City Pacific Ltd (in liq) v CBRE (V) Pty Ltd - [2021] NSWSC 456

Supreme Court

New South Wales

Medium Neutral Citation: City Pacific Ltd (in liq) v CBRE (V) Pty Ltd [2021] NSWSC 456
Hearing dates: 2-5 September 2019; 24 October 2019
Date of orders: 30 April 2021
Decision date: 30 April 2021
Jurisdiction: Common Law
Before: Walton J
Decision:
The Court makes the following orders:
(1) The plaintiffs shall file and serve within 14 days of the date of this judgment short minutes of order reflecting this judgment.
(2) The plaintiffs shall file and serve within 28 days of this judgment any submissions and evidence as to any disputed question as to interest and costs together with the terms of any orders proposed with respect to those disputed matters.
(3) The defendants shall file and serve any submissions and evidence in reply as to any disputed questions, together with the terms of any proposed orders in that respect, within 14 days after being served with the submissions and evidence in (2) above.

Catchwords:
VALUATION – valuation of marina – valuation retainers – practice standards
MISLEADING AND DECEPTIVE CONDUCT – s 52 of Trade Practices Act 1975 (Cth) – s 12DA of Australian Securities and Investment Commission Act 2001 (Cth) – s18 of the Australian Consumer Law – representations in valuation reports – failure to adopt appropriate valuation methodology – failure to explain and cross check methodology – gross overvaluation
BREACH OF DUTY – duty of care – breach of duty of care – failure to take precautions against identified risks of harm – valuation not based on reasonable opinion of the value of marina – not product of reasonable care and skill – defendants knew or ought to have known if plaintiffs advanced monies in excess of value
NEGLIGENCE – actual reliance – reasonableness
CAUSATION – causation arising from breach of duty by misleading and deceptive conduct
DEFENCES – statutory time limitations – mitigation – contributory negligence – proportional liability – s 601FS of the Corporations Act 2001 (Cth)
DAMAGES – Martha Cove Property Monies – interest – costs

Legislation Cited:
Australian Consumer Law
Australian Securities and Investments Commission Act 2001 (Cth)
Civil Procedure Act 2005 (NSW)
Corporations Act 2001 (Cth)
Evidence Act 1995 (NSW)
Limitation of Actions Act 1958 (Vic)
Trade Practices Act 1975 (Cth)
Wrongs Act 1958 (Vic)

Cases Cited:
ABN Amro Bank NV v Bathurst Regional Council (2014) 309 ALR 445; [2014] FCAFC 65
Adelaide Bank Limited v DTS Property Services Pty Ltd [2008] NSWSC 1328
Amadio Pty Ltd v Henderson (1998) 81 FCR 149; [1998] FCA 823
APF Properties Pty Ltd v Kestrel Holdings Pty Ltd (No 2) [2007] FCA 1561
Arcus Shopfitters Pty Ltd v Western Australian Planning Commission [2004] WASC 85
Australian Breeders Co-operative Society Ltd v Jones (1997) 26 ASCR 26; [1997] FCA 1405
Australian Competition and Consumer Commission v TPG Internet Pty LTD (2013) 250 CLR 640; [2013] HCA 54
Australian Securities and Investments Commission v Hellicar (2012) 247 CLR 345; [2012] HCA 17
Australian Securities and Investments Commission v Vines (2003) 48 ACSR 291; [2003] NSWSC 1095
Bone v Wallalong Investments [2012] NSWSC 137
Briess v Woolley [1954] AC 333
BT Australia Ltd v Raine & Horne Pty Ltd [1983] 3 NSWLR 221
Commercial Banking Co of Sydney v R H Brown & Co (1972) 126 CLR 337
Coris and Investments Ltd v Druce & Co [1978] 2 EGLR 86
Derring Lane Pty Ltd v Fitzgibbon (2007) 16 VR 563; [2007] VSCA 79
Dunn v Hanson Australasia Pty Ltd (2017) 12 ACTLR 138
Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241
Fitzwood Pty Ltd v Unique Goal Pty Ltd (in liquidation) [2001] FCA 1628
Flemington Properties Pty Ltd v Raine & Horne Commercial Pty Ltd (1997) 148 ALR 271; [1997] FCA 788
Genworth Financial Mortgage Insurance Pty Limited v Hodder Rook & Associates Pty Limited [2010] NSWSC 1043
Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435; [2013] HCA 1
Gould v Vaggelas (1985) 157 CLR 215; [1985] HCA 75
Hann Nominees Pty Ltd v National Australia Bank Ltd [2000] FCA 454
Hawkins v Clayton (1988) 164 CLR 539
Henville v Walker (2001) 206 CLR 459; [2001] HCA 52
HTW Valuers (Central QLD) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640; [2004] HCA 54
Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd (2013) 247 CLR 613
I & L Securities Pty Limited v R S Melloy Pty Limited [2002] QSC 306
Interchase Corporation Ltd v ACN 010 087 573 Pty Ltd [2003] 1 Qd R 26
Israel v Foreshore Properties Pty Limited (in liq) (1980) 30 ALR 631
Kenny & Good Pty Ltd v MGICA(1992) Ltd (1999)199 CLR 413; [1999] HCA 25
Kestrel Holdings Pty Ltd v APF Properties Pty Ltd (2009) 260 ALR 418
Khoury v Coffey Projects (Australia) Pty Ltd [2015] NSWCA 371
Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70; [1990] HCA 31
Lloyd v Grace, Smith & Co [1912] AC 716
Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705; [2001] NSWCA 305
MGICA(1992) Ltd v Kenny & Good Pty Ltd (1996) 140 ALR 313; [1996] FCA 766
Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388
O3 Capital Pty Limited v WY Properties Pty Limited (2016) 49 WAR 517; [2016] WASCA 82
Perre v Apand Pty Ltd (1999) 198 CLR 180; [1999] HCA 36
Pine River Pty Ltd v Scorda [2001] WASC 105
Propell National Valuers (WA) Pty Ltd v Australian Executor Trustees Limited (2012) 202 FCR 158; [2012] FCAFC 31
Roads & Traffic Authority of NSW v Dederer (2007) 234 CLR 330; [2007] HCA 42
Robinson v 470 St Kilda Road Pty Ltd (2018) 263 FCR 572
Ross v Cook [2009] NSWSC 671
Ryan Wealth Holdings Pty Ltd v Baumgartner (2018) 131 ASCR 236; [2018] NSWSC 1502
Salomon v Salomon & Co Ltd [1897] AC 22
Segal t/as Segal Litton & Chilton v Fleming [2002] NSWCA 262
Singer & Friedlander Ltd v John D Wood & Co [1977] 2 EGLR 84
Spencer v Commonwealth of Australia (1907) 5 CLR 418
Ta Ho Ma Pty Ltd v Allen [1999] NSWCA 202
Tepko Pty Ltd v Water Board (2001) 206 CLR 1; [2001] HCA 19
Tomasetti v Brailey (2012) 91 ATR 531
Trade Credits Ltd v Baillieu Knight Frank (NSW) Pty Ltd (1985) Aus Torts Rep 69
Wallace v Kam (2013) 250 CLR 375
Wardley Australia Limited v Western Australia (1992) 175 CLR 514; [1992] HCA 55
Winnote Pty Ltd v Page (2006) 68 NSWLR 531; [2006] NSWCA 287

Texts Cited:
C Lockhart, The Law of Misleading or Deceptive Conduct (2019, 5th ed, Lexis Nexis Butterworths)
K Mason, J W Carter and G J Tolhurst, Mason and Carter’s Restitution Law in Australia (2008, 2nd ed, LexisNexis Butterworths)

Category: Principal judgment
Parties: City Pacific Ltd (in liq) (First Plaintiff)
Martha Cove Marina Pty Ltd (in liq) (Second Plaintiff)
CBRE (V) Pty Ltd (First Defendant)
Christopher Nicodimou (Second Defendant)
Representation:
Counsel:
J C Giles SC with B G Curtin (Plaintiffs)
D A Lloyd SC with V Bulut (Defendants)
Solicitors:
Banton Group (Plaintiffs)
Kennedys Law (Defendants)

File Number(s): 2015/251608

Judgment

INTRODUCTION

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

OVERVIEW

The plaintiffs’ claim arose out of valuation reports, prepared by the defendants of Lot S17 (also known as stage S6 and 2H, being initially 239 and subsequently 233 marina berths) (“the Marina”), which formed part of the Martha Cove Development on the Mornington Peninsula in Victoria. (The Marina was also interchangeably referred to in documentation and by the parties as “the Martha Cove Property”, “Lot S17” and “the Marina lot”). The reports also contained valuations of the following properties: Lots S22, S23 and S24 on Plan of Subdivision 435310J, which were part of the Martha Cove Development (collectively, “the Other Properties”). However, the valuations of the Marina are what were in issue in the present proceedings.
Three valuation reports were prepared with respect to the Marina and the Other Properties, namely:

the “Valuation Report prepared for City Pacific Limited of Martha Cove Marina & Commercial Centre”, dated 18 May 2006, and provided by CBRE to City Pacific on 30 June 2006 (“the June Valuation”);

the “Valuation Report prepared for MCD (Aust) Pty Ltd (“MCD”) on behalf of Indigo (Martha Cove Harbour Precinct Land Owner) Pty Ltd of Martha Cove Marina & Commercial Centre”, dated 30 January 2007, and provided by the Indigo Group to City Pacific on or about 16 March 2007 (“the Indigo Valuation”); and

the “Valuation Report prepared for MCD (Aust) Pty Ltd (“MCD”) on behalf of Indigo (Martha Cove Harbour Precinct Land Owner) Pty Ltd of Martha Cove Marina & Commercial Centre”, dated 30 January 2007, and provided by the Indigo Group to City Pacific on 26 June 2007 (“the Amended Indigo Valuation”).

The relevant valuations for the purposes of the plaintiffs’ claim were the June Valuation and the Amended Indigo Valuation (which shall hereinafter be referred to as, collectively, “the valuations”). I shall return to the contents of those valuations, and the entities mentioned therein, below.
The Marina has never been transferred to Martha Cove and the vendor has failed to repay any of the Martha Cove Property Monies. Consequently, Martha Cove has been unable to repay the debt it owed to City Pacific.
The plaintiffs contended that the valuations:

failed to adopt an appropriate valuation methodology for a freehold marina lot and grossly overvalued the Marina. The valuations were prepared on a gross realisation of individual leasehold berths basis which did not provide advice of market value of the Marina;

were prepared and published in breach of the duties owed to the plaintiffs and constituted misleading or deceptive conduct; and

were not the product of due care and skill, did not have a reasonable basis and consequently conveyed misleading or deceptive representations.

The plaintiffs also contended that, in reliance on the valuations and associated representations:

City Pacific entered into and exercised its rights under a Put and Call Option Deed dated 29 June 2007 (“the Put and Call Option”) containing a nomination right to buy (in the event Martha Cove, its wholly owned subsidiary and nominee, exercised the call option) the Marina for a price well in excess of the true value of the Marina;

Martha Cove entered into a Contract of Sale with ILO dated 8 October 2007 (“the Contract of Sale”), to purchase the Marina, and paid a total of
$11.1 million (“the Martha Cove Property Monies”) to or at the direction of the vendor in part consideration for the Marina; and

City Pacific provided Martha Cove the money for payments towards the purchase of the Marina and to pay the Martha Cove Property Monies.

