopsis and Flick JJ agreed); Addenbrooke at [500]-[502] (Gilmour and White JJ). Direct evidence from Elanor as to what it would have done on the counterfactual assumption is unnecessary. The surrounding circumstances are usually sufficient to infer reliance on identified misleading or deceptive conduct. As put by Kiefel J in Hanave Pty Ltd v LFOT Pty Ltd (formerly Jagar Projects Pty Ltd) (1999) 43 IPR 545 at 555-556: The question of causation can sometimes be resolved not by direct evidence as to what part a misrepresentation played in the process of entry into contract, but by a court determining what effect must be taken to have resulted. Indeed this course may sometimes be preferable to one which rested solely on evidence later given on the point. In Gould v Vaggelas at CLR 236 Wilson J held that if a material representation is calculated (which is to say, objectively likely: Ricochet Pty Ltd v Equity Trustees Executor & Agency Co Ltd (1993) 41 FCR 229; 113 ALR 30; Henderson v Amadio Pty Ltd (No 1) (1995) 62 FCR 1 at 166; 140 ALR 391) to induce the representee to enter into a contract and the person in fact enters into a contract, a fair inference arises that the representation operated as an inducement, adding that it need not be the only cause. The latter point is now uncontroversial. It suffices for liability if a misrepresentation played some part in inducing entry into contract for the price agreed. That part of Wilson J's judgment was not stated to be an exhaustive rule, but is to be seen as a guide to a question of fact which may arise. A conclusion of inducement may then be reached where a combination of factors, including the quality of the representation itself, goes unanswered. In relation to the representation itself it would need to be of a kind likely to provide that inducement and such that "...commonsense would demand the conclusion that the false representations played at least some part in inducing the plaintiff to enter into the contract" (per Wilson J at CLR 238) … 251 As I have noted, the inquiry is not objective. One is concerned with the conduct of a particular claimant, with the benefit of hindsight informed by what happened: Vairy v Wyong Shire Council [2005] HCA 62; 223 CLR 422 at [124] (Hayne J). Elanor must establish a causal link by analysing the character of the conduct alleged and the whole of the circumstances "bearing in mind what matters of fact each knew about the other as a result of the nature of their dealings and the conversations between them, or which each may be taken to have known": Butcher at [37] (Gleeson CJ, Hayne and Heydon JJ). It is sufficient to establish that the conduct was a cause of the damage - it need not be the only or the substantial cause: Henville at [14] (Gleeson CJ), [59]-[60] (Gaudron J), [106] and [109] (McHugh J), and [162]-[165] (Hayne J). 252 To discharge its causation onus, Elanor must satisfy me that it suffered damage because of the impugned misleading or deceptive conduct of the respondents upon the entirety of the evidence. I must be reasonably satisfied on this issue on the preponderance of probabilities: Palmer v McGowan (No 5) [2022] FCA 893; 404 ALR 621 at [462] (Lee J). 253 The decision to proceed with the purchase of the Centre was made by the board of Elanor at the meeting held in early September 2017. I have set out above the relevant portions of the circulating resolution which I have found was first signed by the director Mr Moss on 9 September 2017. The resolution refers to "completion of appropriate due diligence", when in fact the report of Mr Hamilton had not by that date been received. There is then a reference to discussion between the directors "of the transaction and review of the relevant material provided by management" which is a reference to the due diligence checklist and investment overview that was prepared by Mr McNaughton and Mr Baliva. The directors resolved to approve the establishment of the investment syndicate and "to proceed with the acquisition" of the Centre subject to "finalisation any [sic] required financial arrangements, raising the required equity capital, and completion of all transaction documents in a form satisfactory to Elanor." No evidence was given as to what matters were discussed by the directors. 254 The documentation that the board considered noted, inter alia, that the financial due diligence was "largely in-line with expectations", the demographic due diligence favourably assessed a growing trade area with no significant new competition expected, that draft numbers had been received from Mr Kwan "which support purchase price" and that by reference to Moreton Bay Regional Council, inquiries made by Elanor and the Urbis town planning report that: Zoning and town planning controls confirmed. Moreton Bay Council appear pro development in view Bluewater Square is a landmark site. They would like to see further density on the site and surrounding area. The Redcliffe Activity Centre Strategy is being prepared and should reinforce this. 255 There is then a reference to the Bureau Proberts architectural analysis with the commentary that: Various schemes are proposed that focus on minimising disruption to retail and maximising ocean aspect. 85 apartments above the specialty shops and retention of the commercial podium is the most likely redevelopment scenario. 256 Next follows the investment overview, a document intended to be provided to the prospective investors in the syndicate, which I have set out above. Notably in that document it is recorded that the Centre had been acquired at a yield "representing a discount to prevailing market" and with a forecast return, if sold at the end of the third year and excluding any development potential, of 12% as a base internal rate of return and 14% as a target internal rate of return. Further, an entire page of that document is devoted to the medium-term development potential of the site. 257 There is no reference in those documents to the forecast net operating income (fully leased) or net operating income (passing) figures as contained in the Information Memorandum or as updated in the financial documents provided to Mr McNaughton on 2 August 2017. What was considered as important by Mr McNaughton and Mr Baliva to convey to the board in relation to the calculation of the purchase price of $55.25 million, is that it was based on a yield of 7.7% when fully leased or 7% passing. On those figures, one derives a passing net rental income of $3,867,500, which is less than the figure of $3,907,170, which Mr McNaughton took from the updated financial information. Nor is there any reference in the material provided to the board as to the income payable by individual tenants, more particularly the Food Court Tenants. In combination, the relatively detailed focus on the potential redevelopment of the site, when compared with the absence of attention to the estimated passing net rental income and the absence of any reference to risk that any tenancy may default, is consistent with the fact that the individual arrears position of any of the Food Court Tenants was simply not taken into account as a material factor in the overall assessment at the time. 258 The respondents in submissions place significant reliance on the fact that no director of Elanor was called to give evidence. Alceon submits that this "fundamentally affects Elanor's ability to prove it relied upon the impugned conduct", describing it as an evidentiary gap as to what motivated the directors. In developing its submission, Alceon describes it as "a mystery" what matters motivated the board to acquire the Centre and what would the board have done if it understood either that there was some undisclosed arrears for some of the Food Court Tenants in July 2017 or alternatively that it understood the arrears position as subsequently reconciled by Mr Hellen or adjusted in accordance with the report of Mr Gwynne. Similarly, CPRAM broadly adopts the submission of Elanor, but also submits that an adverse inference should be drawn by reason of the failure to call one or more of the directors. 259 I do not regard Elanor's failure to adduce evidence as to what motivated the directors, by calling at least one of them, as a fatal defect on the reliance question. On the evidence of Mr McNaughton, if one accepts it, he would not have progressed the matter in the form of the report to the board if he had known about the arrears position and, at least on the basis that the case was opened, each of the other representations and the conduct by silence. Acknowledging the difficulties with subjective evidence of that type, if it is accepted then in my view, it answers these points for the straightforward reason that the acquisition of the Centre would not have been discussed by the board at all. 260 However, it does not follow that there should be put to one side and discounted how the board considered the acquisition based on the evidence that has been adduced and how the recommendation to proceed was formulated by Mr McNaughton and Mr Baliva. That is so for several reasons. First, I am not satisfied that if Mr McNaughton and Mr Baliva had known that three Food Court Tenants were in arrears as at July 2017, that they would not have recommended to the board to proceed. For reasons that I have explained that quantum of rental arrears is insignificant in the context of an intended acquisition in excess of $55 million, with 46 other tenants, including Woolworths as the major anchor tenant, with a gross fully let net income estimated to 1 December 2017 of $4.26 million and a net passing operating income of $3.9 million per annum. 261 Secondly, Mr McNaughton was aware that the net rental income figures were estimates to 1 December 2017. It is the very nature of an estimate, that it might not be realised. He was also provided with the revised financial figures including the tenancy reports which disclosed that seven of the Food Court Tenants had no trading history as at August 2017. He was aware that the casual dining precinct had only recently been developed. He knew that it was populated by small business proprietors, not by national retailers. He had the benefit of the report from Mr Schneider that on 28 August 2017, the Centre was quiet and that all food retailers were "extremely quiet". Mr McNaughton was aware that the casual dining precinct was unproven in terms of trading and financial performance. I reject Mr McNaughton's evidence that he could not place reliance upon the monthly trading figures that were provided to him as part of the financial information on 2 August 2017. As I have explained that document clearly conveyed that a number of the Food Court Tenants had either not commenced trading or had only recently commenced trading. The conclusion which I draw from these findings is that Mr McNaughton was prepared to accept the risk that one or more of the Food Court Tenants may be in arrears or may subsequently fall into arrears in the event of acquisition of the Centre. 