Trilogy Funds Management Limited as trustee and responsible entity of the Pacific First Mortgage Fund v CBRE

Applicable principles

1. The relevant principles have been articulated, and their application illustrated, in recent decisions of the High Court.
2. In Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507; [2015] HCA 28, French CJ, Bell, Gageler and Kiefel JJ said (citations omitted): "25 Abuse of process, which may be invoked in areas in which estoppels also apply, is inherently broader and more flexible than estoppel. Although insusceptible of a formulation which comprises closed categories, abuse of process is capable of application in any circumstances in which the use of a court's procedures would be unjustifiably oppressive to a party or would bring the administration of justice into disrepute. It can for that reason be available to relieve against injustice to a party or impairment to the system of administration of justice which might otherwise be occasioned in circumstances where a party to a subsequent proceeding is not bound by an estoppel. 26 Accordingly, it has been recognised that making a claim or raising an issue which was made or raised and determined in an earlier proceeding, or which ought reasonably to have been made or raised for determination in that earlier proceeding, can constitute an abuse of process even where the earlier proceeding might not have given rise to an estoppel. Similarly, it has been recognised that making such a claim or raising such an issue can constitute an abuse of process where the party seeking to make the claim or to raise the issue in the later proceeding was neither a party to that earlier proceeding, nor the privy of a party to that earlier proceeding, and therefore could not be precluded by an estoppel."
3. In UBS AG v Tyne (2018) 265 CLR 77; [2018] HCA 45, Kiefel CJ, Bell and Keane JJ said (citations omitted): "1 … The varied circumstances in which the use of the court's processes will amount to an abuse, notwithstanding that the use is consistent with the literal application of its rules, do not lend themselves to exhaustive statement. Either of two conditions enlivens the power: where the use of the court's procedures occasions unjustifiable oppression to a party, or where the use serves to bring the administration of justice into disrepute. …"
4. Their Honours described the conduct that was alleged to be an abuse of process in that case. Mr Tyne had commenced proceedings in the Federal Court of Australia making essentially the same claims that had been made in earlier proceedings in the Supreme Court of New South Wales commenced by Mr Tyne and two entities controlled by him. The Supreme Court proceedings had been discontinued by Mr Tyne and one of his controlled entities, and had been continued by the other entity until the proceedings were stayed on the grounds that that entity was seeking to re-litigate in the Supreme Court claims that had already been determined in proceedings in the High Court in Singapore. Kiefel CJ, Bell and Keane JJ then continued: "7 Whether conduct of this description rises to the level of an abuse of the processes of the court is a determination that requires consideration of all the circumstances. As Lord Bingham of Cornhill explained, that consideration requires the court to make: 'a broad, merits‐based judgment which takes account of the public and private interests involved and also takes account of all the facts of the case, focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the court by seeking to raise before it the issue which could have been raised before. As one cannot comprehensively list all possible forms of abuse, so one cannot formulate any hard and fast rule to determine whether, on given facts, abuse is to be found or not.'"
5. The passage cited is from the judgment of Lord Bingham of Cornhill in Johnson v Gore Wood & Co [2002] 2 AC 1 at 31.
6. Trilogy submitted that the Court need not (indeed, ought not) undertake the broad, merits-based judgment to which his Lordship referred unless the party alleged to be engaging in an abuse of process by commencing and maintaining the subsequent proceeding was a party to or privy of a party to the earlier proceeding, or had a connection to a party to the earlier proceeding of a kind that has been found to suffice in other cases (such as control over the party to the earlier proceeding).
7. I reject that submission. In my opinion, it is a misconceived attempt to construct an artificially staged analysis and erect categories of cases for the application of a doctrine that is fundamental to the administration of justice and that the majority of the High Court has expressly said in Tomlinson and in UBS v Tyne is "insusceptible of a formulation which comprises closed categories" and requires consideration of all of the circumstances.
8. The private interests referred to by Lord Bingham in the passage cited in UBS v Tyne are the interests of the parties to the litigation. The wider public interests include the timely, cost effective and efficient conduct of modern civil litigation: UBS v Tyne at [38] per Kiefel CJ, Bell and Keane JJ.
9. The determination of whether the bringing or continuance of proceedings is an abuse of process of the court, having regard to all of the facts of the particular case, must take into account all of the procedural law administered by the court: UBS v Tyne at [34] per Kiefel CJ, Bell and Keane JJ. In this case, that law includes ss 56-58 of the Civil Procedure Act 2005 (NSW).
10. As senior counsel for CBRE properly accepted, the onus of satisfying the court that there is an abuse of process lies on the party alleging it, and that onus is a heavy one: Williams v Spautz (1992) 174 CLR 509 at 529; [1992] HCA 34 per Mason CJ, Dawson, Toohey and McHugh JJ.

Matters relevant to the broad merits-based judgment in this case

1. I set out below in chronological order the circumstances of this case that are relevant to the broad merits-based judgment that is required to be made in order to determine whether the current proceedings are an abuse of process

Roles and responsibilities of City Pacific and Trilogy in relation to the Scheme

1. There is no dispute about the following matters.
2. City Pacific was the responsible entity of the Scheme at all relevant times prior to 7 July 2009, including as at 30 June 2006. Trilogy became the responsible entity of the Scheme on 7 July 2009, at which time the alleged rights that are the subject of the current proceedings became rights of Trilogy (and ceased to be rights of City Pacific) by reason of s 601FS of the Corporations Act.
3. As at 30 June 2006, the Scheme was known as the City Pacific First Mortgage Trust. The name of the Scheme changed on 6 December 2007 to the City Pacific First Mortgage Fund and changed again on 13 August 2009 to the Pacific First Mortgage Fund.