In an agreed glossary of terms provided by the parties, the Martha Cove Property Monies were said to have comprised of the following separate payments:

$2.1 million paid on 29 June 2007 (“the Call Option Fee”);

$2 million paid on 10 October 2007 (“the Further Deposit”); and

$7 million paid on 28 November 2007.

(The three separate payments that comprised the Martha Cove Property Monies were referred to throughout the proceedings as the First, Second and Third Payment, respectively. I will variously use the above shorthand expressions to describe the Martha Cove Property Monies throughout this judgment).

I will return to the circumstances of those payments in the context of the factual background.
The plaintiffs submitted that, but for the conduct of the defendants, they would not have entered into those abovementioned agreements and paid the Martha Cove Property Monies.
If they had known the true value of the Marina, City Pacific would not have paid to the benefit of Martha Cove those monies, and Martha Cove would not have paid those moneys to the vendor.
Broadly, the plaintiffs’ claim had then two elements:

a claim in misleading and deceptive conduct; and

a claim in negligence.

Adopting the terms of the parties, hereinafter, I will refer to those claims as the “Representation Case” and “Duty Case”, respectively.

In summary, the defendants’ position was that the plaintiffs’ Duty Case and Representation Case failed at every stage of the relevant inquiries to be made by the Court. That is:

the defendants did not owe any duty to the plaintiffs when preparing the Amended Indigo Valuation;

the duty owed by the defendants to City Pacific with respect to the preparation of the June Valuation was not breached. If a duty of care was owed in preparing the Amended Indigo Valuation, that duty was not breached;

none of the representations pleaded were misleading or deceptive;

there was no reliance by the plaintiffs on the June Valuation or Amended Indigo Valuation in their decision to pay the Martha Cove Property Monies;

the plaintiffs did not demonstrate that any breach of duty or misleading and deceptive conduct caused any of the pleaded loss;

the plaintiffs have failed to mitigate their loss and damage;

the plaintiffs’ pleaded claims are statute barred; and

the claims were not maintainable pursuant to s 601FS of the Corporations Act 2001 (Cth).

The defendants further contended that, if the plaintiffs were to overcome each of those hurdles, the damages should be reduced by 100%, or close to that figure, on account of contributory negligence or the concurrent wrongdoing of the directors, Philip Sullivan, Director of City Pacific and Martha Cove, and James Finucan, Director of Martha Cove.

DRAMATIS PERSONAE

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

The Plaintiffs

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

City Pacific

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

City Pacific Mortgage Trust

The CPMT was established on 13 July 1999. It invested in property secured by registered first mortgage. As mentioned above, City Pacific was the manager and responsible entity, specifically from 13 July 1999 to 7 July 2009.
The CPMT was referred to by different names between 1999 and 2009, as follows:

“City Pacific First Mortgage Trust”, between 13 July 1999 and 6 December 2007;

“City Pacific First Mortgage Fund”, between 7 December 2007 to 12 August 2009; and

“Pacific First Mortgage Trust”, from 13 August 2009.

The Public Trustee of Queensland (“PTQ”) was the custodian of the CPMT.

CP1 Ltd

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

Marina Cove Pty Ltd

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

Indigo Pacific Capital Limited

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

Martha Cove

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

The Defendants

CBRE and Mr Nicodimou are the defendants.

CBRE

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

Mr Nicodimou

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

“The Indigo Group”

The Indigo Group

The expression “Indigo group” as used in the proceedings, was not intended to convey the existence of a legal entity or commercial connotation. It was adopted by the parties as a “shorthand” adjectival term; as a means to describe three companies that had “a loose commercial affiliation”. Those companies were as follows:

Indigo (Martha Cove Marina Land Owner) Pty Ltd (“ILO”);

Indigo (Martha Cove Harbour Precinct Land Owner) Pty Ltd (“IHPO”); and

Indigo Pacific Capital Limited (“IPC”).

ILO

ILO was, relevantly, the registered proprietor of the Marina from 18 July 2006 to 21 July 2015.
It was also the trustee of the following trusts:

The Neilson Martha Cove Marina Loan Owner Trust; and

The Truce Martha Cove Marina Land Owner Trust.

It was deregistered on 18 November 2018.

IHPO

IHPO, relevantly, was the registered proprietor of the Other Properties from 18 July 2006 to 15 January 2014.
It was the trustee of the following trusts:

The Neilson Martha Cove Harbour Precinct Land Owner Trust; and

The Truce Martha Cove Harbour Precinct Land Owner Trust.

It was deregistered on 16 November 2014.

IPC

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

Australian Property Institute

The Australian Property Institute (“API”) was an industry recognised organisation for property professionals in Australia which, together with the Property Institute of New Zealand:

represents the interests of more than 11,000 property specialists throughout Australia and New Zealand; and

issues annual manuals (including Practice Standards) setting out the duties, responsibilities and professional standards of members of the Australian Property Institute and of the Property Institute of New Zealand.

Reference was made to API Practice Standards and API Guidance Notes in these proceedings.

MCD (Aust) Pty Ltd

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

Key Individuals

In addition to the multitude of relevant entities, the factual matrix of these proceedings was complicated by the number of “key individuals” that held and/or changed positions within one or more of the abovementioned entities. As such, the key individuals, together with their respective roles at relevant times, are summarised in the below in tabular form, by reference to the following groupings:

the plaintiffs;

liquidators of the plaintiffs;

the Indigo Group; and

MCD.

The Plaintiffs

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

Liquidators of the Plaintiffs

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

The Indigo Group

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

MCD

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

TERMINOLOGY

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

“As If Complete”

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

“As Is”

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

“Berth”

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

“Capitalisation methodology”

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

“Gross Realisation”

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

THE EVIDENCE

The evidence in the proceedings was voluminous and primarily consisted of the following documents:

Amended Evidentiary Statement of Simon Cathro, Liquidator of the plaintiffs, dated 4 July 2017 (Ex 7);

Supplementary Evidentiary Statement of Simon Cathro dated 6 July 2018 (Ex 8);

Part E of the Court Book, which consisted of 12 volumes, described as a “chronological bundle”, and included material from 11 June 1999 through to 17 June 2019 (Ex 9);

Defendants’ Tender Bundle (Ex 10);

Joint Key Documents Bundle (Ex 11);

Affidavit of Douglas Robert Lane dated 5 July 2018, together with exhibit DLR-3 (Ex 12);

Affidavit of Douglas Robert Lane dated 19 February 2019, together with exhibit DLR-4 (Ex 13);

Affidavit of Michael Wright dated 5 October 2018, together with exhibit MW-1 (Ex 14);

Affidavit of Michael Wright dated 5 October 2018, together with exhibit MW-1 (Ex 15) (notwithstanding the repeated date and exhibit description, Ex 14 and 15 were two different documents);

ANZ Valuation Guidance Note 2: “Valuations for Mortgage Loan Security Purposes” (Revised February 2006) (Ex 16);

Affidavit of Robert Gordon dated 4 October 2018, together with exhibit RG-1 (Ex 17); and

Affidavit of Robert Gordon dated 2 August 2019, together with exhibit RG-2 (Ex 18A).

At the hearing Mr Lane, Mr Wright and Mr Gordon, the expert witnesses, provided oral evidence via concurrent evidence. I will turn to a summary of the expert evidence in the course of my considerations after setting out the factual background.
In considering the lay evidence given by each party, it is important to bear in mind the respective positions of the parties. The plaintiffs are in liquidation and bring these proceedings by their liquidator, Mr Cathro. Mr Cathro has put in evidence of the documents available to him. The plaintiffs did not call any of their former officers. As was common ground, and stated by counsel for the defendants on a number of occasions, Mr Cathro in his capacity as liquidator of City Pacific had sued some of those officers in separate proceedings. Jones v Dunkel has no application to the position of the plaintiffs, the former directors and employees of City Pacific are not in the same camp as the companies in liquidation: see, by analogy, Australian Securities and Investments Commission v Hellicar (2012) 247 CLR 345 at [254] and [265] (per Heydon J).
On the other hand, Mr Nicodimou was available and was not called by the defendants. I accept the submissions of the plaintiffs that the Court should not draw any inference favourable to the defendants as to what Mr Nicodimou may have said orally regarding the valuations or how it was that he came to adopt a particular valuation methodology.

SUBMISSIONS

The Court had the benefit of detailed and comprehensive written submissions prepared by counsel for the plaintiffs, Mr J C Giles SC with Mr B G Curtin, and the defendants, Mr D A Lloyd SC with Ms V Bulut. Their written submissions are as set out below:

Plaintiffs’ Outline of Closing Submissions dated 20 September 2019, which consisted of 296 paragraphs (78 pages);

Defendants’ Outline of Closing Submissions dated 14 October 2019, which consisted of 151 paragraphs (45 pages); and

Plaintiffs’ Outline of Closing Submissions in Reply dated 21 October 2019, which consisted of 93 paragraphs (22 pages).

FACTUAL FINDINGS

Introduction

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

CBRE Quality Assurance Procedures

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

Valuation instructions

The Draft Valuation

On about 10 March 2006, Mr Nicodimou provided Mr Sullivan of City Pacific with a copy of a draft valuation of a number of properties within the Martha Cove Development, including the Marina. The draft valuation was titled: “A Valuation Report prepared for City Pacific Limited Of Stages 2A —H, S7, S8 & 3, 4A-C, 5, 6, Martha Cove Safety Beach VIC 3004” (“the draft valuation”) and dated 9 February 2006.
In s 1.1 of the draft valuation, the defendants recorded the instructions they had received from City Pacific dated 27 February 2006, being, relevantly, to assess the “Current Market Value ‘As Is’” and the “Gross Realisation ‘As if Complete’” of the Marina for “first mortgage security purposes”. Section 1.1. is extracted below:

1.1 Instructions
We refer to written instructions received from Mr Matt Gillam, City Pacific Limited, dated 27 February 2006 requesting us to undertake a valuation of the freehold interest of the subject property for first mortgage security purposes. Specifically we are to assess the following:
1. Current Market Value "As Is" acknowledging the permit, approved plans, pre-sales and Quantity Surveyor verification of Costs (Rider Hunt) and the Gross Realisation "As if Complete" for each Stages 2A-H, 57, S8, 3 and Stages 4A-C, 5, 6.

We enclose herewith a copy of the Letter of Instruction, refer Appendix I.

(The “copy of the Letter of Instruction” was not annexed with the draft valuation).