262 Thirdly, Mr McNaughton plainly knew that to have any chance of acquiring the Centre, Elanor was required to submit an offer at more than $54,750,000. In undertaking his calculations, he applied a yield of 7% which was most favourable in comparison to the comparable sales that he considered. It will be recalled that his list of comparable sales indicated yields for shopping centres in the form of neighbourhood centres in Queensland at between 5.57% at the lower end and 8.97% at the upper. He was very familiar with the Gladstone Square Shopping Centre, with an initial yield of 6.74% and a core market yield of 7.5%. As was explained in the investor overview that formed a component of the report to the board, the 7% yield representing a discount to prevailing market yields. Elanor was plainly keen to acquire the Centre. The first expression of interest was submitted on 30 May 2017 for a price at $54,750,000 without any investigation by Mr McNaughton as to the position of individual tenancies within the casual dining precinct. 263 Fourthly, the forecast net passing income to 1 December 2017 of $3,907,170 (the figure that Mr McNaughton based his price calculation upon) included a net annual rental payable by Woolworths of $1,145,000 and $803,061 payable by the two mini-major tenants. Of the balance, the most substantial portion payable was the total rent for the 28 specialty shops. As I have explained, the quantum of rent payable by the three Food Court Tenants in arrears as at July 2017 is insignificant in the context of these figures. It is also the case that Elanor had been informed through the Location IQ report that it should consider more national brands for food catering to replace Food Court Tenants upon cessation of their leases. I find that this advice formed the basis of the statement which was subsequently made in the finalised version of the investment overview that was provided to prospective syndicate members on 28 September 2017, where it is noted under the heading "syndicate and strategy" that the strategy is to, inter alia, "actively asset manage the Property by implementing repositioning, leasing, tenant remixing and marketing to optimise the income and value of the property." Mr McNaughton gave evidence to the effect that he considered that Elanor could generate a 12% internal rate of return, by undertaking such remixing. 264 On these findings, the arrears position of individual Food Court Tenants was not a consideration which Elanor took into account at the time, more so, the position of three of those tenants. 265 Fifthly, there is the extensive evidence about what investigations Mr McNaughton undertook about the potential mixed-use redevelopment of the site and whether it was a primary motivating factor for the acquisition of the Centre, contrary to the claim that the arrears position of the nine Food Court Tenants was relied upon. I have set out above my factual findings on what was done and when. Mr McNaughton was extensively cross-examined on this issue. He did not mention his inquiries with the Moreton Bay Regional Council, his consideration of the Bureau Proberts report, his consideration of the Urbis town planning report or his direct contact with Urbis in his affidavit evidence-in-chief. In cross-examination, he denied that what attracted him to the Centre was the mixed-use development potential answering: Every asset that we buy, Elanor Investors, we look to get a stable income for our investors, and then hope that there's some upside potential as well. So what attracted us to Bluewater Square was the stable income coming from the tenant base. The upside potential to build something above the Centre, we placed [no] reliance on it, but we hoped that something can happen in the future. You seriously suggest that you placed [no] reliance on this development potential when making that second expression of interest?---Correct. As I said, we - we hope that there will be upside potential. If you look at our information memorandum that we published for our investors, we put no numbers around what that upside potential is. We focus solely on the income. I didn't ask you any question about an information memorandum that you provided to your investors, did I?---No. Please don't volunteer information. Do you understand?---I understand. I'm sorry. 266 At various points in his cross-examination, Mr McNaughton gave answers to similar effect. I reject his evidence. Mr McNaughton was aware from the outset that the site had redevelopment potential, which was stated and highlighted in the Information Memorandum. The fourth page of the document highlights development of mixed use buildings in the immediate vicinity of the Centre, while other pages in the document summarise the town planning controls to the effect that the Moreton Bay Regional Council had identified the precinct "as a key area for potential increased density" and then by reference to the Urbis report highlights the site potential for a mixed use development comprising two buildings of five stories each constructed above the existing development. Montages from the Bureau Proberts report are reproduced in the Urbis report which favourably considers one of the concept schemes to develop and use the site for the purpose of 85 residential units. 267 If Mr McNaughton was only interested in the redevelopment as having some "upside potential", then it is difficult to understand why he then made a direct inquiry of the Moreton Bay Regional Council and Urbis. On 22 August 2017, he emailed Mr Liam Proberts, noting that he had viewed the architectural report in the data room and requested a discussion because "we too feel there is scope to develop the centre into a mixed use scheme in the medium to long-term." On 23 August 2017, Mr McNaughton emailed Ms Lam at Urbis and in substance repeated the statement that he had made to Mr Proberts. On 23 August 2017, McNaughton also emailed the Moreton Bay Regional Council noting that under the current zoning the Centre "would appear to have strong medium to long term prospects to be redeveloped into a mixed-use project" and requested a meeting about strategic planning. He attended a meeting with Mr Proberts on 23 August 2017, the file note for which discloses that there was an in-depth discussion about the potential to redevelop the Centre. He provided the Bureau Proberts schemes by email to the council on 24 August 2017. With Mr Baliva, he attended a pre-lodgement conference with officers of the council on 5 September 2017, and was provided with a detailed summary of the town planning controls, and what would be required for a compliant development. 268 The result of these extensive inquiries was recorded by Mr McNaughton in the due diligence checklist as provided to the board prior to 8 September 2017 and which was then highlighted in the investment overview attached to the board papers and the subsequent more detailed version provided to investors of 28 September 2017. 269 Elanor subsequently lodged an application for redevelopment of the site on 16 December 2022. The description of the proposal is: Request to Change (Other) - Material Change of Use - Development Permit for Shopping Centre, Short Term Accommodation (142 rooms) Function Facility and Bar and Reconfiguring a Lot - Development Permit for Subdivision (1 Standard Format and 1 Volumetric Lot). 270 The application was approved, by grant of a planning permit on 24 May 2023, subject to conditions. 271 I reject the evidence of Mr McNaughton as inconsistent with what he did at the time, the focus if his inquiries and the degree of effort that he expended in investigating the development potential of the site. The respondents also invite me to reject his evidence for credibility reasons being the failure of Elanor to make discovery of documents relating to these inquiries and what is said to be unsatisfactory aspects of some of the evidence given by Mr McNaughton being the absence of any reference to these inquiries in his evidence-in-chief and his answers in cross-examination as implausibly inconsistent with the contemporaneous documents. It is not necessary that I make a direct adverse credibility finding. I approach his evidence by reference to the well-understood limitations that apply to self-serving evidence about reliance: once a litigant asserts that if it had not been misled, the outcome would have been different. I find, based on the contemporaneous documents, that the redevelopment potential of the site was a primary motivating factor to acquire the Centre. I also approach Mr McNaughton's reliance evidence with caution as he is clearly a witness with an indirect interest in the success of this proceeding. 272 Having regard to each of these findings, I am not satisfied that Elanor has discharged its onus that it relied upon the representations or the conduct that it asserts, even if I am wrong in my finding that the respondents did not engage in that misleading or deceptive conduct. It follows that Elanor has failed to establish an essential integer of its claim pursuant to s 236 of the ACL.

Damage and damages 273 The essential distinction between damage and damages was blurred somewhat in the framing and presentation of Elanor's case: cf Hunt and Hunt Lawyers (a firm) v Mitchell Morgan Nominees Pty Ltd [2013] HCA 10; 247 CLR 613 at [24] (French CJ, Hayne and Kiefel JJ). However, as I have noted in closing submissions Mr Fernon accepted that Elanor must prove that the true value of the Centre was less than the price paid. This is a no transaction case and is not a lost opportunity case. In the language of s 236 of the ACL, Elanor must prove that it suffered damage because of the misleading conduct before it may recover the amount of that damages by a compensatory award.

