Federal Court of Australia Elanor Funds Management Ltd v Alceon Group Pty Ltd [2024] FCAFC 121 Appeal from: Elanor Funds Management Ltd v Alceon Group Pty Ltd [2023] FCA 1291 File number(s): QUD 521 of 2023 Judgment of: BROMWICH, THAWLEY AND O'SULLIVAN JJ Date of judgment: 18 September 2024 AUSTRALIAN CONSUMER LAW – appellant alleges misleading and deceptive conduct in relation to the sale of Bluewater Square Shopping Centre – where trial judge found that the respondents did not engage in misleading and deceptive conduct, appellant did not rely on any misleading conduct and the appellant did not suffer any damage – held that respondents engaged in misleading and deceptive conduct in representing that Centre tenants were not in arrears of rent and had no relevant history of arrears in rent – held that the appellant sustained damage because of the respondents' conduct – damaged quantified on appeal – appeal allowed AUSTRALIAN CONSUMER LAW – where second respondent pleaded apportionable claim against first respondent – where respondents concurrent wrongdoers – damage apportioned between respondents EVIDENCE – where appellant alleges that trial judge relied on expert accounting evidence which relied on untested hearsay evidence in the form of annotations to business records – annotations objected to – annotations should have been rejected where controversial PROCEDURAL FAIRNESS – where trial judge declined to consider appellant's submissions about why various conclusions of expert in connection with actual rent arrears position were wrong or should be qualified, including on the basis that hearsay annotations were inadmissible and unreliable – appeal court able to consider and address the submissions on appeal – submissions mostly made out – actual arrears position quantified on appeal Catchwords: EVIDENCE – assessment of credibility – trial judge treated reliance evidence with "caution" on the basis that such evidence must be treated with caution because it is self-serving and hypothetical – observations about whether such evidence must be treated with "caution" EVIDENCE – assessment of credibility – trial judge treated evidence of an employee of the appellant with "caution" because employee was considered to have an interest in the outcome of the litigation – interest in outcome of litigation not identified – observations about whether evidence of an employee of a party must be treated with "caution" EVIDENCE – assessment of credibility – one part of opinion evidence of expert witness considered by trial judge to be unexplained – lack of explanation considered to go to more than the reliability of the evidence – where expert's explanation for opinion not referred to by trial judge DAMAGES – assessment of market value by reference to opinions of experts adopting broadly the same methodologies – discussion of proper approach to determination of value – discussion of duty of court to form and act on its own opinion of value – role of expert is to furnish the court with the necessary scientific criteria for testing the accuracy of their conclusions, so as to enable the court to form its own independent judgment by the application of these criteria to the facts proved in evidence DAMAGES – determination of real or true value of Centre with the assistance of expert opinion evidence on market value – loss or damage because of misleading conduct determined Australian Consumer Law s 18, s 87CB, s 87CD, s 236 Competition and Consumer Act 2010 (Cth) s 137B Legislation: Corporations Act 2001 (Cth) s 286, s 1305 Evidence Act 1995 (Cth) s 79 Trade Practices Act 1974 (Cth) s 82 Trade Practices Act 1976 (Cth) s 52 101 Collins Street v City of Melbourne (unreported, Batt J, 2 April 1996) Addenbrooke Pty Ltd v Duncan (No 2) [2017] FCAFC 76; 348 ALR 1 Advanced Holdings Pty Ltd as trustee for The Demian Trust v Commissioner of Taxation [2021] FCAFC 135 Ardizzone v Valentino Nominees Pty Ltd [2019] WASC 55 Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54; 250 CLR 640 Australian Securities and Investments Commission v Rich [2009] NSWSC 1229; 236 FCR 1 Barnes v Forty Two International Pty Ltd [2014] FCAFC 152; 316 ALR 408 Blatch v Archer (1774) 1 Cowp 63 Brewarrana Pty Ltd v Commissioner of Highways (No 2) (1973) 6 SASR 541; 32 LGRA 170 Butcher v Lachlan Elder Realty Pty Limited [2004] HCA 60; 218 CLR 592 Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; 238 CLR 304 Carter v Commissioner of Taxation [2020] FCAFC 150; 279 FCR 83 Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 Davie v Magistrates of Edinburgh 1953 SC 34 Dominelli Ford (Hurstville) Pty Ltd v Karmot Auto Spares Pty Ltd [1992] FCA 550; 38 FCR 471 Elanor Funds Management Ltd v Alceon Group Pty Ltd [2023] FCA 1291 Flexible Steel Lacing Co v Beltreco Ltd [2000] FCA 890; 49 IPR 331 Google Inc v Australian Competition and Consumer Commission [2013] HCA 1; 249 CLR 435 Gould v Vaggelas [1985] HCA 75; 157 CLR 215 H & Q Café Pty Ltd v Melbourne Café Pty Ltd [2023] VSCA 200; 72 VR 53 Cases cited: Hanave Pty Ltd v LFOT Pty Ltd (formerly Jagar Projects Pty Ltd) [1999] FCA 357; 43 IPR 545 Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR 546 Hill v Commissioner of Highways [1966] SASR 316; 13 LGRA 369 HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd [2004] HCA 54; 217 CLR 640 Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd [2013] HCA 10; 247 CLR 613 Keys Consulting Pty Ltd v CAT Enterprises Pty Ltd [2019] VSCA 136 Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11; 243 CLR 361 Lang v The Queen [2023] HCA 29; 97 ALJR 758 Latteria Holdings Pty Ltd v Corcoran Parker Pty Ltd [2014] FCA 880; 224 FCR 519 Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305; 52 NSWLR 705 Masters Home Improvement Pty Ltd v North East Solution Pty Ltd [2017] VSCA 88; 372 ALR 440 Murphy v Overton Investments Pty Ltd [2004] HCA 3; 216 CLR 388 O'Kelly Holdings Pty Ltd v Dalrymple Holdings Pty Ltd (1993) 45 FCR 145 Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; 149 CLR 191 Potts v Miller [1940] HCA 43; 64 CLR 282 P-Value Pty Ltd v Vicland Property Group No 1 Pty Ltd [2016] VSC 100 Rush v Nationwide News Pty Ltd (No 5) [2018] FCA 1622 Self Care IP Holdings Pty Ltd v Allergan Australia Pty Ltd [2023] HCA 8; 97 ALJR 388 Short v Crawley (No 38) [2008] NSWSC 917; 67 ACSR 627 Shrimp v Landmark Operations Limited [2007] FCA 1468; 163 FCR 510 Yorke v Lucas [1985] HCA 65; 158 CLR 661 Division: General Division Registry: Queensland National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Number of paragraphs: 963 Dates of hearing: 20 – 21 May 2024 Date of last submissions: 6 June 2024 Counsel for the Appellant: Mr A F Fernon SC and Ms E M Keynes Solicitor for the Appellant: Holding Redlich Counsel for the First Respondent: Mr M S Henry SC and Mr D Delany Solicitor for the First Respondent: Arnold Bloch Leibler Counsel for the Second Respondent: Mr S S Monks Solicitor for the Second Respondent: Clyde & Co ORDERS QUD 521 of 2023 BETWEEN: ELANOR FUNDS MANAGEMENT LIMITED (ACN 125 903 031) Appellant ALCEON GROUP PTY LTD (ACN 122 365 986) AND: First Respondent CPRAM INVESTMENTS PTY LTD (ACN 120 836 839) Second Respondent order made by: BROMWICH, THAWLEY AND O'SULLIVAN JJ DATE OF ORDER: 18 september 2024 THE COURT ORDERS THAT: 1. The first respondent's notice of contention be dismissed. 2. With the exception of Ground 5, the second respondent's notice of contention be dismissed. 3. The appeal be allowed. 4. Set aside the orders made on 30 October 2023 and, in their place, order: 1. the first respondent pay to the appellant the sum of $2,360,000, plus interest at Court rates calculated from 1 November 2017. 2. the second respondent pay to the appellant the sum of $590,000, plus interest at Court rates calculated from 1 November 2017. 3. the first and second respondents pay the appellant's costs of the proceedings at first instance. 5. The first and second respondents pay the appellant's costs of the appeal. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT BROMWICH AND THAWLEY JJ: OVERVIEW 1. This appeal raises forty-four grounds of appeal from orders made by a judge of this court, dismissing proceedings instituted by the disappointed purchaser of a shopping centre in Queensland: Elanor Funds Management Ltd v Alceon Group Pty Ltd [2023] FCA 1291 (hereafter "J"). The two respondents each rely on a notice of contention raising alternative bases for upholding various aspects of the decision of the trial judge. 2. On 1 November 2017, Elanor Funds Management Ltd purchased the Bluewater Square Shopping Centre in Redcliffe, Queensland, from Alceon Group Pty Ltd (the first respondent). CPRAM Investments Pty Ltd (the second respondent) had been appointed by Alceon on 13 December 2012, under an investment management agreement, as one of the joint managers of an unregistered management investment scheme known as the "Bluewater Trust". Its duties included the identification of opportunities to dispose of the Centre. 3. Elanor acquired the Centre by entering into a Put and Call Option Agreement on 15 September 2017 and exercising the Call Option on 23 October 2017. This mechanism was adopted because Elanor was also purchasing the Centre for the purposes of an unregistered management investment scheme that it would market to sophisticated investors. 4. Elanor contended that, during the sale process, Alceon and CPRAM engaged in misleading or deceptive conduct, breaching s 18 of the Australian Consumer Law (ACL), being schedule 2 to the Competition and Consumer Act 2010 (Cth) (CCA). The final form of the pleadings was contained in a Further Amended Statement of Claim (FASOC). 5. By the time of closing submissions, Elanor's case was confined to what was said to be three representations referred to as the "commencement date representation", the "arrears representations" and the "rental return representation". The alleged conduct of particular importance to the appeal related to nine tenants who operated in the Centre's two restaurant precincts (referred to collectively as the Food Court Tenants) and concerned whether they were in, or had a history of, arrears in rent at the time Elanor conducted its due diligence. 6. As the trial judge noted at J[30]: [30] Elanor contends that the data room contained copies of … a document for each month between December 2016 and July 2017 in the form of a Tenant Arrears Report. … [A] primary contention of Elanor (opened on its case), is that the Tenant Arrears Reports "did not identify any of the [Food Court Tenants] as being in arrears for any amount" and further that no other arrears report nor any other documents were provided which recorded tenancy arrears between December 2016 and July 2017 ... 1. Elanor contended that: 2. it was provided with Tenant Arrears Reports in the due diligence data room which did not disclose that any of the Food Court Tenants were in, or had a history of, arrears; 3. when Elanor later asked CPRAM – during a tenant by tenant review on 30 August 2017 – whether there were any such arrears, it was not informed of any relevant history; 4. to varying degrees, a number of the Food Court Tenants did have a history of, or were in, arrears at relevant times; 5. if it had known the true position, Elanor would have re-calculated what it was prepared to offer to purchase the Centre by notionally excluding the tenants which it considered to be "at risk" from its calculation of anticipated income, and made other adjustments, with the result that it would not have proceeded with the offer of $55.25 million which it had made in an expression of interest on 16 August 2017; and 6. it either would have paid less for the Centre or, if an offer less than $55.25 million were not acceptable to Alceon, it would not have purchased the Centre. 7. Elanor agreed with the proposition put by the trial judge that, if Elanor had known the true position, it would only have been prepared to pay an amount which was less than the minimum amount which Alceon was prepared to accept, namely $55.25 million: J[1], [42]. The case was therefore conducted as a 'no transaction' case. Leaving relevant defences aside and assuming Elanor were otherwise successful, there was no issue that the measure of damages was the difference between the real value of the Centre and the price which was in fact paid. Elanor contended that the real value of the Centre was $49 million: J[6]. The price paid was $55.25 million, although the parties agreed that there should be an adjustment of $650,000 (related to a rental guarantee). Accordingly, Elanor claimed a loss of $5.6 million. 8. The trial judge concluded that Elanor failed to prove that: (a) Alceon or CPRAM engaged in misleading or deceptive conduct; (b) Elanor relied on that conduct; or (c) Elanor sustained any loss. The proceeding was therefore dismissed: J[8]. 9. As is explained further below, the evidence established that: 10. Alceon and CPRAM provided Elanor and its representatives (including Mr Hamilton of CBRE Pty Ltd, providing investment advisory services to Elanor) access to a data room for the purpose of enabling Elanor to undertake a due diligence process. 11. Elanor examined Tenant Arrears Reports for the months December 2016 to July 2017 contained in the data room (the Data Room Arrears Reports). These were business records of the entity managing the tenancies (Savills (Qld) Pty Ltd) sourced from their electronic management system. The Data Room Arrears Reports did not reveal any of the Food Court Tenants as having arrears of rent in any month. 12. No other Tenant Arrears Reports, nor any other documents, were provided in the data room or otherwise which recorded arrears in respect of any of the Food Court Tenants for the period December 2016 to July 2017. 13. There was in fact a significant history of arrears on the part of one or more of the Food Court Tenants in every month from December 2016 to July 2017. Indeed, there were a number of Tenant Arrears Reports that existed at the time of due diligence (but which were not in the data room) that recorded rental arrears, first obtained during the trial proceedings under subpoena (the Discovered Arrears Reports). 14. At a meeting on 30 August 2017, CPRAM (by Mr Frenil Shah) did not identify any of the Food Court Tenants as having arrears, or a history of arrears, or any issue in respect of their respective sales, when asked questions in that respect by Elanor (through its agent, Mr Hamilton). 15. The trial judge confined his analysis essentially to the Tenant Arrears Report for July 2017 and to what was said at the meeting on 30 August 2017. The reasons why the trial judge concluded that the respondents' conduct was not misleading or deceptive were, in summary, that, although: (i) the Tenant Arrears Report for July 2017 did not disclose that any of the Food Court Tenants were in arrears; and (ii) CPRAM failed to tell Elanor that there was in fact a history of arrears when it was asked questions in relation to each Food Court Tenant on 30 August 2017: 16. Elanor "assumed" the risk that the data in the data room was inaccurate and "chose not to undertake any due diligence as to the accuracy of the data contained therein": J[235]; 17. Elanor "assumed the accuracy" of the business records in the data room, including the Tenant Arrears Reports: J[235]; 18. Elanor could have better investigated or audited the information which was in the data room and asked questions through a question and answer facility in order to determine that the Tenant Arrears Reports were incorrect: J[226], [238]. 19. The reasons why the trial judge concluded that Elanor did not rely on the conduct were, in summary, that, although: (i) Elanor calculated its offer price for the purchase of the Centre by reference to the anticipated income to be derived from the rent; and (ii) marketed the investment to investors in the proposed managed investment scheme by reference to the anticipated return from the rental income to be derived from the Centre over a three year term: 20. "the arrears position of individual Food Court Tenants was not a consideration which Elanor took into account at the time": J[264] (see also J[257]); and 21. "the redevelopment potential of the site was a primary motivating factor to acquire the Centre": J[271]. 22. The reason why the trial judge concluded that no loss was suffered was, in summary, that Elanor in fact got a remarkable deal: the real value of the property, on the hypothesis that there were nine "at risk" Food Court Tenants, was $58.7 million, namely $3.45 million more than the actual sale price of $55.25 million. The actual sale price was agreed, after a marketing campaign, between sophisticated investors (Elanor and Alceon) pursuing their respective commercial interests in an arm's length transaction conducted, at least from Elanor's perspective, on the basis that none of the Food Court Tenants were "at risk". 23. For the reasons given below, each of the trial judge's three reasons for dismissing Elanor's claim was affected by error: 24. The respondents' conduct viewed as a whole, including their silence, conveyed that there was no history of arrears on the part of any of the Food Court Tenants between December 2016 and July 2017. Assessed in the context of the whole course of conduct, the Data Room Arrears Reports conveyed that none of the Food Court Tenants had arrears in any month from December 2016 to July 2017: + the Data Room Arrears Reports, including the Tenant Arrears Report for July 2017, did not indicate that any of the Food Court Tenants had arrears in rent; + there was no other document in the data room or otherwise which identified any arrears of rent on the part of the Food Court Tenants; and + on 30 August 2017, CPRAM represented (either expressly or through silence) that the Food Court Tenants had neither current arrears nor a relevant history of arrears. What that conduct conveyed was misleading because there was a material history of arrears, including outstanding arrears as at 31 July 2017. 1. If Elanor had not been misled by the respondents' conduct, Elanor would only have been prepared to offer an amount lower than $55.25 million for the purchase of the Centre with the (uncontroversial) result that it would not have purchased the Centre. 2. The real value of the Centre was $51.65 million. The result is that Elanor is entitled to damages in the amount of $2.95 million once account is taken of the agreed adjustment of $650,000 related to the rental guarantee. This amount should be apportioned between the respondents as concurrent wrongdoers. 3. In the reasons that follow, references to relevant affidavits are provided by stating the name of the deponent, followed by a number indicating whether the reference is to the first or second affidavit, followed by the relevant paragraph number. References to "AB" are to the page number of Part C of the Appeal Book. These include references to the trial transcript. FACTUAL BACKGROUND 1. Elanor is a corporation within the Elanor Investors Group. It conducts an investment and funds management business. Elanor is the responsible entity of the Elanor Investment Fund which is a registered managed investment scheme operated pursuant to a trust. Units in the trust form part of stapled securities listed on the Australian Stock Exchange: J[10]. 2. Mr Blake McNaughton, an executive director of Elanor, was centrally involved in assessing the purchase of the Centre as an investment to be marketed to sophisticated investors in a proposed unregistered management investment scheme. 3. Mr McNaughton reported to Mr Michael Baliva as to the outcome of the assessments that he made concerning the prospective acquisition: J[12]. Mr Baliva was Elanor's co-head of real estate: J[12]. Mr Baliva's primary role was to report to Elanor's board in relation to the proposed acquisition. 4. The Centre was constructed in 2008 as a neighbourhood shopping complex. It comprised 49 tenancies with a Woolworths Supermarket as the anchor tenant: J[2]. It was purchased by Alceon on 3 April 2013 for $41,750,000: J[51]. 5. Alceon entered into an investment management agreement with CPRAM on 13 December 2012 under which CPRAM accepted appointment as one of the joint managers of the "Bluewater Trust". CPRAM's duties included identification of intended trust acquisitions, management of trust assets, budgeting, forecasting, reporting and oversight of day-to-day asset management and administration of trust assets: J[19]. It also had the task of identifying opportunities for the disposal of trust assets: J[50]. 6. Mr Frenil Shah was a director of CPRAM. He was the portfolio manager in relation to four shopping centres, including the Centre. Mr Shah's responsibilities included supervising centre managers and liaising with external contractors and consultants. As portfolio manager he was responsible for oversight of the day-to-day management and administration of the Centre, financial analysis and reporting, as well as being a direct liaison with the tenants. Mr Frenil Shah supervised Mr Carrigan (a leasing manager), Mr Song (an analyst) and Mr Neil Shah (his brother and a junior analyst). Mr Frenil Shah recommended that Alceon engage Savills as the property manager for the Centre. 7. Alceon engaged Savills as the on-site property manager at the Centre, under a property management agreement dated 19 December 2015: J[14]. Ms Anna-Maree Coco was employed by Savills as the on-site property manager between May 2016 and November 2017: J[14]. Savills provided services which included the general administration of each of the tenancies by collecting rent, holding security deposits, ensuring compliance with tenant obligations, maintaining a tenancy schedule, maintaining tenancy files and financial management: J[51]. Savills' financial management obligation included the preparation of: monthly financial management reports for the Centre; a monthly statement of monies received and expenses incurred; the issue of monthly invoices to tenants; the collection of rent and charges; and review of rental arrears. 8. Savills operated a reporting system, referred to as the "MRI Management System", for its financial management and reporting obligations to Alceon. Neither Alceon nor CPRAM had the ability to make changes within the MRI Management System, but CPRAM could generate reports from it: J[162]. 9. CPRAM recommended to Alceon that the dining or restaurant areas or precincts in the Centre be upgraded: Shah 1 at [30]. The proposed project formed part of a broader strategy for the Centre, designed to attract a range of new tenants and adding "attractive dining options" in the Centre: Shah 1 at [32]; J[55]. It involved upgrading the existing restaurant precinct and the creation of a new restaurant precinct, referred to in the cross-examination of Mr McNaughton as the "casual dining precinct". The "casual dining precinct" was also sometimes referred to as the "new precinct" or the "external precinct". CPRAM's recommendation was accepted and work commenced in late 2016. 10. Elanor's case focussed on the nine Food Court Tenants. Two of these tenants had operated for some time (Bel Cibo and Sushi Kuni) and the remainder were new tenants. The nine Food Court Tenants were: 11. TGS Kuber Pty Ltd trading as Dizzy Dukes Bar and Grill, which operated an American style bar and grill. According to the lease terms, its lease commenced on 1 April 2017. The actual rent commencement date was 1 June 2017: AB235. 12. Kailash Corporation Pty Ltd trading as Burrito Bar, which operated a Mexican restaurant. According to the lease terms, its lease commenced on 1 March 2017. The actual rent commencement date was 14 May 2017: AB235. 13. Tushaan Enterprises Pty Limited trading as Bel Cibo, which operated an Italian restaurant. According to the lease terms, its lease commenced on 1 May 2016. The actual rent commencement date was 15 June 2016: AB235. 14. Mass Nutrition Chermside Pty Ltd, which was a supplier of fitness supplements. According to the lease terms, its lease commenced on 1 April 2017. The actual rent commencement date was 1 May 2017: AB235. 15. Queensland Employment Services Pty Ltd trading as Kebab Express which operated a fast-food outlet. According to the lease terms, the lease commenced 1 April 2017. The actual rent commencement date was 1 June 2017: AB235. 16. Gorani Pty Ltd trading as Sushi Kuni, which operated a Japanese style fast food outlet. The lease for the original operator of Sushi Kuni commenced on 15 February 2015. The lease was assigned with effect from 30 April 2017. The actual rent commencement date was 15 June 2016: AB235. 17. TGS Kuber Pty Ltd, trading as Mumbai Blues, which operated an Indian restaurant. According to the lease terms, the lease commenced on 1 March 2017. The actual rent commencement date was 1 May 2017: AB235. 18. Thai Me Down Pty Ltd, which operated a Thai restaurant. According to the lease terms, the lease commenced on 1 May 2017. The actual rent commencement date was 1 July 2017: AB235. 19. Ms Jie Liu trading as Redcliffe Noodle Kitchen, which operated an Asian noodle restaurant. According to the lease terms, the lease commenced on 1 April 2017. The actual rent commencement date was 25 June 2017: AB235. 20. Alceon appointed the real estate firms Stonebridge Property Group and CBRE to market the Centre for sale: J[56]. 21. By an Information Memorandum finalised on 2 May 2017 and emailed on that day to Mr McNaughton, Alceon sought expressions of interest for a sale of the Centre closing on 30 May 2017: J[3], [56]. It noted that leases and associated documents were available in an electronic data room. Mr McNaughton was provided with access to the data room on 10 May 2017. He commenced inspecting documents on 11 May 2017. There was a data room log which recorded who accessed the data, when, for how long and what was viewed. Documents could be downloaded and printed, either individually or in bulk. The data room log recorded that Mr McNaughton performed a bulk download of all of the documents in the data room on 18 May 2017 (comprising 484 documents) and another bulk download on 23 May 2017 (comprising 486 documents). 22. On 30 May 2017, Elanor submitted an expression of interest to Alceon to purchase the Centre for $54.75 million: J[3], [58]. The trial judge found at J[59] that, at this time, Mr McNaughton: 23. knew that the Food Court Tenants in the casual dining precinct had not commenced to trade and that this area was "a work in progress" and that they "may or may not fall into rental arrears"; 24. had made no inquiries as to whether any of the Food Court Tenants outside of the casual dining precinct had commenced to trade and did not know whether or not those Food Court Tenants were in arrears in rent. 25. As to the matter in (a) above, only three of the nine Food Court Tenants were located in the "casual dining precinct". This precinct was the subject of works which sought to take advantage of that area's frontage to a council carpark, which explains why it was sometimes referred to as the "new precinct" or the "external precinct": AB2969.21 – 26; AB1439. It was uncontroversial that Mumbai Blues, Thai Me Down and Redcliffe Noodle Kitchen were located in what was referred to as the "casual dining precinct" or "external precinct": AB3111.22 – 26. These were new tenants. It was uncontroversial that Sushi Kuni, which was adjacent to the "casual dining precinct", had commenced trading by at least July 2015, about two years earlier: AB2928.41 – 2929.3. It was also uncontroversial that Sushi Kuni had continued to generate income over the course of the whole period in which the casual dining precinct was being developed T115.10 – 15; AB1464. 26. Elanor's expression of interest: (a) expressly assumed the annual fully leased and passing net operating income as $4,230,309 and $3,870,759 respectively, as had been represented in the Information Memorandum; (b) required Alceon to grant a rental income guarantee equivalent to 2 years' gross market rent for any tenancy that was vacant as at the settlement date (there being five vacant tenancies at the time); (c) requested the grant of an exclusive dealing period of 20 business days during which Elanor would conduct due diligence to its satisfaction and negotiate in good faith to agree and execute a contract of sale; (d) was stated to expire on 2 June 2017: J[58]. 27. Alceon did not accept Elanor's expression of interest. Alceon entered into a conditional contract with another prospective purchaser for a price of $57 million: J[60]. This contract failed to complete. Mr McNaughton and Mr Baliva then met with Mr Gartland of Stonebridge, and Elanor was invited to submit a further expression of interest to purchase the Centre: J[3], [60]. Mr Baliva inspected the Centre with Mr Gartland after this meeting. 28. The casual dining precinct upgrade, as a whole, was complete by at least 1 July 2017, probably by late June 2017: J[55]. However, that is not to say that none of the three Food Court Tenants in that area traded until then. It was uncontroversial that Mumbai Blues traded in at least June 2017: AB1464. 29. After his inspection of the property, Mr Baliva reviewed the Information Memorandum with Mr McNaughton: J[61]. The trial judge stated: [61] Mr McNaughton then undertook certain calculations in order to derive a purchase price for the Centre. At that time Mr McNaughton had more than five years' experience in analysing potential investments and in determining an appropriate investment yield. He derived a yield of 7%, in part based upon yield information disclosed for comparable sales in a database that he had access to. There is a difference in those comparable sales between initial yield and core market yield. As explained by Mr McNaughton, initial yield is based on the passing rent and core market yield is based on the fully leased market rent. In those comparable sales the initial yield is within the range of 5.57% at the lower end and 8.97% at the upper end. On the assessment undertaken by Mr McNaughton, the majority of comparable sales revealed initial yields of 6.5% or less. Despite that comparable sales information, Mr McNaughton considered that the Centre should be purchased at a higher yield for a number of reasons: the reported sales for Woolworths were less than what might be expected, the Centre faced an increased risk of competition, the Woolworths lease was due to expire (subject to the exercise of any options) in 2028, the catchment area for the Centre was limited by its proximity to the coast and was relatively small in comparison with other centres and the purchase price that Alceon wanted (in excess of $50 million) was comparatively high with a corresponding increased risk of investment. 1. Mr McNaughton applied the yield of 7% to the net operating passing income: J[62]. He used a figure of $3,907,170 which was the same as the figure for total passing net operating income disclosed in a revised statement of financial figures for the Centre that had been emailed to Mr McNaughton on 2 August 2017. The figure of $3,907,170 was based on a financial summary and projection as at 1 December 2017. In order to calculate the purchase price, Mr McNaughton divided $3,907,170 by the yield of 7% and then multiplied the result by 100 to arrive at $55,816,714. In accordance with his practice, Mr McNaughton subtracted $500,000 on account of his estimate of the expected future capital expenditure, based on 1% of the purchase price and then rounded down to $55.25 million. At the time, Mr McNaughton was aware that there were five vacant tenancies: J[68]. He addressed this by including a condition in the expression of interest that Alceon provide a rental income guarantee equivalent to two years' gross market rent for any vacant tenancy as at the settlement date. 2. Mr McNaughton and Mr Baliva discussed Mr McNaughton's calculations and Mr Baliva agreed with his assessment and methodology. 3. Mr Baliva signed a second expression of interest, dated 16 August 2017 to purchase the Centre for $55.25 million. 4. On 18 August 2017, Alceon and Elanor entered into a Heads of Agreement in relation to a potential sale of the Centre for $55.25 million. 5. The Heads of Agreement provided for an exclusive dealing period of 20 business days, commencing on 21 August 2017 and concluding on 15 September 2017 during which period Elanor would conduct due diligence: J[4]. The Heads of Agreement also relevantly provided (J[69]): (1) The annual fully leased and passing net operating income, as at 1 December 2017, was $4,266,720 and $3,907,170 respectively, as per the information provided. (2) The vendor would grant to the purchaser a rental income guarantee equivalent to two years' gross market rent for any tenancies which are not subject to a lease at the date of settlement, as per the financials provided as at 1 December 2017. This guarantee would be held in a trust account managed by the purchaser's solicitor. (3) All outstanding leasing incentives, fit-out contributions, rental abatements, and other capital commitments would remain the responsibility of the vendor and be adjusted in the purchaser's favour at settlement. (4) All bank guarantees and or security deposits required under the leases would be in place at settlement and novated across to the purchaser. There would be an adjustment in favour of the purchaser for any outstanding bank guarantees or security deposits not provided at settlement. 1. In mid-August 2017, Mr McNaughton spoke with Mr Alexander (Sandy) Hamilton of CBRE Pty Ltd for the purpose of retaining CBRE to undertake a due diligence assessment: J[72]. Mr Hamilton was the regional director for CBRE's investment advisory services with experience in performing due diligence investigations for investors buying or selling multi-tenanted properties, including regional and sub-regional shopping centres in Australia: J[13]. Mr McNaughton requested the submission of a written proposal from CBRE, with a fee estimate, which he received on 21 August 2017: J[72]. 2. Amongst other matters, Mr Hamilton offered a "financial and tenancy due diligence service" which included "comparison of the net income provided by the vendor with our revised estimate of the sustainable net income". Pursuant to the scope of works, Mr Hamilton advised that he would undertake "a critical review of all income and expenditure" to cover a number of issues including: a review of the commercial aspects of the lease agreements and audit of the tenancy schedule; the identification of any clause in the lease "that may have an impact on the income stream"; review of the trading performance of the property including the major tenants and each individual tenant; review and comment "upon the current arrears report"; the undertaking of a SWOT analysis; the identification of "'problem' tenants" by analysis of arrears reports; and the undertaking of a check of rental and other charges due under each lease with the charges depicted on monthly invoices. CBRE offered to do this work for a fee of $50,000 plus GST. Mr McNaughton accepted the proposal. 3. On 21 August 2017, Mr McNaughton sent an email to Mr Hamilton attaching a financial pack of relevant information. 4. Mr McNaughton also contacted Mr Kwan on 21 August 2017, first by telephone and then by confirming email: J[73]. Mr Kwan was a partner and Head of Valuation and Advisory at Knight Frank Valuation and Advisory Queensland (KFVAQ). Mr McNaughton provided to Mr Kwan the financial information received from Stonebridge and the Information Memorandum and requested a valuation proposal. Mr McNaughton received a fee proposal from Mr Kwan later that day, which he accepted: J[74]. 5. Alceon and CPRAM made information available in an electronic data room for Elanor to conduct its due diligence: J[53]. Mr McNaughton and Mr Baliva had access to the data room throughout the due diligence period: J[71]. Amongst other things, the data room contained copies of: (a) leases for the Food Court Tenants; (b) Incentive Deeds; and (c) the Tenant Arrears Reports: J[53]. CBRE and Elanor were each able to make inquiries regarding the tenants and the financial position of the Centre through a question-and-answer facility in the data room. As is explained further below, the Tenant Arrears Reports did not identify any of the Food Court Tenants as being in arrears for any amount: J[54]. 6. Mr McNaughton accessed the data room on 21 August 2017 when he undertook a bulk download of 628 documents: J[57]. Each "Tenant Arrears Report" contained in the data room bore Savills logo and recorded that they were: "Produced by smart (Savills Management Accounting & Reporting Tools)". These were produced from what has earlier been referred to as the MRI Management System. As at 21 August 2017, the data room contained seven unredacted Tenant Arrears Reports as follows: * December 2016, dated 21 June 2017: AB1316. This referred to one tenant of the Centre, not being a Food Court Tenant. This was one page long. * January 2017, dated 21 June 2017: AB1317. This referred to two tenants of the Centre, not being Food Court Tenants. This was one page long. * February 2017, dated 21 June 2017: AB1318. This referred to two tenants of the Centre, not being Food Court Tenants. This was one page long. * March 2017, dated 4 April 2017: AB1319. This referred to five tenants of the Centre, not being Food Court Tenants. This was two pages long. * April 2017, dated 17 May 2017: AB1321. This referred to five tenants of the Centre, not being Food Court Tenants. This was two pages long. * May 2017, dated 21 June 2017: AB1323. This referred to six tenants of the Centre. The only Food Court Tenant mentioned was Bel Cibo which had $10 credit. This was two pages long. * June 2017, dated 25 July 2017: AB1325. This referred to five tenants of the Centre, not being Food Court Tenants. This was two pages long. 1. These seven Tenant Arrears Reports – together with an arrears report later added to the data room for July 2017, referred to below – will be referred to as the Data Room Arrears Reports. These did not reveal that any of the Food Court Tenants were in arrears for any of the months from December 2016 until July 2017. These Tenant Arrears Reports need to be distinguished from Tenant Arrears Reports covering some of the same months, referred to below, first produced during the proceedings under a subpoena issued to Savills, indicating that Food Court Tenants did have a history of arrears in those months, the Discovered Arrears Reports. 2. The trial judge found that, of the Data Room Arrears Reports, Mr McNaughton reviewed reports for May and June 2017, "but not until 30 October 2017": at J[71]. It is clear from this finding, and what is said elsewhere including at J[126] and [155], that the trial judge overlooked that Mr McNaughton's unchallenged evidence was that, on 21 August 2017, he briefly reviewed the documents contained in the data room that referred to the Centre income, outgoings and any documents in respect of arrears: McNaughton 1 at [44], [71] and [74]; AB2942.16 to 2943.14. 3. The trial judge ought to have concluded that, on 21 August 2017, Mr McNaughton reviewed the Data Room Arrears Reports for the months of December 2016 through to June 2016. Mr McNaughton's evidence was that he did not see any documents about arrears which concerned him: McNaughton 1 at [71] and [74]. Mr McNaughton's unchallenged evidence at McNaughton 1 at [74] was: … I had not seen anything in my review of the documents in the Data Room, including the Dec - June Arrears Reports, to indicate that any of the Food Tenants were in arrears at any point in the six months prior. Because the July Arrears Report was not of concern, and I had not seen any other arrears reports of concern in my own review, I did not question Mr Hamilton on this further either in our meeting on 6 September 2017 or any other time. I did not investigate any of the Food Tenants further after the due diligence and prior to entering the Sale Contract. I included all of the Food Tenants in the Passing Income for the Centre in my report to the Board. 1. In cross-examination, Mr McNaughton accepted that his review was brief because he knew that Mr Hamilton would also conduct a review, but Mr McNaughton did not accept that he relied solely on Mr Hamilton's review: AB2942.37-42. 2. As mentioned earlier, a Tenant Arrears Report for July 2017 was produced and printed on 25 August 2017 and was then made available in the data room: J[82]. It was two pages long. It refers to five tenants, none of which was a Food Court Tenant. A copy of it is reproduced at J[83]. According to the data room log, Mr Hamilton viewed this report on 27 August 2017 and again on 29 August 2017 when he printed it: J[84]. Mr McNaughton viewed the Data Room Arrears Report for July 2017 on 28 August and 30 October 2017: J[71] and [84]. 3. It should be noted at this point that it was common ground that the true position was that some of the Food Court Tenants had been in arrears in the period from December 2016 to July 2017 and also later, in August, September and October 2017. This was the subject of evidence which included various business records and expert evidence. As mentioned, the Discovered Arrears Reports were first obtained during the course of the proceedings. The accuracy of them was the subject of debate in expert evidence to be discussed below. They comprised Tenant Arrears Reports each of which, although in the same form as the Data Room Arrears Reports, were significantly lengthier and were heavily redacted (but not necessarily appropriately) to remove reference to tenants in arrears who were not one of the Food Court Tenants. The length of the complete versions of the Discovered Arrears Reports is not known. The Discovered Arrear Reports, as included in Part C of the Appeal Book, were as follows: December 2016 1. Pages 2, 3, 9 and 10 of a Tenant Arrears Report for December 2016, dated 20 December 2016: AB595-598. It showed the following Food Court Tenants to be in arrears in that month: + Bel Cibo: $21,213.19 + Sushi Kuni: $19,742.56 January 2017 1. An unnumbered page and page 10 of a Tenant Arrears Report for January 2017, dated 7 February 2017: AB599-600. It showed the following Food Court Tenants to be in arrears in that month: + Bel Cibo: $2,523.95 + Sushi Kuni: $4,028.58 March 2017 1. Page 2 of a Tenant Arrears Report for March 2017, dated 5 April 2017: AB601. It showed the following Food Court Tenant to be in arrears in that month: + Bel Cibo: $8,969.49 April 2017 1. Pages 4, 8 and 9 of a Tenant Arrears Report for April 2017, dated 5 May 2017: AB602-604. It showed the following Food Court Tenants to be in arrears in that month: + Bel Cibo: $10,754.70 + Sushi Kuni: $15,708.59 May 2017 1. Pages 2, 3, 7 and 8 of a Tenant Arrears Report for May 2017, dated 7 June 2017: AB605-608. It showed the following Food Court Tenants to be in arrears in that month: + Burrito Bar: $5,278.50 + Bel Cibo: $7,882.23 + Sushi Kuni: $14,328.90 + Mumbai Blue: $2,961.01 It also showed the following Food Court Tenant to be in advance in that month: * + Dizzy Dukes: $13,750.02 June 2017 1. An unnumbered page and pages 2, 3, 4 and 12 of a Tenant Arrears Report for June 2017, dated 1 June 2017: AB609-613. It showed the following Food Court Tenants to be in arrears in that month: + Burrito Bar: $40.51 + Bel Cibo: $10,271.11 + Sushi Kuni: $23,614.79 + Mumbai Blue: $5,921.96 It also showed the following Food Court Tenant to be in advance in that month: * + Dizzy Dukes: $5,197.08 1. An unnumbered page and pages 2, 3, 7 and 8 of a Tenant Arrears Report for June 2017, dated 6 July 2017: AB614-618. It showed the following Food Court Tenants to be in arrears in that month: + Burrito Bar: $40.51 + Bel Cibo: $10,271.11 + Sushi Kuni: $19,214.79 + Mumbai Blue: $5,921.96 It also showed the following Food Court Tenant to be in advance in that month: * + Dizzy Dukes: $5,197.08 July 2017 1. Pages 1, 2, 5 and 6 of a Tenant Arrears Report for July 2017, dated 15 August 2017: AB619-622. It showed the following Food Court Tenants to be in arrears in that month: + Dizzy Dukes: $2,899.17 + Bel Cibo: $16,271.53 + Sushi Kuni: $21,088.72 + Mumbai Blue: $8,847.96 It also showed the following Food Court Tenant to be in advance in that month: * + Mass Nutrition: $5,041.67 + Kebab Express: $4,396.68 + Thai Me Down: $6,176.50 September 2017 1. Pages 1, 2, 3, 6, 7 and 8 of a Tenant Arrears Report for September 2017, dated 5 October 2017: AB623-628. It showed the following Food Court Tenants to be in arrears in that month: + Dizzy Dukes: $28,606.92 + Burrito Bar: $26,011.91 + Bel Cibo: $10,242.95 + Mumbai Blue: $10,759.64 + Redcliffe Noodle Kitchen: $5,606.34 It also showed the following Food Court Tenant to be in advance in that month: * + Sushi Kuni: $1,613.19 1. At some time before 28 August 2017, Mr McNaughton contacted Mr Stephen Schneider of Colliers by way of inquiry as to whether Colliers would manage the Centre for Elanor, should Elanor be the successful purchaser: J[86]. Without being asked to do so, Mr Schneider visited the Centre on 28 August 2017 at 3.40 pm and provided a report by email to Mr McNaughton at 4:16 pm. Under the heading "Retailer and Performance" he observed: At 3:40 the Centre is very quiet, would think with school pick up the Centre would be busier Woolworths looks fresh with new fitout - not very busy Internal common area retailers - one vacancy next to What's Hot Donut King and lean green kitchen extremely quiet - no customers for 20 minutes Sushi kiosk closing at 4pm Juice kiosk closed - possible vacancy. Level 1 commercial looks to be ok with traffic flow to that level Good mix of food and services internally External tenancies mainly food retailers. All food retailers extremely quiet with a vacancy next to Thai restaurant Restaurants not all trading - only opening for lunch and dinner Potentially too much food - not enough traffic / customers to support the two precincts Australia Post should be internal to pull traffic - post boxes could remain in current location. 1. The trial judge noted that Mr McNaughton "accepted in cross-examination that based on this information he was aware, during the due diligence period, that the Food Court Tenants were quiet, at least on the day and at the time of the inspection and that there were insufficient customers to support the two food precincts at the Centre": J[87]. 2. Mr McNaughton emphasised in cross-examination that Mr Schneider's opinion about the insufficiency of customers for the food precincts was an opinion about the number of food customers at 3:40 pm on a Monday: AB2958.45 – 2959.1. 3. On 30 August 2017, Mr Hamilton and two of his colleagues, Ms Brunninghausen and Ms Levene, met with Mr Frenil Shah of CPRAM at the Centre for the purpose of a tenant-by-tenant review: J[88]. What was said at this meeting was a matter of significant contest. 4. Mr Hamilton's account was supported by a contemporaneous file note which had been partly pre-prepared in anticipation of the meeting and partly completed during the course of the meeting by Ms Levene. The trial judge accepted Mr Hamilton's account of what occurred at the 30 August 2017 meeting and rejected Mr Frenil Shah's account. The trial judge found Mr Hamilton to be impartial and reliable and Mr Frenil Shah not credible. The trial judge accepted that Mr Hamilton asked questions about whether any of the Food Court Tenants were then in arrears and was not told that they were. The trial judge proceeded on the basis that Mr Hamilton did not ask about whether there was a history of arrears, but – as is explained later – this was based on a misunderstanding of the evidence that was in fact given. 5. At this point in time, neither Mr McNaughton nor Mr Hamilton had seen or been told anything which indicated that any of the Food Court Tenants were in, or had a history of, arrears. 6. On 7 September 2017, Mr Kwan provided draft calculations for the purpose of preparing a valuation for the Bank of Queensland, which showed a market value of $55.25 million: J[89]. 7. On about 8 September 2017, Mr McNaughton met with Mr Baliva. They reviewed the documentation provided through the due diligence and the valuation figures from Mr Kwan. From these documents, they prepared a document entitled "ENN Board Transaction Due Diligence Checklist" and a document entitled "Investment Overview". The Checklist and the Investment Overview made up the report to be provided to the board: McNaughton 1 at [79]; J[90]. The report was provided to the Elanor Board as part of an agenda with supporting documentation on either 8 or 9 September 2017. 8. The Checklist recorded, amongst other things, that: the financial due diligence being undertaken by Mr Hamilton was a work in progress and that the valuation of the Centre by Mr Kwan was a work in progress, noting that "draft numbers received which support purchase price". 9. The Checklist also recorded that: a demographic due diligence prepared by Location IQ was complete; council zoning and town planning investigations were complete; and architectural scheme proposals prepared by Bureau Proberts were complete. 10. The Investment Overview was a document prepared for the purpose of submission to prospective investors in the proposed management investment scheme: J[93]. It included the following statements: * Acquired at a 7.7% fully leased yield (7% passing) representing a discount to prevailing market yields … * Medium development potential into a mixed use scheme given favourable zoning (27 m (9 storeys) across majority of 1.356 ha site), new transport infrastructure and picturesque coastal location … * Forecast Total Return (if property were to be sold at end of year three and excluding any development potential of additional floor space given favourable planning regime): Base IRR: 12.0% p.a Target IRR: 14.0% p.a … * The Manager will review exit/liquidity strategies within an investment horizon of approximately 3 years, subject to the Manager's discretion 1. The trial judge emphasised that "an entire page of the document [was] devoted to the development potential of the site": at J[94]. 2. On being satisfied as to the extent of due diligence undertaken, the directors of Elanor executed a circulating resolution, the effect of which was to authorise officers of Elanor to enter into a Put and Call Option Agreement to purchase the property: J[4]; [91]. 3. On 11 September 2017, Mr Kwan emailed new calculations to Mr McNaughton and Mr Baliva and Mr McNaughton responded: J[96], [97]. On 15 September 2017, being the end of the due diligence period, CBRE provided a draft due diligence report to Mr McNaughton: J[99]. 4. On 15 September 2017, Alceon and Elanor entered into the Option Agreement: J[99]. 5. On 18 September 2017, CBRE finalised and delivered its due diligence report to Elanor: J[100]. The trial judge recorded at J[102]: [102] Section 5 of the report is a SWOT analysis. The strengths identified include the existing lease to Woolworths, the recently upgraded external casual dining precinct and the likely primary sector trade area population growth of 1% per annum forecast to 2036. Identified weaknesses include a reference to the fact that "several tenants" have experienced sales decreases of 5% or more in the past year. Under opportunities, it is mentioned that there is: "potential for strong population growth in the immediately surrounding area if DA approved apartment developments proceed". Under threats it is said: "the trading performance of the new external restaurant precinct is unproven and it remains to be seen if it will provide the hoped for increase in sales and customer traffic." 1. The trial judge recorded at J[103] that section 7 of the report addressed the 30 August 2017 meeting: [103] Section 7 of the report comprises a tenancy review "based upon our review of the information provided in discussions with the Asset Manager", which is a reference to the 30 August meeting. No issue is raised in that analysis with the performance of any of the Food Court Tenants, although they are dealt with in section 8: Review of Retail Sales Performance. The nine Food Court Tenants are mentioned with a high level of analysis by comparing occupancy costs per square metre and sales per square metre of the Centre as a whole with benchmarks published by Urbis. The result is that the occupancy costs and sales for the Centre are each lower than the benchmarks. Section 11 notes that CBRE "have been provided with an arrears report dated July 2017" which disclosed there "was a credit of $2,957.05 and there were no significant arrears dated 30 days or over". That statement is incorrect: the report records arrears in that sum, not prepayments. 1. The trial judge recorded that section 12 of the report was concerned with tenancies at risk: J[104]. Sushi Kuni was the only Food Court Tenant mentioned, because of its occupancy cost ratio of 28.1%. 2. On 23 October 2017, Elanor exercised the Call Option: J[108]. As a result, Elanor and Alceon became contracting parties for the sale of the Centre pursuant to a Sale Contract dated 23 October 2017 for a price of $55,250,000, less certain adjustments to be made at settlement. 3. The trial judge noted that the respondents emphasised certain clauses in the Sale Contract. These were summarised at J[108] in the following way: (1) The buyer acknowledges that it has not relied, and does not rely, on any representation or warranty of any nature made by or on behalf of the seller, the seller's solicitor or the agent other than those expressly set out in this contract: cl 3(b); (2) The buyer acknowledges that the seller has made available and disclosed to the buyer on or before the option date all relevant due diligence material: cl 5(a); (3) The buyer acknowledges that subject to special condition 33, the seller makes no representation or warranty as to the accuracy or otherwise of the information contained in the due diligence material: cl 5(b)(i); (4) The buyer acknowledges that the seller has not conducted its own independent inquiries and investigations into information in the due diligence material prepared by third parties: cl 5(b)(ii); (5) The due diligence material may include statements, estimates and projections that reflect various assumptions which may or may not be correct and does not purport to contain all of the information the buyer may require: cl 5(b)(iv); (6) The seller does not warrant or represent that any lease will be in force on settlement or that the provisions of each lease have been complied with: cl 10.4(c) and (d); (7) The seller warrants to the buyer as at the option date and to the best of the seller's knowledge, information and belief based on due inquiry, but without independent verification that the tenancy schedule is correct (as at the date of the tenancy schedule) in all material respects, the outstanding incentive schedule is correct (as at the date of the outstanding incentive schedule) in all material respects and that all questions and answers are given in good faith: cl 33.1. 1. The trial judge observed at J[109] that the respondents did not contend that these clauses operated to displace liability for misleading or deceptive conduct. Rather, the clauses were emphasised as part of the context within which the asserted misleading or deceptive conduct was to be viewed. 2. On 27 October 2017, Alceon's solicitor provided to Elanor's solicitor a copy of the Tenant Arrears Report for October 2017 together with an outstanding incentive schedule as at 31 October 2017: J[110]. Only one of the five tenants then in arrears was one of the Food Court Tenants, namely Burrito Bar which had an amount of $11,022.85 outstanding for less than 30 days. 3. The Sale Contract settled and Elanor became the registered proprietor of the Centre by transfer dated 1 November 2017: J[110]. 4. Although not referred to in the trial judge's reasons, Elanor's business records revealed a history of continuing arrears in rent on the part of the Food Court Tenants from the time Elanor became the owner on 1 November 2017 until 30 June 2018. This was summarised in McNaughton 1 at [96] in the following table: Tenant Amount Approximate shortfall Dizzy Dukes $117,840.98 Equating to approximately 6 months' rent and other charges Burrito Bar $43,572.73 Equating to approximately 4 months' rent and other charges Bel Cibo $79,801.59 Equating to approximately 7 months' rent and other charges Kebab Express $44,503.71 Equating to approximately 8 months' rent and other charges Mass Nutrition Redcliffe $44,527.75 Equating to approximately 7.5 months' rent and other charges Sushi Kuni $37,940.00 Equating to approximately 3 months' rent and other charges Mumbai Blues $44,444.18 Equating to approximately 6 months' rent and other charges Thai Me Down $53,803.55 Equating to approximately 7 months' rent and other charges Redcliffe Noodle Kitchen $49,299.02 Equating to approximately 6 months' rent and other charges 1. Each one of the nine Food Court Tenants ultimately vacated or abandoned their leases and Elanor resumed possession: J[111]. The trial judge accepted Mr McNaughton's evidence in this regard, which his Honour summarised at J[111]. Mr McNaughton's evidence (McNaughton 1 at [94]) was: [94] Since November 2017: (a) The owner of Burrito Bar vacated and abandoned its premises at the Centre in January 2018. Elanor re-entered and took possession of its premises, terminating the lease. As at 30 June 2018 there was $43,572.73 in unpaid rent, outgoings, electricity, other direct recoveries and GST for those premises. At page 1456 of Exhibit BM1 is a copy of the Termination Notice dated 15 January 2018 [AB2191]. (b) The owner of Thai Me Down wished to surrender the lease of its premises at Bluewater Square on 30 June 2018. No agreement was reached between the parties as to the terms of the surrender and accordingly at no time was a Deed of Surrender of Lease executed by the parties. As a consequence of its unremedied failure to pay rent under the lease, Elanor terminated Thai Me Down's lease of its premises at Bluewater Square on 30 June 2019. (c) Elanor terminated Sushi Kuni's lease of its premises at Bluewater Square on 4 February 2019, as a consequence of its unremedied breach of the lease. At page 1457 of Exhibit BM1 is a copy of the Termination Notice dated 4 February 2019 [AB2192]. (d) Bel Cibo went into liquidation on 12 April 2019. On that date the liquidator gave notice to Elanor that he disclaims Bel Cibo's lease of its premises at Bluewater Square. At page 1458 to 1460 of Exhibit BM1 is a copy of a letter from the liquidator to Elanor dated 2 May 2019 attaching a copy of the Notice of Declaimer dated 12 April 2019 [AB2221 – 2223]. (e) Elanor terminated Dizzy Dukes' lease of its premises at Bluewater Square on 26 April 2019, as a consequence of its unremedied breach of the lease. At page 1461 of Exhibit BM1 is a copy of the Termination Notice dated 26 April 2019 [AB3219]. (f) Elanor terminated Mumbai Blues' lease of its premises at Bluewater Square on 26 April 2019, as a consequence of its unremedied breach of the lease. At page 1462 of Exhibit BM1 is a copy of the Termination Notice dated 26 April 2019 [AB2220]. (g) Kebab Express ceased trading officially on 16 March 2020. Prior to that time it had been in breach of its lease. As at May 2021 it was in $230,600.34 in arrears. At pages 1463 to 1464 of Exhibit BM1 are copies of an Aged Debtors Report for Kebab Express showing its arrears [AB2307 – 2308]. I am not able to access arrears reports for Kebab Express produced prior to 1 September 2021. Elanor appointed a new centre manager at that time and as at the time of swearing this affidavit I no longer have access to the Colliers' records. Colliers are the centre manager Elanor first appointed when it purchased the Centre. (h) Redcliffe Noodle Kitchen surrendered its lease or about 20 June 2020 following numerous breaches of lease. At pages 1465 to 1479 of Exhibit BM1 is a copy of a signed Deed of Surrender and an aged debtors report as at May 2020 [AB2266 – 2280]. The Deed of Surrender shows the total amount payable by the tenant at the time of surrender of the lease as $76,718.68. The aged debtors report shows Redcliffe Noodle Kitchen in arrears of $73,187.48. (i) On 19 March 2018, McAndrew Law acting for the owner of Mass Nutrition sent a letter to Chrissie Hoffman of Colliers on behalf of Elanor requesting Elanor agree to accept a surrender of the lease of Mass Nutrition's premises at Bluewater Square. At pages 1480 to 1481 of Exhibit BM1 is a copy of the letter from McAndrew Law dated 19 March 2018. The lease was surrendered on 30 June 2018, pursuant to a Deed of Surrender of Lease. At pages 1482 to 1496 of Exhibit BM1 is a copy of the Deed of Surrender of Lease dated 7 November 2018 and the registered Surrender of Freehold Lease dealing number 719154203 [AB2193 – 2209]. THE ARREARS REPRESENTATION Elanor's case 1. The FASOC included: 19. Between about 18 August 2017 and 15 September 2017: (a) Alceon and CPRAM provided Elanor and its representatives, including CBRE, access to a data room for the purpose of enabling Elanor to undertake a due diligence process in relation to the Property (Data Room); (b) Elanor and its representatives undertook a due diligence process in relation the Property; and (c) as part of the due diligence process, Elanor and its representatives were provided access to reports said to record arrears in the payment of tenancy and rental and other lease obligations in respect of the Property from December 2016 to July 2017 as part of the Data Room. 20. For the purpose of making documents available in the Data Room, Alceon and CPRAM had access to the MRI System maintained and operated by Savills, including reports from such system concerning tenants, payments made by them and rental and other arrears in respect of such tenants. 21. The Data Room contained copies of: (a) leases for the Food Outlets; (b) incentive deeds for Dizzy Dukes, Burrito Bar, Mass Nutrition, Kebab Express, Mumbai Blue, Thai Me Down, and Redcliffe Noodle Kitchen (Incentive Deeds); (c) a document for each of the months between December 2016 and July 2017 titled "Tenant Arrears Report" (Tenant Arrears Reports). 22. The Tenant Arrears Reports did not identify any of the Food Outlets as being in arrears for any amount. 23. Other than the Tenant Arrears Reports for December 2016 and July 2017, no other Tenant Arrears Reports nor any other documents were provided recording tenancy arrears in respect of the Property for the period December 2016 to July 2017. 24. The Tenant Arrears Report recorded for the month of July 2017: (a) identified the total arrears in respect of that month as $2,957.05; and (b) did not identify any of the Food Outlets as being in arrears for any amount. 25. On or about 30 August 2017, Alexander Hamilton, Sophie Brunninghausen and Georgie Levene of CBRE, met with Mr Frenil Shah of CPRAM at the Property (30 August Meeting). 26. On 30 August 2017: (a) Alexander Hamilton asked Frenil Shah about the trading and rental performance of each of the tenants of the Property; and (b) in response Mr Shah did not identify any of the tenants of the Food Outlet as: (i) having outstanding arrears; (ii) receiving any abatements or incentives beyond those disclosed in the Incentive Deeds; or (iii) having any issue in respect of their respective sales, their ability to pay rent or to satisfy their other obligations under their respective leases. … 35. On 27 October 2017, Minter Ellison on behalf of Alceon provided Connor O'Meara on behalf of Elanor with copies of: (a) a document titled 'Tenant Arrears Report' for the month of October 2017 (October Arrears Report); (b) a document titled 'Outstanding Incentive Schedule as at 31 October 2017' (October Incentive Schedule). Particulars The documents were provided as attachments to an email from Alan Olcayto of Minter Ellison to Greg O'Meara, Elias Stephen, Despina Roussakis of Connor O'Meara. 36. The October Arrears Report identified only one of the Food Outlets, being Burrito Bar, as being in arrears and for less than 30 days as at October 2017. … 40. The passing base rent per annum and outstanding abatements in respect of the Food Outlets were stated in the Tenancy Schedule, the Outstanding Incentive Schedule and the October Incentive Schedule respectively to be as follows: [Table omitted] … 44. By reason of the matters pleaded in paragraphs 19 to 26 and 35, 36 and 40 above, Alceon and/or CPRAM represented to Elanor that: … (f) The Tenant Arrears Reports and the October Arrears Report were correct and complete statements of all amounts which had not been paid by the Food Outlet tenants in the corresponding month for that report from all previously rendered invoices and that all amounts in invoices rendered in the months prior to the month of the respective report had otherwise been paid in full by the tenants of the respective Food Outlets (Arrears Representations); Particulars The Arrears Representations are partly express, partly implied and partly oral. (i) In so far as they are express, they are contained in the Tenant Arrears reports and the October Arrears Report. (ii) In so far as they are implied, they arises [sic] from the circumstances in which the Tenant Arrears Reports and the October Arrears Report were provided and absence of any other document or information of a similar nature for different periods or difference [sic] tenants being provided. (iii) In so far as they are oral, they arise from the matters and conversations pleaded in 25 and 26 above. … 46A Further, or alternatively, by reason of the matters pleaded in paragraphs 19 to 26 and 35, 36 and 40, Elanor had a reasonable expectation that Alceon and/or CPRAM would have disclosed to Elanor if any of the Food Court Tenants were in arrears of more than 30 days during the period December 2016 to October 2017. 1. Put simply, Elanor's case on misleading or deceptive conduct was that: 2. the monthly Data Room Arrears Reports for the months December 2016 to June 2017 reviewed by Mr McNaughton did not suggest that the Food Court Tenants had arrears of rent (and one would expect them to show such arrears if those tenants did have arrears); 3. the Tenant Arrears Reports for July 2017 reviewed by Mr McNaughton and Mr Hamilton did not suggest that the Food Court Tenants had arrears of rent (and one would expect them to show such arrears if those tenants did have arrears); 4. neither Mr McNaughton nor Mr Hamilton saw any other documentation in the data room or otherwise recording arrears of rent in respect of the Food Court Tenants; and 5. after Mr Hamilton reviewed the Tenant Arrears Report for July 2017, Mr Hamilton asked Mr Frenil Shah on 30 August 2017, in a tenant-by-tenant review, questions about current and historical arrears of each of the Food Court Tenants and was not told that there was any issue in that respect; 6. in light of that conduct: 1. the Data Room Arrears Reports conveyed that the Food Court Tenants did not have arrears in the period December 2016 to July 2017; 2. Mr Frenil Shah conveyed that the Food Court Tenants were not in, and did not have a history of, arrears in rent; 7. further, in the circumstances, Alceon and CPRAM should have disclosed to Elanor if any of the Food Court Tenants were in arrears of more than 30 days during the period December 2016 to October 2017. Summary of trial judge's reasoning on misleading or deceptive conduct 1. The trial judge noted that, by the time of closing submissions, Elanor conceded that its claim could not succeed for Kebab Express, Thai Me Down and Mass Nutrition because there were no arrears for these tenants: J[154]. 