The draft valuation responded to express instructions to value the Marina on a gross realisation basis.
At some stage prior to 25 May 2006, Marina Cove became the registered proprietor of the Marina and the Other Properties. As earlier mentioned, City Pacific was the ultimate parent company of Marina Cove.
On about 28 April 2006, Marina Cove provided various documents to Mr Neilsen at IPC, including feasibility reports for the Marina and Other Properties, in connection with a proposed sale of those properties to the Indigo group. The defendants disputed the relevance of this fact to the proceedings, but did not appear to dispute its occurrence.
It is apparent that it was anticipated that the purchase by the Indigo group was to be funded by a loan by City Pacific in its capacity as responsible entity of the CPMT. In the events which occurred, Marina Cove also provided vendor finance. Although that is part of the factual setting, the vendor finance does not inform the analysis. The purchaser repaid Marina Cove in about August 2007.

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

By letter dated 25 May 2006, addressed to Mr Nicodimou, City Pacific engaged CBRE to provide a valuation report in respect of the Marina and the Other Properties for mortgage security purposes in accordance with “City Pacific Limited Valuation Guidelines” (“the Valuation Retainer”). The Valuation Retainer expressly stated that the valuation report was to be relied upon by City Pacific and PTQ as custodian for the CPMT.
The purpose of the valuation, expressly stated in the letter, was that City Pacific was considering funding, by loan, the acquisition by an Indigo group company of the Marina and Other Properties. The following facts are not controversial:

the letter expressly referred to a valuation for mortgage security purpose (the “re” of the letter);

the letter stated that the valuation be of, inter alia, the Marina, drawing no distinction between the Marina and the Other Properties in terms of that which was to be valued; and

the letter stated that the valuation was to be “as is”.

At the outset, the Valuation Retainer stated:

It is essential that you use and undertake procedures, processes, enquiries and examinations that would reasonably be expected of a registered valuer to determine market value of the property. City Pacific Limited will place considerable reliance on your valuation in assessing whether the loan proceeds.
[Emphasis added.]

As to that initial instruction, the plaintiffs contended that the reference to “procedures, processes, enquiries and examinations that would reasonably be expected of a registered valuer to determine market value of the property” is informed by the API Practice Standards and the expert evidence before this Court. Reference, in that respect, was made to Practice Standard 1, in particular, para 4.0, which is extracted below:

4.0 SALE IN ONE LINE OR SINGLE TRANSACTION
Where a valuation is undertaken of multiple properties in one development the sum of individual values must not be reported as the value of the development, but if aggregated must be reported as the total gross realisation.
A Sale In One Line valuation must be based on the assumption of a single transaction for the total holding or a sale in one line to one buyer.

The effect of that standard, it was correctly submitted, “is that a gross realisation analysis is not to be stated as a valuation of separate properties”. That requirement, it was further contended by counsel for the plaintiffs, was consistent with the suggestion ultimately made by Mr Wright that a gross realisation might be an integer in a valuation, but otherwise tells one little or nothing about the market value of a property. That evidence is extracted below (T112.48-115.20):

GILES: Just coming back to paragraph 39 and the valuation of May 2006, do you accept that the valuation of May 2006 was not a valuation of a freehold interest in lot S17?
WITNESS WRIGHT: I do agree.
GILES: Do you also agree that it did not express the market value of the 239 lots if traded in one line?
WITNESS WRIGHT: Correct.
GILES: And one would say the same about the 2007 valuation. That is, it was not a valuation of a freehold interest in lot S17?
WITNESS WRIGHT: That’s right.
GILES: And it did not tell you what the market value of the then 233 berths were if sold in one line?
WITNESS WRIGHT: That’s right.
GILES: And that’s because if sold in one line you would not expect the market value to equate to the sum of 239 individual sales?
WITNESS WRIGHT: Correct.

That conclusion also follows as the definition of market value which was adopted in substance reflecting the well-known Spencer v Commonwealth of Australia (1907) 5 CLR 418 (“Spencer”) definition at 431-432 (per Griffith CJ).
Returning to the Valuation Retainer, the following “special instructions” were also included:

Special Instructions relating to the Valuation are:
• Include a copy of these instructions (including Valuation Guidelines and Report Content Requirements) in each report provided.
• We are seeking an ‘as is’ valuation only.
• Assessment of values must exclude GST.

• The report must be signed or counter-signed by a Director or Officer of your Company authorised by your current professional indemnity policy.

The Valuation Retainer incorporated a copy of the City Pacific Limited Valuation Guidelines (which included “the Report Content Requirements”) (collectively, “the Valuation Guidelines”). An extract of those guidelines appears below:

Immediately following that table was a further table described as “Valuation Report Content where applicable”. It included additional guidelines with respect to the content of the report and including, inter alia, the following categories:

Land and Title Details;

Environment and other Special Risks;

Improvements;

Market Commentary;

Valuation Rationale; and

Determination of Valuation and Summary.

Next to the heading, “Valuation Rationale”, the following guidelines relevantly appeared:

• The valuer must use the most appropriate method of valuation showing adequate substantiation and compliance with the relevant API Practice Standards and API Guidance Notes
…
• The valuation rationale is to be supported by at least one check method. The reasons as to why one method of valuation is deemed to be most reliable should be provided…

Next to the heading, “Determination of Value and Summary”, the following guideline relevantly appeared:

• Comment on the ability of the property to hold its value over a period of 3-5 years

On 1 June 2006, Mr Nicodimou sent an email to Mr Gillam, then the Assistant Lending Manager at City Pacific, providing details of the valuations for the Marina and the Other Properties. That email stated:

Matt please find attached assessments for Meinstock and Barton.
In relation to the Retirement Site as per the valuation report. The assessment of 7,500,000 is GST exclusive and assumes approval for 150 units and a land size of 6.2 hectares. Please let me know if these details vary.
Can you provide me with the Contracts of Sale for the retirement site to Grande Pacific and the Contract to Indigo for Stages 2H, S7 & S8.
In relation to the Commercial S7 and S8 I have assessed the value for the retail at $10,000,000 based on the finished product. We did not do a land value for• this part. Please call to discuss this.
In relation to the 239 berths the “completed” value of these leasehold berths was assessed at $26,185,000. The GST exclusive figure will be $23,804,545 and the 44 condos villa lots (as if complete) were assessed at $8,800,000 inc GST so the GST exclusive figure is $8,000,000.
I am assuming that Indigo are buying the completed berth and condo lots not the land?
Please note that if the information in the valuation report is now not current, ie planning etc, then the above numbers will vary particularly for the Mariner Berths and commercial and aged care.
Please call to discuss the above.
[Emphasis added.]

On 1 June 2006, Mr Gillam responded by an email to Mr Nicodimou, which stated:

Thanks Chris. Mienstock and Barton numbers look ok.
In direct response to your queries (in the order you have sent through below);
Retirement Site — As it stands at present your assumption of 150 units and land size is correct. This is in the process of being varied but as it stands right now this is correct. The retirement site price will be $7.5M plus GST.
Contracts — are currently being prepared for Grande Pacific and Indigo. Unavailable to get to you at present.
Commercial land — For the Retail portion the land price is $3M plus GST.
Indigo are buying the completed berths and condo lots — you are correct.
[Emphasis added.]

Later that day, Mr Nicodimou responded by an email to Mr Gillam, which stated:

Ok Matt, therefore all is satisfactory.
Or do you need me to assess a land value for the retail?
Can you confirm the land area please.

A factual dispute arose as to the effect of Mr Gillam’s emails with Mr Nicodimou upon the instructions given to the defendants via the Valuation Retainer.
In support of that finding the defendants contended:

That the effect of those communications was that the relevant interest to be valued was the leasehold interest in the Marina; that the leasehold interest was to be valued on a gross realisation basis; and that the Marina was to be valued “as if complete” rather than “as is”.

That the basis of preparation alleged by the defendants should have been obvious to any sophisticated reader of the June Valuation, such as City Pacific.

Further, it was contended that “the plaintiffs’ expert accept[ed] that this email changed the instructions given to the defendants, to require them to value the [Marina] on a completed berth basis”.

For the following reasons, I do not accept that the email exchange between Mr Gilliam and Mr Nicodimou in June 2006 constituted a change of instructions set out in the Valuation Retainer:

The June Valuation stated that it was prepared on the basis of the instructions contained in the Valuation Retainer (see s 1.1 of the June Valuation, extracted below). Any reader, sophisticated or otherwise, is entitled to understand that the June Valuation was prepared on the stated basis, namely, on the instructions attached and act on that on that basis. If the communications between Mr Gillam and Mr Nicodimou did alter the basis on which the June Valuation was to be prepared, it would be misleading for the valuation not to expressly and clearly refer to any changes to the Valuation Retainer brought about by those communications.

To the extent the expert evidence can go to this issue, in cross-examination the defendants did not take Mr Lane or Mr Wright, the valuation experts retained by each party, to any of the references to market value in either the June Valuation (or the Amended Indigo Valuation). To the extent the experts could make comment on what the email correspondence meant (noting the expert cannot properly do so because it not being a topic of expertise and the communications were incomplete as the telephone conversations referred to are not proved and may inform the meaning) the cross-examination miscarried by not referring to market value.

Whilst Mr Nicodimou communicated with Mr Gillam and Mr McCormick in early June 2006 about the June Valuation (and, as set out below, again in June 2007 about the Martha Cove Development and the Amended Indigo Valuation), the defendants failed to call Mr Nicodimou. The defendants served an affidavit sworn by Mr Nicodimou, and there was no reason not to call him. In those circumstances, the plaintiffs’ contended that Jones v Dunkel (1959) 101 CLR 298 applies. I accept that it should be inferred that Mr Nicodimou could not give any evidence consistent with the defendants’ theory that the basis on which they were instructed to value of the Marina was changed by instruction (at least beyond a suggestion of “as if complete” rather than “as is”).

To the extent it is open to suggest that the defendants’ instructions changed by reference to the communications between Mr Gillam and Mr Nicodimou, it is important to note the extent to which they changed. Those communications may justify a change in instructions from an “as is” to an “as if complete” valuation, however, they would not explain any change in instructions from valuing the freehold interest in the Marina to the leasehold interest. The opposite is true: the email from Mr Gillam dated 1 June 2006 only refers to the “completed berths”. Further, those communications do not justify a change from market value to a gross realisation value, and the evidence is that gross realisation tells one little or nothing about market value. The gross realisation value of the Marina may be an integer in a discounted cash flow analysis if a valuer was to assume a business model of selling leases on a long term basis, but it does not itself tell one anything about market value.

Offers of finance

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

The Indigo Loan Facility

After exchanging preliminary offers, on 22 June 2006, City Pacific, in its capacity as the responsible entity of the CPMT, offered to provide a facility of $27.84 million to the Indigo Group for the purposes of acquiring the Marina and the Other Properties (“the Indigo Loan Facility”).
The parties provided the following agreed definition of the Indigo Loan Facility:

Deed of loan between the PTQ, acting as agent for City Pacific in its capacity as the responsible entity of the CPMT, ILO and IHPO in the amount of $27.84 million for the purposes of acquiring the Marina and the Other Properties dated 30 June 2006.

The Indigo Mezzanine Facility

On the same day, Marina Cove offered to provide a facility of $6.88 million to the Indigo Group to assist with the purchase of security, expenses and interest costs associated with the Indigo Loan Facility (“the Indigo Mezzanine Facility”).
The parties provided the following agreed definition of the Indigo Mezzanine Facility:

Deed of loan between Marina Cove, ILO and IHPO in the amount of $6.88 million for the purposes of assisting with the purchase of security, expenses and interest costs associated.