The roles of City Pacific in the Martha Cove development

1. Senior counsel for Trilogy, who also appeared for City Pacific in the 2015 proceedings, informed the Court that: 1. the business operations of City Pacific included investing on its own account in addition to raising funds from investors to be managed as part of the Scheme; 2. subsidiary companies of City Pacific owned the land comprising the commercial marina and the associated properties forming part of the Martha Cove development with which the 2006 valuation was concerned; 3. those subsidiary companies sold that land to third parties; and 4. those third parties financed the purchase in part by the $27,840,000 loan that City Pacific caused the custodian of the Scheme to enter into.
2. I did not understand these matters to be disputed (at least for the purposes of the present motion).

Claims made by City Pacific in the 2015 proceedings up to the commencement of the hearing in September 2015

1. The plaintiffs in the 2015 proceedings were City Pacific and its subsidiary company Martha Cove Marina Pty Ltd (MC Marina), both of which were in liquidation. The defendants were CBRE and Mr Christopher Nicodimou, who prepared the 2006 valuation on behalf of CBRE.
2. On the pleadings that had been filed as at the commencement of the final hearing on 2 September 2019, the plaintiffs claimed: [2] 1. equitable compensation for the defendants' alleged knowing involvement in breaches by the plaintiffs' directors and officers of equitable and fiduciary duties owed by those directors and officers to the plaintiffs (referred to by the parties as the knowing assistance claim); and 2. damages for alleged misleading or deceptive conduct; and 3. damages for alleged negligence.
3. The material facts pleaded in support of the knowing assistance claim insofar as they relate to the 2006 valuation may be summarised as follows: 1. at the time that the 2006 valuation was issued (and also at the earlier time that an indicative valuation was issued on 1 June 2006), CBRE and Mr Nicodimou knew or ought reasonably to have known that: [3] 1. Marina Cove Pty Ltd (Marina Cove) was the owner of the marina and associated properties; 2. City Pacific was the ultimate holding company of Marina Cove and controlled Marina Cove; 3. City Pacific was also the responsible entity of the Scheme; 1. CBRE and Mr Nicodimou issued the 2006 valuation in the precise amount that one of the officers of City Pacific told Mr Nicodimou that City Pacific needed to achieve in order to support: [4] 1. a proposed loan of $27,840,000 by City Pacific as responsible entity for the Scheme to the Indigo group of companies (the Indigo Group) to fund the purchase of the marina and associated properties; and 2. a proposed loan of $6,880,000 by Marina Cove to the Indigo Group to assist with the purchase of security, expenses and interest costs associated with the proposed $27,840,000 loan; 1. at the time of the 2006 valuation (and the earlier indicative valuation), CBRE and Mr Nicodimou knew or ought reasonably to have known that City Pacific would rely on it in deciding whether to: [5] 1. lend money in its capacity as trustee of the Scheme to the Indigo Group to fund its purchase of the marina and associated properties from City Pacific's related company Marina Cove Pty Ltd (Marina Cove); 2. cause Marina Cove to lend money to the Indigo Group to provide further funding in connection with its purchase of the marina and associated properties; and 3. cause Marina Cove to sell the marina and associated properties to a company within the Indigo Group, and that it was likely that City Pacific would not proceed with the $27,840,000 loan and that the transactions would not proceed if the defendants valued the properties for an amount materially less than $34,800,000; 1. CBRE and Mr Nicodimou knew (or ought reasonably to have known), and certain officers of City Pacific knew, that the indicative valuation and the 2006 valuation were not honest and reliable opinions as to the value of the marina and associated properties and that the marina and associated properties were worth substantially less than the values ascribed to them in the indicative valuation and the 2006 valuation; [6] 2. those officers of City Pacific intended to represent to other officers of City Pacific that the indicative valuation and the 2006 valuation were honest and reliable opinions as to the value of the marina and associated properties, and this was known or ought reasonably to have been known to CBRE and Mr Nicodimou; [7] 3. the representations referred to immediately above would constitute a dishonest and fraudulent breach by the first mentioned group of officers of their duties owed to City Pacific pursuant to ss 181 and 182 of the Corporations Act, the provision of the 2006 valuation would assist that group of officers in engaging in that conduct, and this was known or ought reasonably to have been known to CBRE and Mr Nicodimou when the 2006 valuation was issued; [8] 4. the first mentioned group of officers did dishonestly and fraudulently breach their duties by making the representations referred to above to other officers of City Pacific on or about 30 June 2006; [9] and 5. in reliance on the indicative valuation and the 2006 valuation, City Pacific decided on or about 30 June 2006 to: [10] 1. cause the custodian of the Scheme to make the $27,840,000 loan to Indigo Group to finance its acquisition of the marina and associated properties; 2. cause Marina Cove to make the loan of $6,880,000 to the Indigo Group to finance those acquisitions; and 3. cause Marina Cove to sell the marina and associated properties to the Indigo Group, and those transactions were entered into on or about the date those decisions were made.