2. His Honour also stated that the claim framed by reference to the Tenant Arrears Report for October 2017 could not succeed because that report was provided shortly before settlement of the Sale Contract and could not have led Elanor into any anterior error inducing any of its decisions to acquire the Centre: J[154]. His Honour continued: … Although Elanor conjunctively pleaded that in reliance on the conduct it entered the Option Agreement, exercised the call option and completed the Sale Contract, no evidence was led as to what recommendation would have been put to the board between 15 September 2017, when the Option Agreement was entered into, and 1 November 2017, when settlement of the Sale Contract occurred, relating to options to withdraw from the transaction. Nor was evidence adduced as to what steps would have been taken, including after the call option was exercised on 23 October 2017, about the likely risks that Elanor may have faced in seeking to withdraw, including litigation that it may have then faced … 1. No issue was raised on the appeal about this analysis. Particular (i) to [44(f)] of the FASOC 1. As to what the trial judge referred to at J[155] as the "express representations", his Honour's preliminary conclusions can be summarised relevantly as follows: 2. Initially, the data room only included Tenant Arrears Reports for March and April 2017. On or about 21 June 2017, additional reports were printed and uploaded to the data room for December 2016 and January, February, and May 2017. 3. A further report for June 2017 was printed on 25 July 2017 and then placed in the data room: J[156]. The Tenant Arrears Report for July 2017 was printed on 25 August 2017: J[158]. Inferentially, this was placed in the data room on or before 28 August 2017: J[155]. 4. The March, April and June 2017 arrears reports did not identify any of the Food Court Tenants as being in arrears, indeed none of the Food Court Tenants are listed: J[156]. 5. It was "not necessary to interrogate the content of the December 2016, January, February, and May 2017 reports as Elanor accepts that these reports record the arrears position as at the date of printing, and not as at the close of each month and therefore 'provide no additional arrears information' in relation to those months": J[156]. 6. The conclusion at (d) was erroneous for two reasons. 7. First, Elanor's position was not that the reports did not need to be considered by the trial judge. Its position was that – if it were true that the Tenant Arrears Reports for each of those months only reflected the arrears position as at the print date and noting that the reports were added to the data room at the request of another interested party – then what was the point of providing them when they should all state the same level of arrears given that they were all printed on the same day. Contrary to J[156], Elanor did not "accept that these reports record the arrears position as at the date of printing". 8. Secondly, Elanor's case was that Mr McNaughton reviewed each of the Tenant Arrears Reports in the data room on 21 August 2017 (not then including the Tenant Arrears Report for July 2017), understanding them to relate to the month for which the report was stated to apply, and did not see anything which caused him concern. 9. It follows that the trial judge erred in not considering each of the Tenant Arrears Reports. As noted earlier, none of the Data Room Appears Reports revealed any Food Court Tenant to have been arrears. Each of the Data Room Arrears Reports being made available to facilitate due diligence was a part of the conduct relied upon and had to be assessed in order to determine what the conduct as a whole conveyed. 10. The trial judge's conclusions in relation to the Tenant Arrears Report for July 2017 can be summarised in the following way: 11. Mr McNaughton viewed the Tenant Arrears Report for July 2017 "on 28 August and 30 October 2017": J[155]. Mr Hamilton, and his assistants, also examined the Tenant Arrears Report for July 2017: J[157]. The July Arrears Report did not disclose arrears on the part of any of the Food Court Tenants: J[158]. 12. The July Arrears Report was ambiguous. His Honour explained this at J[161] in the following way: In my view the July Arrears Report was ambiguous. If the report purports to be a record of all arrears to 31 July 2017, then what is the point of recording a last payment date and an amount thereafter? Further, what is the point of the date of 25 August 2017 and the time of printing, if objectively the document is a "correct and complete" statement of all amounts "which had not been paid" by any of the Food Court Tenants for amounts previously invoiced? 1. The "objective meaning of the two page July Arrears Report … must be considered in the context that it was a component of a large amount of information that was made available to Elanor during the due diligence period as contained in the data room": J[165]. 2. The information in the data room included: "rental tax invoices for the period January until May 2017, tenant recovery letters for the financial year 2017, outgoings recovery records for the financial year 2018 and the monthly turnover data for the period March to July 2017". 3. Mr McNaughton and Mr Hamilton both "assumed the risk" that the information in the Tenant Arrears Report for July 2017 might not be accurate: J[163] and [164] read with J[166]. 4. Elanor "did not examine the detail of this documentation and made no attempt to reconcile amounts charged with amounts paid": J[165]. The trial judge stated at J[165] that Elanor could have, but did not, make a number of inquiries. His Honour's observations included: 1. "The Savills records included detailed monthly reconciliations of amounts charged to and paid by each tenant and, although these documents were not made available in the data room, no request was made by Elanor or Mr Hamilton for the provision of this type of information". 2. "Moreover, through the question-and-answer facility in the data room, Elanor could have asked a simple question to the effect: Is the July Arrears Report a correct and complete statement of all rental arrears for each tenancy to 31 July 2017?" 3. "Similarly, through that facility, Elanor could have sought clarification as to the difference between the print date and the last payment date on the July Arrears Report and the period to which it relates". 5. This aside, there was "considerably more evidence to the effect that Elanor was not lead into error by the July Arrears Report because it took the risk that one or more, or indeed all, of the Food Court Tenants may be in arrears and may not ultimately be complying with their payment obligations pursuant to the leases or whether the Food Court Tenants were in arrears was immaterial to its decision-making": J[166]. 6. The reference to "considerably more evidence" is a reference to J[220] to [238] under the heading "The overall contextual circumstances", in which his Honour considered the "context" in which the alleged misleading conduct occurred. In this section, the trial judge was also critical of Elanor's lack of inquiry – see: J[226], [229], [235], [238]. Particulars (ii) and (iii) to [44(f)] of the FASOC 1. His Honour dealt with the second and third particulars to [44(f)] of the FASOC by stating: [167] The second Arrears Representation is pleaded as an implication: the circumstances in which the Tenant Arrears Reports were provided and the absence of any other document of a similar nature for different periods or tenants. This pleading is difficult to understand and was not elaborated upon in Elanor's closing submissions. It does not add to the express representation said to be conveyed by the arrears reports and self-evidently the implication cannot be inconsistent with the objective meaning of those reports. In my view the implied representation contention takes Elanor's case no further than the express representation case. [168] Thirdly, there is the oral representation claim that is founded on what Mr Shah said and did not say during the 30 August Meeting. As I have found, Mr Shah did not identify any of the Food Courts Tenant as having arrears of more than 30 days during that meeting, but it does not follow from that finding that his conduct was, in all of the circumstances, misleading or deceptive or likely to mislead or deceive, which point I return to later in these reasons. Paragraph [46A] of the FASOC 1. The trial judge dealt with [46A] of the FASOC under the heading "Did the respondents engage in misleading conduct by non-disclosure?" from J[172] to [176]. The trial judge explained the case in the following way: [173] Paragraphs [19] to [26] of the FASOC concern the access granted by Elanor to the documents in the data room between 18 August and 15 September 2017, as well as the 30 August Meeting. The Tenant Arrears Reports for the period December 2016 to July 2017 are mentioned, and the July Arrears Report is emphasised. Paragraphs [35] and [36] reference provision of the October Arrears Report and the October incentive schedule provided to Elanor's solicitor on 27 October 2017. As I have explained, the October documents are simply irrelevant to the decision-making of Elanor to enter into the Sale Contract, and no attempt has been made to lay out a case in the evidence as to what would have been done to end that contract in the event that relevant information had later been disclosed and that Elanor had been misled. Paragraph [40] is a reference to the passing base rent per annum in the tenancy schedule and to the outstanding incentive schedule, each as attached to the Sale Contract. 1. The trial judge rejected that case in one paragraph at J[174] stating: [174] Elanor fails to explain how these documents gave rise to a reasonable expectation that the fact of arrears of more than 30 days by any of the Food Court Tenants between December 2016 and October 2017, would have been disclosed to it. The fact is that Elanor had the benefit of the due diligence material and period of investigation, was itself a sophisticated investor and engaged Mr Hamilton as an experienced person in the undertaking of due diligence assessments, particularly for shopping centres. It was open to Elanor throughout the due diligence period to seek more documents and to ask specific questions. Relevantly, it did neither. 1. As to this, of course, Elanor had asked specific questions of Mr Frenil Shah on 30 August 2017, but was not informed that any of the Food Court Tenants were in arrears. The principles 1. In Self Care IP Holdings Pty Ltd v Allergan Australia Pty Ltd [2023] HCA 8; 97 ALJR 388 at [80] and [81], Kiefel CJ, Gageler, Gordon, Edelman and Gleeson JJ set out the four steps involved in determining whether a person has breached s 18 of the ACL. That case concerned representations to members of the public, but the steps are relevantly the same where the target audience is more confined. The steps are: 2. First, identifying with precision the "conduct" said to contravene s 18. The first step requires asking: "what is the alleged conduct?" and "does the evidence establish that the person engaged in the conduct?" 3. Second, considering whether the identified conduct was conduct "in trade or commerce". There is no issue in the present case that the conduct was "in trade or commerce". 4. Third, considering what meaning that conduct conveyed to its intended audience. Where the pleaded conduct is said to amount to a representation, it is necessary to determine whether the alleged representation is established by the evidence. 5. Fourth, determining whether that conduct in light of that meaning meets the statutory description of "misleading or deceptive or ... likely to mislead or deceive", that is, whether it has the tendency to lead into error. 6. In relation to the third and fourth steps the High Court stated at [82] (footnotes omitted): The third and fourth steps require the court to characterise, as an objective matter, the conduct viewed as a whole and its notional effects, judged by reference to its context, on the state of mind of the relevant person or class of persons. That context includes the immediate context – relevantly, all the words in the document or other communication and the manner in which those words are conveyed, not just a word or phrase in isolation – and the broader context of the relevant surrounding facts and circumstances … 1. It is wrong only to analyse the separate effect of each piece of conduct asserted to give rise to a representation without analysing whether the representation was conveyed by the whole of the conduct assessed in context: Parkdale Custom Built Furniture Pty Ltd v Puxu Pty Ltd [1982] HCA 44; 149 CLR 191 at 199; Butcher v Lachlan Elder Realty Pty Limited [2004] HCA 60; 218 CLR 592 at [39] (Gleeson CJ, Hayne and Heydon JJ); Australian Competition and Consumer Commission v TPG Internet Pty Ltd [2013] HCA 54; 250 CLR 640 at [52]. Examining only isolated parts of the conduct "invites error": Butcher at [109] (McHugh J); approved in Campbell v Backoffice Investments Pty Ltd [2009] HCA 25; 238 CLR 304 at [102]. 2. Further, it is important not to confuse the conduct with that which the conduct is said to convey. References to representations should not obscure the need to identify the contravening conduct: Campbell at [102]. Consideration Did the trial judge assess the conduct as a whole? 1. One of the complaints made by Elanor on the appeal was that the trial judge treated the particulars to [44(f)] as giving rise to separate representations or cases rather than assessing the conduct as a whole to determine whether that conduct conveyed the representations pleaded or was misleading or deceptive. 2. The pleaded representation alleged to have been conveyed by the conduct as a whole was that the Data Room Arrears Reports were a correct and complete statement of amounts which had not been paid in the relevant month to which the reports related. These were referred to as the "arrears representations". The particulars to [44(f)] explained how the arrears representations were conveyed and, in part only, the conduct. The particulars explained that the representations were partly express and partly implied, the express aspect being partly written and partly oral. The principal conduct relied upon as giving rise to the arrears representations was the conduct pleaded in [19] to [26], [35], [36] and [40] of the FASOC. 3. Closely allied to the case pleaded in [44(f)] was the case, also said to flow from the conduct and matters pleaded in [19] to [26], [35], [36] and [40] of the FASOC, that Elanor had a reasonable expectation that Alceon and CPRAM would have disclosed any arrears of more than 30 days owed by any of the Food Court Tenants within the period December 2016 to October 2017 and that the failure to do so gave rise to a reasonable expectation by Elanor that none of the Food Court Tenants were in arrears for more than 30 days during that period: J[41]; FASOC [46A]. 4. Elanor's complaint that the trial judge treated the particulars to [44(f)] as giving rise to separate representations or cases finds support in the structure of the trial judge's reasons. The trial judge addressed the "express representations" (a reference to the express written representations in particular (i) to [44(f)] of the FASOC) from J[155] to [166]. His Honour dealt with particulars (ii) and (iii) of the arrears representation as the "second Arrears Representation" at J[167] and the "oral representation claim" at J[168], respectively. His Honour addressed the claim of misleading conduct by non-disclosure separately at J[173] and [174]. His Honour later addressed contextual matters said to be relevant to whether the conduct was misleading at J[220] to [238], but much of this is in fact directed to questions relevant to reliance. 5. The complaint also finds support in the trial judge's reasoning. 6. The trial judge stated in several places that he was required to assess the conduct as a whole and in context and also stated that it would be "an error to separately examine the effect of each representation or failure to disclose, without considering the conduct as a whole": J[114], [120]. However, his Honour then analysed the particulars to [44(f)] individually as if they were separate "cases" or separate representations: 7. His Honour considered separately whether the pleaded representation arose from the Tenant Arrears Report of July 2017 (particular (i)). Whilst it is relevant to consider what the Tenant Arrears Report of July 2017 would have conveyed if viewed in isolation from the whole of the conduct, the real issue is whether the conduct as a whole conveyed the pleaded representation. What a document conveys when viewed in isolation is often different to what it conveys when viewed in context, including in the context of a course of conduct. His Honour did not consider each of the Data Room Arrears Reports. His Honour did not consider what the Data Room Arrears Reports conveyed when assessed against the respondents' conduct as a whole. 8. His Honour found the "second Arrears Representation" to be "difficult to understand", but that is because his Honour was addressing particular (ii) as if it was a stand-alone case giving rise to the pleaded representation. Particular (ii) was one of the matters relied upon as explaining how or why the pleaded representation was conveyed by the conduct as a whole. The conduct was principally pleaded in [19] to [26], [35], [36] and [40] of the FASOC and partly in [44(f)]. The trial judge addressed particular (ii) in one paragraph at J[167], where it was concluded that it "takes Elanor's case no further than the express [written] representation case". Neither was a separate case. 9. His Honour also dealt separately with "the oral representation claim" – that which Mr Frenil Shah stated at the meeting on 30 August 2017 – at J[168] as if it were a stand-alone case. However, particular (iii) identified conduct relevant to determining how the Data Room Arrears Reports would have been understood assessed in the context of the whole course of conduct. This was not the trial judge's approach. 10. The focus on whether the "arrears representations" arose from one or other of the identified particulars in isolation does not furnish the answer to the questions involved in the first and third steps identified in Self Care at [80]. 11. Further, the analysis of each particular to [44(f)] as if they were separate cases was not undertaken in the context of the conduct relied upon, namely the conduct pleaded from [19] to [26], [35], [36] and [40] of the FASOC. 12. Finally, it should also be observed that the trial judge's approach to what was relevant as the "context" in which to assess whether the respondents breached s 18 of the ACL was more focussed on questions of reliance than on the context in which the respondents' conduct should be assessed. The principal matters of "context" to which the trial judge referred was an asserted "assumption of risk" on the part of Mr McNaughton and Mr Hamilton and a failure on their respective parts to audit the records in the data room or make inquiries. The trial judge addressed reliance separately, but considered these matters persuasive in denying that the respondents' conduct breached s 18 of the ACL. As will be explained further below: 13. the asserted "assumption of risk" proceeds on a misunderstanding of the evidence; 14. the trial judge's reliance on a failure to audit the Tenant Arrears Report for July 2017, by reference to other business records of Savills contained in the data room, or make further inquiries: 1. involves the non sequitur that a failure to make inquiries means that misleading conduct is not misleading; 2. involves the difficulty that his Honour later concluded that Savills' records were "very messy" and unreliable such that the task his Honour hypothesised as one which should have been undertaken was in substance later found to be an impossible one; and 3. ignores the fact that making inquiries is precisely what Mr Hamilton did by conducting a tenant-by-tenant review with Mr Frenil Shah on 30 August 2017. 15. For these reasons, and the further reasons given below, the trial judge's assessment of whether Alceon and CPRAM breached s 18 of the ACL miscarried. Before returning to the trial judge's reasoning in more detail, it is convenient to say something more about the Tenant Arrears Reports and the meeting of 30 August 2017. The Tenant Arrears Reports 1. The Tenant Arrears Reports contained columns indicating whether the relevant arrears were 30, 60, 90 or 120 days overdue. Each was headed as relating to a particular calendar month. None of the Data Room Arrears Reports revealed any of the Food Court Tenants to be in arrears in any of the months. 2. It was Mr Hamilton's practice to examine arrears reports as part of the due diligence exercise. It was his experience that monthly arrears reports showed the arrears as at the end of the month to which the report related: Hamilton 1 at [19(f)], [23(h)]; Hamilton 2 at [43]. This was also his understanding of the Tenant Arrears Reports produced by Savills: Hamilton 1 at [29], [30]. Mr McNaughton had the same experience and understanding: McNaughton 2 at [18]. Mr McNaughton made the observation that a monthly arrears report which takes into account payments made after the end of the month does not show the monthly arrears. 3. Indeed, Mr Hamilton's understanding of what an arrears report usually shows accorded with Ms Hansen's experience. Ms Hansen was an expert in financial due diligence called by the respondents. Her report included (emphasis added): 6.2.1. With respect to 'arrears reports', in my experience: (a) 'Arrears reports' summarise outstanding debtors balances. Such reports may also be called the 'aged receivable reports' or 'aging reports'. (b) Such reports would normally show debts based on the period for which each debt is outstanding. These categories usually include 'current' (i.e. debts that are due for less than 30 days) and those that are due past 30 days, 60 days, 90 days, and so on. (c) Such information would normally be shown as at the ending date of a period, i.e. a July 2017 report would show the outstanding amounts as at 31 July 2017. … 11.2.1. Paragraph 30 of Hamilton Affidavit states that: "30. I have reviewed both the July Arrears report and the December to June Arrears Reports. My understanding upon reviewing these reports is that they show what tenants were in arrears in that respective month. So for example, the July Arrears Report, I expect that to show what tenants had not paid as at the month of July as at the last day of that month (being whatever has not been paid during that month or any months prior)." 11.2.2. I refer to my comments on the Tenant Arrears Report for July 2017 set out in Section 6 of this report. 11.2.3. I agree with Mr Hamilton that, as an FDD advisor, I would expect an arrears report of July 2017 to show what tenants had not paid as at the last day of that month (i.e. 31 July 2017). 1. Ms Hansen also concluded, however, that there was information in the Tenant Arrears Report for July 2017 which indicated that it did not reflect the outstanding amounts as at 31 July 2017: at [2.4.3] and [11.2.5]. 2. On careful examination, the Tenant Arrears Reports are ambiguous. They contain a reference to a "Last Payment" which, in some, refer to a date after the end of the relevant month. The arrears reports also contain a print date. By way of example, the Tenant Arrears Report for July 2017 refers to five tenants (none of which is one of the Food Court Tenants) and, in relation to each, refers to a "Last Payment" made after 31 July 2017 and before the print date of the July Arrears Report of 25 August 2017. Importantly, the arrears reports do not reveal whether, and if so how, the "Last Payment" has been taken into account in the statement of the arrears position for the month. 3. Further, it is not appropriate to confine the analysis to the Tenant Arrears Report for July 2017, which is what the trial judge did and what Ms Hansen appears to have done in expressing her views. For example, the Tenant Arrears Report for March 2017 and April 2017, in the data room, do not contain any "Last Payments" which post-date the relevant month. 4. It was entirely reasonable for Mr Hamilton (who only reviewed the Tenant Arrears Report for July 2017 at the time) and Mr McNaughton to have understood the Data Room Arrears Reports as stating what the arrears position was at the end of the relevant month. Mr Hamilton explained (Hamilton 2 at [43]): I do not review arrears reports believing them to be inaccurate or do not otherwise record the arrears of the month in question. This does not change with the print date of the arrears report. The print date should not matter in assessing an arrears report for a specified month. I do not focus on the date of last payment recorded in the arrears report. I do not believe this to impact on the arrears recorded for a specific month, even if that last payment post-dated the month in question. I focus on whether there are 30 day arrears, or 60 day arrears, or 90 day arrears, or 120 day arrears. Further, a reference to the last payment does not to me, reflect what date the arrears are on the report. I expect a arrears report for a month to show arrears as at the end of that month. 1. As mentioned earlier, the trial judge overlooked that Mr McNaughton read each of the Data Room Arrears Reports. Mr McNaughton's evidence was that, on 21 August 2017, he briefly reviewed the documents contained in the data room that referred to the Centre income, outgoings and documents in respect of arrears (which did not then contain the Tenant Arrears Report for July 2017): McNaughton 1 at [44]; AB2942.16 to 2943.14. Mr McNaughton accepted that his review of the arrears reports was brief: AB2942.37-42. 2. Both Mr McNaughton and Mr Hamilton reviewed the Tenant Arrears Report for July 2017 before the meeting with Mr Frenil Shah on 30 August 2017. 3. None of the Data Room Arrears Reports indicated that any of the Food Court Tenants had been in arrears. There was no other material in the data room reviewed by McNaughton or Mr Hamilton which indicated that the Food Court Tenants had been in arrears: Hamilton 1 at [26]. 4. A part of the context in which Mr Hamilton went to the meeting with Mr Frenil Shah on 30 August 2017 included that he had reviewed the Tenant Arrears Report for July 2017 and other documentation in the data room and nothing he had reviewed indicated that any of the Food Court Tenants had been in arrears. If tenants were shown to be in arrears, then Mr Hamilton is likely, if not certain, to have raised this with the person representing the vendor who was familiar with the tenants (Mr Frenil Shah), and in his presentation to Elanor and in his due diligence report: Hamilton 1 at [31]. This was the effect of Mr Hamilton's evidence. Ground 1 of the respondents' notices of contention 1. By Ground 1 of separate notices of contention, the respondents contended that the "arrears representations" were not made because the Data Room Arrears Reports stated the arrears positions of the tenants as at the dates the reports were printed, not as at the end dates of the relevant months to which each of the Data Room Arrears Reports related. 2. The trial judge was correct to conclude that the Data Room Arrears Reports were ambiguous. It was not clear that they stated the arrears position as at the print date. By way of example, the Data Room Arrears Report for February 2017 was printed on 21 June 2017 and stated a 30 day arrears position for an amount invoiced on 18 January 2017. If the amount remained unpaid, it could not have been only 30 days overdue. 3. Further, if the Data Room Arrears Reports reflected arrears as at the print date, then – on one view – the Tenant Arrears Reports in the data room for December 2016, January 2017, February 2017 and May 2017 – each of which was printed on 21 June 2017 – should have reflected, but did not reflect, the same overall arrears position. By way of example, the Tenant Arrears Report for December 2016 - printed on 21 June 2017 – showed Donut King to be $1,259.02 in arrears. The Tenant Arrears Reports for January 2017, February 2017 and May 2017 – each printed on 21 June 2017 – do not show any arrears for Donut King. 4. It has been noted above that both Mr McNaughton and Mr Hamilton understood the Data Room Arrears Reports to record the arrears position as at the end of the relevant month, not the print date. The assessment of what the Data Room Arrears Reports conveyed to a reasonable potential purchaser is not determined by what one of those reports (the July 2017 report) conveyed upon careful analysis to any accounting expert. On careful analysis of all of the reports, the Data Room Arrears Reports are ambiguous. For the reasons given earlier, if they stated the arrears position as at the print date, that is by no means clear. On any view, what is not ambiguous is that none of them conveyed that any of the Food Court Tenants had arrears between December 2016 and July 2017. 5. In any event, and most importantly of all, what the Data Room Arrears Reports conveyed was a matter to be assessed in light of the conduct as a whole in which respect Elanor relied upon the conduct and matters pleaded in [19] to [26], [35], [36], [40], [44(f)] and [46A]. 6. Ground 1 of the notices of contention should be dismissed. The 30 August 2017 meeting 1. In his first affidavit, Mr Hamilton gave the following evidence about the meeting and about his usual practice: [35] On 30 August 2017 after completing my review of the Data Room, I met with Mr Frenil Shah, the director of CPRAM at the Centre. In every due diligence I undertake I have a meeting of this kind. The purpose of meeting Mr Shah was to ask him questions about each of the tenants in the Centre so that I could ascertain from his answers if there are any tenants that warrant further investigation or are considered tenants that may be unable to pay rent or abandon their tenancy. In all due diligence investigations I conduct, I provide a summary of that information to the prospective purchaser, together with my opinion on the tenants based on that information. [36] Every other time I have conducted this type of due diligence for a tenanted asset, I conduct the meeting with the Centre Manager. I do this because they are usually located in the centre management office, are in contact with tenants on a daily or weekly basis, and observe the tenancy operating. The centre manager is the person that has most contact with the tenants and is most familiar with their rental payments and arrears position. [37] In this case on 22 August 2017, I was advised by Philip Gartland of Stonebridge (who was one of the sales agents for the property) that Frenil Shah from CPRAM would meet me on site for the meeting … … [39] …[O]n 30 August 2017 I attended a meeting with Mr Shah of CPRAM. I took a tenancy schedule of the tenants with me to the meeting and went through the tenancy schedule as I ask questions about each tenant. [40] In this meeting I asked a series of questions about each tenant. I ask the same questions at all such meetings during a due diligence process. My practice is to ask the following questions: (a) Is [tenant] trading well or poorly? I ask this question as it can indicate a tenant's ability to pay rental and other charges, and possibly the length of time the tenant will stay leasing the premises. This is because, in my experience, if the tenant is trading well, it will receive sufficient income to make payment of its expenses including rental and other charges. Further, if it is trading well, it will likely stay in the lease for the duration of the lease and possibly renew the lease. If there is any adverse comment made in answer to this question I record that comment in my report to the prospective purchaser. (b) Is [tenant] in arrears or do they have a history of arrears? I ask this question as it can indicate a tenant's ability to pay rental and other charges, and the length of time the tenant will stay leasing the premises. If the tenant has a history of arrears or is in arrears at the time of the meeting, this can, in my experience, indicate the tenant may have future issues paying rental and other charges, and further may abandon the lease or not renew the lease once it has finished. If there is any adverse comment made in answer to this question I always include that in my report to the prospective purchaser. (c) Are there any issues with [tenant]? I ask this question in addition to the two questions above to ensure I capture any other matters that may be of interest to the prospective purchaser but which are not directly related to payment of rent or sales made by the tenant. For example, if a tenant is disruptive in the shopping centre I expect to be told that. This is the type of issue I advise prospective purchasers about as I consider it a negative factor in respect of the purchase. (d) Has [tenant] requested more space or less space? I ask this question because in my experience, it can, indicate whether a tenant is easily able to pay rental and other charges for the space it has leased. If a tenant has requested less space that can indicate it is finding it difficult to pay rental and other charges. This can show whether a tenant is likely to continue to pay its rental and other charges and stay for the duration of the lease. If there is any adverse comment made in answer to this question I always include that in my report to the prospective purchaser. [41] I also ask "what is the likelihood of [tenant] renewing their lease" in respect of tenants that are coming to the end of their lease i.e. are within six months of the end of their lease. I ask this because I consider that the longer a tenant remains in a tenancy (including renewing their lease), the more profitable the tenant is for the owner of the asset, as there are no periods where the tenancy is vacant and the owner is not receiving rent. In addition, in my experience it is common for tenants and landlords to enter into incentive agreements at the beginning of a tenancy by which the tenant pays less rent through various means, which equals less profit for the landlord. If there is any adverse comment made in answer to this question I always include that in my report to the prospective purchaser. 1. Mr Hamilton gave the following evidence about the preparation of the contemporaneous file note partially created before, and completed at, the meeting on 30 August 2017: [42] The meeting with Mr Shah took place in a coffee shop on 30 August 2017. Ms Brunninghausen and Ms Levene were also present at the meeting. No-one else was in attendance. Prior to the meeting, I said to Ms Levene words to the following effect: "Can you please make notes of what is discussed in the meeting. Can you please write a heading for each tenant and if Mr Shah makes any adverse comment about any of the tenants please note down under the name of the tenant what he says. If he does not say anything adverse, just leave the space under the tenant blank". [43] I asked Ms Levene to do this because I wanted to be able to speak to Mr Shah without stopping to make notes, but I wanted to ensure that we recorded any adverse comments about any of the tenants so I could include them in the due diligence report I was preparing for Elanor. I always include any comments from the meeting with the centre manager (or in this case, the asset manager) in the due diligence report which I consider would be of interest to the prospective purchaser. Those matters which I considered to be of interest are the matters set out above at 40-41. 1. Paragraph 44 of Mr Hamilton's affidavit as contained in Part C of the Appeal Book included a note that it was "removed as received viva voce". In his reasons, the trial judge noted that he had "required viva voce evidence to be adduced in relation to materially disputed conversations and events and to that extent the narrative contained in the affidavits made by the witnesses was not received": J[134]. The transcript makes clear that evidence as to disputed conversations were "to be given viva voce and not adopted as part of the affidavit evidence" (AB2818.14; 2820.10; 2832.32; 3050.17-34). Paragraph 44 was rejected at AB3175.30. 2. The affidavit continued: [45] As we spoke, I observed Ms Levene typing into a document on her laptop computer. 1. Mr Hamilton gave evidence that he read the note after the meeting and that it was accurate: [46] Shortly after the meeting concluded, I read Ms Levene's note. It was an accurate reflection of what was said at the meeting in particular by Mr Shah. Annexed and marked "AH6" [AB1581] is a copy of the typed note prepared by Ms Levene at that meeting and then reviewed by me. Where nothing is recorded in those notes about a particular tenant, I recall nothing adverse was said by Mr Shah for that particular tenant. If Mr Shah had said that a tenant was frequently in arrears or special arrangements were in place for a tenant's rent or something else of a similar nature, I would have ensured that such comment was recorded in these notes. I always also pass those comments on to the prospective purchaser. [47] In the course of that meeting (or at any other time) Mr Shah did not raise any issues of concern to me as to the Food Court Tenants' performance, or their ability to satisfy their respective rent and other obligations under their leases. I accepted that Mr Shah was giving an accurate summary of each of the tenants to me as I had no reason to think he was not being accurate. [48] Nothing in the material contained in the Data Room indicated to me that there had been any undisclosed forgoing of rent otherwise due to Alceon, that the Food Court Tenants were in arrears in payment of rental and other charges, had been in arrears in the past, or that the Food Court Tenants had indicated to Alceon that they were having difficulty with paying their rent. 1. Mr Hamilton was cross-examined in relation to [40] and [41] of his affidavit. This made clear that Mr Hamilton asked each of the four questions in [40] and the fifth question in [41] in relation to each of the tenancies. His evidence included (AB3231.14-22): Now, so here – just coming back again, we've got 49 tenancies that you're asking questions of from – about Mr Shah. And you've come along to this meeting, knowing you're going to ask 49 questions, and you then ask questions – sorry, I withdraw that – and you say this meeting lasted for 30 minutes. Do you recall that?---Well, I – I can't remember exactly but that's an estimate. But that's what you said?---Yes. So during this meeting, it's your – your contention is that you went through every tenancy?---Yes. You asked each of those four questions?---Yes. And then you also asked another question, which is at paragraph 41, which I took you to, of your first affidavit?---Yes. 1. Mr Hamilton was challenged on whether he asked questions tenant-by-tenant (AB3227.21-36, emphasis added): So what I'm suggesting to you – you wouldn't have asked questions about this to Mr Shah during the course of the meeting because whether someone is trading poorly over a short period of time, according to you, is not indicative of any risk; isn't that correct?---Again, I – I'm looking for the, sort of, anecdotal feedback. So if they've been open for six months, and they've told Mr Shah or the centre manager, "Look, it's not going as well as expected", or "It's going way better than expected", that would be interesting feedback to the question. So is what you're saying you asked this question about every tenant irrespective of how long they had been trading?---Well, I – I ask all the questions at the beginning, and then we go through tenant by tenant. So you don't ask the question in relation to each tenant. You ask a group of questions up front - - -?---Yes, yes. - - - and then go in for each tenant?---Yes. 1. Mr Hamilton's evidence included (AB3236.5-45, emphasis added): … I suggest to you at the meeting that you didn't go through each tenant one by one?---Well, we did go through each tenant one by one. I'm suggesting to you that you didn't ask Mr Shah whether each tenant was trading poorly?---No. As I said, that was the preamble. And then we went through and I would ask if there were any - - - I suggest to you that you weren't interested in historical arrears of any tenant – of the tenants at the centre?---In the historical - - - Historical arrears history for the tenants at the centre?---Yes, I was. Yes. All right. I will suggest you weren't interested in the historical arrears of the new food precinct tenants - - -?---Yes, we were. - - - at the meeting. Do you agree with that?---Sorry. Repeat the question. I suggested to you at the meeting that you weren't interested in determining the historical arrears of the new food court tenants?---Well, most of the food court tenants had only been trading for a month or two and they were under incentive deeds, so may not have been paying any rent. So therefore - - - HIS HONOUR: So do you agree with that, Mr Hamilton, that you weren't interested in historical arrears?---No. If there were historical arrears. But if they're very new tenants and they hadn't started paying rent, there wouldn't be any historical arrears. There wouldn't be any arrears. MR McQUADE: But did you have all that defined when you – which were those tenants when you went along to the meeting?---I think it's obvious that, you know, if someone hasn't been trading for very long or hasn't even started paying rent, they wouldn't have arrears. So - - - So therefore, you agree that that's not something you were interested in raising at the meeting with Mr Shah?---I was interested in it across the board for all the tenants. But if some of the tenants had only just started trading then I wouldn't expect there to be a response. And I suggest that you didn't ask Mr Shah whether in respect to each tenant, there were any issues with the tenant?---Well, I suggest we did. 1. In his judgment, the trial judge noted that Mr Hamilton acknowledged his obvious difficulty in recalling the words used and the content of the discussion that occurred six years earlier: J[135]. At J[135], the trial judge set out the following part of the transcript (emphasis added; AB3151.6-41): Yes?---So essentially, I would have said that – thank you for your time – for meeting with us. We've had about a week to go through the data room, and there's a lot of information in there that we've already obtained. We're not here to go over information that's already in the data room. We're trying to get some background to the numbers and the documents and, you know, anecdotal evidence of what's going on in the shopping centre. Yes?---And in order to do that, we would like to go through tenant by tenant and ask for your feedback on anything that you can – you know, that may be out of the ordinary or of interest, and I've given a few examples in the affidavit which – I haven't got the right page in front of me but - - - HIS HONOUR: No, no, no. I don't want you looking at the affidavit. I want to just hear it in your own words?---Yes. So essentially, things like how are the tenants trading, do they have a history of arrears, do they need more or less space, are they likely to renew their lease when their lease expiry comes round – those are the sort of questions, and the idea is to give a few pointers of the sort of things we're interested in, but what would normally happen is that that would draw out any other discussion points or points of interest. So - - - MR FERNON: And you identified a number of matters, including are there any – I think you meant are there any arrears – are there any matters – do you recall, in answer to those questions, that you put what, if anything, Mr Shah said in respect of – now, when I say the food court tenants, do you – there's nine tenants that have been the subject of your report. Do you know what I'm talking about?---Yes. Yes. Do you recall what it was that Mr Shah replied to you when you went through each of those tenants, as you say, in respect of the food court tenants on those matters?---Well, I – we had one of my colleagues taking notes. There were no notes. My recollection is there was no information given unless it's noted in that document of the record of the meeting. When you say, "no information given" - - -?---Well, there might have been no issues would be a typical response. Is it in response to the questions that you asked?---Yes. 1. The trial judge at J[136]: 2. accepted that Mr Hamilton was taken to the contemporaneous file note, prepared by Ms Levene, which Mr Hamilton confirmed accorded with his recollection of the matters discussed; 3. accepted that the document was pre-prepared and contained a number of headings corresponding to the various tenancies; 4. noted that, on Elanor's case (which the trial judge accepted), if Mr Frenil Shah gave a response, the relevant response was recorded below the relevant heading. For example, in relation to Woolworths, there is a note that: Sales are down due to other Woolworths opening nearby – an old Woolworths that was upgraded. Never paid percentage rent – so rent unlikely to change at rent review in 2018. 1. The trial judge made findings which indicate that Ms Levene's note was consistent with Mr Hamilton's due diligence report of 18 September 2017: J[137], [138]. The due diligence report noted that Mr Hamilton met with "the asset manager". In that part of the report dealing with the tenancy review, there was a reproduction of the information contained in the file note: J[138]. There was no reference to anything that Mr Shah said about the Food Court Tenants and there was no further mention in the document of any other information provided directly by Mr Shah at the meeting. 2. The trial judge stated: [139] Mr Hamilton was extensively cross-examined as to his recollection of the meeting. He accepted that although the turnover data and arrears reports for each of the Food Court Tenants between December 2016 and July 2017 was in the data room, he only looked at the July Arrears Report. He accepted that he knew by reference to the July 2017 turnover data that six out of 14 tenants in the food sales category had reported sales of three months or less to 31 July 2017. He was also aware that the turnover data which he examined was based on a projection to 1 December 2017. This evidence of Mr Hamilton provides context to his evidence-in-chief that his purpose in meeting Mr Shah was "to get some background to the numbers…anecdotal evidence of what's going on…" understood by reference to the limited data that he had examined. [140] Mr Hamilton explained that he did not ask separate questions of Mr Shah relevant to trading performance for each tenant because he had that information from the reviewed documents and that is what he relied on. He would ask a generic question, designed to elicit anything extra from Mr Shah. He further accepted that when he asked questions concerning tenant arrears, he was seeking information as to the current position, not historic arrears, although later in his evidence he appeared to contradict this answer by insisting that he was interested in receiving information about historical arrears. He then qualified the answer in response to a question from me as to whether he was interested in historical arrears stating: … No. If there were historical arrears. That if they're very new tenants and they hadn't started paying rent, there wouldn't be any historical arrears. There wouldn't be any arrears. [141] Mr Hamilton also denied the direct proposition that he did not ask Mr Shah whether there were any issues in respect of each tenant. 1. The first sentence in the emphasised passage from J[140] above contains a misunderstanding of Mr Hamilton's evidence. Mr Hamilton did not accept that, when he asked questions concerning tenant arrears, he was only seeking information as to the current position, not historic arrears. 2. The relevant question put in cross-examination (to which the trial judge was referring at J[140]) was about [40(b)] of Mr Hamilton's affidavit. In cross-examination, Mr Hamilton accepted the (obvious) proposition put to him that the first part of the question identified at [40(b)] of his affidavit was concerned with current arrears. The question at [40(b)] was: "Is [tenant] in arrears or do they have a history of arrears?". 3. Mr Hamilton's evidence was (AB3228.1-46, emphasis added): Now, the next question [in paragraph 40 of your affidavit] then is the tenancy arrears reports or do they have a history of arrears. Again – sorry, I will withdraw that. The next question – subparagraph (b), you say, "Is tenant in arrears or do they have a history of arrears?" Now, your – when you say – correct me if I'm wrong. The question you're directing to the person you're speaking to – "Is the tenant in arrears?" – you're asking about the date of the meeting, aren't you?---Asking about - - - Arrears at the date of the meeting?---Yes. You're not asking about historic – in that first part of it, you're not asking about historical information?---No. So "or do they have a history of arrears" – but you do have, as you've said, the July arrears report?---Yes. 1. In other words, Mr Hamilton's evidence did not contain the inconsistency to which the trial judge referred at J[140]. 2. Mr Hamilton's evidence is properly understood as asking both about current and historic arrears, as would be expected both as a matter of probability and consistently with his usual practice. 3. The trial judge noted that Mr Frenil Shah also gave evidence as to what was discussed at the meeting on 30 August 2017. Mr Shah stated that the meeting lasted for between 60 and 90 minutes. Mr Shah accepted that Mr Hamilton phrased his questions by reading from notes: J[142]. In relation to Mr Shah's evidence, the trial judge stated: [144] Turning to the specifics of the 30 August Meeting, he denied that Mr Hamilton at the outset stated that he intended to ask a series of questions in relation to each of the tenants. He denied that he was asked to comment on the trading performance of the tenants. He denied that he was asked about whether there was a history of tenant arrears. He denied that he was asked about whether tenants were likely to renew leases. He denied being asked questions in relation to each of the tenants listed in the file note of Mr Hamilton. Upon being taken to the file note, he said that he had made his own notes of the meeting but no longer had them. There is no reference in his affidavit evidence-in-chief to the fact of preparing any notes. He said that they existed in the form of a notebook that he had "probably" disposed of within two or three months of the meeting. He accepted that despite the absence of notes and the effluxion of time, nonetheless he had a detailed recollection from recall, not reconstruction, of the matters discussed. [145] He maintained that Mr Hamilton did not ask him direct questions in relation to the trading performance of each of the Food Court Tenants and responded that if he had done so, he would have referred Mr Hamilton to the material in the data room. The extent of Mr Shah's recall of what was discussed at this meeting is highlighted by evidence that he gave in relation to a question about the floor area of a particular tenancy. Mr Shah stated that he had been asked to comment on the discrepancy between a survey plan area of 25m² and a statement on the tenancy schedule that the area was 27m². Objectively, this evidences an extraordinary ability on the part of Mr Shah to recall evidence about a discussion that occurred in August 2017 in minute detail and without the assistance of any contemporaneous note. This causes me to doubt his reliability. 1. The trial judge found Mr Hamilton to be impartial and reliable: [146] I have no hesitation in accepting Mr Hamilton as an objective witness of the truth who gave reliable evidence to the best of his recollection as to what was discussed at the 30 August Meeting with Mr Shah. From observation, Mr Hamilton was a careful and measured witness who Alceon accepts "was plainly a witness of the truth" and suffered from no partiality in the proceeding. 1. His Honour found Mr Shah to be unimpressive and evasive: [146] … In contrast, Mr Shah was an unimpressive witness who was not forthcoming in his evidence. I find that his evidence was not reliable where it conflicts with that of Mr Hamilton and with contemporaneous documents. On many occasions he avoided giving simple answers to direct questions, often requesting simply expressed questions be repeated. His evidence that he never looked at the monthly tenancy arrears reports, despite being included on the emails from Ms Coco which attached them, strains credulity: Mr Shah was the individual from CPRAM who had the primary responsibility for portfolio management of the Centre and with it performance of the agreement between Alceon and CPRAM. He also denied discussing the content of those monthly reports with Ms Coco, despite her evidence, which I accept, that she did so. [147] Mr Shah also gave unimpressive and incredulous evidence about an amount of $13,750 credited to the account of Dizzy Dukes on 20 April 2017, described as an unapplied receipt on the Tenant Arrears Report for May 2017. Mathematically, by reference to other business records, this sum represented a part payment of the security deposit of $41,250. The balance of $27,500 was paid on 20 April 2017. Despite being faced with this compelling evidence, Mr Shah insisted that the tenant had simply paid rent in advance – a proposition that sits uncomfortably with the fact that the incentive deed deferred the rent commencement date to 15 May 2017 and there were further deferrals, caused by the upgrading work, to 1 June 2017. Mr Shah's evidence that $13,750 was a pre-payment of rent cannot be accepted in the light of the contemporaneous business records. [148] Overall, and by careful observation of the evidence of Mr Shah given over some hours, I formed the negative impression that he was unwilling to give evidence that he perceived contrary to the interests of the respondents. 1. At J[149], the trial judge concluded that: 2. Mr Hamilton asked questions of Mr Shah designed to elicit background information as to the operation of the Centre that was not apparent from the documentation disclosed in the data room. 3. Mr Hamilton commenced by asking a series of general questions relating to whether a tenant was trading, was there a history of arrears, whether more or less space was required and whether it was likely that a tenant would renew a lease. 4. For the Food Court Tenants, Mr Hamilton "did not receive any negative information, or at least information sufficiently material to be recorded in the notes of the meeting and included in his due diligence report". 5. "Mr Shah did not identify any single Food Court Tenant as having outstanding rental arrears as at 30 August 2017". 6. In substance, the trial judge accepted that, at the meeting on 30 August 2017, Mr Frenil Shah conveyed that the Food Court Tenants were not in arrears as at 30 August 2017. 7. To this, it should be added that Mr Hamilton was not told that any Food Court Tenant had a history of arrears. 8. The trial judge at J[149] accepted that Mr Hamilton asked general questions about a history of arrears. Once the trial judge's misunderstanding of Mr Hamilton's evidence at J[140] is corrected, there is no doubt that, in accordance with his evidence, Mr Hamilton asked about historical arrears. In this regard, Mr Frenil Shah conveyed that there was no relevant history of arrears or he was silent about any such history in a way which conveyed that there was no relevant arrears history. The trial judge's reasoning 1. There are three further aspects of the trial judge's reasoning on whether Alceon and CPRAM engaged in misleading or deceptive conduct which warrant mention. The trial judge considered that a part of the "context" for assessing whether the respondents' conduct was misleading was: 2. what his Honour saw as the fact that Mr McNaughton and Mr Hamilton each "assumed the risk" that the information in the Tenant Arrears Report for July 2017 might not be accurate: J[163] and [164] read with J[166]; 3. the fact that Mr McNaughton and Mr Hamilton did not audit the Data Room Tenant Arrears Reports or make further inquiries; and 4. what the trial judge considered was the "overall contextual circumstances". 5. These issues are better seen as matters relevant to whether damage was caused because of any misleading conduct, but they are addressed now because they formed a part of the trial judge's reasons for concluding that the conduct itself was not misleading. Assumption of risk 1. As to Mr McNaughton's "assumption of risk", the trial judge reasoned as follows at J[163] (emphasis added): [163] In cross-examination, Mr McNaughton was taken in detail to various sub-clauses contained in the special conditions of the Sale Contract at cl 5 … His attention was directed to the buyer acknowledgement to the effect that the seller "makes no representation or warranty as to the accuracy or otherwise" of the due diligence material, that the seller has not conducted its "own independent inquiries and investigations into information in the due diligence material prepared by third parties" and that the buyer warrants that it has "examined and satisfied itself" in relation to all matters contained in the due diligence material. It was then directly put to Mr McNaughton that Elanor accepted the risk as to whether or not the information prepared by Savills [including the Tenant Arrears Reports] was reliable or alternatively accurate to which he answered [AB3070-3071]: …. We accepted the risk. No. We were working on the assumption that it was accurate. That's right. So if it wasn't, you are accepting the risk that it wasn't? --- I guess so. Yes. … Mr McNaughton, Elanor could have, if it chose to do so, could have undertaken a due diligence of the accuracy of the financial information or material that Savills had regarding the Centre? --- If time, cost and industry practice permitted, then – yes. But you didn't even turn your mind to that, did you? --- No. 1. Understood fairly, Mr McNaughton's evidence was to the effect that: (a) he relied on the accuracy of the reports which Savills prepared (which included the Data Room Arrears Reports) – that is, he was "working on the assumption that it was accurate"; (b) he accepted that the terms of the Sale Contract had the effect that Elanor accepted the contractual risk that the due diligence material was not accurate. 2. There is nothing surprising about assuming that the Data Room Arrears Reports were accurate, those being business records which Savills created in order to manage the Centre. As the trial judge recorded at J[162]: [162] … According to Mr McNaughton: "Savills is a globally recognised and reliable property management company. Its existence in managing the Centre was a form of primary audit that I considered Elanor could rely upon." His evidence then continued: …[I]n my experience, when documents, reports or ledgers for instance are generated by property management software system of a globally renowned company such as Savills, it is assumed that those documents, reports or ledgers are reconciled and cross-checked with other relevant documents, reports or ledgers in that system. Accordingly, in my experience it is reasonable to take those documents, reports or ledgers at 'face-value' and not take steps verify [sic] the source documents that those documents, reports or ledgers were based upon. 1. As to Mr Hamilton, it is unclear what the trial judge had in mind in stating that Mr Hamilton "assumed the risk" that the information in the Tenant Arrears Report for July 2017 might not be accurate. In his affidavit at [29], Mr Hamilton stated (AB360): I did not undertake, and was not asked to undertake, a forensic accounting investigation of the Centre. Given the manager for the Centre was Savills, a globally recognised manager of commercial properties, and given the substantial nature of the asset being sold, I placed considerable trust in the accuracy of the documentation provided and the information contained in it, such that an audit of its contents was not required. 1. Mr Hamilton was taken to this in cross-examination and was not challenged on it: AB3190-91. 2. Mr Hamilton also stated in his second affidavit at [33]: [33] [G]iven the medium to large sized institution owning the Centre and the involvement of Savills, there is a significant level of trust in the accuracy and completeness of the documents provided. I assume that other information provided orally or in writing by the vendor's representative is accurate and correct. I take the documents and information that I am provided with from the vendor at face value, so that I do not need to conduct an investigation into the documents and information itself as to whether it is accurate. There may be mistakes in the documents produced or discrepancies. For example, in this particular due diligence there were some minor discrepancies in the tenancy schedule compared to various leases. But if an arrears report does not show tenants to be in arrears, I expect that information to be correct. I do not expect to have to cross check such information that is provided to me. 1. Mr Hamilton made clear in his evidence in cross-examination that he relied upon the Tenant Arrears Report for July 2017: AB3216.40. He gave evidence that he generally assumed that tenants in shopping centres were up to date with their rent if there no reason to think otherwise: AB3217.30. 2. It follows that the trial judge's conclusion that Mr McNaughton and Mr Hamilton "assumed the risk" that the information in the Tenant Arrear Report for July 2017 might not be accurate was not supported by the evidence. Failure to audit and make inquiries 1. As noted earlier, the trial judge was critical of Elanor, stating that Elanor "did not examine the detail of [the] documentation and made no attempt to reconcile amounts charged with amounts paid": J[165]. The trial judge stated at J[165] that Elanor could have, but did not, make a number of inquiries. 2. There are three problems with this reasoning. First, as a matter of principle, the question was whether the respondents engaged in misleading or deceptive conduct, not whether further inquiries might have revealed the true position. The content of the data room, including the Data Room Arrears Reports, and Mr Frenil Shah's conduct conveyed that the Food Court Tenants were not, and had not relevantly been, in arrears. It is no answer to conclude that, if further inquiries had been made, Elanor might have discovered that the position was otherwise. As Lockhart J stated in Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR 546 at 558, to which Elanor referred: It is no answer to say that Collins Marrickville should have made its own inquiries and that, if it had done so, it would have found out the true position: see Redgrave v Hurd (1881) 20 Ch D 1 per Jessel MR at 14 and 17; per Baggallay LJ at 23, in the context of the equitable right to rescind for innocent misrepresentation. It is true that Mr Collins recognised the importance of verifying the material given to him by Mr Le May about the seating capacity of the restaurant and that, had his solicitor done what he should have done, the true position would have emerged and the sale probably would not have proceeded. But these circumstances did not negate the duty to disclose which the circumstances otherwise imposed. 1. The same point was made by McHugh J in Butcher at [111], to which Elanor also referred: Conduct is misleading or deceptive if it induces or is capable of inducing error. A corporation does not avoid liability for breach of s 52 because a person who has been the subject of misleading or deceptive conduct could have discovered the misleading or deceptive conduct by proper inquiries. Conduct that objectively leads one into error is misleading. 1. That is not to say that the ability to make inquiries is necessarily irrelevant to the question of whether conduct is misleading in all situations. The difficulty is that the trial judge's reasoning, fairly understood, was that the respondents' conduct was not misleading or deceptive because, although it conveyed something which was incorrect, the true position could have been discovered (according to the trial judge) on further inquiry. 2. Secondly, the expert evidence on the topic of whether there were in fact arrears in rent revealed that the underlying records furnished no easy answer. When the trial judge came to consider whether there were in fact arrears in rent, the trial judge considered that Savills' records were "very messy" (a description given by one of the experts who sought to reconcile the records): J[196]. 3. It is clear that, in the due diligence time available, Elanor could not have audited the arrears reports. It took experts considerable time and expense to attempt to determine what they considered to be the true arrears position on the basis of certain assumptions, a matter acknowledged by the trial judge at J[191]. 4. As will be seen later, the expert who sought to reconcile the relevant records (Mr Hellen) could not undertake the task without reliance on unsubstantiated annotations made on those records by Mr Neil Shah and without making a number of assumptions. Further, in some respects the conclusions of those experts were inconsistent with contemporaneous business records the reliability of which could not seriously be doubted. Further still, the experts could not agree on all issues even on the basis of the various assumptions made. The trial judge's treatment of Savills' business records on the topic of the true arrears position of the Food Court Tenants, is difficult to reconcile with his conclusion that, during due diligence, Elanor should have attempted to reconcile amounts charged with amounts paid or could have undertaken that exercise with any meaningful result. 5. Third, Elanor did make inquiries, by Mr Hamilton. Mr Hamilton conducted a tenant-by-tenant review with the person most likely to know the detail of how tenants were faring, namely the "asset manager", Mr Frenil Shah, on 30 August 2017. 