Both offers were subject to the provision of security by the Indigo group, including mortgages over the properties, and to a satisfactory valuation for mortgage security purposes being obtained.
The offers did not commit City Pacific; its commitment to lend on the terms suggested being subject to its determination that the security was of sufficient value.
The Indigo Group accepted the offers on 26 June 2006. City Pacific’s commitment to lend remained subject to, inter alia, satisfactory valuations of the security.

Valuation of the Marina

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

The plaintiffs contended that between 26 and 29 June 2006, in connection with the proposed sale and finance of the Marina and the Other Properties, Mr Gillam and Mr Nicodimou exchanged emails and had discussions pursuant to which Mr Gillam requested that the assessment of market value and the valuation for the Marina and Other Properties be increased.
Conversely, the defendants submitted that there was no evidence before the Court as to the contents of any discussions between Mr Nicodimou and Mr Gillam. The Court can only proceed, it was submitted, on the basis of the contents of the emails which were in evidence. Those emails are extracted below.
On 26 June 2006 at 6.08pm, Mr Nicodimou sent an email to Mr Gillam, which stated:

Hi Matt, got your phone message.
I will look into further over night, but I can move the S17 (239 berths) to $20,845,000 ex GST which is $22,929,000 inc GST.
The original figure of $26,185,000 was inclusive of GST.
I have reviewed the figure down as a result of the higher outgoings that you sent me as compared with my evidence.
Also I have moved the commercial centre value up from $10,000,000 up to $12,500,000 which now gives a land value of $2,500,000.
Last time I did not report a land value, just an as [sic] if complete value, based on a build out for the commercial.
I also noticed that S17 does include some waterside houses. If the S17 figure is still a problem then I can always apportion the value a bit differently so more goes towards S17 (ie inc some the waterside apaprtments [sic]).
PS the apportionment of uses to each Lot is roughly mine as you did not have a map or PS for each Lot.
Let me know of your thoughts.
[Emphasis added.]

On 27 June 2006 at 9.03am, Mr Gillam responded by email to Mr Nicodimou, which stated:

I'll give you a call mid morning if that's ok Chris — I've just got a couple of pressing matters to attend to before I can get my head back into this! The main thing I'll be wanting to know is where the original figure of $23.8 exc came into play as that is what we were counting on/relying on to get us over the line. I'll discuss with you in an hour or so.
[Emphasis added.]

Later on 27 June 2006 at 1.36pm, Mr Gillam sent a further email to Mr Nicodimou (“the Further 27 June 2006 Email”), which stated:

Hi Chris,
Further to this;
The total value we need to achieve is $34,800,000 exclusive of GST. This can be apportioned in any manner but this is a critical figure [Original emphasis]. The contract suggests all parcels are being sold under this figure but this is to be expected given the relationship we have with the Indigo Group, hence the Vendor Finance arrangement being undertaken by Marina Cove Pty Ltd. The purchase price exclusive of GST is $30,473,000 with GST of $1,252,172.88 on top of this. Contract prices were set a reasonable time ago and whilst they are arms length, they have been discounted.
The commercial land apportionment could be raised if you are comfortable with an overall value of $12,500,000. A land content of $4,000,000 would not be unreasonable? I assume there would have had to have been a land content included in an 'as if complete' value of $9,090,909 exc GST? CPPM had originally assumed from a land/building split - $3,000,000/$6,090,909.
Would this then allow you to place a figure of $22,000,000 exc GST on the Marina berths without compromising your evidence to any severe degree?
Give me a call to discuss in need.
[Emphasis added.]

In my view, notwithstanding the absence of viva voce evidence from either Mr Nicodimou or Mr Gillam (noting that neither were called to give evidence in these proceedings), it may be plainly inferred that the two men were engaged in discussions between 26 and 29 June 2006, which included verbal conversations not captured in the above email exchange. That conclusion is supported by the content of the above emails, in particular, the repeated references to “phone message” and “give me[/you] a call”, which features in each email. That said, as to the nature and contents of any conversation had, it may only be inferred that the it connected to the issues raised in the emails. No further conclusions are available on the evidence before the Court. As such, the weight to be put on the fact of such conversations is limited.

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

The plaintiffs contended that the Further 27 June 2006 Email informed
Mr Nicodimou of the relationship between City Pacific and the purchaser (at that time). The text relied upon in the Further 27 June 2006 emailed was:

… The contract suggests all parcels are being sold under this figure but this is to be expected given the relationship we have with the Indigo Group, hence the Vendor Finance arrangement being undertaken by Marina Cove Pty Ltd.

The defendants submitted that the email speaks for itself. At its highest, it tells of a relationship but not the nature of extent of that relationship.
In the absence of Mr Nicodimou being called to give evidence, it is difficult to see how significant weight can be attached to a statement of Mr Gillam to Mr Nicodimou as to the relationship between City Pacific and the Indigo Group. As to this second factual controversy, I accept the submission of the defendants. At its highest, the Further 27 June 2006 Email, in particular the passage relied upon by the plaintiffs, indicates that a relationship existed as at that time but does not sustain an inference as to Mr Nicodimou’s knowledge of the nature or extent of such a relationship as at that time.

The Significance of the Further 27 June 2006 Email

The plaintiffs advanced the following submissions as to the significance of the Further 27 June 2006 Email:

While it does not reflect well on Mr Gillam’s competence (he appears more interested in the deal rather than value), he was not the decision maker. That Mr Gillam was not the decision maker only emphasised the need for a valuation which accorded with instructions, and the instructions recorded in the valuation.

The email informed Mr Nicodimou of the relationship between City Pacific and the purchaser. That relationship was one foundation of Mr Wright’s evidence (in the “Reply Report” referred to below) to the effect that he thought it usual that the purchaser had the June Valuation, and demonstrates that acting reasonably the defendants ought to have expected that the Amended Indigo Valuation would be shared with City Pacific.

In contrast to the first contention, the defendants relied on the course of correspondence between City Pacific and Mr Nicodimou between 25 May 2006 (the date of the Valuation Retainer) and when the June Valuation was completed as evidencing a change in instructions.
In reply to that contention that plaintiffs submitted:

31. There are numerous problems with that theory, and this email demonstrates one of those problems. Directing attention to higher outgoings to the Marina owner is prima facie inconsistent with a valuation involving tallying up potential sale prices of long-term leases. Taking outgoings into account is a proper analysis, either of capitalising net income or a discounted cashflow. The present point is that this correspondence does not convey the meaning for which the defendants contend.

Further, even if the Court accepted the defendants’ submission, the plaintiff submitted, such a fact would not diminish the plaintiffs’ case for the following reasons:

The June Valuation was expressly stated to be in response to the instruction contained in the Valuation Retainer. A reader of the June Valuation may reasonably have understood that statement to be accurate. One reason why a valuation usually incorporates the letter of instruction (in this case, the Valuation Retainer) is so that a reader is left in no doubt as to the basis of the valuation. Put another way, publication of the valuation conveys that the valuation was prepared in accordance with the attached instructions and not on some other basis.

Taken at its highest the correspondence might be understood as consistent with an “as if complete” valuation rather than an “as is” valuation. The correspondence does not contemplate:

something other than a market valuation; or

a valuation of the individual berths rather than the freehold Marina lot. As already identified, the communications are consistent with the proper approach to valuation using capitalised income or a discounted cash flow (see the 26 June 2006 email, extracted above, referring to taking outgoings into account).

There appears to have been telephone conversations between Mr Gillam and Mr Nicodimou. As mentioned above, Mr Nicodimou was to give evidence in the defendants’ case but chose not to. No inference should be drawn in the defendants’ favour. Instead, it may be readily inferred that instructions were not expressly altered. Afterall, had Mr Nicodimou given evidence it may be expected that he would (whether in chief or in cross-examination) give evidence about, inter alia:

why the Valuation Retainer was attached to the June Valuation if instructions had been changed;

the use he was making of costs in his valuation exercise; and

his conversations with Mr Gillam. In his public examinations, Mr Nicodimou gave evidence that:

he had prepared the June Valuation in accordance with the Valuation Retainer (see examination before Senior Deputy Registrar Bellach on 9 May 2016);

that he had taken the costs into account in his valuation exercise (see examination before Senior Deputy Registrar Brown on 11 May 2016); and

that he did in fact have conversations with Mr Gillam (see examination before Senior Deputy Registrar Brown on 11 May 2016).

In my view, the course of correspondence does not permit, for the reasons advanced by the plaintiffs in their reply submissions, a change of instructions. With that finding includes a consideration of whether or not Mr Gillam had such authority and/or capacity to make such variations.

June Valuation

On 30 June 2006, Mr Nicodimou sent an email to Mr Gillam attaching the final signed June Valuation. The Valuation Retainer and Valuation Guidelines were annexed to the June Valuation (see Appendix I to the June Valuation). There is no express statement of any different instruction.
The June Valuation valued the Marina and the Other Properties as at 18 May 2006 for a total assessed value of $34.8 million (excluding GST). The June Valuation was comprised as follows:

Lot S17 (239 leasehold berths) - $22.5 million GST exclusive on a “Gross Realisation – ‘As if Complete’” basis;

Lots S22 and S24 - $8.8 million GST exclusive on a “Current Land Value As Is” basis; and

Lot 23 – $3.5 million GST exclusive on a “Current Land Value As Is” basis.

The “client” listed on the June Valuation was City Pacific.
In light of the contentions raised by the plaintiffs in these proceedings, it is necessary to set out particular aspects of the June Valuation.
The June Valuation is divided into seven broad areas:

Introduction;

Site Details;

Property Description;

Market Commentary;

Sales Evidence for "As Is" Values;

Valuation Rationale; and

Contact Details.

In addition to those topics, the June Valuation included a “Valuation Summary”; “Assumptions, Disclaimers, Limitations & Qualifications”; and Appendices I-VI.
In written submissions, the parties made particular reference to the contents appearing within Introduction, Property Description, Sales Evidence for "As Is " Values, and Valuation Rationale. Reference was also made to the disclaimers included within the report. The relevant passages are extracted below.

Introduction

Section 1.1 is extracted below:

1.1 Instructions
We refer to written instructions received from Mr Matt Gillam, City Pacific Limited, dated 25 May 2006 requesting us to undertake a valuation of the leasehold and freehold interest of the subject property for first mortgage security purposes. Specifically we are to assess the following:
1. Current Market Value "As Is" acknowledging the permit, approved plans for each Stages Lot Si 7 (As If Complete), Lot S23, Lot S22 and S24 on Plan of Subdivision PS435310J (Stages S7, SS, 2H, S6).
We enclose herewith a copy of the Letter of Instruction, refer Appendix I.