4. The material facts pleaded in support of the negligence claim insofar as they relate to the 2006 valuation may be summarised as follows: 1. by reason of their acceptance of the retainer to undertake a valuation of the marina and associated properties and the matters that I have summarised at [26] above, CBRE and Mr Nicodimou owed a contractual or general law duty of care to City Pacific and Marina Cove to exercise reasonable care, skill and diligence when providing valuation services, including when issuing the 2006 valuation, when making certain representations alleged to have been made by issuing the 2006 valuation and when issuing a further valuation on or about 16 March 2007 (referred to by the parties as the Indigo valuation); [11] 2. it was reasonably foreseeable to CBRE and/or Mr Nicodimou that City Pacific and Marina Cove could suffer economic loss if the alleged representations were not accurate or if CBRE and/or Mr Nicodimou failed to exercise reasonable skill, care and diligence in undertaking the 2006 valuation and the Indigo valuation, and that risk of harm was not insignificant; [12] and 3. CBRE and/or Mr Nicodimou breached their duty of care by failing to adopt an appropriate methodology for valuing marinas, failing to make sufficient enquiries to properly value the marina and associated properties, conducting the valuation on an "as if complete" rather than an "as is" basis contrary to the retainer, and failing to exercise reasonable skill, care and diligence in certain respects. [13]
5. The plaintiffs also alleged that CBRE and Mr Nicodimou had been negligent in issuing the Indigo valuation to which I have referred above. [14]
6. In support of their claim for misleading or deceptive conduct, the plaintiffs claimed that CBRE and Mr Nicodimou had made certain representations by issuing the indicative valuation, the 2006 valuation and the Indigo valuation. [15] The following representations were alleged to have been made by issuing the 2006 valuation: 1. representations that the marina and associated properties had the market value ascribed to them in the 2006 valuation, and that this was an honest and reliable opinion based on reasonable grounds; [16] 2. representations that City Pacific could rely on the valuation in making the decisions referred to at [26(3)] above and for first mortgage security purposes; [17] and 3. representations that the valuation had been conducted in accordance with the retainer and that CBRE and Mr Nicodimou had exercised reasonable skill, care and diligence in undertaking the valuation and in expressing the opinions therein. [18]
7. The plaintiffs alleged that the defendants repeated several of these representations concerning the 2006 valuation by issuing the Indigo valuation, [19] although that valuation was also alleged to have included a representation that the market value of the marina had increased since the 2006 valuation. [20]
8. The plaintiffs alleged that the representations in the indicative valuation, 2006 valuation and Indigo valuation were misleading or deceptive, including because the marina and associated properties were worth substantially less than the values ascribed to them in the 2006 valuation, which (the plaintiffs alleged) was not an honest and reliable opinion, had not been conducted in accordance with the retainer, had not been conducted exercising reasonable care, skill and diligence and could not be relied on for first mortgage security purposes. [21]
9. The plaintiffs alleged that, by reason of the negligence and/or misleading or deceptive conduct referred to above, the 2006 valuation and the Indigo valuation, and the representations contained within those two valuations, were not free from material misstatement and/or were not accurate and/or were misleading and deceptive or likely to mislead and deceive. [22]
10. It was alleged that, on 29 June 2007, City Pacific had relied on the 2006 valuation and Indigo valuation (and the various representations contained therein) in entering into a deed with the Indigo Group company that had purchased the marina. Pursuant to that deed, City Pacific paid $2,100,000 for a call option over the marina. On about 8 October 2007, MC Marina exercised the call option as City Pacific's nominee, whereupon the $2,100,000 paid by City Pacific became the deposit for the acquisition of the marina. On about 10 October 2007 and 28 November 2007, City Pacific and/or MC Marina made further payments of $2,000,000 and $7,000,000, respectively as further payments towards MC Marina's acquisition of the marina. [23] As I understand the pleading and the submissions made by both parties at the hearing of the motion before me, City Pacific entered into these transactions in its own right and not in its capacity as responsible entity of the Scheme.
11. The plaintiffs pleaded that the marina was not transferred to MC Marina or City Pacific, the Indigo Group had failed to repay the amounts totalling $11,100,000 paid by City Pacific and MC Marina under the deed referred to above, and the $27,840,000 loan made by the custodian of the Scheme on or about 30 June 2006 had not been repaid. [24] The sale of the marina in May 2015 had realised only $12,946,693 - considerably less than the amount owing under the 30 June 2006 loan. [25]
12. The plaintiffs claimed that, as a result of the defendants' knowing assistance of the alleged dishonest and fraudulent breaches of duty by officers of City Pacific and the defendants' alleged negligence and misleading or deceptive conduct referred to above, the plaintiffs had suffered loss in that: [26] 1. they had lent monies to the Indigo Group in excess of the value of the marina and associated properties against which those loans were secured; and 2. they had entered into the deed in June 2007 and paid $11,100,000 to the Indigo Group under that deed.
13. Particulars were provided of each plaintiff's loss. In relation to each of the three causes of action, it was alleged that: 1. City Pacific had lost the profit that would have been earned by lending to a different borrower the $27,840,000 that it had lent to the Indigo Group, in addition to the $11,100,000 paid under the deed entered into in June 2007; and 2. MC Marina had lost the $11,100,000 paid under the deed entered into in June 2007.