6. Elanor's case was that the Data Room Arrears Reports, in particular the Tenant Arrears Report for July 2017, did not show that any of the Food Court Tenants were in arrears. When Elanor, by Mr Hamilton, conducted its tenant-by-tenant review with Mr Frenil Shah on 30 August 2017, it was either told that there were no arrears or no relevant arrears were identified. Perhaps Elanor could have found out the true position if it conducted an audit along the lines of that later conducted by forensic accounting experts. That fact, even if true, does not mean that the respondents did not contravene s 18(1). The "overall contextual circumstances" 1. As noted earlier, the trial judge referred at J[166] to there being "considerably more evidence to the effect that Elanor was not lead [sic] into error by the July Arrears Report because it took the risk that one or more, or indeed all, of the Food Court Tenants may be in arrears and may not ultimately be complying with their payment obligations pursuant to the leases or whether the Food Court Tenants were in arrears was immaterial to its decision-making": J[166]. 2. The trial judge addressed this evidence under the heading: "The overall contextual circumstances": J[220] to [238]. His Honour considered that there was "considerable evidence that Elanor took the risk that the Food Court Tenants, individually or as a group, may fail": J[221]. There are two significant issues with the analysis that follows. 3. First, the trial judge was critical of: (a) the level of inquiry which Elanor undertook; and (b) the fact that Mr McNaughton assumed that Savills records were accurate. His Honour considered that this was important context to the question of whether the respondents had engaged in misleading or deceptive conduct. For example, his Honour stated: [226] … Elanor was provided with access to the data room, together with the question-and-answer facility through which it, and its advisors, could ask specific questions in the event that the information provided was considered insufficient, or ambiguous. No relevant additional questions were asked in relation to the conduct that is claimed to have been misleading or deceptive. Mr McNaughton accepted that he was aware that in the establishment of the content of a data room, the first step required is that the vendor assesses what categories of documents will be included and the time period. Mr McNaughton was aware that additional documents could be requested, as was Mr Hamilton. No relevant requests were made. … [235] Further, as I have found, Mr McNaughton assumed the accuracy of the Savills records, and in particular the July Arrears Report. He chose not to undertake any due diligence as to the accuracy of the data contained therein. … [238] It is also the case that the July Arrears Report and the failure of Mr Shah to disclose any tenancy arrears for Food Court Tenants, must be viewed against the considerable amount of information that was made available to Elanor during the due diligence period. Access was provided to the tax invoices, which, had they been examined, would have disclosed that there were no tax invoices for Dizzy Dukes, Kebab Express, Mumbai Blues and Redcliffe Noodle Kitchen and that only Burrito Bar, Bel Cibo and Sushi Kuni had been charged rent for May 2017. That information was inconsistent with the deferred dates for the commencement of these leases in accordance with the incentive deeds. Examination of this material would have put Elanor on further inquiry. Questions could have been asked; for example, as to why this discrepancy existed and more specific questions could have been asked about rental arrears. The monthly tenancy schedules, which reported whether the tenants had commenced to trade and if so when, as I have found, objectively conveyed that these tenants, together with Burrito Bar and Thai Me Down had either not commenced to trade in accordance with the deferred lease commencement dates in the Incentive deeds, or had commenced trading later than as provided for in those deeds. It also disclosed the limited trading activity for these tenants. 1. This analysis, particularly at J[235], ignores the fact that Elanor did make further inquiry. It inquired of the very person most likely to know whether the tenants were in arrears or had a history of arrears, Mr Frenil Shah. If Mr Frenil Shah had stated that there were issues, then no doubt Mr Hamilton would have conducted further due diligence to ascertain the extent of the issues. 2. Secondly, much of the trial judge's analysis of "context" is in fact an analysis of whether or not Elanor relied on the misleading or deceptive conduct, a topic which his Honour also separately addressed from J[247] to [272]. 3. As mentioned, his Honour considered that there was "considerable evidence that Elanor took the risk that the Food Court Tenants, individually or as a group, may fail": J[221]. His Honour referred in this regard to the Information Memorandum emailed to Mr McNaughton on 2 May 2017: [221] I begin this part of my analysis with whether the representations were likely to lead Elanor into error? There is considerable evidence that Elanor took the risk that the Food Court Tenants, individually or as a group, may fail. The commencing point is the Information Memorandum that was emailed to Mr McNaughton on 2 May 2017. It makes express reference to the casual dining precinct floorplan. It provides an explanation of the work that Alceon "is undertaking" by way of improvement to the casual dining area, that a range of food court operators "have been secured" and that the upgrade was expected to be completed in May 2017, with the new retailers expected to be trading by the end of June 2017. Mr Hamilton emphasised each of those facts in his due diligence report and went considerably further. He noted that there were five vacancies based on the tenancy schedule forecast to 1 December 2017. He specifically noted as a threat to the trading performance of the new external restaurant precinct, that it was unproven and that it remained to be seen if it would provide "the hoped for increase in sales and customer traffic". He included an analysis of tenancies at risk, including Sushi Kuni. His report attaches a tenancy schedule analysis as at 1 December 2017. It is based on estimates. 1. As noted earlier and as further discussed below, the conclusion that Mr McNaughton and Mr Hamilton "took the risk" that the Food Court Tenants might fail proceeds at least in part on a misunderstanding of the evidence. The matters in J[221] are more relevant to reliance than "context" and, in that regard, the question which is not answered is what Mr Hamilton would have said in his due diligence report if Mr Frenil Shah had given information which was properly responsive to the inquiries which Mr Hamilton made on 30 August 2017. 2. The trial judge then referred to the "updated financial figures" provided on 2 August 2017. In this respect, the trial judge stated: [222] Mr McNaughton received a set of updated financial figures by email on 2 August 2017 from Stonebridge. That document makes it clear that four out of the nine Food Court Tenants had not reported sales for the reason that they had not commenced to trade. Five of the Food Court Tenants there recorded had not commenced trading either in May or June 2017 and there is a notation for one that disruption was caused by fit out works. For two, it is noted that the trading period was very brief, either 12 or 14 days of actual trading from which a monthly projection had been prepared. A further document supplied on that day comprised the updated financial summary of the Centre overall with figures forecast to 1 December 2017, including a forecast for the updated total passing net operating income of $3,907,170. Elanor well knew that this was a forecast figure, based on estimates and for that reason might not have been achieved. 1. It may be accepted that Elanor knew that the information provided on 2 August 2017 was an estimate. The fact that forecasts had been provided is relevant context to the questions raised by Mr Hamilton at the meeting on 30 August 2017, but the trial judge does not appear to be addressing the matter for that purpose. Rather, the trial judge appears to be addressing the question of reliance. The same may be said about the email from Colliers received on 28 August 2017 which indicated that the Centre was quiet when Colliers had visited: J[223]. 2. The trial judge noted that Mr Hamilton accepted in cross-examination that it may take up to 12 months of trading performance to determine whether a newly opened food court tenant was at risk, and that it is very hard to tell from "a couple of months trading figures" whether a newly opened food court tenant would subsequently be at risk: J[224]. The trial judge noted that "Mr Hamilton accepted that trade data was available in the data room when he undertook his due diligence, and that it disclosed that six out of 14 tenants in the food catering category had sales of three months or less" and that Mr Hamilton "was aware that the upgrade of the casual dining precinct was anticipated to be complete either in May or June 2017". It might be noted in this regard that Mr Hamilton was retained in August 2017. The trial judge continued at J[224]: [Mr Hamilton] accepted that it is very common for building works to be delayed, and that explains why a tenant can be given a rent-free period. Importantly he accepted that he could not identify whether a tenant was at risk of falling into subsequent arrears from one or two months of figures. He said: "it's very hard to tell from a couple of months" and that it may take up to one year to make a judgment on that question. 1. The trial judge contrasted Mr Hamilton's evidence with Mr McNaughton's evidence, which he rejected: J[225] to [228]. 2. This evidence is relevant context to why Mr Hamilton asked the questions which he did on 30 August 2017 , but the trial judge does not explain why the evidence suggests that the relevant conduct was not misleading or deceptive. Rather, the trial judge appears to be addressing the question of reliance. 3. The trial judge was critical of Mr McNaughton's "haste" in putting forward the proposal to purchase the Centre. His Honour considered this "clearly a relevant contextual matter in assessing whether the conduct of Mr Shah in not identifying any of the Food Court Tenants as being in arrears at the 30 August Meeting was objectively misleading or deceptive". His Honour stated: [230] The discussion between Mr McNaughton and Mr Baliva occurred on, or shortly before, 8 September 2017, prior to conclusion of the due diligence period and without the benefit of Mr Hamilton's completed due diligence report. He did so having had the benefit of his discussion with and an oral report from Mr Hamilton on 6 September 2017. What is apparent, is that Mr McNaughton was determined to "press ahead" with the making of a formal recommendation to Elanor's board to acquire the Centre, without being in receipt of the finalised due diligence report from Mr Hamilton. The same observation applies to the finalised valuation report of Mr Kwan which was not provided to Mr McNaughton until 28 September 2017, although I accept that as early as 7 September 2017 Mr Kwan had provided draft calculations to Mr McNaughton. That does not, however, detract from the haste with which Mr McNaughton proceeded to finalise a recommendation to the board for Elanor to acquire the Centre for a very substantial price which is clearly a relevant contextual matter in assessing whether the conduct of Mr Shah in not identifying any of the Food Court Tenants as being in arrears at the 30 August Meeting was objectively misleading or deceptive and whether that conduct in combination with the ambiguous nature of the July Arrears Report was misleading or deceptive. 1. It is not clear why Mr McNaughton's "haste" to put a proposal to Elanor's board provides any context at all to "whether the conduct of Mr Shah in not identifying any of the Food Court Tenants as being in arrears at the 30 August Meeting was objectively misleading or deceptive". What was the conduct and what did the conduct convey? 1. The first step was to identify the relevant conduct: Self Care at [80]. A representation should not be confused with the conduct giving rise to the representation. As noted earlier, the "arrears representations" were said to arise by reason of the conduct and matters pleaded in [19] to [26], [35], [36] and [40] of the FASOC and in part in [44(f)]. In simple terms, the relevant conduct was: * Alceon and CPRAM providing Elanor and its representatives access to a data room for the purpose of enabling Elanor to undertake a due diligence process in relation to the Centre: [19(a)] of the FASOC. * Elanor and its representatives being provided access as part of the data room to the Data Room Arrears Reports, sourced from the MRI Management System kept by Savills, from December 2016 to July 2017: [19(c)], [20], [21] of the FASOC. * The Data Room Arrears Reports provided by Alceon and CPRAM not identifying any of the Food Outlets as being in arrears for the period from December 2016 to July 2017 for any amount: [22], [24] of the FASOC. * No other Tenant Arrears Reports nor any other documents being provided which recorded arrears in respect of the Food Court Tenants for the period from December 2016 to July 2017: [23] of the FASOC. * On 30 August 2017, Mr Shah not identifying any of the Food Court Tenants as having arrears or any issue in respect of their respective sales or their ability to pay rent when asked questions by Mr Hamilton: [26] of the FASOC. 1. The trial judge did not approach the case in this way, instead addressing the particulars to [44(f)] of the FASOC as separate cases. Further, the trial judge incorrectly focussed only on the Tenant Arrears Report for July 2017. Mr McNaughton had read all of them. 2. The third step was to identify what meaning the conduct conveyed: Self Care at [80]. 3. The conduct viewed as a whole, including what was not said, conveyed that there was no relevant history of arrears on the part of the Food Court Tenants: * the Data Room Arrears Reports, including the Tenant Arrears Report for July 2017, did not indicate that any of the Food Court Tenants had arrears in rent; * there was no other document in the data room which identified any arrears of rent; * on 30 August 2017, Mr Frenil Shah represented (either expressly or through silence) that the Food Court Tenants had neither current arrears nor a relevant history of arrears. 1. Assessed in the context of the whole of the conduct, and accepting that in isolation they were capable of various different interpretations, the Data Room Arrears Reports conveyed that none of the Food Court Tenants had arrears in any month from December 2016 to July 2017. This is the essential point made in the FASOC and it is the way in which the case was conducted. As the trial judge recorded at J[30]: [A] primary contention of Elanor (opened on its case), is that the Tenant Arrears Reports "did not identify any of the [Food Court Tenants] as being in arrears for any amount" and further that no other arrears report nor any other documents were provided which recorded tenancy arrears between December 2016 and July 2017, save for the report of July 2017 which recorded total arrears in that month of $2,957.05 for five tenancies that are not the subject of complaint by Elanor. What were the rent arrears? 1. Elanor's case was that from December 2016 to 1 November 2017, the tenants of the Food Court were, from time to time, in arrears paying their rent: FASOC [42]. Extensive particulars were provided in relation to each of the nine tenants. The particulars were supported by extensive business records referred to in McNaughton 1 at [99] to [221]: J[43] and [184]. The trial judge, however, proceeded principally by reference to a joint expert report, stating at J[184]: [184] … Fortunately, I am relieved of performing the tedious and time-consuming task of individually reconciling those documents to make findings of fact, as two accountants have undertaken a reconciliation and produced a joint expert report. Despite that report, in certain aspects, Elanor invites interrogation of some of the underlying documents which, on its submission, do not establish some of the assumptions made by the respondents' expert, Mr Hellen and to that extent submits that findings should be made in accordance with the source documents. 1. The respondents jointly engaged Mr Hellen to undertake four reconciliations and to consider and comment upon the extent to which any of the Food Court Tenants were in arrears in the period from December 2016 to October 2017: J[185] and [186]. 2. Mr Gwynne was engaged by Elanor to review and comment upon the rental arrears calculations and analysis of Mr Hellen, but not to undertake an independent reconciliation: J[189]. Mr Hellen and Mr Gwynne attended a joint expert conclave before a Registrar of the Court and produced a joint experts' report dated 30 June 2023: J[190]. They also gave concurrent evidence at trial. There was no order to the effect that this joint expert report replace earlier reports or that the question of what the rental arrears of any given Food Court Tenant at any given time be assessed solely by reference to the joint report. 3. In preparing his report, Mr Hellen was instructed to make certain assumptions. The trial judge explained at J[188] that some of these were controversial: [188] Mr Hellen was instructed to make certain assumptions which are controversial and which arise from his analysis of the end of month MRI reports together with copies of bank statements. As explained by Mr Hellen, in order to allocate cash receipts to tenant accounts he relied upon certain comments, in the form of annotations to the documents, applied by Mr Neil Shah which identified and allocated various receipts. Mr Neil Shah did not give evidence and the submission of Mr Fernon is that I should not make findings of fact that rest on those untested assumptions where there is a dispute. 1. Mr Neil Shah's annotations were not rejected, the trial judge expressly preserving Elanor's right to submit (as it did) that they were unproven assumptions: AB3530.43. The trial proceeded, in substance, on the basis that the notations were an aid-memoire only: AB3531. However, in the judgment, and notwithstanding Elanor's submissions (some of which, as discussed below, were not entertained) the trial judge preferred Mr Hellen's conclusions even when those conclusions were based partly or wholly on Mr Neil Shah's annotations. This was to treat Mr Shah's annotations as more than an aide-memoire. No reasons were given for adopting this course. 2. The trial judge noted that Elanor relied on the evidence of Ms Coco together with the documents referenced in McNaughton 1 at [99]-[220]: at J[212]. His Honour noted that the documents included individual tenant ledger accounts, emails between Food Court Tenants or their representatives and persons responsible for the management of the Centre, the Discovered Tenant Arrears Reports, the Savills receivables ledger and correspondence sent by Savills to various tenants in relation to the asserted arrears position. His Honour noted that Elanor contended that this documentation comprised "financial records" within the meaning of s 286 of the Corporations Act 2001 (Cth) which pursuant to s 1305 have prima facie evidentiary status: at J[212]. 3. The trial judge accepted "that individual tenancy receivables ledgers are financial records within this provision, together with the tenancy arrears reports": J[214]. However, his Honour did not accept that correspondence between Savills and individual tenants relating to asserted rental arrears, claimed payments and requests for extensions were financial records. His Honour noted that the evidence of Mr Hellen, portions of which were agreed by Mr Gwynne, included evidence to the effect that the Savills Tenant Arrears Reports and individual tenancy receivables ledgers contained material errors: J[215]. His Honour accepted the evidence of Mr Hellen, "who succinctly summarised by his overall comment that the Savills accounts 'are very messy'": J[216]. His Honour concluded "that the prima facie evidence status of the Savills records as comprising financial records, is displaced". 4. The trial judge did not reject any of the documents on which Elanor relied, most of which comprised admissible business records. 5. It does not follow from the trial judge's rejection of the "prima facie evidentiary status of some of the Savills documentation" (being a reference to s 1305 of the Corporations Act) that each and every business record was unreliable or could be ignored or that each and every transaction recorded in them was unreliably recorded. Indeed, the expert evidence proceeded on the basis that the majority of the individual entries in the Discovered Arrears Reports were correct, for example, the imposition of the various charges and the recording of a great many of the payments made. 6. Elanor provided a detailed submission (Arrears Schedule) identifying what it claimed were errors in Mr Hellen's analysis. It did so by reference to the evidence, including the contemporaneous business records. The trial judge accepted Mr Hellen's evidence (based in part on the untested hearsay notations made by Mr Neil Shah), rejected the "prima facie evidentiary status of some of the Savills documentation" and stated that it "follows" from those two matters that his Honour "reject[ed] Elanor's submission that [he] should go behind entries in the joint expert report, accept components of the evidence of Mr Gwynne or otherwise have regard to and make findings in accordance with the Arrears Schedule analysis prepared by counsel": J[217]. That is, his Honour did not consider Elanor's submissions or case in this respect. 7. The trial judge's reasoning at J[217] suffers three problems: 8. First, the reasoning involves accepting Mr Hellen's evidence as correct and using that acceptance as a basis for refusing to "have regard to" the submissions as to why Mr Hellen's evidence should not be accepted. This is illogical. 9. Secondly, the business records were admissible and admitted into evidence. The fact that the business records may have contained some errors was not a reason for refusing to have regard to any of them or for rejecting the probative value of all parts of those business records. 10. Thirdly, substantial parts of Mr Hellen's opinion were based entirely or partly on Mr Neil Shah's annotations. Those annotations, which included allocations of cash receipts, were hearsay and should have been rejected where reliance on them was controversial. No consideration was given to the possible admissibility of the annotations through any exception or relieving provision. The annotations were controversial and it was unfair to allow them into evidence in circumstances where Mr Neil Shah, a junior analyst, was not to be called to give evidence. This was particularly so where some of the annotations were inconsistent with, or not supported by, the business records – see, for example, the discussion in relation to Bel Cibo, below. The absence of evidentiary support for Mr Neil Shah's annotations, and the inconsistency of his annotations with some of the business records, furnished a reason not to accept the relevant annotations as being either accurate or reliable, but this was not considered by the trial judge, in part because the trial judge did not consider the submissions in the Arrears Schedule: J[217]. If Mr Neil Shah had been called to give evidence, the inconsistencies between the annotations and the contemporaneous business records could have been explored. This, coupled with the refusal to entertain cogent submissions based on contemporaneous business records, unfairly resulted in Elanor's case on this important issue not being entertained or properly addressed. 11. This breach of procedural fairness is not rescued by the fact that the two witnesses agreed that the differences between them were summarised in schedules. First, it is the parties, not witnesses, who define the issues. Secondly, the schedules referred to other parts of the evidence and could not be understood in isolation. Thirdly, evidence had been given during the trial by other witnesses which was relevant to the issues. Fourthly, Elanor submitted to the trial judge, correctly, that the issues could not be resolved only by reference to the schedules prepared by Mr Hellen and Mr Gwynne. 12. It was submitted for the respondents that the matters in the Arrears Schedule should have been put to Mr Hellen and Mr Gwynne. The matters raised in the Arrears Schedule were either put to them or otherwise plainly in issue. The respondents have not identified any submission in the Arrears Schedule as one which should have been, but was not, put to the witnesses, nor explained why the matter was one which should have been put to them. 13. Before turning to the arguments which Elanor sought to advance through its Arrears Schedule, it is appropriate to say something about Mr Hellen's methodology. Mr Hellen was provided with a "CM Receivables Ledger" (CMR) for the period from December 2016 through to October 2017, which recorded that, by 31 October 2017, only Burrito Bar had an outstanding balance of $11,022.85: AB2210 – 2218; AB232. 14. In October 2017, Mr Frenil Shah was focussed on bringing the arrears positions of the various tenants to zero, in light of Alceon's ownership coming to an end. Mr Frenil Shah's evidence (partly limited to his understanding) included (Shah 1 at [115]): Post exchange, in the lead up to completion of the sale to Elanor, I was focused on clearing all arrears. This is because rent for periods prior to completion are funds which rightly belong to Alceon. However, I understood pursuant to the terms of the sale contract, any arrears not collected by 31 October 2017 would be foregone. I wanted to ensure that Alceon received all money it was entitled to before completion. For example, I would not normally care if by the 21st day of the month a tenant had not paid their rent for that month, but in September and October 2017, I did. 1. However, what was not available was Savill's EOM Report (or Tenant Arrears Report) for October 2017. As will be explained further below, Mr Hellen had to assume payments were made, and make assumptions about when they were made, in order to ensure the CM Receivables Ledger for each tenant balanced – that is, equalled zero by 31 October 2017 – for all tenants other than Burrito Bar. One criticism advanced by Elanor at trial was that amounts were allocated in months earlier than October 2017 when, having regard to Mr Frenil Shah's evidence, it was more likely that the amounts would have been received in October 2017. Whether or not this is in fact what happened could not be positively established by reason of an absence of sufficient information. 2. There were significant limitations in the documents provided to Mr Hellen. Mr Hellen's "reconstruction of the tenant's rental position [was] heavily reliant on the records" that were generated by Savills MRI Management System: AB239 at [4.3.1]. The MRI Management System produced: * "CM Receivables Ledgers" which were a report summarising all transactions applied to a tenant's account: at [4.3.1]; * "Tax Invoice/Statement of Account", issued on the first of the month, which set out the amounts due and payable, credits offsetting those amounts and outstanding invoices: at [4.3.2]; * "Tenant Arrears Reports": at [4.3.4]; * "End of Month (EOM) Reports": at [4.3.5] 1. In his report, Mr Hellen explained that he was provided with redacted bank statements for accounts operated by Savills: at [4.3.7]. These sometimes included a transaction description and sometimes included Mr Neil Shah's "comment regarding source of funds": at [5.1.1]. 2. Mr Hellen stated that he used documents attached to his report at Appendix C to ensure Mr Shah's "allocation appears reasonable", but – in relation to seven transactions – he relied solely on Mr Shah's comments: at [2.3.6], [2.3.9]. 3. Mr Hellen was not provided with Savill's EOM Reports (or Tenant Arrears Reports) for February 2017, August 2017 or October 2017: AB235 at [2.3.2]. He considered that the Tenant Arrears Reports for May 2017, July 2017 and September 2017 had been "over-redacted": AB235 at [2.3.3]. This was plainly correct. 4. At trial, Mr Hellen was asked to explain his methodology and the "limitations" which he experienced: AB3536.4. He explained that the payments made by the tenants were reconstructed from the source documents, being bank statements, which were then "traced" to "the ledgers" of each of the nine Food Court Tenants. Mr Hellen "used what records were available to us but it was not always the case that all the records were available". He commented that the bank statements were "heavily redacted". Mr Gwynne agreed and considered that there were "significant limitations": AB3538. Mr Hellen also described the fact that certain CMRs were not provided and that others were redacted as presenting a "significant difficulty": AB3540.6 – 12. Savills had produced, under subpoena, CMRs for December 2016, January 2017, March 2017, April 2017, May 2017, June 2017, July 2017 and September 2017. 5. The redactions to the Discovered Arrears Reports (which were also provided to Mr Hellen) were apparently applied to conceal information concerning any tenant which was not a Food Court Tenant, meaning that it was not possible, for example, to see whether an amount which Mr Hellen thought should be applied to one or other Food Court Tenant had in fact been applied to a non-Food Court Tenant. As will be seen below, this is not without significance, because – for example – Mr Hellen allocated a payment of $12,000 to Bel Cibo in circumstances where another business record (an email, the reliability of which could not be open to serious doubt), indicated that the amount of $12,000 should be allocated as to $6,000 to Bel Cibo and as to $6,000 to Montezuma's. The answer to the question whether the amount of $12,000 was properly to be allocated to Bel Cibo may have been easily resolved if records relating to tenants who were not Food Court Tenants had not been redacted. 6. In explaining the difficulties experienced, Mr Hellen stated [AB3540.12]: The other significant difficulty was the allocation of the receipts. We just get an eighty thousand dollar amount in the bank statement and try to allocate who that should be for and to what extent. 1. The following exchange then occurred: HIS HONOUR: This was a trust account [bank statement], though, wasn't it? MR HELLEN: Well, it says "trust account" on the bank statement, your Honour, but I don't know whether it's a true trust account or not. HIS HONOUR: Am I correct in thinking that, ordinarily, there are much stricter requirements for trust accounting? MR HELLEN: Yes. HIS HONOUR: Was this complied with by Savills? MR HELLEN: I don't have an answer for that, your Honour. No. And I'm not an auditor either, your Honour, but it's pretty messy. 1. Mr Hellen then explained that he was not provided with all the tax invoices for the respective tenants: AB3541.8. Mr Hellen observed that he had not been given the "end of month reports", which he said was a reference to the "CMR reports", for February, August or October 2017: AB3540-3541. Mr Gwynne observed that the absence of the October CMR was significant because it would show how payments were allocated and what payments were received in October 2017: AB3541. This was important because it coincided with Mr Frenil Shah seeking, successfully, to bring arrears in rent up to date. 2. As will be explained further below, the trial judge erred in the way he addressed the topic of the actual arrears of the Food Court Tenants. The principal errors were: (a) the failure to reject Mr Shah's annotations; (b) the failure to consider any of the business records in a meaningful way on the basis that Savills' "accounts" were "messy"; and (c) the refusal to consider or address submissions which Elanor had made in its Arrears Schedule. 3. It was not submitted that the matter should be remitted or that there should be a retrial by reason of the failure to address Elanor's submissions or if it were otherwise considered that the trial judge's analysis miscarried. This Court can determine the arrears position on the basis of the evidence given and the submissions which were made. Bel Cibo 1. Mr Hellen allocated $12,000 to the Bel Cibo ledger in December 2016 based on a notation made by Mr Neil Shah, while only $6,000 had been allocated by Savills to the Bel Cibo ledger. 2. The $12,000 was received on 28 November 2016: AB3550.7.The evidence included an email dated 28 November 2016 from Ms Chaubal to Ms Coco (of Savills), copied to Mr Frenil Shah: AB594. The email stated: Please find attached bank transfer receipts for payment of $6,000 towards [Montezuma's – redacted in original] Rent and $6000 towards Bel Cibo Rent. 1. Mr Hellen's evidence in cross-examination was to the effect that he applied the full $12,000 to Bel Cibo on 28 November 2016, rather than allocating $6,000 to Bel Cibo and $6,000 to Montezuma's, because that was the only way he could get Bel Cibo's account to balance – that is, to equal zero by 31 October 2017. 2. Mr Hellen's evidence included (AB3553.10): After going through a painstaking process of going through all of the other documentation – and there was no other 6000, and we needed 6000 to balance it – we used that 6000 to balance it. 1. Mr Hellen stated in cross-examination that Mr Neil Shah had annotated the bank statement for the amount to be allocated to Bel Cibo: AB3553.24. This was not one of the transactions which Mr Hellen identified in his report at [2.3.9] as being based solely on Mr Shah's annotations, and there was no identification of any process of verification to determine that Mr Shah's allocation was reasonable. Indeed, Mr Hellen stated in cross-examination that he had done his best to put payments where they were most likely to have occurred and that "[m]ost of the time, I've had evidence to do that, but there are some, like the 6000, that is unclear": AB3555. 2. The following exchange then took place (AB3555.35 to 3556.15): HIS HONOUR: And I think I made a note of what you said earlier – that the Savills accounts are pretty messy. MR HELLEN: They're very messy, your Honour. And - - - HIS HONOUR: Mr Gwynne, did you – do you have that view of the Savills accounts? MR GWYNNE: I – I don't know that I have a view they're very messy, your Honour, but they're certainly - - - HIS HONOUR: Messy? MR GWYNNE: I – your Honour, what – what we don't know is – in reality, they've allocated 6000 in January but not the 12,000, and what we don't know is when that – for example, we don't know when that other $6000 was received. HIS HONOUR: But if the accounts were kept in accordance with Australian accounting standards, you wouldn't have this issue about, "Well, when was the money received? When was it allocated?" It should be self-evident from the ledgers, shouldn't it? MR GWYNNE: Well, it should be. You would expect, your Honour, that the only thing you would get would be those differences that revolve in the next month. HIS HONOUR: And so - - - MR GWYNNE: And so, for example, that $6000 could have been paid in October. 1. The point Mr Gwynne was conveying, consistently with Mr Hellen's earlier evidence, was that the CMRs were missing for certain months, and redacted for others, and – in particular – that the CMR for October 2017 had not been provided. Mr Gwynne was seeking to explain that it was unlikely that $12,000 should be allocated to Bel Cibo in December 2016 because the email of 28 November 2016 indicated that only $6,000 was for Bel Cibo's rent and, consistently with that email, Savills' records – kept in the ordinary course of its business operations – indicated that only $6,000 was allocated to Bel Cibo's ledger (albeit in January 2017). Mr Gwynne was attempting to convey that it was more likely that $6,000 was paid in October 2017 when Mr Frenil Shah was seeking to bring the arrears in rent up to date. 2. The evidence did not establish that Savills "accounts" (whatever that was intended to mean) were not "kept in accordance with Australian accounting standards". The evidence established that Mr Hellen was not provided with relevant documents such that he had to reconstruct what occurred from incomplete records, making assumptions, some of which were based on Mr Neil Shah's unexplained annotations. One of the glaringly absent documents was the CMR and Tenant Arrears Report for October 2017 which would have showed amounts received in October 2017. 3. In his reasons, the trial judge stated: [196] … [T]here is a material dispute about whether an amount of $12,000 recorded as a payment in December 2016, which in fact was received on 28 November 2016. Based on a notation made by Mr Neil Shah, Mr Hellen allocated this entire amount to Bel Cibo in December 2016. In contrast an amount of $6,000 is allocated in January 2017 in the Savills records. In Mr Gwynne's view, the difference of $6,000 related to another tenancy that is not in issue in this proceeding – Montezuma's. When Mr Hellen was taken to these documents he accepted that $6,000 "definitely" should be allocated to Bel Cibo, but explained that "through a painstaking process of going through all of the other documentation – and there was no other $6,000, we needed $6,000 to balance it – we used that $6,000 to balance it." A little later, Mr Hellen explained that he had worked through "all of the documentation available over a very long period of time" and in consequence did his best to allocate payments "when they were most likely to have occurred". For most of those payments he had evidence to support his allocations, but ultimately as to this difference of $6,000 he said that the position was "unclear". He then emphasised a point that he made earlier in his evidence that Savills records are "very messy". [197] Ultimately, Elanor carries the onus of proof to demonstrate that this additional $6,000 should not be allocated to the arrears account of Bel Cibo and that in consequence, I should find that the arrears position as at July 2017 was $16,271.53 and should not be adjusted by crediting an amount of $12,000 in order to reduce it to $4,271.53, which is very close to the figure derived by Mr Hellen of $4,216.42. I am not satisfied on the evidence that the Savills records are sufficiently accurate to establish the fact of arrears for Bel Cibo in the amount contended by Elanor. What is clear from Mr Hellen and Mr Gwynne's analysis is that amounts were received, but not allocated in MRI correctly in the month of receipt. Mr Hellen undertook an extensive reconciliation of the Savills records by reference to primary source documents, such as the bank statements and tax invoices, and I prefer his comprehensive analysis to the more limited task that Mr Gwynne performed without interrogating the correctness of the Savills records. The arrears position as at July 2017 was $4,216.42. 1. Mr Neil Shah's annotations were inadmissible and ought to have been rejected. The email of 28 November 2016 was admitted as a business record. It was relied upon in the Arrears Schedule. The trial judge at [197] concluded that Mr Hellen had given evidence that the "Savills records" were "very messy" and proceeded, as a matter of substance, on the basis that it was unnecessary to have regard to the Arrears Schedule or the documents referred to in that submissions: J[217]. Mr Hellen's unexplained opinion, first made in the context of a question concerning a bank statement, was not a proper basis for refusing to consider, or rejecting the reliability of, a contemporaneous email explaining the purpose of a business transaction. The email of 28 November 2016 was inherently likely to be correct in its explanation that $6,000 was for Bel Cibo and $6,000 was for Montezuma's. 2. The trial judge's conclusion that the whole $12,000 was properly allocated to Bel Cibo's "ledger" was affected by error, as was his approach to the evidence and submissions more generally. A payment of $6,000 was correctly recorded as rent paid by Bel Cibo in Savills' records. The payment should have been recorded when received on 28 November 2016, rather than being first recorded in January 2017. 3. It should also be noted that, whilst the trial judge was correct to state at J[197] that Elanor bore the onus of proving its case, the evidence ought to have been assessed in accordance with the relative capacities of the parties to bring evidence on the topic: Blatch v Archer (1774) 1 Cowp 63. The documents provided to Mr Hellen were those in the control of the respondents (and their agents) and the redactions were presumably applied by them or their advisors. The documents provided were incomplete in material ways, in particular by reason of the absence of some of the EOM Reports (and monthly Tenant Arrears Reports and "CMR reports") and, in particular, documents explaining what transactions occurred in October 2017 when Mr Frenil Shah was seeking to bring the various tenants' arrears into order. 4. The trial judge's lack of satisfaction "on the evidence that the Savills records are sufficiently accurate to establish the fact of arrears for Bel Cibo in the amount contended by Elanor" was affected by error. 5. The fact that some entries in Savills' records were incorrect (in particular late entries), or even that its "accounts" were "messy", was not a proper basis for the wholesale rejection of each and every transaction recorded in all of them, without consideration of the reliability of the particular aspect of them relevant to the factual issue in dispute, particularly when it was not disputed that most of the transactions within them were correctly recorded. 6. Leaving aside the fact that $6,000 should have been allocated to Bel Cibo in December 2016 rather than January 2017, the only material issue in dispute was whether an additional $6,000 should have been allocated to Bel Cibo in December 2016. That is, the Tenant Arrears Report for December 2016 was agreed to be relevantly correct except for this amount. There was a persuasive contemporaneous business record which showed that the relevant $6,000 was to be allocated to a tenant other than Bel Cibo. Mr Hellen's allocation of the amount of $6,000 to Bel Cibo to make the ledger balance was arbitrary. It was directly contrary to persuasive contemporaneous evidence and unsupported by anything apart from Mr Neil Shah's annotation. 7. Further, whilst the trial judge referred at J[197] to Mr Hellen's "extensive reconciliation of the Savills records by reference to primary source documents, such as the bank statements and tax invoices" and his "comprehensive analysis", the trial judge did not address the fact that Mr Hellen's analysis was in fact performed on the basis of materially incomplete records in a process which assumed nil arrears balances as at 31 October 2017 (except for Burrito Bar) without knowing many of the transactions which took place in October 2017. 8. Mr Hellen allocated a payment of $726 to Bel Cibo's ledger in January 2017. There was no evidence of this payment being made at any time. The only evidence that the payment was made was the fact that Bel Cibo's arrears balance was zero by 31 October 2017. No reasons were given for accepting Mr Hellen's allocation of the amount to January 2017. One might have thought, given the absence of the EOM Report or Tenant Arrears Report for October 2017 and the absence of a reference to the amount in any of the other Tenant Arrears Reports, that the amount was received in October 2017. Mr Hellen included the amount of $726 to ensure the "ledger" balanced, ignoring that the payment could have been made in October 2017. The trial judge did not address Elanor's submissions in this regard: J[217]. This Court is in as good a position as the trial judge to consider it. In light of Mr Frenil Shah's evidence, and the absence of any record of a payment of $726 in the incomplete material made available to Mr Hellen or any other business record in evidence, it is more likely that arrears were paid in October 2017 than that an amount of $726 was paid in January 2017. 9. Mr Hellen allocated an amount of $1,500 to Bel Cibo in May 2017. The issue arose in the following way. A bank statement showed that an amount of $9,392.23 was paid to Savills on 30 May 2017: AB479. There was no annotation by Mr Neil Shah allocating this amount as between tenants. The monthly Tenant Arrears Report for May 2017 recorded that a "Last Payment" of $7,892.23 had been made by Bel Cibo on 30 May 2017. The monthly Tenant Arrears Report for June 2017 allocated the amount of $7,892.23 to Bel Cibo on 30 May 2017: AB427; AB611. The experts agreed that $7,892.23 was paid on 30 May 2017. 10. Mr Hellen's allocation of the additional amount of $1,500 to Bel Cibo is: (a) based on an assumption that the amount was paid by Bel Cibo; (b) not based on any annotation made by Mr Shah; and (c) is inconsistent with Savills' records, except to the extent that they show a nil balance as at the end of October 2017. The trial judge did not address the issue: J[217]. 11. It is more likely that Bel Cibo's arrears were brought up to date in October 2017 than that the amount of $1,500 was paid in May 2017 in light of: (a) the Savills records recording the payment of $7,892.23 on 30 May 2017; (b) the lack of any record of a payment of $1,500 being made by Bel Cibo before 31 October 2017; (c) the absence of documents recording the transactions in October 2017; and (d) Mr Frenil Shah's evidence that he pursued arrears in October 2017. 12. The consequence is that Bel Cibo was in arrears in December 2016 in the amount of $15,213.19. It was also in arrears in February 2017 ($9,991.23), March 2017 ($8,969.49), June 2017 ($10,271.11) and July 2017 ($10,990.42). 13. Bel Cibo remained in arrears in August 2017. Given his position and role at the time, including his role in providing information relevant to the Centre to prospective purchasers, it is likely that Mr Frenil Shah knew Bel Cibo was in arrears as at 30 August 2017 when he met with Mr Hamilton. The same applies with respect to other tenants with arrears at that time. Dizzy Dukes 1. In addressing the evidence given by Mr Frenil Shah, the trial judge stated at J[147]: [147] Mr [Frenil] Shah also gave unimpressive and incredulous evidence about an amount of $13,750 [paid on 8 February 2017 and] credited to the account of Dizzy Dukes on 20 April 2017, described as an unapplied receipt on the Tenant Arrears Report for May 2017. Mathematically, by reference to other business records, this sum represented a part payment of the security deposit of $41,250. The balance of $27,500 was paid on 20 April 2017. Despite being faced with this compelling evidence, Mr Shah insisted that the tenant had simply paid rent in advance – a proposition that sits uncomfortably with the fact that the incentive deed deferred the rent commencement date to 15 May 2017 and there were further deferrals, caused by the upgrading work, to 1 June 2017. Mr Shah's evidence that $13,750 was a pre-payment of rent cannot be accepted in the light of the contemporaneous business records. 1. The experts agreed that the amount of $13,750 was applied to Dizzy Duke's rent: AB481. It was allocated to rent by Savills on 20 April 2017: AB605; AB640. Mr Hellen considered that it should have been applied to rent when it was paid, namely on 8 February 2017. The experts disagreed about whether the amount of $27,500 paid on 20 April 2017 was a pre-payment of rent or part payment of the security deposit. 2. The trial judge, inconsistently with his conclusion based on the contemporaneous business records at J[147], accepted the evidence of Mr Hellen that the amount of $27,500 was a pre-payment of rent. His Honour stated: [201] Mr Hellen next drew attention to a contemporaneous email sent by Mr Neil Shah to Ms Coco on 26 September 2017 which recorded, amongst other things, an amount of $11,250 received from Dizzy Dukes, in which Mr Shah directed to be transferred to the security deposit account. Mr McQuade drew Mr Gwynne's attention to an email sent by a Mr Chaubal of Dizzy Dukes to Ms Coco on 18 September 2017, which attached a bank receipt for payment of $15,000 for the bank guarantee. He then identified other payments recorded in email correspondence on 22 and 25 September 2017 in the further sums of $15,000 and $11,250, in order to make up the total payment of $41,250 to the bank guarantee. Mr Gwynne accepted that these amounts should be allocated to the security deposit, which leaves for allocation the earlier amounts identified by Mr Hellen of $27,500 and $2,664.45 paid on 20 April 2017. I find in accordance with the evidence of Mr Hellen that these amounts should have been allocated to rent. 1. The Dizzy Dukes "Commencement Date", according to the lease, was 1 April 2017: AB682. The lease was signed by Dizzy Dukes on 9 March 2017. The Dizzy Dukes tenancy did not in fact commence until 1 June 2017: J[147]. The material before the Court on this appeal does not establish that there was any requirement to pay rent before that date. The "Security Amount" was stated to be: "As at the Commencement Date, the bank guarantee amount is $41,250.00" (broadly, 3 months' rent). Clause 9 of the lease provided that the tenant must give the bank guarantee at least seven days before the Commencement Date: AB704. The trial judge referred to the "Security Amount" or bank guarantee as the "security deposit". It was uncontroversial that the Food Court Tenants could give a security deposit rather than a bank guarantee. 2. According to the terms of the lease, if the tenant did not comply with any of its obligations under the lease, the landlord may draw on the security deposit without notice: AB704. If the landlord drew on the security deposit, the tenant had to give the landlord a replacement deposit or bank guarantee within 14 days of demand: AB704. 3. In addition to the payments made on 8 February 2017 and 20 April 2017 totalling $41,250, Dizzy Dukes made three payments in September 2017, totalling $41,250: two payments of $15,000 and a payment totalling $11,250 (a payment of $5,000 and a payment of $6,250): AB1895-1897. The emails confirming these September 2017 payments expressly stated that they were made in respect of Dizzy Duke's bank guarantee. 4. The trial judge considered that the business records put to Mr Frenil Shah, described at J[147] as comprising "compelling evidence", showed that the two amounts paid on 8 February 2017 and 20 April 2017 totalling $41,250 were for the security deposit. Inconsistently with this conclusion, his Honour accepted the evidence of Mr Hellen that both amounts were pre-payments of rent: J[201]. His Honour stated at J[201] that "Mr Gwynne accepted that [the] amounts [paid in September 2017] should be allocated to the security deposit". That is correct, but Mr Gwynne did not accept that the amount of $27,500 paid on 20 April 2017 was paid as a pre-payment of rent: AB3570. Mr Gwynne's evidence, although not entirely clear, was that the amount was for the security deposit but that something changed by or in September. His Honour did not address this evidence or the submission made by Elanor in its Arrears Schedule that the amount of $27,500, when paid on 20 April 2017, was paid in respect of the security deposit: J[217]. 5. There are a number of possibilities as to what the payments on 8 February 2017 and 20 April 2017 totalling $41,250 could have been for: (a) pre-payments of rent; (b) payment of the "security deposit" of $41,250; (c) partly pre-payment of rent and partly pre-payment of the "security deposit". 6. It is likely that the amount of $13,750 paid on 8 February 2017 was paid as a rental deposit to secure the lease, consistently with the evidence of Mr Frenil Shah (AB3427) and the treatment of that amount in Savills records (on 20 April 2017). 7. It is more likely that the amount of $27,500 paid on 20 April 2017 was, when made, paid on account of the security deposit rather than for rent given the circumstances that: * there was no apparent obligation to pre-pay rent; * there was an obligation to pay a security deposit before the "Commencement Date"; * the payment of $27,500 was not allocated to rent in Savills records; and * it would be uncommercial to pay rent in advance where there was no obligation to do so and an outstanding obligation to pay a security deposit. 1. The probabilities favour that the amount of $13,750 paid on 8 February 2017 was applied to rent and outgoings and that the amount of $27,500 paid on 20 April 2017 was ultimately applied to rent and outgoings. The amount of $27,500 paid on 20 April 2017 was probably not allocated, when it was received, as a pre-payment of rent in Savills records because, at that time, it was paid and held in respect of the security deposit. The later application of the amount of $27,500 to rent would explain why the full security deposit was required to be paid in September 2017. 2. The Tenant Arrears Report for July (printed on 15 August 2017) indicates that Dizzy Dukes was in arrears in the amount of $2,899.17: AB619. The Tenant Arrears Report for September (printed on 5 October 2017) indicates that Dizzy Dukes was in arrears in the amount of $2,899.17 (for July 2017); $11,535.05 (for August 2017) and $14,172.70 (for September 2017), totalling $28,606.92: AB623. Mr Hellen's report concludes that Dizzy Dukes was in advance for each month from June 2017 (the lease commenced on 1 June 2017) to September 2017 and that there was a zero balance as at 31 October 2017. This results from the recording of the amount of $27,500 as a pre-payment of rent made in April 2017 and from the inclusion of an amount of $2,664.45 in April 2017 and from the inclusion of amounts of $2,513.82, $11,327.76 and $2,600 in September 2017. The amounts of $2,664.45 (April 2017) and $2,513.82, $11,327.76 and $2,600 (September 2017) were each based on Mr Neil Shah's annotations to bank statements. None of them were referred to in the Tenant Arrears Report for September 2017. Given that Mr Neil Shah's annotations ought to have been rejected, there was no evidentiary basis for allocating these amounts to Dizzy Dukes rent inconsistently with Savills' business records. 3. The better conclusion on the evidence adduced is that Dizzy Dukes was in arrears as at July 2017 in an amount of $2,899.17. It was in arrears as at 30 August 2017 in an amount of $14,434.22 and in September 2017 in an amount of $28,606.92. Sushi Kuni 1. The trial judge accepted that Sushi Kuni had arrears in April, May, June, July and August 2017, but that it made regular payments over that period such that the arrears total did not materially increase within that period: according to the second scenario of Mr Hellen the amount fluctuated between $15,708.59 and $11,139.78 and according to the Savills records the amounts were between $15,708.69 and $19,942.61: J[210]. Inferentially, the trial judge accepted the "second scenario of Mr Hellen". It was not disputed on appeal that the trial judge was correct to do so. 2. Although the trial judge did not address the matter, or make an explicit finding, it follows from his Honour's reasoning that Sushi Kuni was also in arrears in December 2016, January 2017 and February 2017. Burrito Bar 1. Burrito Bar was always in arrears, even at 31 October 2017. The issue between the experts concerned an amount of $14,782.10. The trial judge stated: [198] For Burrito Bar, the joint reconciliation of the experts reveals that as at July 2017 this tenant was in credit in the amount of $14,782.10, which deteriorated to an arrears of $11,022.85 by October 2017. According to the Savills records there was a zero balance in July 2017, and then an arrears of $11,022.85 in October 2017. The July balance difference is explained by a non-cash credit that was ultimately applied against the rent to September 2017, but which was not posted until October 2017. Mr Hellen maintained his view that credits raised in October 2017 should be taken into account in the period to which they relate, in this case September 2017. On closer analysis, Mr Hellen explained that some of those credits appeared to relate to March to May 2017, although in the documents available to him he was not able to "work it out" with precision. Once again, to the extent that there remains a difference between Mr Hellen and Mr Gwynn's analysis, I prefer Mr Hellen's evidence and I find accordingly because of the thoroughness of the reconciliation that he undertook and the fact that he did not work from the assumption that the MRI records were correct. As at July 2017 Burrito Bar was in credit in an amount of $14,471.59. 1. In its Arrears Schedule, Elanor had referred to various business records. An email from Mr Neil Shah to Ms Coco sent on 10 October 2017 requested her to "please raise credits for all Sep 17 charges for a total of $14,782.10": AB2186. The email of 10 October 2017 clearly indicated that the credit was to be applied to the list of charges raised on 1 September 2017 for base rent and other matters. The trial judge did not have regard to Elanor's submissions: J[217]. 2. In the joint report, Mr Hellen stated [AB480]: Mr Hellen is of the opinion that credits raised by Savills in October 2017 should be taken into account in the period that the credits relate to, namely September in relation to Scenario A and March to May 2017 for Scenario B. It is possible that the credits relate to March to May and September as the exact details cannot be ascertained… 1. The difficulty with Mr Hellen's Scenario B is that the only business records in evidence indicated that the credit was agreed on 10 October 2017 and it was agreed to be applied to the identified charges on 1 September 2017. Mr Hellen's evidence in the joint report that "it [was] possible that the credits relate to March to May and September as the exact details cannot be ascertained" was not sufficiently explained in his oral evidence: AB3563. Mr Gwynne correctly stated that there was a "trail of documents [which] suggests it's a credit for September", those documents having been referred to in the joint report: AB3563; AB480. The trial judge did not have regard to the Arrears Schedule which referred to the business records to which Mr Gwynne referred, including the email of 10 October 2017: J[217]. There was no sound evidentiary basis to conclude that there was an agreement, contradicting the terms of the email of 10 October 2017, that the credits related to earlier charges. 2. The better view on the evidence was that Burrito Bar was in arrears in May 2017 ($5,278.50), June 2017 ($40.51) and August 2017 ($11,229.81). Mumbai Blues 1. The issue dividing the parties on appeal concerned an amount of $5,683.33. At trial, the experts agreed that the amount was to be allocated to Mumbai Blues, but differed as to when it should be allocated. Mr Hellen allocated the amount to Mumbai Blues' ledger for March 2017, with the result that it was ahead in its rent payments, noting its lease commenced on 1 May 2017. Mr Gwynne considered it should be allocated in August 2017. 2. The trial judge did not address this issue, instead addressing an issue concerning an amount of $8,864.01. This amount was not contentious on the appeal. His Honour stated: [207] Mumbai Blues is next. Mr Hellen's reconciled balance for July 2017 is an amount of $3,164.63 in arrears, which by October 2017 improved to a credit amount of $8,864.01. In contrast, the Savills records disclose arrears for July 2017 of $8,847.96 and a nil balance in October 2017. In explanation of the differences, Mr Hellen said that he could not be "absolutely certain" but, by the time he had undertaken a complete reconciliation for this tenant, he had $8,864.01 leftover, which he then applied to the October 2017 balance. Mr Gwynne pointed out that this amount was allocated in accordance with a narration on a bank statement from Mr Neil Shah, and the amount does not appear at all in the Savills records. On that basis, Mr Gwynne questioned the assumption made by Mr Hellen. In response Mr Hellen said that it was "very curious" that the amount annotated by Mr Shah was exactly the same amount as the excess sum that he calculated. In resolving this item, I am not satisfied that Elanor has discharged its onus of proving the accuracy of the Savills records. I accept the evidence of Mr Hellen, that having undertaken a complete reconciliation, there is an amount outstanding which he applied to rent. The point is that the Savills records do not explain the difference. 1. The respondents submitted that Elanor's argument on appeal concerning the amount of $5,683.33 was different to what it had submitted at trial. However, contrary to this submission, the argument was raised in the Arrears Schedule. As noted earlier, the Arrears Schedule was not considered by the trial judge: J[217]. On this occasion that does not matter because Elanor's contention should be rejected. 2. The relevant record of payment, a document called "Payee Transfer details", does not establish that the amount was paid with respect to Mumbai Blues: AB681. The amount was paid from the "Bluewater Trust" (an account held by Alceon) to Savills. Savills bank account statement records the payment on 10 March 2017 as being "Deposit – Bluewater rent chqBluewater Trust": Annexure B to the Respondents' Joint Submissions on Arrears Schedule. Mr Hellen appeared to be unfamiliar with the accounts referred to on the "Payee Transfer details": AB3574.14 to 3575.15. However, an email from Mr Neil Shah sent on 15 August 2017 to Ms Chan and Ms Coco requests that the amount be allocated to "Mumbai Blue's arrears at Bluewater as their 1st month rent": AB1474. There is no apparent reason to doubt the accuracy of this business record. The amount should be allocated to Mumbai Blues' ledger when it was received, not when it was allocated. It follows that Mr Hellen's treatment of this amount was correct. 3. The better view on the evidence adduced is that Mumbai Blues had arrears in June 2017 ($238.63), July 2017 ($3,164.63) and September 2017 ($1,895.63): AB485. Redcliffe Noodle Kitchen 1. The trial judge addressed Redcliffe Noodle Kitchen in the following way: [208] Redcliffe Noodle Kitchen is marked as "not known" on the Savills records for the period December 2016 until July 2017. And then in August 2017, the rent account is shown in arrears in the amount of $6,302.87, reducing to an arrears of $5,606.34 in September 2017. In contrast, Mr Hellen calculates that the tenant was in credit in the amount of $16,654.01 in May 2017, and remained in credit, with the balance reducing each month, until October 2017 when the credit was $10,293.43. Mr Hellen explained that the final credit was allocated by him to rental, because it was money that was left over in consequence of his reconciliation, although he did rely on the identification by Mr Neil Shah of two payments of $16,654.01 and $14,063.91 as relating to this tenant. Mr Gwynne points out that he was not able to identify any documentation which supports these allocations. My finding is that despite the fact that Mr Hellen placed some reliance upon the identification of two amounts by Mr Neil Shah, the basis of which was not established in evidence given by him, I am not satisfied that Elanor has established the arrears balances as recorded in the Savills records for August and September 2017 because of my overall finding that these records are not reliable. In any event, the joint position of the experts is that there were no arrears in July 2017, and none before that month. 1. In its Arrears Schedule, Elanor submitted that an email from CPRAM (Mr Neil Shah) on 18 August 2017 to Mr Song and Ms Coco established that Redcliffe Noodle Kitchen was in fact in arrears. The email set out calculations (arrears of $1,076 as at June 2017, $5,546 as at July 2017, and $5,323 as at August 2017) and stated that the tenant "needs to urgently pay $11,944 to clear all the arrears from 25th June to 31st August 2017": AB1483. 2. Mr Hellen considered that Redcliffe Noodle Kitchen was in advance of its rental obligations on the basis of payments of $16,654.01 on 2 May 2017 and $14,063.91 on 27 September 2017. Mr Hellen relied only on the advice of Mr Neil Shah to justify those payments: AB 237 at [2.3.9]; AB486 at Notes MJG 1 and MJG 2. 3. The respondents submitted that the experts accepted that there were no arrears in June or July 2017. That proposition cannot be accepted so far as concerns Mr Gwynne. Mr Gwynne's position as expressed in the relevant schedule to the joint report was that the position as at June 2017 and July 2017 was not known, in that there were no monthly reports for Redcliffe Noodle Kitchen. However, he did not accept the amounts of $16,654.01 on 2 May 2017 and $14,063.91 on 27 September 2017 relied upon by Mr Hellen. 4. At trial, Mr Frenil Shah gave evidence that invoices for June and July 2017 had not been issued to Redcliffe Noodle Kitchen: AB3465. Referring to this evidence in closing submissions at trial, senior counsel for Elanor submitted: The other tenancy, your Honour, that we say arrears is applicable to is the Redcliffe Noodle Kitchen … Now, I think there was some evidence that they hadn't yet been put on the system for Savills and, therefore, invoices hadn't yet been issued. But with respect, that doesn't change the circumstances that they were in arrears. 1. On this appeal, the respondents submitted that the email of 18 August 2017, or the propositions said to flow from it, should have been put to the experts. That submission was not advanced at trial. Indeed, at trial, senior counsel for CPRAM, addressed the case advanced by Elanor, submitting that "[e]ven though there was an allocated payment, you may recall that Redcliffe Noodle wasn't invoiced until August … [s]o according to the arrears reports, it wasn't in arrears": AB3839.47 – AB3840.6. 2. The notations of Mr Neil Shah ought to have been rejected. There was insufficient basis for Mr Hellen's conclusion that Redcliffe Noodle Kitchen was in advance of rent for the whole period May 2017 to 31 October 2017: AB486. Savills' records for August and September 2017 were inconsistent with Mr Hellen's assumption (based on Mr Neil Shah's unexplained notations) as was the email of 18 August 2017. 3. It is likely that Mr Frenil Shah was aware, as at 30 August 2017, that Redcliffe Noodle Kitchen had commenced its lease on 25 June 2017 and that it had incurred obligations to pay rent in respect of June and July 2017 and, on 1 August 2017, in respect of the month of August 2017 which had either not been invoiced as at 30 August 2017 or had only then recently been invoiced. Further, the preferable view is that Redcliffe Noodle Kitchen was in arrears as at 31 August 2017 in the amount of $6,302.87 (AB486) and in the amount of $5,606.34 in September 2017, consistently with Savills' records. Summary of arrears 1. The trial judge's conclusion was that, of the nine Food Court Tenants, only 3 were in arrears as at 31 July 2017: Bel Cibo with arrears of $4,216.42, Mumbai Blues with arrears of $3,164.63 and Sushi Kuni "which on one scenario was in credit but on the alternative was in arrears in the amount of $11,802.83": J[218]. This conclusion was affected by a number of errors, as demonstrated above. 