The definitions of “Market Value”, “Gross Realisation” and “As If Complete” adopted in the June Valuation appear at s 1.6, see below:

1.6 Market Value Definition
The Australian Property Institute (API) has adopted the international definition of Market Value, namely:
"Market Value is the estimated amount for which an asset should exchange on the date of valuation between a willing buyer and a willing seller in an arm's length transaction, after proper marketing, wherein the parties had each acted knowledgeably, prudently and without compulsion".
We also provide the following definition of 'Gross Realisation' and 'As if Complete' which are in accordance with the API Guidelines:
"Gross Realisation at the date of valuation is the sum of the Market Values of the individual units which a property can achieve over a specified selling period, assuming an orderly sole, between willing buyers and willing sellers, in arms length transactions, after proper marketing, wherein the parties acted knowledgeably, prudently and without compulsion."
"The Value 'As If Complete' assessed herein is the Market Value of the proposed improvements as detailed in the report on the assumption that all construction has been satisfactorily completed in all respects at the date of this report. The valuation reflects the valuer's view of the market conditions existing at the date of the report and does not purport to predict the market conditions and the value at the actual completion of the improvements because of the time lag. Accordingly, the 'As If Complete' valuation must be confirmed by a further inspection by the valuer, initiated and instructed by the lender, on completion of improvements. The right is reserved to review, and if necessary, vary the valuation in this report if there are any changes in relation to the project itself or in the properly market conditions and prices."

Property Description

At s 3.1, the land that was subject to the valuation was set out. Under the heading “Overall Proposal” the following appeared:

Martha Cove is a unique waterfront residential community combining an integrated boat harbour and commercial development currently under construction. The total estate is set on 94 hectares of land with 17 hectares of waterways with direct access to Port Phillip Bay. It is intended that on completion there will be 1,173 residential dwellings, 786 marina berths, 200 dry berths, commercial and retail precincts and tourist accommodation. The development will be released in 6 stages over 4 years. Stages 1 and 2 are currently for sale and includes a mix of waterfront apartments and harbour side apartments/townhouses.

An extract appears below:

Section 3.2 is titled “Development Timeline”. The section confirms that CBRE “have been provided with a detailed development timeline for the subject development”, which “form part of Stage 2”. Following a table that sets out the timing for development from Stage 2 to Stage 6, the following is recorded:

Development of Martha Cove is well advanced with the waterway complete up to Precinct 2A. At the time of inspection much of the infrastructure associated with Stage 2 was underway with some internal roads complete. The revetment wall associated with Precincts S6 and 2H were under construction.
As indicated in the above table from the date of valuation a number of the stages identified have commenced.
The final completion date is expected in October 2008 assuming the current timing.
Our assessment of the value of the subject site is critical that this timing be maintained and advised that our assessment be referred back in the event of any variation.

Sales Evidence for "As Is " Values

Section 5.2.1 provided:

5.2.1 Conclusion — Berths "As If Complete"
Therefore based on the above sales evidence of leasehold berths we have adopted a wet berth value of $55,000 to $187,500 per berth varying on size and width for the subject.
Leasehold Marina Berths Lot 517 (Stage 2H 56)
Our estimates of present day value are based on current market knowledge and are exclusive of GST.

Section 5.5 is extracted below:

5.5 Summary of Assessed Values
We have summarised below our assessments for the individual components above.

Lot S22 and 524 (44 Waterside Apt)

$ 8,800,000

Lot S17 (239 Leasehold Berths)

$22,500,000 (As If Complete)

Lot 523 (Retail Site)

$ 3,500,000

TOTAL ASSESSMENT

$34,800,000

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

Valuation Rationale

Sections 6.1 and 6.2 appear below:

6.1 Introduction
In arriving at our opinion of the market value of the subject site we have relied on the direct comparison approach having regard to comparable sales particularly within the subject development and current economic conditions.
6.2 Assessment Summary
We have summarised below our assessments for the individual components above.

Lot S22 and 524 (44 Waterside Apt)

$ 8,800,000

Lot S17 (239 Leasehold Berths)

$22,500,000 (As If Complete)

Lot 523 (Retail Site)

$ 3,500,000

TOTAL ASSESSMENT

$34,800,000

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

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

The Disclaimers

Two disclaimers appeared in the June Valuation, which attracted significant controversy in the context of the parties’ respective cases vis-à-vis reliance (particularly in the context of the Amended Indigo Valuation, which will be set out below). The relevant disclaimers are found on page vi and s 1.4 of the valuations.
The disclaimer on page vi appears next to the heading “Assumptions, Disclaimers, Limitations & Qualifications”. It is extracted below:

Assumptions, Disclaimers, Limitations & Qualifications:
This valuation report is provided subject to the assumptions, qualifications, limitations and disclaimers detailed throughout this report which are made in conjunction with those included within the Assumptions, Qualifications, Limitations & Disclaimers section located at the beginning of this report. Reliance on this report and extension of our liability is conditional upon the reader’s acknowledgement and understanding of these statements. This valuation is for the use only of the party to whom it is addressed and for no other purpose. No responsibility is accepted to any third party who may use or rely on the whole or any part of the content of this valuation. The valuer has no pecuniary interest that would conflict with the proper valuation of the property.
The assessment of the individual values assumes the development is completed to a satisfactory standard as at the date of valuation having regard to market evidence existing at the time, and does not purport to represent values at any future point in time.
[Emphasis added.]

Section 1.4 is also described as a disclaimer. Under the heading, “Extension of Liability & Confidentiality”, the following appears:

This report may only be relied upon by City Pacific Limited, The Public Trustee of Queensland ACF the City Pacific Mortgage Trust for first mortgage security purposes.
This confidential document is for the sole use of persons directly provided with it by CB Richard Ellis. Use by, or reliance upon this document by anyone other than City Pacific Limited, The Public Trustee of Queensland ACF the City Pacific Mortgage Trust is not authorised by CB Richard Ellis and CB Richard Ellis is not liable for any loss arising from such unauthorised use or reliance. This document should not be reproduced without our prior written authority.

I will return to the plaintiffs’ contentions as to the alleged misleading and deceptive representations within the June Valuation at a separate juncture in the context of a consideration of the relevant issues in dispute.

Sale of the Marina to Indigo

On about 29 June 2006, a proposal in relation to the Indigo Loan Facility was prepared. The proposal was titled: “Proposal – Variation/Extension of Loan”. An extract of that proposal appears below:

That proposal referred to a valuation date of 18 May 2006 and a property value of $34.8 million, which details correspond with the June Valuation. That proposal adopted the June Valuation. Further, City Pacific at that stage, it was contended, was expressly acting in reliance on the June Valuation.
The sale of the Marina and Other Properties occurred, financed by City Pacific as responsible entity for the CPMT and by vendor finance from Marina Cove. On the same day, the sale of the Marina and Other Properties occurred, financed by City Pacific as responsible entity for the CPMT and by vendor finance from Marina Cove. A number of documents were executed effecting the sale of the Marina and the Other Properties, including:

contract of sale for the sale of the Marina to ILO for a purchase price of $21,203,000 (excluding GST), including the Berth Infrastructure Payment of $3,251,728.82 (excluding GST);

contract of sale for the sale of the Other Properties to IHPO for a total purchase price of $9,270,000 (plus GST).

(It may be noted that whilst the presence of different buyers is part of the factual narrative to these proceedings, that fact is of no significance to the outcome of the ultimate issues in dispute).

On 30 June 2006, a number of documents effecting the Indigo Loan Facility and the Indigo Mezzanine Facility and associated security were also executed, including:

a mortgage given by ILO to PTQ over the Marina; and

a mortgage given by IHPO to PTQ.

The effect of those transactions, when completed, relevantly was that ILO acquired the Marina, funded by PTQ as custodian of the CPMT. Marina Cove provided mezzanine finance, secured by a second ranking mortgage.
As to the issues concerning the operation of s 601FS of the Corporations Act 2001 (Cth) vis-à-vis the rights, obligations and liabilities of former responsible entities, I will return to those contentions at a separate juncture in the context of the consideration of the issues in dispute.

Indigo Valuation

By early 2007, ILO was looking to sell or refinance the Marina.
By letter of instruction dated 14 February 2007, MCD on behalf of the Indigo group engaged CBRE “to update the Valuation for Martha Cove Activity Centres for the Marina Lot S17 and the apartments at Lots S22, and 24 to reflect Current Market Value “As Is” acknowledging the permit, approved plans for each Lot S17, Lot S23, Lot S22 and S24 on Plan of Subdivision PS435310J (Stages S7, S8, 2H, S6 of the Martha Cove Master Plan” (“14 February 2007 Letter”).
That letter of instruction is extracted in full below:

Dear Chris
Re: Martha Cove Activity Centre
Revision of Land Valuation Commission Confirmation
MCD Australia on behalf of Indigo Group, confirm your commission to update the Valuation for Martha Cove Activity Centres for the Marina Lot S17 and the apartments at Lots S22, and 24 to reflect Current Market Value "As Is" acknowledging the permit, approved plans for each Lot S17, Lot S23, Lot S22 and S24 on Plan of Subdivision PS435310,1 (Stages S7, S8, 2H, S6 of the Martha Cove Master Plan)".
We request that you proceed with the completion of this report and issue a draft copy to our offices via email as soon as possible. We agree to reimburse you upon the completion and issue of this report for the agreed fee of $25,000 plus GST.
We trust the above is concise and await your report.
Yours faithfully
MCD (Aust) Pty Ltd
Bart O'Callaghan
Victorian Manager

On 16 March 2007, Mr Nicodimou provided MCD with a valuation report in response to the above instructions, and which expressed an opinion as to market value as at 30 January 2007. That valuation report was titled: “A Valuation Report prepared for MCD AUSTRALIA ON BEHALF OF INDIGO (MARTHA COVE HARBOUR PRECINCT LAND OWNER) PTY LTD Of “Martha Cove Marina & Commercial Centre” Lot S17, Lot S23, Lot S22 and S24 on Plan of Subdivision PS435310J “Martha Cove” Safety Beach VIC 3936” and dated 30 January 2007 (“the Indigo Valuation”). The relevant letter of instruction is extracted below:

Dear Mr O'Callaghan,
Valuation Report — City Pacific Land Portfolio
Lot S17, S23, S22, S24, on PS435310J, Martha Cove
In accordance with instructions received, we enclose 2 bound originals and a PDF version on CD of our valuation report in relation to the abovementioned property, together with our account for professional fees to the agreed amount.
Please note our terms of payment are 14 days net.
We thank you for this instruction and if we can be of further assistance, please do not hesitate to contact us.
Yours sincerely
CB Richard Ellis (V) Pty Ltd
Chris Nicodimou

In light of the contentions raised by the plaintiffs in these proceedings, it is necessary to set out particular aspects of the Indigo Valuation.
The Indigo Valuation was divided into seven broad areas:

Introduction;

Site Details;

Property Description;

Market Commentary;

Sales Evidence for "As Is " Values;

Valuation Rationale; and

Contact Details.

The Indigo Valuation valued the Marina (namely, Lot S17) at $27.7 million GST exclusive on a “Gross Realisation – As if Complete” basis. The date of valuation was 30 January 2007.
The client listed on the Indigo Valuation was “MCD Australia on behalf of Indigo (Martha Cove Harbour Precinct Land Owner) Pty Ltd”.