Valuation independence 274 The expert valuation evidence of Mr Kwan is critical to proof of damage. The contract price required to be paid by Elanor was $55.25 million, subject to certain adjustments at settlement, of which the most significant was an allowance in the agreed sum for the rental guarantee for five vacant tenancies, of $650,000. Thus, the amount actually paid was closer to $54.6 million. The precise figure, after allowance for the usual adjustments on settlement was not addressed in evidence. In the expert opinion of Mr Kwan, the true value of the Centre, assuming nine vacant Food Court Tenants, was $49 million by adoption of the capitalisation method. None of these amounts account for GST, which may be safely ignored for my purposes. 275 In contrast, the expert valuation evidence of Mr Goran for the respondents is that the true value of the Centre, in accordance with certain assumptions that he made, was $57 million by adoption of the capitalisation method to which he then added an amount of $1.7 million to reflect the redevelopment potential of the site. 276 Mr Kwan and Mr Goran participated in a joint expert conclave and produced a joint expert report dated 28 June 2023. I received concurrent expert evidence, save that Mr Kwan was separately cross-examined on a substantial issue agitated by the respondents concerning his independence. It is submitted that I should give his evidence no or little weight. The submission goes so far as to say that I should find that Mr Kwan was a partisan witness. It is the issue that I first consider. 277 There is no doubt that Mr Kwan is an experienced, well-qualified professional valuer. He holds appropriate tertiary qualifications and is a registered valuer and a certified practising valuer in Queensland. His current position is as a partner and the Head of Valuation and Advisory in the Queensland office of Knight Frank. He has extensive experience in commercial valuations, including shopping centres. He is an expert by training, study and experience in valuation as required by s 79 of the Evidence Act 1995 (Cth). 278 I have set out above my findings as to the contact between Mr McNaughton and Mr Kwan commencing on 21 August 2017, when Mr Kwan was first engaged to advise Elanor and ending on 21 September 2017 when Mr Kwan provided to Mr McNaughton a copy of his valuation report addressed to the Bank of Queensland. Thereafter, Mr McNaughton and Mr Kwan had further contact. On 2 September 2021, Mr McNaughton had a telephone discussion with Mr Kwan. Mr McNaughton accepted that "essentially" he asked Mr Kwan to "help" Elanor, by which he meant the provision of assistance in order to determine the "potential quantum of loss" that it had suffered by acquiring the Centre. At 4:44 pm that day, Mr McNaughton sent an email to Mr Kwan, acknowledging their discussion, and he provided a list of the nine Food Court Tenants in issue together with the gross rent for each which totalled $701,448. He requested Mr Kwan to: Please have a think about what kind of retrospective indicative valuation you could do for us assuming that they were all vacant. There is of course promo, signage and electricity profit to consider to. 279 "They" is a reference to the nine Food Court Tenants. Mr McNaughton accepted that this request was for the purpose of contemplated litigation. In cross-examination, Mr McNaughton denied that he instructed Mr Kwan to assume nine vacancies in order to "increase the loss". His evidence was that he knew or felt there was a loss but did not understand its quantum. I do not accept that evidence of Mr McNaughton. At the time he was experienced in deriving the purchase price for real property assets, including shopping centres, by the mathematical calculation of applying a market yield to the net passing operating income. If one assumes nine vacant tenancies, then self-evidently, the net passing operating income reduces as does the derived purchase price. He was perfectly able to calculate the quantum of the loss. 280 I pause at this point to record a further finding. The nine vacancy assumption was implicitly stated in the solicitor's letter of instruction to Mr Kwan, to prepare an expert report for the purpose of this proceeding, dated 12 December 2022. Mr Kwan was provided with a copy of the affidavit of Mr McNaughton, and his attention in particular was drawn to Mr McNaughton's identification of "at risk tenants", which is a reference to the nine Food Court Tenants which Mr McNaughton there identified as at risk, and which in his retrospective analysis, he excluded from his calculations. Lest there be any doubt about that, Mr McNaughton accepted in cross-examination that the "same assumption" that he had asked Mr Kwan to make is reflected in the letter of instruction. 281 Mr Kwan responded to Mr McNaughton by email on 15 September 2021. Relevantly he said: Thank you for your patience on this. I've reworked our modelling with the listed tenants assumed to be vacant (as highlighted in orange colour). Assuming the shops are effectively vacant, I think one needs to revisit the market rents for those premises. Their face levels for that time are arguably toward the high side but obviously supported by incentives. I have considered it appropriate to subsequently write these back somewhat, however, the impact is cushioned to an extent by the Vendors Rental and Incentive Guarantee. With the higher vacancy level I also consider that a higher vacancy provision is warranted in the capval whilst lower rental growth would be expected in the short term in the DCF. I have also reviewed sales leading up to your acquisition of Bluewater and based on the evidence would think the yield/capitalisation rate of 7% to be fair even with the higher vacancies, although one could argue that this is underpinned by the Vendor's Guarantee. If there was no guarantee provided then perhaps of softer capitalisation rate at say 7.25% could be argued, however, based on the evidence this could easily be challenged. Anyway, please review and let me know your thoughts….hindsight is a wonderful thing they say…. Speak soon, Cheers 282 There is attached to that email a DCF calculation marked as a draft, which at the discount rate of 7.75% results in a valuation of $52.5 million for the Centre. There is also an alternative capitalisation calculation also marked as a draft which by application of a yield of 7% to an adjusted net core income of $3,747,605, results in a figure of $53,537,221 before "below the line" adjustments. Following those adjustments, the derived valuation that is adopted is $52.5 million. 283 Mr McNaughton responded to Mr Kwan by email on 15 September 2021. He requested that Mr Kwan "consider" a scenario with no rental guarantee and he questioned whether the incentives and capital expenditure may need to be greater "to fill these vacancies given usage may need to change". Mr Kwan responded on 17 September 2021. He stated that he had taken "a more conservative view with regards to [capital expenditure] and vacancy provisions" from which he then deduced a new valuation based on the DCF model of $51 million at a discount rate of 7.75%, which then corresponded with his capitalisation valuation by adoption of a rate of 7% as applied to an adjusted net core income of $3,747,419, to produce a figure of $53,534,559 before below the line adjustments reduced this figure to $50,868,104, from which he then adopted a figure of $51 million. 284 Mr Kwan received his formal engagement as an expert witness in this proceeding from Elanor's solicitor by letter of 12 December 2022. The letter relevantly provides: Instructions 1. We confirm we act for Elanor Funds Management Limited (Elanor) in respect of its dispute with Alceon Pty Ltd and CPRAM Pty Ltd which is the subject matter of the above proceedings in the Federal Court of Australia (Proceedings). The Proceedings concern an allegation by Elanor that it was misled into acquiring the Bluewater Square Shopping Centre (Centre) for a price in excess of $55 million. We understand that you provided advice and assistance to Elanor in relation to the determination of the purchase price paid on 1 November 2017. 2. For the purposes of the Proceedings we require your expert opinion as to fair market value of the Centre as at 1 November 2017, having regard to assumed changes in the net passing income of the Centre arising from the removal of rental income from what is alleged to be 'at risk' tenants. 3. The relevant 'at risk' tenants and their rental obligations are the subject of an Affidavit sworn by Blake McNaughton in the Proceedings. Copies of that Affidavit and Exhibit BMl to the Affidavit are delivered with this letter. In particular we draw your attention to paragraphs [238) to [243) of the Affidavit. 4. You will note from those paragraphs that Mr McNaughton asserts what he considers to be a fair purchase price for the Centre once the relevant at risk tenant rental income was removed. It is also apparent from those paragraphs that Mr McNaughton's view is that the relevant yield return to Elanor from the Centre should be increased from 7% to 7.5% having regard to the at risk tenants. 5. In providing your opinion you are instructed to consider the material contained in Mr McNaughton's Affidavit, in particular his identification of at risk tenants. Your opinion should consider whether or not the rental from such at risk tenants should be removed from the net passing income in assessing the fair market value of the Centre. You should also consider whether, by reason of the number of such at risk tenants or any other reason, it is appropriate to increase the relevant yield from 7% to 7.5% or some other figure. 6. On having considered the above matters, and any other matter you consider appropriate, you are instructed to provide us with a report as to the fair market value of the Centre as at 1 November 2017. 7. Given that you have already provided advice to Elanor in respect of its acquisition of the Centre, it cannot be said that you are truly an independent, arms-length expert. Nevertheless, we ask that you prepare an expert report as if you were independently retained. In that sense, you must consider that your ultimate duty is to the Court and provide a true and fair expert report in accordance with that duty. For that purpose, we have attached a copy of the Federal Court of Australia Harmonised Expert Witness Code of Conduct (Code of Conduct). Your report must acknowledge that you have read and agree to be bound by the Code of Conduct. 285 It should be noted that the letter concludes with an emphasis that "your ultimate duty is to the Court to provide an independent report based on your experience." 286 Mr Kwan prepared the report as engaged. It is dated 22 December 2022. In the covering letter, Mr Kwan: (1) Provided an executive summary that in modelling the nine "at risk" Food Court Tenants identified by Mr McNaughton and hypothetically treating each as vacant as at 1 November 2017, with subsequent adjustments, resulted in a derived valuation of the Centre as at that date of $49 million, "supported by sales evidence around the time of the transaction"; (2) Accepted that the relevant "at risk" tenants with the nine Food Court Tenants identified in Mr McNaughton's affidavit and considered how their subsequent vacancies would have impacted Mr McNaughton's considerations of the relevant yield return; (3) Confirmed that he had read and agreed to be bound by the harmonised expert witness code of conduct; (4) Acknowledged that he was instructed to treat the nine Food Court Tenants as "at risk tenants to be treated as vacant shops within the valuation modelling"; (5) By excluding the nine Food Court Tenants, the gross market income reduced from $5,007,350 per annum to $4,929,872 per annum and the net income before below the line adjustments from $4,017,708 per annum to $3,939,992 per annum; (6) The higher degree of risk from the nine food court tenant vacancies resulted in application of a higher vacancy allowance of 3.50% rather than 3%, a softer capitalisation rate of 7.25% instead of 7%, an increase in the letting up period for vacant shops from 12 months to 18 months, an increase in total incentives for vacant shops from 15% of the lease term to 20% of the lease term and an increase in anticipated capital expenditure to $750,000; (7) The net effect of each of these adjustments is to reduce the capitalised value of the Centre to $48,893,978 as at 1 November 2017. 