2. The trial judge did not appear to consider the history of arrears before or after 31 July 2017 to be significant. The arrears at times other than 31 July 2017 are relevant. First, Mr McNaughton reviewed each of the Data Room Arrears Reports and saw nothing that concerned him. Secondly, if Mr Frenil Shah had answered the questions asked of him at the meeting on 30 August 2017, the history of arrears is likely to have become apparent because it is likely that Mr Hamilton and Mr McNaughton would have sought more information and it is likely that they would have obtained more accurate Tenant Arrears Reports such as the much lengthier ones comprising the Discovered Arrears Reports which recorded that many of the Food Court Tenants had arrears at relevant times. It is likely that, in these circumstances, the tenancy arrears position would have been monitored by Elanor after 30 August 2017. 3. On the evidence adduced at trial, the tenancy arrears position was as follows: 4. As at 31 December 2016: 1. Bel Cibo: $15,213.19 2. Sushi Kuni: $8,742.56 5. As at 31 January 2017: 1. Sushi Kuni: $2,788.90 6. As at 28 February 2017: 1. Bel Cibo: $9,991.23 2. Sushi Kuni: $15,180.71 7. As at 31 March 2017: 1. Bel Cibo: $8,969.49 8. As at 30 April 2017: 1. Sushi Kuni: $15,708.59 9. As at 31 May 2017: 1. Sushi Kuni: $9,928.90 2. Burrito Bar: $5,278.50 10. As at 30 June 2017: 1. Bel Cibo: $10,271.11 2. Sushi Kuni: $9,285.89 3. Burrito Bar: $40.51 4. Mumbai Blues: $238.63 5. Redcliffe Noodle Kitchen: $1,076 11. As at 31 July 2017: 1. Bel Cibo: $10,990.42 2. Dizzy Dukes: $2,899.17 3. Sushi Kuni: $11,802.83 4. Mumbai Blues: $3,164.63 5. Redcliffe Noodle Kitchen: $5,546 12. As at 30 August 2017: 1. Bel Cibo: $10,142.58 2. Dizzy Dukes: $14,434.22 3. Sushi Kuni: $11,139.78 4. Burrito Bar: $11,229.81 5. Redcliffe Noodle Kitchen: $6,302.87 13. As at 30 September 2017: 1. Bel Cibo: $10,252.95 2. Dizzy Dukes: $28,606.92 3. Burrito Bar: $11,229.81 4. Redcliffe Noodle Kitchen: $5,606.34 5. Mumbai Blue: $1,895.63 Conclusion on misleading conduct 1. The fourth step is to determine whether the relevant conduct, in light of the meaning conveyed by the conduct, was "misleading or deceptive or ... likely to mislead or deceive": Self Care at [80]. 2. As at 31 July 2017, some of the Food Court Tenants either were in, or had a history of, arrears. It follows that the conduct was misleading or deceptive because it conveyed that none of the Food Court Tenants were in, or had a history of, arrears as at 31 July 2017. 3. The case was also conducted on the basis that Alceon conveyed that none of the Food Court Tenants were in, or had a history of, arrears as at the time of the meeting on 30 August 2017. The respondents' conduct also conveyed this meaning. This was also misleading. RELIANCE Introduction 1. As noted earlier, the trial judge addressed the question of reliance at J[247] – [272]. His Honour had also addressed issues relevant to reliance at J[220] – [238] as part of the "context" for assessing whether the conduct was misleading or deceptive. 2. It is convenient to refer to "reliance" given the terms of the trial judge's reasons, however the question is whether the respondents suffered damage "because of" the impugned conduct, as the trial judge made clear at J[252] and see: Campbell at [143]. 3. The trial judge was "not satisfied that Elanor has discharged its onus that it relied upon the representations or the conduct that it asserts": J[272]. This conclusion was based on two overarching conclusions (each of which arise from or involve other findings): 4. first, "the arrears position of individual Food Court Tenants was not a consideration which Elanor took into account": J[264]; 5. secondly, "that the redevelopment potential of the site was a primary motivating factor to acquire the Centre": J[271]. 6. Before turning to the two overarching findings, something should be said about the trial judge's approach to the assessment of the reliability of Mr McNaughton's evidence generally. The assessment of the reliability of Mr McNaughton's evidence 1. The trial judge noted that the only subjective evidence on reliance was given by Mr McNaughton: J[249]. The evidence of Mr McNaughton in this respect concerned how he would have recalculated what price to recommend to Elanor's board for Elanor to purchase the Centre if he (Mr McNaughton) had come to find out, after the second expression of interest on 18 August 2017 (for a purchase at $55.25 million) that the Food Court Tenants had a history of arrears and were "at risk". 2. The trial judge summarised Mr McNaughton's evidence at J[249] in the following way: 3. If Mr McNaughton had known that "one or more" of the Food Court Tenants were at risk during the due diligence period, then he would have performed a recalculation of the purchase price by removing those tenants from the net passing income, adjusting the capitalisation figure to reflect a higher degree of risk and by adding back some of the expected rental, on the assumption that three tenancies would likely be relet within 12 months. 4. Mr McNaughton would have discussed the recalculated position with Mr Baliva and would not have progressed the recommendation to Elanor's board that the Centre be acquired at the price of $55.25 million stated in the second expression of interest. 5. The recalculated purchase price would have resulted in a lower expression of interest. In the event that the new offer was rejected, he would not have progressed a report to the board to acquire the Centre at the price stated in the second expression of interest. 6. In those circumstances, and in his experience, the board would not have proceeded to consider the purchase of the Centre and the transaction would have concluded at that point. 7. As to (a), Mr McNaughton's evidence that he would add back three tenancies was based on the assumption that he had notionally removed from his calculations all nine of the Food Court Tenants by reason of them being "at risk" tenants. Mr McNaughton did not state that he would add back three no matter how many "at risk" tenants were removed. His Honour's reference to "one or more" must be understood as a reference to all nine. It would make no sense to exclude one "at risk" tenant and then add back three. The reason for notionally adding back three tenants was explained by Mr McNaughton and included that, with a high level of vacancies, he would consider at most only three would be leased out again within a year and that he would consider the remaining six to be permanent vacancies: McNaughton 1 at [238(d)]. His reasons for that position were explained and included that: "Where a number of tenancies are geographically grouped together, a longer-term vacancy is expected whilst potential structural work is undertaken". The nature of the structural work, and the reasons for it, were also explained. 8. After summarising at J[249] the aspects of Mr McNaughton's evidence as to how he would have calculated what offer to make for the purchase of the Centre if he had known that the Food Court Tenants had a history of arrears and were "at risk", the trial judge summarised the relevant legal principles employed to examine whether a person did something because of misleading conduct. At the beginning this summary, his Honour stated at J[250]: I exercise caution in relation to this evidence of Mr McNaughton for the well-known reason that retrospective hypothetical evidence of that character is unreliable because it is self-serving. 1. For the proposition that it is "well-known … that retrospective hypothetical evidence of that character is unreliable because it is self-serving", his Honour cited Barnes v Forty Two International Pty Ltd [2014] FCAFC 152; 316 ALR 408 at [184] (Beach J, with whom Siopis and Flick JJ agreed) and Addenbrooke Pty Ltd v Duncan (No 2) [2017] FCAFC 76; 348 ALR 1 at [500]-[502] (Gilmour and White JJ). 2. The passage in Barnes at [184] is: Further, direct evidence of reliance was not necessary. As was said by this Court in Dominelli Ford (Hurstville) Pty Ltd v Karmot Auto Spares Pty Ltd (1992) 38 FCR 471 at 483 per Beaumont, Foster and Hill JJ, absence of direct evidence of reliance is not fatal. Absence of such direct evidence does not necessarily preclude a finding of reliance. Moreover, any question of what they would have done if the information had been disclosed would necessarily be hypothetical. As was said by this Court, "[a]s such, the answer, in itself, might well be regarded as carrying little weight and being essentially self-serving". The appellants referred to some observations in Campbell v Backoffice Investments Pty Ltd (2009) 238 CLR 304 at [55] per French CJ and at [147] per Gummow, Hayne, Heydon and Kiefel JJ to suggest that his Honour could not "put forward his own assessment of what may have happened in the absence of any director saying what they in fact would have done". These passages do not stand for that proposition in such generality. First, in that case, only the evidence and state of mind of one person, Mr Weeks was being considered. That is not this case. Second, all that the Court said at [147] was that "…it was not open to the Court of Appeal to infer, from its own assessment of the materiality of the representation and its own assessment of whether the representation was calculated to induce entry into a contract, that Mr Weeks would not have proceeded with the share purchase". But in the present case, his Honour was not proceeding on the basis of such a limited foundation. 1. The reference to "direct evidence" in Barnes in this context is a reference to evidence from the person who would have behaved differently if the conduct had not occurred. 2. The first matter to note about the reasoning in Barnes at [184] is that it addressed a ground of appeal to the effect that the trial judge erred in concluding that there was reliance when none of the respondents' witnesses gave evidence that they had been misled or that they relied on the relevant conduct: at [180]. The Full Court stated that the "[a]bsence of such direct evidence does not necessarily preclude a finding of reliance": at [184] (emphasis added). It was in that context that the Full Court observed that, in any event, it might be the case that such evidence would carry little weight or be "essentially self-serving": at [184]. That is, the principal point being made was that an applicant does not fail to discharge the onus of establishing reliance merely because the applicant fails to adduce direct evidence of reliance. 3. The parts of Campbell referred to in Barnes at [184], show that there are circumstances where direct evidence is important, particularly if it is the state of mind of one person which is of significance. In the present case, Mr McNaughton's state of mind was of central importance. 4. The context of the passages referred to by the trial judge at J[250] in the reasons of the Full Court in Addenbrooke at [500]-[502] is similar to the context in Barnes. The complaint made by the appellant in Addenbrooke was that one Mr O'Neil had not given evidence "that knowledge of the more extensive matters said not to have been disclosed would have made any difference to his decision": at [495]. Like the Full Court in Barnes, the Full Court in Addenbrooke at [500] referred to the observations of the Full Court in Dominelli Ford (Hurstville) Pty Ltd v Karmot Auto Spares Pty Ltd [1992] FCA 550; 38 FCR 471 at 483: Although direct evidence of reliance might have been obtained by the appropriate questioning of [the witness], we do not regard the absence of this evidence as fatal in the sense that it necessarily precludes the finding of reliance. Indeed, as the information as to the prior problems with the supplier had been held from [the witness], any question as to what he would have done had it been disclosed to him, would necessarily be hypothetical. As such, the answer, in itself, might well be regarded as carrying little weight and being essentially self‑serving. 1. The proposition that Mr McNaughton's evidence about what he would have done in terms of his calculations, had he come to learn that the income stream he had considered achievable was in fact less than he had thought, was "unreliable because it is self-serving", and that it should be treated with "caution" because it is hypothetical, overstates the effect of the authorities. 2. The true position is that, in giving weight to direct evidence about reliance, account should be taken of all of the circumstances, including the obvious circumstance that the evidence is necessarily hypothetical. Further, where appropriate, account should be taken of the fact that evidence about reliance might be difficult to test. In this case, however, the evidence of Mr McNaughton summarised at J[249] to which the trial judge was referring at J[250] was not of a nature that it could not be tested. It was easily capable of being tested by reference to the objective circumstances and its objective rationality. Another circumstance which might be taken into account is that a witness might consciously or subconsciously seek to advance their own case. That consideration is not difficult to take into account in assessing direct evidence against the objective circumstances. One should not start from the assumption that all evidence about reliance is unreliable because it is hypothetical and self-serving. 3. As discussed further below, Mr McNaughton's evidence concerning how he would have gone about recalculating the offer price if he had known tenants had been in arrears was consistent with what one would conclude from a consideration of the objective circumstances. Further, in circumstances where there was no dispute about the way Mr McNaughton calculated the offer price, his evidence provided important and valuable support for what would otherwise have required the Court to reach conclusions solely on the basis of inference from the established facts. No doubt if he had not given evidence on the topic, the respondents would have asked the Court to draw an adverse inference having regard to what was said by Handley JA in Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418F-G and, in particular, 419E-F. In those two passages, his Honour stated: There appears to be no Australian authority which extends the principles of Jones v Dunkel to a case where a party fails to ask questions of a witness in chief. However I can see no reason why those principles should not apply when a party by failing to examine a witness in chief on some topic, indicates "as the most natural inference that the party fears to do so". This fear is then "some evidence" that such examination in chief "would have exposed facts unfavourable to the party": see Jones v Dunkel (at 320-321) per Windeyer J … In my opinion the trial judge fell into error in drawing the inference that the endorsement would not have been acceptable to the insured. Counsel for the insured did not ask Mr Ferrarese about this matter either in chief or in reply and did not cross-examine Mr Green on the matter either. Moreover the insured did not call any representative of the broker to establish what view the broker would have taken and what advice it would have given Mr Ferrarese. In these circumstances I do not consider that inferences should be drawn favourable to a party whose counsel refrained from asking any question on this topic. Again it appears to me that the principles earlier referred to derived from Jones v Dunkel and the decision of the Appellate Division of the Supreme Court of New York in Milliman v Rochester Ry Co [3 App Div 109; 39 NYS 274 (1896)] are applicable, and indeed the proper inference is to the opposite effect of that drawn by the trial judge. 1. See also: Kuhl v Zurich Financial Services Australia Ltd [2011] HCA 11; 243 CLR 361 at [63]. Whether such a submission would have been accepted is not to the point for present purposes. 2. There was no dispute as to the process which Mr McNaughton took to calculate the offer which he considered should be made by Elanor to purchase the Centre. Essential to that process was an assessment of the likely rental income, because this constituted the income stream which would give rise to the return that Elanor would represent to the investors in its proposed managed investment scheme was achievable over the course of the investment, then contemplated to have an "investment horizon of approximately three years": AB1669. Given these circumstances, and the nature of the evidence which Mr McNaughton gave, it is not obvious that the evidence should be treated as "unreliable" as opposed to being assessed against whether the evidence was objectively rational. 3. There is nothing unusual about notionally excluding income from a calculation undertaken to determine the likely return from an investment where it is considered that there is some doubt about that income being received. Mr McNaughton's evidence was focussed on what inputs would have been used in his calculations. 4. Further, Mr McNaughton's evidence explained various considerations relevant to an objective assessment of "reliance" in light of the commercial context. The commercial context included the purchase of a shopping centre and the attraction of external investment through a managed investment scheme. This involved matters which are not common knowledge and which were of material importance in assessing, objectively, whether Elanor suffered damage because of the respondents' conduct. Elanor may have been criticised if it had not adduced evidence from Mr McNaughton to explain what he would have done if he had known the true position with respect to the arrears history of the Food Court Tenants. On a fair reading of the trial judge's reasons, his Honour discounted the entirety of Mr McNaughton's evidence on this topic as "unreliable" without explaining why it was unreliable in the particular circumstances. 5. There is one other aspect of the trial judge's approach to Mr McNaughton's evidence which should be mentioned. Mr McNaughton was cross-examined extensively in relation to his interest in the Centre arising from the mixed-use redevelopment potential of the site. The trial judge concluded that this potential "was a primary motivating factor" for the acquisition of the Centre: J[271]. This finding is addressed in more detail later. What is important for present purposes is that, in considering this aspect of the case, the trial judge observed that he was asked to make an adverse credibility finding concerning Mr McNaughton and then stated that it was "not necessary that I make a direct adverse credibility finding". His Honour then stated at [J271]: I approach his evidence by reference to the well-understood limitations that apply to self-serving evidence about reliance: once a litigant asserts that if it had not been misled, the outcome would have been different. 1. This is a reference to what his Honour had earlier stated at J[250]. His Honour then concluded that "the redevelopment potential of the site was a primary motivating factor to acquire the Centre" and stated at J[271]: I also approach Mr McNaughton's reliance evidence with caution as he is clearly a witness with an indirect interest in the success of this proceeding. 1. The trial judge's adoption of this stance – which must have applied to an assessment of all of Mr McNaughton's evidence – was not further explained. 2. Alceon submitted that the basis for the trial judge's conclusion was obvious: "Mr McNaughton was one of two employees of Elanor with primary responsibility for the acquisition and remained, at the time of the trial, a senior employee at Elanor". It is not clear that the trial judge was reasoning in that way. 3. If his Honour was reasoning in the way suggested by Alceon, two observations should be made. 4. First, it is regularly the case that employees of a party to litigation give evidence concerning the employee's role in particular events central to the determination of litigation and which might affect their standing in the organisation. No doubt that is a matter which can be taken into account in assessing the evidence, but it does not necessarily or even ordinarily mean that the evidence must be treated with "caution". 5. Secondly, it was not suggested by the respondents on appeal that it was put to Mr McNaughton, either in cross-examination or by the trial judge, that his evidence should be treated with "caution" for the reasons hypothesised by Alceon in its submissions. 6. The substance of what the trial judge stated, notwithstanding that his Honour considered it was "not necessary [to] make a direct adverse credibility finding", is that Mr McNaughton's evidence was not being accepted as truthful or as full and frank. As a matter of substance, his Honour was making an indirect adverse credibility finding. As mentioned, the basis for the adverse finding is not explained in the reasons. A reading of the transcript of Mr McNaughton's cross-examination by reference to the contemporaneous documents and objectively established facts does not readily support the conclusion. The arrears position of the Food Court Tenants 1. At J[264], the trial judge stated: On these findings, the arrears position of individual Food Court Tenants was not a consideration which Elanor took into account at the time, more so, the position of three of those tenants. 1. The trial judge made the same finding at J[257]: [T]he individual arrears position of any of the Food Court Tenants was simply not taken into account as a material factor in the overall assessment at the time. 1. It was uncontroversial that Elanor did not take into account the arrears position of the Food Court Tenants at the time Elanor's board resolved to proceed at the price recommended by Mr McNaughton and Mr Baliva. That is the case that Elanor brought. Elanor's case was that it was misled into thinking that there was no historical or actual arrears position of the Food Court Tenants and that – if it had known the true position – it would have calculated what it was prepared to offer differently. If it had known that the Food Court Tenants were in, and had a history of, arrears, it would have excluded the rent from the "at risk" tenancies in calculating its offer. 2. The "findings" the trial judge referred to at J[264], on which the ultimate finding was based, are those set out at J[260] to J[263], by reference to four matters. The first matter was explained in the following way at J[260]: [260] First, I am not satisfied that if Mr McNaughton and Mr Baliva had known that three Food Court Tenants were in arrears as at July 2017, that they would not have recommended to the board to proceed. For reasons that I have explained that quantum of rental arrears is insignificant in the context of an intended acquisition in excess of $55 million, with 46 other tenants, including Woolworths as the major anchor tenant, with a gross fully let net income estimated to 1 December 2017 of $4.26 million and a net passing operating income of $3.9 million per annum. 1. There are three problems with this reasoning. 2. First, it is confined to a conclusion as to what Mr McNaughton and Mr Baliva would have done had they known that three Food Court Tenants were in arrears as at July 2017 and not also whether there was a history of arrears. As to the history of arrears: 3. Mr McNaughton had also reviewed, at least briefly, the Data Room Arrears Reports for the months of December 2016 to June 2016. These did not show any arrears for any of the Food Court Tenants. If they had shown a history of arrears – for example along the lines of those contained in the Discovered Arrears Reports – it is reasonable to assume that he would have raised the issue with Mr Hamilton and that Mr McNaughton and Mr Hamilton would have further pursued the issue in order to determine the correct position. 4. Mr Hamilton and Mr McNaughton were led to believe, by the respondents' conduct, that there was no history of arrears on the part of the Food Court Tenants as at 30 August 2017 when Mr Hamilton conducted his tenant by tenant review with Mr Frenil Shah. 5. Secondly, it is confined to a conclusion that only three tenants were in arrears as at July 2017, which is incorrect for the reasons given earlier. 6. Thirdly, even in the absence of the first two matters just discussed, the trial judge's conclusion that the "quantum of rental arrears is insignificant in the context of an intended acquisition in excess of $55 million" suggests a material misunderstanding of the evidence and the point which was being made. 7. The quantum of the rental arrears of the three tenants referred to by the trial judge was $19,183.88 on the trial judge's assessment: J[218]. Of course that is insignificant compared to $55.25 million. The real issue which Elanor raised for consideration was whether Mr McNaughton would have calculated the purchase price by reference to a different income stream, namely by excluding the income from certain tenancies on the basis that they were sufficiently "at risk" as for it to be prudent to exclude that income from the relevant calculation. Mr McNaughton used a net operating passing income of $3,907,170 to derive the purchase price he was prepared to recommend. He would have excluded the gross rent of the tenants at risk: McNaughton 1 at [238(c)]. Depending on the number, he may have added back some if he considered the relevant tenancies could be relet within a year. The annual gross rent for the three tenants referred to by the trial judge as having rental arrears as at July 2017 was $245,417: AB1770. If Mr McNaughton had used net operating passing income of $3,661,753 ($3,907,170 - $245,417), the resulting offer would have been $51.8 million adopting Mr McNaughton's yield of 7% and his process of calculation (without adding back any tenancies). 8. The second matter said to support the conclusion at J[264] was explained in the following way at J[261]: [261] Secondly, Mr McNaughton was aware that the net rental income figures were estimates to 1 December 2017. It is the very nature of an estimate, that it might not be realised. He was also provided with the revised financial figures including the tenancy reports which disclosed that seven of the Food Court Tenants had no trading history as at August 2017. He was aware that the casual dining precinct had only recently been developed. He knew that it was populated by small business proprietors, not by national retailers. He had the benefit of the report from Mr Schneider that on 28 August 2017, the Centre was quiet and that all food retailers were "extremely quiet". Mr McNaughton was aware that the casual dining precinct was unproven in terms of trading and financial performance. I reject Mr McNaughton's evidence that he could not place reliance upon the monthly trading figures that were provided to him as part of the financial information on 2 August 2017. As I have explained that document clearly conveyed that a number of the Food Court Tenants had either not commenced trading or had only recently commenced trading. The conclusion which I draw from these findings is that Mr McNaughton was prepared to accept the risk that one or more of the Food Court Tenants may be in arrears or may subsequently fall into arrears in the event of acquisition of the Centre. 1. The fact that the rental incomes figures as at 1 December 2017 were estimates was neither disputed nor particularly probative of what Mr McNaughton would have done if he knew the true arrears position in relation to the Food Court Tenants, including the arrears history. 2. There was nothing unreliable about the forecast if the tenants were likely to be paying rent as at 1 December 2017. As noted earlier, the real issue was what Mr McNaughton would have done if the true position had been disclosed as to the arrears, including the arrears history. 3. The trial judge attached considerable significance to one of the tabs of the Excel spreadsheet attached to the email sent on 2 August 2017 which contained turnover figures. As noted above, the trial judge stated: I reject Mr McNaughton's evidence that he could not place reliance upon the monthly trading figures that were provided to him as part of the financial information on 2 August 2017. As I have explained that document clearly conveyed that a number of the Food Court Tenants had either not commenced trading or had only recently commenced trading. 1. What the trial judge had earlier explained is contained at J[63] – [66]: [63] Something more needs to be said about the revised financial figures that were provided on 2 August 2017. The covering email to Mr McNaughton attached an Excel spreadsheet with a series of tabs. One was labelled "Bluewater Square turnover figures" divided as between the various tenants which included information about whether a tenant had reported trading data and if so, the month of the first report. Some comments were also recorded in relation to relevant tenants. [64] The effect of that data is accurately summarised in a table contained in the closing submissions of Alceon: Food court Tenant Trading data reported? Month commenced reporting trading Comments? Sushi Kuni Yes July 2015 N/A Bel Cibo Yes June 2016 N/A Dizzy Dukes Yes June 2017 Yes, "14 days of actual trading converted to full month" Burrito Bar Yes May 2017 Yes, "Disruption in trade as Dizzy Dukes fitting out" Mumbai Blues Yes June 2017 Yes, "12 days of actual trading converted to full month" Mass Nutrition No N/A N/A Kebab Express No N/A N/A Thai Me Down No N/A N/A Redcliffe Noodle Kitchen No N/A N/A [65] Mr McNaughton recalled the spreadsheet when cross-examined as to its content but disputed it as a reliable record as to when those tenants commenced trading. On his evidence it is the tenancy schedule, being that tab on the Excel spreadsheet, which is the reliable source of that information. Similar turnover reports for March 2017 were available in the data room and were viewed by Mr McNaughton. Mr McNaughton gave similar evidence to that effect in answer to a number of questions put to him in cross-examination. On his evidence the turnover data is not a reliable indicator of the commencement of a tenancy because it depends upon the accuracy of the reporting of the tenant, which accuracy cannot be assumed in the case of small operators. He described these as "mum and dad operators" who sometimes prefer cash sales which are not subsequently disclosed. [66] Whilst that fact may impact on the quantum of the reported turnover, I do not find Mr McNaughton's explanation to be satisfactory. The Food Court Tenant leases were in standard form. By cl 3.2 each tenant was obliged to "keep complete and accurate accounting records" of all transactions relating to the leased premises including data relevant to gross sales. Not later than seven days after the end of each calendar month, the tenant was obliged to give to Alceon a statement in reasonable detail of the gross sales for the previous month. By cl 3.3, Alceon had the right to inspect and have audited the tenant's records. I find that the turnover data was a reliable indicator as to whether tenants had or had not commenced to trade because it was provided in satisfaction of a lease obligation. Logically the commencement of trading would be reflected in a monthly gross sales amount reported by each of the Food Court Tenants to Alceon. Correspondingly, the absence of a reported amount points strongly to the conclusion that a tenant had not commenced trading or at least should have invited further inquiry. 1. Ultimately, it may be that little turns on this aspect of Mr McNaughton's evidence because, as mentioned, Mr McNaughton did not deny knowing (at various points in time) that many of the Food Court Tenants had not commenced trading or had only recently commenced trading. However, given that the trial judge rejected his evidence (and that this appears to have affected the trial judge's acceptance of Mr McNaughton's evidence more generally) it is necessary to point out a number of matters. 2. First, much of Mr McNaughton's evidence concerning reliance on the turnover schedule was directed to the reliability of the figures provided rather than what they suggested about the lease commencement date. Thus, for example, he stated that "we don't place a lot of reliance on sales figures other than Woolworths and other major tenants": AB2931.28. Later, he gave evidence to the effect that, in assessing whether a tenant might fall into arrears, he gave less regard to sales data where smaller operators were concerned because of the potential for such data to be affected by "people taking cash" or "not wanting to clear it for tax and things like that": AB2971. None of this evidence is surprising and it is objectively supported by the fact that many tenants apparently did not report turnover figures, as discussed below. 3. Secondly, to the extent Mr McNaughton's evidence was that he did not rely on the turnover schedule for the lease commencement dates, it should be emphasised that the context was that the 2 August 2017 email included as spreadsheets: 4. The "Bluewater Square Turnover Figures" which did not purport to address the lease commencement dates or, as is more fully set out below, the turnover figures for a large number of tenants. 5. The "Bluewater Square Tenancy Schedule" which expressly identified the lease commencement dates for each lease. 6. Thirdly, in relation to those Food Court Tenants where turnover figures were reported on the turnover schedule, that fact is probative of the fact that the relevant lease had commenced, but it is not determinative of when the lease commenced. This is objectively established by the facts. In relation to Mumbai Blues, the turnover schedule only contains turnover figures for June 2017 and the comment "12 days of actual trading converted to full month". It was uncontroversial that the Mumbai Blues lease commenced on 1 May 2017: AB2698 at [91]; AB2735 at [7]; J[122]. Accordingly, if Mr McNaughton had relied on the turnover schedule to determine the lease commencement date for Mumbai Blues he would have been misled. A similar example is provided by Redcliffe Noodle Kitchen. 7. Fourthly, in relation to those Food Court Tenants where no turnover figures were reported, it is difficult to draw the conclusion that the relevant lease had not commenced even by drawing an inference, as the trial judge did at J[66], that the tenants were sticklers for compliance with the obligations contained in their leases. That inference was unlikely on an examination of all of the evidence. It was uncontroversial that Mass Nutrition's lease commenced on 1 May 2017: J[122]. No turnover is contained in the turnover schedule for Mass Nutrition for May or June 2017. It was uncontroversial that Kebab Express's lease commenced on 1 June 2017: J[122]. No turnover was reported for Kebab Express for June 2017. If Mr McNaughton had relied on the turnover schedule to determine the lease commencement dates in these respects, he would have been misled. 8. Fifthly, the table referred to by the trial judge at J[64], is apt to mislead in suggesting that an inference could safely be drawn from the turnover schedule that the lease had not commenced where no turnover figures for a particular tenant were contained in it. What inference can be drawn must be assessed from the whole of the turnover schedule. There were 49 tenancies in the Centre, five of which were vacant, leaving 44 which could have supplied turnover figures. Leaving aside the nine Food Court Tenants, of the balance of 35 tenancies, the spreadsheet revealed no monthly trading for 16 tenancies. Accordingly, including the fact that it showed no turnover in respect of four of the Food Court Tenants, it contained no monthly turnover figures for 20 tenancies out of the 44 non-vacant lots. Put simply, no turnover figures were contained in the turnover schedule for 45% of the Centre's tenancies. There was no dispute that the Centre was 96% let. One possible explanation for this is that not all tenancies had to report turnover figures. That might be the case or it might not. Woolworths, Terry White Chemist, Lucky Charm, What's Hot, Brazilian Beauty, Adora Nails, Flight Centre and many more reported turnover, whilst those which did not included Pure Serenity Massage, a medical practice and lawyers. It is difficult to accept that a reasonable reader of the schedule would think that Brazilian Beauty had an obligation to report turnover and Pure Serenity Massage did not. 9. The trial judge's reliance at J[66] on the terms of the leases also contains the difficulty that it assumes that Mr McNaughton knew the particular terms of each of the 44 leases in the Centre. Without that information, he could not have known which tenancies were obliged to report turnover. 10. A reasonable observer of the turnover schedule could not have considered that it was reliable as indicating the dates of commencement of the various leases of the Food Court Tenants. A fortiori, when a schedule was also provided with the turnover schedule which expressly stated the lease commencement dates. 11. At best, the turnover schedule contained a partial account of the turnover figures. Mr McNaughton's evidence that he did not place reliance on the turnover schedule in order to determine the lease commencement dates was entirely rational. So too was his evidence that he did not rely on the turnover figures contained within it. The trial judge's rejection of Mr McNaughton's evidence that he could not place reliance on the monthly turnover figures contained in the spreadsheet does not take into account that the spreadsheet could not objectively be regarded as reliable, in particular as reliably revealing the lease commencement dates. 12. As to the trial judge's observation at J[261] that Mr McNaughton had the "benefit of the report from Mr Schneider that on 28 August 2017, the Centre was quiet and that all food retailers were 'extremely quiet'", this was one person's observations over a short period of time at a particular time of the day. Any reasonable person in Mr McNaughton's position would have relied on the objective data which was provided and what was said by those with knowledge of the Centre operations over an extended period. It was two days later that Mr Hamilton was to meet with Mr Frenil Shah. 13. The third matter said to support the conclusion at J[264] was explained in the following way at J[262]: [262] Thirdly, Mr McNaughton plainly knew that to have any chance of acquiring the Centre, Elanor was required to submit an offer at more than $54,750,000. In undertaking his calculations, he applied a yield of 7% which was most favourable in comparison to the comparable sales that he considered. It will be recalled that his list of comparable sales indicated yields for shopping centres in the form of neighbourhood centres in Queensland at between 5.57% at the lower end and 8.97% at the upper. He was very familiar with the Gladstone Square Shopping Centre, with an initial yield of 6.74% and a core market yield of 7.5%. As was explained in the investor overview that formed a component of the report to the board, the 7% yield represent[ed] a discount to prevailing market yields. Elanor was plainly keen to acquire the Centre. The first expression of interest was submitted on 30 May 2017 for a price at $54,750,000 without any investigation by Mr McNaughton as to the position of individual tenancies within the casual dining precinct. 1. The facts as proved, objectively assessed, indicate that Elanor was keen to acquire the Centre. The facts also indicate that it carefully assessed what price it was prepared to pay, as one would expect. Elanor was a sophisticated investor. It was inherently unlikely to purchase a shopping centre otherwise than by attempting accurately to predict the returns it could expect. It did so by reference to the expected rental income. Mr McNaughton adopted a yield of 7%. This was just under the middle of the range he had examined, namely 5.57% at the lower end and 8.97% at the upper. In the Investor Overview which was given to the board it was stated that "the 7% yield represent[ed] a discount to prevailing market yields": AB1669. This expression of opinion was a statement made in the context of seeking to attract investors to the managed investment scheme. Elanor's interests lay in putting the investment forward in the best light possible and in ensuring that the returns it forecast to participants in the managed investment scheme were accurate. 2. The fact that the first expression of interest was submitted on 30 May 2017 at $54,750,000 without any investigation by Mr McNaughton as to the position of individual tenancies within the casual dining precinct does not bear the significance attributed by the trial judge. Expressions of interest were sought on 2 May 2017 with a closing date of 30 May 2017, by a detailed Information Memorandum issued by Alceon. This contained detailed information about the rental returns which were expected. Elanor was not the only interested party. As Mr McNaughton repeatedly explained in his evidence, the expression of interest was subject to a number of matters including due diligence. Contrary to the assumption implicit in the trial judge's reasoning, there is nothing unusual about not investigating the position of individual tenancies for the purposes only of expressing interest given those circumstances. If, during that hypothetical due diligence, Elanor had been provided with the Discovered Arrears Reports or received full and frank answers to its tenant-by-tenant review from Mr Frenil Shah, Elanor may well have reconsidered its position with respect to the price stipulated in its expression of interest. 3. The fourth matter said to support the conclusion at J[264] was explained in the following way at J[263]: [263] Fourthly, the forecast net passing income to 1 December 2017 of $3,907,170 (the figure that Mr McNaughton based his price calculation upon) included a net annual rental payable by Woolworths of $1,145,000 and $803,061 payable by the two mini-major tenants. Of the balance, the most substantial portion payable was the total rent for the 28 specialty shops. As I have explained, the quantum of rent payable by the three Food Court Tenants in arrears as at July 2017 is insignificant in the context of these figures. It is also the case that Elanor had been informed through the Location IQ report that it should consider more national brands for food catering to replace Food Court Tenants upon cessation of their leases. I find that this advice formed the basis of the statement which was subsequently made in the finalised version of the investment overview that was provided to prospective syndicate members on 28 September 2017, where it is noted under the heading "syndicate and strategy" that the strategy is to, inter alia, "actively asset manage the Property by implementing repositioning, leasing, tenant remixing and marketing to optimise the income and value of the property." Mr McNaughton gave evidence to the effect that he considered that Elanor could generate a 12% internal rate of return, by undertaking such remixing. 1. The first part of this reasoning, concerning the "quantum of rent payable by the three Food Court Tenants in arrears as at July 2017", has been addressed above. 2. The second part of this reasoning has a tenuous relationship to the question of whether Elanor suffered damage because of the respondents' conduct. At most it indicates that Elanor wanted to manage the asset responsibly, with a view to maximising the return to participants in the managed investment scheme by maximising rental income. 3. In summary, the four matters referred to by the trial judge for concluding at J[264] that "the arrears position of individual Food Court Tenants was not a consideration which Elanor took into account" do not provide significant support for a conclusion that Mr McNaughton would have recommended that Elanor purchase the Centre for the price it did even if he had not been misled as to the arrears position of the Food Court Tenants. It is more likely that he would have reassessed the position as he stated in his evidence. The development potential 1. The second overarching finding made by the trial judge which led to the conclusion that "reliance" was not established was the finding "that the redevelopment potential of the site was a primary motivating factor to acquire the Centre": J[271]. 2. The reasoning for this conclusion was given in J[265] to [271]: [265] [T]here is the extensive evidence about what investigations Mr McNaughton undertook about the potential mixed-use redevelopment of the site and whether it was a primary motivating factor for the acquisition of the Centre, contrary to the claim that the arrears position of the nine Food Court Tenants was relied upon. I have set out above my factual findings on what was done and when. Mr McNaughton was extensively cross-examined on this issue. He did not mention his inquiries with the Moreton Bay Regional Council, his consideration of the Bureau Proberts report, his consideration of the Urbis town planning report or his direct contact with Urbis in his affidavit evidence-in-chief. In cross-examination, he denied that what attracted him to the Centre was the mixed-use development potential answering: Every asset that we buy, Elanor Investors, we look to get a stable income for our investors, and then hope that there's some upside potential as well. So what attracted us to Bluewater Square was the stable income coming from the tenant base. The upside potential to build something above the Centre, we placed [no] reliance on it, but we hoped that something can happen in the future. You seriously suggest that you placed [no] reliance on this development potential when making that second expression of interest?---Correct. As I said, we – we hope that there will be upside potential. If you look at our information memorandum that we published for our investors, we put no numbers around what that upside potential is. We focus solely on the income. I didn't ask you any question about an information memorandum that you provided to your investors, did I?---No. Please don't volunteer information. Do you understand?---I understand. I'm sorry. [266] At various points in his cross-examination, Mr McNaughton gave answers to similar effect. I reject his evidence. Mr McNaughton was aware from the outset that the site had redevelopment potential, which was stated and highlighted in the Information Memorandum. The fourth page of the document highlights development of mixed use buildings in the immediate vicinity of the Centre, while other pages in the document summarise the town planning controls to the effect that the Moreton Bay Regional Council had identified the precinct "as a key area for potential increased density" and then by reference to the Urbis report highlights the site potential for a mixed use development comprising two buildings of five stories each constructed above the existing development. Montages from the Bureau Proberts report are reproduced in the Urbis report which favourably considers one of the concept schemes to develop and use the site for the purpose of 85 residential units. [267] If Mr McNaughton was only interested in the redevelopment as having some "upside potential", then it is difficult to understand why he then made a direct inquiry of the Moreton Bay Regional Council and Urbis. On 22 August 2017, he emailed Mr Liam Proberts, noting that he had viewed the architectural report in the data room and requested a discussion because "we too feel there is scope to develop the centre into a mixed use scheme in the medium to long-term." On 23 August 2017, Mr McNaughton emailed Ms Lam at Urbis and in substance repeated the statement that he had made to Mr Proberts. On 23 August 2017, McNaughton also emailed the Moreton Bay Regional Council noting that under the current zoning the Centre "would appear to have strong medium to long term prospects to be redeveloped into a mixed-use project" and requested a meeting about strategic planning. He attended a meeting with Mr Proberts on 23 August 2017, the file note for which discloses that there was an in-depth discussion about the potential to redevelop the Centre. He provided the Bureau Proberts schemes by email to the council on 24 August 2017. With Mr Baliva, he attended a pre-lodgement conference with officers of the council on 5 September 2017, and was provided with a detailed summary of the town planning controls, and what would be required for a compliant development. [268] The result of these extensive inquiries was recorded by Mr McNaughton in the due diligence checklist as provided to the board prior to 8 September 2017 and which was then highlighted in the investment overview attached to the board papers and the subsequent more detailed version provided to investors of 28 September 2017. [269] Elanor subsequently lodged an application for redevelopment of the site on 16 December 2022. The description of the proposal is: Request to Change (Other) – Material Change of Use – Development Permit for Shopping Centre, Short Term Accommodation (142 rooms) Function Facility and Bar and Reconfiguring a Lot – Development Permit for Subdivision (1 Standard Format and 1 Volumetric Lot). [270] The application was approved, by grant of a planning permit on 24 May 2023, subject to conditions. [271] I reject the evidence of Mr McNaughton as inconsistent with what he did at the time, the focus if [sic] his inquiries and the degree of effort that he expended in investigating the development potential of the site. The respondents also invite me to reject his evidence for credibility reasons being the failure of Elanor to make discovery of documents relating to these inquiries and what is said to be unsatisfactory aspects of some of the evidence given by Mr McNaughton being the absence of any reference to these inquiries in his evidence-in-chief and his answers in cross-examination as implausibly inconsistent with the contemporaneous documents. It is not necessary that I make a direct adverse credibility finding. I approach his evidence by reference to the well-understood limitations that apply to self-serving evidence about reliance: once a litigant asserts that if it had not been misled, the outcome would have been different. I find, based on the contemporaneous documents, that the redevelopment potential of the site was a primary motivating factor to acquire the Centre. I also approach Mr McNaughton's reliance evidence with caution as he is clearly a witness with an indirect interest in the success of this proceeding. 1. Observations have earlier been made about the trial judge's approach in treating Mr McNaughton's evidence with caution because he had an indirect interest in the success of the litigation. However, one further observation should be made. As is explained below, Mr McNaughton's evidence extracted at J[265] was unremarkable. The trial judge was wrong to "reject the evidence of Mr McNaughton as inconsistent with what he did at the time": J[271]. 2. Leaving credibility issues to one side, the difficulty with this aspect of the trial judge's reasoning is that it does not furnish a sound basis to deny 'reliance' on – or, more accurately, to deny that damage was sustained because of – the impugned conduct in a way material to the statutory question under s 236 of the ACL as it applied to the facts. 3. It is to be accepted that a major reason why Elanor was interested in the site was because of its redevelopment potential. Elanor recognised, as the third aspect of the Blue Water Square Syndicate's strategy, that there was a "[s]ignificant medium term expansion potential into a mixed use scheme given favourable zoning" and that it was "well positioned in a coastal location with new transport infrastructure": AB1903. Elanor had thoroughly investigated this potential and concluded that it existed. It was not costed, but it could not be open to serious doubt that Elanor considered a future redevelopment was likely to be profitable if it could be undertaken. 4. It may also be accepted that Elanor considered that an investment in the Syndicate should be "viewed as medium to long term": AB1900. It is tolerably clear that Elanor would continue looking into the redevelopment potential. Although the Investment Overview sent to the board on 8 September 2017 stated that the investment horizon was "approximately 3 years" (AB1668), the Investment Memorandum dated 28 September 2017 stated that the Manager of the Syndicate would "review exit / liquidity strategies with an investment horizon of approximately 3 to 5 years or more": AB1905. 5. The redevelopment potential was a significant reason for Elanor's interest in this particular site, and its purchase of it. The trial judge was not wrong to conclude that the redevelopment potential was "a primary motivating factor" for the purchase, although the meaning of the word "primary" in this context is unclear. 6. On the other hand, it is not possible reasonably to conclude otherwise than that the purchase price was determined in accordance with an assessment of the likely return to Syndicate investors over an investment horizon of three years. This depended on rental income and not on profit from any future potential redevelopment. Mr McNaughton had given evidence as to how he calculated the purchase price. In summary, Mr McNaughton applied a yield of 7% to the net operating passing income of $3,907,170 to calculate an amount of $55,816,714. Mr McNaughton subtracted $500,000 on account of his estimate of the expected future capital expenditure, based on 1% of the purchase price and then rounded down to $55.25 million. At the time, Mr McNaughton was aware that there were five vacant tenancies: J[68]. He addressed this by including a condition in the expression of interest that Alceon provide a rental income guarantee equivalent to two years' gross market rent ($650,000) for any vacant tenancy as at the settlement date. 7. Mr McNaughton's evidence on that topic was unchallenged, it was cogent, it was what would have been expected in the commercial scenario, it was consistent with the contemporaneous documents and it was accepted by the trial judge: J[62]. 8. Mr McNaughton and Mr Baliva discussed Mr McNaughton's calculations and Mr Baliva agreed with his assessment and methodology. Mr McNaughton's calculations formed the basis of the recommendations to the board and the calculations of what investors could expect by way of return over 3 years. 9. The evidence given by Mr McNaughton set out by the trial judge at J[265] was unremarkable. Mr McNaughton's evidence was consistent with the trial judge's acceptance of his evidence as to how the offer was calculated, it was consistent with the Investment Overview provided to the board on 8 September 2017 and with the Information Memorandum sent to potential investors on 28 September 2017. All of the contemporaneous documents indicated that the purchase price was calculated by reference to the rental income from the Centre. All of the contemporaneous documents indicated that the anticipated return to Syndicate investors was determined by reference to the rental income from the Centre. No document suggested that the purchase price was determined by reference to possible profits from a potential redevelopment. Indeed, as would be expected, no calculations had been made in relation to a potential future development. There was no examination of what redevelopment costs would be or of what proceeds of sale might be expected. 10. It is difficult to see what it is in the evidence which Mr McNaughton gave, extracted at J[265], which troubled the trial judge. There is some ambiguity in the question: "You seriously suggest that you placed [no] reliance on this development potential when making that second expression of interest?" It could be interpreted as asking whether Mr McNaughton was suggesting that the development potential was of no interest; but, in context, the question was appropriately understood by Mr McNaughton as being directed to his formulation of the offer price, not whether the development potential was one of the factors that motivated Elanor to purchase the Centre. 11. The trial judge considered it important that an "entire page" in the Investment Overview document provided to the board on 8 September 2017 was "devoted to the medium-term development potential of the site": at J[94] and [256]. His Honour compared this to the income information contained in the Investment Overview in the following way at J[257]: [257] There is no reference in those documents to the forecast net operating income (fully leased) or net operating income (passing) figures as contained in the Information Memorandum [sent on 2 May 2017] or as updated in the financial documents provided to Mr McNaughton on 2 August 2017. What was considered as important by Mr McNaughton and Mr Baliva to convey to the board in relation to the calculation of the purchase price of $55.25 million, is that it was based on a yield of 7.7% when fully leased or 7% passing. On those figures, one derives a passing net rental income of $3,867,500, which is less than the figure of $3,907,170, which Mr McNaughton took from the updated financial information. Nor is there any reference in the material provided to the board as to the income payable by individual tenants, more particularly the Food Court Tenants. In combination, the relatively detailed focus on the potential redevelopment of the site, when compared with the absence of attention to the estimated passing net rental income and the absence of any reference to risk that any tenancy may default, is consistent with the fact that the individual arrears position of any of the Food Court Tenants was simply not taken into account as a material factor in the overall assessment at the time. 1. There is no way to read the Investment Overview otherwise than as calculating the returns from the proposed investment on the basis of rental income to be derived from the Centre over 3 years. It is not to the point that future development opportunities were explained in an "entire page" and that this was thought to be longer or more detailed than the explanation of the calculations used to determine the returns to investors. The fact is that the Investment Overview as a whole is self-evidently directed to the likely returns from investment income derived from the rents in the Centre over a three-year investment horizon. If it be relevant, it is far from clear that less than one page of the document is devoted to calculation of investment returns. The Investment Overview was, in these respects, consistent with the Information Memorandum dated 28 September 2017. 2. As to the lack of reference to the individual arrears positions of any of the Food Court Tenants, this has been addressed above. The material which Mr McNaughton had seen led him to believe that there was no serious "arrears position" to raise and Mr Hamilton had not been told otherwise when he directly asked questions to elicit such information. The fact that the "individual arrears position of any of the Food Court Tenants was … not taken into account as a material factor in the overall assessment" was the very point of the case Elanor brought. If it had not been misled, the position of the Food Court Tenants would have been taken into account. 3. It follows that the trial judge's analysis in relation to 'reliance' is affected by error. Did Elanor suffer loss because of the conduct? 1. The question whether Elanor suffered damage because of the impugned conduct requires an analysis of what Elanor did because of the conduct and what would probably have occurred absent the impugned conduct. This involves a consideration of all of the circumstances as established by the evidence and the drawing of inferences from the objective facts. As mentioned earlier, the weight to be attributed to direct evidence as to what a person would have done in hypothetical circumstances depends on the context and the nature of the evidence. 2. There was no issue that the state of arrears, and the existence or not of a history of arrears, was a centrally important consideration to the decision to purchase and to the amount to offer. That was evidenced by the terms of Mr Hamilton's engagement and his questions of Mr Frenil Shah. It was acknowledged by Mr Frenil Shah in cross-examination and accords with the fact that it was the rental income which supplied the return on investment. Further, the existence of vacancies was objectively of central importance as was established by the fact that the Heads of Agreement entered into on 18 August 2017 provided for Alceon to grant a rental income guarantee equivalent to two years' gross market rent for any tenancies which were not subject to a lease at the date of settlement, as per the financials provided as at 1 December 2017 – see [38] above. 3. If the impugned conduct had not occurred it is objectively likely that Mr McNaughton would have known that various Food Court Tenants had a history of arrears, some longer than others. It is likely that he would have further investigated the position of each of the Food Court Tenants given the history of arrears. He knew that many had only recently commenced trading and this would have been taken into account in his assessment. Indeed, if the conduct had not occurred, it is likely that Mr McNaughton, either directly or through Mr Hamilton, would have made inquiries which would have resulted in the Discovered Arrears Reports (which then existed) being disclosed or other material coming to light which indicated that there were arrears issues with the Food Court Tenants. Whether or not the Discovered Arrears Reports were in all respects accurate is not to the point in this respect, although it is apparent that Savills and CPRAM considered that those reports were generally accurate because they conducted their business operations on the basis of them, including seeking unpaid rent. The point is that, whether accurate in all respects or not, the arrears position as disclosed in Savills' Tenant Arrears Reports would have raised a concern and resulted in further investigation. 4. Mr Hamilton accepted that it is difficult to determine whether a tenant was at risk of falling into arrears from one or two months trading and that it may take up to a year to make a judgment on that question. Also, the trial judge recorded that Mr Hamilton "noted as a threat to the trading performance of the new external restaurant precinct, that it was unproven and that it remained to be seen if it would provide 'the hoped for increase in sales and customer traffic'": J[221]. 5. Two matters should be noted about this. First, the "external restaurant precinct" comprised Mumbai Blues, Thai Me Down and Redcliffe Noodle Kitchen only. 6. Secondly, on the basis of his investigations – which did not include knowledge of the actual arrears history of the various Food Court Tenants – Mr Hamilton's assessment was that there would only be five vacancies as at 1 December 2017. These were the five existing vacancies. It follows that Mr Hamilton did not consider the Food Court Tenants to be "at risk" in the sense of being prudently treated as vacant tenancies. The natural inference to be drawn from the established facts is that, if Mr Hamilton had known the true position, his assessment is likely to have been different, notwithstanding that, as a general proposition, it is difficult to project how a tenant might fare after only a few months trading. The length of time for which a tenant is in arrears is obviously relevant. However, it is not a good sign if a tenant who has only recently commenced is unable to meet its obligations on time. The number of Food Court Tenants which had arrears issues, even taking into account the short time most of them had traded, would have raised more serious concerns about the viability of the external restaurant precinct and concerns about the restaurant precincts in combination notwithstanding the short period of time for which many had traded. 7. If the misleading conduct had not occurred, in addition to coming to know about the full history of arrears before July 2017, it is likely that Mr McNaughton and Mr Hamilton would have come to know the level of arrears past July 2017. That is because Mr Frenil Shah would have answered the questions he was asked by Mr Hamilton on 30 August 2017 truthfully and that, in turn, is likely to have led Mr McNaughton and Mr Hamilton to make further inquiries and to continue to monitor the level of arrears – see: McNaughton 1 at [62] to [68]. 8. The objective facts included: 9. Elanor's offer price was calculated by reference to the likely rental income. 10. Elanor intended to, and did, purchase the Centre in its capacity as trustee of the Bluewater Square Syndicate, an unregistered managed investment scheme. 11. The rental income was used to establish the market value for bank valuation purposes which in turn was used to determine the level of borrowings: AB1905. 12. Elanor calculated the return to investors by reference to rental income over a three year term: AB1925. 13. Mr McNaughton gave direct evidence to the effect that he would have excluded the gross rent from "at risk" tenants in calculating the offer price and considered whether to add some back. He gave evidence as to what he would have done by reference to each tenant. Given his experience and the fact that the investment was to be marketed to wholesale clients and sophisticated investors, it is inherently unlikely that Mr McNaughton would have been prepared to put to one side serious concerns about the reliability of the income stream, and consequently put forward a purchase price recommendation which he considered to be incorrect or open to serious doubt. 14. Mr McNaughton's evidence in his first affidavit included: [55] In preparing the report with Michael Baliva to go to the Board in respect of purchasing the Property, it was very important to me to ascertain what tenants in the Centre were 'at risk' tenants. An 'at risk' tenant is a tenant I deemed at risk of abandoning their lease. If I deemed a tenant to be 'at risk', then I ruled them out of the Passing Income for the Centre and classified that tenancy as vacant. I did this because Elanor does not receive income from a lost tenancy, so I consider such tenancies to be lost. Even after a tenant is replaced (which could take a significant period of time), Elanor loses further income during the period incentives are in place for the new tenant and has to contribute to their fit out. I considered 'at risk' tenants to be those having difficulty paying rent or other charges and fees, having current or historical arrears or who may fall into arrears in the future. 1. Mr McNaughton further explained the concept of an "at risk" tenant in his first affidavit – see: McNaughton 1 at [62] to [70]. It is clear that it is a matter of degree, but – for example – Mr McNaughton would have been concerned by tenants paying late (noting the rent was due on the first of each month), particularly if that occurred repeatedly: at [62]. He would have been concerned if tenants were in arrears past 30 days on multiple occasions: at [63]. Payments of "bulk or rounded" amounts, being amounts of two or more months, would cause concern because they would indicate to Mr McNaughton an inability to pay rent as and when it fell due and might suggest that there had been a cash injection such as a loan: at [64]. 