Introduction

The relevant instructions provided to CBRE by MCD commissioning the valuation were set out at s 1.1, extracted below:

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

The definitions of “Market Value”, “Gross Realisation” and “As If Complete” appeared again at s 1.6. The definitions adopted for the purposes of the June Valuation were repeated in the Indigo Valuation.

Property Description

At s 3.1, the land that was subject to the valuation was set out. Under the heading “Overall Proposal” the following appeared:

Martha Cove is a unique waterfront residential community combining an integrated boat harbour and commercial development currently under construction. The total estate is set on 94 hectares of land with 17 hectares of waterways with direct access to Port Phillip Bay. It is intended that on completion there will be 1,173 residential dwellings, 786 marina berths, 200 dry berths, commercial and retail precincts and tourist accommodation. The development will be released in 6 stages over 4 years. Stages 1 and 2 are currently for sale and includes a mix of waterfront apartments and harbour side apartments/townhouses.

. An extract appears below:

Section 3.2 is titled “Development Timeline”. The section confirms that CBRE “have been provided with a detailed development timeline for the subject development”, which “form part of Stage 2 and Stage 3”. Following a table that sets out the timing for development from Stage 2 to Stage 6, the following is recorded:

Pursuant to the above development program development of Martha Cove is well advanced with the waterway complete up to Precinct 2G. At the time of inspection much of the infrastructure associated with Stages 1 and 2 was complete with internal roads complete. The revetment wall associated with Precincts S6 and 2H is also complete which includes the Inland Harbour comprising the 233 leasehold berths.
As indicated in the above table from the date of valuation a number of the stages identified have commenced.
The final completion date is expected in 2008/2009 assuming the current timing.
Our assessment of the value of the subject site is critical that this timing be maintained and advised that our assessment be referred back in the event of any variation.

Sales Evidence for “As Is” Values

Relevantly, at ss 5.2.1 and 5.5, the following appeared:

5.2.1 Conclusion - Berths "As If Complete"
Therefore based on the above sales evidence of leasehold berths we have adopted a wet berth value of $72,000 to $300,000 per berth varying on size and width for the subject.

Our estimates of present day value are based on current market knowledge and are exclusive of GST.
…
5.5 Summary of Assessed Values
We have summarised below our assessments for the individual components above.

Lot S22 and 524 (44 Waterside Apt)

$ 8,800,000

Lot S17 (239 Leasehold Berths)

$27,700,000 (As If Complete)

Lot 523 (Retail Site)

$ 3,500,000

TOTAL ASSESSMENT

$40,000,000

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

Valuation Rationale

Sections 6.1 and 6.2 appear below:

6.1 Introduction
In arriving at our opinion of the market value of the subject site we have relied on the direct comparison approach having regard to comparable sales particularly within the subject development and current economic conditions.
6.2 Assessment Summary
We have summarised below our assessments for the individual components above.

Lot S22 and 524 (44 Waterside Apt)

$ 8,800,000

Lot S17 (239 Leasehold Berths)

$27,700,000

Lot 523 (Retail Site)

$ 3,500,000

TOTAL ASSESSMENT

$40,000,000

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

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

Factual Controversies: The Indigo Valuation

I now turn to three particular factual controversies raised with respect to the Indigo Valuation, which concerned the following:

Mr Nicodimou’s knowledge of the relationship (if any) between City Pacific and the Indigo Group in 2007;

Mr Nicodimou’s knowledge of the instructions given to CBRE by MCD; and

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

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

As to Mr Nicodimou’s knowledge of the relationship between City Pacific and the Indigo Group as at 2007, the plaintiffs relied upon their submissions with respect to Mr Nicodimou’s knowledge as at 2006 and, furthermore, the content of the letter of instruction dated 14 February 2007. Turning to the letter, the plaintiffs highlighted the first line of the letter, which stated: “MCD Australia on behalf of Indigo Group, confirm your commission to update the Valuation for Martha Cove Activity Centres for the Marina Lot S17…” (emphasis added). It was contended that such words confirm that it was expressly communicated to Mr Nicodimou that it was the Indigo Group that engaged CBRE to provide a valuation of the Marina.
Additionally, in consideration of this controversy, Mr Nicodimou’s appreciation for a relationship may also be inferred by the subject line of his letter address to MCD: “Valuation Report — City Pacific Land Portfolio”.
In written submissions, the plaintiffs also submitted:

44. … Objectively the defendants also knew that the Indigo group had the June Valuation, as that which was requested was an “update” of that valuation. Further, the requested valuation, sought by the landowners, was for mortgage lending purposes which objectively meant that IHPO was likely to share the valuation with counterparties to proposed transactions. For IHPO to do so was consistent with market practice, as demonstrated by Mr Wright’s evidence, being that a valuer would expect IHPO was likely to share the valuation with counterparties to possible transactions involving the land.

The relevant part of Mr Wright’s evidence at the hearing, relied upon in the preceding submission, is extracted below (see T109.35-110.31):

GILES: In that circumstance you’re telling his Honour it’s not surprising that the May 2006 valuation had been passed from one to the other?
WITNESS WRIGHT: Correct.
GILES: That’s something which, in your experience in the industry occurs?
WITNESS WRIGHT: Yes.
GILES: That is, related entities, even if on the other side of transactions, will share valuations?
WITNESS WRIGHT: Yes.
GILES: That’s something that you’ve seen happen in the industry quite often?
WITNESS WRIGHT: Yes.
GILES: You’ve seen that happen with your reports?
WITNESS WRIGHT: Yes.
GILES: And as an expert valuer, you would expect when you publish a report that it may well be shared by the address with, amongst others, the counterparty to the transaction?
WITNESS WRIGHT: Yes.
GILES: And you would expect the counterparty to the transaction to rely upon it?
WITNESS WRIGHT: I can’t say.
GILES: But you’d certainly expect the counterparty to the transaction to read it?
WITNESS WRIGHT: Yes.
GILES: If you were doing a valuation for a borrower which is expressed to be for mortgage purposes, you would expect the borrower to share that with the lender?
WITNESS WRIGHT: Yes.
GILES: And you would expect that the lender may rely upon it?
WITNESS WRIGHT: Yes.

Turning to the position of the defendants, with respect to the same, they repeated there earlier submission with respect to the evidence of Mr Nicodimou’s knowledge of the relationship as at 2006, namely, there was no evidence that CBRE was told of the nature or extent of the relationship but “merely of the existence of a relationship with the Indigo Group, whatever that label actually means”.
In light of my earlier finding, I accept that Mr Nicodimou had knowledge of the relationship between City Pacific and the Indigo Group. Further, I accept that Mr Nicodimou must have or should have understood the instructing relationship as existed in exchange above.

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

As to Mr Nicodimou’s knowledge of the instructions given to CBRE by MCD, the plaintiff’s contended that, objectively, the defendants knew that the Indigo Group had the June Valuation, as that what was requested in the 14 February 2007 Letter was an “update” of that valuation.

[934] It is convenient to refer to a passage of the judgment in Astley in the present context (at [30]) where the majority (per Gleeson CJ, McHugh, Gummow and Hayne JJ):
[30] A finding of contributory negligence turns on a factual investigation of whether the plaintiff contributed to his or her own loss by failing to take reasonable care of his or her person or property. What is reasonable care depends on the circumstances of the case. In many cases, it may be proper for a plaintiff to rely on the defendant to perform its duty. But there is no absolute rule. The duties and responsibilities of the defendant are a variable factor in determining whether contributory negligence exists and, if so, to what degree. In some cases, the nature of the duty owed may exculpate the plaintiff from a claim of contributory negligence; in other cases the nature of that duty may reduce the plaintiff's share of responsibility for the damage suffered; and in yet other cases the nature of the duty may not prevent a finding that the plaintiff failed to take reasonable care for the safety of his or her person or property. Contributory negligence focuses on the conduct of the plaintiff. The duty owed by the defendant, although relevant, is one only of the many factors that must be weighed in determining whether the plaintiff has so conducted itself that it failed to take reasonable care for the safety of its person or property. [Footnote omitted.]

[935] In Cam & Bear, Macfarlan JA then turned to the provisions of s 5R(2)(a) of the Civil Liability Act as follows (at [83]):
[83] In considering contributory negligence, s 5R(2)(a) (quoted in [80] above) requires regard to be had to how a reasonable person “in the position of” the claimant would have acted. There is no doubt that this provision permits the application of the common law principle stated in Rogers v Whitaker (1992) 175 CLR 479 at 487; [1992] HCA 58 that “the standard of care to be observed by a person with some special skill or competence is that of the ordinary skilled person exercising and professing to have that special skill”. The extent to which it allows or requires a plaintiff’s disabilities to be taken into account when considering contributory negligence has however been the subject of discussion (see for example Boral Bricks Pty Ltd v Cosmidis (No 2) (2014) 86 NSWLR 393; [2014] NSWCA 139 at [87]-[88]; T & X Company Pty Ltd v Chivas [2014] NSWCA 235 at [48]-[56]; (2014) 67 MVR 297, in each case per Basten JA, referring in particular to Joslyn v Berryman (2003) 214 CLR 552; [2003] HCA 34 at [32]-[39] per McHugh J).

[936] In the consideration of Cam & Bear, it is worth noting that both parties accepted that the standard of care required in an assessment of whether a plaintiff has failed to take reasonable care is that of a “reasonable person in the position of the plaintiff… on the basis of what the plaintiff knew or ought to have known at the time”: see T & X Company Pty Ltd v Chivas [2014] NSWCA 235 at [4] (per Beazley P).
[937] In the application of those principles, Macfarlan JA commenced by reviewing some of the particular circumstances of that matter which resonate in the present case. His Honour stated (at [84]):
[84] The issue does not arise in the present case as Dr Bear did not have any relevant disability. Certainly, he lacked any special expertise in financial matters but that simply results in it being necessary to treat him as a person of ordinary capabilities in considering the standard of care he ought to have attained. I add that the appellant, correctly, did not contend that it was not responsible for any default on the part of its directors. No doubt, it was so responsible, either because the directors were effectively acting as the company itself or the directors were persons for whom the appellant was vicariously liable (see Daniels v Anderson (1995) 37 NSWLR 438 at 570).

[938] Further, Macfarlan JA held (at [89]):
[89] In making an apportionment based on a plaintiff’s contributory negligence, the Court must consider “the degree of departure from the standard of care of the reasonable man” and “the relative importance of the acts of the parties in causing the damage” (Podrebersek v Australian Iron & Steel Pty Ltd [1985] HCA 34; (1985) 59 [ALR 529 at 532-3]).

[939] The reference by Macfarlan JA to Podrebersek v Australian Iron & Steel Pty Ltd (1985) 59 ALR 529 (“Podrebersek”) at 532-533 is extracted below:
The making of an apportionment as between a plaintiff and a defendant of their respective shares in the responsibility for the damage involves a comparison both of culpability, ie of the degree of departure from the standard of care of the reasonable man (Pennington v Norris (1956) 96 CLR 10 at 16) and of the relative importance of the acts of the parties in causing the damage: Stapley v Gypsum Mines Ltd [1953] AC 663 at 682; Smith v McIntyre [1958] Tas SR 36 at 42–49 and Broadhurst v Millman [1976] VR 208 at 219 , and cases there cited.