Issues raised between the parties in the 2015 proceedings concerning the proper plaintiff in July and August 2019

1. Ms Amanda Banton of Squire Patton Boggs acted for City Pacific and MC Marina in the 2015 proceedings. Mr Chris Finn of Kennedys acted for CBRE and Mr Nicodimou.
2. It appears that, as the final hearing of the 2015 proceedings approached, both parties' legal representatives belatedly paid close attention to the nature and basis of the pleaded claims.
3. On 9 July 2019, Squire Patton Boggs wrote to Kennedys. The letter stated: "As you are aware, on 25 June 2009 City Pacific was removed as the responsible entity of the City Pacific Mortgage Trust (CPMT) (now Pacific First Mortgage Fund) and was replaced by Trilogy Funds Management Ltd (Trilogy). … Our clients are of the view that the Knowing Assistance Claim pleaded in the ASOC, including at paragraphs 22A to 25 may have vested in Trilogy upon its commencement as the responsible entity of CPMT. This is because pursuant to s 601FS(1) of the Corporations Act 2001 (Cth) (the Act), if the responsible entity of a registered scheme changes, the rights obligations and liabilities of the former responsible entity in relation to the scheme become rights, obligations and liabilities of the new responsible entity. In the present context, this means that when Trilogy became the new responsible entity of the CPMT on 25 June 2009, the Knowing Assistance Claim may have become a right of Trilogy. Accordingly, for the purposes of this offer only and without prejudice to our clients' rights to pursue the Knowing Assistance Claim at hearing, no amount of money is sought for the alleged loss in relation to this claim."
4. Kennedys then wrote to Squire Patton Boggs on 26 July 2019 setting out their views that the claims pleaded in the Amended Statement of Claim were "untenable" because: 1. the right to bring the knowing assistance claim had vested in Trilogy pursuant to s 601FS of the Corporations Act when it became the responsible entity of the Scheme and, in any event, there was no evidence to support the allegations of dishonesty and fraud against Mr Nicodimou and there had been no loss suffered by City Pacific or MC Marina arising from the knowing assistance claim; 2. the negligence and misleading or deceptive conduct claims maintained by City Pacific in relation to the indicative valuation and 2006 valuation had also vested in Trilogy pursuant to s 601FS and, in any event, neither City Pacific nor MC Marina had suffered loss arising from the alleged negligence and misleading or deceptive conduct.
5. The letter contended that it was improper for the allegations of dishonesty and fraud to be pressed against Mr Nicodimou having regard to what CBRE's solicitors considered to be an absence of evidence to support those allegations.
6. The letter foreshadowed an application to strike out parts of the Amended Statement of Claim if the plaintiffs did not immediately seek leave to amend to abandon the claims referred to in the letter.
7. It appears that the matters raised in the correspondence of 9 July and 26 July 2019 concerning the effect of s 601FS on some of the claims made by City Pacific in the 2015 proceedings had not been considered by the parties' legal representatives in the four years since the proceedings were commenced, notwithstanding a previous round of contested amendments to the plaintiffs' claims in 2017.
8. Kennedys' letter of 26 July 2019 prompted Ms Banton to send an email to representatives of Trilogy on 30 July 2019 advising that a letter had been received from CBRE's solicitors stating that "part of the claim has vested with trilogy under the corporations act with the transfer of RE" and "So we have to elect really whether to drop that claim or not and identify if you wish to pursue it". Ms Banton's unchallenged evidence is that she did not have instructions to act for Trilogy at this time. The reference to the election that "we" have to make is plainly a reference to the plaintiffs in the 2015 proceedings.
9. The Trilogy representatives replied to Ms Banton requesting a discussion the following week. Ms Banton asked whether Trilogy was "content for me to tell cbre lawyers that we are waiting to hear from you regarding joinder or any involvement and in the mean time [sic] you are happy to attend a mediation".
10. On 5 August 2019, Squire Patton Boggs replied to Kennedys' letter of 26 July 2019 in the following terms: "With respect to your statement that the 'Knowing Assistance' claim pleaded in the ASOC is untenable because the right to bring that claim vested in Trilogy Funds Management Ltd (Trilogy), we are taking instructions from Trilogy about their joinder to the proceedings. Unfortunately, the relevant decision maker has been and is away until early this week. Once we hear from Trilogy we will revert to you about this part of the claim."
11. Squire Patton Boggs disputed Kennedys' assertions that the other claims in the Amended Statement of Claim were untenable, but stated that they did propose to amend and would provide the proposed amended pleading shortly. The letter concluded by proposing a settlement conference and confirmed that Trilogy was prepared to attend such a conference.
12. Kennedys replied to the settlement conference proposal on 7 August 2019, expressing some concern that a conference would be unlikely to be productive given the history of what CBRE regarded as the defendants making sensible commercial offers and the plaintiffs' failure to be commercial or reasonable in approaching potential settlement of the proceedings. Kennedys requested that the plaintiffs make "an offer of settlement at a sensible commercial level" so that "we will be in a position to advise our clients about whether your clients are serious about a commercial resolution of the proceedings" and take instructions as to whether the defendants are prepared to attend a settlement conference. Kennedys raised no objection to, and made no comment about, the prospect of Trilogy participating in any settlement conference.
13. Squire Patton Boggs replied on 8 August 2019. A redacted version of that letter was in evidence. The unredacted portion of the letter reiterated that Trilogy was considering whether it would seek leave to be joined to the proceedings and was agreeable to attending a settlement conference.
14. A settlement conference was in fact conducted on 23 August 2019. The 2015 proceedings did not settle.