2. Mr McNaughton further explained the removal of "at risk" tenants from his consideration of an appropriate offer price in the following way: [56] Taking 'at risk' tenancies out of the Passing Income has two consequences. Firstly, the purchase price I calculate to achieve the 7% yield will change. A lower Passing Income will mean a lower purchase price. [57] Secondly, if a significant number of tenants are 'vacant tenants', I would view the Centre as riskier overall. A significant number of vacant tenants may indicate the Centre had too many tenancies to fill. This may be because of the population base surrounding the shopping centre is low or there are various competitors close by. I would also consider that a portion of these tenancies may never be filled and are 'permanent vacancies'. [58] Further, with significant vacancies, the tenancy mix may not be right. The vacancies may relate to those tenants who did not fit into the Centre. If so, the tenancy mix would need to change. [59] When considering a change in tenancy mix (and its impact on the purchase price) I take a cautionary approach. I would consider the lowest possible rate of return for Elanor. When there are significant vacant tenancies in a similar area, I would consider changing the lettable space's purpose entirely. For example, the vacant tenancy could be consolidated with others to become a larger tenant, for example a cinema, day care centre, or sporting/games tenant. If that occurred, significant expenditure is required to structurally change the Centre and the space would remain vacant for a longer period while those works were undertaken. [60] Either of the above scenarios (permanent vacancies or structural change to create a new usage) would create longer term vacant space in the Centre. Significant vacant space in the Centre also creates the higher risk that other tenancies vacate. It is likely to concern existing tenants in the Centre. It is also harder to attract new tenancies when there are a large number of vacancies. [61] All the above factors impact the rate of return sought by Elanor. They increase the risk of a lower yield from the Centre for what I consider a significant period. The investment yield sought by Elanor rises as the risk inherent in purchasing the Centre rises. 1. As noted earlier, Elanor conceded that Kebab Express, Thai Me Down and Mass Nutrition would not have been treated by Mr McNaughton as "at risk" or excluded from his determination of an appropriate offer price. In light of that concession and the conclusions identified earlier in relation to the history and state of arrears, it is likely that Mr McNaughton would have excluded the remaining six Food Court Tenants from his calculation of the appropriate offer price. He may have added some back if he considered that the resulting vacancy could be relet. Mr Hamilton's due diligence flagged six tenants as being to some degree "at risk", one of which was Suhi Kuni: McNaughton 1 at [71]. None of the other Food Court Tenants were mentioned. Generally, the reason for Mr Hamilton's conclusion that the six were to some degree at risk was the occupancy cost ratio. Whilst Mr McNaughton did not consider that six such tenancies was "material to the decision to proceed with the investment", if the number had been higher (for example, by the addition of another six Food Court Tenants) that would have had an impact on his consideration of the price and consideration would have been given whether to proceed with the investment: at [72]. 2. Given the history of arrears and the number of Food Court Tenants involved, it would have been unreasonable to assume that this income as a whole was a secure line of income. The arrears position of the Food Court Tenants was objectively suggestive of a problem with the restaurant precincts. This is so notwithstanding that the trading history was relatively brief for all of the Food Court Tenants apart from Bel Cibo and Sushi Kuni. Excluding one or more of the Food Court Tenants from the calculation of the appropriate offer price would necessarily have resulted in an offer less than $55.25 million. The accepted position of the parties was that, in that eventuality, no transaction would have eventuated. 3. At this point, it is convenient to address two contentions put by the respondents. Ground 2 of the respondents' notices of contention 1. By Ground 2 of the respondents' notices of contention, Alceon and CPRAM contend that Elanor failed to establish that it relied on the pleaded misleading or deceptive conduct because Elanor's evidence on reliance "proceeded on the basis that Kebab Express, Thai Me Down and Mass Nutrition were 'at risk' tenants". 2. It is true that Elanor contended that all nine Food Court Tenants were "at risk". However, Mr McNaughton's evidence dealt individually with each of the Food Court Tenants – see: McNaughton 1 at [223] to [237]. It is also true that, having dealt with each individually, Mr McNaughton gave evidence as to what he would have done if had excluded all nine: McNaughton 1 at [238] to [246]. This direct evidence is of some weight in assessing what Mr McNaughton would have done, including as to what he would have done if the number was less than nine. It was not necessary to address by direct evidence every possible permutation of what Mr McNaughton would have done in the event one or more of the nine Food Court Tenants was ultimately found not to have been "at risk". 3. The task for the court is to assess, by reference to all of the evidence including Mr McNaughton's direct evidence, what Mr McNaughton would have done. It should be inferred from the objective circumstances, and the direct evidence which Mr McNaughton gave, that he would have treated the six Food Court Tenants identified earlier as "at risk". 4. Ground 2 of the notices of contention should be dismissed. Ground 3 of the respondents' notices of contention 1. Ground 3 of the respondents' notices of contention is that Elanor failed to prove misleading conduct because, on the trial judge's finding at J[260] that Mr McNaughton would still have recommended the purchase to the board if he had known that the three Food Court Tenants found by the trial judge to have been in arrears as at 31 July 2017 were in arrears, there was no member of the board called to say that the board would not have approved the purchase. 2. This issue does not arise because Mr McNaughton would have treated six of the Food Court Tenants as being in arrears and this would have resulted in an offer which Alceon would not have accepted if it were put. It is unlikely that Mr McNaughton would have put a recommendation to the board to purchase the Centre. 3. Ground 3 of the noticed of contention should be dismissed. Conclusion 1. Assuming that the real value of the Centre was less than what Elanor paid, Elanor has established that it sustained damage because of the respondents' conduct. THE EXPERT VALUATION EVIDENCE Introduction 1. As noted, the case was ultimately conducted on the basis that Elanor's loss was the difference between what was paid and the real or true value of the Centre as at 1 November 2017. The phrase "true value" and "real value" was used by Dixon J in Potts v Miller [1940] HCA 43; 64 CLR 282 at 299; see also Gould v Vaggelas [1985] HCA 75; 157 CLR 215 at 255 (Brennan J). The phrases are interchangeable – see, for example: HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd [2004] HCA 54; 217 CLR 640 at [36]. The "real value" concept is used to distinguish the value being spoken about from the "market value" of the asset. 2. Expert opinion evidence was given by Mr Kwan for Elanor and Mr Goran for Alceon in relation to the market value of the Centre. 3. As mentioned, Mr Kwan was a partner and Head of Valuation and Advisory at KFVAQ. He commenced his career as an assistant valuer in Brisbane in 1993: AB126. His unchallenged evidence was that he performed "approximately over 100 … retail centre valuations in Queensland each year" and that he had been preparing such valuations for over 25 years: Kwan 2 at [6]. Mr Kwan was not an independent expert witness in the sense that phrase is usually employed in the litigation context, because he had assisted Elanor in relation to the valuation of the Centre when Elanor purchased the property. He gave a valuation in 2017. He had also been retained by Elanor before providing that valuation: AB1519. 4. Mr Goran was a senior valuer at Field & Kaye: Goran at [1]. He was first registered as a valuer in Queensland on 9 June 2023, shortly before the hearing of the trial: AB3668.27. His evidence was to the effect that he had nevertheless valued properties in Queensland giving as examples a KFC, several centres in Cairns, a cinema in Mackay and various other commercial properties: AB3669.38 – 42. Mr Goran was an independent expert witness. 5. Mr Kwan's report was based on an assumption that nine of the Food Court Tenant lots were vacant: AB118. On that basis, he considered the market value of the Centre to be $49 million. At trial, the applicant submitted allowance should be made for the rental guarantee of $650,000 such that its loss was $5.6 million ($55.25m - $49m – $650,000): AB121 at [216]. 6. Mr Goran did not assume that any of the Food Court Tenant lots were vacant. On that basis, he considered that the market value of the Centre was $58.7 million: AB306. This was based on an amount of $57 million determined by reference to discounted cash flows and an additional amount of $1.7 million "which reflects the additional development potential": AB335; J[318]. 7. In other words, Mr Goran considered that the market value of the Centre exceeded the price in fact paid by arm's length parties by about $3.45m. It was not suggested – either by Alceon or Mr Goran – that Alceon had some important misunderstanding when entering into the transaction, or that the sale was in some way forced, or that there was any other circumstance which might explain a sale at a significant undervalue. Obviously, Alceon had full information. 8. Despite Mr Goran's somewhat surprising conclusion, the trial judge preferred Mr Goran's views. The trial judge accepted "each aspect of the opinions and evidence of Mr Goran on the market value question, before any allowance for redevelopment potential": J[357]. His Honour also appears to have accepted that an amount of $1.7 million should be added to the $57 million. 9. Apart from an acceptance of Mr Goran's valuation, no reason was given by the trial judge for the implicit conclusion that a sophisticated vendor, aggressively pursuing its interests in an arm's length transaction, sold its shopping centre $3.45 million below its market value. 10. The only information deficiency was on the part of Elanor. On the basis of that information deficiency, Alceon secured a sale at $55.25 million in a competitive market process. In the absence of explanation on the part of the vendor, and uninstructed by expert evidence but instructed by logic, it was likely that the market value was, if anything, less than $55.25 million if the true position – that there were in fact a number of "at risk" tenancies – were known to the purchaser. 11. As explained below, the trial judge's assessment of damage involved error. None of the parties were keen for the issue of damage to be remitted and the question can be fairly addressed on appeal. Independence, expertise and credibility 1. The trial judge extensively examined the dealings between Mr McNaughton and Mr Kwan in his reasons: J[73] – [74]; [85]; [89] – [91]; and [274] – [314]. His Honour ultimately concluded that "Mr Kwan did not act as one would expect an independent expert witness to act in the preparation of a valuation opinion for the purposes of this proceeding" and that "[r]ather than acting truly independently, Mr Kwan was an active participant in assisting Elanor by provision of, what was to Elanor, an acceptable valuation figure – one that was considerably less than the purchase price that it had paid for the Centre": J[303]. 2. His Honour accepted that it was Mr Kwan's honestly held view that, in his role as an expert in the proceedings, he was impartial and acted impartially: J[305] and [306]. However, his Honour did not accept that he was "a truly independent and impartial witness in this proceeding", stating: [306] … The effect of his prior involvement with Elanor, his provision of draft opinions to Mr McNaughton prior to his engagement as an independent valuer for the Bank of Queensland and the subsequent provision of the revised opinion for Mr McNaughton, in anticipation of this proceeding, corrodes his independence and impartiality. 1. The trial judge stated at J[307]: [307] There are two further relevant matters. Mr Kwan signed a response affidavit on 21 June 2023, specifically to address Mr Goran's valuation. In it he contrasted his valuation experience in Queensland, with that of Mr Goran. He said: "I am very familiar with persons who also perform valuations in retail centres. In the course of my time performing such valuations, I have never encountered [Mr Goran's firm] previously providing valuation evidence of retail centres. I have not heard of [the firm] prior to reviewing the… report." When questioned about this evidence it was put to him that his intent was to "belittle or denigrate" Mr Goran's firm, to which Mr Kwan responded: "the other side would be doing the same to me." Unsurprisingly, Mr Kwan's attention was then directed to that part of the Expert Witness Code of Conduct which provides that an expert witness is not an advocate for a party. Mr Kwan denied that he was attempting to belittle the character of Mr Goran's firm, but nonetheless accepted that he was hardly paying a compliment to the firm. That statement in my view was unnecessary, was not a matter for Mr Kwan to include as part of his reply evidence and is a further basis for questioning his independence. 1. The trial judge at J[307] was referring to paragraph 6 of Mr Kwan's second affidavit. This was in the following terms: [6] I perform approximately over 100 of retail centre valuations in Queensland each year. I have been preparing such valuations for over 25 years. I refer to my curriculum vitae attached to my Affidavit of 22 December 2022 setting out my experience as a valuer. By reason of my experience, I am very familiar with persons who also perform valuations in retail centres. In the course of my time performing such valuations, I have never encountered FK previously providing valuation evidence of retail centres. I have not heard of FK prior to reviewing the FK Report. 1. He was taken to the final two sentences in cross-examination. The first questions he was asked and the answers given were: Who drafted this paragraph?---The lawyers. So you didn't draft this paragraph?---We had a teleconference to draft the affidavit. 1. Mr Kwan was asked some questions about who he discussed the paragraph with and the cross-examination continued (AB3623.45 – 3625.41): Now, coming back to paragraph 6, the last two sentences: I've never encountered FK previously providing valuation evidence of retail centres. I have not heard of FK prior to reviewing the FK report. You see that?---Yes. Now, you were trying in those sentences to assist Elanor's cause in these proceedings, weren't you?---No. I was asked a question by the lawyers for this affidavit of whether I had heard of F&K, and my answer was, "No." Yes. But you understood, didn't you, that the effect of these two sentences is to try to belittle or denigrate FK; isn't that right?---The other side would be doing the same to me. But - - - No?---Yes. No, Mr Kwan?---Yes. You accept that?---I accept that. Yes. All right. Those sentences have nothing to do whatsoever, do they, with the proper value of this shopping centre for the court to determine?---They were – that statement was made after review of their valuation report for the centre. I will go back, if I may, to page 196. This is back to the court – the expert code of conduct; you with me?---Yes. It says, "An expert witness" – at paragraph 2: An expert witness is not an advocate for a party and has a paramount duty overriding any duty to the parties to the proceedings or other person retaining expert witness. Do you see that?---Yes. …to assist the court in ..... matters relevant to the area of expertise of the witness. Do you see that?---Yes. You see it?---Yes. What part of the two sentences to which I took you in paragraph 6 of your second affidavit fall within that duty?---What part? Could you just say that again. Do you want to see the paragraph again?---The – where – the F&K statements? Yes?---Yes. I know – I know that statement. That's just a statement of fact. I've never heard of F&K. But in terms of my duty - - - I'm sorry. I will pause you there. You said you've never heard of F&K?---No. So you don't know any – well, do you know anything – did you know anything about them at the time at which you swore your affidavit?---No. Yet you were prepared to make the observation that you did with a view to trying to belittle the character of F&K in front of the court; is that right?---I don't think I was belittling them. No. It was hardly a compliment, was it?---No. And it had nothing to do, I suggest to you, with assisting the court in attempting to value this property; isn't that right?---My statement about F&K has nothing to do with my valuation of opinion on the Bluewater ..... valuation. No. Yes. So if one goes back to the – paragraph 2 of the code of conduct, you accept that you have failed to comply with your paramount duty as described in that paragraph with what you said about F&K in paragraph 6 of your second affidavit?---No. I just said I've never heard of F&K, and I'm not – I'm not aware that they've done any retail valuations of retail centres in Queensland. Nonetheless, you saw fit to make the observations you did in paragraph 6 with a view to, I suggest, denigrating them in front of the court; isn't that right?---Well, I was provided with a valuation report they had prepared on the centre, and that was just a statement of fact. Well, you didn't descend into, in paragraph 6, anything to do with the contents of the report, did you?---That came afterwards, didn't it? Yes. It was a gratuitous swipe F & K, wasn't it?---No. It was – I was - - - You were trying to advocate for Elanor, weren't you?---No, it was – I was asked the question and I answered it. You understood, didn't you, Mr Kwan, that your answer to that question was anything but impartial; you agree?---No, it was a statement of fact. Included for a nefarious purpose, wasn't it?---I don't understand that word, but - - - 1. The trial judge's view was that the statement made by Mr Kwan (presumably a reference to the last two sentences of paragraph 6 of his second affidavit) was "unnecessary" and "was not a matter for Mr Kwan to include as part of his reply evidence". In his Honour's view, this supplied "a further basis for questioning his independence". This reasoning is not sound. 2. Mr Kwan was asked a question by Elanor's lawyers about whether he had encountered F&K before and he answered "no". Elanor's lawyers drafted paragraph 6 on the basis of the answer those lawyers had been given. 3. It is wrong, and contrary to practical reality, to approach the matter as if it were a matter only for Mr Kwan to decide what did and what did not ultimately form a part of his evidence. The consideration of what to address in reply evidence proceeds from an identification of the legal and factual issues, a task generally undertaken predominantly by the legal advisers. The question of what was relevant to the issues in the proceedings was not so much for Mr Kwan as it was for Elanor's advisers. Evidently, Elanor's advisers considered that Mr Goran's experience in the Queensland market was relevant. The position adopted by Elanor's advisers in this respect was entirely rational. Mr Kwan's evidence in this respect was relevant and potentially important. It was in this context that Mr Kwan's reply evidence was given. 4. It was Mr Kwan's experience that a vacancy allowance is always applied to multi-tenanted assets to account for inevitable vacancy periods in Queensland: Kwan 2 at [32] – [35], [68], [69]. Such an allowance had been applied in his 2017 valuation. Mr Goran's position was that a vacancy allowance should not be applied. His experience in the Queensland market was relevant to an assessment of the competing opinions on this issue. 5. Further, the trial judge noted at J[325] that "Mr Goran opines that if a vacancy allowance is applied, then it should also be applied to the analysis of the comparable sales evidence, which is problematic because the financial figures of a shopping centre are not readily available". The "financial figures" were, on the other hand, available to Mr Kwan. The respective experience of a valuer in the particular market, and with respect to the particular assets (shopping centres), is obviously capable of affecting the assessment of the reliability of the resulting opinions because one valuer might (and in this case did) have more experience than the other in the relevant market and in relation to the relevant assets. Apart from the obvious better understanding of relevant local market forces, a valuer inevitably accumulates the financial and other data on which local valuations are based, large parts of which are unlikely to be available to those who have not conducted (or otherwise seen) the valuations. Amongst other things, this facilitates better assessment of relevant comparable transactions. 6. There was no sound basis to conclude that it "was not a matter for Mr Kwan to include [the evidence about Mr Goran's experience] as part of his reply evidence". 7. The trial judge was also unimpressed with Mr Kwan posing a question to Mr Goran, when joint expert evidence was being given during the trial, as to how he could practise in Queensland if he was not registered in Queensland. The trial judge stated at J[308]: [308] The other matter concerns evidence that he gave as part of the joint expert evidence session. Mr Goran did not become a registered valuer in Queensland (he was first registered in NSW) until 9 June 2023. After that was put to Mr Goran by Mr Fernon, Mr Kwan put a question to Mr Goran, which he framed as not being personal but: "how do you practice as a valuer if you're not registered up here?" Mr Goran gave the answer that he has practised in most States and Territories in Australia and has undertaken work in Queensland for clients based interstate. Mr Henry, in later questions took this up with Mr Kwan. He put to him that the question was indeed personal, to which Mr Kwan answered that it was simply "a question of curiosity". Very direct questions were then put to Mr Kwan that his curiosity demonstrated his role as an advocate for Elanor. Despite Mr Kwan's denial, that is the inference that I draw. Mr Kwan well knew of Mr Goran's qualifications by reason of the fact that they are attached to his CV which forms a component of his expert valuation report. He was perfectly content to engage with Mr Goran at the joint expert conclave and then to prepare and countersign the joint expert report. It is not a matter for Mr Kwan as to whether Mr Goran was or was not registered in Queensland as a valuer as unquestionably, he is a qualified and very experienced one. 1. A part of the context in which Mr Kwan said what he did was the difference in experience between the two experts in the Queensland market. The question Mr Kwan asked was relevant. It was open to conclude that the raising of the question tended towards advocating rather than giving impartial evidence. However, it should be recognised that the evidence was given in the cut and thrust of litigation, more specifically in giving concurrent evidence where one expert might seek to convey why he considers his opinion to be preferable to the opinion of the other. This was the first time Mr Kwan had given evidence in Court. Ultimately, it is a careful examination of the facts, the reasoning underlying the opinions, and the rationality of the views expressed, which is the surer guide to the correct outcome than the manner in which one particular piece of evidence is given or the fact that a witness temporarily lost his cool or slipped into a transient moment of what could be seen as advocacy. 2. In contrasting the comparative independence of Mr Kwan and Mr Goran at J[313] and [314], the trial judge stated that there was "no question of lack of expertise or independence" in relation to Mr Goran. There was certainly no suggestion of lack of independence. Nor, at the level of the admissibility of the evidence, or general expertise in relation to valuing, was there any suggestion of lack of expertise. However, there was a material difference in expertise in the geographical market and in the valuation of the particular type of asset, the importance of which should not be underestimated given the access to confidential financial and other information that is inevitably gained the more one values particular assets and the more one operates in a particular market. 3. When addressing how he should approach Mr Kwan's evidence, his Honour stated at J[311]: [311] … As I have said, Mr Kwan is a well-qualified, experienced, and professional valuer. I do not doubt that he honestly approached the various tasks that he was entrusted with first by Elanor, and then by Elanor's solicitor. He participated in the joint expert conclave with Mr Goran and produced the joint expert report, which I find to be a most useful distillation of the issues and well-reasoned account of the differences between the valuers. In that report, there are many matters of agreement that are recorded including the valuation methodology, the gross market rental income, the adjusted net income and, importantly, the capitalisation rate. In carefully observing Mr Kwan's evidence, I detected no evasiveness – in fact he answered questions in a straightforward manner, and repeatedly made admissions as to the extent to which he took into account Mr McNaughton's views. 1. His Honour concluded that he would "exercise caution before accepting the evidence of Mr Kwan where it differs from Mr Goran": J[313]. In the result, where they differed, the trial judge preferred Mr Goran's evidence on each occasion. 2. Ground 5 of the appeal includes that the trial judge erred in "inter alia": (a) finding (at J[292]-J[294]) in finding that Mr Kwan's was influenced by Mr McNaughton in his analysis of value of the Centre; (b) in not accepting or otherwise giving weight to Mr Kwan's evidence of value by reason of his prior dealings with Mr McNaughton in respect of the Centre; (c) finding that Mr Kwan's independence as an expert was detracted by his prior dealings with Mr McNaughton in respect of the Centre; (d) finding (at J[302]) that Mr Kwan did not act as one would expect an independent expert witness to act in the preparation of his valuation opinion; (e) finding (at J[309]-J[313]) that Mr Kwan was not a truly independent, arm's length expert which significantly affected the weight that should be given to his evidence … 1. As mentioned, it is the facts and the reasoning and rationality of the opinions expressed which is the surest guide to the correct outcome. No doubt where an opinion on a particular matter rests on unexaminable matters of experience, then competing views might have to be resolved by reference to credibility or lack of independence. However, even then, it would generally be appropriate to take into account the relative experience of the competing experts in connection with the particular matter about which the opinion is expressed if there are rational reasons to infer that such experience is likely to translate into a more reliable opinion. 2. It is not generally appropriate to resolve a difference between experts by reference to a generalised cautionary approach based on lack of independence, as opposed to assessing the persuasiveness of the opinions in light of the facts and the reasoning upon which the opinion is based. 3. The trial judge was correct to conclude that Mr Kwan was not independent and that his previous involvement and the manner in which he undertook his task may have influenced his opinions. It was, of course, never in dispute that Mr Kwan could not be an independent expert witness (in the sense that expression is used in litigation) given his earlier involvement with Elanor, including in valuing the Centre for the purposes of Elanor's purchase. He was nevertheless instructed, in substance, to undertake the role of independent witness owing his paramount duty to the Court. As the trial judge noted at J[285], the letter of instruction to Mr Kwan "concludes with an emphasis that 'your ultimate duty is to the Court to provide an independent report based on your experience'". The trial judge also rightly observed that no personal criticism should be levelled at Mr Kwan for undertaking the task he was asked to undertake: J[310]. 4. This Court is in as good a position as the trial judge to take Mr Kwan's lack of independence into account in assessing his evidence. 5. As is noted at [417] below, the trial judge implicitly made an adverse credibility finding concerning Mr Kwan. For the reasons given below, this finding ought not to have been made. The main differences between the experts 1. Mr Kwan and Mr Goran participated in a joint expert conclave before a Registrar of the Court on 28 June 2023 and produced a joint expert report dated 28 June 2023: J[315]. They agreed that a "capitalisation methodology" was appropriate. They agreed that the appropriate capitalisation rate was 7.25%. The joint report was prepared by reference to Kwan's and Mr Goran's earlier reports. Provision for capital expenditure 1. As noted in the joint expert report, if it were hypothesised that nine shops in the food precinct were vacant or "at risk", then it "would be appropriate to either allow for make-good of vacated premises or any Lessors Works to reconfigure premises": AB500 at [8]. The experts agreed that "[b]oth are time consuming and expensive undertakings and that some new start-up tenants to the centre may require financial support from the Landlord". Mr Kwan made an allowance of $750,000 for capital expenditure in this respect. 2. Mr Kwan's position was stated in the joint expert report in the following way: A mutual understanding was reached in why KFAVQ provisioned $750,000 of Capital Expenditure (including $250,000 Stabilisation Allowance) in its modelling. It was largely explained that were Bluewater be acknowledged to have a further 9 vacant shops then a capital provision would be appropriate to either allow for make-good of vacated premises or any Lessors Works to reconfigure premises etc. Both are time consuming and expensive undertakings and that some new start-up tenants to the centre may require financial support from the Landlord . 1. Mr Goran's position was stated in the joint expert report in the following way: F&K whilst agreeing that there would be capital expenditure required to make good the vacant tenancies however, there are no documents to support $750,000 as being the amount of capital expenditure at the date of valuation. Of note there are bank guarantees and / or bonds in place to subsidise any capital required to make good these areas. 1. The trial judge considered that an adjustment should not be made for the following reasons: [321] It will be recalled that Mr Kwan increased the allowance for capital expenditure from nil to $750,000, following receipt of the email from Mr McNaughton on 15 September 2017. In evidence I asked Mr Kwan how he derived his figure. He said that it was a discretionary sum, explaining that a lot of buyers will consider future capital expenditure by way of deduction from a purchase price. When asked to explain why the figure was $750,000, and not $740,000 or even $700,000, Mr Kwan confirmed that he did not have any calculations to support his figure. Later, when pressed by Mr Henry to explain the basis for his figure, he denied that it was a guess, insisted that it was an opinion and when ultimately answering the question: "you made it up, didn't you?" Simply answered: "well, it's my opinion, yes". [322] This adjustment is a substantial below the line deduction. Mr Kwan provides no evidence as to how he derived the figure, which is not only a matter which goes to the reliability of his evidence. It is a figure that is built upon Mr McNaughton's suggested allowance. In contrast, Mr Goran's evidence is logical and supported by cl 9.2 of the standard form leases, which permits the landlord to apply the bank guarantee "against any obligation or liability of the tenant." Making good a tenancy following breach by a tenant in order to relet, is an expenditure of that character. [323] For the reasons that I have given in my assessment of independence, I do not accept this component of Mr Kwan's evidence and I accept the evidence of Mr Goran if an allowance of this type is to be made, there should at least be a principled and explained basis for it. I also reject Mr Kwan's evidence because the basis for the estimate was not explained. 1. As to whether Mr Kwan explained "how he derived his figure" of $750,000, the following should be noted. First, on three occasions, Mr Kwan explained that the capital allowance of $750,000 included a "stabilisation provision" of $250,000. He explained this in his second affidavit where he stated: [29] If there were 9 additional vacancies in Bluewater than what was already vacant in the Bluewater as at the time of the 2017 Valuation, that additional space would have to be leased. The configuration of some of those tenancies may have been tailored to those specific tenants. However, this specific configuration may not suit all other prospective tenants and therefore capital (in the form of capital expenditure) would have to be expended to re-configure any such customised premises. This process involves a lot of work such as knocking down walls, and re-routing the plumbing and electricity and other services. [30] It is also reasonable to conclude that, should the tenants occupying the imminent vacant space continue to fall deeper into rental arrears and not meet their rental obligations, then it would take the landlord both time, expense and management resources to either work with the tenant to improve their trading (much like an administrator would) or 'lock the tenant out' and then deal with the matter legally. This latter course of action would inevitably involve more capital expenses including, but not limited to, making good the premises, the potential need to reconfigure some originally custom designed tenancies and the need to undertake further lessor's works to enable the vacant premises to be re-let. [31] Within the amount I allowed for capital expenditure in the 2022 Report, I included a stabilisation provision in the amount of $250,000. This is a contingency amount Landlords could provide assistance to new tenants with, especially those who are starting up in a shopping centre and require financial assistance due to e.g. trading and cashflow issues. It can also take the form of rent concessions and or further rent free periods. This is the basis for my figure of $250,000 to account for stabilisation, which I consider is a conservative figure in the circumstances where this amount would only account for some of the 9 additional vacancies and not necessarily all of them. For the reasons set out above at 29, 30 and in this paragraph, I increased the capital expenditure amount by $500,000. 1. He explained it again in the joint expert report, in the passage extracted at [411] above. He explained it a third time when giving concurrent evidence at the hearing: AB3678.29 – 3679.2. He explained that: the "stabilisation allowance" related to rental concessions that would be needed to new incoming tenants; if there were fourteen vacancies, nine of which were in a particular precinct, then it would be expected that incentives would need to be given whilst the precinct and new tenants "trade up and stabilise their trade". Mr Kwan then turned to explaining the remaining $500,000 of capital expenditure. In essence, there were two reasons for his view that capital expenditure should be factored into the market value: 2. It was an allowance, which prudent and prospective buyers would factor into their pricing, which covered what would be required over a period of ten years to cover what one would anticipate needing to spend on various matters, including upgrading tiles, malls, air-conditioning, plant and equipment : AB3653.41 – 3654.3. He returned to the topic later, explaining that most buyers would consider it in their deliberations in relation to the purchase of complex retail assets to cover upgrading signage, upgrading toilets, tiles and addressing wear and tear. Mr Kwan observed that this was expenditure which the landlord could not recover from the tenant: "They are basically lessor's expenditure, and it's basically to acknowledge that retail centres are very capital and management intensive beasts": AB3679.4 – 20. 3. On the basis that one has "a handful of shops, all in a particular retail category, all notionally in trouble or not paying rent", then one would need either need to manage them to pay rent (presumably involving expenditure directed at improvements which might translate to an increase in trade for the precinct) or "get them out of their premises, in which case, [one] might be left with some capital obligations": AB3679.31 – 42. 4. It was inaccurate to describe, as the trial judge did at J[323], Mr Kwan's evidence as not being "principled" or "explained". Further, the observation at J[322] that "Mr Kwan provide[d] no evidence as to how he derived the figure" is not correct. 5. The trial judge stated that the fact that Mr Kwan "provide[d] no evidence as to how he derived the figure" was "not only a matter which goes to the reliability of his evidence". By this, his Honour evidently meant that he considered the lack of evidence went to Mr Kwan's credibility. This implicit adverse credibility finding is not soundly based. It appears to have affected the trial judge's assessment of Mr Kwan's evidence more generally. The adverse credibility finding is unsound for the following reasons. 6. First, Mr Kwan explained his reasoning adequately on three occasions. The reasons given by Mr Kwan were not referred to by the trial judge or apparently considered. 7. Secondly, there was no dispute between the experts that, as a matter of "principle", an allowance should be made for capital expenditure. 8. Thirdly, there was uncontroversial evidence that prospective purchasers acted in precisely the way identified by Mr Kwan in relation to the relevant asset. Earlier in his reasons, the trial judge accepted that Mr McNaughton in fact subtracted $500,000 from his recommended offer to purchase the Centre on account of his estimate of the expected future capital expenditure, based on 1% of the purchase price. Mr McNaughton's evidence in this respect was (McNaughton 1 at [28]): [28] From this number, I subtracted $500,000 to account for expected future capital expenditure, being approximately 1% of the purchase price. I always include such a deduction to calculate a purchase price so as to allow for future capital expenditure that is likely to be spent. This includes building works and potential contributions to tenant fitouts and lease incentives following lease expiries of sitting tenants in the future. 1. There was no suggestion that the amount calculated by Mr McNaughton was an amount derived with the assistance of a quantity surveyor or any other expert. The making of an estimate of the amount of capital expenditure which might be required for the diverse range of matters which might need to be addressed in the upkeep of a shopping centre was a matter plainly within the knowledge and experience of Mr McNaughton, just as it was within Mr Kwan's experience. 2. As mentioned, there was no dispute between the experts that capital expenditure should be taken into account. It was appropriate to take it into account for both of the reasons given by Mr Kwan – see: [415] above. Mr Kwan gave evidence that his view on the issue of capital expenditure would not particularly change if it was only five or six additional vacant tenancies rather than nine: AB3681.5. This is partly because the allowance was also for general expenditure. 3. To the extent the capital expenditure provision related to capital expenditure specific to the restaurant precincts, as a matter of commercial reality and contrary to the reasoning of the trial judge at J[322] and [323], it is unlikely that bank guarantees or security bonds would be available. The very premise of the need for this type of capital expenditure is that a number of tenants had failed. It is probable that the bank guarantees or security deposits would be substantially used, or exhausted, in satisfaction of outstanding rent obligations. It is more likely than not that, in such a situation, substantial capital expenditure would be required beyond what might be recovered under bank guarantees or security deposits, assuming in the respondents' favour that bank guarantees or security deposits can be accessed to make good vacated premises by reason of cl 9.2 of the relevant leases. 4. An assessment of what should be allowed for capital expenditure for the purposes of determining the market value of the Centre, was within the experience of Mr Kwan and a matter about which he could express an opinion. In addition to ordinary capital expenditure which might be required due to the aging of the Centre, the evidence supported the reasonable likelihood of capital expenditure being required for the restaurant precincts – see: McNaughton 1 at [58] and [59], referred to at [363] above. An amount of $500,000 should be allowed in the valuation calculation "below the line" for capital expenditure. Vacancy allowance 1. In the joint report, Mr Kwan explained that he (or KFVAQ) took the view that a vacancy allowance should be applied with respect to multi-tenant assets: AB500 at [9]; J[324]. Mr Kwan stated in the joint report: It is considered to accepted market norm by owners, prospective purchasers in their pricing and by most banks as acknowledgement of the risks of tenancy churn and or unforeseen tenant failures. … The non application of a vacancy allowance results in a very material difference of value. The vacancy allowance of 3.5% for non-major tenant income adopted by KFVAQ or $132,471 pa loosely equates to 1 larger shop or 2 smaller shops assumed as being permanently vacant. This amount translates to approximately [$1,827,186] of capital value. The actual vacancy rate of Bluewater at the time of sale with the 5 acknowledged vacant shops was 7.29%. The consideration of an additional 9 notionally vacant shops results in a vacancy rate of 22.61%. 1. Mr Goran (or F&K) stated in the joint report: F&K believe that vacancy allowances if used should then also be applied when analysing the sales evidence. The difficulty of applying a vacancy allowance to sales evidence is that the financials of a shopping centre comprising a tenancy, outgoings and outgoings recovery schedules is not readily available as they are usually of a confidential nature. It is therefore of F&K's opinion that as a vacancy allowance cannot in the majority of cases be applied to the sales evidence, then it should be disregarded in the financial model of the subject property. Vacancies within the building and/or imminent vacancies as at the date of the valuation are dealt with by deducting from the capitalised value a letting up allowance comprising a lead time to secure a new tenant, agents leasing fees and an incentive by way of a fit out or rent-free period. In F&K's opinion when a letting up allowance has been made within the financials of those vacant or imminent vacant tenancies, to also apply a vacancy allowance would be a case of "double dipping". 1. After summarising Mr Goran's position at J[325], the trial judge continued: [325] … On Mr Goran's calculations, his letting up allowance (assuming nine vacancies) is $386,800, calculated over a period of 18 months, plus agents' fees of $46,416 and a four month incentive of $171,911: in total a deduction of $605,127 which contrasts markedly with Mr Kwan's capitalised deduction of approximately $1.8 million. 1. When Mr Kwan had valued the Centre in 2017 for the Bank of Queensland, he had used a "vacancy allowance" of 3%. He explained in his second affidavit that, in his experience (in Queensland) a vacancy allowance should always be made in relation to a "multi-tenanted asset": Kwan 2 at [32]. This was "to account for inevitable vacancy periods of tenancies in shopping centres whether anticipated or not". He continued at [33] to [35]: [33] The only instance where I would not allow a vacancy factor in a valuation may be in circumstances where there is a single tenanted asset, such as a Bunnings or an Officeworks or a Hotel Tavern that are on long-term leases. [34] In a shopping centre, where there may be 30 or 40 tenants or more, there is always the potential for tenancy failure. In that case, every time a tenancy does fail, the landlord then requires time, effort, resources and expenses to relet those premises. In my experience, when a tenancy fails the tenants do not always have the funds to make good the premises and sometimes this cost is also placed onto the Landlord even if it is written into the lease that make-good is the responsibility of the tenant. When this occurs, the landlord is required to enter and clean out the premises, and present the empty store to a new tenant. Such a process takes time (letting up period), as it includes finding a new suitable tenant, conducting negotiations with that tenant, the drawing up of leases, the tenant fitting out the premises before occupying them and commencing trade. [35] This is the reasoning for applying a vacancy allowance. The calculation of the vacancy allowance is otherwise a discretionary contingency. It can be based on what the current occupancy of a centre is, or what the history of vacancy has been. I increased the vacancy allowance in paragraph 16(e) in the 2022 Report to 3.5% of non-major gross income, up from the 3% I had allowed for in the 2017 Valuation, because the 2022 Report was based on there being 9 additional vacancies at Bluewater. There were therefore more vacancies and additional amounts for vacancy allowance required. I do not consider the vacancy allowance I made in either the 2017 Valuation or the 2022 Report to be a generous amount. I consider that in reality, the allowance is not a significant amount and it may be used very quickly if multiple shops concurrently become vacant and physically leave the centre. 1. At [68], Mr Kwan stated: [68] [I]t is accepted valuation practice that a vacancy allowance of some degree be applied to the valuation of multi-tenanted assets to account for either tenancy churn and/ or any unforeseen tenancy failures which result in associated costs to then re-let vacant shops. This is still applied in circumstances even where there is a rental guarantee provided as the rental guarantee does not last in perpetuity … 1. The "vacancy allowance" is applied "above the line". This is because the Centre will always have unanticipated vacancies. The increase from 3% (in the 2017 valuation) to 3.5% (in the 2022 valuation) was made by reason of the assumption that, in addition to the five actual vacancies, there were an additional nine tenants "at risk". 2. In addition to a "vacancy allowance", Mr Kwan made various "below the line" adjustments to take into account expenditure which would be incurred on the hypothesis that there were nine vacancies in the restaurant precinct. This was referred to in the evidence as the "letting up allowance". Mr Kwan stated in his second affidavit that this expenditure was "additional to the vacancy allowance": Kwan 2 at [39]. As will be discussed below, the letting up allowance requires consideration (amongst other matters) of how long it is likely to take to fill the particular vacancies. 3. The "above the line" vacancy allowance and the "below the line" letting-up allowance were directed to different matters. Amongst the explanations given by Mr Kwan was the following evidence given during the concurrent evidence (AB3671.8 – 3671.16): [T]he vacancy allowance that we adopt or apply is in relation to the entire speciality tenants, both existing and/or vacant. And that applies a very general provision which acknowledges that the centre – or, a centre will not be fully leased perpetually. The letting-up deductions that we apply below the line are a little bit more specific. They relate to expiries over the – a coming period, whether it's 12 months or 24 months, sometimes it could be more. And that acknowledges that depending on the nature of the centre, how many vacancies you may have, the market conditions, that invariably even some of your existing tenancies, when they come up for lease expiry may choose to vacate. 1. As the trial judge observed at J[327], Mr Kwan accepted in cross-examination that there was, in part, an "overlap" involved in the "above the line" vacancy allowance and the "below the line" allowances made specifically for the additional nine "at risk" tenants. This is because the nine tenancies are necessarily included in the generalised vacancy allowance assessed by reference to all tenancies. The fact that there was some overlap was not a sound basis for excluding the "vacancy allowance" altogether. Any overlap would have been amply catered for by reducing the "vacancy allowance" to 3%, as it had been in the 2017 valuation. 2. Mr Kwan had greater experience in the relevant market with respect to the relevant type of assets. His evidence that a vacancy allowance was always applied for this type of asset was inherently plausible as was the underlying reasoning for why it was included. The trial judge's rejection of the vacancy allowance was explained at J[330], by reference to Mr Goran's evidence, as being "that one should not assume that vacancies at the Centre will occur in perpetuity and should in consequence be reflected by a capitalised discount before deriving the adjusted net annual or core income". However, this is precisely what the vacancy allowance represents: the likelihood that for the life of the Centre there will always be unanticipated vacancies which should be taken into account in the relevant cash flows. There was no persuasive reason given by Mr Goran or the trial judge as to why it was more likely than not that the Centre would always be fully tenanted. 3. It is appropriate to allow a 3% vacancy allowance "above the line". Reversion allowance 1. Mr Goran added an amount of $1,403,748 to his valuation, below the line, to as a "reversion allowance". This was an amount to reflect the prospective higher return from leases, when rent is reviewed and adjusted over a period of 11 months from the valuation date. 2. The trial judge explained at J[331]: [331] … Mr Goran added an amount of $1,403,748, the explanation for which is set out in detailed calculations in a schedule to his valuation report by reference to each tenancy, the current rent and the estimated future rent by application of the rental adjustment provisions in each lease. The total for all 49 tenancies is the reversion amount, calculated as the present value of these amounts. Mr Goran explained in the joint report that an allowance of this nature, in his more than 30 years of experience, "is an industry accepted method used for single and multi-tenanted properties for all asset classes". 1. Mr Kwan disagreed. As the trial judge recorded at J[332]: [332] Mr Kwan disagrees. In his view the likelihood of future rental reviews is implicitly reflected in the adopted capitalisation rate, and he is not aware in his experience of any prospective purchaser: "who would explicitly price future rent reviews in a shopping centre in this manner. Effectively, a purchaser would be paying for the property's future income in their current pricing and giving away 12 months rental income growth." 1. Mr Kwan accepted that the gross market rental income figure of $4,929,872 and is taken as at a fixed point in time and does not take account of increases in gross rent consequential upon rental reviews: J[333]. 2. The trial judge referred to aspects of the evidence given by Mr Kwan and Mr Goran at J[334] and [335]: [334] … Mr Henry … put to Mr Kwan a hypothetical as to whether he would ignore, for example, if Woolworths was due to have a rent increase "next week". Mr Kwan said that he would not ignore a rental increase of that character, because the buyer would be "likely to receive" that income at the time of settlement of the property. Mr Kwan was then questioned as to whether he would ignore likely rental increases for 10 tenancies due within a period of three months of the settlement date. Mr Kwan answered that he would "not necessarily" ignore that likely increase in income. [335] Mr Goran was then asked to comment on this evidence. In his opinion, likely rental increases are not properly reflected in the capitalisation rate, because a relatively small adjustment in the rate is "far too big a slice to take out" and the appropriate methodology is to include a reversion amount. He also explained that a reversion amount is "guaranteed rental" which cannot be ignored as a component of the overall transaction. 1. His Honour accepted the evidence of Mr Goran for the following reasons: [336] … He undertook comprehensive calculation of the reversion amount. The 11-month reversion selected is in my view reasonable and appropriate in this case in that there is contained in each lease an annual rental review clause. Even if one puts aside small specialist tenancies as falling within the "at risk" class, what cannot be ignored is that the major tenants were due for rental reviews, which is likely to have resulted in a material increase within a relatively short period of time, to the adjusted net annual income of the Centre. It is therefore appropriate to make that allowance. Mr Kwan did not make it. 1. It is not clear why the trial judge accepted the evidence of Mr Goran that rental increases are not properly reflected in the capitalisation rate, because a relatively small adjustment in the rate is "far too big a slice to take out". Mr Goran's evidence in this respect is not logical. The capitalisation rate is selected or deduced by reference to a myriad of considerations and it can be increased or decreased to whatever extent considered appropriate. No reason was given for discounting Mr Kwan's experience in the Queensland market in respect of the relevant class of assets. Leaving aside the trial judge's implicit adverse credibility finding, there was no obvious reason not to accept Mr Kwan's greater experience that a "below the line" reversion allowance is not used to value assets in the relevant class in Queensland. Consistently with his evidence, it was not used in his 2017 valuation. 2. Although the experts agreed that the capitalisation rate was 7.25%, it would seem that – for Mr Kwan – this took into account likely increases in rent and – for Mr Goran – it did not. Letting-up provision for future vacancies 1. Mr Kwan assumed fourteen vacancies, comprising the five actual vacancies and the nine Food Court Tenants: J[337]. He assumed a vacancy period of 18 months, resulting in a below the line adjustment of $2,073,426. 2. The trial judge did not accept Mr Kwan's conclusion because the underlying assumptions were not made out. As the trial judge noted at J[339], Elanor submitted that: 3. the Court should assess the "real value" of the Centre by assuming that Kebab Express, Thai Me Down and Mass Nutrition were vacant, as they were all part of the same precinct in the Centre, and each of these tenants, together with the six remaining Food Court Tenants, ultimately abandoned the leases or were the subject of termination notices for breach; 4. alternatively, it was open to the Court to "readily assess the net present value" of the lost income for these three tenancies, and then to apply it to Mr Kwan's schedule of calculations. 5. The trial judge rejected both of these submissions. 6. Elanor submitted, correctly, that the trial judge did not explain why he rejected the first submission. Although speaking in the context of the value of shares, in Potts at 299, Dixon J observed: [T]he real value of what the plaintiff got must be ascertained in the light of the events which afterwards happened, because those events may show, for instance, that what the shares might have sold for was not their true value or that it was a worthless company. 1. That passage was quoted with approval in HTW Valuers at [38]. 2. Dixon J in Potts at 298 stated: If the cause is inherent in the thing itself, then its existence should be taken into account in arriving at the real value of the shares or other things at the time of the purchase. If the cause be 'independent', 'extrinsic', 'supervening' or 'accidental', then the additional loss is not the consequence of the inducement. 1. That passage was quoted with approval in HTW Valuers at [40]. The High Court went on observe at [46]: Figures worked out by analysing what willing but not anxious buyers and willing but not anxious sellers would agree on, without taking account of subsequent events, may correspond with market value; but they do not necessarily correspond with true value because the market can operate under some material mistakes. 1. On the appeal, Alceon submitted that there was no evidence as to why the Food Court Tenants failed after the Centre was acquired by Elanor. 2. However, the evidence established that: * as at the time of the relevant events, most of the Food Court Tenants (not Bel Cibo or Sushi Kuni) had been newly acquired by Alceon for the purposes of its redevelopment of the restaurant precincts; * six of the Food Court Tenants had varying degrees of arrears in rent for the limited time that they had traded until October 2017 when Mr Frenil Shah pursued outstanding arrears in anticipation of settlement of the sale to Elanor; * in addition to the rent arrears which existed before Elanor became the owner of the Centre (of which Elanor was not aware), each of the nine Food Court Tenants continued to have arrears in the period from 1 November 2017 (when Elanor became the owner of the Centre) to 30 June 2018 as recorded in Elanor's Receivables Ledgers which were in evidence at trial and summarised at McNaughton 1 at [96] – see [74] above; and * each of the nine Food Court Tenants ultimately failed – see [75] above; and * there was no evidence of any supervening event, or event apart from the trading difficulties and rent arrears, which caused the nine Food Court Tenants to fail. 1. The inference to be drawn is that the Food Court Tenants failed because of trading difficulties. Apart from being the natural inference to draw from the facts set out earlier, including those set out immediately above, that the Food Court Tenants failed because of trading difficulties is supported, for example, by the letter from Mass Nutrition's solicitor dated 19 March 2018 included (AB2193): As you are aware, the lessee has experienced great difficulty in trading and has had no choice but to cease operating the business. The lessee had arranged for an assignment of the lease and this assignment subsequently did not proceed. 1. Mass Nutrition was not one of the Food Court Tenants which had arrears as at July 2017. The causes of the trading difficulties was, more likely than not, related to the structure and tenant mix of the restaurant precincts, present at the time of purchase. That is, the likely future failure of the Food Court Tenants was, more likely than not, inherent in what was purchased. It follows that it was appropriate to analyse the "real value" by reference to the ultimate failure of all of the Food Court Tenants. As mentioned, the evidence did not suggest any extraneous or new cause for the failure of the Food Court Tenants. It should be added that this conclusion only alters the real value by a small amount ($140,000) because, for the reasons given below, Mr Kwan's below the line adjustment should not be accepted. 2. As to the second submission, the trial judge considered that "although a court may, where there is conflicting valuation evidence, accept the evidence of one valuer on an issue while preferring the evidence of another valuer on a different issue, it is not a function of the court to: 'bring a third set of opinions into the arena, nor to piece together its own valuation'", citing Masters Home Improvement Pty Ltd v North East Solution Pty Ltd [2017] VSCA 88; 372 ALR 440 at [420] (Santamaria, Ferguson and Kaye JJA). The trial judge considered that it was not his role to arrogate to himself the role of valuer, citing Brewarrana Pty Ltd v Commissioner of Highways (No 2) (1973) 6 SASR541; 32 LGRA 170 at 175 (Wells J). 3. The two authorities cited by the Court of Appeal in Masters were Brewarrana and 101 Collins Street v City of Melbourne (unreported, Batt J, 2 April 1996). Brewarrana was a compulsory acquisition case and 101 Collins Street was a ratings case. In Brewarrana, the valuations ranged from $194,000 to $479,00 and the competing methodologies were the comparable sales method and the hypothetical subdivision method. It was submitted that (at 545): because the three witnesses who had essayed a complete valuation of the land had included an assessment based on a hypothetical subdivision, it would be convenient and right to place their valuations alongside one another; to examine and compare each trio of figures contained in them and the material and reasoning supporting them, respectively; to decide, in the light of that examination, what was the best, or most nearly correct, figure that could be devised in each case; and, finally, by a species of comprehensive amalgamation, to work out what was the correct hypothetical subdivision for the purposes of the case as a whole. 1. Of this, and unsurprisingly, Wells J stated (at 545): All these submissions I have taken into account. But it remains true that the foundation of his submissions was as I have described it, and no amount of rationalization can disguise its essential character: it was an invitation to the Court to piece together, from the several valuations placed before it, what would be, in effect, a paramount valuation of its own. In my opinion, that invitation must be refused, because to accept it would necessitate my accepting, pro tanto, the role of an expert. 1. It might also be observed that a part of the historical context at the time Brewarrana was decided was that the Land and Valuation Court had recently been established as a special division of the Supreme Court of South Australia. One of the points Wells J made was that (at 544): I have always taken the view, and shall continue to do so unless directed by a superior Court to do otherwise, that the creation of a special division in a Court to deal with a particular class of case is not intended to turn the presiding judge into an independent expert in the very field in which testimony will be tendered to him that he will be called on to evaluate. 1. Justice Batt's discussion of the Court's role in relation to valuation is detailed and refers to numerous authorities (including Brewarrana) in which the principles are often expressed at a broad level of abstraction: 101 Collins Street at 80 to 84. His Honour's observation concerning 'piecing together a valuation' was as follows: Whilst I cannot piece together a valuation of my own (Brewarrana at 545), it appears to me that I am entitled, by reference to evidence of one valuer, to adjust on a number of aspects the valuation of another valuer, provided that I make allowance for the fact that one variable in a component consisting of several variables may in fact have been balanced in the latter valuer's valuation by one or more of the other variables. In such a case it might, depending upon the circumstances, be necessary to refrain from making the adjustment and to adopt the component in full or not at all. 1. It is often necessary to make adjustments in order to discharge the duty of assessing loss. The task is not one of simply preferring one expert's views over another without being satisfied as to the correct answer having regard to the facts as found by the judge, and having obtained the assistance of the experts, including as to the appropriate methodology. The guiding principle was neatly expressed in O'Kelly Holdings Pty Ltd v Dalrymple Holdings Pty Ltd (1993) 45 FCR 145 at 156 (Sweeney and O'Connor JJ), which concerned the difference between purchase price and real value in a misleading conduct case, citing Hill v Commissioner of Highways [1966] SASR 316; 13 LGRA 369 (Mitchell J): [T]he Court's duty is to form and act on its own original opinion, taking such assistance as it can from the opinion of experts, but it is not bound, nor should it defer, to the opinion of experts in the sense of permitting experts to hijack the fundamental fact finding obligation of the Court. 1. This passage was referred to with approval by Hely J in Flexible Steel Lacing Co v Beltreco Ltd [2000] FCA 890; 49 IPR 331 at [147] and by the Victorian Court of Appeal in H & Q Café Pty Ltd v Melbourne Café Pty Ltd [2023] VSCA 200; 72 VR 53 at [148], also referring to Masters at [420]. 2. The role of the expert "is to furnish the Judge or jury with the necessary scientific criteria for testing the accuracy of their conclusions, so as to enable the Judge or jury to form their own independent judgment by the application of these criteria to the facts proved in evidence": Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 at [59], citing Davie v Magistrates of Edinburgh 1953 SC 34 at 40, referred to with approval in Lang v The Queen [2023] HCA 29; 97 ALJR 758 at [7]. 3. The Court's duty is to form and act on its own "original opinion", taking such assistance as it can from the opinion of experts: O'Kelly at 156. It is the role and duty of the judge to determine the value on the basis of the opinion evidence (assuming it is intelligible, convincing and tested), together with all of the evidence in the case: Lang at [7]. It is entirely permissible for a judge to make adjustments to calculations provided by an expert valuer where those calculations are made on the basis of assumptions which are only partially made out. Those adjustments can be made by reference to the facts as proved in evidence or from the evidence of another expert, particularly where the experts have adopted the same essential methodology but disagree on the quantification of particular inputs. An example of the correct process being undertaken is shown in the careful analysis of White J in Short v Crawley (No 38) [2008] NSWSC 917; 67 ACSR 627. 