[940] The plaintiff also relied upon the following passage from Polon at [877] (per Hall J):
[877] In determining contributory negligence, a comparison is required of the degree of fault or culpability on the part of each of the parties. That consideration occurs in the context of a comparison between the lack of care of one party with the lack of care of the other and then a determination, having assessed the culpability and the causal potency of the relevant acts, of the degree of contributory negligence on the part of the plaintiff: see Podrebersek v Australian Iron & Steel Pty Ltd (1985) 59 ALR 529 at 523; Ghunaim v Bart [2004] NSWCA 28 per McColl JA at [71]. As the High Court observed in Podrebersek, it is the whole of the conduct of each negligent party in relation to the circumstances of the case that must be subjected to comparative examination.

[941] In Daniels v Anderson, Clarke and Sheller JJA observed (at 568):
The role of the auditor … will, almost certainly, be relevant in considering questions of apportionment and it may be appropriate, in particular circumstances, to make a finding that it is just and equitable that, for instance, the auditor bear all the damages despite the fault of the client.

In my view, the acts of the defendants in causing damage in the present matter are, for the reasons given earlier in this judgment, significant. That consideration needs to be borne steadily in mind in drawing a comparison between that lack of care (or misrepresentation) and, as I have considered to be the case, a lack of care of by the plaintiffs who, in my view, share part of the responsibility for the damage occasioned with respect to the Third Payment.
Thus, central to the consideration of contributory negligence is the Third Payment made by the plaintiffs. By the time of the making of the Third Payment, the plaintiffs acting carefully must have been possessed of real doubts regarding the advice received through the June Valuation and the Amended Indigo Valuation and were otherwise possessed of information which, at least, required greater care before making the Third Payment.
Significantly, the plaintiffs pleaded that the Third Payment was made to ILO “in consideration for the acquisition of the Martha Cove Property”. In written submissions, it was contended the payments were made to preserve the purchase having regard to the worth established by the Amended Indigo Valuation. However, that payment was not required under the Put and Call Option or the Contract for Sale. I agree with the submission of the defendants that this part of the consideration was paid before completion where City Pacific had no contractual obligation to make the payment and when the surrounding circumstances would have called for greater care. There was no documentation explaining the basis for the taking of this step.
Further, the Due Diligence Observations Report emphatically identified the risk associated with the transactions of this kind. It is clear that further finances were being sourced in the period leading to the Third Payment, with a precursor to such funds being provided by the CBA to City Pacific being subject to receipt of a “new” valuation. The surrounding circumstances, in particular, the steps taken by City Pacific in making the Third Payment, notwithstanding concerns raised in internal correspondence about the valuation and the processes associated with the transaction, exhibit the conduct identified as both “commercially risky” and concerning on the part of City Pacific within the Due Diligence Observation Report.
I find no contributory negligence on the part of the plaintiffs with respect to the First and Second Payments of the Martha Cove Property Monies. Those payments do not attract, in my view, these issues.
Having regard to the above considerations, I find contributory negligence with respect to the loss occasioned through the Third Payment. Having regard to the significance of the defendants’ duties and the representations made by them, I nonetheless consider that as to the loss occasioned with respect to the Third Payment the loss should be apportioned 60% to the plaintiffs and 40% to the defendants.

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

The defendants’ primary position was that Phillip Sullivan and James Finucan were concurrent wrongdoers, although they accepted that the concurrent wrongdoers defence overlapped with the contributory negligence defence to the extent that the actions of Mr Sullivan and/or Mr Finucan, through the principles of attribution, the actions of the plaintiffs.
The alternative submission of the defendants involved reliance upon the concurrent wrongdoer defence to the extent that the actions of Mr Sullivan and/or Mr Finucan involved breaches by them of their obligations to one or other or either of the plaintiffs. It was said that this defence was set out in the commercial list statements and the evidence of Mr Gordon.
I accept the contentions of the plaintiff that, to the extent the defence is raised, it is unsustainable for a number of reasons. This is because:

the actions of Mr Sullivan and Mr Finucan are the actions of the plaintiffs and the proportionate liability provisions relied on by the defendants do not apply to require or permit apportion of liability between a company and its officers or employees: see Robinson v 470 St Kilda Road Pty Ltd (2018) 263 FCR 572, following Dunn v Hanson Australasia Pty Ltd (2017) 12 ACTLR 138 and Tomasetti v Brailey (2012) 91 ATR 531;

the defendants have failed to identify, much less lead any credible evidence to prove, the basis of the defence;

to the extent the defendants rely on the Commercial List Statement, that document is not in evidence and in any event the allegations in that document are not capable of constituting admissions by either of the plaintiffs: Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 at 85-6 (per Mason CJ and Brennan J) and 98 (per Gaudron and McHugh JJ); and

Mr Gordon’s evidence has been given little or no weight.

It follows that the answer to Issue 17 is that proportionate liability legislation does not have an effect on any orders for damages the Court will make against one or more of the defendants.

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

Section 601FS of the Corporations Act provides as follows:

(1) If the responsible entity of a registered scheme changes, the rights, obligations and liabilities of the former responsible entity in relation to the scheme become rights, obligations and liabilities of the new responsible entity.
(2) Despite subsection (1), the following rights and liabilities remain rights and liabilities of the former responsible entity:
(a) any right of the former responsible entity to be paid fees for the performance of its functions before it ceased to be the responsible entity; and
(b) any right of the former responsible entity to be indemnified for expenses it incurred before it ceased to be the responsible entity; and
(c) any right, obligation or liability that the former responsible entity had as a member of the scheme; and
(d) any liability for which the former responsible entity could not have been indemnified out of the scheme property if it had remained the scheme's responsible entity.

The defendants contended that the cause of action brought by the first plaintiff is not maintainable. It was submitted that on the evidence, (at least) $9 million of CPMT funds was advanced by City Pacific for the acquisition of the Marina. It was submitted that when City Pacific advanced the Martha Cove Property Monies, it did so in its capacity as a responsible entity of the CPMT. Reliance was placed on the evidence of Mr Cathro that City Pacific’s principal activity was to act as the responsible entity of three registered managed investment schemes, one of which was CPMT (it was then contended by the defendants that City Pacific was replaced as reasonable entity of the fund by Trilogy Funds Management Limited on 25 June 2009 such that the rights of City Pacific become the rights of Trilogy Funds Management Limited as at that date).
It was contended that the evidence did not show that City Pacific used its own funds to pay the Martha Cove Property Monies but rather the payment of $2 million on the 7 October 2007 was transferred from CPMT and the further payment of $7 million on 7 November 2007 was “redeemed” from CPMT to cover “MCM Settlement”.
It was contended, therefore, that City Pacific did not have standing to bring the claim against the defendants as they did not suffer the pleaded loss.
The factual contest between the parties in this respect revolves around the defendants establishing on the evidence that the claims, the subject of the proceedings, were part of CPMT’s scheme property for the purposes of 106FS of the Corporations Act. This is because it is only the scheme property to which section 106FS applied.
The evidence reveals that City Pacific carried on various businesses, some in its own right and some as the responsible entity for various managed investment schemes. So much is clear from the City Pacific’s annual report for the year 30 June 2007. Further, PTQ held the property of CPMT so that investments undertaken by City Pacific were not done as responsible for CPMT.
The separation of City Pacific’s financial affairs between transactions in its own account and as responsible entity of the CPMT are illustrated through City Pacific’s bank accounts which were managed both in its own name and on behalf of its managed entities including CPMT. The evidence revealed the existence of separate bank accounts for that purpose in the CBA, the issuing of separate account statements for each of the accounts as well as the issuing of a report entitled “Diamond Cash Management – Statement Report” which reported on a number of these accounts in one document but with a separation relevant to the separate financial transactions.
To return to the role of PTQ as custodian of the CPMT, PTQ would periodically withdraw money from the CPMT funds account and deposit that money in the CPMT redemptions account. When CPMT acted on a redemption request from a unit holder, or investor in the fund, it would transfer the proceeds of the redemption of the unit holder or investor from the CPMT redemption fund.
With that background in mind, attention may then be directed specifically to the payment of Martha Cove Property Monies by City Pacific.
On 29 June 2007, City Pacific made the First Payment of $2.1 million from a “cash deposit account” operated by City Pacific. That account was operated separately to accounts held by City Pacific on behalf of CPMT.
On 10 October 2007, City Pacific made further payment (the Second Payment of $2 million) from the City Pacific cheque account, which was operated by City Pacific for its own purposes.
Previously, on 28 September 2007, PTQ had withdrawn these funds from the CPMT funds account and deposited them into the City Pacific cheque account.
In my view, it is clear that the aforementioned withdrawal and deposit constituted proper payment by PTQ to City Pacific in its own right.
Next, reference may be made to an email to Mr McCormick sent to Mr Purss entitled “CPL Cash from CPMT”. That email demonstrates that City Pacific invested in the CPMT and, on that particular occasion, redeemed part of its investment. I agree with the submission of the plaintiffs that, in part, the defendants submission proceeded on the premise that City Pacific made no investments in CPMT, but this email stands to the contrary.
On 28 November 2007, City Pacific redeemed part of its investment in CPMT and directed PTQ to make the Third Payment directly to ILO (or IPC on behalf of ILO) from the proceeds of that redemption that were deposited into the CPMT redemption account. On that date, the following transactions occurred:

PTQ withdrew $8.5 million from the CPMT funds account and deposited those funds in the CPMT redemptions account; and

PTQ withdrew $7 million from the CPMT redemptions account with the description “City Pacific Limit City Pacific CLE” .

In City Pacific’s transaction detail ledger dated 11 December 2007, the Third Payment of $7 million is recorded as being “[f]unds redeemed from CPMT to cover MCM Settlement”.
In addition, the Martha Cove Property Monies are recorded in:

City Pacific’s balance sheet included in City Pacific’s board reporting papers for December 2007; and

City Pacific’s audited balance sheet included in its 2008 Annual Financial Report.

In my view, the aforementioned analysis of the evidence establishes that City Pacific used its own money to fund Martha Cove and did not pay the Martha Cove Property Monies in its capacity as responsible entity of the CPMT. Ultimately, the transactional ledger and balance sheets record the Martha Cove Property Monies as an investment by City Pacific in respect of Martha Cove.
In this light, Issue 18 should be answered in the affirmative.

DAMAGES

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

In the FASOC, the plaintiff relevantly claimed the following relief:

damages under s 82 of the TPA; and/or s 236 of the Australian Consumer Law; alternatively,

damages pursuant to s 12GF of the ASIC Act;

damages pursuant to s 1041I of the Corporations Act;

general damages;

interest pursuant to s 100 of the Civil Procedure Act;

costs; and

interest on costs pursuant to s 101(4) of the Civil Procedure Act.