Amendments to City Pacific's claims at the commencement of the hearing of the 2015 proceedings

1. On 28 August 2015, the plaintiffs in the 2015 proceedings served a proposed Further Amended Statement of Claim. The proposed amendments did not involve the joinder of Trilogy to the 2015 proceedings, and no application for joinder was made by Trilogy.
2. The plaintiffs' application for leave to amend was the subject of a contested hearing conducted over the first two days of the final hearing on 2 and 3 September 2019. The Further Amended Statement of Claim that was ultimately filed on 4 September 2019 pursuant to leave granted by the Court amended the plaintiffs' claims in the following material respects: [27] 1. the plaintiffs withdrew the knowing assistance claim; 2. the allegations of negligence and misleading or deceptive conduct were withdrawn insofar as they concerned the indicative valuation; 3. the allegations that the defendants knew that City Pacific would rely on the 2006 valuation in making the specific decisions referred to at [26(3)] above (including a decision whether to cause the custodian of the Scheme to make the proposed $27,840,000 loan to the Indigo Group) were withdrawn and replaced with an allegation pleaded in more general terms, that the defendants knew that City Pacific or one of its subsidiaries would rely on the 2006 valuation in order to determine whether to make an investment in relation to the marina, including by way of loan to fund the purchase of the marina; and 4. similar changes were made to the pleading of the allegedly misleading or deceptive representations made by the defendants about the purposes for which the 2006 valuation could be relied on by City Pacific and its subsidiaries; 5. the plaintiffs' withdrew their claim that they had relied on the 2006 valuation in making the 30 June 2006 loans, but maintained their claim that they had relied on the 2006 valuation (together with the Indigo valuation) in entering into the June 2007 deed and making the payments totalling $11,100,000 under that deed.
3. The plaintiffs otherwise maintained their claims summarised at [24] to [36] above concerning the defendants' alleged negligence and misleading or deceptive conduct in relation to the 2006 valuation and the Indigo valuation. However, consistent with the change in the reliance and causation case identified immediately above, the loss claimed was limited to the $11,100,000 paid under the June 2007 deed.

The course of the hearing in the 2015 proceedings

1. The final hearing of the 2015 proceedings was conducted before Walton J on 2 - 5 September and 24 October 2019.
2. In preparation for that hearing, the parties had given extensive discovery and exchanged extensive evidence, including expert valuation evidence. The parties' expert valuers had participated in a conclave and produced a joint report. The court book for the final hearing comprised 21 volumes and the parties served lengthy written opening submissions. Cross-examination of the expert valuers accounts for approximately 70 pages of the transcript of the final hearing.
3. The parties served lengthy written closing submissions which addressed in considerable detail the terms on which CBRE had been retained to prepare the 2006 valuation and the circumstances surrounding that retainer, communications between representatives of City Pacific and Mr Nicodimou during preparation of the 2006 valuation, the basis on which the 2006 valuation was prepared and whether it was negligent or contained representations that were misleading or deceptive.
4. The plaintiffs' written submissions confirmed that City Pacific did not sue on the loan made by the Scheme custodian to the Indigo Group in June 2006 because it was common ground between the parties that the rights relating to that loan, including any chose in action arising from the 2006 valuation, vested in the responsible entity that replaced City Pacific pursuant to s 601FS of the Corporations Act. By contrast, the plaintiffs submitted that City Pacific could sue in its own right in relation to the 2007 transactions and not in its capacity as responsible entity of the Scheme. Nevertheless, the plaintiffs sued on both the 2006 valuation and the Indigo valuation, as they claimed to have relied on both valuations in entering into the June 2007 transaction.
5. Judgment was reserved.
6. Mr Finn gave unchallenged evidence that CBRE and Mr Nicodimou incurred legal costs of $1,346,198 in defending the 2015 proceedings.

Trilogy retains solicitors in November 2019

1. Ms Banton's unchallenged evidence is that she was first retained by Trilogy in relation to any claim against CBRE in November 2019. A letter of engagement from Squire Patton Boggs to Trilogy dated 11 November 2019 stated that the firm would act for Trilogy in its capacity as responsible entity of the Scheme and described the scope of the engagement in the following terms: "You have asked us to act for Trilogy in relation to their claim against CBRE (V) Pty Ltd and Mr Christopher Nicodimou (CBRE). You have asked us to undertake preliminary investigations into Trilogy's claim, … and to issue a letter of demand to CBRE prior to Trilogy determining whether it will commence proceedings."

Judgment delivered in the 2015 proceedings

1. Walton J delivered judgment in the 2015 proceedings on 30 April 2021: City Pacific Ptd Ltd (in liq) v CBRE (V) Pty Ltd [2021] NSWSC 456. The reasons for judgment are detailed and exceed 200 pages in length.
2. Walton J made findings as to the terms on which CBRE was retained to undertake the 2006 valuation (at [67]-[83]). His Honour noted that the defendants accepted that the 2006 valuation contained the representations alleged by the plaintiffs (at [342]-[343]), found on the basis of the expert and other relevant evidence that the 2006 valuation was not based on reasonable grounds, was not a reliable opinion of the value of the marina and was not the product of due care and skill (at [345]-[382]), found that the marina was overvalued by the defendants even if their methodology had been found to be appropriate (at [383]) and found that the representations in the 2006 valuation were misleading or deceptive or likely to mislead or deceive (at [345]-[396]). In relation to the negligence claim, his Honour noted that the defendants admitted they owed a duty of care to the plaintiffs with respect to the 2006 valuation (at [416]-[422]) and found that the defendants had breached that duty of care for the same reasons that the 2006 valuation was misleading (at [434]-[445]).
3. It is not relevant for present purposes to refer to Walton J's findings concerning the Indigo valuation, whether the plaintiffs relied on the 2006 valuation and Indigo valuation in entering into the June 2007 transaction and making the payments totalling $11,100,000, and whether the plaintiffs thereby suffered loss. His Honour's ultimate conclusion was that City Pacific was entitled to damages against the defendants in respect of the $11,100,000 payments, subject to the qualification that City Pacific was only entitled to 60% of the third of those payments by reason of contributory negligence. The claims of MC Marina were time barred (at [621]).
4. The defendants have foreshadowed an appeal from his Honour's judgment.