4. The trial judge stated: [339] … Mr Fernon calls in aid [of arguing that one can alter the number of "at risk" tenants in Mr Kwan's calculations] the well-known principle that in assessing damages, a court should do the best that it can on the evidence, even if it lacks precision. One must not take that proposition too far. It does not permit a court to do the best that it can by assessing damages where an applicant has failed to adduce the evidence that is necessary to prove the case, in this matter that it suffered damage because of the conduct alleged: Keys Consulting Pty Ltd v CAT Enterprises Pty Ltd [2019] VSCA 136 at [69]-[70] (Maxwell ACJ, Niall and Macaulay JJA) … [340] I reject Mr Fernon's submission. It conflates assessment of the reliability of Mr Kwan's evidence, which turns on whether his underlying assumptions are established, with whether one can then take components of his evidence and adjust his calculations to produce a different derived market value for the Centre. On the reliability question, with which I am presently concerned, the fact is that he assumed fourteen vacancies for his letting-up allowance, when the applicant now concedes three of those vacancies and, in accordance with my findings, there were only three at risk tenant tenancies and therefore vacancies that ought to have been assumed. 1. There are two aspects of this reasoning about which something should be said. 2. First, for the reasons given earlier, to the extent the trial judge considered he could not make adjustments to Mr Kwan's calculations, his Honour was incorrect. Further, in this task, the Court should not too readily resort to questions of onus of proof. In 101 Collins Street at 83, after his careful review of the authorities, Batt J emphasised (emphasis in original): Although on some aspect or aspects the evidence may be unsatisfactory to my mind, the fact is that the evidence cannot now be supplemented and I am bound to reach a decision overall and thus on the aspect or aspects in question, having regard, if it should be appropriate to do so, to the onus of proof. 1. The trial judge's reference at J[339] to Keys Consulting Pty Ltd v CAT Enterprises Pty Ltd [2019] VSCA 136 at [69]-[70] is to observations addressing a different situation to the one which Elanor raised in its submission and those observations do not translate to the present context. The observations in Keys refer to the situation in which an applicant fails to adduce evidence reasonably available which would have established the losses suffered. In the present case, Elanor adduced evidence of its loss through an expert valuer. The fact that a part of one assumption on which the expert's opinion was based was not established (if that be the case) does not have the necessary consequence that loss has not been established or that the Court is relieved of its duty of forming an "original opinion", taking such assistance as it can from the opinion of the experts. That is particularly so when it was at all times clear that the number of "at risk" tenancies was a matter to be decided at trial. 2. Secondly, whether or not the assumptions upon which Mr Kwan's opinions were based – that is, relevantly, whether it was 14 vacancies (9 Food Court Tenants and 5 actual vacancies) or 11 vacancies or some other number of vacancies – did not go to the "reliability" of Mr Kwan's evidence, but to whether the correct value was calculated by application of the methodology to the facts as found. 3. The trial judge preferred Mr Goran's evidence on an appropriate letting-up allowance. Mr Goran deducted from the capitalised value a letting up allowance comprising a lead time to secure new tenants, agents leasing fees and an incentive by way of a fit out or rent-free period: AB501 at [11]; J[341]. His reasoning included: I acknowledge that the 9 additional alleged problematic tenancies are all part of Bluewater's food / dining area temporarily having an adverse effect regarding drawing in customers during lunchtime however, this may have occurred for a number of reasons including poor tenancy mix, weak calibre of tenant etc, however for an active investor this may be seen as an opportunity to change the status quo at the date of valuation. It is also my opinion that a passive investor also may have changed the alleged tenancy situation with a desire in mind to see growth in the Centre. 1. Mr Kwan considered the majority of potential purchasers would be passive investors who would not want to take on the risk of "leasing up a large number of vacant shops". Mr Goran agreed, but considered that there would be a considerable number of active investors, stating: In my professional opinion the majority of purchasers would be passive investors not wanting to take on the risks of leasing up a large number of vacant shops however, there are also a significant number of purchasers that are active investors who may see the opportunity in "firming up" the tenancies and increasing the value of the property. I am therefore not in a position to identify which purchaser may ultimately acquire this property. 1. As the trial judge correctly noted at J[342], Elanor was a sophisticated investor which acquired the Centre, as trustee for a syndicate, expressly anticipating, that it would actively manage the investment: "by implementing repositioning, leasing, tenant remixing and marketing to optimise the income and value of the property": AB1904. This indicated that the market included active investors. 2. For reasons given below, the preferable approach is: (a) to allow a letting-up allowance somewhat more than calculated by Mr Goran; and (b) not to allow a below the line deduction for the present value of net rent shortfalls of $2,073,426. Development potential 1. Mr Goran did not conduct any analysis of whether a development was financially feasible. He did not consider the fact that Woolworths, the major tenant, had a "demolition clause". The figure adopted by him was "discretionary" and, it would seem, determined without reference to any particular calculation. Mr Goran's assessment was unconvincing. The arm's length value of the Centre was best reflected by its use as a multi-tenanted shopping centre. The market was more likely to assess value by reference to the discounted cashflows arising from that use without regard to uncalculated profit from a potential redevelopment. Ground 4 of the respondents' notices of contention 1. By Ground 4 of the respondents' notices of contention, Alceon and CPRAM contended that Elanor failed to prove that it suffered loss or damage because it failed to prove, in respect of any of the Food Court Tenants, that – as at 1 November 2017 – those tenants were "at risk" by reason of the fact that: (a) the tenants had not been paying any rent for some while; and (b) the tenants' tenancies were likely to end imminently. 2. Alceon referred in this regard to Mr Kwan's evidence that tenancies should only be excluded if those two matters were true: AB3688.34 – 3889.46. 3. Although not entirely clear, it would seem that Mr Kwan prepared his evidence by reference to Mr McNaughton's evidence as to "at risk" tenants: AB3719.28 – 32. In any event, having regard to the facts outlined earlier, an arm's length purchaser would have notionally excluded the six relevant Food Court Tenants in the sense of assuming for the purposes of making an offer, that those tenants were likely to fail. 4. It is ultimately a matter for the Court to reach a conclusion on all of the evidence, including by reference to the expert opinion evidence. An arm's length purchaser would have taken into account the position of the six Food Court Tenants who were "at risk". It was also appropriate for Mr Kwan to take that into account in forming a view about market value. 5. However, the question is ultimately the "real value" and, for the reasons given earlier, that should be assessed on the basis that each of the nine Food Court Tenants was "at risk". The subsequent events were sufficient to establish that – whilst the fact might not have been known to a fully informed purchaser at the time – the risk of all nine tenants failing was inherent in the Centre. 6. Ground 4 of the notices of contention should be dismissed. The real value 1. Mr Kwan's general methodology for determining market value is appropriate. Mr Kwan expressed an opinion by applying a methodology which is applied by valuers in the Queensland market and in relation to assets of the relevant kind. The methodology adopted is the methodology he adopted when valuing the Centre in 2017. Mr Goran is undoubtedly experienced, but his experience in the Queensland market in relation to shopping centres was less than Mr Kwan's. In any event, in many respects their methodologies are the same. 2. There are some respects, however, in which Mr Kwan's opinions should not be accepted. 3. First, it is appropriate to adopt 3% for the ongoing vacancy allowance rather than 3.5%. This was the amount adopted in his 2017 valuation. The vacancy allowance addresses the fact that there will always be a number of vacancies. That is why it is capitalised in perpetuity. The additional nine vacancies are ones which should be addressed below the line by taking into account a letting-up allowance specific to those tenancies. Using 3% rather than 3.5% results in a change to adjusted net core income from $3,757,521 to $3,776,446. 4. When $3,776,446 is capitalised at 7.25%, this gives rise to a capitalised core value of $52,088,910. When other income is added, the estimated value before below the line adjustments becomes $52,624,278. 5. Secondly, as mentioned, the Court should not accept Mr Kwan's below the line deductions for the present value of net rent shortfalls of $2,073,426, or in full the associated letting up amounts of $138,570, $76,620 and $380,651. Mr Goran's allowance of leasing fees, letting up allowance and incentives totalled $231,123. This was based on a 12-month vacancy period, 50% effective, which Mr Kwan considered insufficient in light of the fact that the notional vacancies were all in the restaurant precinct. The amount allowed by Mr Goran is too low given the assumption of nine vacancies all in the restaurant precincts. On the other hand, it is to be acknowledged that Elanor was a sophisticated investor who would actively manage the Centre and that a part of Mr Kwan's capital expenditure allowance was also directed to structural alterations which might be necessary in those precincts. Taking into account the competing opinions between Mr Kwan and Mr Goran an amount of $420,000 should be allowed. This takes into account all nine tenancies which is appropriate to determine the "real value" for the reasons given at [445] to [454] above. If only six tenancies had been considered the amount would be $280,000. 6. Thirdly, Mr Kwan's capital expenditure allowance of $750,000 should be $500,000. 7. Applying these calculations results in the following: $52,624,278 - $50,000 - $500,000 - $420,000 = $51,654,278. The real value of the Centre as at 1 November 2017 was $51.65 million. The result is that Elanor is entitled to damages in the amount of $2.95 million once account is taken of the agreed adjustment of $650,000 related to the rental guarantee. CPRAM'S ADDITIONAL NOTICE OF CONTENTION GROUNDS 1. In its notice of contention, CPRAM raised three grounds for consideration in the event that the appeal was to be upheld. These grounds raised issues which were not considered by the trial judge because of his conclusion that Elanor's claim failed. Apportionable claim: Alceon 1. Ground 5 of CPRAM's notice of contention is: [I]n the event that the appeal is upheld and an award of damages is made, the appellant's claim against the second respondent was an apportionable claim for the purposes of Part VIA of the Competition and Consumer Act 2010 (Cth), and that pursuant to section 87CD of that Act, it would be just to limit the proportion of any such award of damages for which the second respondent is liable to a proportion that has regard to the extent of the second respondent's responsibility for the appellant's loss, by having regard to the fact that the first respondent received all of the purchase monies paid by the appellant, and the second respondent was merely an agent of the first respondent. 1. Elanor's claim against CPRAM is an apportionable claim for the purposes of Part VIA of the CCA: s 87CB(1). Sections 87CD(1), (3) and (4) provide: (1) In any proceedings involving an apportionable claim: (a) the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of the defendant's responsibility for the damage or loss; and (b) the court may give judgment against the defendant for not more than that amount. … (3) In apportioning responsibility between defendants in the proceedings: (a) the court is to exclude that proportion of the damage or loss in relation to which the plaintiff is contributorily negligent under any relevant law; and (b) the court may have regard to the comparative responsibility of any concurrent wrongdoer who is not a party to the proceedings. (4) This section applies in proceedings involving an apportionable claim whether or not all concurrent wrongdoers are parties to the proceedings. 1. CPRAM is a concurrent wrongdoer within the meaning of s 87CD(1). CPRAM is one of two parties because of whose conduct Elanor suffered the loss the subject of the apportionable claim: see Shrimp v Landmark Operations Ltd [2007] FCA 1468; 163 FCR 510 (Besanko J). The position of CBRE as a concurrent wrongdoer is addressed below. 2. The Court is required to consider who bears what "level of responsibility and culpability" for the losses claimed: P-Value Pty Ltd v Vicland Property Group No 1 Pty Ltd [2016] VSC 100 at [490], [492]. The Court will do this by "having regard to relevant considerations in a broad sense" and may take into account that "one wrongdoer received a benefit, or a greater benefit than another wrongdoer": Ardizzone v Valentino Nominees Pty Ltd [2019] WASC 55 at [723]-[724]. CPRAM submitted that the Court should have regard to the fact that Alceon received all the purchase monies paid by Elanor and that CPRAM was "merely an agent" of Alceon. Alceon did not make written or oral submissions on Ground 5. 3. Alceon received all the purchase monies from Elanor, deriving a greater benefit than CPRAM from the transaction. CPRAM was also Alceon's agent. However, describing CPRAM as "merely" acting as Alceon's agent does not address its substantial involvement. CPRAM accepted an appointment as one of the joint managers of the "Bluewater Trust". This was a serious commercial endeavour so far as CPRAM was concerned. Mr Frenil Shah was a director of and portfolio manager for CPRAM. He was responsible for oversight of the day-to-day management and administration of the Centre. On 30 August 2017, Mr Hamilton (among others) met with Mr Frenil Shah. At that meeting, Mr Hamilton asked Mr Frenil Shah, in a tenant by tenant review, questions about current and historical arrears of each of the Food Court Tenants and was not told that there was any issue in that respect. Mr Shah, in the position of asset manager, was the person most likely to know whether any tenants were in arrears. Mr Shah's conduct was a material part of the conduct found to be misleading. It is appropriate that CPRAM bear a level of responsibility. CPRAM should be apportioned 20% of the damages. Alceon should be apportioned the balance. Although Alceon did not raise the issue in it notice of contention, its raised the issue in its defence at trial. Apportionable claim: CBRE 1. Ground 6 of CPRAM's notice of contention is: [I]n the event the appeal is upheld and an award of damages is made, the appellant's claim against the second respondent was an apportionable claim for the purposes of Part VIA of the Competition and Consumer Act 2010 (Cth), and that pursuant to section 87CD of that Act, it would be just to limit the proportion of any such award of damages for which the second respondent is liable to a proportion that has regard to the extent of CBRE's responsibility for the appellant's loss, by having regard to the fact that CBRE had the opportunity to identify, and should have identified, any pleaded misleading or deceptive conduct, including when the Food Court Tenants (as defined at Judgment, [27]) had actually commenced trading, and whether any of them had a history of rental arrears. 1. CPRAM relied on Ms Hansen's expert evidence about what CBRE had the opportunity to identify, and should have identified, when conducting its due diligence. 2. Elanor submitted that Ms Hansen was a chartered accountant and not a commercial property manager and that she was not asked to consider Mr Hamilton's perspective, experience and skill set: ARS at [42]. CPRAM submitted that whilst Ms Hansen is qualified in a different discipline from Mr Hamilton, her qualifications and experience put her in a position to give objective evidence about what CBRE should have done when carrying out the instructions CBRE had been given: 2RS on NOC at [6]. CPRAM contended that Mr Hamilton's subjective perspective, experience and skillset were irrelevant to that question. 3. CBRE should not bear any proportionate liability for Elanor's loss. CBRE (and Mr Hamilton) took a reasonable approach, within the scope of their retainer, to conducting due diligence. CBRE's mandate was to undertake a critical review of all income and expenditure to determine the sustainable net income of the Centre: AB1520. CBRE's due diligence investigations involved reviewing and commenting upon the current arrears report (as at 31 July 2017). Before the 30 August 2017 meeting, Mr Hamilton reviewed the current arrears report, which did not disclose that any Food Court Tenants were in arrears. It was reasonable for Mr Hamilton to have understood the arrears report as stating the position at the end of the relevant month. This also accorded with Ms Hansen's understanding. Mr Hamilton conducted a tenant by tenant review and was either told that there were no arrears or no arrears were identified. Mr Hamilton asked about historical arrears and was not informed of any issues. If Mr Frenil Shah had stated during the 30 August 2017 meeting that there was an arrears issue, then Mr Hamilton would have undoubtedly made further enquiries. However, in circumstances where that did not occur, it was reasonable for Mr Hamilton to have relied on the current arrears report and Mr Shah's representations. 4. Ms Hansen's opinion about what CBRE should have done when carrying out their instructions is of limited weight. Ms Hansen approached the question of what should be considered when conducting financial due diligence from the perspective of a chartered accountant, being her speciality. Ms Hansen's report was premised on the basis that she was considering the "financial due diligence conducted by CBRE… on the [Centre], which in my view, is in the context of an M&A transaction": AB174. Ms Hansen could not, and did not, give evidence about what was "market" practice in conducting due diligence as a commercial property manager for the purchase of a shopping centre. 5. The relevant context was that CBRE was conducting financial due diligence as a commercial property and investment manager, for the purchase of a shopping centre, not for the purposes of an M&A transaction. Mr Hamilton's primary experience is in chartered surveying and property, not accountancy, and CBRE's role must be viewed from this perspective. 6. Ground 6 of the notice of contention should be dismissed. Elanor's responsibility for its own loss 1. Ground 7 of CPRAM's notice of contention is: [I]n the event the appeal is upheld and an award of damages is made, the amount of any damages that the second respondent is ordered to pay should be reduced pursuant to section 137B of the Competition and Consumer Act 2010 (Cth) to reflect the appellant's share of responsibility for its own loss, because of its failure (including the failure of its agent CBRE) to take reasonable care to identify any pleaded misleading or deceptive conduct, including failing to determine when the Food Court Tenants (as defined at Judgment, [27]) had actually commenced trading, and whether any of them had a history of rental arrears. 1. Section 137B of the CCA provides: If: (a) a person (the claimant) makes a claim under subsection 236(1) of the Australian Consumer Law in relation to economic loss, or damage to property, suffered by the claimant because of the conduct of another person; and (b) the conduct contravened section 18 of the Australian Consumer Law; and (c) the claimant suffered the loss or damage as result: (i) partly of the claimant's failure to take reasonable care; and (ii) partly of the conduct of the other person; and (d) the other person did not intend to cause the loss or damage and did not fraudulently cause the loss or damage; the amount of the loss or damage that the claimant may recover under subsection 236(1) of the Australian Consumer Law is to be reduced to the extent to which a court thinks just and equitable having regard to the claimant's share in the responsibility for the loss or damage. 1. CPRAM submitted that Elanor, as a publicly listed entity, was not taking reasonable care of its own economic interests in relying uncritically on financial information prepared by Savills, regardless of Savills' size and reputation: 2RS on NOC at [8]. CPRAM contended that Elanor had sufficient time during the due diligence period to investigate the potential development of the Centre and consider what the arrears reports said on their face. CPRAM submitted that to the extent the arrears reports raised any ambiguity, Elanor should have utilised the question and answer function in the data room: 2RS on NOC at [9]-[10]. 2. On 21 August 2017, Mr McNaughton reviewed the Data Room Arrears Reports for the months of December through to June 2017. In cross-examination, Mr McNaughton accepted that his review was brief because he knew that Mr Hamilton would also conduct a review, but Mr McNaughton did not accept that he relied solely on Mr Hamilton's review: AB2942.37-42. Mr McNaughton did not see any other document in the data room which stated that there were arrears on the part of any of the Food Court Tenants. 3. On 27 August 2017, Mr Hamilton reviewed the Tenant Arrears Report for July 2017. Mr McNaughton viewed this report the next day. The Tenant Arrears Report did not indicate that any of the Food Court Tenants were in arrears as at July 2017. 4. As noted above, on 30 August 2017, Mr Hamilton conducted a tenant by tenant review with Mr Frenil Shah following Mr Hamilton's review of the tenant arrears reports. In circumstances where Mr McNaughton had reviewed all of the Data Room Arrears Reports and various other records in the data room, and Mr Hamilton had reviewed the Tenant Arrears Report for July 2017 together with a number of other records in the data room, and Mr Hamilton had had a discussion with Mr Frenil Shah, the manager of the Centre, there was no apparent reason why Elanor should not rely on the information to which they had been provided access regarding tenant arrears. Elanor has not been shown not to have conducted its investigations without reasonable care in the circumstances. 5. Ground 7 of the notice of contention should be dismissed. CONCLUSION 1. For the reasons given above, except for Ground 5 of CPRAM's notice of contention, the notices of contention should be dismissed, and the appeal should be allowed. Taking into account the rental guarantee amount of $650,000, Elanor is entitled to damages of $2.95 million. It is entitled to interest on this amount at Court rates from 1 November 2017. The Court should make the following orders: 2. The first respondent's notice of contention be dismissed. 3. With the exception of Ground 5, the second respondent's notice of contention be dismissed. 4. The appeal be allowed. 5. Set aside the orders made on 30 October 2023 and, in their place, order: 1. the first respondent pay to the appellant the sum of $2,360,000, plus interest at Court rates calculated from 1 November 2017. 2. the second respondent pay to the appellant the sum of $590,000, plus interest at Court rates calculated from 1 November 2017. 3. the first and second respondents pay the appellant's costs of the proceedings at first instance. 6. The first and second respondents pay the appellant's costs of the appeal. I certify that the preceding five-hundred and seven (507) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Bromwich and the Thawley. Associate: Dated: 18 September 2024 REASONS FOR JUDGMENT O'SULLIVAN J: 1. On 23 October 2017, Elanor Funds Management Limited entered into a contract with the first respondent, Alceon Group Pty Ltd, to purchase the Bluewater Square Shopping Centre at Redcliffe in Queensland for the sum of $55,250,000. 2. Settlement occurred on 1 November 2017 at which time Elanor became the registered proprietor of the Centre. 3. Subsequently, Elanor commenced proceedings against Alceon and its agent, the second respondent, CPRAM Investments Pty Ltd, (together the respondents) claiming that Alceon and CPRAM made various representations to it that were misleading or deceptive, or likely to mislead or deceive, within the meaning of s 18 of the Australian Consumer Law. Elanor claims that as a result, it paid more than it considered to be the "true" value of the Centre and claimed a sum representing the difference between what it paid and $49 million, a figure it contends was the actual value of the Centre at the relevant time, a difference of approximately $6 million. 4. Ultimately, there were three representations in issue before the primary judge. The first concerned incentives that had been provided to some of the Food Court Tenants of the Centre and whether rent had been paid since the commencement dates of their leases (RCD Representation). The second representation concerned whether tenancy rental arrears reports for the Food Court Tenants were accurate and reflected the actual rental position (Arrears Representations). The third concerned a representation as to the expected rental income (Rent Return Representation). 5. The primary judge dismissed the proceedings [J], finding that Elanor failed to establish that the respondents had engaged in misleading or deceptive conduct or conduct that was likely to mislead or deceive. The primary judge also found that if he was wrong in that finding, Elanor had in any event, failed to establish that it relied upon any claimed misleading or deceptive conduct. Still further, the primary judge held that Elanor had failed to prove that it suffered damage because of the alleged conduct and the claimed reliance. 6. On 24 November 2023, the appellant filed a notice of appeal contending that the primary judge had made a number of errors. Grounds 2 and 3(b) which contained the Rent Return Representations were abandoned at the hearing of the appeal. 7. On 14 December 2023, each respondent filed a notice of contention asserting that the judgment be affirmed on grounds other than those relied on by the Court. 8. It is for the reasons which follow that the appeal should be allowed. Background 1. On 13 December 2012, Alceon and CPRAM had entered into an investment management agreement by which an unregistered managed investment scheme known as the "Bluewater Trust" was created. CPRAM accepted appointment as one of the joint managers of the Trust with a number of duties, including identification of intended trust acquisitions, management of trust assets, and the day-to-day administration of trust assets. It was also tasked with identification of opportunities for the disposal of trust assets. 2. Alceon had acquired the Centre on 3 April 2013 for a consideration of $41,750,000 and entered into a property management agreement with Savills (Qld) Pty Ltd on 19 November 2015 by which Savills accepted an appointment to provide each of the services in respect of the Centre, set out at schedule 2 to that agreement. Those services included the general administration of each of the tenancies by collecting rent, holding security deposits, ensuring compliance with tenant obligations, maintaining a tenancy schedule, maintaining tenancy files and financial management. 3. Savills' financial management obligations extended to the preparation of a monthly statement of monies received and expenses incurred, the issue of monthly invoices to tenants for rental payable and other charges, the collection of rent and other charges, and the review of rental arrears. Savills also accepted an obligation to provide monthly financial management reports for the Centre. 4. Savills operated a reporting system known as the MRI Management Systemin order to comply with its financial management and reporting obligations to Alceon. Alceon and CPRAM did not have the ability to make changes within the MRI Management System, but CPRAM could generate reports from it. 5. In late 2016, as part of a project forming a portion of the broader strategy for the Centre, CPRAM recommended to Alceon that the external casual dining precinct of the Centre be upgraded to create a new restaurant precinct in the expectation of securing new food tenants. There were four food tenants in the casual dining precinct: Sushi Kuni, Mumbai Blues, Thai Me Down and Redcliffe Noodle Kitchen. Work commenced in late 2016 and was ultimately completed in late June 2017, as a result of which the commencement of the leases for some of the food tenancies was deferred. On the available evidence, the primary judge was unable to provide a more accurate date on which the Works were complete but found that at the latest, the Works were complete by the date of the last food tenant deferred tenancy commenced, which was Thai Me Down on 1 July 2017. 6. There were nine food tenant leases entered into between May 2017 and 1 November 2017 referred to by the primary judge as Food Court Tenants. The lease commencement dates, by reference to their trading names, according to the terms of the leases were as follows: 7. Dizzy Dukes, 1 April 2017; 8. Burrito Bar, 1 March 2017; 9. Bel Cibo, 1 May 2016; 10. Mass Nutrition, 1 April 2017; 11. Kebab Express, 1 April 2017; 12. Sushi Kuni, which pursuant to an assignment of lease had its tenancy take effect from 30 April 2017; 13. Mumbai Blues, 1 March 2017; 14. Thai Me Down, 1 May 2017; and 15. Redcliffe Noodle Kitchen, 1 April 2017. 16. In 2017, Alceon appointed the real estate firms Stonebridge Property Group and CBRE Pty Ltd to market the Centre for sale. By no later than 2 May 2017, an Information Memorandum had been prepared for that purpose. It invited expressions of interest by 30 May 2017. 17. The Information Memorandum was sent by email on 2 May 2017 to Mr Blake McNaughton, who at that time held a position with Elanor as Director, Investments. 18. The Information Memorandum referred recipients of the document to a data room, to which Mr McNaughton was given access. The data room contained documents which could be downloaded and printed, and amongst other things, included copies of: 19. Leases for the Food Court Tenants; 20. Incentive deeds; and 21. Tenant arrears reports (data room tenant arrears reports). 22. Elanor submitted a non-binding expression of interest on 30 May 2017 by which it was prepared to pay $54.75 million to purchase the Centre, subject to due diligence. At that time, Mr McNaughton knew that the Food Court Tenants in the casual dining precinct had not commenced trading, the casual dining precinct area was a "work in progress" and they may or may not fall into rental arrears. Further, he made no enquiries as to whether any of the Food Court Tenants had commenced trading, nor did he know whether any of the Food Court Tenants were or were not in arrears at that time. 23. The primary judge found that in calculating the price of $54.75 million, Elanor did so without interrogating the risk that one or more of the Food Court Tenants may subsequently fall into arrears. 24. On 16 August 2017, Elanor delivered a further non-binding expression of interest which identified a purchase price of $55.25 million. Amongst other things, the expression of interest was conditional on Alceon providing a 20 business day exclusive due diligence period in favour of Elanor. Subsequently, it was agreed that the exclusive due diligence period would commence on 21 August 2017 and conclude on 15 September 2017. 25. On 21 August 2017, Elanor engaged Mr Alexander (Sandy) Hamilton of CBRE Pty Ltd to undertake financial due diligence in relation to the Centre and as from 21 August 2017, Alceon and CPRAM provided Elanor and its representatives, including CBRE, with exclusive access to the data room. The services to be provided by CBRE included a review of the trading performance of the Centre, including each individual tenant, with review and comment "upon the current arrears report" and the identification of "problem" tenants by analysis of arrears reports. 26. The data room tenant arrears reports did not identify any of the Food Court Tenants as being in arrears for any amount. 27. In September 2017, Elanor's Board of Directors resolved by way of a circulating resolution to purchase the Centre. 28. In addition to the material contained in the data room, on 27 October 2017 Minter Ellison Lawyers, on Alceon's behalf, provided to Elanor's solicitors a tenant arrears report for the month of October 2017 (October Arrears Report) and a document comprising an outstanding incentive schedule as at 31 October 2017. These documents did not disclose any arrears of rental for the Food Court Tenants. 29. Subsequently, a number of the Food Court Tenants fell into arrears of rent and outgoings and either vacated or abandoned their leases over the period January 2018 to May 2021 with Elanor resuming possession. The Arrears Representation 1. Elanor acknowledges that the Arrears Representation underpinned its case before the primary judge and is central to the appeal. 2. Elanor contends in ground 3 of its notice of appeal that the primary judge made a number of erroneous findings in relation to the Arrears Representation as particularised in grounds 3(c)-(p). 3. The Arrears Representation was pleaded by the appellant in [44] of the further amended statement of claim (FASOC). 4. The primary judge referred to the pleading at [44(f)] of the FASOC and noted that by the time of the closing submissions, Elanor's case as to the Arrears Representation had been reduced to that pleaded in [46(f)] whereby it was alleged that: 44. By reason of the matters pleaded in paragraphs 19 to 26 and 35, 36 and 40 above above, Alceon and/or CPRAM represented to Elanor that: (f) The Tenant Arrears Reports and the October Arrears Report were correct and complete statements of all amounts which had not been paid by the Food Outlet tenants in the corresponding month for that report from all previously rendered invoices and that all amounts in invoices rendered in the months prior to the month of the respective report had otherwise been paid in full by the tenants of the respective Food Outlets (Arrears Representations); Particulars The Arrears Representations are partly express, partly implied and partly oral. (i) In so far as they are express, they are contained in the Tenant Arrears reports and the October Arrears Report. (ii) In so far as they are implied, they arises (sic) from the circumstances in which the Tenant Arrears Reports and the October Arrears Report were provided and absence of any other document or information of a similar nature for different periods or difference tenants being provided. (iii) In so far as they are oral, they arise from the matters and conversations pleaded in 25 and 26 above. 1. The primary judge identified that the focus of this claim is upon the data room tenancy arrears reports and the October Arrears Report. His Honour characterised the pleading as a rolled-up plea comprising two constituent elements such that the allegation is that these reports. 2. "were correct and complete" in recording all amounts not paid by the Food Court Tenants "in the corresponding month" of each report for all prior rendered invoices; and 3. "all amounts" in rendered invoices in the months prior to the month of the report had otherwise been paid in full. The tenant arrears reports 1. As a part of its financial management obligations, Savills produced tenant arrears reports (Savills tenant arrears reports). 2. Elanor refers in its submissions to two categories of tenant arrears reports. The first category comprises the data room tenant arrears reports, being those reports made available to Elanor in the data room during the exclusive due diligence period. The second category comprises the Savills tenant arrears reports. All the tenant arrears reports are, in fact, tenant arrears reports produced by Savills. 3. The point of difference between the two categories of tenant arrears reports is that there were two sets of data room tenant arrears reports made available to Elanor in the data room during the exclusive due diligence period. 4. The first set of data room tenant arrears reports had a notation with the heading to various pages, the word "Period" and then 12/16, 1/17, 2/17, 3/17, 4/17, 5/17, 6/17 and 7/17 respectively representing the months of the year. These data room tenant arrears reports were uploaded to the data room, together with many other documents, on 21 August 2017. 5. The second set of data room tenants arrears reports had a notation in its heading "Period: 07/17" (July arrears report), uploaded to the data room on 26 August 2017. 6. An important feature of both sets of data room tenant arrears reports and the Savills tenant arrears reports is that the reports record the tenant arrears position as at the print date of the reports and are not end of month reports. The documents comprising the first set of data room tenant arears reports had various print dates: 7. The reports for the period 12/16 – 02/17 had a print date of 21/6/17; 8. The reports for the period 03/17 had a print date of 4/4/17; 9. The reports for the period 04/17 had a print date of 17/5/17; 10. The report for the period 05/17 had a print date of 21/6/17; and 11. The report for the period 06/17 had a print date of 25/7/17. 12. The July arrears report had a print date of 25 August 2017. 13. There is no issue that none of the data reports identified any Food Court Tenants as being in arrears of rent. 14. The October tenant arrears report, to which reference is made in [44(f)] of the FASOC, was provided by Alceon's solicitors to Elanor after the exclusive due diligence period and after the circulating resolution was signed by Elanor's Directors. That document is not relevant to the disposition of this appeal because as the primary judge found, correctly, that report was provided shortly prior to settlement of the contract for the purchase of the Centre and could not have led Elanor into any anterior error inducing any of its decisions to acquire the Centre. 15. After Elanor had acquired the Centre and in answer to a subpoena, Savills produced a number of Savills tenant arrears reports for the period December 2016 to September 2017 with arrears for any tenants other than Food Court Tenants redacted. Apart from the redactions, the documents are obviously incomplete because the page numbers are not sequential. 16. The Savills tenant arrears reports for the Food Court Tenants bore print dates of 20 December 2016 (for the period 12/16); 7 February 2017 (for the period 01/17); 5 April 2017 (for the period 03/17); 5 May 2017 (for the period 04/17); 7 June 2017 (for the period 05/17); 1 June 2017 (for the period 06/17); 6 July 2017 (for the period 06/17); 15 August 2017 (for the period 07/17); and 5 October 2017 (for the period 09/17). 17. The primary judge noted that by the time of closing submissions, Elanor conceded the Arrears Representation Claim could not succeed for three of the Food Court Tenants: Kebab Express, Thai Me Down and Mass Nutrition, because they were not in arrears at any relevant time. That left six Food Court Tenants to be considered: Bel Cibo, Mumbai Blues, Redcliffe Noodle Kitchen, Burrito Bar, Dizzy Dukes and Sushi Kuni. 18. Elanor alleged that the two sets of data room tenant arrears reports were misleading by failing to disclose the rental arrears for the six Food Court Tenants during the due diligence period and that in fact, they incorrectly disclosed or suggested (by their absence from those reports) that these six Food Court Tenants had paid rent in full for each relevant month during that period. 19. Elanor pleaded extensive particulars of the alleged actual arrears for the Food Court Tenants, relying on the Savills tenant arrears reports: FASOC [42]. 20. The major factual issue addressed by the primary judge in relation to the Arrears Representation was the actual rental arrears position of the six remaining Food Court Tenants and to the extent the position as represented was inaccurate, misleading or deceptive or likely to mislead or deceive. With respect to his Honour, as I explain later in these reasons, insofar as the actual rental arrears position differed from the data room tenant arrears reports, in the circumstances of this matter, that is not the issue when considering whether the Arrears Representation was misleading or deceptive. 21. I deal with each of the particulars to ground 3 of the notice of appeal which are directed to the Arrears Representations after considering the primary judge's findings on this issue. There are, however two grounds which raise issues which may be conveniently dealt with at the outset. Grounds 3(c) and (f) – the primary judge assessed Elanor's Arrears Representation case by reference to the July arrears report 1. This issue concerns grounds 3(c) and (f) which contend the primary judge erred in his consideration of Elanor's Arrears Representation case by focusing on the July arrears report. 2. Elanor submitted that the primary judge erred in considering only the July arrears report for the purposes of comparing it with the position revealed by the Savills tenant arrears reports. It submitted Elanor's case was wider than that in the sense that the primary judge should have considered the first set of data room tenant arrears reports and also compared them against the Savills tenant arrears reports. 3. Relevant to that submission, apart from the findings to which I have referred above, the primary judge also found: 4. By 2 May 2017, an Information Memorandum had been prepared for the purposes of marketing the Centre for sale. The Information Memorandum referred to a data room containing various information including leases and associated documents. Those parties to whom the Information Memorandum had been sent, which included Elanor, were provided access to the data room from on or about 10 May 2017; 5. Mr McNaughton was provided access to the data room referred to in the Information Memorandum on 10 May 2017 which was before the exclusive due diligence period commenced. According to the data room log, Mr McNaughton inspected documents contained within it on 11 May 2017 and performed a bulk download of all the documents in it on 18 May 2017 and 23 May 2017. Mr McNaughton downloaded further documents on 21 August 2017 and accessed the data room to view specific documents on various occasions from that time until 2 November 2017; 6. On 2 August 2017, Mr McNaughton was provided with turnover figures for the Centre, divided as between various tenants which included information about whether a tenant had reported trading data and if so, the month of the first report. The primary judge accepted the effect of that data as being accurately summarised in a table contained in Alceon's closing submissions and found that the turnover data was a reliable indicator as to whether tenants had, or had not, commenced trading. His Honour considered that the absence of a reported trading figure pointed strongly to the conclusion that a tenant had not commenced trading or at least should have invited further enquiry; 7. The turnover figures for the Centre established: + Sushi Kuni had commenced reporting trading in July 2015; + Bel Cibo had commenced reporting trading in June 2016; + Dizzy Dukes had commenced reporting trading in June 2017, but there was a comment that "14 days of actual trading converted to full month"; + Burrito Bar had commenced reporting trading in May 2017, but there was a comment that "Disruption in trade as Dizzy Dukes fitting out"; + Mumbai Blues had commenced reporting trading in June 2017, but there was a comment that "12 days of actual trading converted to full month"; + Mass Nutrition no trading data reported; + Kebab Express no trading data reported; + Thai Me Down no trading data reported; and + Redcliffe Noodle Kitchen no trading data reported. 8. On 16 August 2017, Elanor submitted a further expression of interest in which it offered to pay $55.25 million, to which I have referred above; 9. Access to the data room was provided to Elanor, as well as CBRE and others retained by Elanor between 18 August 2017 and 15 September 2017; 10. CBRE and Elanor were each able to make inquiries regarding the tenants and the financial position of the Centre through a question and answer facility in the data room; 11. The July arrears report was printed on 25 August 2017 and made available in the data room on 26 August 2027; 12. Mr McNaughton viewed the July arrears report on 28 August and 30 October 2017; 13. Mr Hamilton viewed the July arrears report on 27 August 2017 and again on 29 August 2017 at which time he printed it; 14. Three of the four Elanor Directors comprising the Board signed a circulating resolution to authorise the purchase of the Centre on 9, 10 and 11 September respectively with the fourth Director signing the resolution on an unknown date in September 2017; 15. On 15 September 2017, CBRE provided its draft financial due diligence report to Mr McNaughton. That day, Alceon and Elanor formally entered into the Option Agreement which, if exercised, required the parties to enter into the Sale Contract attached to that Option Agreement; 16. On 18 September 2017, CBRE finalised and delivered its financial due diligence report to Elanor. Included in the information considered was the July arrears report and May 2017 tenant invoices. Section 11 of the report noted that CBRE "have been provided with an arrears report dated July 2017" which it stated disclosed there "was a credit of $2,957.05 and there were no significant arrears dated 30 days or over". The primary judge found that statement was incorrect and the report recorded arrears in that sum; 17. CBRE's due diligence report identified in section 12 that of the Food Court Tenants mentioned in the report, only Sushi Kuni was considered a "tenancy at risk" because of its occupancy cost ratio of 28.1%; 18. On 23 October 2017, Elanor exercised the call option such that the parties then entered into the Sale Contract. The Sale Contract settled on 1 November 2017; and 19. Mr Hamilton looked only at the July arrears report and, by reference, to turnover data included in the data room for July 2017, six of the 14 tenants in the food sales category had reported sales of three months or less to 31 July 2017. 20. Elanor accepts that Mr Hamilton only reviewed the data room tenant arrears report for July 2017 (which bore a print date of 25 August 2017) but submits that Mr McNaughton gave evidence that he had, in fact, reviewed all of the data room tenant arrears reports which he had downloaded from the data room. 21. Given the data room tenant arrears reports (and the Savills tenant arrears reports provided subsequently) gave the position as at the print date, the most relevant reports are those closest to the time at which Elanor's Board resolved to purchase the Centre and as a consequence exercised its call option, i.e. the July arrears report. That is for a number of reasons. 22. First, the latest and most up to date rental arrears reports will give the longest history of the rental position for any particular Food Court Tenant. 23. Second, the primary judge described the July arrears report as ambiguous, explaining that if the report purported to be a record of all arrears as at 31 July 2017 then there was no point in recording on the report a last payment date and amount paid after that date. 24. Elanor submits that the primary judge's reference to the July arrears report being ambiguous means there are two competing contentions. It submits that the only conclusion that can be drawn from that reference is that the primary judge accepted that both meanings can be obtained from the document, that is: the data room tenant arrears reports represents the state of rental arrears as at the print date or alternatively the state of rental arrears at the end of the month to which the report relates. 25. Elanor presses for the second of the two contentions. 26. I do not accept that contention and do not consider the data room tenant arrears reports to be ambiguous. 27. That is because the evidence before the primary judge from two expert accounting witnesses was that it was common ground between them that the data room tenant arrears reports, and indeed the Savills tenant arrears reports, reflected the position in relation to the particular tenant as at the print date. 28. Further, the reference by the primary judge to the tenant arrears reports being ambiguous means it demands close attention to establish precisely what it is that is being reported upon and at what point in time. If there was any doubt, a question could be asked through the question and answer facility in the data room. 29. Elanor submits that Mr Hamilton and Mr McNaughton assumed the data room tenant arrears reports were end of month reports. 30. Accepting that to be the case, such an assumption was not open to them upon any careful examination because for the reasons set out, and notwithstanding the primary judge's description, it is clear on the face of the documents that they cannot have been end of month reports. To that extent, Mr McNaughton and Mr Hamilton misread the data room tenant arrears reports. 31. Elanor also submits that Ms Fiona Hansen, a Chartered Accountant and Senior Managing Director at FTI Consulting, who was jointly engaged by the solicitors for the respondents as an expert witness in relation to the undertaking of financial due diligence investigations, also made this assumption, i.e. that the data room tenant arrears reports were end of month reports. 32. That submission is not correct. In Ms Hansen's expert report dated 28 April 2023, Ms Hansen observed at [2.4.3] that since the "last payment date" of certain tenants was later than the expected information cut-off date for the report, it is apparent that the tenant arrears reports did not show arrears information at the end of the reporting period and that as a financial due diligence adviser she would have made enquiries about that: see also [6.2.5(a)]. 33. Still further, the basis upon which Elanor ran its case before the primary judge on the express Arrears Representations was that the data room tenant arrears reports were misleading. It submitted before the primary judge that the July arrears report represented the position for each of the Food Court Tenants as at 31 July 2017, notwithstanding the anomaly between the print date of the report and the period to which it related (July 2017). Elanor submitted to the primary judge that the data room tenant arrears reports should not be construed as representing the arrears position as at the print date. 34. Elanor's position taken at trial was that the data room tenant arrears report should not be construed as representing the arrears position as at the print dates but for the end of the identified month. On that basis, Elanor invited the primary judge to compare the position revealed in the data room tenant arrears reports with the Savills tenant arrears reports provided under subpoena which is what the primary judge did. 35. It was in that context that the primary judge noted that Elanor considered the July arrears report to be a very significant document. 36. Third, the July arrears report made available in the data room was printed on 25 August 2017 and was the only report in the data room that was printed at a time when all the Food Court Tenants were actually trading. 37. Fourth, although Elanor submitted its expression of interest on 16 August 2017, its Board of Directors voted in favour of purchasing the Centre in September 2017. The figure contained in the expression of interest was based on Mr McNaughton's and Elanor's assessment of the information in the data room. The first set of data room tenant arrears reports provided no further information than the July arrears report and indeed, a number of the Food Court Tenants were not trading at the times the first set of data room tenant arrears reports were printed. 38. Fifth, the primary judge accepted Mr Hamilton's evidence that he could not identify whether a tenant was at risk of falling into arrears from one or two months of trading and that it may take up to a year to make a judgment on that question. On that basis, the earlier set of the data room tenant arrears reports added nothing and it was the July arrears report which was the most significant of those reports. 39. It is for these reasons that his Honour was correct to consider Elanor's case by reference to the July arrears report. It follows that these grounds of appeal do not succeed. The expert accountants 1. In considering the question of whether any of the Food Court Tenants were in arrears as at 31 July 2017, the primary judge considered expert reports produced by Mr Bradley Hellen for the respondents and Mr Matthew Gwynne, both of whom are Chartered Accountants. 2. Mr Hellen's report is dated 3 May 2023 and Mr Gwynne's is dated 21 June 2023. The Accountants participated in a conclave prior to trial, as a result of which they produced a Joint Report dated 30 June 2023. All three reports were received into evidence. 3. The Accountants gave concurrent evidence and were each cross-examined during that process. There is no complaint about the procedure adopted. Mr Hellen's Report 1. Mr Hellen was instructed to perform a reconciliation of the Food Court Tenants' rental position relying on records generated by the MRI Management System. Mr Hellen identified those records as comprising: 2. The Centre Manager's (CM) Receivables Ledgers for December 2016 to October 2017; 3. Tax invoices for Food Court Tenants setting out the amounts due and payable, as well as other information; 4. Tenant arrears reports showing details of the date and amount of the last payment, the individual transactions including the amount and whether each amount is current or 30, 60 or 90 days overdue; and 5. End of month reports which comprised a general ledger setting out, amongst other things, the balance brought forward as a running balance of the particular tenant's position; a summary of charges pursuant to the lease and the actual transactions for the month under a number of different headings; a summary by tenant which included a one line total of the items listed in the summary of charges; and the tenant arrears report. 6. Mr Hellen also had access to bank statements of three bank accounts operated by Savills, albeit redacted. 7. Mr Hellen's report addressed: 8. A reconciliation of the total rental charges paid and received; 9. A reconciliation of the rent paid (including any charges and applicable levies) by each Food Court Tenant to the end of each month, identifying and explaining any arrears; 10. A reconciliation of: 1. The total incentives and abatements for each of the Food Court Tenants as per the various Incentive Deeds relating to those tenants; and 2. The total incentives and abatements received by and/or applied to each of the Food Court Tenants. 11. A reconciliation of any security deposits paid; 12. Whether any Food Court Tenants received an abatement of rent (including any outgoings or other charges) or incentive above or beyond that provided for in their respective Incentive Deeds. If so, Mr Hellen was to identify and explain the amount; 13. The extent to which any Food Court Tenant was in arrears in the period December 2016 to October 2017; and 14. The Savills tenant arrears reports, in particular: 1. What the Savills tenant arrears reports purported to represent; and 2. In light of the reconciliations performed, whether the Savills tenant arrears reports accurately recorded what they purported to represent. Mr Neil Shah 1. The primary judge noted that when preparing his report, Mr Hellen was instructed to make a number of assumptions which were controversial, and which arose from his analysis of the Savills MRI Reports together with copies of bank statements. In particular, the primary judge noted that Mr Hellen had relied upon certain comments in the form of annotations to documents which had been applied by Mr Neil Shah, a junior analyst with CPRAM, which identified and allocated various receipts. 2. Mr Neil Shah did not give evidence and, prior to the experts being called, counsel for Elanor objected to his annotations being received in evidence without him being called. Elanor's counsel submitted to the primary judge that he should not make findings of fact that rested on those untested annotations where there is a dispute over those annotations. 3. It is convenient to deal with that point now. 4. Elanor submitted before the primary judge and on appeal that no basis was provided for Mr Neil Shah's annotations. Elanor submits that in accepting Mr Hellen's evidence, the primary judge erred in accepting untested hearsay. 5. Unless a party establishes the assumptions upon which an opinion is based, since those assumptions are part of the reasoning process which led to the formation of the opinions, the opinion may not be admitted or if admitted, is of diminished weight: Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 at [86]. 6. Although Elanor's submissions were directed generally in relation to Mr Hellen's report, Mr Hellen's report makes it clear that there were seven annotations upon which Mr Hellen relied solely as the source of his information. 7. Those annotations concern three payments for Dizzy Dukes on 20 April 2017 ($2,664.45), 25 September 2017 ($11,327.76) and 26 September 2017 ($2,600) respectively (total $16,592.21); one payment for Mumbai Blues on 22 August 2017 ($8,864.01); and three payments for Redcliffe Noodle Kitchen on 2 May 2017 ($16,654.01), 23 August 2017 ($5,200) and 24 August 2017 ($500) respectively (total $22,354.01). 8. The respondents submit that in relation to Redcliffe Noodle Kitchen, it was only obligated to pay rent from 25 June 2017 (when it commenced trading) and there was evidence before the Court, which was accepted by Elanor at trial, that Redcliffe Noodle Kitchen had not had charges raised to it in June or July 2017. They submit that if the tenant is not invoiced, it cannot be said that the tenant was in arrears for those months. 9. That may or may not be correct but in any event, for the reasons which follow, the primary judge erred in his acceptance of Mr Hellen's evidence, where Mr Hellen relied solely upon the annotations by Mr Neil Shah. 10. If the annotations by Mr Neil Shah are ignored, the end result, by reference to the Joint Report Schedules as adjusted by removing those allocations, is: 11. Dizzy Dukes' position of being $27,265.28 in advance as at 31 July 2017 is reduced to an advance of $10,673.07; 12. Mumbai Blues' position of being in arrears of $3,164.63 as at 31 July 2017 is increased to arrears of $12,028.64; and 13. Redcliffe Noodle Kitchen's position of being $9,974.14 in advance as at 31 July 2017 is reduced such that it is in arrears of $12,380.01. 14. Accordingly, there were four tenants in arrears as at 31 July 2017, being Bel Cibo ($4,216.42), Mumbai Blues ($12,028.64), Redcliffe Noodle Kitchen ($12,380.01) and Sushi Kuni ($11,802.83) for a total arrears of $40,427.90, not three. 15. The reports of Mr Hellen and Mr Gwynne were received into evidence, along with the Joint Report. The consequence of not calling Mr Neil Shah in relation to the seven payments in question goes to the question of weight when it comes to considering Mr Hellen's report: Makita at [86]. Clearly, the primary judge was aware of the objection but accepted Mr Hellen's evidence, as varied as a result of the conclave and as reflected in the Joint Report. 16. The respondents submit further that Elanor does not link Mr Hellen's sole reliance on Mr Neil Shah's annotations to any particular finding in the judgment. That is not so. Self-evidently, the rental arrears for Mumbai Blues were directly affected by Mr Neil Shah's annotations and Redcliffe Noodle Kitchen went from being in advance to being in arrears as at 31 July 2017. 17. In all the circumstances, the failure to call Mr Neil Shah as a witness had the consequence that the primary judge erred in giving weight to Mr Hellen's opinion where it was based solely on those annotations. Mr Gwynne's Report 1. Mr Gwynne prepared a Report in which he was instructed to respond to Mr Hellen's Report by reviewing and commenting on Mr Hellen's calculations of rental arrears having regard to the information relied upon by Mr Hellen. Joint Report 1. In the Joint Report, the experts agreed that in respect of all of the Food Court Tenants, the only significant differences between the two experts is in respect of the timing of recording of transactions. The accounting evidence 1. The primary judge observed that the experts agreed: 2. As at 31 October 2017, the day before the Sale Contract settled, the only tenant in arrears was Burrito Bar in the amount of $11,022.85; 3. Kebab Express, Thai Me Down and Mass Nutrition were not in arrears at any time between December 2016 and October 2017; and 4. Redcliffe Noodle Kitchen was not in arrears before 31 July 2017, however the experts differed in their views about the period that followed. Mr Hellen considered Redcliffe Noodle Kitchen was in advance in the amount of $17,856.25 in September 2017 and $10,293.43 in October 2017. In contrast, according to the Savills tenant arrears reports, Redcliffe Noodle Kitchen's balance was nil as at October 2017. The two experts also referred to an unexplained difference of $10,293.43 between Mr Hellen's assessment of cash received and the cash applied according to the Savills records. I deal with that difference later in these reasons. 5. Whereas [4] of the Joint Report states that the only significant differences between the two experts was in respect of the timing of recording of transactions, the concurrent evidence provides an important insight into the difficulties faced by Mr Hellen in reconciling those records, particularly the Savills tenant arrears reports. 6. In concurrent evidence: 7. Mr Hellen said that the task he undertook required reconstruction from start to finish, that he used what records were available but it was not always the case that all records were available. Although he was able to use heavily redacted bank accounts and the Centre Manager's Reports (CMR), the reliability of those records was dependent on the information that had been entered into them. He said that in his opinion, the correct information had not been regularly or habitually entered; 8. Mr Gwynne agreed the Savills records were only as good as the information going in, but did not consider there to be significant errors. He said that in Mr Hellen's Report there were allocations made which are not backed up by source documentation, for example a remittance advice from a tenant or an electronic funds transfer remittance copy or an email trail; 9. Responding to that point, Mr Hellen said there were many occasions where a deposit was made on a day which comprised numerous deposits from different tenants and that part of his task was to go through whatever documentation was available, be it in the CMR statements, invoices, emails or anything, to try and determine how much should be allocated to a particular tenant. It was rare that a payment could be allocated to a particular invoice and that most of the time it was a matter of working out what should be allocated to the tenant; 10. Mr Gwynne agreed one of the issues with the bank statements was that there were many deposits that recorded an electronic payment, a number, and then an amount. The consequence was that all that could be seen in many cases was one transaction with an annotation to say "this relates to one or more tenancies". He considered that gave rise to significant limitations in the data. Mr Hellen agreed that there may be an annotation relating to, (say) two tenants but it was not possible to say how much was allocated to each tenant. By way of example, Mr Hellen said there would be an $80,000 amount in the bank statement and the challenge was to try to work out to whom it should be allocated and to what extent. Mr Hellen also said there were three months over the ten-month period under consideration for which he did not receive the CMR at all, and there were other occasions in respect of particular tenants with certain parts of the relevant CMR redacted which posed a significant difficulty. Mr Hellen confirmed he was not an auditor but that the accounts were "pretty messy". He continued that the Savills tenant arrears reports were not available for Sushi Kuni in March 2017, for Burrito Bar and Redcliffe Noodle Kitchen in July 2017, and for Kebab Express, Mass Nutrition and Thai Me Down in September 2017. Mr Hellen said he was not provided with tax invoices for the respective tenants; 1. The process that Mr Hellen undertook was to try and work out all of these elements in reconstructing the tenants' ledgers over the relevant period. He confirmed that the reconstruction was from source documents that were available to him, in addition to redacted bank statements. Further, Mr Hellen went through whatever other documentation would give a hint of what might be required or something might be allocated to, with that process being double-checked. Mr Gwynne noted there were two occasions where the allocations were greater than the cash receipts referred to in an email, namely one for Mumbai Blues and one for Redcliffe Noodle Kitchen; 1. Mr Hellen said the impact of the unavailability of, for example, tax invoices was that in a number of months there was no documentation showing how much was charged and for what. The result was that he had to work back from beginning balances and end balances of previous and following months to work out what happened in between and then find such other documents as he could to fill in the gaps in order to make a whole period work one month after the other; Mr Gwynne observed on this point that the October 2017 CMR, which the experts referred to as the CMR for December 2016 to October 2017, was important since it combined all transactions, however it gave no detail. He noted there were a lot of variations in the Joint Report Schedules as between Mr Hellen's Schedules and the figures in the Savills tenant arrears reports but that the October 2017 CMR might hold the key because it might then show what payments were allocated, what receipts were allocated, or how the October 2017 balances came to zero after an arrears balance at the end of September 2017; 1. On a number of occasions, Mr Hellen confirmed that an amount allocated to a security deposit had been allocated to rent and that if there was no other reference to the security deposit or evidence as to how the security deposit was to be addressed, he was instructed to apply monies to rent before a security deposit; 2. Mr Hellen again confirmed that the Savills accounts are "very messy" with Mr Gwynne agreeing that if the accounts had been kept in accordance with Australian accounting standards, what occurred should be self-evident from the ledgers. Mr Hellen also observed that there were some documents provided by Savills that ought not to have been redacted but had been; 3. Mr Hellen confirmed that during the period being examined, being December 2016 to October 2017, there were deposits totalling $345,679 that were not allocated to the nine Food Court Tenants. However, Mr Gwynne observed that if that was the case, all of the Food Court Tenants would be significantly in advance, a proposition with which Mr Hellen agreed. Mr Gwynne continued that the unallocated payments could relate to other tenants in the Centre; and 4. Given the discrepancies the experts identified, neither had any confidence that the monthly Savills tenant arrears reports were accurate. 