287 The revised capitalisation calculations of Mr Kwan attracted considerable attention in his cross-examination and in the joint expert evidence report and expert evidence conclave. It is also necessary to compare that calculation with that of Mr Goran. The appropriate place to do so is in my consideration of the expert valuation evidence. 288 The cross-examination of Mr Kwan on the question of his independence, elicited the following evidence. Mr Kwan requested that he be provided with a copy of the signed Heads of Agreement in order to be informed as to the purchase price for the Centre. Although he was criticised for doing so, as compromising his independence from the outset, I accept Mr Kwan's explanation that it was necessary for him to review a copy of the contract of sale conformably with the standard instructions that his firm receives from banks, and in particular in this case the Bank of Queensland. Mr Kwan denied that he understood Mr McNaughton had requested him to provide a valuation to justify the purchase price, explaining that he needed to understand the price in order to include it in his valuation report to the bank and that for a professional valuer, it is necessary to understand the purchase price for a property that is the subject of a valuation request, particularly for the purposes of bank finance. I accept Mr Kwan's evidence on those matters. 289 Mr Kwan explained that generally the valuation prepared for mortgagee purposes cannot be higher than a contracted purchase price but may be lower if the valuer disagrees with the purchase price. That is because, generally speaking, a bank does not accept a valuation that is greater than the purchase price, if the bank is to be the mortgagee. I accept that evidence of Mr Kwan. 290 Mr Kwan was next taken to his email to Mr McNaughton of 7 September 2017, to which he attached his draft calculations. When it was put to him that it was "no coincidence" that he had valued the Centre in the same amount as the purchase price pursuant to the contract, he said that in his opinion the contract price represented fair value. He acknowledged that he was aware that this is the figure that Elanor required to justify an application to the bank for finance. 291 He was then taken to the earning capitalisation figure in his draft calculations of 7% and the suggestion made by Mr McNaughton that the capitalisation rate should be higher. Mr Kwan accepted that adoption of a capitalisation rate is a matter for the valuer and not the client and acknowledged that it is "the biggest driver" of the derived valuation. Mr Kwan acknowledged that selection of the capitalisation rate is something that he does by application of his special expertise as a valuer, but then acknowledged that his confirmation that he would "look at" the capitalisation rate reflected the fact that at the time he sought to assist Mr McNaughton. Specifically, it was put to him that revisiting the capitalisation rate reflected willing assistance that Mr Kwan was prepared to provide to Mr McNaughton at the time. However, he denied the suggestion that Mr McNaughton's preference for the capitalisation rate was irrelevant to his function as a valuer, stating that his task was to hypothetically put himself in the position of a buyer in order to determine what that hypothetical buyer would do in the marketplace at the time. To that extent, the capitalisation rate referred to Mr McNaughton was relevant. When further pressed on this issue, Mr Kwan was insistent that Mr McNaughton's preference was not irrelevant, because it is the buyer's "prerogative" to express a preference for the rate. He added that Mr McNaughton's rate was within the degree of tolerance that one normally applies in working out a market capitalisation rate. However, he then accepted the direct proposition that for the purpose of preparing his valuation for the Bank of Queensland, what Mr McNaughton "wants is irrelevant". 292 I find in accordance with this evidence that Mr Kwan was influenced in his analysis by Mr McNaughton. 293 Mr Fernon submits I should not conclude that Mr Kwan acted at the direction of Mr McNaughton, in his selection of the capitalisation rate and the making of the below the line adjustments to the figure for future capital expenditure. I accept that submission, but it does not answer my finding that the willingness of Mr Kwan to accede to the comments, suggestions and views of Mr McNaughton is a matter that is relevant to my assessment of his independence as an expert witness in this proceeding. Relatedly, I am of the same view in response to Mr Fernon's submission that Mr Kwan removed an amount of $500,000 from the anticipated future capital expenditure, which Mr Kwan explained was otherwise incorporated into the capitalisation rate with the consequence that any change to the capital expenditure figure is correspondingly reflected in the capitalisation rate. Whilst I do not find that these adjustments were inappropriate for a valuer to make, Mr Fernon's submission does not answer the obvious point that each of these adjustments were within the province of Mr Kwan's expertise and for the purposes of his role in this proceeding, the fact that he was influenced by Mr McNaughton is relevant to his independence as an expert witness in this proceeding. 294 Mr Kwan was next taken to his email to Mr McNaughton of 11 September 2017, to which he attached revised valuation calculations, particularly by adopting a "softer" capitalisation rate, which for present purposes means a higher figure that results in a lower outcome. What Mr Kwan did was to increase the capitalisation rate by 0.25%, which decreased the core value by $1,249,359. He then revised some of the below the line adjustments, most significantly the letting provision which he adjusted by approximately $350,000 and the forecast capital expenditure figure which he adjusted to $500,000. Despite these adjustments, his valuation did not materially alter. Having taken Mr Kwan carefully through these adjustments, it was directly put to him that he had reverse engineered the numbers so as to preserve the valuation outcome, to which he answered: "not entirely, no." When he was further pressed on that proposition, he explained that he thought that the changes were "not unreasonable, because a lot of buyers would have - in the past - would ask the same thing. As the long the [sic] value doesn't change, it's how you reflect the risk and where within the valuation model." The problem with that answer is that in the calculations provided on 7 September 2017, Mr Kwan made provision for $500,000 worth of future capital expenditure, but on 11 September 2017 excluded it explaining that it is "implicitly within the higher risk of the capitalisation rate" of 7%. He then accepted that he made that change because Mr McNaughton had requested it. 295 Mr Fernon submits that I should not find that Mr Kwan reverse engineered the outcome, as directed by Mr McNaughton. It is not necessary to make that finding as, once again, whilst I accept Mr Kwan's explanations, his answers reveal that he was prepared to make adjustments to his valuation calculations at the request of Mr McNaughton, which tells against his ultimate independence as an expert witness in this proceeding. 296 Mr Kwan was next asked a series of questions about his independence in providing a valuation for the Bank of Queensland. He acknowledged, properly, that he understood that the bank engaged him to prepare an independent valuation based on his own inquiries. He acknowledged that he had in effect resolved the valuation of the property with Mr McNaughton before providing his report to the bank. When challenged that his valuation to the bank was not independent, he denied that proposition and denied that the outcome was the result of the collaborative process between himself and Mr McNaughton, explaining that he "took on board" the views of Mr McNaughton. Once again, he denied that he "reverse-engineered" the numbers to ensure that Mr McNaughton was provided with the figure that he required. He accepted that he owed a paramount duty to the bank at the time. I accept Mr Fernon's submission that Mr Kwan did undertake independent inquiries by reviewing documents in the data room in order to provide his valuation to the Bank of Queensland, and to that extent proceeded independently. 297 However, despite Mr Kwan's evidence, I find that his valuation opinion prepared for the Bank of Queensland was significantly influenced by the instructions conveyed to him by Mr McNaughton, the adjustments that Mr McNaughton requested and the accommodation of those adjustments by Mr Kwan. This is another matter what detracts from Mr Kwan's independence as an expert in this proceeding. 298 I pass over a series of questions put to Mr Kwan relating to a claim made by Elanor for legal professional privilege over proposed or draft valuation reports of Mr Kwan prepared for this proceeding, together with questions that were put to the effect that Mr Kwan initiated contact with Mr McNaughton in 2018 in order to provide assistance in litigation proposed against the respondents. That material, and the evidence given by Mr Kwan, is of no real assistance to my assessment whether Mr Kwan lacks independence as an expert witness. 299 The next relevant series of questions commence with the email from Mr McNaughton to Mr Kwan of 2 September 2021, which requested that Mr Kwan undertake a "retrospective indicative valuation" assuming that each of the nine Food Court Tenants were vacant as at 1 November 2017. Mr Kwan denied that he understood at that time that he was being requested to produce a valuation lower than his 2017 opinion based on the assumption of nine vacancies. He acknowledged however that the consequence of that assumption is to produce a lower valuation. He was pressed further on this issue as follows: And you understood, didn't you, that Mr McNaughton wanted you to produce a lower valuation on account of assuming these nine tenancies were vacant. Isn't that right?---Yes. Well, we wanted some sensitivities as to what the market value of the shopping centre would were [sic] these nine tenants considered to be vacant. Well, he doesn't refer to the word, "sensitivities," in this email, does he?---No. He then came back to you, on page 1244, on 7 September 2021, effectively chasing you up. You agree?---Yes. And he wanted to know what you could do "for us". Correct?---Yes. He was, in effect, asking you for your assistance, wasn't he?---Yes. And that was assistance to produce a lower valuation than you had in 2017, as you understood it. Correct?---Yes. That's the aim. 300 These questions and answers considerably and adversely impact upon my acceptance of Mr Kwan as an independent expert witness. What is clear is that he understood, before he was formally engaged by Elanor's solicitor, that the purpose of his engagement was to assist Elanor in litigation by deriving a lower figure than the purchase price for the Centre. 301 Mr Kwan was then taken to his email to Mr McNaughton of 15 September 2017, which attached his retrospective valuation calculations. He accepted the direct proposition that what he was "simply doing" was recalculating the valuation by applying the assumptions required by Mr McNaughton, and that he did not himself undertake any sensitivity analysis. He was then taken to Mr McNaughton's response by email of 15 September 2017, at which point he confirmed that he understood that Mr McNaughton was requiring further adjustments, being no rental guarantee on additional tenancies and a possible increase to the capitalisation rate. He accepted that these adjustments would further result in a decrease in value. He also accepted that his adopted rental guarantee figure caused the valuation to be higher than would otherwise have been the case, which he then adjusted in order to lower the valuation. 