Trilogy's claims in the current proceedings commenced on 15 April 2021

1. As I have mentioned, Trilogy commenced the current proceedings on 15 April 2021, approximately two weeks before judgment was delivered in the 2015 proceedings on 30 April 2021.
2. Trilogy, in its capacity as the responsible entity of the Scheme, claims damages for alleged breach of a contractual or general law duty of care and alleged misleading or deceptive conduct of CBRE in relation to the 2006 valuation. Mr Nicodimou is not a defendant to the proceedings and no claims are made in relation to the indicative valuation or the Indigo valuation.
3. In its Commercial List Statement, [28] Triology pleads the same express and implied terms of the valuation retainer as pleaded by City Pacific in the 2015 proceedings. [29] As I have referred to above, the Court made findings about those terms in the 2015 proceedings.
4. There is a significant degree of overlap between the matters pleaded in these proceedings as giving rise to the duty of care owed by CBRE to City Pacific at the time the 2006 valuation was issued, and the matters pleaded by the plaintiffs in the 2015 proceedings. In particular, Trilogy alleges that CBRE knew or ought reasonably to have known that City Pacific was the responsible entity of the Scheme and that it would rely on the 2006 valuation in order to determine whether to lend money (in its capacity as responsible entity) to the Indigo Group company to finance the acquisition of the marina and associated properties and on the security of those properties. [30] As I have referred to above, the defendants in the 2015 proceedings accepted that they owed a duty of care to City Pacific in relation to the 2006 valuation.
5. In the present proceedings, Trilogy alleges that the risks of harm to City Pacific that were reasonably foreseeable to CBRE at the time that it issued the 2006 valuation were: [31] 1. the risk of City Pacific advancing funds in excess of the true value of the marina and associated properties; 2. the risk of the borrower defaulting on any funds loaned in reliance on the 2006 valuation; and 3. the risk of City Pacific being unable to recover the full amount advanced because the 2006 valuation ascribed a value to the marina and associated properties that was higher than their actual value.
6. Substantially the same risks of harm were pleaded by the plaintiffs in the 2015 proceedings, both before and after the 4 September 2019 amendments. [32]
7. As in the 2015 proceedings, Trilogy pleads that the risks of harm were reasonably foreseeable to CBRE because the 2006 valuation was required for first mortgage security purposes. [33] In both proceedings, the pleading identifies substantially the same steps that it is alleged a reasonable valuer in CBRE's position would have taken against those risks of harm. [34] Trilogy relies on CBRE's alleged failure to take those steps as constituting a breach of its contractual and general law duty of care, just as City Pacific relied on those same alleged failures in the 2015 proceedings. There are some differences in the terms in which those alleged failures are pleaded by Trilogy compared to the plaintiffs' pleadings in the 2015 proceedings, but those differences do not appear to be material. [35]
8. Trilogy pleads the same representations that the plaintiffs in the 2015 proceedings alleged were made in the 2006 valuation. [36] The grounds on which those representations are alleged to be misleading or deceptive are essentially the same in the present proceedings as the grounds pleaded by the plaintiffs in the 2015 proceedings. [37] As I have referred to above, the defendants admitted in the 2015 proceedings that the representations were made, and Walton J found that the representations were misleading or deceptive or likely to mislead or deceive.
9. Trilogy claims that City Pacific made the $27,840,000 loan on or about 30 June 2016 in reliance on the 2006 valuation and the representations made by CBRE in issuing that valuation. [38] It claims that City Pacific would not have made that loan but for CBRE's alleged breach of duty of care and alleged misleading or deceptive conduct and that Trilogy has suffered loss as a result of that alleged negligence and misleading or deceptive conduct. It is pleaded that the net proceeds of sale of the secured properties in May 2015 were inadequate to pay the amount owing under the loan, that the balance of amount owing has not been repaid and that the Indigo Group is incapable of repaying that balance. The pleading states that particulars of the loss will be provided after service of expert evidence. [39] As will be apparent from my analysis of the pleadings in the 2015 proceedings and the reasons for judgment of Walton J set out above, Trilogy's reliance, causation and loss case in these proceedings is different to the plaintiffs' case that was determined in the 2015 proceedings.