5. The primary judge noted that the concurrent evidence revealed that there was always going to be a difference between Mr Hellen's Report and the Savills tenant arrears reports and it was those variances and the reasons for them which were the subject of the experts working together and producing the Joint Report. 6. The primary judge continued that in Mr Hellen's Expert Report dated 3 May 2023, he identified numerous instances where money received was not allocated to a tenant ledger in a timely way, the timing of non-cash credits applied to a tenant ledger was not always strictly in accordance with the Incentive Deeds, some deposits were omitted entirely, some amounts were required for security deposits and/or guarantee requirements and contributions were not recorded in the receivables ledgers for some tenants. Further, Savills did not raise charges or rent-free amounts to individual tenant ledgers and some rent abatement amounts were not applied in even monthly amounts. His Honour observed this was all detailed in the analysis set out in the Schedules to Mr Hellen's Report. 7. The primary judge noted that although Mr Hellen revisited and adjusted components of his Schedules in the revised Schedules attached to the Joint Report, those alterations did not support the overall proposition that the Savills tenant receivables ledgers were accurately maintained by Savills. His Honour also noted that it is from those ledgers that the Savills tenancy arrears reports were generated and the correspondence about asserted arrears was composed. 8. Elanor submitted to the primary judge that he should go behind the entries in the Joint Report, accept components of the evidence of Mr Gwynne, or otherwise have regard to and make findings in accordance with an arrears schedule prepared by counsel and annexed to Elanor's closing submissions. The primary judge did not accept that submission and refused to embark upon that task. 9. Elanor submits that by ignoring the appellant's arrears schedule, the primary judge did not have regard to a side-by-side comparison of the experts' findings and their concurrent oral evidence, nor an analysis of the experts' findings in conjunction with an analysis of the evidence. 10. I do not accept that submission and his Honour was entirely justified in taking that position. That is so for at least two reasons. 11. First, towards the end of the concurrent evidence, the primary judge confirmed with the expert witnesses that he could work off the Summary Schedule attached to the Joint Report and did not need to go into the detail on the other pages for the adjusted analysis. Mr Hellen agreed with that proposition. Mr Gwynne went further and invited the primary judge to go to the Nine Schedules dealing with each of the Food Court Tenants attached to the Joint Report which the experts had gone through during concurrent evidence, stating that those Schedules summarised everything succinctly. No counsel opposed that course. 12. Second, the respondents submit, and I accept, that parts of the submissions in Elanor's arrears schedule contradict the conclusions in the Joint Report but were not put to the accounting experts. The fact that Elanor takes a contrary view to that formed by the primary judge is not a basis to disturb the primary judge's findings. His Honour had the advantage of the Joint Report which was prepared following the conclave, as well as the concurrent evidence. Each of the matters in the arrears schedule for which Elanor contended should have been, but it seems were not, put to the experts. 13. After addressing the arrears position of each of the Food Court Tenants in accordance with the reconciliation undertaken by Mr Hellen, the primary judge noted that the evidence from Mr Hellen, some of which was agreed to by Mr Gwynne, was to the effect that the Savills tenancy arrears reports and individual tenancy receivables ledger contained material errors. 14. The primary judge was faced with the appellant relying on Savills' financial records but in relation to which two expert accountants expressed no confidence in their accuracy. His Honour found that the Savills records did not allocate amounts received to the month of receipt when they should have been; that Mr Hellen undertook an extensive reconciliation of the Savills records by reference to primary source documents, such as bank statements and tax invoices; and that Mr Hellen prepared a comprehensive analysis as compared to the more limited task performed by Mr Gwynne who had not interrogated the accuracy of the Savills records. 15. In making those findings, his Honour concluded that the prima facie evidentiary status as to the accuracy of the Savills tenant arrears reports had been displaced. I deal further with that issue below, but that conclusion was open to his Honour on the evidence. The six remaining Food Court Tenants 1. The primary judge identified that Elanor pleaded the Arrears Representations were misleading or deceptive or likely to mislead or deceive by reason of the fact that they were "incorrect and understated", such that objectively they were likely to lead into error: FASOC [46(f)]. 2. His Honour noted that this proposition was the subject of a very detailed particularisation in [42] of the FASOC in which Elanor pleads what it says was the actual position for each of the Food Court Tenants, relying upon a large body of evidence in the form of the Savills records, emails and other documents, cross referenced to the first affidavit of Mr McNaughton, which were admitted into evidence. 3. His Honour also noted that he was relieved of performing an individual reconciliation of the various documents to make findings of fact since that exercise had been undertaken by the two expert accountants who had produced the Joint Report. It is for the reasons I have also set out above that the primary judge was correct in proceeding in this way. 4. The primary judge dealt with the six remaining Food Court Tenants. Elanor challenges the primary judge's findings in relation to each of these tenants. Bel Cibo 1. His Honour found Bel Cibo was in arrears as at 31 July 2017 in the sum of $4,216.42. 2. In reaching that conclusion, the primary judge referred to the Savills tenant arrears reports which revealed the arrears as at 31 July 2017 totalled $16,271.53, and $10,242.95 as at 30 September 2017. The primary judge noted that in contrast, because Mr Hellen allocated $22,687 to the security deposit, the arrears for this tenant as at 31 July 2017 was reduced to $4,216.42 and $3,368.58 as at 31 August 2017. Further, Mr Hellen allocated a payment made by the tenant on 28 April 2017 to the tenant's account when it was received, as opposed to in May 2017 when it was applied by Savills to the account. 3. A further dispute concerning this tenant concerned the amount of $12,000 recorded as a payment in 2016 and received on 28 November 2016. 4. Relying in part on a notation made by Mr Neil Shah, Mr Hellen allocated the full $12,000 to Bel Cibo in December 2016, as opposed to Savills allocating $6,000 to the account in January 2017. The primary judge noted that documents shown to Mr Hellen revealed that $6,000 should be allocated to this tenant but that since he needed $6,000 to balance the account, he used the remaining $6,000 to balance it. It was in that context that Mr Hellen emphasised the point he made in his evidence that Savills records are "very messy". 5. It should be noted that in Mr Hellen's Report at [2.3.9], Mr Hellen does not list Bel Cibo as a tenancy in relation to which he relied solely on Mr Neil Shah's comments. 6. In making his factual findings, the primary judge noted that Elanor carried the onus of proof to demonstrate that the additional $6,000 should not be allocated to the arrears account of Bel Cibo. 7. Ultimately, his Honour was not satisfied on the evidence that the Savills records were accurate such as to establish that Bel Cibo was in rental arrears in the amount for which Elanor contended. 8. The primary judge's factual finding in relation to the arrears for this tenant as at 31 July 2017 in the sum of $4,216.42 was open on the evidence. Burrito Bar 1. Mr Hellen provided two scenarios. The first, (Scenario A) shows this tenant in arrears from May 2017 to October 2017. Those arrears match that shown in the Savills tenant arrears report. 2. The second, (Scenario B) shows the tenant in advance until the end of August 2017, at which time it fell into arrears for the month of September 2017 ($11,229.81) and October 2017 ($11,022.85). 3. The difference between the two scenarios was explained by the primary judge as being due to a non-cash credit that was ultimately applied against the rent to September 2017 but not posted until October 2017. His Honour noted Mr Hellen's view that credits raised in October 2017 should be taken into account in the period to which they relate, in this case September 2017. The primary judge also referred to a closer analysis by Mr Hellen which revealed that some of the credits appeared to relate to March to May 2017, although Mr Hellen had difficulty in establishing whether that was correct with any degree of precision. 4. Ultimately, the primary judge accepted the figures in the Joint Report in finding Burrito Bar to be in credit in the amount of $14,471.59 as at July 2017 (sic $14,782.10 - the primary judge had used the figure for June 2017 - nothing turns on this error). To the extent the primary judge found Burrito Bar was in arrears, that related to the position in October 2017 and is not relevant. 5. Elanor submits that Scenario B was unsustainable because the relevant credit was made pursuant to an instruction from Mr Neil Shah in an email dated 10 October 2017, requiring the credit to be applied to the September 2017 charges. That may be so but as I have set out above, that is not the only basis upon which Mr Hellen proceeded. 6. Elanor faces a further difficulty with that submission because the alternative Scenario A is consistent with the Savills tenant arrears report of July 2017 which shows Burrito Bar as having nil arrears as at 31 July 2017. Thus, even if the Savills tenant arrears report was to be accepted as being accurate, it does not assist Elanor. 7. The primary judge's factual finding that Burrito Bar was in credit as at July 2017 relies upon his Honour preferring Mr Hellen's evidence over that of Mr Gwynne, which his Honour explained was because of the thoroughness of the reconciliation Mr Hellen undertook and the fact he did not work from the assumption that the Savills records were correct. 8. The primary judge's factual finding in relation to the rental position for Burrito Bar was open on the evidence. Dizzy Dukes 1. The primary judge analysed the differences between the experts in their Joint Report. The differences between them centred on Mr Gwynne's opinion that Mr Hellen should not have allocated certain sums identified by him to rent. Mr Hellen had allocated amounts received for a security deposit to the security account but subsequently identified amounts which ought to have been applied to the security deposit but which were not receipted as such. 2. In cross-examination during concurrent evidence, Mr Gwynne accepted that various amounts should be allocated to the security deposit, leaving for allocation earlier amounts identified by Mr Hellen which should have been allocated to rent. 3. The summary Schedule attached to the Joint Report reveals Dizzy Dukes to be in credit as at July 2017. 4. The end result is that the primary judge accepted Mr Hellen's reconciliation that Dizzy Dukes was not in arrears at any point between December 2016 to October 2017 as opposed to that recorded in the Savills tenant arrears report. 5. The basis for the primary judge's finding that Dizzy Dukes was not in arrears at any point between December 2016 and October 2017 is clearly set out and was open on the evidence. 6. Elanor submits that other adjustments to the Savills tenant arrears report figures for Dizzy Dukes made by Mr Hellen were based on instructions provided by Mr Neil Shah, and for that reason cannot be relied upon as payments on behalf of this tenant. 7. It is for the reasons I have set out above, that even if Mr Neil Shah's annotations are ignored, as at July 2017, Dizzy Dukes was still in credit. 8. Next, Elanor submits that the timing of the credits to this tenant's account are wrong. Rather than earlier payments made being allocated to a security deposit, they have been applied to rent when, in September 2017 additional payments of security were paid. 9. Elanor submits that if the earlier payments of $13,750 and $27,500 were intended to be payments of rent, that leads to the rhetorical question of why rent was paid well before the rental obligation started to accrue in June 2017. With respect, the same question might be asked in relation to the security deposit, but in any event, the primary judge's factual finding was open on the evidence and mere disagreement is not a basis to disturb the primary judge's finding. 10. There is a further difficulty with Elanor's submissions which is that both experts agreed that the amounts paid by this tenant were greater than the allocation towards the security deposit. The inevitable conclusion that flows from that agreement is that there were excess funds over the obligation to provide the security deposit. It was those excess funds which Mr Hellen applied to rent. 11. The primary judge had the advantage of the Joint Report and hearing the views of the two experts in concurrent evidence. His Honour's factual finding in relation to the rent position for this tenant was open on the evidence. Mumbai Blues 1. The primary judge noted that after consultation between the two experts, Mr Hellen's adjusted July 2017 balance for this tenant was $3,164.63 in arrears, improving by October 2017 to a credit amount of $8,864.01. The Savills tenant arrears report records that Mumbai Blues was in arrears of $8,847.96 as at July 2017, $6,090.63 in August 2017, and $10,759.64 in September 2017 before a nil balance in October 2017. 2. The primary judge referred to Mr Hellen's evidence that whereas he could not be absolutely certain, after a complete reconciliation for this tenant, he had $8,864.01 left over which he applied to the October 2017 balance. The primary judge also referred to Mr Gwynne's observation that that sum was allocated in accordance with the annotation on a bank statement from Mr Neil Shah and the amount did not appear at all in the Savills records. The primary judge noted that in response to that evidence, Mr Hellen said it was "very curious" that the amount annotated by Mr Neil Shah was exactly the same amount as the excess sum calculated by Mr Hellen. 3. Mumbai Blues is one of the tenants in relation to which Mr Hellen relied solely upon a notation by Mr Neil Shah. 4. As I have set out above, Elanor submitted that because Mr Neil Shah was not called, an unallocated amount of $8,864.01, which matched precisely with the amount Mr Hellen had calculated as the amount by which Mumbai Blues was in credit as at October 2017, should not be taken into account. 5. I accept that submission for the reasons I have set out. The failure to call Mr Neil Shah deprived Elanor of challenging the factual basis underpinning Mr Hellen's opinion. 6. Next, Elanor submits that a significant aspect of the difference between Mr Hellen and the Savills tenant arrears reports relates to a payment of $5,683.33 which the two experts agreed was paid on 10 March 2017 but not applied to this tenant's account until August 2017. 7. Elanor submits that the payment records for this transaction show that this was a payment into Savills account by Alceon and not Mumbai Blues, such that there was no payment by Mumbai Blues at this time. Elanor refers to a transfer from "Bluewater Trust" on 10 March 2017 and a subsequent decision made by Mr Neil Shah to credit that payment to Mumbai Blues on 15 August 2017. It seems that Mr Hellen did not know of that trust account. 8. As best as I can understand the submission, Elanor submits that Mr Hellen did not know of this account and the decision to credit the amount of $5,683.33 was due to an instruction from Mr Neil Shah. 9. Although there is no suggestion that the sum of $5,683.33 was improperly credited or that the payment should have been allocated to another tenant, again the absence of Mr Neil Shah being called as a witness deprived Elanor from challenging the factual basis for Mr Hellen's opinion. 10. The failure to call Mr Neil Shah as a witness on this point was significant. 11. The primary judge's factual findings in relation to the arrears for Mumbai Blues were in error for the reasons I have set out. Redcliffe Noodle Kitchen 1. The primary judge considered the Savills tenant arrears reports and Mr Hellen's reconciliation for this tenant. His Honour noted the Savills tenant arrears reports as reproduced in the Joint Report, Schedule 7 revealed that between December 2016 and July 2017, the rental position for this tenant was "not known". 2. Mr Hellen's reconciliation revealed that Redcliffe Noodle Kitchen was in credit in the amount of $16,654.01 in May 2017 with the balance reducing until October 2017 when the credit was $10,293.43. 3. The primary judge referred to Mr Hellen's sole reliance on the identification by Mr Neil Shah of two payments comprising $16,654.01 and $14,063.91 relating to this tenant and observed that Mr Gwynne was not able to identify any documentation which supported those allocations. 4. His Honour continued that notwithstanding the fact that Mr Hellen placed reliance upon the identification of those two amounts in annotations made by Mr Neil Shah, nonetheless his Honour was not satisfied that Elanor had established the arrears balances which were recorded in the Savills tenant arrears reports for August and September 2017. That was because of the primary judge's overall finding that those records were not reliable. 5. The primary judge found in accordance with the joint position of the experts that there were no arrears for this tenant in July 2017 and none before that month. 6. Elanor submitted before the primary judge that this tenant was in arrears since June 2017, relying on an email from Mr Neil Shah sent 18 August 2017 which records arrears as at July 2017 of $5,546 ($3,605 base rent) and total arrears as at 31 August 2017 of $11,944 ($7,931 base rent). Self-evidently, Elanor does not rely on the Savills records for 31 July 2017 which the Joint Report, Schedule 7 records as "not known". 7. Having relied upon an email from Mr Neil Shah to support its contention that Redcliffe Noodle Kitchen was in arrears at 31 July 2017, Elanor submits the primary judge was in error in accepting Mr Hellen's reliance on an annotation by Mr Neil Shah to apply two payments of $16,654.01 on 2 May 2017 and $14,063.91 on 27 September 2017 to rent. 8. Nonetheless, the primary judge erred in relying solely on Mr Neil Shah's annotations for the reasons I have set out previously. 9. In these circumstances, the primary judge's factual finding in relation to the rental position for this tenant in July 2017 and in the period up to that month, was in error. Sushi Kuni 1. Mr Hellen presented two scenarios, one resulting in a credit and the other in arrears. 2. The experts agreed, that when the entire period between December 2016 and October 2017 was analysed and reconciled, the ultimate balance for this tenant was nil. 3. The primary judge found Sushi Kuni was in rental arrears for the months of April to August 2017, but that the tenant was making regular payments so that there were no material arrears within that period. The primary judge found that by September 2017, Sushi Kuni was in credit on either analysis and by October the balance was nil. Summary of the primary judge's conclusion as to rental arrears 1. After a detailed analysis of each of the six remaining Food Court Tenants, the primary judge found that as at 31 July 2017, only three tenants were in arrears: Bel Cibo ($4,216.42); Mumbai Blues ($3,164.63); and Sushi Kuni ($11,802.83). 2. The primary judge should have found that as at 31 July 2017, there were four Food Court Tenants in arrears with Redcliffe Noodle Kitchen being the fourth. 3. Further, the primary judge was not satisfied Elanor had established that for the six remaining Food Court Tenants in issue, as at 31 July 2016 [sic 2017], there were rental arrears or other amounts payable under the leases of more than 30 days. That factual finding was not open to the primary judge on the evidence for the reasons I have set out. Were the Arrears Representations made? 1. There were three types of arrears representations pleaded: express, implied and oral. 2. In considering this issue, it is important to maintain the distinction between the actual rental position as determined by the expert accountants and what was represented in the Savills tenant arrears reports had they been provided. Express representations 1. The express Arrears Representations were pleaded in [44(f)(i)] of the FASOC. 2. The primary judge had found that contrary to the data room tenant arrears reports, there were three Food Court Tenants in rental arrears as at the end of July 2017, namely: Bel Cibo, Mumbai Blues and Sushi Kuni. The primary judge also found the arrears representation had been made expressly. 3. However, those findings reflect the actual arrears position as at 31 July 2017 based on a detailed examination by expert accountants. 4. The Savills tenant arrears reports produced under subpoena revealed: 5. As at 20 December 2016, Bel Cibo was in arrears of $21,213.19 and Sushi Kuni was in arrears of $19,742.56; 6. As at 7 February 2017, Bel Cibo was in arrears of $2,523.95 and Sushi Kuni was in arrears of $4,028.58; 7. As at 5 April 2017, Bel Cibo was in arrears of $7,529.44; 8. As at 5 May 2017, Bel Cibo was in arrears of $10,754.70 and Sushi Kuni was in arrears of $15,708.59; 9. As at 1 June 2017, Dizzy Dukes was in arrears of $5,197.08, Burrito Bar was in advance of $40.51, Bel Cibo was in arrears of $10,231.11, Sushi Kuni was in arrears $23,614.79 and Mumbai Blues was in arrears of $5,921.96; 10. As at 7 June 2017, Dizzy Dukes was in advance of $13,750.02, Burrito Bar was in arrears in the sum of $5,278.50, Bel Cibo was in arrears in the sum of $7,882.23, Sushi Kuni was in arrears of $14,328.90, and Mumbai Blues was in arrears of $2,961.01; 11. As at 6 July 2017, Dizzy Dukes was in advance of $5,197.08, Bel Cibo was in arrears of $10,231.11, Sushi Kuni was in arrears of $19,214.7 and Mumbai Blues was in arrears of $5,921.96; and 12. As at 15 August 2017, Dizzy Dukes was in arrears of $2,899.17, Bel Cibo was in Arrears of $16,271.53, Sushi Kuni was in arrears of $21,088.72, Mumbai Blues was in arrears of $8,847.96. Mass Nutrition, Thai Me Down and Kebab Express were in advance. 13. The next report at AB 623, although said to be for the period 09/17, was not printed until 5 October 2017 and therefore was after the date Elanor's Directors voted to acquire the Centre. Implied representation 1. The primary judge identified the implied Arrears Representations allegations as those set out in [44(f)(ii)] of the FASOC. 2. It is alleged that the implied Arrears Representations arose from the circumstances in which the data room tenant arrears reports and the October arrears reports were provided in the absence of any other documentation or information of a similar nature for different periods or different tenants being provided. 3. Elanor submits the implied element of the Arrears Representations derived from the provision of the data room tenant arrears reports absent any other information as to tenancy arrears at the end of each month. 4. That submission relies upon the data room tenant arrears reports as providing information as to the tenancy arrears for the specific month. That is contrary to the understanding of the expert accounting witnesses, contrary to the evidence of Ms Hansen, and contrary to the view I take as to the data room tenant arrears reports and the Savills tenant arrears reports. 5. In any event, the primary judge considered Elanor's case that the data room tenant arrears reports reflected the position at the end of the month. Noting that the implication cannot be inconsistent with the objective meaning of the data room tenant arrears reports, the primary judge concluded the implied representation contention takes Elanor's case no further than the express representation case. His Honour was correct in reaching that conclusion. Oral representation 1. The oral representation was pleaded in [44(f)(iii)] of the FASOC. 2. Mr Hamilton, accompanied by two of his Associates, met with Mr Frenil Shah, a Director of CPRAM on 30 August 2017. 3. CPRAM had been engaged by Alceon as asset manager and Mr Frenil Shah was responsible for the oversight of day-to-day management administration of the Centre, financial analysis and reporting, as well as directly liaising with the tenants. 4. Mr Frenil Shah denied that during the meeting he was asked to comment on the trading performance of the tenants; denied he was asked about whether there was a history of tenant arrears; denied he was asked about whether tenants were likely to renew leases; and denied being asked questions in relation to each of the tenants listed in a file note prepared by Mr Hamilton. He maintained Mr Hamilton did not ask him direct questions in relation to the trading performance of each of the Food Court Tenants. 5. Further, Mr Frenil Shah did not identify any Food Court Tenant as having outstanding rental arrears as at 30 August 2017. As the above analysis shows, that was demonstrably false. 6. The primary judge characterised Mr Frenil Shah as an unimpressive witness who was not forthcoming in his evidence; whose evidence was not reliable where it conflicted with that of Mr Hamilton and contemporaneous documents; and on occasion gave unimpressive and incredulous evidence. The primary judge concluded that Mr Frenil Shah was unwilling to give evidence that he perceived contrary to the interests of the respondents. 7. The primary judge found this element of the appellant's pleading had been made out. The allegations with which his Honour was there dealing with is what is known as the Commencement Date Representations: [44(e)] of the FASOC, however the primary judge also used his findings in relation to the oral Arrears Representations. 8. I pause to note that Elanor submits that although the primary judge was critical of the evidence given by Mr Frenil Shah as to the allocation to the Dizzy Dukes rental account of $13,750 as a pre-payment of rent, which the primary judge indicated could not be accepted in light of the contemporaneous business records, his Honour contradicted that finding later in the reasons. That contradiction is said to occur when the primary judge was dealing with the rental arrears account for Dizzy Dukes, at J [199]-[204]. In these passages the primary judge referred to Mr Gwynne's opinion that two sums comprising $13,750 and $27,500 received in February and April 2017 should not have been allocated to rent but to security. In contrast, Mr Hellen had initially assumed those two sums should have been allocated to the security account but on further analysis considered that the sum of $27,500 and a further small amount paid on 20 April 2017 should have been allocated to rent. There was no further mention by Mr Hellen of the sum of $13,750. 9. The consequence is that there is no inconsistency. The amount of $13,750 was allocated to security. Non-disclosure 1. Part of Elanor's pleaded case in relation to the Arrears Representations was that Elanor alleged: at [46A]-[46C] of the FASOC that Alceon should have disclosed any arrears of more than 30 days during the period December 2016 to July 2017 and that the failure to do so gave rise to a reasonable expectation by Elanor that none of the Food Court Tenants were in arrears for more than 30 days during that period. 2. The primary judge was not satisfied that Elanor had established that any of the six remaining Food Court Tenants in issue, as at 31 July 2017, were in arrears of more than 30 days for rental or other amounts payable under the leases. 3. In reaching that conclusion, the primary judge was relying on the actual position as revealed by the expert accounting evidence, which he accepted. The primary judge erred in taking that approach because the Savills tenant arrears reports revealed that there were Food Court Tenants in arrears of rental for over 30 days during the period 20 December 2016 to 15 August 2017. It did not matter the Savills tenant arrears reports were correct or not. Had they been made available, that is what they revealed. Ground one of the respondents' notice of contention 1. Ground one of the respondents' notice of contention provides: That the Arrears Representations (as defined at Judgment, [34(6)] were not made because the Tenant Arrears Reports (as defined at Judgment, [30]) stated the arrears positions of tenants as at the dates that the reports were printed, not as at the end dates of the corresponding months for the reports. 1. The issue of whether the Arrears Representations were made or not did not depend on whether the data room tenant arrears reports or the July arrears report were current as at the end of the month in question or the print date. In no case did the data room tenant arrears reports or the July arrears report record any Food Court Tenant as being in arrears. The issue was whether the information contained within those reports was misleading or deceptive or likely to mislead or deceive. Accordingly, the distinction sought to be drawn by the respondents in ground one of the notice of contention should be dismissed. The Arrears Representations in Context 1. The primary judge addressed the representations arising out of the July arrears report and Mr Frenil Shah's oral representations against the entire course of relevant conduct for the period from 2 May 2017 (when the Information Memorandum was provided) to the time Elanor's Directors signed the circulating resolution on 9 September 2017. 2. Prior to doing so, the primary judge referred to the principles he had set out as to whether conduct is misleading or deceptive or likely to mislead or deceive. 3. The primary judge referred to Butcher v Lachlan Elder Realty Pty Ltd [2004] HCA 60 (2002); 218 CLR 592 at [39] (Gleeson CJ, Hayne and Heydon JJ) and [108]-[109] (McHugh J). The primary judge noted that although McHugh J dissented in the result, what his Honour said in the cited paragraphs is authoritative: Section 52 applies to a wide range of conduct. Confining "conduct" in s 52 to "representations" is to ignore the ordinary meaning of "conduct". Furthermore, such a restricted reading of the section cannot be reconciled with the terms of other sections in Pt V that specifically refer to representations. Thus, s 53 of the Act is directed at "false or misleading representations" in connection with the supply, possible supply or promotion of the supply or use of goods and services. Similarly, s 53A, among other things, is directed at false or misleading representations in connection with the sale or grant, or the possible sale or grant, or the promotion of the sale or grant of an interest in land. Section 52 is not limited to conduct in relation to statements about goods or services. Nor is it limited to activity in relation to the sale or grant of interests in land (including the promotion of the sale of an interest in land). For the purposes of s 52, "engage in conduct" extends to conduct concerning land, including conduct in connection with the promotion of the sale of interests in land (see s 53A(2A)). The question whether conduct is misleading or deceptive or is likely to mislead or deceive is a question of fact. In determining whether a contravention of s 52 has occurred, the task of the court is to examine the relevant course of conduct as a whole. It is determined by reference to the alleged conduct in the light of the relevant surrounding facts and circumstances. It is an objective question that the court must determine for itself. It invites error to look at isolated parts of the corporation's conduct. The effect of any relevant statements or actions or any silence or inaction occurring in the context of a single course of conduct must be deduced from the whole course of conduct. Thus, where the alleged contravention of s 52 relates primarily to a document, the effect of the document must be examined in the context of the evidence as a whole. The court is not confined to examining the document in isolation. It must have regard to all the conduct of the corporation in relation to the document including the preparation and distribution of the document and any statement, action, silence or inaction in connection with the document. (Citations omitted). 1. In Self Care I P Holdings Pty Ltd v Allergan Australia Pty Ltd [2023] HCA 8; (2023) 97 ALJR 388 at [80]-[84] (Kiefel CJ, Gageler, Gordon, Edelman and Gleeson JJ), the High Court said that in determining whether a person has breached s 18 of the ACL, four steps are involved. The first and second involve identifying with precision the conduct about which complaint is made and whether that conduct was "in trade or commerce". The third step is to consider what meaning the conduct conveyed, and the fourth step is to determine whether that conduct "in light of that meaning was 'misleading or deceptive or … likely to mislead or deceive'". As to this last point, see Google Inc v Australian Competition and Consumer Commission [2013] HCA 1; (2013) 249 CLR 435, [89] (Hayne J). 2. In relation to the third and fourth steps identified in Self Care, the High Court said: at [82]: The third and fourth steps require the court to characterise, as an objective matter, the conduct viewed as a whole and its notional effects, judged by reference to its context, on the state of mind of the relevant person or class of persons. That context includes the immediate context – relevantly, all the words in the document or other communication and the manner in which those words are conveyed, not just a word or phrase in isolation – and the broader context of the relevant surrounding facts and circumstances. It has been said that "[m]uch more often than not, the simpler the description of the conduct that is said to be misleading or deceptive or likely to be so, the easier it will be to focus upon whether that conduct has the requisite character". That said, the description of the conduct alleged and identified at the first step should be sufficiently comprehensive to expose the complaint, because it is that conduct that will ultimately, as a whole, be determined to be or not to be misleading or deceptive. (Citations omitted) 1. The primary judge had identified the context in which the express and oral representations were made as being a component of a large amount of information made available in the data room. That information included monthly rental tax invoices for the period January to May 2017; tenant recovery letters for the 2017 financial year; monthly turnover data for the period March to July 2017; and outgoings recovery records for the 2018 financial year. 2. The primary judge found Elanor made no attempt to reconcile amounts charged with amounts paid, nor examine the detail of the available documentation. That is not surprising given there was no information provided in the form of the data room tenant arrears reports, including the July arrears report, that indicated further investigation was required. His Honour found that the Savills records contained detailed monthly reconciliation of amounts charged and paid by each tenant, but they were not made available in the data room. Nonetheless, the primary judge found no request was made by Elanor or Mr Hamilton for this type of information, nor did Elanor make use of the question and answer facility in the data room. Still further, his Honour found that Elanor could have clarified the ambiguity it found existed in the data room tenant arrears reports. 3. Nonetheless, the primary judge considered those circumstances without addressing the Savills tenant arrears reports which had not been made available and which on their face, showed numerous Food Court Tenants in arrears of rental. Had those documents been provided, at the least, Elanor would have been put on notice that there was an issue as to arrears of rental and that further investigations were required. 4. Elanor submits that the primary judge's finding in this part of his Honour's reasons, (at J [165]) that Elanor did not examine the detail, nor make any attempt to reconcile amounts charged with amounts paid; could have asked whether the July arrears report was a correct and complete statement of all rental arrears for each tenancy to 31 July 2017; or sought clarification as to the difference between the print date and the date of the last payment in the July arrears report and the month to which it relates, does not avoid a finding of misleading conduct. It submits further that the suggested need to make further inquiries of records imposed an improper and uncommercial impost. 5. Elanor submits the primary judge's approach was contrary to legal principle and industry practice. Industry practice 1. As to the submission that the primary judge's approach was contrary to industry practice, that appears to be based on a single answer in Mr McNaughton's evidence which the primary judge set out at J [163]. In that passage, Mr McNaughton accepted in cross-examination that Elanor accepted the risk as to whether or not the information prepared by Savills was reliable or alternatively accurate, and that Elanor could have undertaken due diligence of the accuracy of the financial information or material that Savills had regarding the Centre, "If time, cost and industry practice permitted, then - yes". Mr McNaughton continued by accepting that he did not turn his mind to that. 2. Putting aside the obvious difficulty that the Court was not taken to any evidence which identified in any detail what is encompassed by the term "industry practice", in the particular context of this matter, Elanor submitted on appeal that the "industry practice" concerned the asking of questions. As I understand the submission, Elanor contends that because there was no information about tenant arrears in the material made available to it, there was no basis to ask questions. 3. I accept that submission. Irrespective of the accuracy or otherwise of the Savills tenant arrears reports, as I have noted above, provision of those documents would have put Elanor on notice. 4. Elanor submits further that the primary judge ignored the context of the provision of the data room tenant arrears reports, in particular that knowledge of historical arrears assisted in assessing the risk profile of acquiring the Centre. 5. There are two parts to that submission. I do not accept the primary judge ignored the context of the provisions of the data room tenant arrears reports. However, because his Honour considered the actual position as opposed to what was revealed in the Savills tenant arrears reports, his Honour did not consider the historical arrears position revealed in the Savills tenant arrears reports which would have assisted in Mr Hamilton and Elanor in assessing the risk profile of acquiring the Centre. To that extent, I accept Elanor's submission. 6. The primary judge noted that in cross-examination, Mr McNaughton conceded that Elanor accepted the risk as to whether or not the information prepared by Savills (which included the data room tenant arrears reports) was reliable or alternatively accurate, and that Elanor could have, if it chose to do so, undertaken due diligence of the accuracy of the financial information material that Savills had regarding the Centre, but that Elanor did not turn its mind to it. With respect to his Honour, missing from that analysis is the provision of the Savills tenant arrears reports which showed Food Court Tenants in rental arrears, in two cases for extended periods. 7. Although the primary judge referred to the evidence as to what material was available to Elanor, including the monthly trade data and the financial due diligence report prepared by Mr Hamilton of CBRE, which noted that there was a threat to the trading performance of the new external restaurant precinct in that it was unproven and that it remained to be seen if it would provide "the hope for increase in sales and customer traffic", that information was incomplete. 8. The primary judge referred to the "clear and logically probative evidence of Mr Hamilton" that six of the 14 tenants in the food catering category had sales of three months or less; that Mr Hamilton could not identify whether a tenant was at risk of falling into rental arrears from one or two months of figures; and that it may take up to a year to make a judgement on that question. So much so may be accepted but it does not address what the Savills tenant arrears reports revealed and deprived Elanor of the information upon which it could act, if so advised. 9. The primary judge also found, contrary to the evidence of Mr McNaughton, that if the tenant is not reporting monthly sales, that is a relevant indicator that the tenant is not trading, or not trading very well, and is therefore at risk of rental default, a risk it had accepted. It was open to the primary judge to accept that evidence but it does not detract from the information in the Savills tenant arrears reports which impacted on Elanor's decision as to whether or not to accept that risk. 10. Elanor also submitted on appeal that Mr Frenil Shah was fully aware of the significance of the data room tenants arrears reports. That submission should be accepted and is of particular consequence given the Savills tenant arrears reports. 11. Elanor had retained CBRE to carry out a "financial and tenancy due diligence service" which included as part of its scope of works "'a critical review of all income and expenditure' to cover a number of issues including: a review of the commercial aspects of the lease agreements and audit of the tenancy schedule, the identification of any clause in the lease 'that may have an impact on the income stream', review of the trading performance of the property including the major tenants and each individual tenant, review and comment 'upon the current arrears report', the undertaking of a SWOT analysis, the identification of '"problem" tenants' by analysis of arrears reports and the undertaking of a check of rental and other charges due under each lease with the charges depicted on monthly invoices." 12. The primary judge included as a part of the relevant facts and circumstances that both the July arrears report and the failure of Mr Frenil Shah to disclose any tenancy arrears for Food Court Tenants must be viewed in the context of the considerable amount of information made available to Elanor during the due diligence period. Again, so much may be accepted, but the critical information was that revealed by the Savills tenant arrears reports which were not made available. 13. In considering the surrounding relevant facts and circumstances, the primary judge referred to the fact that Mr McNaughton and Mr Baliva of Elanor were very experienced in commercial property transactions; that Elanor is and was at the time a sophisticated commercial property investor; that Elanor had been provided with access to the data room together with the question and answer facility; that no relevant additional questions were asked in relation to the conduct that is claimed to have been misleading or deceptive; and that additional documents could be requested but that no relevant requests were made. The same point that I have stated above arises in relation to the failure to provide the Savills tenant arrears reports. 14. Finally, whatever industry practice may have entailed, it is inconceivable that it involved the type of forensic analysis carried out by the expert accountants. The failure to provide the Savills tenant arrears reports was a significant component of the respondents' conduct. Authority 1. As to the submission that the primary judge's approach was contrary to authority, Elanor refers to Henjo Investments Pty Ltd v Collins Marrickville Pty Ltd (No 1) (1988) 39 FCR 546, 558 (Lockhart J) where his Honour said: It is no answer to say that Collins Marrickville should have made its own inquiries and that, if it had done so, it would have found out the true position: see Redgrave v Hurd (1881) 20 Ch D 1 per Jessel MR at 14 and 17; per Baggallay LJ at 23, in the context of the equitable right to rescind for innocent misrepresentation. It is true that Mr Collins recognised the importance of verifying the material given to him by Mr Le May about the seating capacity of the restaurant and that, had his solicitor done what he should have done, the true position would have emerged and the sale probably would not have proceeded. But these circumstances did not negate the duty to disclose which the circumstances otherwise imposed. 1. Elanor relied upon the Savills tenant arrears reports at trial in an attempt to establish the actual rental position of the Food Court Tenants, albeit unsuccessfully, but for the reasons I have explained, ultimately that did not matter. It was the fact of what was revealed, albeit inaccurately, that had it been made available would at the least have put Elanor on notice that further questions needed to be asked. Henjo is on point. 2. Elanor also refers to the statement by McHugh J in Butcher at [111] that: Conduct is misleading or deceptive if it induces or is capable of inducing error. A corporation does not avoid liability for breach of s 52 because a person who has been the subject of misleading or deceptive conduct could have discovered the misleading or deceptive conduct by proper inquiries. Conduct that objectively leads one into error is misleading. 1. McHugh J was describing what was required for conduct to be misleading or deceptive. His Honour had observed previously that whether conduct was misleading or deceptive, or is likely to mislead or deceive, is a question of fact and that in determining whether a contravention of s 52 (of the Trade Practices Act 1976 (Cth)) has occurred, the task of the court is to examine the relevant course of conduct as a whole. McHugh J's observations at [111] are directed at a corporation avoiding liability for a breach of s 52 because the person who has been the subject of the misleading or deceptive conduct could have discovered that misleading or deceptive conduct by proper inquiries. It is that question of fact, i.e, was the conduct in question misleading or deceptive or likely to mislead or deceive, which has to be considered in the context of the relevant facts and circumstances: Self Care at [82]. If so, it is not an answer for a corporation to avoid liability to say that the person who had been the subject of the conduct could have discovered that it was, in fact, misleading or deceptive. 2. Accordingly, I accept the submission that the primary judge adopted an approach which was contrary to legal principle. In arriving at his conclusion that the representations which Elanor had established were not misleading or deceptive or likely to mislead or deceive, when considered in the context of the surrounding relevant facts and circumstances (Self Care at [82]), the primary judge omitted to consider what the Savills tenant arrears reports would have revealed had they been made available. 3. Overall, Elanor submits the primary judge concluded erroneously that when all the circumstances his Honour identified are taken into account and properly considered, his Honour was not satisfied Elanor had established that, in context, the July arrears report was misleading or deceptive in relation to the rental arrears of three Food Court Tenants, nor that the failure by Mr Frenil Shah to disclose that the arrears position for three tenancies, was misleading or deceptive conduct or conduct that was likely to mislead or deceive within the meaning of s 18 of the ACL. 4. It follows from what I have set out above that I accept that submission. 5. It is for these reasons that Elanor's contention that the primary judge erred in his consideration of the context in which the Arrears Representations were made should be accepted. The grounds of appeal relating to the Arrears Representations 1. Ground three of the grounds of appeal contends that the primary judge erred in finding that the respondents had not engaged in conduct that was misleading or deceptive or likely to mislead to deceive within the meaning of s 18 of the ACL. Relevant to the Arrears Representations are grounds 3(c)-(p). Grounds 3(c) and (f) 1. These grounds contend that the primary judge: (c) failed to consider, or alternatively not finding that, (at J[82]-[84]) the Appellant's claim in respect of misleading or deceptive conduct extended to the provision of the December 2016 to June 2017 and August 2017 arrears reports; and (f) found (at J[156]) that it was not necessary to interrogate the arrears reports for December 2016 and January, February and May 2017. 1. These grounds contend that the primary judge erred in addressing only the July arrears report. It is for the reasons set out above at [554]-[576], that these grounds fail. Ground 3(d) 1. Elanor contends that the primary judge erred in finding (J [66]) that the turnover data was a reliable indicator as to whether tenants had or had not commenced to trade. 2. Whereas for the reasons given in [208] that finding was open to his Honour, in the overall context and the entirety of the conduct, it did not detract from the failure to provide the Savills tenant arrears reports. 3. Nonetheless, as a ground viewed in isolation and where Elanor makes no attempt to link the error to why the appeal should be allowed, this ground fails. Ground 3(e) 1. This ground contends the primary judge erred in finding (at J [103]) that the July 2017 arrears report recorded arrears and not a credit of amounts. 2. The arrears report to which the primary judge refers in this part of his Honour's reasons is contained in section 11 of a due diligence report dated 18 September 2017 prepared by CBRE for Elanor. Assuming Elanor's contention to be correct, that means that the July 2017 arrears report recorded a credit in the sum of $2,957.05. To the extent there was an error, it is an error by Elanor's own consultant. 3. This ground fails. Ground 3(g) 1. This ground is of broad compass and contends that the Court erred in finding that Elanor had not established that the Arrears Representations were misleading and deceptive or likely to mislead and deceive within the meaning of s 18 of the ACL. 2. It is for the reasons at [677]-[733] above that this ground succeeds. Grounds 3(h) and (i) 1. Ground 3(h) contends that the primary judge erred in placing (at J [197]) less weight on the expert accounting evidence of Mr Gwynne because he undertook an analysis of Mr Hellen's report and not a complete analysis of the Savills reports and documents. 2. Ground 3(i) contends that the primary judge erred in not finding that the arrears of the Food Court Tenants wholly or substantially accorded with arrears reports produced by Savills as the Centre Manager for the respondents and provided to Elanor after its acquisition of the Centre. 3. It is clear from the expert evidence that the Savills records were unreliable, but as I have noted, that is not to the point. The primary judge was satisfied, with respect correctly, that such was the unsatisfactory state of the Savills tenant arrears reports that a reconciliation of the type conducted by Mr Hellen, as adjusted in discussions between him and Mr Gwynne, provided the best analysis of the actual arrears position. However, had Elanor been provided with the Savills tenant arrears reports, it would have, at the least, been put on notice to make the type of inquiries the primary judge found were not made. 4. Nonetheless, this ground fails. Ground 3(j) 1. Ground 3(j) contends that the primary judge erred in accepting (at J [204] and [216]) the evidence of Mr Hellen that the records of Savills were "very messy". 2. I have dealt with this issue when considering the expert evidence. 3. An examination of the expert reports, the Joint Report, and the evidence given in the concurrent evidence reveals that there is no doubt the Savills records were "very messy". 4. This ground fails. Ground 3(k) 1. Ground 3(k) contends the primary judge erred (at J [216]) in finding that the prima facie accuracy of the Savills tenancy arrears reports arising by reason of s 286 of the Corporations Act 2001 (Cth) was displaced. 2. Section 286 of the Corporations Act imposes an obligation on a corporation to keep financial records and the reference should include a reference to s 1305(1) of the Corporations Act which provides: (1) A book kept by a body corporate under rule requirement of this Act is admissible in evidence in any proceeding and is prima facie evidence of any matter stated or recorded in the book. (2) … 1. It is clear that s 1305(1) does not operate so as to require the tribunal of fact to make a finding in accordance with what is contained in the books of the company in the absence of proof to the contrary. Although prima facie evidence of the matters contained within them, it is ultimately a question of "the weight of that evidence … to be measured in accordance with the common sense of the tribunal of fact": Australian Securities and Investments Commission v Rich [2009] NSWSC 1229; (2009) 236 FCR 1 at [397] (Austin J). 2. Further, it is open to the tribunal of fact to find that the prima facie evidence status of the company's books (here Savills) is outweighed by other evidence, or by the quality or characteristics of the books. Accordingly, it is open to the tribunal of fact to reject as evidence any matter contained within the books for reasons it considers appropriate: Rich at [398]. 3. The passages in Rich at [397]-[398] to which I have referred were cited with apparent approval by the Full Court in Carter v Commissioner of Taxation [2020] FCAFC 150 at [36] (Jagot, Davies and Thawley JJ). 4. The underlying transactions and the accuracy of the Savills records were squarely in issue in this matter and their accuracy and reliability directly challenged such that s 1305 does not assist Elanor. See also Advanced Holdings Pty Ltd as trustee for The Demian Trust v Commissioner of Taxation [2021] FCAFC 135, [169] (Logan, McKerracher and Perram JJ). 5. The primary judge had ample evidence upon which to base his finding that the presumption had been displaced but for the reasons set out above, that does not assist the respondents on the issue of whether their conduct was misleading or deceptive or likely to mislead or deceive. 6. This ground fails. Ground 3(l) 1. Ground 3(l) contends that the primary judge erred in finding (at J [207]) that Elanor bore the onus of proving the accuracy of the Savills financial records including the Savills tenant arrears reports. 2. His Honour's observations about Elanor failing to discharge its onus of proving the accuracy of the Savills records has to be seen in the light of the primary judge's finding that the respondents had established that the Savills tenant arrears reports were not accurate. Under those circumstances, the onus shifted to Elanor to counter the respondents' case to that effect, an onus it failed to satisfy. 3. This ground fails. Ground 3(m) 1. Ground 3(m) contends that the primary judge erred in refusing to consider (J [217]) and make findings in accordance with the primary financial records reflected in the appellant's Arrears Schedule annexed to its closing written submissions. 2. I have dealt with this issue at [606]-[609] above and it is for those reasons that this ground fails. Ground 3(n) 1. The appellants submit that the primary judge erred in finding (at J [236] - J [237]) that by reason of no Food Court Tenant being in arrears as at 31 October 2017, the arrears reports disclosing arrears at a single point of time meant the arrears reports were not misleading. 2. The point the primary judge was making was that because no Food Court Tenant was in arrears as at 31 October 2021, then even if Food Court Tenants had been in arrears as at 31 July 2021, those arrears had been cleared. That highlighted to the primary judge why arrears at a single point in time made it difficult to conclude that a representation was misleading in context. 3. With respect to the primary judge, it was the history of arrears which was the issue with which Mr Hamilton and Elanor were concerned. 4. It is for that reason that this ground succeeds. Ground 3(o) 1. Ground 3(o) contends that the primary judge erred in finding (at J [245]) that the July arrears report and the failure of Mr Frenil Shah to disclose arrears were not misleading or deceptive. 2. I have dealt with this issue at [677]-[733] above and it is for those reasons that this ground succeeds. Ground 3(p) 1. Finally, the appellants submit that the primary judge failed to find that each of the December 2016 and January to August 2017 data room tenant arrears reports were misleading or deceptive or likely to mislead or deceive the appellant and that the failure of Mr Frenil Shah to disclose the rental arrears of Food Court Tenants prior to 18 August 2017 was misleading or deceptive or likely to mislead or deceive the appellant. 2. In practical effect, this repeats ground 3(o). The ground succeeds for the same reasons. Rent Commencement Date Representation (Grounds 1, and 3(a), (d)) 1. The pleaded case is at [44(e)] of the FASOC in which Elanor pleads that the respondents represented to it that: (e) the Food Court Tenants subject to an incentive deed had been invoiced for rent and other charges since the rent commencement date listed in their respective incentive deed and had paid rent and other charges since the rent commencement date listed in their respective incentive deed (Commencement Date Representation); Particulars The Commencement Date Representation is partly express and partly implied. (i) In so far as it is express, it arises from the content of the Leases in respect of the rent commencement dates and rent due subject to the incentive deeds and Tenants Arrears Reports. (ii) In so far as it is implied, it arises from the circumstances in which such documents were provided in the absence of any other document or information to advise the commencement dates had not been deferred. (iii) In so far as it was oral, it arises from the matters and conversations pleaded in paragraphs 25 and 26 above. 1. The primary judge noted the RCD representation was pleaded as partly express and partly implied with the express representation being both written and oral. Written representation 1. The express written representation was pleaded by reference to "… the content of the Leases in respect of the rent commencement dates and rent due subject to the incentive deeds and the (data room) tenants arrears reports" [brackets provided]. 2. The primary judge noted it was common ground that actual lease commencement dates for the Food Court Tenants had been deferred which the primary judge set out in a table at J [122] as follows: Tenant Lease Commencement Incentive Date Deferred Until Bel Cibo 1 May 2016 Tenant in place Not changed Burrito Bar 1 March 2017 14 April 2017 14 May 2017 Dizzy Dukes 1 April 2017 15 May 2017 1 June 2017 Kebab Express 1 April 2017 1 May 2017 1 June 2017 Mass Nutrition 1 April 2017 1 May 2017 Not changed Mumbai Blues 1 March 2017 15 April 2017 1 May 2017 Redcliffe Noodle Kitchen 1 April 2017 15 May 2017 25 June 2017 Sushi Kuni 15 February 2015, Tenant in place Not changed assigned 30 April 2017 Thai Me Down 1 May 2017 15 June 2017 1 July 2017 1. The Food Court Tenant leases were in common form, with the primary judge considering both the lease and the incentive deed for Dizzy Dukes as an exemplar. 2. The primary judge concluded, correctly, that contrary to what had been pleaded by Elanor, there was nothing in either the lease or the incentive deed which expressly represented that Dizzy Dukes "had been invoiced for rent and other charges since the commencement day". The primary judge also concluded, again correctly, that there was no representation in either of these documents that if Dizzy Dukes had been invoiced, then it had paid those amounts since the commencement date. It follows that the same position applied to the remaining five Food Court Tenants. 3. Elanor submits the primary judge took an unduly technical approach to the RCD representation by finding there is nothing in the lease or incentive deed which "expressly represents" that Dizzy Dukes had been invoiced for rent since the commencement date. It submits that the findings ignore the meaning and substance of the pleaded representation and what it described as the "obvious conclusion" to be drawn from a listed rent start date in the lease. 4. The respondents submit that the primary judge's finding addresses the pleaded allegation in [44(e)] of the FASOC that "Food Court Tenants subject to an incentive deed had been invoiced for rent and other charges since the rent commencement date listed in their respective incentive deed and had paid rent and other charges since the rent commencement date listed in their respective incentive deed". I accept that submission. 5. As to the role the data room tenant arrears reports played in the RCD representation, the primary judge found that on its face, the July arrears report did not convey any information as to when Alceon had commenced to charge any of the tenants referred to for any amount payable under any of the leases nor the date of invoicing nor the payment of any amounts due by any other tenant, including the remaining Food Court Tenants in issue. 6. Elanor submits that in fact it was the data room tenants arrears reports that represented tenants had paid rent since the rental commencement dates. It submits that if tenants are not in arrears, they are necessarily paying their rent, such that their absence from the data room tenant arrears reports represented that those tenants have been paying rent on time since the rental commencement dates. 7. I do not accept that submission and indeed, it is a non sequitur. The information concerning the dates at which each of the Food Court Tenants commenced trading was apparent from the revised financial figures that were provided to Mr McNaughton on 2 August 2017. 8. Although Elanor contends that the information provided is not evidence of when a tenant commences rent payments, that contention amounts to no more than a disagreement with the primary judge's factual finding. 9. It is for these reasons that the primary judge was correct to conclude that the written RCD representation was not made out. Implied RCD representation 1. The primary judge found the implied representation, which was pleaded as arising from the circumstances in which the leases, incentive deeds and data room tenant arrears reports were provided in the absence of any other document, was not made out. 2. The primary judge found that the June and July 2017 monthly turnover reports were in the data room, that on 28 August 2017, Mr McNaughton viewed the monthly turnover data for July 2017 and received the updated financial information on 2 August 2017. 3. The primary judge also found that those documents disclosed that "Burrito Bar did not report any sales until May 2017, Dizzy Dukes and Mumbai Blues did not report any sales until June 2017, and Mass Nutrition, Kebab Express and Redcliffe Noodle Kitchen did not report any sales until July 2017", noting that in the updated financial information, there were notations that Dizzy Dukes had only reported 14 days of actual trading as at June 2017. The information revealed Burrito Bar had commenced trading in May 2017 but had been disrupted by Dizzy Dukes' fit out, and Mumbai Blues had reported only 12 days of actual trading in June 2017. 4. The primary judge made these findings, at least in part, by relying on the evidence of Mr Hamilton which he preferred over that Mr McNaughton. 5. Elanor submits the primary judge erred in finding the RCD representation was not made out by implication because of the information available to it other than the leases, incentive deeds and the data room tenant arrears reports. That submission is to the same effect as the submission that the primary judge erred in his consideration of the Arrears Representations in context. It should be accepted in relation to the RCD Representations for the same reasons. 6. Elanor submits further that the primary judge placed undue weight on non-contractual documents in circumstances where the contractual documents provided that no variation to them would be permitted other than in writing. 7. I do not accept that submission. The primary judge was addressing the question of whether in the context of all the relevant facts and circumstances, an implied representation had been made to a party which was objectively misleading or deceptive or likely to mislead or deceive. The fact that there may or may not have been any variation in writing to a lease commencement date, whilst a matter for consideration, is not sufficient of itself to find that the primary judge erred. 8. Further, the primary judge noted there was information which is inconsistent with the implication Elanor sought. In particular, the Information Memorandum expressly disclosed to Elanor that an upgrade to the casual dining precinct was a work in progress with Food Court Tenants "expected to begin trading by the end of June 2017", that the monthly sales data provided for June and July 2017 recorded an absence of reported sales for some of the Food Court Tenants, that there had been rent commencement dates adjusted in accordance with the incentive deeds for a number of the Food Court Tenants, and there were no tax invoices for four of the Food Court tenants for May 2017. 