302 Mr Kwan was then requested to compare the calculations he provided to Mr McNaughton on 15 and 17 September 2017, respectively. He was taken through the differences, primarily adjustments from $511,430 and $137,750 to zero of the present value of the vendor two-year rental guarantee and adding $750,000 to the forecast capital expenditure, from zero. He agreed that the effect of these two changes is to reduce the valuation from $52.5 million to $51 million. Mr Kwan's attention was then drawn to a number of emails, the subject of a claim to legal professional privilege, which at least disclosed an exchange of correspondence between Mr McNaughton and Mr Kwan in September 2021 as laying the premise for the following series of questions: And as at that date, you accept this: that you and Mr McNaughton have exchanged ideas about how the valuation that you produced in 2017 could be decreased on account of an assumption involving the nine food court tenants being considered vacant; do you accept that?---The second - the subsequent engagement was to run some scenarios testing, which is effectively sensitivity testing for Mr McNaughton's understanding of what the market value of the shopping centre may have been had the nine vacancies been treated as vacancies at the time of acquisition. You refer to a sensitivity analysis, but it wasn't an analysis undertaken by you of your own volition, was it?---No. He engaged me to - to look at it. Yes. And you understood at all times that the purpose for which he was asking you to revisit the valuation was to see if you could not produce a lower valuation on account of the assumption concerning the nine food court tenants being vacant; that's right, isn't it?---Well, that, I guess, was his intent. Yes. Yes. And the aim of the exercise was to see how low the valuation could get; you accept that?---Yes. 303 These questions and answers in my view make it clear that Mr Kwan did not act as one would expect an independent expert witness to act in the preparation of a valuation opinion for the purposes of this proceeding, despite the submissions of Mr Fernon. Mr Kwan well understood that Mr McNaughton was requesting him to make a number of adjustments to his valuation in order to produce a lower result. Plainly he was aware that his valuation opinion, so adjusted, would be used by Elanor in order to consider the framing of its case against each respondent. Rather than acting truly independently, Mr Kwan was an active participant in assisting Elanor by provision of, what was to Elanor, an acceptable valuation figure - one that was considerably less than the purchase price that it had paid for the Centre. 304 Mr Kwan's attention was next addressed to the Expert Witness Code of Conduct and his letter of engagement from Elanor's solicitor, which followed a further exchange of emails between Mr McNaughton, Mr Kwan and the solicitor commencing in the week of 18 November 2022. In all, 24 emails (each the subject of a claim for legal professional privilege) were exchanged before the letter of engagement of 12 December 2022. Mr Kwan was pressed as to whether the assumptions as set out in that letter were the same as the changes that Mr McNaughton had earlier requested him to make to his draft valuations. He confirmed they were. He agreed that the "inference" that he drew from the letter of engagement was that he should increase the capitalisation rate, and not re-evaluate it for himself. Despite this evidence, Mr Kwan maintained that he was always independent and impartial in the preparation of his expert opinion in this proceeding. His evidence was: …And you made the point earlier, didn't you, that you considered your paramount duty at the time of preparing the report for the bank was to assist the bank?---Yes. You didn't have any duty to the court at that point, did you?---No. Who's your paramount duty to now in respect of the report that you've produced in response to this letter of instruction?---To the court. Not the bank, is it?---No. So I suggest to you you [sic] couldn't be truly independent and at arms' length and fulfill your duty to the court in preparing your report for these proceedings. You accept that?---That could be perceived. Yes. Well, that's because it's the truth, isn't it?---The court wants my professional opinion, and if I can provide that impartially then I'm happy to provide that. You don't seriously suggest you can provide an impartial opinion now, can you - do you?---It's a professional, and I've always been impartial. It's my role to be impartial. You've been inextricably linked with the valuation of this property on behalf of Elanor since 2017. Isn't that right?---Correct. Well before these proceedings commenced, correct?---Yes. And long before Mr Deutsch provided you with a letter of instruction in December of 2022, correct?---Yes. 305 Mr Fernon submits that I should find Mr Kwan's evidence that as a professional, it is his role to be impartial and at all times he has so acted in this proceeding as accurately reflecting his position, and presumably the objective facts. 306 I accept that to be the honestly held view of Mr Kwan, but objectively I do not accept that he is a truly independent and impartial witness in this proceeding. The effect of his prior involvement with Elanor, his provision of draft opinions to Mr McNaughton prior to his engagement as an independent valuer for the Bank of Queensland and the subsequent provision of the revised opinion for Mr McNaughton, in anticipation of this proceeding, corrodes his independence and impartiality. 307 There are two further relevant matters. Mr Kwan signed a response affidavit on 21 June 2023, specifically to address Mr Goran's valuation. In it he contrasted his valuation experience in Queensland, with that of Mr Goran. He said: "I am very familiar with persons who also perform valuations in retail centres. In the course of my time performing such valuations, I have never encountered [Mr Goran's firm] previously providing valuation evidence of retail centres. I have not heard of [the firm] prior to reviewing the… report." When questioned about this evidence it was put to him that his intent was to "belittle or denigrate" Mr Goran's firm, to which Mr Kwan responded: "the other side would be doing the same to me." Unsurprisingly, Mr Kwan's attention was then directed to that part of the Expert Witness Code of Conduct which provides that an expert witness is not an advocate for a party. Mr Kwan denied that he was attempting to belittle the character of Mr Goran's firm, but nonetheless accepted that he was hardly paying a compliment to the firm. That statement in my view was unnecessary, was not a matter for Mr Kwan to include as part of his reply evidence and is a further basis for questioning his independence. 308 The other matter concerns evidence that he gave as part of the joint expert evidence session. Mr Goran did not become a registered valuer in Queensland (he was first registered in NSW) until 9 June 2023. After that was put to Mr Goran by Mr Fernon, Mr Kwan put a question to Mr Goran, which he framed as not being personal but: "how do you practice as a valuer if you're not registered up here?" Mr Goran gave the answer that he has practised in most States and Territories in Australia and has undertaken work in Queensland for clients based interstate. Mr Henry, in later questions took this up with Mr Kwan. He put to him that the question was indeed personal, to which Mr Kwan answered that it was simply "a question of curiosity". Very direct questions were then put to Mr Kwan that his curiosity demonstrated his role as an advocate for Elanor. Despite Mr Kwan's denial, that is the inference that I draw. Mr Kwan well knew of Mr Goran's qualifications by reason of the fact that they are attached to his CV which forms a component of his expert valuation report. He was perfectly content to engage with Mr Goran at the joint expert conclave and then to prepare and countersign the joint expert report. It is not a matter for Mr Kwan as to whether Mr Goran was or was not registered in Queensland as a valuer as unquestionably, he is a qualified and very experienced one. 309 Mr Henry submits that I cannot give any of the valuations prepared by Mr Kwan credence as they do not represent "an impartial expression of expert opinion as to the [Centre's] fair market value" at various points in time. He accepts that s 79 of the Evidence Act "does not require untrammelled independence or impartiality" (Rush v Nationwide News Pty Ltd (No 5) [2018] FCA 1622 at [29]-[36] (Wigney J)), but nonetheless I should conclude that Mr Kwan was not a truly independent, arm's length expert which significantly affects the weight that I should give to his various expressions of opinion. Mr McQuade submits that Mr Kwan was a partisan witness and that I should give no weight or alternatively very little weight to his opinions. In contrast, Mr Fernon submits that despite the "significant and sustained attack" made on the credit of Mr Kwan, such attack was misguided and that I should conclude from the entirety of his evidence that he was a witness of "truth, reliability, credibility, impartiality and, most importantly, expertise." 310 What my analysis of the evidence and my findings reveal, is that Mr Kwan has been closely involved with Mr McNaughton in the preparation of several valuation opinions for the Centre, commencing well before his engagement as an expert witness in this proceeding, has regularly provided draft calculations for review and comment by Mr McNaughton and, largely, has readjusted his calculations as suggested by Mr McNaughton. I do not personally criticise Mr Kwan for accepting engagement as an expert witness in this proceeding for two reasons. One is that this is the first occasion on which he has ever given expert evidence in a legal proceeding and the other is that Elanor's solicitor chose to engage Mr Kwan despite the fact, recorded in the letter of engagement, that: "Given that you have already provided advice to Elanor in respect of its acquisition of the Centre, it cannot be said that you are truly an independent, arms-length expert." The following sentence, doubtless intended to ameliorate the difficult position that the solicitor placed Mr Kwan in, that "nevertheless" he should proceed "as if you were independently retained", fails to address the fundamental paradox that was created for Mr Kwan. 311 How then should I approach Mr Kwan's evidence? There is no proper basis to reject it in its entirety. As I have said, Mr Kwan is a well-qualified, experienced, and professional valuer. I do not doubt that he honestly approached the various tasks that he was entrusted with first by Elanor, and then by Elanor's solicitor. He participated in the joint expert conclave with Mr Goran and produced the joint expert report, which I find to be a most useful distillation of the issues and well-reasoned account of the differences between the valuers. In that report, there are many matters of agreement that are recorded including the valuation methodology, the gross market rental income, the adjusted net income and, importantly, the capitalisation rate. In carefully observing Mr Kwan's evidence, I detected no evasiveness - in fact he answered questions in a straightforward manner, and repeatedly made admissions as to the extent to which he took into account Mr McNaughton's views. 312 The key matters of difference between Mr Kwan and Mr Goran relate to an assumed capital expenditure provision, a vacancy allowance, reversions, a letting-up provision on vacancies and whether an amount should be allowed for the development potential of the site. 313 I have concluded that I will exercise caution before accepting the evidence of Mr Kwan, where it differs from Mr Goran primarily because of his prior involvement with Elanor and his multiple exchanges of correspondence with Mr McNaughton, which undermines his true independence as an expert witness. In my view his involvement has impaired his ability to approach the retrospective valuation question uncritically and independently. There is also a question, that I address in detail below, about whether Mr Kwan accepted the nine vacancy assumption uncritically and without assessing all the evidence. 314 In contrast, no question of lack of expertise or independence is raised in relation to Mr Goran. His firm, Field & Kay, was jointly engaged by the solicitors for the respondents on 6 April 2023. He jointly authored the report of 26 May 2023, with Mr Field. Neither had any prior involvement with the parties to this proceeding or valuation of the Centre. Mr Goran impressed me as a conscientious, well qualified and experienced valuer. He has over 30 years' experience in the property industry in Australia and over 25 years' experience in property valuations. He is a fellow of the Australian Property Institute, a certified practising valuer and a specialist retail valuer.