Consideration and determination

1. CBRE accepts that Trilogy was neither a party to the 2015 proceedings nor a privy of a City Pacific. There were three elements to CBRE's contention that the present proceedings are an abuse of process. First, it was submitted that CBRE should not be vexed twice by the same claims that have been litigated by the prior responsible entity of the Scheme at significant cost to CBRE. Second, it was submitted that Trilogy should not be permitted to maintain the present proceedings in circumstances where it made "a forensic decision not to be joined" to the 2015 proceedings. Third, it was submitted that the present proceedings raise the same factual allegations as the 2015 proceedings and therefore carry the attendant risk of inconsistent judgments.
2. In relation to the first element, CBRE is not being vexed by the same claims in the present proceedings as the claims that were ultimately maintained in the 2015 proceedings. As demonstrated by the detailed analysis set out above of the pleadings in the 2015 proceedings and the Commercial List Statement filed by Trilogy in the present proceedings, the claims are very different.
3. The claims pressed at the final hearing of the 2015 proceedings were claims by City Pacific and MC Marina for losses said to have been incurred as a result of transactions they entered into in June 2007 in their own right (not as responsible entity or trustee of the Scheme) in reliance on allegedly negligent or misleading valuations issued by CBRE in 2006 and 2007.
4. By contrast, the present proceedings concern Trilogy's claim for losses allegedly suffered as a result of City Pacific (as responsible entity of the Scheme) causing the Scheme custodian to make the loan of $27,840,000 in June 2006 in reliance on the allegedly negligent or misleading 2006 valuation issued by CBRE. The claim vested in Trilogy when it became the responsible entity of the Scheme pursuant to s 601FS of the Corporations Act and is made for the benefit of scheme members.
5. The claims in both proceedings involve the determination of whether the 2006 valuation was negligent or contained or representations that were misleading or deceptive, or likely to mislead or deceive. That is relevant to the third element of CBRE's abuse of process contention. However, as senior counsel for Trilogy submitted, the claims in the two proceedings are not the same. They are claims properly made by different plaintiffs, one suing for its own benefit and the other suing for the benefit of Scheme members, in respect of different losses arising from different transactions, incurred at different times. The allegedly negligent and misleading 2006 valuation is said to have been part of the chain of causation resulting in the losses that are the subject of the plaintiffs' claims in the two proceedings. However, the chain of causation is different in each case.
6. In relation to CBRE's second element, it was submitted that the Court should find that Trilogy made a decision in July or August 2019 not to apply to be joined to the 2015 proceedings and not to commence separate proceedings with a view to having them heard together with the 2015 proceedings. It was further submitted that the Court should find that this was a calculated decision, involving forensic manoeuvring for tactical advantage. It was submitted that the correspondence between Squire Patton Boggs and Kennedys during July and August 2019 supported inferences to this effect. It was also submitted that those inferences could be more comfortably drawn in the absence of any direct evidence from a representative of Trilogy explaining the reasons for its decision not to apply to be joined to the 2015 proceedings at that time. It was submitted that the Court should infer that any such evidence that could have been given by a representative of Trilogy would not have assisted Trilogy in opposing CBRE's motion for dismissal of the present proceedings as an abuse of process.
7. In my opinion, the evidence does not support the inferences for which CBRE contends.
8. Whilst the tone of the email correspondence between Ms Banton and the Trilogy representatives of 30 July 2019 suggests that there may have been some prior communication between them about Trilogy being the proper plaintiff in respect of some of the claims pleaded in the 2015 proceedings, there is no evidence that Trilogy had engaged any legal representative to act for it in relation to any such claims as at July - August 2019. Ms Banton's unchallenged evidence is that Trilogy first engaged Squire Patton Boggs to act for it in relation to such claims in November 2019. The letter of retainer dated 11 November 2019 records that Squire Patton Boggs was engaged in the first instance to undertake preliminary investigations in relation Trilogy's claim against CBRE and Mr Nicodimou.
9. It is plain from the Commercial List Statement that Trilogy subsequently filed when the present proceedings were commenced on 15 April 2021, that Trilogy gave independent consideration to the outcome of such investigations and decided not to pursue all of the same claims that had been pursued by City Pacific in the 2015 proceedings up to 28 August 2019. In the present proceedings, Trilogy makes no claims against Mr Nicodimou and does not pursue any "knowing assistance claim".
10. Trilogy does claim damages for loss suffered as a result of the $27,840,000 loan said to have been made in reliance on the allegedly negligent and misleading 2006 valuation. Those claims are based on substantially the same contentions of fact and law that had underpinned the same claims that City Pacific ultimately abandoned in the 2015 proceedings.
11. There is no evidence to suggest that it was improper for Trilogy to take time to investigate the subject matter of the claims that City Pacific had pleaded in the 2015 proceedings, take legal advice and decide whether to pursue any of those claims (or, indeed, any other claims) for the benefit of Scheme members. Any decision by Trilogy to step in to City Pacific's role as plaintiff in relation to some of the relevant claims in the 2015 proceedings, without undertaking its own investigation of those claims and their merits, would not have been consistent with Trilogy's obligations to Scheme members as responsible entity.. That is particularly so in circumstances where CBRE's solicitors had written to Squire Patton Boggs on 26 July 2019 contending that all of the claims in the 2015 proceedings were "untenable" for reasons independent of the identity of the proper plaintiff.
12. The evidence does not support CBRE's submission that Trilogy commenced the present proceedings on 15 April 2021 rather than applying to be joined to the 2015 proceedings in order to gain some tactical advantage. Trilogy did not wait for the outcome of the 2015 proceedings prior to commencing the present proceedings. As events happened, judgment in the 2015 proceedings was delivered approximately two weeks after Trilogy commenced the present proceedings.
13. The matters I have referred to above are clear from the chronology of events revealed by the contemporaneous documents and from Ms Banton's unchallenged evidence about the time at which Squire Patton Boggs was retained to act for Trilogy. It was not necessary for Trilogy to adduce direct evidence of these matters from any witness to avoid a Jones v Dunkel inference for which CBRE contents.
14. It is also relevant to note that, as Trilogy submitted and as senior counsel for CBRE fairly accepted, Trilogy had no duty or obligation under s 56 of the Civil Procedure Act in relation to the 2015 proceedings because it was not a party to those proceedings and did not have a relevant interest in those proceedings: see s 56(3), (4) and (6).
15. As senior counsel for Trilogy accepted, Trilogy did make a decision not to apply to be joined to the 2015 proceedings or take other steps to have the claims that it now makes in these proceedings heard and determined together with the 2015 proceedings. For the reasons explained above, that decision does not render the present proceedings an abuse of process in all the circumstances of this case.
16. I now turn to the third element of CBRE's abuse of process contention. I accept that there is a risk of findings being made in the present proceedings that are inconsistent with the findings made in the 2015 proceedings concerning whether the 2006 valuation was negligent and whether CBRE engaged in misleading or deceptive conduct by issuing that valuation. There is no risk of inconsistent findings in relation to other matters that will fall for determination in the present proceedings, including reliance, causation and loss.
17. In my opinion, the risk of some inconsistent findings does not bring the administration of justice into disrepute in circumstances where the two proceedings in which the inconsistent findings may be made have been brought by different plaintiffs, neither of whom controls the other, and in relation to different claims. The risk of inconsistent findings does not arise by reason of the plaintiff in the later proceeding (Trilogy) mounting any collateral attack on or seeking to undermine the findings made in the earlier proceeding. As senior counsel for Trilogy submitted, it will be contending for findings to the same effect as those made in the 2015 proceeding concerning the 2006 valuation.
18. In my opinion, it would bring the administration of justice into disrepute if Trilogy were precluded from maintaining its claims for the benefit of Scheme members merely because City Pacific's claims made for its own benefit, but involving some common issues, have already been litigated. That is particularly so in circumstances where Trilogy did not act unreasonably in deciding not to endeavour to have its claims determined at the same time as City Pacific's claims, for the reasons I have explained above.
19. It would unquestionably have been preferable for CBRE if City Pacific's claims and Trilogy's claims, involving the common allegations of negligence and misleading or deceptive conduct concerning the 2006 valuation, had been heard and determined at the same time. That would also have been a more efficient utilisation of the publicly funded resources of the Court. However, for the reasons I have explained above, the evidence does not establish that this alternative course could have been taken by Trilogy in July or August 2019 without sacrificing the care and diligence required to verify the pleading of any claims that it decided to pursue and without undermining the legitimate interests of Scheme members in not incurring legal costs and exposing the Scheme assets to liability for other parties' legal costs by litigating claims without appropriate investigation and advice. In all of the circumstances of this case, the fact that CBRE will be required to engage twice with the question of whether the 2006 valuation was negligent or misleading does not constitute unjustifiable oppression and the fact that the Court will have to engage with those questions in two different proceedings does not render the present proceeding an abuse of process.
20. It follows that CBRE's motion must be dismissed. There is no apparent reason why the costs of the motion should not follow the event.

