CBRE (V) Pty Ltd v City Pacific Ltd (in liq) [2022] NSWCA 54

30 Jun CBRE (V) Pty Ltd v City Pacific Ltd (in liq) [2022] NSWCA 54

This case is of interest because it is an illustration of the attempt to avoid liability for misleading or deceptive conduct by way of a disclaimer. The case concerns a valuation of land which had been negligently prepared.

Facts

City Pacific Ltd entered into a transaction to obtain land with reference to valuations prepared by a Mr Christopher Nicodimou, a valuer employed by CBRE (V) Pty Ltd. City Pacific made payments of approximately $11.1 million for the land but did not intend to directly purchase it, instead nominating their wholly owned subsidiary Martha Cove Marina Pty Ltd to do so. However, the sale did not go forward. City Pacific and Martha Cove Marina brought proceedings against Mr Nicodimou and CBRE, claiming the valuations they had purportedly relied on were negligently prepared.

The primary judge decided the valuations were negligently prepared and comprised of misleading representations regarding the market value of the land. Therefore, City Pacific was awarded $6.9 million in damages. CBRE and Mr Nicodimou appealed this decision to the New South Wales Court of Appeal.

Decision

The Court of Appeal comprising of Justices Leeming and Brereton along with Chief Justice Bell, considered these issues:

1. Whether the claims of misleading and deceptive conduct could be dismissed because the final valuation was not directed to the purchaser, and because there was a disclaimer stating that no responsibility was accepted for reliance on the valuation by any third party.
2. Whether the price paid for the land was paid in reliance on the valuation.

Regarding the first question, the Court asserted that claims of misleading and deceptive conduct should not be immunised merely because the recipient of the document is not the purchaser, in this case, City Pacific. This was so, even though the disclaimer in the valuation specified that ‘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’ [at 63]. The Court emphasised that this is irrelevant to the question in the Trade Practices Act 1974 (Cth) (“TPA”) and Australian Consumer Law embedded in Schedule 2 of the Competition and Consumer Act 2010 (Cth), of ‘whether there was conduct in trade or commerce that contravened the statutory norm…’ [at 64].

As to the second question, the Court decided that City Pacific was burdened with the onus of proving they relied upon the final valuation in deciding to make payments for purchase of the land. The Court evaluated whether the ‘negligent valuation was a necessary condition of City Pacific causing the three payments to be made, and whether it was appropriate for the scope of the appellants’ liability to extend that far…’ [at 72]. Additionally, the Court was to assess whether City Pacific suffered loss or damage ‘by’ the infringement as per the TPA s 82, the wording of which denotes the element of causation as was established in Wardley Australia Ltd v Western Australia (1992) 175 CLR 514. On this point, the Court asserted City Pacific could not have relied on the 2006 valuation prepared a year earlier while simultaneously relying on the amended valuation, especially as both had substantially different values attached – $21.203 million and $27.3 million, respectively. Consequently, the Court found that City Pacific making payments to obtain the Marina was more about end of financial year considerations rather than a reliance on the valuations.

The Court decided the appeal should be allowed, dismissing the matter, and that the original judgment be set aside.