The expert valuation evidence 315 As noted, Mr Kwan and Mr Goran participated in a joint expert conclave before a registrar of this Court on 28 June 2023 and subsequently produced the joint expert report dated 28 June 2023. Before turning to that report, it is important to understand the differences in the capitalisation valuation between Mr Kwan and Mr Goran, noting that each agrees that the capitalisation methodology is appropriate. 316 Mr Kwan's calculations are: 317 Mr Goran's calculations are: 318 To the figure of $57 million Mr Goran separately adds $1.7 million "which reflects the additional development potential as per the Urbis Report" to derive a market value of $58.7 million as at 1 November 2017. 319 I will examine each of the differences which are material to the outcome in due course. However, I commence with the matters of agreement as set out in the joint expert report. They are: 2. Valuation Methodology The parties agree that both the 'Reversionary Yield' valuation approach undertaken by KFVAQ and the 'initial Yield' approach applied by F&K are appropriate. Whilst the approaches are subtly different in terms of their layering of risk to various income components, if applied correctly, theoretically both should deduce similar outcomes . 3. Gross Market Rental Income The Gross Market Rental Income from the retail shops including the 5 acknowledged vacancies whilst slightly different with KFVAQ at $4,929,872 pa vs F&K at $5,080,590 pa is within circa 3.5% of each other and is largely due to the respective valuers opinions of market rental value for the additional 9 shops alleged to be vacancies . 4. Adjusted Net Income The Valuers can agree that the Net Income difference is attributed to the adoption of an ongoing vacancy allowance of 3.5% by KFVAQ and no allowance by F&K. Were F&K to adopt the same, the differences in the property's assessed net income would then be KFVAQ's at $3,757,521 pa versus F&K's at $3,750,748 pa or a difference of only $6,773 . 5. Capitalisation Rate The Valuers are in agreement that a capitalisation rate of 7.25% to be fair and reason able for Bluewater . 6. Other Income The Valuers are in agreement on the quantum of Other Income. KFVAQ acknowledges that the application of a higher capitalisation rate of 15% by F&K for Other Income could be equally acceptable and in fact results in less value being attributed to this source of income . 7. Vendor's 2 Year Rental Guarantee The Valuers agree that the Vendor's Rental Guarantee of $650,000 is an arbitrary sum which has been negotiated by the Vendor and Purchaser. Such guarantees are generally paid out at settlement or the purchase price adjusted by the same. The removal of Vendor' s Rental Guarantee in the KFVAQ modelling allows like for like price and metrics comparison with other retail transactions . 8. Capital Expenditure Provision A mutual understanding was reached in why KFAVQ provisioned $750,000 of Capital Expenditure (including $250,000 Stabilisation Allowance) in its modelling. It was largely explained that were Bluewater be acknowledged to have a further 9 vacant shops then a capital provision would be appropriate to either allow for make-good of vacated premises or any Lessors Works to reconfigure premises etc. Both are time consuming and expensive undertakings and that some new start-up tenants to the centre may require financial support from the Landlord . F&K whilst agreeing that there would be capital expenditure required to make good the vacant tenancies however, there are no documents to support $750,000 as being the amount of capital expenditure at the date of valuation. Of note there are bank guarantees and / or bonds in place to subsidise any capital required to make good these areas.

320 It is to be noticed that although the capital expenditure provision is dealt with as a matter of agreement, there is a difference between Mr Kwan and Mr Goran. Mr Kwan deducted an amount of $750,000 which he calculated as the net present value of future capital expenditure in the first year. Mr Goran did not make an allowance of this character, although he accepted in the joint expert report that some future capital expenditure would be required to "make good the vacant tenancies". However, he did not agree with the amount allowed for by Mr Kwan because there were no documents to support the calculation of the amount and, in his view, the bank guarantees and/or bonds for each tenant could be applied to at least "subsidise any capital required to make good these areas". 321 It will be recalled that Mr Kwan increased the allowance for capital expenditure from nil to $750,000, following receipt of the email from Mr McNaughton on 15 September 2017. In evidence I asked Mr Kwan how he derived his figure. He said that it was a discretionary sum, explaining that a lot of buyers will consider future capital expenditure by way of deduction from a purchase price. When asked to explain why the figure was $750,000, and not $740,000 or even $700,000, Mr Kwan confirmed that he did not have any calculations to support his figure. Later, when pressed by Mr Henry to explain the basis for his figure, he denied that it was a guess, insisted that it was an opinion and when ultimately answering the question: "you made it up, didn't you?" Simply answered: "well, it's my opinion, yes." 322 This adjustment is a substantial below the line deduction. Mr Kwan provides no evidence as to how he derived the figure, which is not only a matter which goes to the reliability of his evidence. It is a figure that is built upon Mr McNaughton's suggested allowance. In contrast, Mr Goran's evidence is logical and supported by cl 9.2 of the standard form leases, which permits the landlord to apply the bank guarantee "against any obligation or liability of the tenant." Making good a tenancy following breach by a tenant in order to relet, is an expenditure of that character. 323 For the reasons that I have given in my assessment of independence, I do not accept this component of Mr Kwan's evidence and I accept the evidence of Mr Goran if an allowance of this type is to be made, there should at least be a principled and explained basis for it. I also reject Mr Kwan's evidence because the basis for the estimate was not explained. 324 I now turn to matters of material disagreement. The first is the vacancy allowance. Mr Kwan made an allowance of 3.5% for "non-major tenant income" which he deducted from the estimated net annual income in the amount of $132,471. Unless one understands the capitalised effect of that deduction, it might not seem to be a material difference. However, when it is capitalised in perpetuity at the rate of 7%, the amount becomes $1,827,186 (noting that Mr Kwan corrected as wrong the figure of $3,784,885 in the joint report). Mr Kwan explains in the joint expert report that the allowance "loosely equates to 1 larger shop or 2 smaller shops assumed as being permanently vacant". His explanation continues by comparing it with the actual vacancy rate for the Centre at the time of settlement, being five vacancies, which was 7.29%. If one assumes an additional nine vacancies, the rate increases to 22.61%. 325 In contrast, Mr Goran opines that if a vacancy allowance is applied, then it should also be applied to the analysis of the comparable sales evidence, which is problematic because the financial figures of a shopping centre are not readily available and for that reason the allowance "cannot in the majority of cases be applied to the sales evidence" and should therefore be disregarded. In his opinion the correct method for dealing with "imminent vacant tenancies" is to deduct from the capitalised value a letting up allowance, calculated by reference to the lead time to secure a new tenant, and the associated costs of leasing. Further in his opinion: "when a letting up allowances has been made within the financials of those vacant or imminent vacant tenancies, to also apply a vacancy allowance would be a case of 'double dipping'". On Mr Goran's calculations, his letting up allowance (assuming nine vacancies) is $386,800, calculated over a period of 18 months, plus agents' fees of $46,416 and a four month incentive of $171,911: in total a deduction of $605,127 which contrasts markedly with Mr Kwan's capitalised deduction of approximately $1.8 million. 326 These contrasting opinions were explored in the joint evidence session. Mr Goran maintained his opinion that it is wrong to deduct a vacancy allowance for nine tenancies calculated in perpetuity, as that is an unrealistic assumption forecast for the life of the investment. The vacancy rate will vary over time. He said that when he inspected the Centre for the purposes of his report, there were no vacancies. To proceed, as Mr Kwan did, also results in double counting for the allowance, noting that some of the below the line adjustments in Mr Kwan's calculations include letting fees for current vacancies, outstanding concessions and incentives and a leasing provision calculated over a 24-month period including leasing costs of $380,651. Mr Goran further explained that the vacancy allowance is not taken account of in order to assess the risk of the investment, as risk is reflected in the capitalisation rate. Hence, he maintained his opinion that the approach of Mr Kwan involved a double deduction. 327 Mr Kwan maintained his opinion, acknowledging however that "it's a very general provision", albeit one that should be applied in the case of a mixed retail centre. Mr Henry posed a series of very carefully framed questions to Mr Kwan on this issue. Mr Kwan confirmed that he applied the allowance to each of the 29 specialty shops in the Centre and calculated the amount in perpetuity. His attention was then directed to the below the line adjustments, and in particular figure of $380,651 being the present value of letting provisions calculated over a 24-month period. It was directly put to Mr Kwan that, at least to an extent, the below the line adjustments made provision twice for the same risk. Mr Kwan's next series of answers are important: MR HENRY: You accept, though, don't you, that each of those entries below the line, if I can call it that, are made provision for in your vacancy allowance? MR KWAN: No, not entirely. MR HENRY: Well, aren't they directed at precisely the same problem, that is, if a tenancy becomes vacant, expenses have to be incurred in order to fill the vacancy? MR KWAN: Yes, but the vacancy allowance is directed at all tenancies, including the vacant - existing vacant tenancies, and the - below the line, the letting up provision is directed at existing tenancies which could prematurely vacate in the next 12 or 24 months, whichever period you want to take up. MR HENRY: Yes, but the tenancies that you've referred to as referable to the below the line provisions are also tenancies to which the vacancy allowance applies. MR KWAN: Yes. MR HENRY: Correct? MR KWAN: Yes. Yes. MR HENRY: So there is an overlap, isn't there? MR KWAN: Yes, in part. 328 Mr Goran when asked to comment on this evidence said: "I think it just reiterates what I've been pointing out." 329 My finding is that even if one accepts the methodology applied by Mr Kwan to deduct a vacancy allowance capitalised in perpetuity above the line, there is a degree of double counting in the below the line adjustments. He did not explain the extent to which there is an overlap. I accept Mr Goran's opinion that to proceed as Mr Kwan did involves an element of double counting, which has a material effect on the outcome in that the final figure is less than it would otherwise be if the double counting were eliminated. 