9. Elanor submits that the documents to which the primary judge referred, at their highest, show some tenants reporting turnover data for dates later than the rent commencement dates and reporting, or not reporting, of turnover, does not comprise evidence of when a tenant commences rent payments. 10. Save for the submission that there was no variation in writing to the leases in question, an issue I have dealt with above, no basis is put forward for Elanor's submission other than a disagreement with the primary judge not accepting Mr McNaughton's evidence and his preference for Mr Hamilton's evidence. In particular, Elanor disagrees with the finding that Mr Hamilton was aware that tenants would only report sales data when they start occupation i.e. the tenant begins to trade, and that there could be any number of reasons for a delay to the commencement of trading by a tenant in a shopping centre. Those reasons include delay in securing access because of building work undertaken by other tenants. 11. Elanor also submits that the primary judge ignored the evidence of Mr Paul Kwan, a registered valuer and head of valuation and advisory at Knight Frank Valuation and Advisory, Queensland. Mr Kwan was engaged by Mr McNaughton in August 2017 to prepare a valuation of the Centre for mortgagee purposes and gave evidence to the effect that trading figures were not available because they were not submitted on time to the retailer when requested. Mr Kwan was also called as an expert witness for Elanor. 12. It is true that in this context the primary judge did not refer to Mr Kwan's evidence but given his Honour's clear preference of Mr Hamilton's evidence that tenants would only report sales data when they start trading, it was open to the primary judge to prefer Mr Hamilton. 13. The next submission Elanor makes is directed to the primary judge's finding that deferred rent payments were irrelevant as Elanor did not suffer any monetary loss. 14. Elanor submits that conclusion misunderstands the representation and submits that it is the deferral of the rent commencement day rather than the loss of such rent, because it affected Elanor's risk assessment of tenants. In making that submission, Elanor again relies on evidence from Mr McNaughton notwithstanding that the primary judge preferred the evidence of Mr Hamilton to the contrary. 15. However, none of these matters detract from the failure to provide to Elanor the Savills tenant arrears reports and the primary judge's finding that the implied representation was not made out was made in error. Oral representation 1. The express representation pleading also refers to information not disclosed by Mr Frenil Shah at the meeting with Mr Hamilton on 30 August 2017. 2. I have dealt with the oral representations earlier in these reasons. 3. The primary judge found that Mr Hamilton's evidence, concerning his meeting with Mr Frenil Shah, was limited to the finding that none of the Food Court Tenants were in arrears as at 30 August 2017. 4. Elanor submits that notwithstanding the fact that Mr Hamilton asked the question of "how are the tenants trading", the primary judge found there was insufficient evidence to enable a finding that Mr Frenil Shah did not identify any Food Court Tenant as having any generalised issue in relation to sales or ability to pay rent. Elanor submits that in failing to find that was the case, the primary judge's finding was inconsistent with the questions asked and the lack of any adverse response being given. 5. I accept that submission. The failure to identify any tenants in arrears in circumstances where the Savills tenant arrears reports showed, albeit inaccurately, that was the case, is significant. Misrepresentation by silence 1. Next, Elanor contends that the primary judge erred in finding there was no causal link stated between the provision of the RCD and Elanor's expectations. 2. The primary judge was critical of Elanor's pleading of the alleged failure to disclose deferred rent commencement dates, noting that there was no attempt in closing submissions to explain it. The primary judge referred to what he described as a generalised submission made by Elanor that none of the deferred rental commencement dates were recorded in writing between the parties and are not otherwise disclosed in the data room. 3. Elanor submits that it had a reasonable expectation the Food Court's Tenants had been paying rent since their rent commencement dates such that it was reasonable to expect the respondents would have disclosed any deferral of those dates and provided arrears reports for later months. 4. In particular, Elanor submits that to plead a causal link between the provision of the rental commencement dates and Elanor's expectations "places an unnecessary pleading requirement to plead what is self-evident". 5. The respondents submit that submission only needs to be stated to be rejected. I agree. 6. Elanor submits further that the primary judge erred in accepting CPRAM's submission that the pleading did not lead to the expectations pleaded. 7. The primary judge determined Elanor's claim by reference to the pleaded case. His Honour was correct to do so. 8. It is for these reasons that the primary judge's conclusion that Elanor had not established the reasonable expectation it relied upon was in error. 9. Accordingly, grounds 1 and 3(a) are made out. Ground 3(d) fails. Reliance 1. Elanor pleaded: at [44(e), (f), (g)] of the FASOC, the three categories of Representations, which it defined collectively as the "Representations". 2. Elanor also pleaded what it defined as the "Conduct": at [46C] of the FASOC, that the failure of Alceon and/or CPRAM to disclose that the matters constituted by the Representations were incorrect, and in the case of the Arrears Representations were understated in respect of the Food Outlets, gave rise to a reasonable expectation on the part of Elanor that none of the Food Court Tenants were in arrears of more than 30 days during the period December 2016 to October 2017. 3. Although the primary judge had found the impugned conduct in the form of the Representations and the Conduct was not misleading or deceptive or likely to mislead or deceive, his Honour had considered the remaining issues of reliance and damage. 4. Elanor pleads it relied on each and every one of the Representations in purchasing the Centre and that had it known that the Representations, or alternatively the Conduct, were incorrect and omitted material information, Elanor would either have paid less or alternatively would not have entered into the Sale Contract. 5. The primary judge considered the issue of reliance, ultimately holding that Elanor had not discharged its onus that it relied upon the Representations or the Conduct and thus had failed to establish an essential part of its claim for loss under s 236 of the ACL. 6. Ground four of the notice of appeal asserts that the Court erred in finding Elanor did not rely on the conduct of the respondents that is alleged to be misleading or deceptive or likely to mislead or deceive. 7. The primary judge observed, correctly, that for the purposes of s 236 of the ACL, Elanor had to prove that it suffered damage because of the impugned conduct. 8. In circumstances where no evidence had been led by Elanor as to what recommendation would have been made to the Board and what decision might have been taken thereafter if the required disclosure had been given, the primary judge put to one side the reliance claim concerning the exercise of the put and call option and performance of the Sale Contract. 9. The primary judge identified the relevant principle as being that in order to discharge its causation onus, Elanor was required to satisfy the Court that it suffered damage because of the impugned conduct upon the entirety of the evidence. 10. The primary judge commenced by summarising Mr McNaughton's evidence on this issue in the following terms at J [249]: The only subjective evidence on reliance is from Mr McNaughton. It is concerned with the period prior to the making of the recommendation to the board to proceed with the transaction, that is prior to 8 September 2017. In substance his evidence is that if he had known that one or more of the Food Court Tenants were at risk during the due diligence period, then he would have performed a recalculation of the purchase price by removing those tenants from the net passing income, adjusting the capitalisation figure to reflect a higher degree of risk and by adding back some of the expected rental, on the assumption that three tenancies would likely be relet within 12 months. In those circumstances, he would have discussed the recalculated position with Mr Baliva and would not have progressed the recommendation to the board that the Centre be acquired at the price stated in the second expression of interest. Further, Mr McNaughton would have discussed his recalculated purchase price with Mr Baliva, with the consequence that a new, and lower, expression of interest may have been submitted. In the event that the new offer was rejected, he would not have progressed a report to the board to acquire the Centre at the price stated in the second expression of interest. In those circumstances, and in his experience, the board would not have proceeded to consider the purchase of the Centre and the transaction would have concluded at that point. 1. His Honour exercised caution in relation to Mr McNaughton's evidence on the basis that retrospective hypothetical evidence of that character is unreliable because it is self-serving: Barnes v Forty Two International Pty Ltd [2014] FCAFC 152; 316 ALR 408, [184] (Beach J with whom Siopis and Flick JJ agreed). 2. The primary judge continued that direct evidence from Elanor as to what it would have done on the counterfactual assumption is unnecessary with the surrounding circumstances usually being sufficient to infer reliance on identified misleading or deceptive conduct, citing Hanave Pty Ltd v LFOT Pty Ltd (formerly Jagar Projects Pty Ltd) [1999] FCA 357; (1999) 43 IPR 545, 555-556 (Kiefel J when a member of this Court with whom Wilcox J agreed). 3. The primary judge referred to the resolution put before the Board, including a reference to a due diligence checklist and investment overview prepared by Mr McNaughton and Mr Baliva, as well as the documentation the Board noted as part of its deliberation. 4. After considering those documents, the primary judge summarised the position at J [257]: There is no reference in those documents to the forecast net operating income (fully leased) or net operating income (passing) figures as contained in the Information Memorandum or as updated in the financial documents provided to Mr McNaughton on 2 August 2017. What was considered as important by Mr McNaughton and Mr Baliva to convey to the board in relation to the calculation of the purchase price of $55.25 million, is that it was based on a yield of 7.7% when fully leased or 7% passing. On those figures, one derives a passing net rental income of $3,867,500, which is less than the figure of $3,907,170, which Mr McNaughton took from the updated financial information. Nor is there any reference in the material provided to the board as to the income payable by individual tenants, more particularly the Food Court Tenants. In combination, the relatively detailed focus on the potential redevelopment of the site, when compared with the absence of attention to the estimated passing net rental income and the absence of any reference to risk that any tenancy may default, is consistent with the fact that the individual arrears position of any of the Food Court Tenants was simply not taken into account as a material factor in the overall assessment at the time. 1. That conclusion is contrary to the evidence of Mr McNaughton which the primary judge had summarised at J [249]. 2. At J [259] the primary judge notes: On the evidence of Mr McNaughton, if one accepts it, he would not have progressed the matter in the form of the report to the Board if he had known about the arrears position and, at least on the basis that the case was opened, each of the other representations and the conduct by silence. Acknowledging the difficulties with subjective evidence of that type, if it is accepted then in my view, it answers these points for the straightforward reason that the acquisition of the Centre would not have been discussed by the board at all. 1. The primary judge gave five reasons for not accepting Mr McNaughton's evidence. 2. First, his Honour was not satisfied that had Mr McNaughton and Mr Baliva known that three Food Court Tenants were in arrears as at July 2017, that they would not have recommended to the Board to proceed. His Honour's satisfaction stems from the actual rental arrears position he had found previously as a result of the accounting exercise undertaken by Mr Hellen, the expert conclave, and the joint evidence. 3. As I have noted, his Honour erred in taking that approach. The information available in the Savills tenant arrears reports showed a history of arrears for a number of Food Court Tenants from December 2016, and as at July 2017 there were four Food Court Tenants in arrears, two of whom, Bel Cibo and Sushi Kuni had been in arrears since at least December 2016. Although the primary judge was correct to consider the position by reference to the July arrears report, had the Savills tenant arrears reports been provided during the due diligence period, a very different picture would have emerged and caused Elanor to make further investigations or perhaps not proceed at all. 4. It follows that his Honour's first reason proceeded on a mistaken basis. 5. The second reason given by the primary judge was that Mr McNaughton was aware that the net rental income figures were estimates to 1 December 2017. He was also aware that there was limited trading history for a number of the Food Court Tenants; that the casual dining precinct had only recently been developed (albeit there were four Food Court tenants in that area) and that he had the benefit of a report by Location IQ that the centre was quiet and all food retailers were "extremely quiet". The primary judge rejected Mr McNaughton's evidence that he could not place reliance upon monthly trading figures provided to him on 2 August 2017. 6. So much may be accepted, however his Honour's approach suffers from the same error as the first reason. 7. The third reason was that his Honour considered that plainly Elanor was keen to acquire the Centre with the first expression of interest submitted on 30 May 2017 at a price of $54.75 million being done without any investigation by Mr McNaughton as to the position of individual tendencies within the casual dining precinct. As I have noted above, there were only four tenants in the newly developed casual dining precinct and in any event there should have been, but was not, information in the form of the Savills tenant arrears reports showing the history of Food Court Tenant arrears. Had that been provided, it would have been clear to Mr McNaughton that not only was the position represented in the July arrears report unreliable, and such as to warrant further investigation, but that there was a history of rental arrears for some of the Food Court Tenants. 8. Accordingly, the primary judge's third reason suffers from the same error as the first and second reason. 9. Fourth, the primary judge considered the quantum of rent payable, by what his Honour had found as three Food Court Tenants in arrears as at July 2017, was insignificant in the context of the rental payable by major tenants and 28 specialty shops. 10. His Honour also noted the advice from Location IQ that Elanor should consider more national brands for food catering to replace Food Court Tenants upon cessation of their leases, finding that this advice formed the basis of a statement in an investment overview provided to prospective syndicate members on 28 September 2017, that the strategy was to "actively asset manage the Property by permitting repositioning, leasing, tenant remixing and marketing to optimise the income and value of the property". 11. Whatever the strategy, it was clearly not in contemplation that the income of the Centre would be compromised as a result of the default by Food Court Tenants. The Location IQ report referred to replacing the Food Court Tenants upon cessation of their leases, not upon re-entry following default. 12. The fourth reason suffers from the same error that permeates the first, second and third reasons. 13. Fifth, his Honour referred to the extensive evidence about Mr McNaughton's investigations about the potential mixed-use redevelopment of the Site and whether it was a primary motivating factor for the acquisition of the Centre, as opposed to the claim that the rental position of the nine Food Court Tenants was relied upon. The primary judge rejected Mr McNaughton's evidence in cross-examination where he denied that what attracted him to the Centre was a mixed-use development potential of the Centre and that Elanor looked to get a stable income for its investors and hoped there was some upside potential as well. 14. In rejecting Mr McNaughton's evidence as being inconsistent with what he did at the time, the primary judge referred to the extensive enquiries Mr McNaughton made as to the potential for redevelopment of the Centre into a mixed-use scheme in the medium to long-term and by reference to what his Honour described as the unreliable self-serving evidence about reliance. 15. It is for the reasons Bromwich and Thawley JJ have set out, that the primary judge's approach to Mr McNaughton's evidence and his rejection of that evidence as being "unreliable because it is self-serving" and that it should be treated with "caution" because of its hypothetical nature, overstates the effect of the authorities. 16. That is particularly so in circumstances where it was not certain that any redevelopment of the Centre would proceed. As Bromwich and Thawley JJ have noted Mr McNaughton's evidence as to what he would have done in terms of recalibrating the price had he known tenants were in arrears, was consistent with what one would conclude from a consideration of the objective circumstances. I add that as Kiefel J observed in Hanave at [45] "The question of causation can sometimes be resolved not by direct evidence as to what part a misrepresentation played in the process of entering into contract, but by a court determining what effect must be taken to have resulted". 17. Further, it is well-settled that the impugned conduct need not be the only cause and it suffices for liability for misrepresentation played some part in inducing entry into the contract: Gould v Vaggelas (1985) 157 CLR 215, 236 (Wilson J). 18. In view of the matters I have set out, the primary judge erred in finding that Elanor did not rely on the conduct I have found to be misleading or deceptive or likely to mislead or deceive. Loss 1. The primary judge dealt with damage and damages at J [273]-[350]. 2. I have had the advantage of considering the reasons of Bromwich and Thawley JJ on this issue and agree with their Honours' reasoning, although ultimately I arrive at a different figure for the loss sustained by Elanor. 3. To the extent Elanor had suffered loss, it had to establish that the value of the Centre was less than the price paid. 4. In calculating a purchase price for the Centre, Mr McNaughton factored in rental income as part of the process of arriving at a figure to achieve a desired 7% yield. If the rental income was reduced, so too is the purchase price to maintain a 7% yield. 5. That rental income was factored in to the calculation of the $55.25 million is evident from the Investment Memorandum to potential investors dated 28 September 2017, which recorded on p 7 that the covenants for the purposes of the valuation of the Centre carried out by the Bank of Queensland included a minimum 90% occupancy for six consecutive months. 6. Further, on p 21 of the Investment Memorandum, the Investment Memorandum noted that on an industry basis, food retailing amongst other things continues to outperform on retail spending according to the Australian Bureau Statistics, indicating a degree of confidence in the Food Court Tenants. 7. The forecast overall financial performance of the syndicate was prepared using net property income over three years. 8. It was in that context that as part of the process Mr McNaughton used in calculating a purchase price for the Centre, he said in evidence that it was very important to identify "at risk" tenants, which he explained as being those tenants at risk of abandoning their lease. In assessing what comprised "at risk tenants", Mr McNaughton's evidence was that he considered such tenants to be those having difficulty paying rent or other charges and fees, having current or historical arrears, or that may fall into arrears in the future. Those tenants were treated by Mr McNaughton as vacant tenancies: first McNaughton affidavit [55]. 9. To this stage, the issue of whether the Savills tenant arrears reports were inaccurate or not, has not been to the point. The key point has been that the information was not provided to Elanor such that it was not put on notice as to the potential situation with the Food Court Tenants and thereby did not investigate further the position with those tenants. 10. For the purposes of assessing loss however, the question is what the value of the Centre was at the time of purchase. It is in that sense that the actual arrears of the Food Court Tenants are important given Mr McNaughton's focus on "at risk" tenants. That is because as I have noted above, rental income was factored in by Mr McNaughton as part of the process of arriving at a purchase figure to achieve a 7% yield. 11. If, as Mr McNaughton says, it was important to identify "at risk" tenants, then the actual position of each of the Food Court Tenants was important. 12. There is no issue that of the nine Food Court Tenants, Kebab Express, Thai Me Down and Mass Nutrition were not, at any relevant time, in arrears. 13. After assessing the expert evidence to which I have referred above, the primary judge identified three tenants as being in arrears: Bel Cibo ($4,216.42), Mumbai Blues ($3,164.53) and Sushi Kuni ($11,802.83). Since I consider the primary judge erred in accepting the untested annotations of Mr Neil Shah where Mr Hellen relied solely on those annotations, Redcliffe Noodle Kitchen should be included such that it is in arrears of $12,380.01 and the amount of arrears owed by Mumbai Blues arrears should be increased to $12,028.64. 14. On that basis, there were four tenants in arrears as at 31 July 2017, and thus on Mr McNaughton's evidence, "at risk" tenants. 15. Further, it may be observed that the Savills tenant arrears reports reveal that as at 31 July 2017 there were four Food Court Tenants in arrears, some of which had been in arrears for more than 30 days. To that extent, the number of Food Court Tenants in arrears as at 31 July 2017 is the same whether the Savills tenant arrears reports or the Joint Report is considered. Grounds two and three of the notices of contention 1. At this point it is convenient to deal with grounds two and three of the respondents' notice of contention. 2. Ground two asserts: That the appellant failed to prove that it relied upon any pleaded misleading or deceptive conduct because, notwithstanding that it accepted that Kebab Express, Thai Me Down and Mass Nutrition had no relevant rental arrears and were not "at risk" tenants prior to November 2017 (Applicant's Closing Submissions dated 28 July 2023, [130]), the evidence of reliance adduced by the appellant proceeded on the basis that Kebab Express, Thai Me Down and Mass Nutrition were "at risk" tenants. 1. Contrary to the notice of contention, this was not an all or nothing situation. Mr McNaughton factored in any "at risk" tenants in his calculations. The fact that because of the misleading and deceptive conduct of the respondents, only one tenant was considered at risk by Mr Hamilton in section 12 of the CBRE due diligence report, does not mean that had more tenants been considered "at risk" that they would not have been factored into the calculations. 2. It is for that reason, that ground two of the respondents' notice of contention should be dismissed. 3. Ground three of the respondents' notice of contention asserts: That the appellant failed to prove that it relied upon any pleaded misleading or deceptive conduct because, if notwithstanding rental arrears Messrs McNaughton and Baliva would have recommended to the appellant's board of directors to proceed with the acquisition of the Centre (Judgment, [260]), there is no evidence from any member of the board as to whether the appellant would have proceeded with that acquisition. 1. I have dealt with that point when dealing with reliance. 2. Ground three of the respondents' notice of contention should be dismissed. The value of the Centre 1. The issue then becomes of what the real value of the Centre was and whether it was less than that paid by Elanor. If so, Elanor has established that for the purposes of s 236 of the ACL, it has suffered loss because of the respondents' conduct. The Expert Valuers 1. Two valuers gave evidence before the primary judge, Mr Paul Kwan and Mr Michael Goran. 2. As I have noted above, Mr Kwan is a registered valuer and head of valuation advisory at Knight Frank Valuation and Advisory, Queensland. 3. The valuer retained for the respondents, Mr Goran, is a qualified and registered valuer and a senior valuer at Field & Kaye. 4. Mr Kwan was called by Elanor and considered the market value of the Centre as at 1 November 2017 to be $49 million, assuming a capitalisation rate of 7.25%. 5. Mr Goran was called by the respondents and working with another valuer, Mr Field, considered the market value of the Centre as at 1 November 2007 as $57 million assuming a capitalisation rate of 7.25%. 6. Both valuations were exclusive of GST. 7. The experts participated in a joint conclave prior to the hearing as a result of which they produced a joint report. At trial, they gave concurrent evidence. Mr Kwan's independence 1. The major issue with Mr Kwan's evidence was a contention by the respondents that he was a partisan witness. 2. The primary judge considered Mr Kwan's independence at J [288]-[311], ultimately finding that Mr Kwan was not a truly independent and impartial witness in the proceeding. 3. The primary judge noted the following: 4. There is no doubt Mr Kwan is an experienced, well-qualified professional valuer with extensive experience in commercial valuations including shopping centres; 5. Mr Kwan advised Elanor during the period 21 August 2017 to 21 September 2017, when Mr Kwan provided to Mr McNaughton a copy of his valuation report addressed to the Bank of Queensland; 6. On 2 September 2021, Mr McNaughton asked Mr Kwan to "help" Elanor to determine the potential quantum of loss Elanor had suffered by acquiring the Centre and in an email sent the same day, identified the nine Food Court Tenants in issue together with the gross rent totalling $701,448. Mr McNaughton asked Mr Kwan to assume that the nine Food Court Tenants were all vacant; 7. In cross-examination, Mr McNaughton denied he instructed Mr Kwan to assume nine vacancies in order to "increase the loss", evidence which the primary judge did not accept. Notwithstanding that finding, if that was the factual basis upon which Mr Kwan was instructed to proceed, it does not follow as a matter of course that Mr Kwan's impartiality and duty to the Court was compromised; 8. In the solicitor's letter of instruction to Mr Kwan dated 12 December 2022, Mr Kwan was provided with a copy of Mr McNaughton's affidavit and his attention drawn to Mr McNaughton's identification of "at risk tenants". That is a reference to the nine Food Court Tenants; 9. On 15 September 2021, Mr Kwan and Mr McNaughton exchanged email correspondence concerning different approaches to arriving at a valuation for the Centre, with Mr Kwan ultimately adopting a figure of $51 million; 10. Mr Kwan was formally engaged as an expert witness on 12 December 2022. In the letter of instruction to Mr Kwan from Elanor's solicitors dated the same date, it was made clear to Mr Kwan that although it could not be said he was a truly independent arms-length expert, nonetheless his ultimate duty is to the Court and to provide a true and fair expert report in accordance with that duty. The letter enclosed a copy of the Federal Court of Australia Harmonised Expert Witness Code of Conduct which Mr Kwan acknowledged he had read and agreed to be bound by; and 11. Mr Kwan prepared a report dated 22 December 2022 acknowledging, amongst other things, that he was instructed to treat the nine Food Court Tenants as "at risk" tenants which, after other adjustments, reduced the market value of the Centre to $48,893,978 as at 1 November 2017. 12. The primary judge addressed Mr Kwan's cross-examination on the question of his independence noting the following evidence was elicited: 13. On 28 August 2017, Mr Kwan had requested he be provided with a copy of the signed Heads of Agreement in order to be informed of the purchase price for the Centre. Although criticised for doing so, the primary judge accepted Mr Kwan's evidence that he needed to understand the price in order to include it in his valuation report for the Bank of Queensland and that it was necessary to understand the purchase price for a property that is the subject of a valuation request, particularly for the purposes of bank finance. The primary judge accepted that evidence; 14. A valuation prepared for mortgagee purposes (in this case the Bank of Queensland) cannot be higher in the contracted purchase price; and 15. There was correspondence between Mr McNaughton and Mr Kwan in 2017 that led to Mr Kwan providing his draft calculations to Mr McNaughton. 16. The primary judge found Mr Kwan was influenced in his analysis in 2017 by Mr McNaughton and that Mr Kwan was prepared to make adjustments to his valuation calculations at Mr McNaughton's request. 17. Nonetheless, the primary judge found that none of the adjustments made by Mr Kwan were inappropriate for a valuer to make. The primary judge, however takes a further step that for the purposes of Mr Kwan's role in these proceedings, the fact that he was influenced by Mr McNaughton in 2017 is relevant to his independence as an expert. 18. The primary judge also accepted that Mr Kwan undertook independent enquiries by reviewing documents and the data room in order to provide his valuation to the Bank of Queensland and to that extent proceeded independently. 19. The primary judge referred to the part of Mr Kwan's cross-examination: at J [302] And as at that date, [September 2021] you accept this: that you and Mr McNaughton have exchanged ideas about how the valuation that you produced in 2017 could be decreased on account of an assumption involving the nine food court tenants being considered vacant; do you accept that?---The second – the subsequent engagement was to run some scenarios testing, which is effectively sensitivity testing for Mr McNaughton's understanding of what the market value of the shopping centre may have been had the nine vacancies been treated as vacancies at the time of acquisition. You refer to a sensitivity analysis, but it wasn't an analysis undertaken by you of your own volition, was it?---No. He engaged me to – to look at it. Yes. And you understood at all times that the purpose for which he was asking you to revisit the valuation was to see if you could not produce a lower valuation on account of the assumption concerning the nine food court tenants being vacant; that's right, isn't it?---Well, that, I guess, was his intent. Yes. Yes. And the aim of the exercise was to see how low the valuation could get; you accept that?---Yes. 1. The primary judge formed the view that these questions and answers revealed that Mr Kwan did not act as one would expect an independent expert witness to act in the preparation of the valuation opinion for the purposes of the proceedings; that Mr McNaughton was requesting him to make a number of adjustments to his valuation in order to produce a lower result; that Mr Kwan was aware his valuation opinion would be used by Elanor in order to consider framing its case against each respondent; and that he was an active participant in assisting Elanor by the provision of a valuation figure acceptable to Elanor being one that was considerably less than the purchase price it had paid. 2. Next, the primary judge dealt with the cross-examination of Mr Kwan in relation to the Expert Witness Code of Conduct before concluding at [306] that although Mr Kwan had honestly held views, the primary judge did not accept that he was a truly independent and impartial witness in the proceedings. It is important to understand the reasons why the primary judge reached the conclusion which is found at J [306] as being: The effect of his prior involvement with Elanor, his provision of draft opinions to Mr McNaughton prior to his engagement as an independent valuer for the Bank of Queensland and the subsequent provision of the revised opinion for Mr McNaughton, in anticipation of this proceeding, corrodes his independence and impartiality. 1. As a final matter, the primary judge dealt with some evidence from Mr Kwan in relation to Mr Goran's knowledge of the local market and how Mr Goran was able to practice in Queensland, concluding that these matters provided a further basis for questioning Mr Kwan's independence. The primary judge drew an inference that Mr Kwan's curiosity as to how Mr Goran could practice in Queensland demonstrated his role as an advocate for Elanor. 2. The primary judge noted that s 79 of the Evidence Act 1995 (Cth) "does not require untrammelled independence or impartiality": Rush v Nationwide News Pty Ltd (No 5) [2018] FCA 1622 at [29]-[36]. 3. In Rush, the issue was whether an expert opinion should be received into evidence at all in circumstances where the experts in question had known Mr Rush in one case socially and professionally for 12 years, and in another professionally for over 20 years. 4. An objection was made to the admissibility of the reports of the two expert witnesses on that basis. 5. In overruling the objection, Wigney J found at [25]-[43] first, there was no failure to comply with the Federal Court Rules on the part of either expert, no basis to conclude that the experts would not be able to give the Court an objective and impartial assessment of an issue, nor that they would not be able to provide relevant and impartial evidence in the area of their expertise, nor was there was any basis for the contention that the experts are, or will be, advocates for Mr Rush's cause. 6. Second, his Honour found the admissibility of expert opinion evidence is governed by the Evidence Act and not by the Rules, the Practice Note or the Code of Conduct. It was in that context that his Honour referred to s 79 of the Evidence Act, with the consequence that an actual or perceived lack of independence, impartiality objectivity of an expert witness goes to weight, not admissibility. 7. In considering how he should approach Mr Kwan's evidence, the primary judge said: at J [311] There is no proper basis to reject it in its entirety. As I have said, Mr Kwan is a well-qualified, experienced, and professional valuer. I do not doubt that he honestly approached the various tasks that he was entrusted with first by Elanor, and then by Elanor's solicitor. He participated in the joint expert conclave with Mr Goran and produced the joint expert report, which I find to be a most useful distillation of the issues and well-reasoned account of the differences between the valuers. In that report, there are many matters of agreement that are recorded including the valuation methodology, the gross market rental income, the adjusted net income and, importantly, the capitalisation rate. In carefully observing Mr Kwan's evidence, I detected no evasiveness – in fact he answered questions in a straightforward manner, and repeatedly made admissions as to the extent to which he took into account Mr McNaughton's views. 1. Nonetheless, at J [313], the primary judge concluded he would exercise caution before accepting Mr Kwan's evidence where it differs from Mr Goran's evidence primarily because of his prior involvement with Elanor and his multiple exchanges of correspondence with Mr McNaughton which, the primary judge considered, undermined his true independence as an expert witness. His Honour continued that Mr Kwan's involvement had impaired his ability to approach the retrospective valuation question uncritically and independently as well as there being a question about whether Mr Kwan had accepted the nine vacancy assumption uncritically and without assessing all the evidence. 2. With respect, it is difficult to reconcile those two positions. Prior involvement in a matter does not necessarily imply a lack of independence, far less impartiality. It will depend on how the judge perceives the evidence and in light of his Honour's description of Mr Kwan's evidence at J [311] set out above, there is no reason to doubt, at least, Mr Kwan's impartiality. 3. It is for that reason that with respect, the primary judge erred in his conclusion that he should exercise caution before accepting Mr Kwan's evidence where it differed from Mr Goran's evidence. 4. I am fortified in that view by the observations of Bromwich and Thawley JJ on the same issue with which I agree. The valuation evidence 1. The primary judge set out a table setting out matters of agreement as set out in the joint expert report produced following the expert conclave reproduced below: 2. Valuation Methodology The parties agree that both the 'Reversionary Yield' valuation approach undertaken by KFVAQ and the 'initial Yield' approach applied by F&K are appropriate. Whilst the approaches are subtly different in terms of their layering of risk to various income components, if applied correctly, theoretically both should deduce similar outcomes. 3. Gross Market Rental Income The Gross Market Rental Income from the retail shops including the 5 acknowledged vacancies whilst slightly different with KFVAQ at $4,929,872 pa vs F&K at $5,080,590 pa is within circa 3.5% of each other and is largely due to the respective valuers opinions of market rental value for the additional 9 shops alleged to be vacancies. 4. Adjusted Net Income The Valuers can agree that the Net Income difference is attributed to the adoption of an ongoing vacancy allowance of 3.5% by KFVAQ and no allowance by F&K. Were F&K to adopt the same, the differences in the property's assessed net income would then be KFVAQ's at $3,757,521 pa versus F&K's at $3,750,748 pa or a difference of only $6,773. 5. Capitalisation Rate The Valuers are in agreement that a capitalisation rate of 7.25% to be fair and reason able for Bluewater. 6. Other Income The Valuers are in agreement on the quantum of Other Income. KFVAQ acknowledges that the application of a higher capitalisation rate of 15% by F&K for Other Income could be equally acceptable and in fact results in less value being attributed to this source of income. 7. Vendor's 2 Year Rental Guarantee The Valuers agree that the Vendor's Rental Guarantee of $650,000 is an arbitrary sum which has been negotiated by the Vendor and Purchaser. Such guarantees are generally paid out at settlement or the purchase price adjusted by the same. The removal of Vendor' s Rental Guarantee in the KFVAQ modelling allows like for like price and metrics comparison with other retail transactions. Capital Expenditure Provision 8. A mutual understanding was reached in why KFAVQ provisioned $750,000 of Capital Expenditure (including $250,000 Stabilisation Allowance) in its modelling. It was largely explained that were Bluewater be acknowledged to have a further 9 vacant shops then a capital provision would be appropriate to either allow for make-good of vacated premises or any Lessors Works to reconfigure premises etc. Both are time consuming and expensive undertakings and that some new start-up tenants to the centre may require financial support from the Landlord. F&K whilst agreeing that there would be capital expenditure required to make good the vacant tenancies however, there are no documents to support $750,000 as being the amount of capital expenditure at the date of valuation. Of note there are bank guarantees and / or bonds in place to subsidise any capital required to make good these areas. Ground 4 of the notices of contention 1. It is convenient at this stage to deal with ground 4 of the respondents' notice of contention which contends that Elanor had failed to prove, in respect of the Food Court Tenants that, "… as at 1 November 2017 those tenants were 'at risk'" by reason of the facts that: 2. The tenants had not been paying any rent for some while; and 3. The tenants' tenancies were likely to end imminently. 4. Had the information in the Savills tenant arrears reports been made available to Elanor during the due diligence period, it would have revealed that as at a print date of 15 August 2017 (with the heading July 2017) four tenants, Bel Cibo, Sushi Kuni, Mumbai Blues and Dizzy Dukes, were all in arrears. Of those four tenants, Bel Cibo and Sushi Kuni had an extensive history of arrears of rental. Mumbai Blues had never been other than in arrears and Dizzy Dukes had gone from a period of being in arrears as at a print date on 1 June 2017, to being in advance on 7 June 2017 and 6 July 2017 before once again falling into arrears as at 15 August 2017. On that basis, Mr McNaughton's consideration of an "at risk" tenant as being those having difficulty paying rent or other charges and fees, having current or historical arrears, or who may fall into arrears in the future would have excluded them in his process of arriving at an offer, the second of which it may be recalled, was made on 16 August 2017. 5. It follows that ground four of the notices of contention fail. The "real value" of the Centre as at 1 November 2017 1. In a matter such as this where the acquisition of property is induced by misleading and deceptive conduct, in determining the amount of loss sustained for the purposes of s 236 of the ACL, an approach of subtracting the real value of the asset at the date of purchase from the price paid is a common approach, sometimes referred to as the rule in Potts v Miller (1940) 64 CLR 282: HTW Valuers (Central Qld) Pty Ltd v Astonland Pty Ltd [2004] HCA 54; (2004) 217 CLR 640 at [35]. 2. Although dealing with a fraud case and the acquisition of shares, in Potts v Miller (at p 289) Starke J described the rule as being "[t]he measure of damage in a case in which a person is induced by fraud to take up shares is the difference between the amount he subscribed or paid for the shares and the real value - not the market value - of the shares on allotment". 3. Dixon J explained the rule in the following terms (at p 298): The reason given for the rule is that, if, after the date of purchase, the thing which the plaintiff was induced to buy loses in value owing to accidental or extrinsic causes, that loss is not the reasonable consequence of the inducement. "It is not enough to say that but for the misrepresentation or fraud the purchaser would never have bought, and therefore would not have lost the thing bought. To recover back the whole price, if the thing had any value when bought, he must be in a condition to rescind the bargain and replace it, which here the plaintiff is not, as it is not in his power to make the company take back the shares, or in the power of the company to resume them. If a man is induced by misrepresentation to buy an article, and while it is still in his possession it becomes destroyed or damaged, he can only recover the difference between the value as represented and the real value at the time he bought. He cannot add to it any further deterioration which has arisen from some other supervening cause" (per Cockburn C.J. in Twycross v. Grant). This reasoning makes it necessary to distinguish between the kinds of cause occasioning the deterioration or diminution in value. If the cause is inherent in the thing itself, then its existence should be taken into account in arriving at the real value of the shares or other things at the time of the purchase. If the cause be "independent,""extrinsic,""supervening" or "accidental," then the additional loss is not the consequence of the inducement. (Citations omitted) 1. In HTW Valuers, the High Court observed: at [35], [36] that the rule was not inflexible or rigid and that "[o]ne key qualification of the rule which prevents it from being inflexible is that the test depends not on the difference between price and 'market value', but price and 'real value' or 'fair value' or 'fair or real value' or 'intrinsic value' or 'true value' or 'actual value' or what the asset was 'truly worth' or 'really worth' or 'what would have been a fair price to be paid … in the circumstances … at the time of the purchase'. This distinction is sometimes difficult to draw, but it is old and fundamental." (Citations omitted). 2. The High Court identified a second qualification to the rule: at [37], referring to Dixon J (at p 299) in Potts v Miller which is that "[t]he distinction between a value which answers one of the tests just stated and market values means that market values – the prices actually obtainable in market sales – may be disregarded if they are 'delusive or fictitious' because they are the result of 'a fraudulent prospectus, manipulation of the market or some other improper practice on the part of the defendant'". 3. As to the assessment of compensation or value being informed by matters known at a later date, the High Court noted another matter to which Dixon J referred in Potts v Miller (at p 299) in relation to the value of shares where his Honour said "… looking back from subsequent events to the earlier state of the company it may appear that at the time the shares were taken the assets of the company did not correspond in value to the money paid". 4. The High Court continued: at [39], [40]: In the same way, in Kizbeau Pty Ltd v W G & B Pty Ltd (1995) 184 CLR 281, 291-296 this Court pointed out that, in many fields of law, assessments of compensation or value at one date are commonly made taking account of all matters known by the later date when the court's assessment is being carried out. … The limpid words of Lord MacNaghten about the duty of an arbitrator in determining compensation are far too well known to escape repetition [Bwllfa & Merthyr Dare Steam Collieries (1891) Ltd v Pontypridd Waterworks Co [1903] AC 426, 431]: Why should he listen to conjecture on a matter which has become an accomplished fact? Why should he guess when he can calculate? With the light before him, why should he shut his eyes and grope in the dark? The significance of Kizbeau Pty Ltd v W G & B Pty Ltd is that it endorsed that approach in relation to s 82 of the Act when the court is assessing damages by comparing the price and the real value of the asset at the date of the acquisition. Finally, although the court is entitled to take into account events after the date of acquisition, it must distinguish among possible causes of the decline in value of what has been bought. 1. Although the reference in the passage quoted above is to s 82 of the Trade Practices Act 1974 (Cth) it is of equal application to s 236 of the ACL. 2. The primary judge noted, correctly, that whereas Potts v Miller guides the approach to the assessment of damages under s 236, nonetheless the correct approach is to assess an amount for damages that best accords with the remedial purpose of the ACL: Murphy v Overton Investments Pty Ltd [2004] HCA 3; (2004) 216 CLR 388. To that extent, the rule in Potts v Miller is not to be regarded as the test pursuant to s 236 ACL: HTW Valuers at [35]. 3. Accordingly, in this matter an issue for determination by the primary judge was the "real value" of the Centre. The valuers addressed the "market value" of the Centre as at 1 November 2017 which was the date of settlement. As the authorities which I have referred above make it clear, that is not the test. 4. The Sale Contract was entered into on 23 October 2017. Whereas in a matter such as this one might ordinarily assess damages as at the date the contract, in this case nothing turns on the difference between the two dates. 5. Before the primary judge, Elanor had submitted that the "real value" of the Centre should be assessed by assuming all nine Food Court tenancies were vacant since Kebab Express, Thai Me Down and Mass Nutrition were all part of the same precinct in the Centre and ultimately, each of them failed. 6. As an alternative submission before the primary judge, Elanor had submitted that it was open to his Honour to "readily assess the net present value" of the lost income for the three tenancies and apply it to Mr Kwan's schedule of calculations. 7. Dealing with the alternative submission first, the primary judge did not accept that submission on the basis that although a court should do the best it can on the evidence, that does not permit a court to assess damages where an applicant has failed to adduce the evidence necessary to prove the case, citing Keys Consulting Pty Ltd v CAT Enterprises Pty Ltd [2019] VSCA 136 at [69]-[70]. 8. So much so may be accepted although it is not the case that Elanor failed to adduce evidence such that Keys Consulting is not on point. 9. Mr Kwan had assumed nine Food Court tenancies were vacant, along with five other tenancies. 10. Certainly, whether the Savills tenant arrears reports or the July arrears report are considered, there were four tenants "at risk" as at 31 July 2017. 11. Although the valuers assessed the market value, that does not necessarily mean that the value of the Centre at which each valuer arrived does not reflect the "real value" of the centre. 12. It is in that context that Mr Kwan's assumption concerning the nine Food Court tenancies assumed importance. The primary judge found that the assumption had not been made out, however, the assumption by Mr Kwan as to the number of vacant Food Court tenancies is not an all or nothing proposition. 13. In the event a court arrives at a factual finding which differs from the assumptions made by an expert, but does not in any way affect or compromise the method by which an expert such as a valuer arrives at their opinion, that does not mean that the evidence adduced by the expert is of no utility. In this matter, it is not a question of there being a challenge to the method adopted by Mr Kwan, rather it is the application of different inputs to those which Mr Kwan assumed. 14. It is important to bear in mind that the approach taken to the assessment of damages is not the same approach as when considering reliance. It is not a question of whether Elanor would have paid a lesser sum or not entered into the transaction. It is a calculation, as best as the Court can do on the available evidence of the "real value" of the Centre. 15. Unlike HTW Valuers, this was not a matter in which there was a significant risk to the Centre identified in the form of external competition which had not been disclosed. 16. Certainly, there was evidence that: 17. Two tenants, Bel Cibo and Sushi Kuni had been in arrears since December 2016; 18. The casual dining precinct had recently been upgraded and that the other seven Food Court Tenants had commenced trading from May or June 2017; 19. Mr Frenil Shah had ensured that arrears had been brought up-to-date prior to settlement (save as to Burrito Bar); 20. In the period between 1 November 2017 and 16 March 2020, each of the Food Court Tenants either vacated or abandoned their leases with Elenor resuming possession. Specifically: 1. Burrito Bar abandoned its lease in January 2018; 2. Thai Me Down's lease was terminated on 30 June 2019 for breach of lease; 3. Elanor re-entered the premises and terminated Sushi Kuni's lease on 4 February 2019 for non-payment of rent; 4. Bel Cibo was placed in liquidation on 12 April 2019 at which time the liquidator disclaimed its lease; 5. Dizzy Duke's lease was terminated by Elanor on 26 April 2019 for unremedied breach of lease; 6. Mumbai Blues lease was terminated on 26 April 2019 for unremedied breach of lease; 7. Kebab Express ceased trading on 16 March 2020 following a period of time in which it had been in breach of its lease; 8. Redcliffe Noodle Kitchen surrendered its lease on or about June 2020 following breaches of lease; and 9. Mass Nutrition surrendered its lease on 30 June 2018. 21. It is apparent from the above that two Food Court Tenants failed within eight months of settlement, five Food Court Tenants failed within 20 months, and the remaining two Food Court Tenants failed within 32 months. 22. There was no evidence that Elanor mismanaged the Food Court Tenants after settlement or in any other way contributed to the failure of the Food Court Tenants. 23. Against that evidence, is information included on p 21 of the Investment Memorandum provided to potential investors that, "[o]n an industry basis, Food retailing along with Cafes, restaurants and take away food services, continue to outperform" on retail sales growth by industry according to the Australian Bureau Statistics. 24. The Investment Memorandum continued, "Bluewater Square has a large proportion of Food Catering retailers and is therefore well-placed to benefit from this ongoing spending trend. Further, the Manager sees a strong opportunity to re-mix the Centre offering (e.g. fruit shop, chicken shop all, seafood, bakery, etc)". 25. Putting aside the management opportunities to re-mix the Centre offering, on an objective basis, the evidence discloses that as at 1 November 2017, the Food Court component of the Centre had positive prospects, notwithstanding its relatively recent renovation and new tenants. 26. The issue therefore is whether in determining the "real value" of the Centre, the Court should accept Mr Kwan's assumption of nine vacant Food Court tenancies or proceed on some other lesser number, given the primary judge's factual finding that there were three Food Court tenancies in arrears at 31 July 2017, or four vacant Food Court tenancies as I have concluded should have been found by the primary judge. 27. Elanor asks the Court to find that the real value of what it purchased should be ascertained in light of the subsequent events which showed that the price paid for the purchase of the Centre was not its true value. 28. When the available evidence is considered, whereas seven of the Food Court Tenants failed within 20 months of settlement, two continued for approximately 32 months to June 2020, which was in the COVID era. Nonetheless, the two remaining Food Court Tenants were in significant arrears of rental at the time their leases were terminated. 29. It seems to me that in the light of the information from the Australian Bureau of Statistics published in the Investment Memorandum, the failure of the Food Court Tenants was, to use the words of Dixon J in Potts v Miller at p 298, "'independent', 'extrinsic', 'supervening' or 'accidental'" such that "the additional loss is not the consequence of the inducement". 30. Unlike the position in, for example, HTW Valuers there was no evidence that the redeveloped Food Court faced a significant risk from the start such that it was inherent in the asset being purchased. On the contrary, Mr Hamilton's evidence, which was accepted by the primary judge, was that that he could not identify whether a tenant was at risk of falling into arrears from one or two months of trading and that it may take up to a year to make a judgment on that question. 31. Accordingly, although the issue is finally balanced, it is a step too far to say that the subsequent events comprising the failure of the Food Court Tenants were inherent in the Centre. 32. It is for these reasons that I am not prepared to determine the real value of the Centre on the basis of there being nine vacant Food Court tenancies as at 1 November 2017. 33. I have had the advantage of considering Bromwich and Thawley JJ's reasons dealing with the value of the Centre as at 1 November 2017 and their Honours' analysis of the difference between the two experts. 34. I agree with their Honours' reasons as to the approach to be adopted in ascertaining the value of the Centre as at that date, although because I do not accept there were nine Food Court vacancies, for the reasons I have explained above, I differ slightly in the quantum of Elanor's loss. 35. Further, although I agree with Bromwich and Thawley JJ's observations about Mr Kwan's below the line deductions, I do not agree with their Honours' observations that Mr Goran's allowance is too low because their Honours proceed on the assumption there were nine Food Court vacancies. 36. Both the Savills tenant arrears reports and the Hellen Report as varied by the Joint Report and as further adjusted in these reasons to reflect the removal of Mr Neil Shah's annotations, showed four tenants in arrears as at 31 July 2017. Adopting Bromwich and Thawley JJ's figures but allowing for four vacancies instead of nine and using a capitalisation rate of 7.25% to reflect the vacancies and the rate agreed by both valuers, the calculation becomes: Estimated value before below the line adjustments $52,474,347 Less ongoing capital expenditure - year 1 $50,000 Other capital expenditure forecast - year 1 $500,000 Leasing fees, letting up allowances and incentives (4 tenancies) $186,666 $51,737,681 1. It follows that as at 1 November 2017, the real value of the Centre was $51.74 million such that Elanor has suffered a loss of $55.25 million - $51.74million = $3.51 million. If the agreed adjustment of $650,000 for the rental guarantee is deducted, Elanor's loss becomes $2.86 million. 2. It follows that ground five of the notice of appeal, which contends that the primary judge erred in finding Elanor suffered no loss, succeeds. The remaining notice of contention grounds 1. Alceon's four grounds in its notice of contention fail. 2. CPRAM's notice of contention contains two further grounds. Ground five in CPRAM's notice of contention 1. Ground five asserts: That, in the event that the appeal is upheld and an award of damages is made, the appellant's claim against the second respondent was an apportionable claim for the purposes of Part VIA of the Competition and Consumer Act 2010 (Cth), and that pursuant to section 87CD of that Act, it would be just to limit the proportion of any such award of damages for which the second respondent is liable to a proportion that has regard to the extent of the second respondent's responsibility for the appellant's loss, by having regard to the fact that the first respondent received all of the purchase monies paid by the appellant, and the second respondent was merely an agent of the first respondent. 1. There is no issue that Elanor's claim against CPRAM is an apportionable claim for the purposes of s 87CB of the ACL such that s 87CD is engaged. 2. Section 87CD provides: 87CD Proportionate liability for apportionable claims (1) In any proceedings involving an apportionable claim: (a) the liability of a defendant who is a concurrent wrongdoer in relation to that claim is limited to an amount reflecting that proportion of the damage or loss claimed that the court considers just having regard to the extent of the defendant's responsibility for the damage or loss; and (b) the court may give judgment against the defendant for not more than that amount. (2) If the proceedings involve both an apportionable claim and a claim that is not an apportionable claim: (a) liability for the apportionable claim is to be determined in accordance with the provisions of this Part; and (b) liability for the other claim is to be determined in accordance with the legal rules, if any, that (apart from this Part) are relevant. (3) In apportioning responsibility between defendants in the proceedings: (a) the court is to exclude that proportion of the damage or loss in relation to which the plaintiff is contributorily negligent under any relevant law; and (b) the court may have regard to the comparative responsibility of any concurrent wrongdoer who is not a party to the proceedings. (4) This section applies in proceedings involving an apportionable claim whether or not all concurrent wrongdoers are parties to the proceedings. (5) A reference in this Part to a defendant in proceedings includes any person joined as a defendant or other party in the proceedings (except as a plaintiff) whether joined under this Part, under rules of court or otherwise. 1. In order for the s 87CD to have any work to do, CPRAM must be a concurrent wrongdoer within the meaning of s 87CB(3), being "… a person who is one of two or more persons whose acts or omissions (or act or omission) caused, independently of each other or jointly, the damage or loss that is the subject of the claim." 2. In assessing the liability of a concurrent wrongdoer, the legislation provides that a claimant can recover from each wrongdoer only that proportion of the loss and damage claimed, the Court considers just having regard to the particular wrongdoer's responsibility for the damage or loss: s 87CD(1). 3. In approaching s 87CD, the Court has regard to the particular wrongdoer's responsibility for the damage or loss: Hunt & Hunt Lawyers v Mitchell Morgan Nominees Pty Ltd [2013] HCA 10; (2013) 247 CLR 613, [16] (French CJ, Hayne and Kiefel JJ). See also Shrimp v Landmark Operations Limited [2007] FCA 1468; 163 FCR 510 (Besanko J); Latteria Holdings Pty Ltd v Corcoran Parker Pty Ltd [2014] FCA 880; 224 FCR 519 (Mortimer J as her Honour then was). 4. CPRAM submits, correctly, that Alceon received all of the purchase monies paid by Elanor, and that it was Alceon's agent. Nonetheless, CPRAM's role in the contravening conduct was not limited to merely passing on information, e.g. Yorke v Lucas [1985] HCA 65; (1985) 158 CLR 661. As the analysis of the impugned conduct shows, Mr Frenil Shah played an active role in that conduct by making the oral representations in his meeting with Mr Hamilton and others on 30 August 2017. Further, he was in a position as portfolio manager for CPRAM in relation to the Centre and was responsible for the oversight of day-to-day management and administration of the Centre, financial analysis and reporting, as well as direct liaison with the tenants. It is clear that he played an active role in the misleading and deceptive conduct such that it is appropriate CPRAM, of which he is a Director, bears some responsibility. 5. As to the level of that responsibility, whereas it is the case that the data room tenant arrears reports and the July arrears report did not show any Food Court Tenant in arrears, in Mr Frenil Shah's position with the day-to-day management of the Centre, the issue of any tenant, whether Food Court are otherwise, being in arrears of rent or other payments must have been the focus of his attention. A face-to-face meeting between Mr Hamilton and Mr Frenil Shah was the opportunity for Mr Hamilton to understand if there were any issues with any of the tenants. Mr Frenil Shah misled Mr Hamilton, who was seeking information at a day-to-day management level. 6. In all the circumstances, I consider it appropriate that CPRAM should bear 30% responsibility for the damages with Alceon being apportioned 70%. Grounds six and seven of CPRAM's notice of contention 1. Grounds six and seven of CPRAM's notice of contention seek apportionment against CBRE and Elanor's failure to take reasonable care to identify any misleading or deceptive conduct respectively. 2. As to CBRE, Mr Hamilton made such enquiries as he was able to make. The tenant arrears reports made available to him showed no Food Court Tenant in arrears and he was misled by Mr Frenil Shah at his meeting on 30 August 2017. 3. I am not satisfied that CBRE should bear any responsibility for the loss suffered by Elanor such that ground six of CPRAM's notice of contention should be dismissed. 4. The assertion in ground seven of CPRAM's notice of contention, that Elanor failed to take reasonable care to identify any pleaded misleading or deceptive conduct, including failing to determine when the Food Court Tenants had actually commenced trading, and whether any of them had a history of rental arrears, relies on s 137B of the which provides: 137B Reduction of the amount of loss or damage if the claimant fails to take reasonable care If: (a) a person (the claimant) makes a claim under subsection 236(1) of the Australian Consumer Law in relation to economic loss, or damage to property, suffered by the claimant because of the conduct of another person; and (b) the conduct contravened section 18 of the Australian Consumer Law; and (c) the claimant suffered the loss or damage as result: (i) partly of the claimant's failure to take reasonable care; and (ii) partly of the conduct of the other person; and (d) the other person did not intend to cause the loss or damage and did not fraudulently cause the loss or damage; the amount of the loss or damage that the claimant may recover under subsection 236(1) of the Australian Consumer Law is to be reduced to the extent to which a court thinks just and equitable having regard to the claimant's share in the responsibility for the loss or damage 1. In all the circumstances, it is difficult to know why it is alleged that Elanor failed to take reasonable care to identify the matters in ground seven. It was entitled to take the documents provided in the data room at face value and it engaged CBRE (Mr Hamilton) to carry out financial due diligence. The information with which it was provided from the data room was misleading and Mr Frenil Shah misled Mr Hamilton. It is inconceivable that the type of exercise engaged in by the expert accountants would be undertaken by a prospective purchaser. 2. If any criticism can be levelled at Elanor it is that the recommendation to the board was given before CBRE's final financial due diligence report was provided to Elanor, but it was sometime after the financial due diligence report was provided that Elanor exercised its option. 3. In the circumstances, Elanor did not fail to take reasonable care such that it did not share in the responsibility for the loss or damage. 4. It follows that ground seven of the notice of contention fails. Conclusion 1. The appeal should be allowed. 2. Elanor is entitled to damages of $2.86 million together with interest on that sum from 1 November 2017. 3. In view of the apportionment I have determined, Alceon is to pay to Elanor the sum of $2.002 million together with interest on that sum from 1 November 2017. 4. CPRAM is to pay the sum of $858,000 together with interest on that sum from 1 November 2017. 5. Save for those figures, I agree with the orders proposed by Bromwich and Thawley JJ. I certify that the preceding four hundred and fifty-six (456) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice O'Sullivan. Associate: Dated: 18 September 2024