Conclusion and orders

1. For those reasons, I make the following orders: 1. Order that the defendant's notice of motion filed on 28 May 2021 is dismissed. 2. Order that the defendant is pay to the plaintiff's costs of that notice of motion in an amount agreed or assessed.

Endnotes

1. In Schedule 2 of the Competition and Consumer Act 2010 (Cth).
2. Amended Statement of Claim filed on 8 December 2017 in the 2015 proceedings (ASOC): Exhibit 1, p 192.
3. ASOC, paragraphs 25(a)-(c).
4. ASOC, paragraphs 21, 22, 22A, 22B, 22C, 23 and 24.
5. ASOC, paragraphs 25(d)-(f).
6. ASOC, paragraphs 25(g)-(h) and 26(a).
7. ASOC, paragraph 25(j).
8. ASOC, paragraph 25(k)-(m).
9. ASOC, paragraph 26(b)-(d).
10. ASOC, paragraphs 26(e) and 27.
11. ASOC, paragraph 25A.
12. ASOC, paragraphs 25B-25F.
13. ASOC, paragraph 37B.
14. ASOC, paragraphs 27A-27I, 37C.
15. ASOC, paragraphs 27J-28B.
16. ASOC, paragraphs 28(a), (c) and (d).
17. ASOC, paragraphs 28(b) and (e).
18. ASOC, paragraphs 28(f)-(g).
19. ASOC, paragraph 28A.
20. ASOC, paragraph 28B.
21. ASOC, paragraphs 29, 29A and 30.
22. ASOC, paragraphs 37D-37E.
23. ASOC, paragraphs 31-37.
24. ASOC, paragraphs 38-44.
25. ASOC, paragraph 43.
26. ASOC, paragraphs 44A-44D and 45.
27. Further Amended Statement of Claim filed on 4 September 2019 in the 2015 proceedings (FASOC).
28. Commercial List Statement filed in the current proceedings on 15 April 2021 (CLS).
29. FASOC, paragraphs 18-20; CLS, paragraphs 18-20.
30. CLS, paragraphs 31-32 compared to FASOC, paragraphs 25-25A.
31. CLS, paragraphs 33-36.
32. FASOC, paragraphs 25B-25E.
33. FASOC, paragraph 25D; CLS, paragraph 35.
34. FASOC, paragraph 25F; CLS, paragraph 37.
35. CLS, paragraph 40; FASOC, paragraph 37B.
36. CLA, paragraph 38; FASOC, paragraph 28.
37. CLA, paragraphs 41-42; FASOC, paragraphs 29A-30.
38. CLS, paragraph 43.
39. CLS, paragraphs 70-78. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 21 July 2021