330 I also find, in accordance with Mr Goran's evidence , that one should not assume that vacancies at the Centre will occur in perpetuity and should in consequence be reflected by a capitalised discount before deriving the adjusted net annual or core income. I further find in accordance with his evidence that the appropriate methodology in this case is to proceed by deducting a letting up allowance, in the manner clarified by Mr Goran. That finding is also important in this case in light of Elanor's ultimate concession that three tenancies should not be considered at risk and therefore vacant and my finding that only three tenancies on the applicant's approach to risk should have been considered vacant in any event. 331 The second matter of disagreement relates to reversions. As accepted by each valuer, a reversion allowance reflects the prospective higher return from leases, when rent is reviewed and adjusted over a period of 11 months from the valuation date of 1 November 2017. Mr Goran added an amount of $1,403,748, the explanation for which is set out in detailed calculations in a schedule to his valuation report by reference to each tenancy, the current rent and the estimated future rent by application of the rental adjustment provisions in each lease. The total for all 49 tenancies is the reversion amount, calculated as the present value of these amounts. Mr Goran explained in the joint report that an allowance of this nature, in his more than 30 years of experience, "is an industry accepted method used for single and multi-tenanted properties for all asset classes". 332 Mr Kwan disagrees. In his view the likelihood of future rental reviews is implicitly reflected in the adopted capitalisation rate, and he is not aware in his experience of any prospective purchaser: "who would explicitly price future rent reviews in a shopping centre in this manner. Effectively, a purchaser would be paying for the property's future income in their current pricing and giving away 12 months rental income growth." 333 In evidence Mr Kwan explained that he had taken that future income into account as reflected in his capitalisation of gross market income. Mr Henry explored that evidence in greater detail. Mr Kwan acknowledged that the gross market rental income figure of $4,929,872, includes all of the income capable of being generated, assuming no vacancies. I then clarified with Mr Kwan as to whether the gross figure takes into account the likelihood of future rental adjustments. Mr Kwan answered that it takes account of that matter: "partly - but the majority of that - of the vacancies - is all the vacant income from - potential income from the vacancies." Not been entirely certain as to what Mr Kwan meant, I sought further clarification from him. He confirmed that the gross market rental income figure is taken as at a fixed point in time and does not take account of increases in gross rent consequential upon rental reviews. 334 The questions then returned to Mr Henry. He put to Mr Kwan a hypothetical as to whether he would ignore, for example, if Woolworths was due to have a rent increase "next week". Mr Kwan said that he would not ignore a rental increase of that character, because the buyer would be "likely to receive" that income at the time of settlement of the property. Mr Kwan was then questioned as to whether he would ignore likely rental increases for 10 tenancies due within a period of three months of the settlement date. Mr Kwan answered that he would "not necessarily" ignore that likely increase in income. 335 Mr Goran was then asked to comment on this evidence. In his opinion, likely rental increases are not properly reflected in the capitalisation rate, because a relatively small adjustment in the rate is "far too big a slice to take out" and the appropriate methodology is to include a reversion amount. He also explained that a reversion amount is "guaranteed rental" which cannot be ignored as a component of the overall transaction. 336 I accept the evidence of Mr Goran. He undertook comprehensive calculation of the reversion amount. The 11-month reversion selected is in my view reasonable and appropriate in this case in that there is contained in each lease an annual rental review clause. Even if one puts aside small specialist tenancies as falling within the "at risk" class, what cannot be ignored is that the major tenants were due for rental reviews, which is likely to have resulted in a material increase within a relatively short period of time, to the adjusted net annual income of the Centre. It is therefore appropriate to make that allowance. Mr Kwan did not make it. 337 The third matter of disagreement is the letting-up provision for future vacancies, which I have partly addressed in dealing with the first point. Mr Kwan proceeded on the assumption of fourteen vacancies, comprising the five initial vacancies and the assumption that he made about the nine Food Court Tenants. He made his vacancy assumption forecast over a period of 18 months, which resulted in a below the line adjustment of $2,073,426. And it is to be recalled that Mr Kwan also made a vacancy allowance of 3.50% above the line of $132,471 which when capitalised produces an amount of approximately $1.8 million. His assumption is not established by the evidence, even if one limits the field of consideration to the three tenancies subsequently conceded by Elanor as not at risk and therefore not vacant in accordance with the framing of its case. 338 That point is forcefully made by the respondents in submissions. In particular, reliance is placed on Masters Home Improvement Pty Ltd v North East Solution Pty Ltd [2017] VSCA 88; 372 ALR 440 at [420] (Santamaria, Ferguson and Kaye JJA) that although a court may, where there is conflicting valuation evidence, accept the evidence of one valuer on an issue while preferring the evidence of another valuer on a different issue, it is not a function of the court to: "bring a third set of opinions into the arena, nor to piece together its own valuation". To that I add that it is not my role to arrogate to myself the role of valuer: Brewarrana Pty Ltd v Commissioner of Highways (No 2) (1973) 32 LGRA 170 at 175 (Wells J). 339 In answer, Mr Fernon submits that I should assess the "real value" of the Centre by assuming that Kebab Express, Thai Me Down and Mass Nutrition were vacant, as they were all part of the same precinct in the Centre, and that each of these tenants, together with the balance six Food Court Tenants, ultimately abandoned the leases or were the subject of termination notices for breach. Alternatively, it is submitted that it is open to me to "readily assess the net present value" of the lost income for these three tenancies, and then to apply it to Mr Kwan's schedule of calculations. Mr Fernon calls in aid the well-known principle that in assessing damages, a court should do the best that it can on the evidence, even if it lacks precision. One must not take that proposition too far. It does not permit a court to do the best that it can by assessing damages where an applicant has failed to adduce the evidence that is necessary to prove the case, in this matter that it suffered damage because of the conduct alleged: Keys Consulting Pty Ltd v CAT Enterprises Pty Ltd [2019] VSCA 136 at [69]-[70] (Maxwell ACJ, Niall and Macaulay JJA). Quintessentially, expert valuation evidence is required to assist the Court in order to resolve that question: it is not a matter of common knowledge or experience: Lang v The Queen [2023] HCA 29 at [6]-[8], Kiefel CJ and Gageler J. 340 I reject Mr Fernon's submission. It conflates assessment of the reliability of Mr Kwan's evidence, which turns on whether his underlying assumptions are established, with whether one can then take components of his evidence and adjust his calculations to produce a different derived market value for the Centre. On the reliability question, with which I am presently concerned, the fact is that he assumed fourteen vacancies for his letting-up allowance, when the applicant now concedes three of those vacancies and, in accordance with my findings, there were only three at risk tenant tenancies and therefore vacancies that ought to have been assumed. 341 Moreover, I accept as more convincing and reasoned the opinion of Mr Goran on this issue, which he in part summarised in the joint report as follows: I acknowledge that the 9 additional alleged problematic tenancies are all part of Bluewater's food/dining area temporarily having an adverse effect regarding drawing in customers during lunchtime however, this may have occurred for a number of reasons including poor tenancy mix, weak calibre of tenant etc, however for an active investor this may be seen as an opportunity to change the status quo at the date of valuation. It is also my opinion that a passive investor also may have changed the alleged tenancy situation with a desire in mind to see growth in the Centre. As mentioned previously as at the date of valuation I have deducted from the capitalised value a letting up allowance comprising a lead time to secure new tenants, agents leasing fees and an incentive by way of a fit out or rent-free period. 342 The distinction between active and passive investors is drawn by Mr Kwan. In his opinion "most prospective buyers" of a shopping complex like the Centre "would typically be passive investors not wanting to take on the risks of leasing up a large number of vacant shops." That may be so, but it is contrary to the facts in this proceeding. Elanor is a sophisticated investor which acquired the Centre as trustee for a syndicate. It expressly did so anticipating, in accordance with its investor overview of 28 September 2017, and the syndicate strategy disclosed therein, that it would actively manage the investment: "by implementing repositioning, leasing, tenant remixing and marketing to optimise the income and value of the property." 343 Further, I accept Mr Goran's opinion that it should not be assumed that a potential vacancy will endure in perpetuity and that in accordance with standard valuation practice it is appropriate to address the vacancy issue by the making of a reasonable letting up allowance, rather than to deduct a capitalised amount in deriving the net adjusted rental income. 344 Overall, I find that in determining the market value of the Centre, it is appropriate to make a letting up allowance for the reasons given by Mr Goran. I prefer his evidence to that of Mr Kwan because of his independence which I give greater weight to for the detailed reasons that I have set out. I also find it more convincing and logical. Mr Kwan should have made an allowance for this item conformably with the methodology of Mr Goran, and had he done so the derived figure would have been higher. 