Having established the causes of action in damages for tort and under s 52 of the TPA and its analogues, damages may be awarded to put the plaintiff in the position they would have been in if the relevant wrongs had not occurred.
With respect to misleading and deceptive conduct, the appropriate approach to damages in this case is to identify what the plaintiffs have suffered by way of prejudicial disadvantage in consequence of altering their position by reason of the breach of the relevant statutory provisions as I have found: Henville v Walker (2001) 206 CLR 459; [2001] HCA 52 at [132] (per McHugh J). In any event, the measure of the plaintiffs’ loss at law and under statute are in this case relevantly identical.
The case for damages in this respect focused upon:

the First Payment to ILO as required by the Key Terms Agreement;

the Second Payment to ILO on 2 November 2007 as required by the Contract of Sale; and

the Third Payment to ILO in part payment of the purchase price for the Marina on 28 November 2007 by City Pacific on behalf of Martha Cove.

The position of the plaintiffs with respect to damages was stated thus. Recognising that the plaintiffs cannot recover twice, the Court should award City Pacific or Martha Cove damages in the total amount of $11.1 million (being the total of the First, Second and Third Payments), or alternatively in the amount of one or more of those payments (that is $2.1 million paid on 29 June 2007; $2 million paid on 10 October 2007; and $7 million paid on 28 November 2007). In each case, the plaintiffs also claim interest, costs and interest on costs.

The basis upon which the claims were made in that respect were correctly and succinctly expressed. The Martha Cove Property Monies had been lost and ILO was deregistered. Martha Cove is incapable of paying the Martha Cove Property Monies to City Pacific. It was claimed, therefore, that damages should primarily represent the sum of the First Payment, Second Payment and Third Payment, as earlier mentioned, in the total amount of $11.1 million.
The plaintiffs also claimed interest on each of the separate amounts comprising the Martha Cove Property Monies calculated from the date of payment or, alternatively, the date of accrual of the cause of action to the date of judgment. The plaintiffs also claim costs and interest on costs.
Having regard to my conclusion as to reliance and causation, the damages in the matter should be calculated on the loss occasioned for the Martha Cove Property Monies as adjusted in accordance with my findings as to contributory negligence.

CONCLUSION

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

ORDERS

The Court makes the following orders:

The plaintiffs shall file and serve within 14 days of the date of this judgment short minutes of order reflecting this judgment.

The plaintiffs shall file and serve within 28 days of this judgment any submissions and evidence as to any disputed question as to interest and costs together with the terms of any orders proposed with respect to those disputed matters.

The defendants shall file and serve any submissions and evidence in reply as to any disputed questions, together with the terms of any proposed orders in that respect, within 14 days after being served with the submissions and evidence in (2) above.

Decision last updated: 05 May 2021

Medium Neutral Citation:	City Pacific Ltd (in liq) v CBRE (V) Pty Ltd [2021] NSWSC 456
Hearing dates:	2-5 September 2019; 24 October 2019
Date of orders:	30 April 2021
Decision date:	30 April 2021
Jurisdiction:	Common Law
Before:	Walton J
Decision:	The Court makes the following orders: (1) The plaintiffs shall file and serve within 14 days of the date of this judgment short minutes of order reflecting this judgment. (2) The plaintiffs shall file and serve within 28 days of this judgment any submissions and evidence as to any disputed question as to interest and costs together with the terms of any orders proposed with respect to those disputed matters. (3) The defendants shall file and serve any submissions and evidence in reply as to any disputed questions, together with the terms of any proposed orders in that respect, within 14 days after being served with the submissions and evidence in (2) above.
Catchwords:	VALUATION – valuation of marina – valuation retainers – practice standards MISLEADING AND DECEPTIVE CONDUCT – s 52 of Trade Practices Act 1975 (Cth) – s 12DA of Australian Securities and Investment Commission Act 2001 (Cth) – s18 of the Australian Consumer Law – representations in valuation reports – failure to adopt appropriate valuation methodology – failure to explain and cross check methodology – gross overvaluation BREACH OF DUTY – duty of care – breach of duty of care – failure to take precautions against identified risks of harm – valuation not based on reasonable opinion of the value of marina – not product of reasonable care and skill – defendants knew or ought to have known if plaintiffs advanced monies in excess of value NEGLIGENCE – actual reliance – reasonableness CAUSATION – causation arising from breach of duty by misleading and deceptive conduct DEFENCES – statutory time limitations – mitigation – contributory negligence – proportional liability – s 601FS of the Corporations Act 2001 (Cth) DAMAGES – Martha Cove Property Monies – interest – costs
Legislation Cited:	Australian Consumer Law Australian Securities and Investments Commission Act 2001 (Cth) Civil Procedure Act 2005 (NSW) Corporations Act 2001 (Cth) Evidence Act 1995 (NSW) Limitation of Actions Act 1958 (Vic) Trade Practices Act 1975 (Cth) Wrongs Act 1958 (Vic)
Cases Cited:	ABN Amro Bank NV v Bathurst Regional Council (2014) 309 ALR 445; [2014] FCAFC 65 Adelaide Bank Limited v DTS Property Services Pty Ltd [2008] NSWSC 1328 Amadio Pty Ltd v Henderson (1998) 81 FCR 149; [1998] FCA 823 APF Properties Pty Ltd v Kestrel Holdings Pty Ltd (No 2) [2007] FCA 1561 Arcus Shopfitters Pty Ltd v Western Australian Planning Commission [2004] WASC 85 Australian Breeders Co-operative Society Ltd v Jones (1997) 26 ASCR 26; [1997] FCA 1405 Australian Competition and Consumer Commission v TPG Internet Pty LTD (2013) 250 CLR 640; [2013] HCA 54 Australian Securities and Investments Commission v Hellicar (2012) 247 CLR 345; [2012] HCA 17 Australian Securities and Investments Commission v Vines (2003) 48 ACSR 291; [2003] NSWSC 1095 Bone v Wallalong Investments [2012] NSWSC 137 Briess v Woolley [1954] AC 333 BT Australia Ltd v Raine & Horne Pty Ltd [1983] 3 NSWLR 221 Commercial Banking Co of Sydney v R H Brown & Co (1972) 126 CLR 337 Coris and Investments Ltd v Druce & Co [1978] 2 EGLR 86 Derring Lane Pty Ltd v Fitzgibbon (2007) 16 VR 563; [2007] VSCA 79 Dunn v Hanson Australasia Pty Ltd (2017) 12 ACTLR 138 Esanda Finance Corporation Ltd v Peat Marwick Hungerfords (1997) 188 CLR 241 Fitzwood Pty Ltd v Unique Goal Pty Ltd (in liquidation) [2001] FCA 1628 Flemington Properties Pty Ltd v Raine & Horne Commercial Pty Ltd (1997) 148 ALR 271; [1997] FCA 788 Genworth Financial Mortgage Insurance Pty Limited v Hodder Rook & Associates Pty Limited [2010] NSWSC 1043 Google Inc v Australian Competition and Consumer Commission (2013) 249 CLR 435; [2013] HCA 1 Gould v Vaggelas (1985) 157 CLR 215; [1985] HCA 75 Hann Nominees Pty Ltd v National Australia Bank Ltd [2000] FCA 454 Hawkins v Clayton (1988) 164 CLR 539 Henville v Walker (2001) 206 CLR 459; [2001] HCA 52 HTW Valuers (Central QLD) Pty Ltd v Astonland Pty Ltd (2004) 217 CLR 640; [2004] HCA 54 Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd (2013) 247 CLR 613 I & L Securities Pty Limited v R S Melloy Pty Limited [2002] QSC 306 Interchase Corporation Ltd v ACN 010 087 573 Pty Ltd [2003] 1 Qd R 26 Israel v Foreshore Properties Pty Limited (in liq) (1980) 30 ALR 631 Kenny & Good Pty Ltd v MGICA(1992) Ltd (1999)199 CLR 413; [1999] HCA 25 Kestrel Holdings Pty Ltd v APF Properties Pty Ltd (2009) 260 ALR 418 Khoury v Coffey Projects (Australia) Pty Ltd [2015] NSWCA 371 Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70; [1990] HCA 31 Lloyd v Grace, Smith & Co [1912] AC 716 Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705; [2001] NSWCA 305 MGICA(1992) Ltd v Kenny & Good Pty Ltd (1996) 140 ALR 313; [1996] FCA 766 Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388 O3 Capital Pty Limited v WY Properties Pty Limited (2016) 49 WAR 517; [2016] WASCA 82 Perre v Apand Pty Ltd (1999) 198 CLR 180; [1999] HCA 36 Pine River Pty Ltd v Scorda [2001] WASC 105 Propell National Valuers (WA) Pty Ltd v Australian Executor Trustees Limited (2012) 202 FCR 158; [2012] FCAFC 31 Roads & Traffic Authority of NSW v Dederer (2007) 234 CLR 330; [2007] HCA 42 Robinson v 470 St Kilda Road Pty Ltd (2018) 263 FCR 572 Ross v Cook [2009] NSWSC 671 Ryan Wealth Holdings Pty Ltd v Baumgartner (2018) 131 ASCR 236; [2018] NSWSC 1502 Salomon v Salomon & Co Ltd [1897] AC 22 Segal t/as Segal Litton & Chilton v Fleming [2002] NSWCA 262 Singer & Friedlander Ltd v John D Wood & Co [1977] 2 EGLR 84 Spencer v Commonwealth of Australia (1907) 5 CLR 418 Ta Ho Ma Pty Ltd v Allen [1999] NSWCA 202 Tepko Pty Ltd v Water Board (2001) 206 CLR 1; [2001] HCA 19 Tomasetti v Brailey (2012) 91 ATR 531 Trade Credits Ltd v Baillieu Knight Frank (NSW) Pty Ltd (1985) Aus Torts Rep 69 Wallace v Kam (2013) 250 CLR 375 Wardley Australia Limited v Western Australia (1992) 175 CLR 514; [1992] HCA 55 Winnote Pty Ltd v Page (2006) 68 NSWLR 531; [2006] NSWCA 287
Texts Cited:	C Lockhart, The Law of Misleading or Deceptive Conduct (2019, 5th ed, Lexis Nexis Butterworths) K Mason, J W Carter and G J Tolhurst, Mason and Carter’s Restitution Law in Australia (2008, 2nd ed, LexisNexis Butterworths)
Category:	Principal judgment
Parties:	City Pacific Ltd (in liq) (First Plaintiff) Martha Cove Marina Pty Ltd (in liq) (Second Plaintiff) CBRE (V) Pty Ltd (First Defendant) Christopher Nicodimou (Second Defendant)
Representation:	Counsel: J C Giles SC with B G Curtin (Plaintiffs) D A Lloyd SC with V Bulut (Defendants) Solicitors: Banton Group (Plaintiffs) Kennedys Law (Defendants)
File Number(s):	2015/251608

Lot S22 and 524 (44 Waterside Apt)	$ 8,800,000
Lot S17 (239 Leasehold Berths)	$22,500,000 (As If Complete)
Lot 523 (Retail Site)	$ 3,500,000
TOTAL ASSESSMENT	$34,800,000