345 The final matter of disagreement concerns the allowance made by Mr Goran for the development potential of the site, which was considerably explored in the joint evidence session. Mr Goran added value for this potential and Mr Kwan did not. 346 I commence with Mr Goran's methodology. In his report, Mr Goran considered the redevelopment potential in his consideration of highest and best use in accordance with "accepted valuation principles." He had regard to the zoning of the site pursuant to the planning scheme, the Urbis report, the Bureau Proberts analysis, and the planning permit subsequently granted upon Elanor's application. The methodology as explained in his report is: We refer to the Urbis report which indicates that the subject property could accommodate potential for 85 units (subject to council approval). In addition to the above assessment, we refer to the potential of the site and have allowed an additional $1,700,000 which reflects approximately $20,000 per unit to reflect the potential of the property and the highest and best use. As supporting evidence, we have endeavoured to research comparable sales of development sites. This includes but is not limited to the following: 265 Oxley Avenue, Margate. Sold for $2,500,000.RP Data states 1/12/2005. The marketing brochure indicates 20/4/2016. Comprises a DA approved development site with approval for 49 units plus 885 square metres of commercial space. Based upon an equivalent analysed DA for approximately 62 units (including the commercial space) reflects approximately $40,000 per unit site. We appreciate that the subject property is situated in a better position in the market improved from the date of sale until the date of valuation. However, being cognisant that the subject property does not have DA approval and the development is to be erected above the shopping centre (which would incur additional costs), we have adopted a lower rate. We have adopted a conservative approach and have allowed approximately $20,000 per unit site which based upon the potential to erect 85 units, reflects an added value of approximately $1,700,000 (rounded). In our opinion, this reflects a modest adjustment of approximately 3% for the potential. We have not carried out a hypothetical feasibility approach, which would be subject to various assumptions, and would not add rigour to the above approach nor would assist in outlining the differences in our calculations and Mr Kwan's. 347 At the time of that report, the council had not issued the development permit. In the joint expert report, Mr Goran commences with a reference to the International Valuation Standards which require that a valuer "must consider the highest and best use of real property, which may differ from its current use." He continues: I have assessed the market value reflecting the highest and best use. I have made the relevant enquiries with the Moreton Bay Regional Council and are [sic] unaware of any floor space provisions that were applicable as at the date of valuation. I understand that the guidelines permitted a maximum height development between 21 metres and a maximum height limit of up to 27 metres (subject to council approval). Furthermore, I referred to the Urbis planning report dated 27 April 2017… Based upon this report, I have therefore assumed that the subject property could potentially accommodate a mixed-use development with 85 units (subject to council approval). I have assumed that any development comprising the units would be above the retail podium. Subsequent to the date of valuation, I am cognisant that Elanor has submitted plans for a proposed 142 room hotel bar facility on the subject property… I have adopted a conservative approach and not allowed for any added value for this application. I am therefore of the opinion that a prospective purchaser would be prepared to pay more for the potential to develop the site further than a property not having that potential. There is substantial evidence of shopping centres that have added to the respective podium levels commercial and/or residential towers after the shopping complex was initially built. 348 Mr Kwan is of a different opinion. It is that the redevelopment potential would only have value if there were development approvals in place, those approved proposals are commercially feasible and a purchaser is "willing to pay for it". He points out that, at least when Mr Goran prepared his report, there was no development permit, no costing sought or provided and no marketing campaign to gauge apartment buyer interest to achieve pre-sales to secure project finance. In more detail, Mr Kwan addresses this issue in his response affidavit. He accepts that valuation principles require assessment of the highest and best use of a property. However, he does not accept the application of the principle in this case in the way applied by Mr Goran. Primarily, his analysis does not consider the costs of redeveloping the site and whether the overall cost is commercially viable. In his opinion the highest and best use of the site is its present use for the purposes of the Centre. To go further, much more detail would be required in the form of a financial feasibility analysis which would turn upon detailed redevelopment costings. In his experience, he has not encountered a valuation of a shopping centre, comparable to the Centre, to which there was added an explicit allowance for additional redevelopment potential. 349 Mr Fernon explored this issue at length with Mr Goran. Very many of the questions were to the effect that Mr Goran had not conducted a feasibility analysis to support his opinion, which at least would require knowledge of, or assumptions about, the engineering feasibility of the redevelopment, the cost of undertaking it, legal permissibility, the displacement effect on existing tenancies and quiet enjoyment and the likely investment return and profit margin. Mr Goran quite properly considered the relevance of these matters. When pressed to example any development of any shopping centre involving a building with five stories on top of it in Queensland, Mr Goran drew attention to the Southport Central complex. Mr Kwan disagreed that this is a relevant example. 350 I accept that each of these limitations are potential considerations applicable to the question of highest and best use of the Centre. However, as is often the case, the answer to the feasibility question depends on the purpose for which the question is asked. Properly understood, Mr Goran did not add an amount to his derived capitalised value based on the profitability of undertaking a redevelopment of the site. As he explained in subsequent answers to Mr Henry, it is often the case that an asset will be acquired "as is", the new owner will then lodge an application for a development approval and, if it is obtained, sell the asset with the development approval. In that circumstance, value is added to the asset by reason of the fact of the approval, rather than the financial feasibility of undertaking it. Mr Goran drew a distinction, which I accept, that a hypothetical purchaser would not require a feasibility study to obtain a development permit. All that would be required is compliance with the submission requirements for a development application, in this case architectural and engineering concept plans. It would not be necessary, for example, to engage a quantity surveyor at that stage to cost the development.

Summary of findings on the valuation evidence 351 I am not satisfied that Elanor has discharged its onus to prove that it suffered damage, in the form of pure economic loss, because it paid more for the Centre than its true value as at 1 November 2017. From my detailed findings above, I base that conclusion on the following. Where the opinions of Mr Kwan conflict with those of Mr Goran, I prefer and accept the opinions of Mr Goran. I do so because I approach the evidence of Mr Kwan cautiously due to my findings about his independence and therefore impartiality as an expert witness in this proceeding. Further, quite apart from my reservations about Mr Kwan's independence, there are aspects of his evidence that I simply do not accept where his opinions differ from those of Mr Goran. Those matters concern first, findings about the capital expenditure allowance of $750,000, which lacks an explained basis. 352 Second, the vacancy allowance should not have been applied by way of a capitalised deduction. Rather it ought to have been dealt with as a below the line adjustment conformably with Mr Goran's opinion and the allowance made by Mr Kwan below the line was excessive. 353 Third, there is an unexplained degree of double counting in Mr Kwan's below the line allowance for vacancies, even if one accepts that in principle, he was correct to make an allowance for it in the capitalisation calculation. 354 Fourth, Mr Kwan ought to have made an allowance for reversionary income, likely to be received by the purchaser within 11 months of the date of purchase due to rental reviews and adjustments. 355 Fifth, the allowances made by Mr Kwan for letting up on vacancies was excessive and based on an assumption of fourteen vacancies which have not been established on the evidence. Mr Kwan ought to have made a more moderate allowance, of the kind and in accordance with the methodology of Mr Goran. 356 Sixth, some allowance should have been made by Mr Kwan for the redevelopment potential of the site, not by reference to the cost of undertaking a future development and deriving a profit therefrom, but by reference to the added potential value presented by the favourable zoning of the site, the Urbis town planning assessment and a development scheme of the type set out in the Bureau Proberts report. I need not specifically find that this added development potential is $1.7 million in accordance with the opinion of Mr Goran. Indeed, even if one puts aside this component of his opinion, the fair market value of the Centre as of 1 November 2017 was $57 million. 357 Seventh, I accept each aspect of the opinions and evidence of Mr Goran on the market value question, before any allowance for redevelopment potential. Mr Goran performed his function as a truly independent expert witness. I have found the manner of his methodology, where it differs from Mr Kwan, to be correct and preferable to the approach of Mr Kwan. The result of acceptance of his evidence is that the Centre was worth at least $55.25 million as of 1 November 2017. 358 For these reasons, Elanor has failed to prove that it suffered damage in consequence of the impugned misleading or deceptive conduct that it pleads was relied upon.

Result 359 Each of the applicant's claims fail, the proceeding must be dismissed and it is unnecessary for me to consider the residual questions of contributory negligence and proportionate liability. I order as follows:

1. The proceeding is dismissed.
2. Any application for costs is to be made in writing, within 14 days of the publication of these reasons, limited to no more than five pages.
3. Any response to an application for costs is to be made in writing within 7 days thereafter, limited to no more than five pages.
4. Subject to any further order of the Court, the question of costs will be determined on the papers. I certify that the preceding three hundred and fifty-nine (359) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice McElwaine.